Execution Version
Exhibit 10.2
INDENTURE
between
COMSTOCK HOMEBUILDING COMPANIES, INC.
and
WELLS FARGO BANK, N.A.,
as Trustee
 
Dated as of March 15, 2007
 

 

--------------------------------------------------------------------------------

 

TABLE OF CONTENTS

                      Page   ARTICLE I DEFINITIONS AND OTHER PROVISIONS OF
GENERAL APPLICATION     1  
Section 1.1
  Definitions     1  
Section 1.2
  Compliance Certificate and Opinions     12  
Section 1.3
  Forms of Documents Delivered to Trustee     12  
Section 1.4
  Acts of Holders     13  
Section 1.5
  Notices, Etc. to Trustee and Company     15  
Section 1.6
  Notice to Holders; Waiver     15  
Section 1.7
  Effect of Headings and Table of Contents     16  
Section 1.8
  Successors and Assigns     16  
Section 1.9
  Separability     16  
Section 1.10
  Benefits of Indenture     16  
Section 1.11
  Governing Law     16  
Section 1.12
  Submission to Jurisdiction     16  
Section 1.13
  Non-Business Days     17  
Section 1.14
  Counterparts     17  
 
            ARTICLE II SENIOR NOTE FORMS     17  
Section 2.1
  Form of Senior Note     17  
Section 2.2
  Restrictive Legend     22  
Section 2.3
  Form of Trustee’s Certificate of Authentication     24  
Section 2.4
  Temporary Senior Notes     25  
Section 2.5
  Definitive Senior Notes     25  
 
            ARTICLE III THE SENIOR NOTES     26  
Section 3.1
  Payment of Principal and Interest     26  
Section 3.2
  Denominations     28  
Section 3.3
  Execution, Authentication, Delivery and Dating     28  
Section 3.4
  Global Senior Notes     29  
Section 3.5
  Registration, Transfer and Exchange Generally     31  
Section 3.6
  Mutilated, Destroyed, Lost and Stolen Senior Notes     32  
Section 3.7
  Persons Deemed Owners     33  
Section 3.8
  Cancellation     33  
Section 3 9
  Agreed Tax Treatment     33  
Section 3.10
  CUSIP Numbers     34  
 
            ARTICLE IV SATISFACTION AND DISCHARGE     34  
Section 4.1
  Satisfaction and Discharge of Indenture     34  
Section 4.2
  Application of Trust Money     35  
 
            ARTICLE V REMEDIES     35  
Section 5.1
  Events of Default     35  
Section 5.2
  Acceleration of Maturity; Rescission and Annulment     36  

 

--------------------------------------------------------------------------------

 

                      Page  
Section 5.3
  Collection of Indebtedness and Suits for Enforcement by Trustee     37  
Section 5.4
  Trustee May File Proofs of Claim     38  
Section 5.5
  Trustee May Enforce Claim Without Possession of Senior Notes     38  
Section 5.6
  Application of Money Collected     38  
Section 5.7
  Limitation on Suits     39  
Section 5.8
  Unconditional Right of Holders to Receive Principal, Premium, if any, and
Interest     40  
Section 5.9
  Restoration of Rights and Remedies     40  
Section 5.10
  Rights and Remedies Cumulative     40  
Section 5.11
  Delay or Omission Not Waiver     40  
Section 5.12
  Control by Holders     40  
Section 5.13
  Waiver of Past Defaults     41  
Section 5.14
  Undertaking for Costs     41  
Section 5.15
  Waiver of Usury, Stay or Extension Laws     42  
 
            ARTICLE VI THE TRUSTEE     42  
Section 6.1
  Corporate Trustee Required     42  
Section 6.2
  Certain Duties and Responsibilities     42  
Section 6.3
  Notice of Defaults     43  
Section 6.4
  Certain Rights of Trustee     44  
Section 6.5
  May Hold Senior Notes     46  
Section 6.6
  Compensation; Reimbursement; Indemnity     46  
Section 6.7
  Resignation and Removal; Appointment of Successor     47  
Section 6.8
  Acceptance of Appointment by Successor     47  
Section 6.9
  Merger, Conversion, Consolidation or Succession to Business     48  
Section 6.10
  Not Responsible for Recitals or Issuance of Senior Notes     48  
Section 6.11
  Appointment of Authenticating Agent     48  
 
            ARTICLE VII HOLDER’S LISTS AND REPORTS BY COMPANY     50  
Section 7.1
  Company to Furnish Trustee Names and Addresses of Holders     50  
Section 7.2
  Preservation of Information, Communications to Holders     50  
Section 7.3
  Reports by Company     51  
 
            ARTICLE VIII CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE  
  52  
Section 8.1
  Company May Consolidate, Etc., Only on Certain Terms     52  
Section 8.2
  Successor Company Substituted     52  
 
            ARTICLE IX SUPPLEMENTAL INDENTURES     53  
Section 9.1
  Supplemental Indentures without Consent of Holders     53  
Section 9.2
  Supplemental Indentures with Consent of Holders     54  
Section 9.3
  Execution of Supplemental Indentures     54  
Section 9.4
  Effect of Supplemental Indentures     55  

ii

--------------------------------------------------------------------------------

 

                      Page  
Section 9.5
  Reference in Senior Notes to Supplemental Indentures     55  
 
            ARTICLE X COVENANTS     55  
Section 10.1
  Payment of Principal, Premium, if any, and Interest     55  
Section 10.2
  Money for Senior Note Payments to be Held in Trust     55  
Section 10.3
  Statement as to Compliance     56  
Section 10.4
  Calculation Agent     57  
Section 10.5
  Additional Covenants     57  
Section 10.6
  Waiver of Covenants     59  
Section 10.7
  Treatment of Senior Notes     60  
Section 10.8
  Limitation on Issuance of Securities     60  
 
            ARTICLE XI REDEMPTION OF SENIOR NOTES     60  
Section 11.1
  Optional Redemption and Mandatory Redemptions     60  
Section 11.2
  Special Event Redemption     61  
Section 11.3
  Election to Redeem; Notice to Trustee     61  
Section 11.4
  Selection of Senior Notes to be Redeemed     61  
Section 11.5
  Notice of Redemption     62  
Section 11.6
  Deposit of Redemption Price     63  
Section 11.7
  Payment of Senior Notes Called for Redemption     63  
 
            ARTICLE XII RESERVED     63  
 
            ARTICLE XIII DEFEASANCE     68  
Section 13.1
  Defeasance and Discharge     68  
Section 13.2
  Conditions to Defeasance     69  
Section 13.3
  Deposited Money and U.S. Government Obligations to be Held in Trust; Other
Miscellaneous Provisions     70  
Section 13.4
  Reinstatement     70  

          SCHEDULE AND EXHIBIT
 
       
Schedule A
  -   Determination of LIBOR
 
       
Exhibit A
  -   Form of Officer’s Financial Certificate pursuant to Section 7.3(b)
 
       
Exhibit B
  -   Form of Officer’s Certificate pursuant to Section 10.3

iii

--------------------------------------------------------------------------------

 

INDENTURE
     This INDENTURE, dated as of March 15, 2007, is between Comstock
Homebuilding Companies, Inc., a Delaware corporation (the “Company”), and Wells
Fargo Bank, N.A., as Trustee (in such capacity, the “Trustee”).
RECITALS OF THE COMPANY
     WHEREAS, the Company has duly authorized the execution and delivery of this
Indenture to provide for the issuance of its senior unsecured notes, and to
provide the terms and conditions upon which such senior unsecured notes are to
be authenticated, issued and delivered; and
     WHEREAS, all things necessary to make this Indenture a valid agreement of
the Company, in accordance with its terms, have been done.
     NOW, THEREFORE, THIS INDENTURE WITNESSETH:
     For and in consideration of the premises and the purchase of the Senior
Notes by the Holders thereof, it is mutually covenanted and agreed, for the
equal and proportionate benefit of all Holders of the Senior Notes, as follows:
ARTICLE I
     DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
     Section 1.1 Definitions.
     For all purposes of this Indenture, except as otherwise expressly provided
or unless the context otherwise requires:
     (a) the terms defined in this Article I have the meanings assigned to them
in this Article I;
     (b) the words “include,” “includes” and “including” shall be deemed to be
followed by the phrase “without limitation”;
     (c) all accounting terms used but not defined herein have the meanings
assigned to them in accordance with GAAP;
     (d) unless the context otherwise requires, any reference to an “Article,” a
“Section,” a “Schedule” or an “Exhibit” refers to an Article, a Section, a
Schedule or an Exhibit, as the case may be, of or to this Indenture;
     (e) the words “hereby,” “herein,” “hereof and “hereunder” and other words
of similar import refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision;

 

--------------------------------------------------------------------------------

 

     (f) a reference to the singular includes the plural and vice versa; and
     (g) the masculine, feminine or neuter genders used herein shall include the
masculine, feminine and neuter genders.
     “Acceptable Repurchase” has the meaning specified in Section 10.5(g).
     “Acceptable Repurchase Mandatory Redemption Price” has the meaning set
forth in Section 11.1(d).
     “Act” when used with respect to any Holder, has the meaning specified in
Section 1.4(a).
     “Additional Interest” means the interest, if any, that shall accrue on any
amounts payable on the Senior Notes, the payment of which has not been made on
the applicable Interest Payment Date and which shall accrue at the rate per
annum specified or determined as specified in such Senior Note, in each case to
the extent legally enforceable.
     “Affiliate” of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
“control,” when used with respect to any specified Person, means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms “controlling” and “controlled” have meanings correlative to the
foregoing.
     “Applicable Depositary Procedures” means, with respect to any transfer or
transaction involving a Global Senior Note or beneficial interest therein, the
rules and procedures of the Depositary for such Senior Note, in each case to the
extent applicable to such transaction and as in effect from time to time.
     “Authenticating Agent” means any Person authorized by the Trustee pursuant
to Section 6.11 to act on behalf of the Trustee to authenticate the Senior
Notes.
     “Board of Directors” means the board of directors of the Company or any
duly authorized committee of that board.
     “Board Resolution” means a copy of a resolution certified by the Secretary
or an Assistant Secretary of the Company to have been duly adopted by the Board
of Directors and to be in full force and effect on the date of such
certification.
     “Breakage Costs” means any and all reasonable costs and fees of any Holder
of Senior Notes (including, without limitation, the reasonable fees and expenses
of any counsel engaged by such Holder to enforce the obligations of the Company
hereunder) (as determined by such Holder), directly associated or incurred in
connection with unwinding, terminating, modifying or otherwise breaking of any
interest rate swap or other interest rate hedging arrangement entered into with
respect to the interest rate on the Senior Notes prior to the expiration of the
Fixed Rate Period where such unwinding, termination, modification or breaking is
caused by the payment or defeasance of principal on the Senior Notes prior to
the expiration of the Fixed Rate Period in connection with a Change-of-Control
Election.

2

--------------------------------------------------------------------------------

 

     “Breakage Gains” means the amount of gain actually realized by any Holder
of Senior Notes (as determined by such Holder), directly associated or incurred
in connection with unwinding, terminating, modifying or otherwise breaking any
interest rate swap or other interest rate hedging arrangement entered into with
respect to the interest rate on the Senior Notes prior to the expiration of the
Fixed Rate Period where such unwinding, termination, modification or breaking is
caused by the payment or defeasance of principal on the Senior Notes prior to
the expiration of the Fixed Rate Period in connection with a Change-of-Control
Election.
     “Business Day” means any day other than (i) a Saturday or Sunday, (ii) a
day on which banking institutions in the City of New York are authorized or
required by law or executive order to remain closed or (iii) a day on which the
Corporate Trust Office of the Trustee is closed for business.
     “Calculation Agent” has the meaning specified in Section 10.4(a).
     “Capital Lease” means lease of (or other agreement conveying the right to
use) any real or personal property by a Person that, in conformity with GAAP, is
accounted for as a capital lease on the balance sheet of such Person
     “Change-of-Control” means (i) any person (as such term is used in Sections
13(d) and 14(d) of the Exchange Act), including a “group” as defined in
Section 13(d)(3) of the Exchange Act (but excluding a director or other
fiduciary holding securities under an employee benefit plan of the Company),
becomes the beneficial owner of Equity Interests of the Company having at least
fifty percent (50%) of the total number of votes that may be cast for the
election of directors of the Company; (ii) the merger or other business
combination of the Company, sale of all or substantially all of the Company’s
assets or combination of the foregoing transactions (a “Transaction”), other
than a Transaction immediately following which the shareholders of the Company
immediately prior to the Transaction continue to have a majority of the voting
power in the resulting entity (excluding for this purpose any shareholder owning
directly or indirectly more than ten percent (10%) of the shares of the other
company involved in the Transaction); or (iii) the persons who were directors of
the Company on the date hereof (the “Incumbent Directors”) shall cease to
constitute at least a majority of the Board or a majority of the board of
directors of any successor to the Company; provided, that, any director who was
not a director as of the date hereof shall be deemed to be an Incumbent Director
if such director was elected to the Board by, or on the recommendation of or
with the approval of, at least two-thirds of the directors who then qualified as
Incumbent Directors either actually or by prior operation of this provision,
unless such election, recommendation or approval was the result of an actual or
threatened election contest of the type contemplated by Regulation 14a-11
promulgated under the Exchange Act or any successor provision.
     “Change-of-Control Election” has the meaning specified in Section 10.5(b).
     “Change-of-Control Event” means the occurrence of (i) a Change-of-Control
and (ii) a Ratings Downgrade.
     “Change-of-Control Event Notice” has the meaning specified in Section
10.5(b).

3

--------------------------------------------------------------------------------

 

     “Change-of-Control Mandatory Redemption Price” has the meaning set forth in
Section 11.1(b).
     “Change-of-Control Notice” has the meaning specified in Section 10.5(b).
     “Code” means the Internal Revenue Code of 1986 or any successor statute
thereto, in each case as amended from time to time.
     “Commission” has the meaning specified in Section 7.3(c).
     “Company” means the Person named as the “Company” in the first paragraph of
this Indenture until a successor Person shall have become such pursuant to the
applicable provisions of this Indenture, and thereafter “Company” shall mean
such successor Person.
     “Company Request” and “Company Order” mean, respectively, the written
request or order signed in the name of the Company by its Chairman of the Board
of Directors, its Vice Chairman of the Board of Directors, its Chief Executive
Officer, President or a Vice President, and by its Chief Financial Officer, its
Treasurer, an Assistant Treasurer, its Secretary or an Assistant Secretary, and
delivered to the Trustee.
     “Consolidated Tangible Net Worth” means (i) the consolidated net worth of
the Company and its consolidated subsidiaries minus (ii) the consolidated
intangibles of the Company and its consolidated subsidiaries including, without
limitation, goodwill, trademarks, trade names, copyrights, patents, patent
applications, licenses, and rights in any of the foregoing and other items
treated as intangibles in accordance with generally accepted accounting
principles.
     “Control Agreement” means that certain Interest Reserve Account Control
Agreement dated the date hereof wherein the Company grants a security interest
in the Interest Reserve Account to the Trustee, as security trustee for the
benefit of the Holders.
     “Corporate Trust Office” means the principal office of the Trustee at which
at any particular time its corporate trust business shall be administered, which
office at the date of this Indenture is located at 919 North Market Street,
Suite 1600, Wilmington, Delaware 19801.
     “Debt” means, with respect to any Person, whether recourse is to all or a
portion of the assets of such Person, whether currently existing or hereafter
incurred and whether or not contingent and without duplication, (i) every
obligation of such Person for money borrowed; (ii) every obligation of such
Person evidenced by bonds, debentures, notes or other similar instruments,
including obligations incurred in connection with the acquisition of property,
assets or businesses; (iii) every reimbursement obligation of such Person with
respect to letters of credit, bankers’ acceptances or similar facilities issued
for the account of such Person; (iv) every obligation of such Person issued or
assumed as the deferred purchase price of property or services (but excluding
trade accounts payable or other accrued liabilities arising in the ordinary
course of business); (v) every capital lease obligation of such Person; (vi) all
indebtedness of such Person, whether incurred on or prior to the date of this
Indenture or thereafter incurred, for claims in respect of derivative products,
including interest rate, foreign exchange rate and commodity forward contracts,
options and swaps and similar arrangements; (vii) every obligation of the type
referred to in clauses (i) through (vi) of another Person and all dividends of

4

--------------------------------------------------------------------------------

 

another Person the payment of which, in either case, such Person has guaranteed
or is responsible or liable for, directly or indirectly, as obligor or
otherwise; and (viii) any renewals, extensions, refundings, amendments or
modifications of any obligation of the types referred to in clauses (i) through
(vii).
     “Defaulted Interest” has the meaning specified in Section 3.1(c).
     “Defeasance” has the meaning specified in Section 13.1.
     “Defeasance Maturity Date” has the meaning specified in Section 13.2.
     “Defeasance Senior Notes” has the meaning specified in Section 13.1.
     “Depositary” means an organization registered as a clearing agency under
the Exchange Act that is designated as Depositary by the Company or any
successor thereto. DTC will be the initial Depositary.
     “Depositary Participant” means a broker, dealer, bank, other financial
institution or other Person for whom from time to time a Depositary effects
book-entry transfers and pledges of securities deposited with the Depositary.
     “Dollar” or “$” means the currency of the United States of America that, as
at the time of payment, is legal tender for the payment of public and private
debts.
     “DTC” means The Depository Trust Company, a New York corporation, or any
successor thereto.
     “EBITDA” means, for any period, the net income (or loss) of the Company and
its Subsidiaries for such period, excluding (a) any gains from the sale, lease,
assignment or other transfer for value (each, a “Disposition”) by the Company or
any Subsidiary to any Person (other than the Company or any Subsidiary) of any
asset or right of the Company or such Subsidiary (including, the loss,
destruction or damage of any thereof or any actual or threatened (in writing to
the Company or any Subsidiary) condemnation, confiscation, requisition, seizure
or taking thereof) other than (i) the Disposition of any asset which is to be
replaced, and is in fact replaced, within thirty (30) days with another asset
performing the same or a similar function, (ii) the sale or lease of inventory
in the ordinary course of business and (iii) other Dispositions in any fiscal
year the aggregate cash proceeds (including cash proceeds received pursuant to
policies of insurance or by way of deferred payment of principal pursuant to a
note, installment receivable or otherwise, but only as and when received)
received by the Company or any Subsidiary pursuant to such Disposition net of
(A) the direct costs relating to such sale, transfer or other disposition
(including sales commissions and legal, accounting and investment banking fees),
(B) taxes paid or reasonably estimated by the Company to be payable as a result
thereof (after taking into account any available tax credits or deductions and
any tax sharing arrangements) and (C) amounts required to be applied to the
repayment of any Debt secured by a Lien on the asset subject to such Disposition
(other than the Senior Notes) do not in the aggregate exceed $1,000,000, (b) any
extraordinary gains not related to the extinguishment of debt, (c) any gains
from discontinued operations and (d) with respect to calculating the Fixed
Charge Coverage Ratio in connection with Section 10.5(e)(i), (ii) and
(iii) only, the aggregate amount of all other

5

--------------------------------------------------------------------------------

 

non-cash items reducing net income (including any non-cash charge incurred as a
result of a permanent write-down or impairment of an asset) for such period,
plus, to the extent deducted in determining such net income (or loss), Interest
Expense, income tax expense, depreciation and amortization and non-cash
management compensation expense for such period.
     “EDGAR” has the meaning specified in Section 7.3(c).
     “Equity Interests” means (a) the partnership interests (both common and
preferred partnership interests) in a partnership (whether a general or limited
partnership), (b) the membership interests in a limited liability company (both
common and preferred membership interests) and (c) the shares or stock interest
(both common stock and preferred stock) in a corporation.
     “ERISA” means the Employee Retirement Income Security Act of 1974 or any
successor statute thereto, in each case as amended from time to time.
     “Event of Default” has the meaning specified in Section 5.1.
     “Exchange Act” means the Securities Exchange Act of 1934 or any successor
statute thereto, in each case as amended from time to time.
     “Expiration Date” has the meaning specified in Section 1.4(h).
     “Fixed Rate Period” shall have the meaning specified in the form of Senior
Note set forth in Section 2.1.
     “Fixed Charge Coverage Ratio” means, for each period of determination,
which period shall be either the four consecutive fiscal quarters or the one
fiscal quarter ending on the last day of a particular fiscal quarter as
otherwise indicated herein, the ratio of (a) the total for such period of EBITDA
minus the sum of (i) net income taxes paid in cash by the Company and each of
its Subsidiaries and (ii) all unfinanced expenditures which, in accordance with
GAAP, would be required to be capitalized and shown on the consolidated balance
sheet of the Company, including expenditures in respect of any Capital Lease to
(b) the sum for such period of (i) cash Interest Expense plus (ii) required
payments of principal of all Debt of the Company and its Subsidiaries that
matures more than one year from the date of its creation (or is renewable or
extendible, at the option of such Person, to a date more than one year from such
date) (including the Senior Notes) plus (iii) management fees paid in cash.
     “GAAP” means United States generally accepted accounting principles,
consistently applied, from time to time in effect.
     “Global Senior Note” means a Senior Note that evidences all or part of the
Senior Notes, the ownership and transfers of which shall be made through book
entries by a Depositary.
     “Government Obligation” means (a) any security that is (i) a direct
obligation of the United States of America of which the full faith and credit of
the United States of America is pledged or (ii) an obligation of a Person
controlled or supervised by and acting as an agency or instrumentality of the
United States of America or the payment of which is unconditionally

6

--------------------------------------------------------------------------------

 

guaranteed as a full faith and credit obligation by the United States of
America, which, in either case of clause (i) or (ii), is not callable or
redeemable at the option of the issuer thereof, and (b) any depositary receipt
issued by a “bank” (as defined in Section 3(a)(2) of the Securities Act) as
custodian with respect to any Government Obligation that is specified in clause
(a) above and held by such bank for the account of the holder of such depositary
receipt, or with respect to any specific payment of principal of or interest on
any Government Obligation that is so specified and held; provided, that (except
as required by law) such custodian is not authorized to make any deduction from
the amount payable to the holder of such depositary receipt from any amount
received by the custodian in respect of the Government Obligation or the
specific payment of principal or interest evidenced by such depositary receipt.
     “Holder” means a Person in whose name a Senior Note is registered in the
Securities Register.
     “Indenture” means this Indenture as originally executed or as it may from
time to time be amended or supplemented by one or more amendments or indentures
supplemental hereto entered into pursuant to the applicable provisions hereof.
     “Interest Expense” means consolidated interest expense of the Company and
its Subsidiaries for such period (including all imputed interest on Capital
Leases)
     “Interest Payment Date” means March 30, June 30, September 30 and
December 30 of each year, commencing on March 30, 2007 during the term of this
Indenture.
     “Interest Reserve Account” means an account of the Company at Wells Fargo
Bank, N.A. subject to the limitations set forth in Section 10.5(f) and subject
to the lien of the Control Agreement.
     “Investment Company Act” means the Investment Company Act of 1940 or any
successor statute thereto, in each case as amended from time to time.
     “Investment Company Event” means the receipt by the Company of an Opinion
of Counsel experienced in such matters to the effect that, as a result of the
occurrence of a change in law or regulation (including any announced prospective
change) or a written change in interpretation or application of law or
regulation by any legislative body, court, governmental agency or regulatory
authority, there is more than an insubstantial risk that the Company is or,
within ninety (90) days of the date of such opinion will be, considered an
“investment company” that is required to be registered under the Investment
Company Act, which change or prospective change becomes effective or would
become effective, as the case may be, on or after the date of the issuance of
the Senior Notes.
     “Leverage Ratio” means at any time, the ratio of Debt of the Company
(excluding obligations related to inventory not owned resulting from
consolidations required pursuant to Financial Accounting Standards Board
Interpretation No. 46 entitled “Consolidation of Variable Interest Entities, an
Interpretation of Accounting Research Bulletin (ARB) No. 51” issued in
January 2003 and revised December 2003, as the same may be revised and amended
from time to time) at such time to Consolidated Tangible Net Worth (as reported
in the Company’s balance

7

--------------------------------------------------------------------------------

 

sheet contained in the most recent periodic report filed with the Commission)
for the most recently ended four fiscal quarters of the Company.
     “LIBOR” has the meaning specified in Schedule A.
     “LIBOR Business Day” has the meaning specified in Schedule A.
     “LIBOR Determination Date” has the meaning specified in Schedule A.
     “Maturity,” when used with respect to any Senior Note, means the date on
which the principal of such Senior Note or any installment of principal becomes
due and payable as therein or herein provided, whether at the Stated Maturity or
by declaration of acceleration, call for redemption or otherwise.
     “Notice of Default” means a written notice of the kind specified in Section
5.1(c).
     “Officers’ Certificate” means a certificate signed by the Chairman of the
Board, a Vice Chairman of the Board, the Chief Executive Officer, the President
or a Vice President, and by the Chief Financial Officer, the Treasurer, an
Assistant Treasurer, the Secretary or an Assistant Secretary, of the Company and
delivered to the Trustee.
     “Opinion of Counsel” means a written opinion of counsel, who may be counsel
for or an employee of the Company or any Affiliate of the Company.
     “Optional Redemption Price” has the meaning set forth in Section 11.1.
     “Original Issue Date” means the date of original issuance of each Senior
Note.
     “Outstanding” means, when used in reference to any Senior Notes, as of the
date of determination, all Senior Notes theretofore authenticated and delivered
under this Indenture, except:
     (i) Senior Notes theretofore canceled by the Trustee or delivered to the
Trustee for cancellation;
     (ii) Senior Notes for whose payment or redemption money in the necessary
amount has been theretofore deposited with the Trustee or any Paying Agent
(other than the Company) in trust or set aside and segregated in trust by the
Company (if the Company and/or its Affiliate shall act as its own Paying Agent)
for the Holders of such Senior Notes; provided, that if the Company is acting as
Paying Agent, Senior Notes for which payment or redemption money has been so
deposited in trust with the Paying Agent shall be considered to remain
Outstanding until such time as such payment or redemption money has actually
been paid in full to the Holders of such Senior Notes; and provided, further,
that, if such Senior Notes are to be redeemed, notice of such redemption has
been duly given pursuant to this Indenture or provision therefor satisfactory to
the Trustee has been made; and

8

--------------------------------------------------------------------------------

 

     (iii) Senior Notes that have been paid or in substitution for or in lieu of
which other Senior Notes have been authenticated and delivered pursuant to the
provisions of this Indenture, unless proof satisfactory to the Trustee is
presented that any such Senior Notes are held by Holders in whose hands such
Senior Notes are valid, binding and legal obligations of the Company;
provided, that in determining whether the Holders of the requisite principal
amount of Outstanding Senior Notes have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, Senior Notes
owned by the Company or any other obligor upon the Senior Notes or any Affiliate
of the Company or such other obligor shall be disregarded and deemed not to be
Outstanding unless the Company shall hold all Outstanding Senior Notes, except
that, in determining whether the Trustee shall be protected in relying upon any
such request, demand, authorization, direction, notice, consent or waiver, only
Senior Notes that a Responsible Officer of the Trustee actually knows to be so
owned shall be so disregarded. Senior Notes so owned that have been pledged in
good faith may be regarded as Outstanding if the pledgee establishes to the
satisfaction of the Trustee the pledgee’s right so to act with respect to such
Senior Notes and that the pledgee is not the Company or any other obligor upon
the Senior Notes or any Affiliate of the Company or such other obligor.
     “Paying Agent” means the Trustee or any Person authorized by the Company to
pay the principal of or any premium or interest on, or other amounts in respect
of, any Senior Notes on behalf of the Company.
     “Permitted Debt” means the principal of and any premium and interest on
(including interest accruing on or after the filing of any petition in
bankruptcy or for reorganization relating to the Company, whether or not such
claim for post-petition interest is allowed in such proceeding) all Debt of the
Company, whether incurred on or prior to the date of this Indenture or
thereafter incurred, to the extent such Debt is (i) secured by (or has
provisions in the loan documentation of such Debt permitting, upon the
occurrence of an “event of default” (as defined in such loan documentation),
such debt to become secured by) real property or membership interests of
Subsidiaries of the Company the assets of which primarily consist of real
property or, (ii) Debt of a Subsidiary of the Company which is secured by real
property and which the Company has guaranteed or is responsible or liable for,
directly or indirectly, as obligor or otherwise, (iii) “working capital” or
“revolving” lines of credit with terms of three (3) years or less.
     “Person” means a legal person, including any individual, corporation,
estate, partnership (general or limited), joint venture, association, joint
stock company, company, limited liability company, trust, unincorporated
association or government, or any agency or political subdivision thereof, or
any other entity of whatever nature.
     “Place of Payment” means, with respect to the Senior Notes, the Corporate
Trust Office of the Trustee.
     “Predecessor Senior Note” of any particular Senior Note means every
previous Senior Note evidencing all or a portion of the same debt as that
evidenced by such particular Senior Note. For the purposes of this definition,
any security authenticated and delivered under Section

9

--------------------------------------------------------------------------------

 

3.6 in lieu of a mutilated, destroyed, lost or stolen Senior Note shall be
deemed to evidence the same debt as the mutilated, destroyed, lost or stolen
Senior Note.
     “Proceeding” has the meaning specified in Section 12.2(b).
     “Purchase Agreement” means the Senior Note Purchase and Redemption
Agreement, dated as of the date hereof, between the Company, Kodiak Warehouse
LLC and the Purchaser.
     “Purchaser” means Kodiak Warehouse JPM LLC, a Delaware limited liability
company.
     “Put Election Notice” means written notice delivered to the Company and the
Trustee by the Purchaser (or any Affiliate transferee thereof) after
September 30, 2007, pursuant to which the Purchaser or such Affiliate transferee
elects to cause the Company to redeem a portion of the Senior Notes held by the
Purchaser or such Affiliate transferee in an aggregate principal amount not to
exceed Two Million Dollars ($2,000,000).
     “Put Mandatory Redemption Price” has the meaning set forth in Section
11.1(c).
     “Rating Agencies” shall mean (i) Standard & Poor’s Ratings Group, a
division of The McGraw-Hill Companies, Inc., (ii) Moody’s Investor Services,
Inc. and (iii) Fitch/IBCA, or, in each case its respective successor.
     “Ratings Downgrade” means a downgrading in or withdrawal of the Company’s
general corporate rating or the rating accorded to the Company’s debt securities
or preferred stock, if any, by any two of the Rating Agencies as a result of a
Change-of-Control.
     “Redemption Date” means, when used with respect to any Senior Note to be
redeemed, the date fixed for such redemption by or pursuant to this Indenture.
     “Redemption Price” means, when used with respect to any Senior Note to be
redeemed, in whole or in part, the Special Redemption Price, the Acceptable
Repurchase Mandatory Redemption Price, the Put Mandatory Redemption Price, the
Change-of-Control Mandatory Redemption Price or the Optional Redemption Price,
as applicable, at which such Senior Note or portion thereof is to be redeemed as
fixed by or pursuant to this Indenture.
     “Reference Banks” has the meaning specified in Schedule A.
     “Regular Record Date” for the interest payable on any Interest Payment Date
with respect to the Senior Notes means the date that is fifteen (15) days
preceding such Interest Payment Date (whether or not a Business Day).
     “Responsible Officer” means, when used with respect to the Trustee, the
officer in the corporate trust department of the Trustee having direct
responsibility for the administration of this Indenture.
     “Rights Plan” means a plan of the Company providing for the issuance by the
Company to all holders of its common Equity Interests of rights entitling the
holders thereof to subscribe for or purchase shares or units of any class or
series of Equity Interests in the Company which

10

--------------------------------------------------------------------------------

 

rights (i) are deemed to be transferred with such Equity Interests and (ii) are
also issued in respect of future issuances of such Equity Interests, in each
case until the occurrence of a specified event or events.
     “Securities Act” means the Securities Act of 1933 or any successor statute
thereto, in each case as amended from time to time.
     “Securities Register” and “Securities Registrar” have the respective
meanings specified in Section 3.5(a).
     “Senior Notes” or “Senior Note” means any debt securities or debt security,
as the case may be, authenticated and delivered under this Indenture.
     “Special Event” means the occurrence of an Investment Company Event or a
Tax Event.
     “Special Record Date” for the payment of any Defaulted Interest means a
date fixed by the Trustee pursuant to Section 3.1(c).
     “Special Redemption Price” has the meaning set forth in Section 11.2.
      “Stated Maturity” means March 30, 2017.
     “Subsidiary” means a Person more than fifty percent (50%) of the
outstanding voting stock or other voting interests of which is owned, directly
or indirectly, by the Company or by one or more other Subsidiaries, or by the
Company and one or more other Subsidiaries. For purposes of this definition,
“voting stock” means stock that ordinarily has voting power for the election of
directors, whether at all times or only so long as no senior class of stock has
such voting power by reason of any contingency.
     “Tax Event” means the receipt by the Company of an Opinion of Counsel
experienced in such matters to the effect that, as a result of (a) any amendment
to or change (including any announced prospective change) in the laws or any
regulations thereunder of the United States or any political subdivision or
taxing authority thereof or therein or (b) any judicial decision or any official
administrative pronouncement (including any private letter ruling, technical
advice memorandum or field service advice) or regulatory procedure, including
any notice or announcement of intent to adopt any such pronouncement or
procedure (an “Administrative Action”), regardless of whether such judicial
decision or Administrative Action is issued to or in connection with a
proceeding involving the Company and whether or not subject to review or appeal,
which amendment, change, judicial decision or Administrative Action is enacted,
promulgated or announced, in each case, on or after the date of issuance of the
Senior Notes, there is more than an insubstantial risk that interest payable by
the Company on the Senior Notes is not, or within ninety (90) days of the date
of such opinion, will not be, deductible by the Company, in whole or in part,
for United States federal income tax purposes.
     “Trustee” means the Person named as the “Trustee” in the first paragraph of
this Indenture, solely in its capacity as such and not in its individual
capacity, until a successor Trustee shall have become such pursuant to the
applicable provisions of this Indenture, and, thereafter, “Trustee” shall mean
or include each Person who is then a Trustee hereunder.

11

--------------------------------------------------------------------------------

 

     “Trust Indenture Act” means the Trust Indenture Act of 1939 or any
successor statute thereto, in each case as amended from time to time.
     Section 1.2 Compliance Certificate and Opinions.
     (a) Upon any application or request by the Company to the Trustee to take
any action under any provision of this Indenture, the Company shall, if
requested by the Trustee, furnish to the Trustee an Officers’ Certificate
stating that all conditions precedent (including covenants compliance with which
constitutes a condition precedent), if any, provided for in this Indenture
relating to the proposed action have been complied with and an Opinion of
Counsel stating that in the opinion of such counsel all such conditions
precedent (including covenants compliance with which constitutes a condition
precedent), if any, have been complied with, except that, in the case of any
application or request as to which the furnishing of such documents is
specifically required by any provision of this Indenture relating to such
particular application or request, no additional certificate or opinion need be
furnished.
     (b) Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture (other than the certificate
provided pursuant to Section 10.3) shall include:
     (i) a statement by each individual signing such certificate or opinion that
such individual has read such condition or covenant and the definitions herein
relating thereto;
     (ii) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions of such individual contained
in such certificate or opinion are based;
     (iii) a statement that, in the opinion of such individual, he or she has
made such examination or investigation as is necessary to enable him or her to
express an informed opinion as to whether or not such condition or covenant has
been complied with; and
     (iv) a statement as to whether, in the opinion of such individual, such
condition or covenant has been complied with.
     Section 1.3 Forms of Documents Delivered to Trustee.
     (a) In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
     (b) Any certificate or opinion of an officer of the Company may be based,
insofar as it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless such officer knows, or after reasonable
inquiry should know, that the certificate or opinion or representations with
respect to matters upon which his or her certificate or opinion is based are
erroneous. Any such certificate or Opinion of Counsel may be based, insofar as
it relates to

12

--------------------------------------------------------------------------------

 

factual matters, upon a certificate or opinion of, or representations by, an
officer or officers of the Company stating that the information with respect to
such factual matters is in the possession of the Company, unless such counsel
knows, or after reasonable inquiry should know, that the certificate or opinion
or representations with respect to such matters are erroneous.
     (c) Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
     (d) Whenever, subsequent to the receipt by the Trustee of any Board
Resolution, Officers’ Certificate, Opinion of Counsel or other document or
instrument, a clerical, typographical or other inadvertent or unintentional
error or omission shall be discovered therein, a new document or instrument may
be substituted therefor in corrected form with the same force and effect as if
originally received in the corrected form and, irrespective of the date or dates
of the actual execution and/or delivery thereof, such substitute document or
instrument shall be deemed to have been executed and/or delivered as of the date
or dates required with respect to the document or instrument for which it is
substituted. Without limiting the generality of the foregoing, any Senior Notes
issued under the authority of such defective document or instrument shall
nevertheless be the valid obligations of the Company entitled to the benefits of
this Indenture equally and ratably with all other Outstanding Senior Notes.
     Section 1.4 Acts of Holders.
     (a) Any request, demand, authorization, direction, notice, consent, waiver
or other action provided by this Indenture to be given to or taken by Holders
may be embodied in and evidenced by one or more instruments of substantially
similar tenor signed by such Holders in person or by an agent thereof duly
appointed in writing and, except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments (including any
appointment of an agent) is or are delivered to the Trustee and, where it is
hereby expressly required, to the Company. Such instrument or instruments (and
the action embodied therein and evidenced thereby) are herein sometimes referred
to as the “Act” of the Holders signing such instrument or instruments. Proof of
execution of any such instrument or of a writing appointing any such agent shall
be sufficient for any purpose of this Indenture and conclusive in favor of the
Trustee and the Company, if made in the manner provided in this Section 1.4.
     (b) The fact and date of the execution by any Person of any such instrument
or writing may be proved by the affidavit of a witness of such execution or by
the certificate of any notary public or other officer authorized by law to take
acknowledgments of deeds, certifying that the individual signing such instrument
or writing acknowledged to him or her the execution thereof. Where such
execution is by a Person acting in other than his or her individual capacity,
such certificate or affidavit shall also constitute sufficient proof of his or
her authority. The fact and date of the execution by any Person of any such
instrument or writing, or the authority of the Person executing the same, may
also be proved in any other manner that the Trustee deems sufficient and in
accordance with such reasonable rules as the Trustee may determine.
     (c) The ownership of Senior Notes shall be proved by the Securities
Register.

13

--------------------------------------------------------------------------------

 

     (d) Any request, demand, authorization, direction, notice, consent, waiver
or other action by the Holder of any Senior Note shall bind every future Holder
of the same Senior Note and the Holder of every Senior Note issued upon the
registration of transfer thereof or in exchange therefor or in lieu thereof in
respect of anything done or suffered to be done by the Trustee or the Company in
reliance thereon, whether or not notation of such action is made upon such
Senior Note.
     (e) Without limiting the foregoing, a Holder entitled to take any action
hereunder with regard to any particular Senior Note may do so with regard to all
or any part of the principal amount of such Senior Note or by one or more duly
appointed agents each of which may do so pursuant to such appointment with
regard to all or any part of such principal amount.
     (f) Except as set forth in paragraph (g) of this Section 1.4, the Company
may set any day as a record date for the purpose of determining the Holders of
Outstanding Senior Notes entitled to give, make or take any request, demand,
authorization, direction, notice, consent, waiver or other action provided or
permitted by this Indenture to be given, made or taken by Holders of Senior
Notes. If any record date is set pursuant to this paragraph, the Holders of
Outstanding Senior Notes on such record date, and no other Holders, shall be
entitled to take the relevant action, whether or not such Holders remain Holders
after such record date; provided, that no such action shall be effective
hereunder unless taken on or prior to the applicable Expiration Date by Holders
of the requisite principal amount of Outstanding Senior Notes on such record
date. Nothing in this paragraph shall be construed to prevent the Company from
setting a new record date for any action for which a record date has previously
been set pursuant to this paragraph (whereupon the record date previously set
shall automatically and with no action by any Person be canceled and of no
effect). Promptly after any record date is set pursuant to this paragraph, the
Company, at its own expense, shall cause notice of such record date, the
proposed action by Holders and the applicable Expiration Date to be given to the
Trustee in writing and to each Holder of Senior Notes in the manner set forth in
Section 1.6.
     (g) The Trustee may set any day as a record date for the purpose of
determining the Holders of Outstanding Senior Notes entitled to join in the
giving or making of (i) any Notice of Default, (ii) any declaration of
acceleration or rescission or annulment thereof referred to in Section 5.2,
(iii) any request to institute proceedings referred to in Section 5.7(b) or (iv)
any direction referred to in Section 5.12. If any record date is set pursuant to
this paragraph, the Holders of Outstanding Senior Notes on such record date, and
no other Holders, shall be entitled to join in such notice, declaration, request
or direction, whether or not such Holders remain Holders after such record date;
provided, that no such action shall be effective hereunder unless taken on or
prior to the applicable Expiration Date by Holders of the requisite principal
amount of Outstanding Senior Notes on such record date. Nothing in this
paragraph shall be construed to prevent the Trustee from setting a new record
date for any action for which a record date has previously been set pursuant to
this paragraph (whereupon the record date previously set shall automatically and
with no action by any Person be canceled and of no effect). Promptly after any
record date is set pursuant to this paragraph, the Trustee, at the Company’s
expense, shall cause notice of such record date, the proposed action by Holders
and the applicable Expiration Date to be given to the Company in writing and to
each Holder of Senior Notes in the manner set forth in Section 1.6.

14

--------------------------------------------------------------------------------

 

     (h) With respect to any record date set pursuant to paragraph (f) or (g) of
this Section 1.4, the party hereto that sets such record date may designate any
day as the “Expiration Date” and from time to time may change the Expiration
Date to any earlier or later day; provided, that no such change shall be
effective unless notice of the proposed new Expiration Date is given to the
other party hereto in writing, and to each Holder of Senior Notes in the manner
set forth in Section 1.6, on or prior to the existing Expiration Date. If an
Expiration Date is not designated with respect to any record date set pursuant
to this Section 1.4, the party hereto that set such record date shall be deemed
to have initially designated the ninetieth (90th) day after such record date as
the Expiration Date with respect thereto, subject to its right to change the
Expiration Date as provided in this paragraph. Notwithstanding the foregoing, no
Expiration Date shall be later than the one hundred eightieth (180th) day after
the applicable record date.
     Section 1.5 Notices, Etc. to Trustee and Company.
     Any request, demand, authorization, direction, notice, consent, waiver, Act
of Holders, or other document provided or permitted by this Indenture to be made
upon, given or furnished to, or filed with:
     (a) the Trustee by any Holder or the Company shall be sufficient for every
purpose hereunder if made, given, furnished or filed in writing to or with and
received by the Trustee at its Corporate Trust Office; or
     (b) the Company by the Trustee or any Holder shall be sufficient for every
purpose hereunder if in writing and mailed, first class, postage prepaid, to the
Company addressed to it at 11465 Sunset Hills Road, Suite 510, Reston, Virginia
20190 or at any other address previously furnished in writing to the Trustee by
the Company.
     Section 1.6 Notice to Holders; Waiver.
     Where this Indenture provides for notice to Holders of any event, such
notice shall be sufficiently given (unless otherwise herein expressly provided)
if in writing and mailed, first class, postage prepaid, to each Holder affected
by such event to the address of such Holder as it appears in the Securities
Register, not later than the latest date (if any), and not earlier than the
earliest date (if any), prescribed for the giving of such notice. If, by reason
of the suspension of or irregularities in regular mail service or for any other
reason, it shall be impossible or impracticable to mail notice of any event to
Holders when said notice is required to be given pursuant to any provision of
this Indenture, then any manner of giving such notice as shall be satisfactory
to the Trustee shall be deemed to be a sufficient giving of such notice. In any
case where notice to Holders is given by mail, neither the failure to mail such
notice, nor any defect in any notice so mailed, to any particular Holder shall
affect the sufficiency of such notice with respect to other Holders. Where this
Indenture provides for notice in any manner, such notice may be waived in
writing by the Person entitled to receive such notice, either before or after
the event, and such waiver shall be the equivalent of such notice. Waivers of
notice by Holders shall be filed with the Trustee, but such filing shall not be
a condition precedent to the validity of any action taken in reliance upon such
waiver.

15

--------------------------------------------------------------------------------

 

     Section 1.7 Effect of Headings and Table of Contents.
     The Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction of this Indenture.
     Section 1.8 Successors and Assigns.
     This Indenture shall be binding upon and shall inure to the benefit of any
successor to the Company and the Trustee, including any successor by operation
of law. Except in connection with a transaction involving the Company that is
permitted under Article VIII and pursuant to which the assignee agrees in
writing to perform the Company’s obligations hereunder, the Company shall not
assign its obligations hereunder.
     Section 1.9 Separability.
     If any provision in this Indenture or in the Senior 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, and
there shall be deemed substituted for the provision at issue a valid, legal and
enforceable provision as similar as possible to the provision at issue.
     Section 1.10 Benefits of Indenture.
     Nothing in this Indenture or in the Senior Notes, express or implied, shall
give to any Person, other than the parties hereto and their successors and
assigns, the Holders of the Senior Notes and, solely to the extent set forth
herein, the holders of Permitted Debt, any benefit or any legal or equitable
right, remedy or claim under this Indenture.
     Section 1.11 Governing Law.
     This Indenture and the rights and obligations of each of the Holders, the
Company and the Trustee shall be construed and enforced in accordance with and
governed by the laws of the State of New York without reference to its conflict
of laws provisions (other than Section 5-1401 of the General Obligations Law).
     Section 1.12 Submission to Jurisdiction.
     ANY LEGAL ACTION OR PROCEEDING BY OR AGAINST ANY PARTY HERETO OR WITH
RESPECT TO OR ARISING OUT OF THIS INDENTURE MAY BE BROUGHT IN OR REMOVED TO THE
COURTS OF THE STATE OF NEW YORK, IN AND FOR THE COUNTY OF NEW YORK, OR OF THE
UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK (IN EACH CASE
SITTING IN THE BOROUGH OF MANHATTAN). BY EXECUTION AND DELIVERY OF THIS
INDENTURE, EACH PARTY ACCEPTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY,
GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS (AND
COURTS OF APPEALS THEREFROM) FOR LEGAL PROCEEDINGS ARISING OUT OF OR IN
CONNECTION WITH THIS INDENTURE.

16

--------------------------------------------------------------------------------

 

     Section 1.13 Non-Business Days.
     If any Interest Payment Date, Redemption Date or Stated Maturity of any
Senior Note shall not be a Business Day, then (notwithstanding any other
provision of this Indenture or the Senior Notes) payment of interest, premium,
if any, or principal or other amounts in respect of such Senior Note shall not
be made on such date, but shall be made on the next succeeding Business Day (and
interest shall accrue in respect of the amounts whose payment is so delayed for
the period from and after such Interest Payment Date, Redemption Date or Stated
Maturity, as the case may be, until such next succeeding Business Day) except
that, if such Business Day falls in the next succeeding calendar year, such
payment shall be made on the immediately preceding Business Day, in each case
with the same force and effect as if made on the Interest Payment Date or
Redemption Date or at the Stated Maturity.
     Section 1.14 Counterparts.
     This Indenture may be executed in any number of counterparts, each of which
so executed shall be deemed to be an original, but all such counterparts shall
together constitute but one and the same instrument.
ARTICLE II
SENIOR NOTE FORMS
     Section 2.1 Form of Senior Note.
Any Senior Note issued hereunder shall be in substantially the following form:
COMSTOCK HOMEBUILDING COMPANIES, INC.
Senior Note due 2017

      No.                        $                     

     Comstock Homebuilding Companies, Inc., a corporation organized and existing
under the laws of Delaware (hereinafter called the “Company,” which term
includes any successor Person under the Indenture hereinafter referred to), for
value received, hereby promises to pay to [                      ], or
registered assigns, the principal sum of [PRINCIPAL AMOUNT] ($[
                     ]) [IF THE SECURITY IS A GLOBAL SECURITY, THEN INSERT: or
such other principal amount represented hereby as may be set forth in the
records of the Securities Registrar hereinafter referred to in accordance with
the Indenture] on March 30, 2017. The Company further promises to pay interest
on said principal sum from and including March 15, 2007, or from and including
the most recent Interest Payment Date to which interest has been paid or duly
provided for, quarterly in arrears, to but excluding the succeeding Interest
Payment Date, on March 30, June 30, September 30 and December 30 of each year,
commencing March 30, 2007, or if any such day is not a Business Day, on the next
succeeding Business Day (and interest shall accrue in respect of the amounts
whose payment is so delayed for the period from and after such Interest Payment
Date until such next succeeding Business Day), except that,

17

--------------------------------------------------------------------------------

 

if such Business Day falls in the next succeeding calendar year, such payment
shall be made on the immediately preceding Business Day, in each case, with the
same force and effect as if made on the Interest Payment Date, at a fixed rate
equal to 9.72% per annum through the Interest Payment Date in June 2011 (“Fixed
Rate Period”) and thereafter at a variable rate, reset quarterly, equal to LIBOR
plus 4.20% per annum, until the principal hereof is paid or duly provided for or
made available for payment; provided, that any overdue principal, premium, if
any, and any overdue installment of interest shall bear Additional Interest at a
fixed rate equal to 9.72% per annum through the interest payment date in
June 2011 and thereafter at a variable rate, reset quarterly, equal to LIBOR
plus 4.20% per annum (to the extent that the payment of such interest shall be
legally enforceable), compounded quarterly, from and including the dates such
amounts are due to but excluding the dates such amounts are paid or made
available for payment, and such interest shall be payable on demand.
     During the Fixed Rate Period, the amount of interest payable for any
interest period shall be computed on the basis of a three hundred sixty
(360)-day year of twelve (12) thirty (30)-day months and the amount payable for
any partial period shall be computed on the basis of the actual number of days
elapsed in a three hundred sixty (360)-day year of twelve (12) thirty (30)-day
months. Upon expiration of the Fixed Rate Period, the amount of interest payable
for any interest period will be computed on the basis of a three hundred sixty
(360)-day year and the actual number of days elapsed in the relevant interest
period. The interest so payable, and punctually paid or duly provided for, on
any Interest Payment Date shall, as provided in the Indenture, be paid to the
Person in whose name this Senior Note (or one or more Predecessor Senior Notes)
is registered at the close of business on the Regular Record Date for such
interest installment. Any such interest not so punctually paid or duly provided
for shall forthwith cease to be payable to the Holder on such Regular Record
Date and may either be paid to the Person in whose name this Senior Note (or one
or more Predecessor Senior Notes) is registered at the close of business on a
Special Record Date for the payment of such Defaulted Interest to be fixed by
the Trustee, notice whereof shall be given to Holders of Senior Notes not less
than ten (10) days prior to such Special Record Date, or be paid at any time in
any other lawful manner not inconsistent with the requirements of any securities
exchange or automated quotation system on which the Senior Notes may be listed,
traded or quoted and upon such notice as may be required by such exchange or
automated quotation system, all as more fully provided in the Indenture.
     During an Event of Default, the Company shall not (i) declare or pay any
dividends or distributions on, or redeem, purchase, acquire or make a
liquidation payment with respect to, any Equity Interests of the Company,
(ii) vote in favor of or permit or otherwise allow any of its Subsidiaries to
declare or pay any dividends or distributions on, or redeem, purchase, acquire
or make a liquidation payment with respect to or otherwise retire, any preferred
Equity Interests of such Subsidiaries or other Equity Interests entitling the
holders thereof to a stated rate of return (for the avoidance of doubt, whether
such preferred Equity Interests are perpetual or otherwise) or (iii) make any
payment of principal of or any interest or premium, if any, on or repay,
repurchase or redeem any Debt of the Company other than Permitted Debt (other
than (A) repurchases, redemptions or other acquisitions of Equity Interests of
the Company in connection with (1) any employment contract, benefit plan or
other similar arrangement with or for the benefit of any one or more employees,
officers, directors or consultants, (2) a dividend reinvestment or Equity
Interests purchase plan or (3) the issuance of Equity Interests in the Company
(or securities convertible into or exercisable for such Equity Interests) as
consideration

18

--------------------------------------------------------------------------------

 

in an acquisition transaction entered into prior to the applicable Event of
Default, (B) as a result of an exchange, conversion reclassification or
combination of any class or series of the Company’s Equity Interests (or any
Equity Interests in a Subsidiary of the Company) for, of or with any class or
series of the Company’s Equity Interests or of any class or series of the
Company’s indebtedness for any class or series of the Company’s Equity
Interests, (C) the purchase of fractional interests in the Equity Interests of
the Company pursuant to the conversion or exchange provisions of such Equity
Interests or the security being converted or exchanged, (D) any declaration of a
dividend in connection with any Rights Plan, the issuance of rights, Equity
Interests or other property under any Rights Plan or the redemption or
repurchase of rights pursuant thereto or (E) any dividend in the form of Equity
Interests, warrants, options or other rights where the dividend Equity Interest
or the Equity Interest issuable upon exercise of such warrants, options or other
rights is the same Equity Interest as that on which the dividend is being paid
or ranks pari passu with or junior to such Equity Interest).
     Payment of principal of, premium, if any, and interest on this Senior Note
shall be made in such coin or currency of the United States of America as at the
time of payment is legal tender for payment of public and private debts.
Payments of principal, premium, if any, and interest due at the Maturity of this
Senior Note shall be made at the Place of Payment upon surrender of such Senior
Notes to the Paying Agent, and payments of interest shall be made, subject to
such surrender where applicable, by wire transfer at such place and to such
account at a banking institution in the United States as may be designated in
writing to the Paying Agent at least ten (10) Business Days prior to the date
for payment by the Person entitled thereto unless proper written transfer
instructions have not been received by the relevant record date, in which case
such payments shall be made by check mailed to the address of such Person as
such address shall appear in the Security Register.
     The indebtedness evidenced by this Senior Note is, to the extent provided
in the Indenture, subordinate and junior in right of payment to the prior
payment in full of all Permitted Debt, and this Senior Note is issued subject to
the provisions of the Indenture with respect thereto. Each Holder of this Senior
Note, by accepting the same, (a) agrees to and shall be bound by such
provisions, (b) authorizes and directs the Trustee on his, her or its behalf to
take such actions as may be necessary or appropriate to effectuate the
subordination so provided and (c) appoints the Trustee his, her or its
attorney-in-fact for any and all such purposes. Each Holder hereof, by his, her
or its acceptance hereof, waives all notice of the acceptance of the
subordination provisions contained herein and in the Indenture by each holder of
Permitted Debt, whether now outstanding or hereafter incurred, and waives
reliance by each such holder upon said provisions.
     Unless the certificate of authentication hereon has been executed by the
Trustee by manual signature, this Senior Note shall not be entitled to any
benefit under the Indenture or be valid or obligatory for any purpose.
[FORM OF REVERSE OF SECURITY]
     This Senior Note is one of a duly authorized issue of securities of the
Company (the “Senior Notes”) issued under the Indenture, dated as of March 15,
2007 (the “Indenture”), between the Company and Wells Fargo Bank, N.A., as
Trustee (in such capacity, the “Trustee,”

19

--------------------------------------------------------------------------------

 

which term includes any successor trustee under the Indenture), to which
Indenture and all indentures supplemental thereto reference is hereby made for a
statement of the respective rights, limitations of rights, duties and immunities
thereunder of the Company, the Trustee and the Holders of the Senior Notes, and
of the terms upon which the Senior Notes are, and are to be, authenticated and
delivered. All terms used in this Senior Note that are defined in the Indenture
shall have the meanings assigned to them in the Indenture.
     The Company may, on any Interest Payment Date, at its option, upon not less
than thirty (30) days’ nor more than sixty (60) days’ written notice to the
Holders of the Senior Notes (unless a shorter notice period shall be
satisfactory to the Trustee) (i) on or after June 30, 2011, (ii) upon receipt of
thirty (30) days prior written notice from the Purchaser of Purchaser’s intent
to consummate a sale, assignment or transfer of this Senior Note to a subsequent
purchaser (including to any entity issuing or proposing to issue collateralized
debt obligations) other than an Affiliate of the Purchaser, or (iii) to the
extent the Purchaser has not consummated one of the transactions in subsection
(ii) hereof and subject to the terms and conditions of Article XI of the
Indenture, redeem this Senior Note in whole at any time or, subject to the
consent of the Purchaser (or any Affiliate transferee thereof), in part from
time to time in each case at a Redemption Price equal to one hundred percent
(100%) of the principal amount hereof (or of the redeemed portion hereof, as
applicable), together, in the case of any such redemption, with accrued and
unpaid interest, including any Additional Interest, to but excluding the date
fixed as the Redemption Date and plus all Breakage Costs. Notwithstanding the
foregoing, in the event of a redemption of this Senior Note by the Company
pursuant to (ii) of this paragraph above, the Company shall (y) provide not less
than five (5) days’ nor more than ten (10) days’ written notice to the Holders
of the Senior Notes and (z) the redemption will not be required to occur on an
Interest Payment Date.
     In addition, prior to June 30, 2011, upon the occurrence and during the
continuation of a Special Event, the Company may, at its option, upon not less
than thirty (30) days’ nor more than sixty (60) days’ written notice to the
Holders of the Senior Notes (unless a shorter notice period shall be
satisfactory to the Trustee), redeem this Senior Note, in whole but not in part
and subject to the terms and conditions of Article XI of the Indenture, at a
Redemption Price equal to one hundred seven and one-half percent (107.5%) of the
principal amount hereof, together, in the case of any such redemption, with
accrued interest, including any Additional Interest, to but excluding the date
fixed as the Redemption Date.
     Further, the Company shall, upon receipt of a Change-of-Control Election
after June 30, 2011, redeem the Senior Notes in whole on a date no more than
thirty (30) days after receipt of the Change-of-Control Election, at a
Redemption Price equal to one hundred percent (100%) of the principal amount
thereof, together, in the case of any such redemption, with accrued and unpaid
interest, including any Additional Interest, to but excluding the date fixed as
the Redemption Date. The Company shall in connection with the receipt of a Put
Election Notice, redeem the portion of the Senior Notes elected to be caused to
be redeemed pursuant to such Put Election Notice on a date no more than thirty
(30) days after receipt of the Put Election Notice, at a Redemption Price equal
to one hundred percent (100%) of the principal amount thereof, together, in the
case of any such redemption, with accrued and unpaid interest, including any
Additional Interest, to but excluding the date fixed as the Redemption Date, and
plus all Breakage Costs. The Company shall in connection with an Acceptable
Repurchase, redeem a

20

--------------------------------------------------------------------------------

 

portion of the Senior Notes at a Redemption Price equal to one hundred percent
(100%) of the principal amount thereof, together, in the case of any such
redemption, with accrued and unpaid interest, including any Additional Interest,
to but excluding the date fixed as the Redemption Date, and plus all Breakage
Costs.
     In the event of redemption of this Senior Note in part only, a new Senior
Note or Senior Notes for the unredeemed portion hereof will be issued in the
name of the Holder hereof upon the cancellation hereof. If less than all the
Senior Notes are to be redeemed, the particular Senior Notes to be redeemed
shall be selected not more than sixty (60) days prior to the Redemption Date by
the Trustee from the Outstanding Senior Notes not previously called for
redemption, by such method as the Trustee shall deem fair and appropriate and
which may provide for the selection for redemption of a portion of the principal
amount of any Senior Note.
     The Indenture permits, with certain exceptions as therein provided, the
Company and the Trustee at any time to enter into a supplemental indenture or
indentures for the purpose of modifying in any manner the rights and obligations
of the Company and of the Holders of the Senior Notes, with the consent of the
Holders of not less than a majority in principal amount of the Outstanding
Senior Notes. The Indenture also contains provisions permitting Holders of
specified percentages in principal amount of the Senior Notes, on behalf of the
Holders of all Senior Notes, to waive compliance by the Company with certain
provisions of the Indenture and certain past defaults under the Indenture and
their consequences. Any such consent or waiver by the Holder of this Senior Note
shall be conclusive and binding upon such Holder and upon all future Holders of
this Senior Note and of any Senior Note issued upon the registration of transfer
hereof or in exchange herefor or in lieu hereof, whether or not notation of such
consent or waiver is made upon this Senior Note.
     No reference herein to the Indenture and no provision of this Senior Note
or of the Indenture shall alter or impair the obligation of the Company, which
is absolute and unconditional, to pay the principal of and any premium, if any,
and interest, including any Additional Interest (to the extent legally
enforceable), on this Senior Note at the times, place and rate, and in the coin
or currency, herein prescribed.
     As provided in the Indenture and subject to certain limitations therein set
forth, the transfer of this Senior Note is restricted to transfers to “Qualified
Purchasers” (as such term is defined in the Investment Company Act of 1940, as
amended) and is registrable in the Senior Notes Register, upon surrender of this
Senior Note for registration of transfer at the office or agency of the Company
maintained for such purpose, duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Company and the Securities
Registrar and duly executed by, the Holder hereof or such Holder’s attorney duly
authorized in writing, and thereupon one or more new Senior Notes, of like
tenor, of authorized denominations and for the same aggregate principal amount,
will be issued to the designated transferee or transferees.
     The Senior Notes are issuable only in registered form without coupons in
minimum denominations of $100,000 and any integral multiple of $1,000 in excess
thereof. As provided in the Indenture and subject to certain limitations therein
set forth, Senior Notes are exchangeable for a like aggregate principal amount
of Senior Notes and of like tenor of a different authorized denomination, as
requested by the Holder surrendering the same.

21

--------------------------------------------------------------------------------

 

     No service charge shall be made for any such registration of transfer or
exchange, but the Company may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
     The Company, the Trustee and any agent of the Company or the Trustee may
treat the Person in whose name this Senior Note is registered as the owner
hereof for all purposes, whether or not this Senior Note be overdue, and neither
the Company, the Trustee nor any such agent shall be affected by notice to the
contrary.
     The Company and, by its acceptance of this Senior Note or a beneficial
interest herein, the Holder of, and any Person that acquires a beneficial
interest in, this Senior Note agree that, for United States federal, state and
local tax purposes, it is intended that this Senior Note constitute
indebtedness.
     This Senior Note shall be construed and enforced in accordance with and
governed by the laws of the State of New York without reference to its conflict
of laws provisions (other than Section 5-1401 of the General Obligations Law).
     IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed on this [DAY] day of [MONTH], [YEAR].

                  COMSTOCK HOMEBUILDING COMPANIES, INC.
 
           
 
  By:        
 
           
 
  Name:        
 
           
 
  Title:        
 
           

     Section 2.2 Restrictive Legend.
     (a) Any Senior Note issued hereunder shall bear a legend in substantially
the following form:
IF THIS SECURITY IS A GLOBAL SECURITY INSERT: “THIS SECURITY IS A GLOBAL
SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS
REGISTERED IN THE NAME OF THE DEPOSITORY TRUST COMPANY (“DTC”) OR A NOMINEE OF
DTC. THIS SECURITY IS EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A
PERSON OTHER THAN DTC OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED
IN THE INDENTURE, AND NO TRANSFER OF THIS SECURITY (OTHER THAN A TRANSFER OF
THIS SECURITY AS A WHOLE BY DTC TO A NOMINEE OF DTC OR BY A

22

--------------------------------------------------------------------------------

 

NOMINEE OF DTC TO DTC OR ANOTHER NOMINEE OF DTC) MAY BE REGISTERED EXCEPT IN
LIMITED CIRCUMSTANCES.
UNLESS THIS SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF DTC TO THE
ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY
SECURITY ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREON IS MADE
TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]
THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ORIGINALLY ISSUED IN A
TRANSACTION EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “SECURITIES ACT”) AND SUCH SECURITIES, AND ANY INTEREST THEREIN,
MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF ANY
SECURITIES IS HEREBY NOTIFIED THAT THE SELLER OF THE SECURITIES MAY BE RELYING
ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED
BY RULE 144A UNDER THE SECURITIES ACT.
THE HOLDER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE AGREES FOR THE
BENEFIT OF THE COMPANY THAT (A) SUCH SECURITIES MAY BE OFFERED, RESOLD OR
OTHERWISE TRANSFERRED ONLY (I) TO THE COMPANY, (II) TO A PERSON WHOM THE SELLER
REASONABLY BELIEVES IS (a) A “QUALIFIED INSTITUTIONAL BUYER” (AS DEFINED IN RULE
144A UNDER THE SECURITIES ACT) AND (b) A “QUALIFIED PURCHASER” (AS DEFINED IN
SECTION 2(a)(51) OF THE INVESTMENT COMPANY ACT OF 1940, AS AMENDED) OR (III) TO
A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A “QUALIFIED PURCHASER “ (AS
DEFINED IN SECTION 2(a)(51) OF THE INVESTMENT COMPANY ACT OF 1940, AS AMENDED)
AND (B) THE HOLDER WILL NOTIFY ANY PURCHASER OF ANY SECURITIES FROM IT OF THE
RESALE RESTRICTIONS REFERRED TO IN (A) ABOVE.
THE SECURITIES WILL BE ISSUED AND MAY BE TRANSFERRED ONLY IN BLOCKS HAVING AN
AGGREGATE PRINCIPAL AMOUNT OF NOT LESS THAN $100,000. TO THE FULLEST EXTENT
PERMITTED BY LAW, ANY ATTEMPTED TRANSFER OF SECURITIES, OR ANY INTEREST THEREIN,
IN A BLOCK HAVING AN AGGREGATE PRINCIPAL AMOUNT OF LESS THAN $100,000 AND
MULTIPLES OF $1,000 IN EXCESS THEREOF SHALL BE DEEMED TO BE VOID AND OF NO LEGAL
EFFECT WHATSOEVER. TO THE FULLEST EXTENT

23

--------------------------------------------------------------------------------

 

PERMITTED BY LAW, ANY SUCH PURPORTED TRANSFEREE SHALL BE DEEMED NOT TO BE THE
HOLDER OF SUCH SECURITIES FOR ANY PURPOSE, INCLUDING, BUT NOT LIMITED TO, THE
RECEIPT OF PRINCIPAL OF OR INTEREST ON SUCH SECURITIES, OR ANY INTEREST THEREIN,
AND SUCH PURPORTED TRANSFEREE SHALL BE DEEMED TO HAVE NO INTEREST WHATSOEVER IN
SUCH SECURITIES.
THE HOLDER OF THIS SECURITY, OR ANY INTEREST THEREIN, BY ITS ACCEPTANCE HEREOF
OR THEREOF ALSO AGREES, REPRESENTS AND WARRANTS THAT IT IS NOT AN EMPLOYEE
BENEFIT PLAN, INDIVIDUAL RETIREMENT ACCOUNT OR OTHER PLAN OR ARRANGEMENT SUBJECT
TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED
(“ERISA”), OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
“CODE”), OR SIMILAR LAW (EACH A “PLAN”), OR AN ENTITY WHOSE UNDERLYING ASSETS
INCLUDE “PLAN ASSETS” BY REASON OF ANY PLAN’S INVESTMENT IN THE ENTITY, AND NO
PERSON INVESTING “PLAN ASSETS” OF ANY PLAN MAY ACQUIRE OR HOLD THIS SECURITY OR
ANY INTEREST THEREIN. ANY PURCHASER OR HOLDER OF THE SECURITIES OR ANY INTEREST
THEREIN WILL BE DEEMED TO HAVE REPRESENTED BY ITS PURCHASE AND HOLDING THEREOF
THAT IT IS NOT AN EMPLOYEE BENEFIT PLAN WITHIN THE MEANING OF SECTION 3(3) OF
ERISA, OR A PLAN TO WHICH SECTION 4975 OF THE CODE IS APPLICABLE, A TRUSTEE OR
OTHER PERSON ACTING ON BEHALF OF AN EMPLOYEE BENEFIT PLAN OR PLAN, OR ANY OTHER
PERSON OR ENTITY USING THE ASSETS OF ANY EMPLOYEE BENEFIT PLAN OR PLAN TO
FINANCE SUCH PURCHASE.”
     (b) The above legends shall not be removed from any Senior Note unless
there is delivered to the Company satisfactory evidence, which may include an
Opinion of Counsel, as may be reasonably required to ensure that any future
transfers thereof may be made without restriction under or violation of the
provisions of the Securities Act and other applicable law. Upon provision of
such satisfactory evidence, the Company shall execute and deliver to the
Trustee, and the Trustee shall deliver, upon receipt of a Company Order
directing it to do so, a Senior Note that does not bear the legend.
     Section 2.3 Form of Trustee’s Certificate of Authentication.
     The Trustee’s certificate of authentication shall be in substantially the
following form:

24

--------------------------------------------------------------------------------

 

     This is one of the Senior Notes referred to in the within-mentioned
Indenture.

              Dated:    WELLS FARGO BANK, N.A., not in its individual capacity,
but solely as Trustee    
 
           
 
  By:        
 
           
 
      Name:    
 
      Title:    

     Section 2.4 Temporary Senior Notes.
     (a) Pending the preparation of definitive Senior Notes, the Company may
execute, and upon Company Order the Trustee shall authenticate and deliver,
temporary Senior Notes that are printed, lithographed, typewritten, mimeographed
or otherwise produced, in any denomination, substantially of the tenor of the
definitive Senior Notes in lieu of which they are issued and with such
appropriate insertions, omissions, substitutions and other variations as the
officers executing such Senior Notes may determine, as evidenced by their
execution of such Senior Notes.
     (b) If temporary Senior Notes are issued, the Company will cause definitive
Senior Notes to be prepared without unreasonable delay. After the preparation of
definitive Senior Notes, the temporary Senior Notes shall be exchangeable for
definitive Senior Notes upon surrender of the temporary Senior Notes at the
office or agency of the Company designated for that purpose without charge to
the Holder. Upon surrender for cancellation of any one or more temporary Senior
Notes, the Company shall execute and the Trustee shall authenticate and deliver
in exchange therefor one or more definitive Senior Notes of any authorized
denominations having the same Original Issue Date and Stated Maturity and having
the same terms as such temporary Senior Notes. Until so exchanged, the temporary
Senior Notes shall in all respects be entitled to the same benefits under this
Indenture as definitive Senior Notes.
     Section 2.5 Definitive Senior Notes.
     The definitive Senior Notes shall be printed, lithographed or engraved, or
produced by any combination of these methods, if required by any securities
exchange on which the Senior Notes may be listed, on a steel engraved border or
steel engraved borders or may be produced in any other manner permitted by the
rules of any securities exchange on which the Senior Notes may be listed, all as
determined by the officers executing such Senior Notes, as evidenced by their
execution of such Senior Notes.

25

--------------------------------------------------------------------------------

 

ARTICLE III
THE SENIOR NOTES
      Section 3.1 Payment of Principal and Interest.
     (a) The unpaid principal amount of the Senior Notes shall bear interest at
a fixed rate equal to 9.72% per annum through the Interest Payment Date in
June 2011 and thereafter at a variable rate equal to LIBOR plus 4.20% per annum
until paid or duly provided for, such interest to accrue from and including the
Original Issue Date or from and including the most recent Interest Payment Date
to which interest has been paid or duly provided for to but excluding the
succeeding Interest Payment Date, and any overdue principal, premium, if any,
and any overdue installment of interest shall bear Additional Interest at the
rate equal to a fixed rate equal to 9.72% per annum through the Interest Payment
Date in June 2011 and thereafter at a variable rate, reset quarterly, equal to
LIBOR plus 4.20% per annum (to the extent that the payment of such interest
shall be legally enforceable), compounded quarterly from and including the dates
such amounts are due to but excluding the dates such amounts are paid or funds
for the payment thereof are made available for payment.
     (b) Interest and Additional Interest on any Senior Note that is payable,
and is punctually paid or duly provided for, on any Interest Payment Date shall
be paid to the Person in whose name that Senior Note (or one or more Predecessor
Senior Notes) is registered at the close of business on the Regular Record Date
for such interest, except that interest and any Additional Interest payable on
the Stated Maturity (or any date of principal repayment upon early maturity) of
the principal of a Senior Note or on a Redemption Date shall be paid to the
Person to whom principal is paid. The initial payment of interest on any Senior
Note that is issued between a Regular Record Date and the related Interest
Payment Date shall be payable as provided in such Senior Note.
     (c) Any interest on any Senior Note that is due and payable, but is not
timely paid or duly provided for, on any Interest Payment Date for Senior Notes
(herein called “Defaulted Interest”) shall forthwith cease to be payable to the
registered Holder on the relevant Regular Record Date by virtue of having been
such Holder, and such Defaulted Interest may be paid by the Company, at its
election in each case, as provided in paragraph (i) or (ii) below:
     (i) The Company may elect to make payment of any Defaulted Interest to the
Persons in whose names the Senior Notes (or their respective Predecessor Senior
Notes) are registered at the close of business on a Special Record Date for the
payment of such Defaulted Interest (a “Special Record Date”), which shall be
fixed in the following manner. At least thirty (30) days prior to the date of
the proposed payment, the Company shall notify the Trustee in writing of the
amount of Defaulted Interest proposed to be paid on each Senior Note and the
date of the proposed payment, and at the same time the Company shall deposit
with the Trustee an amount of money equal to the aggregate amount proposed to be
paid in respect of such Defaulted Interest or shall make arrangements
satisfactory to the Trustee for such deposit prior to the date of the proposed
payment, such money when deposited to be held in trust for the benefit of the
Persons entitled to such Defaulted Interest. Thereupon the Trustee shall fix a
Special Record Date

26

--------------------------------------------------------------------------------

 

for the payment of such Defaulted Interest, which shall be not more than fifteen
(15) days and not less than ten (10) days prior to the date of the proposed
payment and not less than ten (10) days after the receipt by the Trustee of the
notice of the proposed payment. The Trustee shall promptly notify the Company of
such Special Record Date and, in the name and at the expense of the Company,
shall cause notice of the proposed payment of such Defaulted Interest and the
Special Record Date therefor to be mailed, first class, postage prepaid, to each
Holder of a Senior Note at the address of such Holder as it appears in the
Securities Register not less than ten (10) days prior to such Special Record
Date. Notice of the proposed payment of such Defaulted Interest and the Special
Record Date therefor having been so mailed, such Defaulted Interest shall be
paid to the Persons in whose names the Senior Notes (or their respective
Predecessor Senior Notes) are registered on such Special Record Date; or
     (ii) The Company may make payment of any Defaulted Interest in any other
lawful manner not inconsistent with the requirements of any securities exchange
or automated quotation system on which the Senior Notes may be listed, traded or
quoted and, upon such notice as may be required by such exchange or automated
quotation system (or by the Trustee if the Senior Notes are not listed), if,
after notice given by the Company to the Trustee of the proposed payment
pursuant to this clause, such payment shall be deemed practicable by the
Trustee.
     (d) Payments of interest on the Senior Notes shall include interest accrued
to but excluding the respective Interest Payment Dates. During the Fixed Rate
Period, the amount of interest payable for any interest period shall be computed
on the basis of a three hundred sixty (360)-day year of twelve (12) thirty
(30)-day months and the amount payable for any partial period shall be computed
on the basis of the actual number of days elapsed in a three hundred sixty
(360)-day year of twelve (12) thirty (30)-day months. Upon expiration of the
Fixed Rate Period, the amount of interest payable for any interest period will
be computed on the basis of a three hundred sixty (360)-day year and the actual
number of days elapsed in the relevant interest period.
     (e) Payment of principal of, premium, if any, and interest on the Senior
Notes shall be made in such coin or currency of the United States of America as
at the time of payment is legal tender for payment of public and private debts.
Payments of principal, premium, if any, and interest due at the Maturity of such
Senior Notes shall be made at the Place of Payment upon surrender of such Senior
Notes to the Paying Agent and payments of interest shall be made, subject to
such surrender where applicable, by wire transfer at such place and to such
account at a banking institution in the United States as may be designated in
writing to the Paying Agent at least ten (10) Business Days prior to the date
for payment by the Person entitled thereto unless proper written transfer
instructions have not been received by the relevant record date, in which case
such payments shall be made by check mailed to the address of such Person as
such address shall appear in the Security Register.
     (f) The parties hereto acknowledge and agree that the Holders have certain
rights to direct the Company to modify the Interest Payment Dates and
corresponding Redemption Date and Stated Maturity of the Senior Notes or a
portion of the Senior Notes pursuant to the Purchase Agreement. In the event any
such modifications are made to the Senior Notes or a portion of the

27

--------------------------------------------------------------------------------

 

Senior Notes, appropriate changes to the form of Senior Note set forth in
Article II hereof shall be made prior to the issuance and authentication of new
or replacement Senior Notes. Any such modification of the Interest Payment Dates
and corresponding Redemption Date and Stated Maturity with respect to any Senior
Notes or tranche of Senior Notes shall not require or be subject to the consent
of the Trustee.
     (g) Subject to the foregoing provisions of this Section 3.1, each Senior
Note delivered under this Indenture upon transfer of or in exchange for or in
lieu of any other Senior Note shall carry the rights to interest accrued and
unpaid, and to accrue, that were carried by such other Senior Note.
     (h) The Senior Notes will rank pari passu with each other and the Company’s
other senior unsecured obligations, other than such senior unsecured obligations
constituting Permitted Debt to the extent set forth in Article XII, from time to
time outstanding.
     Section 3.2 Denominations.
     The Senior Notes shall be in registered form without coupons and shall be
issuable in minimum denominations of $100,000 and any integral multiple of
$1,000 in excess thereof.
     Section 3.3 Execution, Authentication, Delivery and Dating.
     (a) At any time and from time to time after the execution and delivery of
this Indenture, the Company may deliver Senior Notes in an aggregate principal
amount (including all then Outstanding Senior Notes) not in excess of Thirty
Million Dollars ($30,000,000) executed by the Company to the Trustee for
authentication, together with a Company Order for the authentication and
delivery of such Senior Notes, and the Trustee in accordance with the Company
Order shall authenticate and deliver such Senior Notes. In authenticating such
Senior Notes, and accepting the additional responsibilities under this Indenture
in relation to such Senior Notes, the Trustee shall be entitled to receive, and
shall be fully protected in relying upon:
     (i) a copy of any Board Resolution relating thereto; and
     (ii) an Opinion of Counsel stating that: (1) such Senior Notes, when
authenticated and delivered by the Trustee and issued by the Company in the
manner and subject to any conditions specified in such Opinion of Counsel, will
constitute, and the Indenture constitutes, valid and legally binding obligations
of the Company, each enforceable in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors’ rights
and to general equity principles; (2) the Senior Notes have been duly authorized
and executed by the Company and have been delivered to the Trustee for
authentication in accordance with this Indenture; (3) the Senior Notes are not
required to be registered under the Securities Act; and (4) the Indenture is not
required to be qualified under the Trust Indenture Act.
     (b) The Senior Notes shall be executed on behalf of the Company by its
Chairman of the Board, its Vice Chairman of the Board, its Chief Executive
Officer, its President or one of its Vice Presidents. The signature of any of
these officers on the Senior Notes may be manual or

28

--------------------------------------------------------------------------------

 

facsimile. Senior Notes bearing the manual or facsimile signatures of
individuals who were at any time the proper officers of the Company shall bind
the Company, notwithstanding that such individuals or any of them have ceased to
hold such offices prior to the authentication and delivery of such Senior Notes
or did not hold such offices at the date of such Senior Notes.
     (c) No Senior Note shall be entitled to any benefit under this Indenture or
be valid or obligatory for any purpose, unless there appears on such Senior Note
a certificate of authentication substantially in the form provided for herein
executed by the Trustee by the manual signature of one of its authorized
signatories, and such certificate upon any Senior Note shall be conclusive
evidence, and the only evidence, that such Senior Note has been duly
authenticated and delivered hereunder. Notwithstanding the foregoing, if any
Senior Note shall have been authenticated and delivered hereunder but never
issued and sold by the Company, and the Company shall have delivered such Senior
Note to the Trustee for cancellation as provided in Section 3.8, for all
purposes of this Indenture such Senior Note shall be deemed never to have been
authenticated and delivered hereunder and shall never be entitled to the
benefits of this Indenture.
     (d) Each Senior Note shall be dated the date of its authentication.
     Section 3.4 Global Senior Notes.
     (a) The Senior Notes issued on the Original Issue Date shall be in the form
of Global Senior Notes. Upon the election of any Holder holding a definitive
Senior Note after the Original Issue Date, which election need not be in
writing, the Senior Notes owned by such Holder shall be issued in the form of
one or more Global Senior Notes registered in the name of the Depositary or its
nominee. Each Global Senior Note issued under this Indenture shall be registered
in the name of the Depositary designated by the Company for such Global Senior
Note or a nominee thereof and delivered to such Depositary or a nominee thereof
or custodian therefor (which may be the Trustee), and each such Global Senior
Note shall constitute a single Senior Note for all purposes of this Indenture.
     (b) Notwithstanding any other provision in this Indenture, no Global Senior
Note may be exchanged in whole or in part for registered Senior Notes, and no
transfer of a Global Senior Note in whole or in part may be registered, in the
name of any Person other than the Depositary for such Global Senior Note or a
nominee thereof unless (i) such Depositary advises the Trustee and the Company
in writing that such Depositary is no longer willing or able to properly
discharge its responsibilities as Depositary with respect to such Global Senior
Note, and no qualified successor is appointed by the Company within ninety
(90) days of receipt by the Company of such notice, (ii) such Depositary ceases
to be a clearing agency registered under the Exchange Act and no successor is
appointed by the Company within ninety (90) days after obtaining knowledge of
such event, (iii) the Company executes and delivers to the Trustee a Company
Order stating that the Company elects to terminate the book-entry system through
the Depositary or (iv) an Event of Default shall have occurred and be
continuing. Upon the occurrence of any event specified in clause (i), (ii),
(iii) or (iv) above in this Section 3.4(b), the Trustee shall notify the
Depositary and instruct the Depositary to notify all owners of beneficial
interests in such Global Senior Note of the occurrence of such event and of the
availability of Senior Notes to such owners of beneficial interests requesting
the same. The Trustee may

29

--------------------------------------------------------------------------------

 

conclusively rely, and be protected in relying, upon the written identification
of the owners of beneficial interests furnished by the Depositary, and shall not
be liable for any delay resulting from a delay by the Depositary. Upon the
issuance of such Senior Notes and the registration in the Securities Register of
such Senior Notes in the names of the Holders of the beneficial interests
therein, the Trustees shall recognize such holders of beneficial interests as
Holders.
     (c) If any Global Senior Note is to be exchanged for other Senior Notes or
canceled in part, or if another Senior Note is to be exchanged in whole or in
part for a beneficial interest in any Global Senior Note, then either (i) such
Global Senior Note shall be so surrendered for exchange or cancellation as
provided in this Article III or (ii) the principal amount thereof shall be
reduced or increased by an amount equal to (x) the portion thereof to be so
exchanged or canceled or (y) the principal amount of such other Senior Note to
be so exchanged for a beneficial interest therein, as the case may be, by means
of an appropriate adjustment made on the records of the Securities Registrar,
whereupon the Trustee, in accordance with the Applicable Depositary Procedures,
shall instruct the Depositary or its authorized representative to make a
corresponding adjustment to its records. Upon any such surrender or adjustment
of a Global Senior Note by the Depositary, accompanied by registration
instructions, the Company shall execute and the Trustee shall authenticate and
deliver any Senior Notes issuable in exchange for such Global Senior Note (or
any portion thereof) in accordance with the instructions of the Depositary. The
Trustee shall not be liable for any delay in delivery of such instructions and
may conclusively rely on, and shall be fully protected in relying on, such
instructions.
     (d) Every Senior Note executed, authenticated and delivered upon
registration of transfer of, or in exchange for or in lieu of, a Global Senior
Note or any portion thereof shall be executed, authenticated and delivered in
the form of, and shall be, a Global Senior Note, unless such Senior Note is
registered in the name of a Person other than the Depositary for such Global
Senior Note or a nominee thereof.
     (e) The Depositary or its nominee, as the registered owner of a Global
Senior Note, shall be the Holder of such Global Senior Note for all purposes
under this Indenture and the Senior Notes, and owners of beneficial interests in
a Global Senior Note shall hold such interests pursuant to the Applicable
Depositary Procedures. Accordingly, any such owner’s beneficial interest in a
Global Senior Note shall be shown only on, and the transfer of such interest
shall be effected only through, records maintained by the Depositary or its
nominee or its Depositary Participants. The Securities Registrar and the Trustee
shall be entitled to deal with the Depositary for all purposes of this Indenture
relating to a Global Senior Note (including the payment of principal and
interest thereon and the giving of instructions or directions by owners of
beneficial interests therein and the giving of notices) as the sole Holder of
the Senior Note and shall have no obligations to the owners of beneficial
interests therein. Neither the Trustee nor the Securities Registrar shall have
any liability in respect of any transfers effected by the Depositary.
     (f) The rights of owners of beneficial interests in a Global Senior Note
shall be exercised only through the Depositary and shall be limited to those
established by law and agreements between such owners and the Depositary and/or
its Depositary Participants.

30

--------------------------------------------------------------------------------

 

     (g) No holder of any beneficial interest in any Global Senior Note held on
its behalf by a Depositary shall have any rights under this Indenture with
respect to such Global Senior Note, and such Depositary may be treated by the
Company, the Trustee and any agent of the Company or the Trustee as the owner of
such Global Senior Note for all purposes whatsoever. None of the Company, the
Trustee nor any agent of the Company or the Trustee will have any responsibility
or liability for any aspect of the records relating to or payments made on
account of beneficial ownership interests of a Global Senior Note or
maintaining, supervising or reviewing any records relating to such beneficial
ownership interests. Notwithstanding the foregoing, nothing herein shall prevent
the Company, the Trustee or any agent of the Company or the Trustee from giving
effect to any written certification, proxy or other authorization furnished by a
Depositary or impair, as between a Depositary and such holders of beneficial
interests, the operation of customary practices governing the exercise of the
rights of the Depositary (or its nominee) as Holder of any Senior Note.
     Section 3.5 Registration, Transfer and Exchange Generally.
     (a) The Trustee shall cause to be kept at the Corporate Trust Office a
register (the “Securities Register”) in which the registrar and transfer agent
with respect to the Senior Notes (the “Securities Registrar”), subject to such
reasonable regulations as it may prescribe, shall provide for the registration
of Senior Notes and of transfers and exchanges of Senior Notes. The Trustee
shall at all times also be the Securities Registrar. The provisions of
Article VI shall apply to the Trustee in its role as Securities Registrar.
     (b) Subject to compliance with Section 2.2(b), upon surrender for
registration of transfer of any Senior Note at the offices or agencies of the
Company designated for that purpose the Company shall execute, and the Trustee
shall authenticate and deliver, in the name of the designated transferee or
transferees, one or more new Senior Notes of any authorized denominations of
like tenor and aggregate principal amount.
     (c) At the option of the Holder, Senior Notes may be exchanged for other
Senior Notes of any authorized denominations, of like tenor and aggregate
principal amount, upon surrender of the Senior Notes to be exchanged at such
office or agency. Whenever any Senior Notes are so surrendered for exchange, the
Company shall execute, and the Trustee shall authenticate and deliver, the
Senior Notes that the Holder making the exchange is entitled to receive.
     (d) All Senior Notes issued upon any transfer or exchange of Senior Notes
shall be the valid obligations of the Company, evidencing the same debt, and
entitled to the same benefits under this Indenture, as the Senior Notes
surrendered upon such transfer or exchange.
     (e) Every Senior Note presented or surrendered for transfer or exchange
shall be duly endorsed, or be accompanied by a written instrument of transfer in
form satisfactory to the Company and the Securities Registrar, duly executed by
the Holder thereof or such Holder’s attorney duly authorized in writing.
     (f) No service charge shall be made to a Holder for any transfer or
exchange of Senior Notes, but the Company may require payment of a sum
sufficient to cover any tax or

31

--------------------------------------------------------------------------------

 

other governmental charge that may be imposed in connection with any transfer or
exchange of Senior Notes.
     (g) Neither the Company nor the Trustee shall be required pursuant to the
provisions of this Section 3.5: (i) to issue, register the transfer of or
exchange any Senior Note during a period beginning at the opening of business
fifteen (15) days before the day of selection for redemption of Senior Notes
pursuant to Article XI and ending at the close of business on the day of mailing
of the notice of redemption or (ii) to register the transfer of or exchange any
Senior Note so selected for redemption in whole or in part, except, in the case
of any such Senior Note to be redeemed in part, any portion thereof not to be
redeemed.
     (h) The Company shall designate an office or offices or agency or agencies
where Senior Notes may be surrendered for registration or transfer or exchange.
The Company initially designates the Corporate Trust Office as its office and
agency for such purposes. The Company shall give prompt written notice to the
Trustee and to the Holders of any change in the location of any such office or
agency.
     (i) The Senior Notes may only be transferred to a “Qualified Purchaser” as
such term is defined in Section 2(a)(51) of the Investment Company Act.
     (j) Neither the Trustee nor the Securities Registrar shall be responsible
for ascertaining whether any transfer hereunder complies with the registration
provisions of or any exemptions from the Securities Act, applicable state
securities laws or the applicable laws of any other jurisdiction, ERISA, the
Code or the Investment Company Act; provided, that if a certificate is
specifically required by the express terms of this Section 3.5 to be delivered
to the Trustee or the Securities Registrar by a Holder or transferee of a Senior
Note, the Trustee and the Securities Registrar shall be under a duty to receive
and examine the same to determine whether or not the certificate substantially
conforms on its face to the requirements of this Indenture and shall promptly
notify the party delivering the same if such certificate does not comply with
such terms.
     Section 3.6 Mutilated, Destroyed, Lost and Stolen Senior Notes.
     (a) If any mutilated Senior Note is surrendered to the Trustee together
with such security or indemnity as may be required by the Company or the Trustee
to save each of them harmless, the Company shall execute and upon receipt
thereof the Trustee shall authenticate and deliver in exchange therefor a new
Senior Note of like tenor and aggregate principal amount and bearing a number
not contemporaneously outstanding.
     (b) If there shall be delivered to the Trustee (i) evidence to its
satisfaction of the destruction, loss or theft of any Senior Note and (ii) such
security or indemnity as may be required by it to save each of the Company and
the Trustee harmless, then, in the absence of notice to the Company or the
Trustee that such Senior Note has been acquired by a bona fide purchaser, the
Company shall execute and upon its written request the Trustee shall
authenticate and deliver, in lieu of any such destroyed, lost or stolen Senior
Note, a new Senior Note of like tenor and aggregate principal amount as such
destroyed, lost or stolen Senior Note, and bearing a number not
contemporaneously outstanding.

32

--------------------------------------------------------------------------------

 

     (c) If any such mutilated, destroyed, lost or stolen Senior Note has become
or is about to become due and payable, the Company in its discretion may,
instead of issuing a new Senior Note, pay such Senior Note.
     (d) Upon the issuance of any new Senior Note under this Section 3.6, the
Company may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) connected therewith.
     (e) Every new Senior Note issued pursuant to this Section 3.6 in lieu of
any mutilated, destroyed, lost or stolen Senior Note shall constitute an
original additional contractual obligation of the Company, whether or not the
mutilated, destroyed, lost or stolen Senior Note shall be at any time
enforceable by anyone, and shall be entitled to all the benefits of this
Indenture equally and proportionately with any and all other Senior Notes duly
issued hereunder.
     (f) The provisions of this Section 3.6 are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Senior Notes.
     Section 3.7 Persons Deemed Owners.
     The Company, the Trustee and any agent of the Company or the Trustee shall
treat the Person in whose name any Senior Note is registered as the owner of
such Senior Note for the purpose of receiving payment of principal of and any
interest on such Senior Note and for all other purposes whatsoever, and neither
the Company, the Trustee nor any agent of the Company or the Trustee shall be
affected by notice to the contrary.
     Section 3.8 Cancellation.
     All Senior Notes surrendered for payment, redemption, transfer or exchange
shall, if surrendered to any Person other than the Trustee, be delivered to the
Trustee, and any such Senior Notes and Senior Notes surrendered directly to the
Trustee for any such purpose shall be promptly canceled by it. The Company may
at any time deliver to the Trustee for cancellation any Senior Notes previously
authenticated and delivered hereunder that the Company may have acquired in any
manner whatsoever, and all Senior Notes so delivered shall be promptly canceled
by the Trustee. No Senior Notes shall be authenticated in lieu of or in exchange
for any Senior Notes canceled as provided in this Section 3.8, except as
expressly permitted by this Indenture. All canceled Senior Notes shall be
retained or disposed of by the Trustee in accordance with its customary
practices and the Trustee shall deliver to the Company a certificate of such
disposition.
     Section 3.9 Agreed Tax Treatment.
     Each Senior Note issued hereunder shall provide that the Company and, by
its acceptance or acquisition of a Senior Note or a beneficial interest therein,
the Holder of, and any Person that acquires a direct or indirect beneficial
interest in, such Senior Note, intend and agree to treat such Senior Note as
indebtedness of the Company for United States federal, state and local tax

33

--------------------------------------------------------------------------------

 

purposes. The provisions of this Indenture shall be interpreted to further this
intention and agreement of the parties.
     Section 3.10 CUSIP Numbers.
     The Company in issuing the Senior Notes may use “CUSIP” numbers (if then
generally in use), and, if so, the Trustee shall use “CUSIP” numbers in notices
of redemption and other similar or related materials as a convenience to
Holders; provided, that any such notice or other materials may state that no
representation is made as to the correctness of such numbers either as printed
on the Senior Notes or as contained in any notice of redemption or other
materials and that reliance may be placed only on the other identification
numbers printed on the Senior Notes, and any such redemption shall not be
affected by any defect in or omission of such numbers.
ARTICLE IV
SATISFACTION AND DISCHARGE
     Section 4.1 Satisfaction and Discharge of Indenture.
     This Indenture shall, upon Company Request, cease to be of further effect
(except as to any surviving rights of registration of transfer or exchange of
Senior Notes herein expressly provided for and as otherwise provided in this
Section 4.1) and the Trustee, on written demand of and at the expense of the
Company, shall execute proper instruments acknowledging satisfaction and
discharge of this Indenture, when
     (a) either
     (i) all Senior Notes theretofore authenticated and delivered (other than
(A) Senior Notes that have been mutilated, destroyed, lost or stolen and that
have been replaced or paid as provided in Section 3.6 and (B) Senior Notes for
whose payment money has theretofore been deposited in trust or segregated and
held in trust by the Company and thereafter repaid to the Company or discharged
from such trust as provided in Section 10.2) have been delivered to the Trustee
for cancellation; or
     (ii) all such Senior Notes not theretofore delivered to the Trustee for
cancellation
     (A) have become due and payable; or
     (B) will become due and payable at their Stated Maturity within one
(1) year of the date of deposit; or
     (C) are to be called for redemption within one (1) year under arrangements
satisfactory to the Trustee for the giving of notice of redemption by the
Trustee in the name, and at the expense, of the Company;
and the Company, in the case of subclause (ii)(A), (B) or (C) above, has
deposited or caused to be deposited with the Trustee as trust funds in trust for
such purpose (x) an amount in the currency or currencies in which the Senior
Notes are payable, (y)

34

--------------------------------------------------------------------------------

 

Government Obligations which through the scheduled payment of principal and
interest in respect thereof in accordance with their terms will provide, not
later than the due date of any payment, money in an amount or (z) a combination
thereof, in each case sufficient, in the opinion of a nationally recognized firm
of independent public accountants expressed in a written certification thereof
delivered to the Trustee, to pay and discharge the entire indebtedness on such
Senior Notes not theretofore delivered to the Trustee for cancellation, for
principal and any premium and interest (including any Additional Interest) to
the date of such deposit (in the case of Senior Notes that have become due and
payable) or to the Stated Maturity (or any date of principal repayment upon
early maturity) or Redemption Date, as the case may be;
     (b) the Company has paid or caused to be paid all other sums payable
hereunder by the Company; and
     (c) the Company has delivered to the Trustee an Officers’ Certificate and
an Opinion of Counsel each stating that all conditions precedent herein provided
for relating to the satisfaction and discharge of this Indenture have been
complied with.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 6.6, the obligations of
the Company to any Authenticating Agent under Section 6.11 and, if money shall
have been deposited with the Trustee pursuant to subclause (a)(ii) of this
Section 4.1, the obligations of the Trustee under Section 4.2 and
Section 10.2(e) shall survive.
     Section 4.2 Application of Trust Money.
     Subject to the provisions of Section 10.2(e), all money deposited with the
Trustee pursuant to Section 4.1 shall be held in trust and applied by the
Trustee, in accordance with the provisions of the Senior Notes and this
Indenture, to the payment in accordance with Section 3.1, either directly or
through any Paying Agent (including the Company acting as its own Paying Agent)
as the Trustee may determine, to the Persons entitled thereto, of the principal
and any premium and interest (including any Additional Interest) for the payment
of which such money or obligations have been deposited with or received by the
Trustee.
ARTICLE V
REMEDIES
     Section 5.1 Events of Default.
     “Event of Default” means, wherever used herein with respect to the Senior
Notes, any one of the following events (whatever the reason for such Event of
Default and whether it shall be voluntary or involuntary or be effected by
operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):

35

--------------------------------------------------------------------------------

 

     (a) default in the payment of any interest upon any Senior Note, including
any Additional Interest in respect thereof, when it becomes due and payable, and
continuance of such default for a period of thirty (30) days; or
     (b) default in the payment of the principal of or any premium on any Senior
Note at its Maturity; or
     (c) default in the performance, or breach, of any covenant or warranty of
the Company in this Indenture or the Purchase Agreement and continuance of such
default or breach for a period of thirty (30) days after there has been given,
by registered or certified mail, to the Company by the Trustee or to the Company
and the Trustee by the Holders of at least twenty-five percent (25%) in
aggregate principal amount of the Outstanding Senior Notes a written notice
specifying such default or breach and requiring it to be remedied and stating
that such notice is a “Notice of Default” hereunder (a “Notice of Default”);
provided, that any default in the performance or breach of the covenant set
forth in Section 10.8 shall constitute an Event of Default immediately upon such
default or breach (without any obligation of the Trustee or the Holders to
deliver a Notice of Default) and the Holders shall have the immediate right to
exercise all remedies granted to the Holders under this Indenture; or
     (d) the entry by a court having jurisdiction in the premises of a decree or
order adjudging the Company a bankrupt or insolvent, or approving as properly
filed a petition seeking reorganization, arrangement, adjustment or composition
of or in respect of the Company under any applicable federal or state
bankruptcy, insolvency, reorganization or other similar law, or appointing a
custodian, receiver, liquidator, assignee, trustee, sequestrator or other
similar official of the Company or of any substantial part of its property, or
ordering the winding up or liquidation of its affairs, and the continuance of
any such decree or order for relief or any such other decree or order unstayed
and in effect for a period of sixty (60) consecutive days; or
     (e) the institution by the Company of proceedings to be adjudicated a
bankrupt or insolvent, or the consent by the Company to the institution of
bankruptcy or insolvency proceedings against it, or the filing by the Company of
a petition or answer or consent seeking reorganization or relief under any
applicable federal or state bankruptcy, insolvency, reorganization or other
similar law, or the consent by it to the filing of such petition or to the
appointment of or taking possession by a custodian, receiver, liquidator,
assignee, trustee, sequestrator or other similar official of the Company or of
any substantial part of its property, or the making by it of an assignment for
the benefit of creditors, or the admission by it in writing of its inability to
pay its debts generally as they become due and its willingness to be adjudicated
a bankrupt or insolvent, or the taking of corporate action by the Company in
furtherance of any such action.
     Section 5.2 Acceleration of Maturity; Rescission and Annulment.
     (a) If an Event of Default occurs and is continuing, then and in every such
case the Trustee or the Holders of not less than twenty-five percent (25%) in
aggregate principal amount of the Outstanding Senior Notes may declare the
principal amount of all the Senior Notes to be immediately due and payable, by a
notice in writing to the Company (and to the Trustee if given by Holders).

36

--------------------------------------------------------------------------------

 

     (b) At any time after such a declaration of acceleration with respect to
Senior Notes has been made and before a judgment or decree for payment of the
money due has been obtained by the Trustee as hereinafter provided in this
Article V, the Holders of a majority in aggregate principal amount of the
Outstanding Senior Notes, by written notice to the Trustee, may rescind and
annul such declaration and its consequences if:
     (i) the Company has paid or deposited with the Trustee a sum sufficient to
pay:
     (A) all overdue installments of interest on all Senior Notes;

     (B) any accrued Additional Interest on all Senior Notes;
     (C) the principal of and any premium on any Senior Notes that have become
due otherwise than by such declaration of acceleration and interest (including
any Additional Interest) thereon at the rate borne by the Senior Notes;
     (D) all sums paid or advanced by the Trustee hereunder and the reasonable
compensation, expenses, disbursements and advances of the Trustee and its agents
and counsel;
     (E) all sums paid or advanced by the Holders hereunder and the reasonable
fees, expenses, disbursements and advances of the Holders and their agents and
counsel in connection with the relevant default; and
     (ii) all Events of Default with respect to Senior Notes, other than the
non-payment of the principal of Senior Notes that has become due solely by such
acceleration, have been cured or waived as provided in Section 5.13;
No such rescission shall affect any subsequent default or impair any right
consequent thereon.
     Section 5.3 Collection of Indebtedness and Suits for Enforcement by
Trustee.
     (a) The Company covenants that if:
     (i) default is made in the payment of any installment of interest
(including any Additional Interest) on any Senior Note when such interest
becomes due and payable and such default continues for a period of thirty
(30) days; or
     (ii) default is made in the payment of the principal of and any premium on
any Senior Note at the Maturity thereof;
the Company will, upon demand of the Trustee, pay to the Trustee, for the
benefit of the Holders of such Senior Notes, the whole amount then due and
payable on such Senior Notes for principal and any premium and interest
(including any Additional Interest) and, in addition thereto, all amounts owing
the Trustee under Section 6.6 and all sums paid or advanced by the Holders
hereunder and the reasonable fees, expenses, disbursements and advances of the
Holders and their agents and counsel in connection with such default.

37

--------------------------------------------------------------------------------

 

     (b) If the Company fails to pay such amounts forthwith upon such demand,
the Trustee, in its own name and as trustee of an express trust, may institute a
judicial proceeding for the collection of the sums so due and unpaid, and may
prosecute such proceeding to judgment or final decree, and may enforce the same
against the Company or any other obligor upon such Senior Notes and collect the
moneys adjudged or decreed to be payable in the manner provided by law out of
the property of the Company or any other obligor upon the Senior Notes, wherever
situated.
     (c) If an Event of Default with respect to Senior Notes occurs and is
continuing, the Trustee may in its discretion proceed to protect and enforce its
rights and the rights of the Holders of Senior Notes by such appropriate
judicial proceedings as the Trustee shall deem most effectual to protect and
enforce any such rights, whether for the specific enforcement of any covenant or
agreement in this Indenture or in aid of the exercise of any power granted
herein, or to enforce any other proper remedy.
     Section 5.4 Trustee May File Proofs of Claim.
     In case of any receivership, insolvency, liquidation, bankruptcy,
reorganization, arrangement, adjustment, composition or similar judicial
proceeding relative to the Company (or any other obligor upon the Senior Notes),
its property or its creditors, the Trustee shall be entitled and empowered, by
intervention in such proceeding or otherwise, to take any and all actions
authorized hereunder in order to have claims of the Holders and the Trustee
allowed in any such proceeding. In particular, the Trustee shall be authorized
to collect and receive any moneys or other property payable or deliverable on
any such claims and to distribute the same; and any custodian, receiver,
assignee, trustee, liquidator, sequestrator or other similar official 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 first pay to the Trustee any
amount due it for the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel, and any other amounts owing the
Trustee, any predecessor Trustee and other Persons under Section 6.6.
     Section 5.5 Trustee May Enforce Claim Without Possession of Senior Notes.
     All rights of action and claims under this Indenture or the Senior Notes
may be prosecuted and enforced by the Trustee without the possession of any of
the Senior Notes or the production thereof in any proceeding relating thereto,
and any such proceeding instituted by the Trustee shall be brought in its own
name as trustee of an express trust, and any recovery of judgment shall after
provision for the payment of all the amounts owing the Trustee, any predecessor
Trustee and other Persons under Section 6.6, be for the ratable benefit of the
Holders of the Senior Notes in respect of which such judgment has been
recovered.
     Section 5.6 Application of Money Collected.
     Any money or property collected or to be applied by the Trustee with
respect to the Senior Notes pursuant to this Article V shall be applied in the
following order, at the date or dates fixed by the Trustee and, in case of the
distribution of such money or property on account of principal or any premium or
interest (including any Additional Interest), upon presentation of

38

--------------------------------------------------------------------------------

 

the Senior Notes and the notation thereon of the payment if only partially paid
and upon surrender thereof if fully paid:
     FIRST: To the payment of all amounts due the Trustee, any predecessor
Trustee and other Persons under Section 6.6;
     SECOND: To the payment of the amounts then due and unpaid upon the Senior
Notes for principal and any premium and interest (including any Additional
Interest) in respect of which or for the benefit of which such money has been
collected, ratably, without preference or priority of any kind, according to the
amounts due and payable on the Senior Notes for principal and any premium and
interest (including any Additional Interest), respectively; and
     THIRD: The balance, if any, to the Person or Persons entitled thereto
pursuant to the terms hereof.
     Section 5.7 Limitation on Suits.
     Subject to Section 5.8, no Holder of any Senior Notes shall have any right
to institute any proceeding, judicial or otherwise, with respect to this
Indenture or for the appointment of a custodian, receiver, assignee, trustee,
liquidator, sequestrator (or other similar official) or for any other remedy
hereunder, unless:
     (a) such Holder has previously given written notice to the Trustee of a
continuing Event of Default with respect to the Senior Notes;
     (b) the Holders of not less than a majority in aggregate principal amount
of the Outstanding Senior Notes shall have made written request to the Trustee
to institute proceedings in respect of such Event of Default in its own name as
Trustee hereunder;
     (c) such Holder or Holders have offered to the Trustee reasonable indemnity
against the costs, expenses and liabilities to be incurred in compliance with
such request;
     (d) the Trustee after its receipt of such notice, request and offer of
indemnity has failed to institute any such proceeding for sixty (60) days; and
     (e) no direction inconsistent with such written request has been given to
the Trustee during such sixty (60)-day period by the Holders of a majority in
aggregate principal amount of the Outstanding Senior Notes;
it being understood and intended that no one or more of such Holders shall have
any right in any manner whatever by virtue of, or by availing itself of, any
provision of this Indenture to affect, disturb or prejudice the rights of any
other Holders of Senior Notes, or to obtain or to seek to obtain priority or
preference over any other of such Holders or to enforce any right under this
Indenture, except in the manner herein provided and for the equal and ratable
benefit of all such Holders.

39

--------------------------------------------------------------------------------

 

     Section 5.8 Unconditional Right of Holders to Receive Principal, Premium,
if any, and Interest.
     Notwithstanding any other provision in this Indenture, the Holder of any
Senior Note shall have the right, which is absolute and unconditional, to
receive payment of the principal of and premium, if any, on such Senior Note at
its Maturity and payment of interest (including any Additional Interest) on such
Senior Note when due and payable and to institute suit for the enforcement of
any such payment, and such right shall not be impaired without the consent of
such Holder.
     Section 5.9 Restoration of Rights and Remedies.
     If the Trustee or any Holder has instituted any proceeding to enforce any
right or remedy under this Indenture and such proceeding has been discontinued
or abandoned for any reason, or has been determined adversely to the Trustee or
such Holder, then and in every such case the Company, the Trustee and such
Holder shall, subject to any determination in such proceeding, be restored
severally and respectively to their former positions hereunder, and thereafter
all rights and remedies of the Trustee and such Holder shall continue as though
no such proceeding had been instituted.
     Section 5.10 Rights and Remedies Cumulative.
     Except as otherwise provided in Section 3.6(f), no right or remedy herein
conferred upon or reserved to the Trustee or the Holders is intended to be
exclusive of any other right or remedy, and every right and remedy shall, to the
extent permitted by law, be cumulative and in addition to every other right and
remedy given hereunder or now or hereafter existing at law or in equity or
otherwise. The assertion or employment of any right or remedy hereunder, or
otherwise, shall not prevent the concurrent assertion or employment of any other
appropriate right or remedy.
     Section 5.11 Delay or Omission Not Waiver.
     No delay or omission of the Trustee or any Holder of any Senior Notes to
exercise any right or remedy accruing upon any Event of Default shall impair any
such right or remedy or constitute a waiver of any such Event of Default or an
acquiescence therein. Every right and remedy given by this Article V or by law
to the Trustee or to the Holders may be exercised from time to time, and as
often as may be deemed expedient, by the Trustee or the Holders, as the case may
be.
     Section 5.12 Control by Holders.
     The Holders of not less than a majority in aggregate principal amount of
the Outstanding Senior Notes shall have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Trustee or
exercising any trust or power conferred on the Trustee; provided, that:
     (a) such direction shall not be in conflict with any rule of law or with
this Indenture;

40

--------------------------------------------------------------------------------

 

     (b) the Trustee may take any other action deemed proper by the Trustee that
is not inconsistent with such direction; and
     (c) subject to the provisions of Section 6.2, the Trustee shall have the
right to decline to follow such direction if a Responsible Officer or Officers
of the Trustee shall, in good faith, reasonably determine that the proceeding so
directed would be unjustly prejudicial to the Holders not joining in any such
direction or would involve the Trustee in personal liability.
     Section 5.13 Waiver of Past Defaults.
     (a) The Holders of not less than a majority in aggregate principal amount
of the Outstanding Senior Notes may waive any past Event of Default hereunder
and its consequences except an Event of Default:
     (i) in the payment of the principal of, premium, if any, or interest
(including any Additional Interest) on any Outstanding Senior Note (unless such
Event of Default has been cured and the Company has paid to or deposited with
the Trustee a sum sufficient to pay all installments of interest (including any
Additional Interest) due and past due and all principal of and premium, if any,
on all Senior Notes due otherwise than by acceleration); or
     (ii) in respect of a covenant or provision hereof that under Article IX
cannot be modified or amended without the consent of each Holder of any
Outstanding Senior Note.
     (b) Any such waiver shall be deemed to be on behalf of the Holders of all
the Outstanding Senior Notes.
     (c) Upon any such waiver, such Event of 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 Event of Default or impair any right consequent thereon.
     Section 5.14 Undertaking for Costs.
     All parties to this Indenture agree, and each Holder of any Senior Note by
his or her acceptance thereof shall be deemed to have agreed, that any court may
in its discretion require, 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 Trustee, the filing by any party litigant in such suit
of an undertaking to pay the costs of such suit, and that such court may in its
discretion assess reasonable costs, including reasonable attorneys’ fees and
expenses, against any party litigant in such suit, having due regard to the
merits and good faith of the claims or defenses made by such party litigant;
provided, however, that the provisions of this Section 5.14 shall not apply to
any suit instituted by the Trustee, to any suit instituted by any Holder, or
group of Holders, holding in the aggregate more than ten percent (10%) in
aggregate principal amount of the Outstanding Senior Notes, or to any suit
instituted by any Holder for the enforcement of the payment of the principal of
or premium, if any, on the Senior Note after the Stated Maturity or any interest
(including any Additional Interest) on any Senior Note after it is due and
payable.

41

--------------------------------------------------------------------------------

 

     Section 5.15 Waiver of Usury, Stay or Extension Laws.
     The Company covenants (to the extent that it may lawfully do so) that it
will not at any time insist upon, or plead, or in any manner whatsoever claim or
take the benefit or advantage of, any usury, stay or extension law wherever
enacted, now or at any time hereafter in force, which may affect the covenants
or the performance of this Indenture; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such
law, and covenants that it will not hinder, delay or impede the execution of any
power herein granted to the Trustee, but will suffer and permit the execution of
every such power as though no such law had been enacted.
ARTICLE VI
THE TRUSTEE
     Section 6.1 Corporate Trustee Required.
     There shall at all times be a Trustee hereunder with respect to the Senior
Notes. The Trustee shall be a corporation or national banking association
organized and doing business under the laws of the United States or of any state
thereof, authorized to exercise corporate trust powers, having a combined
capital and surplus of at least $50,000,000, subject to supervision or
examination by federal or state authority and having an office within the United
States. If such entity publishes reports of condition at least annually,
pursuant to law or to the requirements of such supervising or examining
authority, then, for the purposes of this Section 6.1, the combined capital and
surplus of such entity shall be deemed to be its combined capital and surplus as
set forth in its most recent report of condition so published. If at any time
the Trustee shall cease to be eligible in accordance with the provisions of this
Section 6.1, it shall resign immediately in the manner and with the effect
hereinafter specified in this Article VI.
     Section 6.2 Certain Duties and Responsibilities.
     (a) Except during the continuance of an Event of Default:
     (i) the Trustee undertakes to perform such duties and only such duties as
are specifically set forth in this Indenture, 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; provided, that in the case of
any such certificates or opinions that by any provision hereof are specifically
required to be furnished to the Trustee, the Trustee shall be under a duty to
examine the same to determine whether or not they substantially conform on their
face to the requirements of this Indenture.
     (b) If an Event of Default known to the Trustee has occurred and is
continuing, the Trustee shall, prior to the receipt of directions, if any, from
the Holders of at least a majority in aggregate principal amount of the
Outstanding Senior Notes, exercise such of the rights and

42

--------------------------------------------------------------------------------

 

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.
     (c) Notwithstanding the foregoing, no provision of this Indenture shall
require the Trustee to expend or risk its own funds or otherwise incur any
financial liability in the performance of any of its duties hereunder, or in the
exercise of any of its rights or powers, if it shall have reasonable grounds for
believing that repayment of such funds or adequate indemnity against such risk
or liability is not reasonably assured to it. Whether or not therein expressly
so provided, every provision of this Indenture relating to the conduct or
affecting the liability of or affording protection to the Trustee shall be
subject to the provisions of this Section 6.2. To the extent that, at law or in
equity, the Trustee has duties and liabilities relating to the Holders, the
Trustee shall not be liable to any Holder for the Trustee’s good faith reliance
on the provisions of this Indenture. The provisions of this Indenture, to the
extent that they restrict the duties and liabilities of the Trustee otherwise
existing at law or in equity, are agreed by the Company and the Holders to
replace such other duties and liabilities of the Trustee.
     (d) No provisions of this Indenture shall be construed to relieve the
Trustee from liability with respect to matters that are within the authority of
the Trustee under this Indenture for its own negligent action, negligent failure
to act or willful misconduct, except that:
     (i) the Trustee shall not be liable for any error or judgment made in good
faith by an authorized officer of the Trustee, unless it shall be proved that
the Trustee was negligent in ascertaining the pertinent facts;
     (ii) the Trustee shall not be liable with respect to any action taken or
omitted to be taken by it in good faith in accordance with the direction of the
Holders of at least a majority in aggregate principal amount of the Outstanding
Senior Notes (or such other percentage as may be required by the terms hereof)
relating to the time, method and place of conducting any proceeding for any
remedy available to the Trustee under this Indenture; and
     (iii) the Trustee shall be under no liability for interest on any money
received by it hereunder except as otherwise agreed in writing with the Company
and money held by the Trustee in trust hereunder need not be segregated from
other funds except to the extent required by law.
     Section 6.3 Notice of Defaults.
     Within ninety (90) days after the occurrence of any default actually known
to the Trustee, the Trustee shall give the Holders notice of such default unless
such default shall have been cured or waived; provided, that except in the case
of a default in the payment of the principal of or any premium or interest on
any Senior Notes, the Trustee shall be fully protected in withholding the notice
if and so long as the board of directors, the executive committee or a trust
committee of directors and/or Responsible Officers of the Trustee in good faith
determines that withholding the notice is in the interest of Holders; and
provided, further, that in the case of any default of the character specified in
Section 5.1(c), no such notice to Holders shall be given until

43

--------------------------------------------------------------------------------

 

at least thirty (30) days after the occurrence thereof. For the purpose of this
Section 6.3, the term “default” means any event which is, or after notice or
lapse of time or both would become, an Event of Default.
     Section 6.4 Certain Rights of Trustee.
     Subject to the provisions of Section 6.2:
     (a) the Trustee may conclusively rely and shall be fully protected in
acting or refraining from acting in good faith and in accordance with the terms
hereof upon any resolution, certificate, statement, instrument, opinion, report,
notice, request, direction, consent, order, bond, debenture, note or other paper
or document reasonably believed by it to be genuine and to have been signed or
presented by the proper party or parties;
     (b) if (i) in performing its duties under this Indenture the Trustee is
required to decide between alternative courses of action, (ii) in construing any
of the provisions of this Indenture the Trustee finds ambiguous or inconsistent
with any other provisions contained herein or (iii) the Trustee is unsure of the
application of any provision of this Indenture, then, except as to any matter as
to which the Holders are entitled to decide under the terms of this Indenture,
the Trustee shall deliver a notice to the Company requesting the Company’s
written instruction as to the course of action to be taken and the Trustee shall
take such action, or refrain from taking such action, as the Trustee shall be
instructed in writing to take, or to refrain from taking, by the Company;
provided, that if the Trustee does not receive such instructions from the
Company within ten (10) Business Days after it has delivered such notice or such
reasonably shorter period of time set forth in such notice the Trustee may, but
shall be under no duty to, take such action, or refrain from taking such action,
as the Trustee shall deem advisable and in the best interests of the Holders, in
which event the Trustee shall have no liability except for its own negligence,
bad faith or willful misconduct;
     (c) any request or direction of the Company shall be sufficiently evidenced
by a Company Request or Company Order and any resolution of the Board of
Directors may be sufficiently evidenced by a Board Resolution;
     (d) the Trustee may consult with counsel (which counsel may be counsel to
the Trustee, the Company or any of its Affiliates, and may include any of its
employees) and the advice of such counsel or any Opinion of Counsel shall be
full and complete authorization and protection in respect of any action taken,
suffered or omitted by it hereunder in good faith and in reliance thereon;
     (e) 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 pursuant to this Indenture, unless such Holders shall have offered
to the Trustee security or indemnity reasonably satisfactory to it against the
costs, expenses (including reasonable attorneys’ fees and expenses) and
liabilities that might be incurred by it in compliance with such request or
direction, including reasonable advances as may be requested by the Trustee;
     (f) 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,

44

--------------------------------------------------------------------------------

 

direction, consent, order, bond, indenture, note or other paper or document, but
the Trustee in its discretion may make such inquiry or investigation into such
facts or matters as it may see fit, and, if the Trustee shall determine to make
such inquiry or investigation, it shall be entitled to examine the books,
records and premises of the Company, personally or by agent or attorney;
     (g) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents, attorneys,
custodians or nominees and the Trustee shall not be responsible for any
misconduct or negligence on the part of any such agent, attorney, custodian or
nominee appointed with due care by it hereunder;
     (h) whenever in the administration of this Indenture the Trustee shall deem
it desirable to receive instructions with respect to enforcing any remedy or
right or taking any other action with respect to enforcing any remedy or right
hereunder, the Trustees (i) may request instructions from the Holders (which
instructions may only be given by the Holders of the same aggregate principal
amount of Outstanding Senior Notes as would be entitled to direct the Trustee
under this Indenture in respect of such remedy, right or action), (ii) may
refrain from enforcing such remedy or right or taking such action until such
instructions are received and (iii) shall be protected in acting in accordance
with such instructions;
     (i) except as otherwise expressly provided by this Indenture, the Trustee
shall not be under any obligation to take any action that is discretionary under
the provisions of this Indenture;
     (j) without prejudice to any other rights available to the Trustee under
applicable law, when the Trustee incurs expenses or renders services in
connection with any bankruptcy, insolvency or other proceeding referred to in
clauses (d) or (e) of the definition of Event of Default specified in
Section 5.1, such expenses (including legal fees and expenses of its agents and
counsel) and the compensation for such services are intended to constitute
expenses of administration under any bankruptcy laws or law relating to
creditors rights generally;
     (k) whenever in the administration of this Indenture the Trustee shall deem
it desirable that a matter be proved or established prior to taking, suffering
or omitting any action hereunder, the Trustee (unless other evidence be herein
specifically prescribed) may, in the absence of bad faith on its part,
conclusively rely upon an Officers’ Certificate addressing such matter, which,
upon receipt of such request, shall be promptly delivered by the Company;
     (l) the Trustee shall not be charged with knowledge of any Event of Default
unless either (i) a Responsible Officer of the Trustee shall have actual
knowledge or (ii) the Trustee shall have received written notice thereof from
the Company or a Holder; and
     (m) in the event that the Trustee is also acting as Paying Agent,
Authenticating Agent or Securities Registrar hereunder, the rights and
protections afforded to the Trustee pursuant to this Article VI shall also be
afforded such Paying Agent, Authenticating Agent or Securities Registrar.

45

--------------------------------------------------------------------------------

 

     Section 6.5 May Hold Senior Notes.
     The Trustee, any Authenticating Agent, any Paying Agent, any Securities
Registrar or any other agent of the Company, in its individual or any other
capacity, may become the owner or pledgee of Senior Notes and may otherwise deal
with the Company with the same rights it would have if it were not Trustee,
Authenticating Agent, Paying Agent, Securities Registrar or such other agent.
     Section 6.6 Compensation; Reimbursement; Indemnity.
     (a) The Company agrees:
     (i) to pay to the Trustee from time to time reasonable compensation for all
services rendered by it hereunder in such amounts as the Company and the Trustee
shall agree from time to time (which compensation shall not be limited by any
provision of law in regard to the compensation of a trustee of an express
trust);
     (ii) to reimburse the Trustee upon its request for all reasonable expenses,
disbursements and advances incurred or made by the Trustee in accordance with
any provision of this Indenture (including the reasonable compensation and the
expenses and disbursements of its agents and counsel), except any such expense,
disbursement or advance as may be attributable to its negligence, bad faith or
willful misconduct; and
     (iii) to the fullest extent permitted by applicable law, to indemnify the
Trustee (including in its individual capacity) and its Affiliates, and their
officers, directors, shareholders, agents, representatives and employees for,
and to hold them harmless against, any loss, damage, liability, tax (other than
income, franchise or other taxes imposed on amounts paid pursuant to clause
(i) or (ii) of this Section 6.6(a)), penalty, expense or claim of any kind or
nature whatsoever incurred without negligence, bad faith or willful misconduct
on its part arising out of or in connection with the acceptance or
administration of this trust or the performance of the Trustee’s duties
hereunder, including the costs and expenses of defending itself against any
claim or liability in connection with the exercise or performance of any of its
powers or duties hereunder.
     (b) To secure the Company’s payment obligations in this Section 6.6, the
Company hereby grants and pledges to the Trustee and the Trustee shall have a
lien prior to the Senior Notes on all money or property held or collected by the
Trustee, other than money or property held in trust to pay principal and
interest on particular Senior Notes. Such lien shall survive the satisfaction
and discharge of this Indenture or the resignation or removal of the Trustee.
     (c) The obligations of the Company under this Section 6.6 shall survive the
satisfaction and discharge of this Indenture and the earlier resignation or
removal of the Trustee.
     (d) In no event shall the Trustee be liable for any indirect, special,
punitive or consequential loss or damage of any kind whatsoever, including, but
not limited to, lost profits, even if the Trustee has been advised of the
likelihood of such loss or damage and regardless of the form of action.

46

--------------------------------------------------------------------------------

 

     (e) In no event shall the Trustee be liable for any failure or delay in the
performance of its obligations hereunder because of circumstances beyond its
control, including, but not limited to, acts of God, flood, war (whether
declared or undeclared), terrorism, fire, riot, embargo, government action,
including any laws, ordinances, regulations, governmental action or the like
which delay, restrict or prohibit the providing of the services contemplated by
this Indenture.
     Section 6.7 Resignation and Removal; Appointment of Successor.
     (a) No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article VI shall become effective until the
acceptance of appointment by the successor Trustee under Section 6.8.
     (b) The Trustee may resign at any time by giving written notice thereof to
the Company.
     (c) Unless an Event of Default shall have occurred and be continuing, the
Trustee may be removed at any time by the Company by a Board Resolution. If an
Event of Default shall have occurred and be continuing, the Trustee may be
removed by Act of the Holders of a majority in aggregate principal amount of the
Outstanding Senior Notes, delivered to the Trustee and to the Company.
     (d) If the Trustee shall resign, be removed or become incapable of acting,
or if a vacancy shall occur in the office of Trustee for any reason, at a time
when no Event of Default shall have occurred and be continuing, the Company, by
a Board Resolution, shall promptly appoint a successor Trustee, and such
successor Trustee and the retiring Trustee shall comply with the applicable
requirements of Section 6.8. If the Trustee shall resign, be removed or become
incapable of acting, or if a vacancy shall occur in the office of Trustee for
any reason, at a time when an Event of Default shall have occurred and be
continuing, the Holders, by Act of the Holders of a majority in aggregate
principal amount of the Outstanding Senior Notes, shall promptly appoint a
successor Trustee, and such successor Trustee and the retiring Trustee shall
comply with the applicable requirements of Section 6.8. If no successor Trustee
shall have been so appointed by the Company or the Holders and accepted
appointment within sixty (60) days after the giving of a notice of resignation
by the Trustee or the removal of the Trustee in the manner required by
Section 6.8, any Holder who has been a bona fide Holder of a Senior Note for at
least six (6) months may, on behalf of such Holder and all others similarly
situated, and any resigning Trustee may, at the expense of the Company, petition
any court of competent jurisdiction for the appointment of a successor Trustee.
     (e) The Company shall give notice to all Holders in the manner provided in
Section 1.6 of each resignation and each removal of the Trustee and each
appointment of a successor Trustee. Each notice shall include the name of the
successor Trustee and the address of its Corporate Trust Office.
     Section 6.8 Acceptance of Appointment by Successor.
     (a) In case of the appointment hereunder of a successor Trustee, each
successor Trustee so appointed shall execute, acknowledge and deliver to the
Company and to the retiring

47

--------------------------------------------------------------------------------

 

Trustee an instrument accepting such appointment, and thereupon the resignation
or removal of the retiring Trustee shall become effective and such successor
Trustee, without any further act, deed or conveyance, shall become vested with
all the rights, powers, trusts and duties of the retiring Trustee; provided,
that on the request of the Company or the successor Trustee, such retiring
Trustee shall, upon payment of its charges, execute and deliver an instrument
transferring to such successor Trustee all the rights, powers and trusts of the
retiring Trustee and shall duly assign, transfer and deliver to such successor
Trustee all property and money held by such retiring Trustee hereunder.
     (b) Upon request of any such successor Trustee, the Company shall execute
any and all instruments for more fully and certainly vesting in and confirming
to such successor Trustee all rights, powers and trusts referred to in paragraph
(a) of this Section 6.8.
     (c) No successor Trustee shall accept its appointment unless at the time of
such acceptance such successor Trustee shall be qualified and eligible under
this Article VI.
     Section 6.9 Merger, Conversion, Consolidation or Succession to Business.
     Any Person into which the Trustee may be merged or converted or with which
it may be consolidated, or any Person resulting from any merger, conversion or
consolidation to which the Trustee shall be a party, or any Person succeeding to
all or substantially all of the corporate trust business of the Trustee, shall
be the successor of the Trustee hereunder, without the execution or filing of
any paper or any further act on the part of any of the parties hereto; provided,
that such Person shall be otherwise qualified and eligible under this
Article VI. In case any Senior Notes shall have been authenticated, but not
delivered, by the Trustee then in office, any successor by merger, conversion or
consolidation or as otherwise provided above in this Section 6.9 to such
authenticating Trustee may adopt such authentication and deliver the Senior
Notes so authenticated, and in case any Senior Notes shall not have been
authenticated, any successor to the Trustee may authenticate such Senior Notes
either in the name of any predecessor Trustee or in the name of such successor
Trustee, and in all cases the certificate of authentication shall have the full
force which it is provided anywhere in the Senior Notes or in this Indenture
that the certificate of the Trustee shall have.
     Section 6.10 Not Responsible for Recitals or Issuance of Senior Notes.
     The recitals contained herein and in the Senior Notes, except the Trustee’s
certificates of authentication, shall be taken as the statements of the Company,
and neither the Trustee nor any Authenticating Agent assumes any responsibility
for their correctness. The Trustee makes no representations as to the validity
or sufficiency of this Indenture or of the Senior Notes. Neither the Trustee nor
any Authenticating Agent shall be accountable for the use or application by the
Company of the Senior Notes or the proceeds thereof.
     Section 6.11 Appointment of Authenticating Agent.
     (a) The Trustee may appoint an Authenticating Agent or Agents with respect
to the Senior Notes, which shall be authorized to act on behalf of the Trustee
to authenticate Senior Notes issued upon original issue and upon exchange,
registration of transfer or partial redemption thereof or pursuant to
Section 3.6, and Senior Notes so authenticated shall be entitled

48

--------------------------------------------------------------------------------

 

to the benefits of this Indenture and shall be valid and obligatory for all
purposes as if authenticated by the Trustee hereunder. Wherever reference is
made in this Indenture to the authentication and delivery of Senior Notes by the
Trustee or the Trustee’s certificate of authentication, such reference shall be
deemed to include authentication and delivery on behalf of the Trustee by an
Authenticating Agent. Each Authenticating Agent shall be acceptable to the
Company and shall at all times be an entity organized and doing business under
the laws of the United States of America, or of any State or Territory thereof
or the District of Columbia, authorized under such laws to act as Authenticating
Agent, having a combined capital and surplus of not less than $50,000,000 and
subject to supervision or examination by federal or state authority. If such
Authenticating Agent publishes reports of condition at least annually pursuant
to law or to the requirements of said supervising or examining authority, then
for the purposes of this Section 6.11 the combined capital and surplus of such
Authenticating Agent shall be deemed to be its combined capital and surplus as
set forth in its most recent report of condition so published. If at any time an
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section 6.11, such Authenticating Agent shall resign
immediately in the manner and with the effect specified in this Section 6.11.
     (b) Any Person into which an Authenticating Agent may be merged or
converted or with which it may be consolidated, or any Person resulting from any
merger, conversion or consolidation to which such Authenticating Agent shall be
a party, or any Person succeeding to all or substantially all of the corporate
trust business of an Authenticating Agent shall be the successor Authenticating
Agent hereunder; provided, that such Person shall be otherwise eligible under
this Section 6.11, without the execution or filing of any paper or any further
act on the part of the Trustee or the Authenticating Agent.
     (c) An Authenticating Agent may resign at any time by giving written notice
thereof to the Trustee and to the Company. The Trustee may at any time terminate
the agency of an Authenticating Agent by giving written notice thereof to such
Authenticating Agent and to the Company. Upon receiving such a notice of
resignation or upon such a termination, or in case at any time such
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section 6.11, the Trustee may appoint a successor
Authenticating Agent eligible under the provisions of this Section 6.11, which
shall be acceptable to the Company, and shall give notice of such appointment to
all Holders. Any successor Authenticating Agent upon acceptance of its
appointment hereunder shall become vested with all the rights, powers and duties
of its predecessor hereunder, with like effect as if originally named as an
Authenticating Agent.
     (d) The Company agrees to pay to each Authenticating Agent from time to
time reasonable compensation for its services under this Section 6.11 in such
amounts as the Company and the Authenticating Agent shall agree from time to
time.
     (e) If an appointment of an Authenticating Agent is made pursuant to this
Section 6.11, the Senior Notes may have endorsed thereon, in addition to the
Trustee’s certificate of authentication, an alternative certificate of
authentication in the following form:

49

--------------------------------------------------------------------------------

 

This is one of the Senior Notes referred to in the within mentioned Indenture.
Dated:

            WELLS FARGO BANK, N.A., not in its
individual capacity, but solely as Trustee
      By:           Authenticating Agent                      By:          
Authorized Signatory   

ARTICLE VII
HOLDER’S LISTS AND REPORTS BY COMPANY
     Section 7.1 Company to Furnish Trustee Names and Addresses of Holders.
     The Company will furnish or cause to be furnished to the Trustee:
     (a) semiannually, on or before June 30 and December 31 of each year, a
list, in such form as the Trustee may reasonably require, of the names and
addresses of the Holders as of a date not more than fifteen (15) days prior to
the delivery thereof; and
     (b) at such other times as the Trustee may request in writing, within
thirty (30) days after the receipt by the Company of any such request, a list of
similar form and content as of a date not more than fifteen (15) days prior to
the time such list is furnished;
in each case to the extent such information is in the possession or control of
the Company and has not otherwise been received by the Trustee in its capacity
as Securities Registrar.
     Section 7.2 Preservation of Information, Communications to Holders.
     (a) The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of Holders contained in the most recent
list furnished to the Trustee as provided in Section 7.1 and the names and
addresses of Holders received by the Trustee in its capacity as Securities
Registrar. The Trustee may destroy any list furnished to it as provided in
Section 7.1 upon receipt of a new list so furnished.
     (b) The rights of Holders to communicate with other Holders with respect to
their rights under this Indenture or under the Senior Notes, and the
corresponding rights and privileges of the Trustee, shall be as provided in the
Trust Indenture Act.
     (c) Every Holder of Senior Notes, by receiving and holding the same, agrees
with the Company and the Trustee that neither the Company nor the Trustee nor
any agent of either of them shall be held accountable by reason of the
disclosure of information as to the names and addresses of the Holders made
pursuant to the Trust Indenture Act.

50

--------------------------------------------------------------------------------

 

     Section 7.3 Reports by Company.
     (a) The Company shall furnish to the Holders and to prospective purchasers
of Senior Notes, upon their request, the information required to be furnished
pursuant to Rule 144A(d)(4) under the Securities Act. The delivery requirement
set forth in the preceding sentence may be satisfied by compliance with
Section 7.3(b).
     (b) The Company shall furnish to each of (i) the Trustee, (ii) the Holders
and to subsequent holders of Senior Notes, (iii) Kodiak Capital Management
Company LLC, 2107 Wilson Boulevard, Suite 400, Arlington, Virginia 22201,
Attention: Robert M. Hurley or such other address as designated by Kodiak
Capital Management Company LLC) and (iv) any beneficial owner of the Senior
Notes reasonably identified to the Company (which identification may be made
either by such beneficial owner or by Kodiak Capital Management Company LLC), a
duly completed and executed officer’s financial certificate substantially and
substantively in the form attached hereto as Exhibit A, including the financial
statements referenced in such Exhibit, which certificate and financial
statements shall be so furnished by the Company not later than forty-five
(45) days after the end of each of the first three (3) fiscal quarters of each
fiscal year of the Company and not later than ninety (90) days after the end of
each fiscal year of the Company, or, if applicable, such shorter respective
periods as may then be required by the Commission for the filing by the Company
of quarterly reports on Form 10-Q and annual reports on Form 10-K.
     (c) If the Company intends to file its annual and quarterly information
with the Securities and Exchange Commission (the “Commission”) in electronic
form pursuant to Regulation S-T of the Commission using the Commission’s
Electronic Data Gathering, Analysis and Retrieval (“EDGAR”) system, the Company
shall notify the Trustee in the manner prescribed herein of each such annual and
quarterly filing. The Trustee is hereby authorized and directed to access the
EDGAR system for purposes of retrieving the financial information so filed.
Compliance with the foregoing shall constitute delivery by the Company of its
financial statements to the Trustee in compliance with the provisions of Section
314(a) of the Trust Indenture Act, if applicable. The Trustee shall have no duty
to search for or obtain any electronic or other filings that the Company makes
with the Commission, regardless of whether such filings are periodic,
supplemental or otherwise. Delivery of reports, information and documents to the
Trustee pursuant to this Section 7.3(c) shall be solely for purposes of
compliance with this Section 7.3(c) and, if applicable, with Section 314(a) of
the Trust Indenture Act, and shall not relieve the Company of the requirement to
deliver the certificate referred to in Section 7.3(b). The Trustee’s receipt of
such reports, information and documents shall not constitute notice to it of the
content thereof or any matter determinable from the content thereof, including
the Company’s compliance with any of its covenants hereunder, as to which the
Trustee is entitled to rely upon Officers’ Certificates.

51

--------------------------------------------------------------------------------

 

ARTICLE VIII
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
          Section 8.1 Company May Consolidate, Etc., Only on Certain Terms.
          The Company shall not consolidate with or merge into any other Person
or convey, transfer or lease its properties and assets substantially as an
entirety to any Person, and no Person shall consolidate with or merge into the
Company or convey, transfer or lease its properties and assets substantially as
an entirety to the Company, unless:
          (a) if the Company shall consolidate with or merge into another Person
or convey, transfer or lease its properties and assets substantially as an
entirety to any Person, the entity formed by such consolidation or into which
the Company is merged or the Person that acquires by conveyance or transfer, or
that leases, the properties and assets of the Company substantially as an
entirety shall be an entity organized and existing under the laws of the United
States of America or any State or Territory thereof or the District of Columbia
and shall expressly assume, by an indenture supplemental hereto, executed and
delivered to the Trustee, in form reasonably satisfactory to the Trustee, the
due and punctual payment of the principal of and any premium and interest
(including any Additional Interest) on all the Senior Notes and the performance
of every covenant of this Indenture on the part of the Company to be performed
or observed;
          (b) immediately after giving effect to such transaction, no Event of
Default, and no event that, after notice or lapse of time, or both, would
constitute an Event of Default, shall have happened and be continuing; and
          (c) the Company has delivered to the Trustee an Officers’ Certificate
and an Opinion of Counsel, each stating that such consolidation, merger,
conveyance, transfer or lease and, if a supplemental indenture is required in
connection with such transaction, any such supplemental indenture, comply with
this Article VIII and that all conditions precedent herein provided for relating
to such transaction have been complied with; and the Trustee may rely upon such
Officers’ Certificate and Opinion of Counsel as conclusive evidence that such
transaction complies with this Section 8.1.
          Section 8.2 Successor Company Substituted.
          (a) Upon any consolidation or merger by the Company with or into any
other Person, or any conveyance, transfer or lease by the Company of its
properties and assets substantially as an entirety to any Person in accordance
with Section 8.1 and the execution and delivery to the Trustee of the
supplemental indenture described in Section 8.1 (a), the successor entity formed
by such consolidation or into which the Company is merged or to which such
conveyance, transfer or lease is made shall succeed to, and be substituted for,
and may exercise every right and power of, the Company under this Indenture with
the same effect as if such successor Person had been named as the Company
herein; and in the event of any such conveyance or transfer, following the
execution and delivery of such supplemental indenture, the Company shall be
discharged from all obligations and covenants under the Indenture and the Senior
Notes.

52

--------------------------------------------------------------------------------

 

          (b) Such successor Person to the Company may cause to be executed, and
may issue either in its own name or in the name of the Company, any or all of
the Senior Notes issuable hereunder that theretofore shall not have been signed
by the Company and delivered to the Trustee; and, upon the order of such
successor Person instead of the Company and subject to all the terms, conditions
and limitations in this Indenture prescribed, the Trustee shall authenticate and
shall deliver any Senior Notes that previously shall have been signed and
delivered by the officers of the Company to the Trustee for authentication, and
any Senior Notes that such successor Person thereafter shall cause to be
executed and delivered to the Trustee on its behalf. All the Senior Notes so
issued shall in all respects have the same legal rank and benefit under this
Indenture as the Senior Notes theretofore or thereafter issued in accordance
with the terms of this Indenture.
          (c) In case of any such consolidation, merger, sale, conveyance or
lease, such changes in phraseology and form may be made in the Senior Notes
thereafter to be issued as may be appropriate to reflect such occurrence.
ARTICLE IX
SUPPLEMENTAL INDENTURES
          Section 9.1 Supplemental Indentures without Consent of Holders.
          Without the consent of any Holders, the Company, when authorized by a
Board Resolution, and the Trustee, at any time and from time to time, may enter
into one or more indentures supplemental hereto, in form reasonably satisfactory
to the Trustee, for any of the following purposes:
          (a) to evidence the succession of another Person to the Company, and
the assumption by any such successor of the covenants of the Company herein and
in the Senior Notes; or
          (b) to evidence and provide for the acceptance of appointment
hereunder by a successor trustee; or
          (c) to cure any ambiguity, to correct or supplement any provision
herein that may be defective or inconsistent with any other provision herein, or
to make or amend any other provisions with respect to matters or questions
arising under this Indenture, which shall not be inconsistent with the other
provisions of this Indenture; provided, that such action pursuant to this clause
(c) shall not be effected unless the Company has delivered a written notice of
such amendment to the Holders at least twenty (20) days prior to the effective
date of such amendment; provided, further, that such action pursuant to this
clause (c) shall not adversely affect in any material respect the interests of
any Holders; or
          (d) to comply with the rules and regulations of any securities
exchange or automated quotation system on which any of the Senior Notes may be
listed, traded or quoted; or
          (e) to add to the covenants, restrictions or obligations of the
Company or to add to the Events of Default; provided, that such action pursuant
to this clause (e) shall not adversely affect in any material respect the
interests of any Holders; or

53

--------------------------------------------------------------------------------

 

          (f) to modify, eliminate or add to any provisions of the Indenture or
the Senior Notes to such extent as shall be necessary to ensure that the Senior
Notes are treated as indebtedness of the Company for United States federal
income tax purposes; provided, that such action pursuant to this clause
(f) shall not adversely affect in any material respect the interests of any
Holders.
          Section 9.2 Supplemental Indentures with Consent of Holders.
          (a) Subject to Section 9.1, with the consent of the Holders of not
less than a majority in aggregate principal amount of the Outstanding Senior
Notes, by Act of said Holders delivered to the Company and the Trustee, the
Company, when authorized by a Board Resolution, and the Trustee may enter into
an indenture or indentures supplemental hereto for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Indenture or of modifying in any manner the rights of the Holders of Senior
Notes under this Indenture; provided, that no such supplemental indenture shall,
without the consent of the Holder of each Outstanding Senior Note:
     (i) except as set forth in Section 3.1(f), change the Stated Maturity of
the principal or any premium of any Senior Note or change the date of payment of
any installment of interest (including any Additional Interest) on any Senior
Note, or reduce the principal amount thereof or the rate of interest thereon or
any premium payable upon the redemption thereof or change the place of payment
where, or the coin or currency in which, any Senior Note or interest thereon is
payable, or restrict or impair the right to institute suit for the enforcement
of any such payment on or after such date; or
     (ii) reduce the percentage in aggregate principal amount of the Outstanding
Senior Notes, the consent of whose Holders is required for any such supplemental
indenture, or the consent of whose Holders is required for any waiver of
compliance with any provision of this Indenture or of defaults hereunder and
their consequences provided for in this Indenture; or
     (iii) modify any of the provisions of this Section 9.2, Section 5.13 or
Section 10.6, except to increase any percentage in aggregate principal amount of
the Outstanding Senior Notes, the consent of whose Holders is required for any
reason, or to provide that certain other provisions of this Indenture cannot be
modified or waived without the consent of the Holder of each Senior Note.
          (b) It shall not be necessary for any Act of Holders under this
Section 9.2 to approve the particular form of any proposed supplemental
indenture, but it shall be sufficient if such Act shall approve the substance
thereof.
          Section 9.3 Execution of Supplemental Indentures.
          In executing or accepting the additional trusts created by any
supplemental indenture permitted by this Article IX or the modifications thereby
of the trusts created by this Indenture, the Trustee shall be entitled to
receive, and shall be fully protected in conclusively relying upon, an Officers’
Certificate and an Opinion of Counsel stating that the execution of such
supplemental indenture is authorized or permitted by this Indenture, and that
all conditions precedent herein provided for relating to such action have been
complied with. The Trustee may,

54

--------------------------------------------------------------------------------

 

but shall not be obligated to, enter into any such supplemental indenture that
affects the Trustee’s own rights, duties, indemnities or immunities under this
Indenture or otherwise. Copies of the final form of each supplemental indenture
shall be delivered by the Trustee at the expense of the Company to each Holder
promptly after the execution thereof.
          Section 9.4 Effect of Supplemental Indentures.
          Upon the execution of any supplemental indenture under this
Article IX, this Indenture shall be modified in accordance therewith, and such
supplemental indenture shall form a part of this Indenture for all purposes; and
every Holder of Senior Notes theretofore or thereafter authenticated and
delivered hereunder shall be bound thereby.
          Section 9.5 Reference in Senior Notes to Supplemental Indentures.
          Senior Notes authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article IX may, and shall if required by
the Company, bear a notation in form approved by the Company as to any matter
provided for in such supplemental indenture. If the Company shall so determine,
new Senior Notes so modified as to conform, in the opinion of the Company, to
any such supplemental indenture may be prepared and executed by the Company and
authenticated and delivered by the Trustee in exchange for Outstanding Senior
Notes.
ARTICLE X
COVENANTS
          Section 10.1 Payment of Principal, Premium, if any, and Interest.
          The Company covenants and agrees for the benefit of the Holders of the
Senior Notes that it will duly and punctually pay the principal of and any
premium and interest (including any Additional Interest) on the Senior Notes in
accordance with the terms of the Senior Notes and this Indenture.
          Section 10.2 Money for Senior Note Payments to be Held in Trust.
          (a) If the Company shall at any time act as its own Paying Agent with
respect to the Senior Notes, it will, on or before each due date of the
principal of and any premium or interest (including any Additional Interest) on
the Senior Notes, segregate and hold in trust for the benefit of the Persons
entitled thereto a sum sufficient to pay the principal and any premium or
interest (including Additional Interest) so becoming due until such sums shall
be paid to such Persons or otherwise disposed of as herein provided, and will
promptly notify the Trustee in writing of its failure so to act.
          (b) Whenever the Company shall have one or more Paying Agents, it
will, prior to 10:00 A.M., New York City time, on each due date of the principal
of and any premium or interest (including any Additional Interest) on any Senior
Notes, deposit with a Paying Agent a sum sufficient to pay such amount, such sum
to be held as provided in the Trust Indenture Act

55

--------------------------------------------------------------------------------

 

and (unless such Paying Agent is the Trustee) the Company will promptly notify
the Trustee of its failure so to act.
          (c) The Company will cause each Paying Agent for the Senior Notes
other than the Trustee to execute and deliver to the Trustee an instrument in
which such Paying Agent shall agree with the Trustee, subject to the provisions
of this Section 10.2, that such Paying Agent will (i) comply with the provisions
of this Indenture and the Trust Indenture Act applicable to it as a Paying Agent
and (ii) during the continuance of any default by the Company (or any other
obligor upon the Senior Notes) in the making of any payment in respect of the
Senior Notes, upon the written request of the Trustee, forthwith pay to the
Trustee all sums held in trust by such Paying Agent for payment in respect of
the Senior Notes.
          (d) The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Company Order direct any Paying Agent to pay, to the Trustee all sums held in
trust by the Company or such Paying Agent, such sums to be held by the Trustee
upon the same trusts as those upon which such sums were held by the Company or
such Paying Agent; and, upon such payment by any Paying Agent to the Trustee,
such Paying Agent shall be released from all further liability with respect to
such money.
          (e) Any money deposited with the Trustee or any Paying Agent, or then
held by the Company in trust for the payment of the principal of and any premium
or interest (including any Additional Interest) on any Senior Note and remaining
unclaimed for two (2) years after such principal and any premium or interest has
become due and payable shall (unless otherwise required by mandatory provision
of applicable escheat or abandoned or unclaimed property law) be paid on Company
Request to the Company, or (if then held by the Company) shall (unless otherwise
required by mandatory provision of applicable escheat or abandoned or unclaimed
property law) be discharged from such trust; and the Holder of such Senior Note
shall thereafter, as an unsecured general creditor, look only to the Company for
payment thereof, and all liability of the Trustee or such Paying Agent with
respect to such trust money, and all liability of the Company as trustee
thereof, shall thereupon cease; provided, that the Trustee or such Paying Agent,
before being required to make any such repayment, may at the expense of the
Company cause to be published once, in a newspaper published in the English
language, customarily published on each Business Day and of general circulation
in the Borough of Manhattan, The City of New York, notice that such money
remains unclaimed and that, after a date specified therein, which shall not be
less than thirty (30) days from the date of such publication, any unclaimed
balance of such money then remaining will be repaid to the Company.
          Section 10.3 Statement as to Compliance.
          The Company shall deliver to the Trustee, within one hundred twenty
(120) days after the end of each fiscal year of the Company ending after the
date hereof, an Officers’ Certificate (substantially in the form attached hereto
as Exhibit B) covering the preceding calendar year, stating whether or not to
the knowledge of the signers thereof the Company is in default in the
performance or observance of any of the terms, provisions and conditions of this
Indenture (without regard to any period of grace or requirement of notice
provided hereunder), and if the

56

--------------------------------------------------------------------------------

 

Company shall be in default, specifying all such defaults and the nature and
status thereof of which they may have knowledge.
          Section 10.4 Calculation Agent.
          (a) The Company hereby agrees that for so long as any of the Senior
Notes remain Outstanding, there will at all times be an agent appointed to
calculate LIBOR in respect of each Interest Payment Date in accordance with the
terms of Schedule A (the “Calculation Agent”). The Company has initially
appointed the Trustee as Calculation Agent for purposes of determining LIBOR for
each Interest Payment Date. Notwithstanding the foregoing, so long as the Senior
Notes are Outstanding, the Calculation Agent shall be the Trustee. If the
Calculation Agent is unable or unwilling to act as such or is removed by the
Company, the Company will promptly appoint as a replacement Calculation Agent
the London office of a leading bank which is engaged in transactions in three
(3)-month Eurodollar deposits in the international Eurodollar market and which
does not control or is not controlled by or under common control with the
Company or its Affiliates. The Calculation Agent may not resign its duties
without a successor having been duly appointed.
          (b) The Calculation Agent shall be required to agree that, as soon as
possible after 11:00 A.M. (London time) on each LIBOR Determination Date (as
defined in Schedule A), but in no event later than 11:00 A.M. (London time) on
the Business Day immediately following each LIBOR Determination Date, the
Calculation Agent will calculate the interest rate (the interest payment shall
be rounded to the nearest cent, with half a cent being rounded upwards) for the
related Interest Payment Date, and will communicate such rate and amount to the
Company, the Trustee, each Paying Agent and the Depositary. The Calculation
Agent will also specify to the Company the quotations upon which the foregoing
rates and amounts are based and, in any event, the Calculation Agent shall
notify the Company before 5:00 P.M. (London time) on each LIBOR Determination
Date that either: (i) it has determined or is in the process of determining the
foregoing rates and amounts or (ii) it has not determined and is not in the
process of determining the foregoing rates and amounts, together with its
reasons therefor. The Calculation Agent’s determination of the foregoing rates
and amounts for any Interest Payment Date will (in the absence of manifest
error) be final and binding upon all parties. For the sole purpose of
calculating the interest rate for the Senior Notes, “Business Day” shall be
defined as any day on which dealings in deposits in Dollars are transacted in
the London interbank market.
          Section 10.5 Additional Covenants.
          (a) The Company covenants and agrees with each Holder of Senior Notes
that if an Event of Default shall have occurred and be continuing, it shall not
(i) declare or pay any dividends or distributions on, or redeem, purchase,
acquire or make a liquidation payment with respect to, any Equity Interests of
the Company, (ii) vote in favor of or permit or otherwise allow any of its
Subsidiaries to declare or pay any dividends or distributions on, or redeem,
purchase, acquire or make a liquidation payment with respect to or otherwise
retire, any preferred Equity Interests of such Subsidiaries or other Equity
Interests entitling the holders thereof to a stated rate of return (for the
avoidance of doubt, whether such preferred Equity Interests are perpetual or
otherwise), or (iii) make any payment of principal of or any interest or
premium, if any, on or repay, repurchase or redeem any Debt of the Company other
than Permitted Debt (other than (A)

57

--------------------------------------------------------------------------------

 

repurchases, redemptions or other acquisitions of Equity Interests of the
Company in connection with any employment contract, benefit plan or other
similar arrangement with or for the benefit of any one or more employees,
officers, directors or consultants, in connection with a dividend reinvestment
or Equity Interests purchase plan or in connection with the issuance of Equity
Interests in the Company (or securities convertible into or exercisable for such
Equity Interests) as consideration in an acquisition transaction entered into
prior to the applicable Event of Default, (B) as a result of an exchange,
conversion reclassification or combination of any class or series of the
Company’s Equity Interests (or any Equity Interests in a Subsidiary of the
Company) for any class or series of the Company’s Equity Interests or of any
class or series of the Company’s indebtedness for any class or series of the
Company’s Equity Interests, (C) the purchase of fractional interests in the
Equity Interests of the Company pursuant to the conversion or exchange
provisions of such Equity Interests or the security being converted or
exchanged, (D) any declaration of a dividend in connection with any Rights Plan,
the issuance of rights, Equity Interests or other property under any Rights Plan
or the redemption or repurchase of rights pursuant thereto or (E) any dividend
in the form of Equity Interests, warrants, options or other rights where the
dividend Equity Interest or the Equity Interest issuable upon exercise of such
warrants, options or other rights is the same Equity Interest as that on which
the dividend is being paid or ranks pari passu with or junior to such Equity
Interest).
          (b) The Company shall notify in writing, within five (5) Business Days
of the occurrence thereof, the Trustee and each Holder of Senior Notes of the
occurrence of a Change-of-Control (the “Change-of-Control Notice”). Within
thirty (30) days of the occurrence of a Change-of-Control, the Depositor shall
initiate a ratings affirmation process with the Ratings Agencies to determine if
a Ratings Downgrade has occurred as a result of such Change-of- Control. Within
five (5) Business Days of the completions of such ratings affirmation process,
the Company shall notify in writing the Trustee and each holder of Senior Notes
of the occurrence of a Change-of-Control Event (the “Change-of-Control Event
Notice”). If the Company shall have received, within thirty (30) days from the
Holders of Senior Notes’ receipt of the Change-of-Control Event Notice, written
notice from any Holder of Senior Notes of such Holder’s election to cause the
Defeasance or redemption, as applicable, of the Senior Notes as provided in this
Section 10.5(b) (the “Change-of-Control Election”), then the Company shall (i)
if such Change-of-Control Election is received on or prior to June 30, 2011,
cause Article XIII to be applied to the Outstanding Senior Notes or (ii) if such
Change-of-Control Election is received after June 30, 2011, redeem the Senior
Notes pursuant to Section 11.1(b).
          (c) The Company hereby covenants and agrees that the Company shall
maintain, (i) as of the end of each fiscal quarter during 2007, a Consolidated
Tangible Net Worth (as reported in the Company’s balance sheet contained in the
most recent periodic report filed with the Commission) in excess of $110,000,000
and (ii) as of the end of each fiscal quarter thereafter commencing with the
Company’s first fiscal quarter during 2008, a Consolidated Tangible Net Worth
(as reported in the Company’s balance sheet contained in the most recent
periodic report filed with the Commission) in excess of $120,000,000.
          (d) The Company will not permit the Leverage Ratio, as of the end of
each fiscal quarter, to be greater than 3.00 to 1.00.

58

--------------------------------------------------------------------------------

 

          (e) The Company will not permit the Fixed Charge Coverage Ratio,
(i) as of the end of each fiscal quarter ending March 31, 2007 and June 30,
2007, to be less than 1.0 to 1.00 in each case for such quarter or,
collectively, such quarter together with the preceding three (3) quarters,
(ii) as of the end of the fiscal quarter ending September 30, 2007 to be less
than 1.50 to 1.00 for such quarter or, collectively, such quarter together with
the preceding three (3) quarters, (iii) as of the end of December 31, 2007 to be
less than 2.0 to 1.00 for such quarter or, collectively, such quarter together
with the preceding three (3) quarters and (iv) each fiscal quarter thereafter,
to be less than 2.00 to 1.00 for, collectively, such quarter together with the
preceding three (3) quarters.
          (f) On each of March 30, 2007, June 30, 2007 and either, at the
Company’s option, September 30, 2007 or December 30, 2007, the Company shall
deposit into the Interest Reserve Account an amount equal to the amount of
interest paid with respect to the Senior Notes on such Interest Payment Date
pursuant to Section 3.1 (a). The amounts on deposit in the Interest Reserve
Account shall not be released to the Company until such time as the Company
shall (i) have maintained a Fixed Charge Coverage Ratio of not less than 2.0 to
1.0 as of the four (4) immediately preceding fiscal quarters in each case for,
collectively, such quarter together with the preceding three (3) quarters and
(ii) be in compliance with all other covenants contained herein.
          (g) Until such time as the Company shall (x) have maintained a Fixed
Charge Coverage Ratio of not less than 2.0 to 1.0 as of the two (2) immediately
preceding fiscal quarters, in each case, for, collectively, such quarter
together with the preceding three (3) quarters and (y) be in compliance with all
other covenants contained herein, the Company shall not repurchase any Equity
Interests of the Company unless in connection with such repurchase of Equity
Interests (an “Acceptable Repurchase”) (i) the Company will redeem pursuant to
Section 11.1 (d) an amount of Senior Notes having an outstanding principal
amount equal to the purchase price of such Equity Interests to be repurchased up
to a maximum of $10,000,000, (ii) the redemption and defeasance of such Senior
Notes shall be in increments of $1,000,000 and (iii) the redemption and
defeasance, if any, of such Senior Notes shall be consummated and all payments
or deposits made with respect thereto shall be made prior to the consummation of
the repurchase of any Equity Interests.
          Section 10.6 Waiver of Covenants.
          The Company may omit in any particular instance to comply with any
covenant or condition contained in Section 10.5 if, before or after the time for
such compliance, the Holders of at least a majority in aggregate principal
amount of the Outstanding Senior Notes shall, by Act of such Holders, either
waive such compliance in such instance or generally waive compliance with such
covenant or condition, but no such waiver shall extend to or affect such
covenant or condition except to the extent so expressly waived, and, until such
waiver shall become effective, the obligations of the Company in respect of any
such covenant or condition shall remain in full force and effect.

59

--------------------------------------------------------------------------------

 

          Section 10.7 Treatment of Senior Notes.
          The Company will treat the Senior Notes as indebtedness, and the
amounts, other than payments of principal, payable in respect of the principal
amount of such Senior Notes as interest, for all U.S. federal income tax
purposes. All payments in respect of the Senior Notes will be made free and
clear of U.S. withholding tax to any beneficial owner thereof that has provided
an Internal Revenue Service Form W-9 or
W-8BEN (or any substitute or successor form) establishing its U.S. or non-U.S.
status for U.S. federal income tax purposes, or any other applicable form
establishing a complete exemption from U.S. withholding tax.
          Section 10.8 Limitation on Issuance of Debt.
          The Company hereby agrees not to, without the prior written consent of
Holders of a majority of outstanding principal amount of the Senior Notes,
offer, sell, contract to sell, grant any option to purchase or otherwise dispose
of, directly or indirectly, any other Debt unless (i) the Company shall be in
compliance with each of the covenants contained herein after taking into account
such offer, sale, contract to sell, grant, purchase or other disposition,
(ii) such Debt is Permitted Debt or (iii) such Debt (A) shall be expressly
subordinate by its terms to the Senior Notes and (B) shall not contain any
covenants of the Company which are more restrictive than the covenants contained
in this Indenture.
ARTICLE XI
REDEMPTION OF SENIOR NOTES
          Section 11.1 Optional Redemption and Mandatory Redemptions.
          (a) The Company may, at its option, (i) on any Interest Payment Date
on or after June 30, 2011, (ii) upon receipt of thirty (30) days prior written
notice from the Purchaser of Purchaser’s intent to consummate a sale, assignment
or transfer of the Senior Notes to a subsequent purchaser (including to any
entity issuing or proposing to issue collateralized debt obligations) other than
an Affiliate of the Purchaser or (iii) to the extent the Purchaser has not
consummated one of the transactions in subsection (ii) hereof, redeem such
Senior Notes in whole at any time or, subject to the consent of the Purchaser
(or any Affiliate transferee thereof), in part from time to time, in each case
at a Redemption Price equal to one hundred percent (100%) of the principal
amount thereof (or of the redeemed portion thereof, as applicable), together, in
the case of any such redemption, with accrued and unpaid interest, including any
Additional Interest, to but excluding the date fixed as the Redemption Date and
plus all Breakage Costs (the “Optional Redemption Price”). In the event of a
redemption pursuant to (ii) of this Section 11.1 (a), the redemption will not be
required to occur on an Interest Payment Date.
          (b) The Company shall, upon receipt of a Change-of-Control Election
after June 30 2011, redeem the Senior Notes in whole on a date no more than
thirty (30) days after receipt of the Change-of-Control Election, at a
Redemption Price equal to one hundred percent (100%) of the outstanding
principal amount thereof, together, in the case of any such redemption, with
accrued and unpaid interest, including any Additional Interest, to but excluding
the date fixed as the Redemption Date (the “Change of Control Mandatory
Redemption Price”).

60

--------------------------------------------------------------------------------

 

          (c) The Company shall, in the event it receives a Put Election Notice,
redeem the portion of the Senior Notes the Purchaser elects to require the
Company to redeem pursuant to such Put Election Notice, at a Redemption Price
equal to one hundred percent (100%) of the principal amount of the redeemed
portion of the Senior Notes, together with, in the case of any such redemption,
any accrued and unpaid interest, including any Additional Interest, to but
excluding the date fixed as the Redemption Date and plus all Breakage Costs (the
“Put Mandatory Redemption Price”).
          (d) The Company shall, in connection with an Acceptable Repurchase,
redeem the portion of Senior Notes required to be redeemed pursuant to
Section 10.5(g), at a Redemption Price equal to one hundred percent (100%) of
the principal amount of the redeemed portion of the Securities, together with,
in the case of any such redemption, any accrued and unpaid interest, including
any Additional Interest, to but excluding the date fixed as the Redemption Date
and plus all Breakage Costs (the “Acceptable Repurchase Mandatory Redemption
Price”).
          Section 11.2 Special Event Redemption.
          Prior to June 30, 2011, upon the occurrence and during the
continuation of a Special Event, the Company may, at its option, redeem the
Senior Notes, in whole but not in part, at a Redemption Price equal to one
hundred seven and one-half percent (107.5%) of the principal amount thereof,
together, in the case of any such redemption, with accrued and unpaid interest,
including any Additional Interest, to but excluding the date fixed as the
Redemption Date (the “Special Redemption Price”).
          Section 11.3 Election to Redeem; Notice to Trustee.
          The election of the Company to redeem any Senior Notes, in whole or in
part, shall be evidenced by or pursuant to a Board Resolution. With the
exception of any redemption pursuant to Section 11.1(a)(ii), in case of any
redemption at the election of the Company, the Company shall, not less than
forty-five (45) days and not more than seventy-five (75) days prior to the
Redemption Date (unless a shorter notice shall be satisfactory to the Trustee),
notify the Trustee in writing of such date and of the principal amount of the
Senior Notes to be redeemed and provide the additional information required to
be included in the notice or notices contemplated by Section 11.5. In the event
of a redemption pursuant to Section 11.1(a)(ii) above, the applicable Trustee
notice period shall be not less than ten (10) days nor more than twenty (20)
days. In the case of any redemption of Senior Notes, in whole or in part,
(a) prior to the expiration of any restriction on such redemption provided in
this Indenture or the Senior Notes or (b) pursuant to an election of the Company
which is subject to a condition specified in this Indenture or the Senior Notes,
the Company shall furnish the Trustee with an Officers’ Certificate and an
Opinion of Counsel evidencing compliance with such restriction or condition.
          Section 11.4 Selection of Senior Notes to be Redeemed.
          (a) If less than all the Senior Notes are to be redeemed, the
particular Senior Notes to be redeemed shall be selected and redeemed on a pro
rata basis not more than sixty (60) days prior to the Redemption Date by the
Trustee from the Outstanding Senior Notes not previously called for redemption;
provided, that the unredeemed portion of the principal amount of any

61

--------------------------------------------------------------------------------

 

Senior Note shall be in an authorized denomination (which shall not be less than
the minimum authorized denomination) for such Senior Note.
          (b) The Trustee shall promptly notify the Company in writing of the
Senior Notes selected for redemption and, in the case of any Senior Notes
selected for partial redemption, the principal amount thereof to be redeemed.
For all purposes of this Indenture, unless the context otherwise requires, all
provisions relating to the redemption of Senior Notes shall relate, in the case
of any Senior Note redeemed or to be redeemed only in part, to the portion of
the principal amount of such Senior Note that has been or is to be redeemed.
          (c) The provisions of paragraphs (a) and (b) of this Section 11.4
shall not apply with respect to any redemption affecting only a single Senior
Note, whether such Senior Note is to be redeemed in whole or in part. In the
case of any such redemption in part, the unredeemed portion of the principal
amount of the Senior Note shall be in an authorized denomination (which shall
not be less than the minimum authorized denomination) for such Senior Note.
          Section 11.5 Notice of Redemption.
          (a) With the exception of any redemption pursuant to Section
11.1(a)(ii), notice of redemption shall be given not later than the thirtieth
(30th) day, and not earlier than the sixtieth (60th) day, prior to the
Redemption Date to each Holder of Senior Notes to be redeemed, in whole or in
part. In the event of a redemption pursuant to Section 11.1(a)(ii) above, the
applicable Holder notice period shall be not less than five (5) days nor more
than ten (10) days.
          (b) With respect to Senior Notes to be redeemed, in whole or in part,
each notice of redemption shall state:
     (i) the Redemption Date;
     (ii) the Redemption Price or, if the Redemption Price cannot be calculated
prior to the time the notice is required to be sent, the estimate of the
Redemption Price, as calculated by the Company, together with a statement that
it is an estimate and that the actual Redemption Price will be calculated on the
fifth Business Day prior to the Redemption Date (and if an estimate is provided,
a further notice shall be sent of the actual Redemption Price on the date that
such Redemption Price is calculated);
     (iii) if less than all Outstanding Senior Notes are to be redeemed, the
identification (and, in the case of partial redemption, the respective principal
amounts) of the amount of and particular Senior Notes to be redeemed;
     (iv) that on the Redemption Date, the Redemption Price will become due and
payable upon each such Senior Note or portion thereof, and that any interest
(including any Additional Interest) on such Senior Note or such portion, as the
case may be, shall cease to accrue on and after said date; and
     (v) the place or places where such Senior Notes are to be surrendered for
payment of the Redemption Price.

62

--------------------------------------------------------------------------------

 

          (c) Notice of redemption of Senior Notes to be redeemed, in whole or
in part, at the election of the Company shall be given by the Company or, at the
Company’s written request, by the Trustee in the name and at the expense of the
Company and shall be irrevocable. The notice if mailed in the manner provided
above shall be conclusively presumed to have been duly given, whether or not the
Holder receives such notice. In any case, a failure to give such notice by mail
or any defect in the notice to the Holder of any Senior Note designated for
redemption as a whole or in part shall not affect the validity of the
proceedings for the redemption of any other Senior Note.
          Section 11.6 Deposit of Redemption Price.
          Prior to 10:00 A.M., New York City time, on the Redemption Date
specified in the notice of redemption given as provided in Section 11.5, the
Company will deposit with the Trustee or with one or more Paying Agents (or if
the Company is acting as its own Paying Agent, the Company will segregate and
hold in trust as provided in Section 10.2) an amount of money sufficient to pay
the Redemption Price of, and any accrued interest (including any Additional
Interest) on, all the Senior Notes (or portions thereof) that are to be redeemed
on that date.
          Section 11.7 Payment of Senior Notes Called for Redemption.
          (a) If any notice of redemption has been given as provided in
Section 11.5, the Senior Notes or portion of Senior Notes with respect to which
such notice has been given shall become due and payable on the date and at the
place or places stated in such notice at the applicable Redemption Price. On
presentation and surrender of such Senior Notes at a Place of Payment specified
in such notice, the Senior Notes or the specified portions thereof shall be paid
and redeemed by the Company at the applicable Redemption Price.
          (b) Upon presentation of any Senior Note redeemed in part only, the
Company shall execute and the Trustee shall authenticate and deliver to the
Holder thereof, at the expense of the Company, a new Senior Note or Senior
Notes, of authorized denominations, in aggregate principal amount equal to the
unredeemed portion of the Senior Note so presented and having the same Original
Issue Date, Stated Maturity and terms.
          (c) If any Senior Note called for redemption shall not be so paid upon
surrender thereof for redemption, the principal of and any premium on such
Senior Note shall, until paid, bear interest from and including the Redemption
Date at the rate prescribed therefor in the Senior Note.
ARTICLE XII
SUBORDINATION OF SECURITIES
          Section 12.1 Senior Notes Subordinate to Permitted Debt.
          The Company covenants and agrees, and each Holder of a Senior Note, by
its acceptance thereof, likewise covenants and agrees, that, to the extent and
in the manner hereinafter set forth in this Article XII, the payment of the
principal of and any premium and interest (including any Additional Interest) on
each and all of the Senior Notes is hereby expressly made subordinate

63

--------------------------------------------------------------------------------

 

and subject in right of payment to the prior payment in full of all Permitted
Debt, other than to the extent of amounts subject to the lien of the Control
Agreement.
          Section 12.2 No Payment When Permitted Debt in Default; Payment Over
of Proceeds Upon Dissolution, Etc.
          (a) In the event of a bankruptcy, insolvency or other proceeding
described in clause (d) or (e) of the definition of Event of Default specified
in Section 5.1 (each such event, if any, herein sometimes referred to as a
“Proceeding”), all Permitted Debt (including any interest thereon accruing after
the commencement of any such proceedings) shall first be paid in full before any
payment or distribution, whether in cash, securities or other property, shall be
made to any Holder of any of the Senior Notes on account thereof, other than
payments made pursuant to the terms of the Control Agreement. Any payment or
distribution, whether in cash, securities or other property (other than
securities of the Company or any other entity provided for by a plan of
reorganization or readjustment the payment of which is subordinate, at least to
the extent provided in these subordination provisions with respect to the
indebtedness evidenced by the Senior Notes, to the payment of all Permitted Debt
at the time outstanding and to any securities issued in respect thereof under
any such plan of reorganization or readjustment), which would otherwise (but for
these subordination provisions and in no event including amounts subject to the
lien of the Control Agreement) be payable or deliverable in respect of the
Senior Notes shall be paid or delivered directly to the holders of Permitted
Debt in accordance with the priorities then existing among such holders until
all Permitted Debt (including any interest thereon accruing after the
commencement of any Proceeding) shall have been paid in full.
          (b) In the event of any Proceeding, after payment in full of all sums
owing with respect to Permitted Debt, the Holders of the Senior Notes, together
with the holders of any obligations of the Company ranking on a parity with the
Senior Notes, shall be entitled to be paid from the remaining assets of the
Company the amounts at the time due and owing on account of unpaid principal of
and any premium and interest (including any Additional Interest) on the Senior
Notes and such other obligations before any payment or other distribution,
whether in cash, property or otherwise, shall be made on account of any Equity
Interests or any obligations of the Company ranking junior to the Senior Notes
and such other obligations. If, notwithstanding the foregoing, any payment or
distribution of any character on any security, whether in cash, securities or
other property (other than securities of the Company or any other entity
provided for by a plan of reorganization or readjustment the payment of which is
subordinate, at least to the extent provided in these subordination provisions
with respect to the indebtedness evidenced by the Senior Notes, to the payment
of all Permitted Debt at the time outstanding and to any securities issued in
respect thereof under any such plan of reorganization or readjustment) shall be
received by the Trustee or any Holder in contravention of any of the terms
hereof and before all Permitted Debt shall have been paid in full (other than
with respect to amounts subject to the lien of the Control Agreement and paid
pursuant to the terms thereof), such payment or distribution or security shall
be received in trust for the benefit of, and shall be paid over or delivered and
transferred to, the holders of the Permitted Debt at the time outstanding in
accordance with the priorities then existing among such holders for application
to the payment of all Permitted Debt remaining unpaid, to the extent necessary
to pay all such Permitted Debt (including any interest thereon accruing after
the commencement of any Proceeding) in full. In the event of the failure of the
Trustee or any Holder to endorse or assign

64

--------------------------------------------------------------------------------

 

any such payment, distribution or security, each holder of Permitted Debt is
hereby irrevocably authorized to endorse or assign the same.
          (c) The Trustee and the Holders, at the expense of the Company, shall
take such reasonable action (including the delivery of this Indenture to an
agent for any holders of Permitted Debt or consent to the filing of a financing
statement with respect hereto) as may, in the opinion of counsel designated by
the holders of a majority in principal amount of the Permitted Debt at the time
outstanding, be necessary or appropriate to assure the effectiveness of the
subordination effected by these provisions.
          (d) The provisions of this Section 12.2 shall not impair any rights,
interests, remedies or powers of any secured creditor of the Company in respect
of any security interest the creation of which is not prohibited by the
provisions of this Indenture, including the rights, interests, remedies or
powers of the Trustee or the Holders of the Senior Notes with respect to the
amounts subject to the lien of the Control Agreement.
          (e) The securing of any obligations of the Company, otherwise ranking
on a parity with the Senior Notes or ranking junior to the Senior Notes, shall
not be deemed to prevent such obligations from constituting, respectively,
obligations ranking on a parity with the Senior Notes or ranking junior to the
Senior Notes.
          Section 12.3 Payment Permitted if No Proceeding.
          Nothing contained in this Article XII or elsewhere in this Indenture
or in any of the Senior Notes shall prevent (a) the Company, at any time, except
during the pendency of any Proceeding referred to in Section 12.2, from making
payments at any time of principal of, premium, if any, or interest (including
any Additional Interest) on the Senior Notes or (b) the application by the
Trustee of any moneys deposited with it hereunder to the payment of or on
account of the principal of, premium, if any, or interest (including any
Additional Interest) on the Senior Notes or the retention of such payment by the
Holders, if, at the time of such application by the Trustee, it did not have
knowledge (in accordance with Section 12.8) that such payment would have been
prohibited by the provisions of this Article XII, except as provided in
Section 12.8.
          Section 12.4 Subrogation to Rights of Holders of Permitted Debt.
          Subject to the payment in full of all amounts due or to become due on
all Permitted Debt, or the provision for such payment in cash or cash
equivalents or otherwise in a manner satisfactory to the holders of Permitted
Debt, the Holders of the Senior Notes shall be subrogated to the extent of the
payments or distributions made to the holders of such Permitted Debt pursuant to
the provisions of this Article XII (equally and ratably with the holders of all
indebtedness of the Company that by its express terms is subordinated to
Permitted Debt of the Company to substantially the same extent as the Senior
Notes are subordinated to the Permitted Debt and is entitled to like rights of
subrogation by reason of any payments or distributions made to holders of such
Permitted Debt) to the rights of the holders of such Permitted Debt to receive
payments and distributions of cash, property and securities applicable to the
Permitted Debt until the principal of and any premium and interest (including
any Additional Interest) on the Senior

65

--------------------------------------------------------------------------------

 

Notes shall be paid in full. For purposes of such subrogation, no payments or
distributions to the holders of the Permitted Debt of any cash, property or
securities to which the Holders of the Senior Notes or the Trustee would be
entitled except for the provisions of this Article XII, and no payments made
pursuant to the provisions of this Article XII to the holders of Permitted Debt
by Holders of the Senior Notes or the Trustee, shall, as among the Company, its
creditors other than holders of Permitted Debt, and the Holders of the Senior
Notes, be deemed to be a payment or distribution by the Company to or on account
of the Permitted Debt.
          Section 12.5 Provisions Solely to Define Relative Rights.
          The provisions of this Article XII are and are intended solely for the
purpose of defining the relative rights of the Holders of the Senior Notes on
the one hand and the holders of Permitted Debt on the other hand. Nothing
contained in this Article XII or elsewhere in this Indenture or in the Senior
Notes is intended to or shall (a) impair, as between the Company and the Holders
of the Senior Notes, the obligations of the Company, which are absolute and
unconditional, to pay to the Holders of the Senior Notes the principal of and
any premium and interest (including any Additional Interest) on the Senior Notes
as and when the same shall become due and payable in accordance with their
terms, (b) affect the relative rights against the Company of the Holders of the
Senior Notes and creditors of the Company other than their rights in relation to
the holders of Permitted Debt or (c) prevent the Trustee or any Holder from
exercising all remedies otherwise permitted by applicable law upon default under
this Indenture, including filing and voting claims in any Proceeding, subject to
the rights, if any, under this Article XII of the holders of Permitted Debt to
receive cash, property and securities otherwise payable or deliverable to the
Trustee or such Holder.
          Section 12.6 Trustee to Effectuate Subordination.
          Each Holder of a Senior Note by his, her or its acceptance thereof
authorizes and directs the Trustee on his, her or its behalf to take such action
as may be necessary or appropriate to acknowledge or effectuate the
subordination provided in this Article XII and appoints the Trustee his, her or
its attorney-in-fact for any and all such purposes.
          Section 12.7 No Waiver of Subordination Provisions.
          (a) No right of any present or future holder of any Permitted Debt to
enforce subordination as herein provided shall at any time in any way be
prejudiced or impaired by any act or failure to act on the part of the Company
or by any act or failure to act, in good faith, by any such holder, or by any
noncompliance by the Company with the terms, provisions and covenants of this
Indenture, regardless of any knowledge thereof that any such holder may have or
be otherwise charged with.
          (b) Without in any way limiting the generality of paragraph (a) of
this Section 12.7, the holders of Permitted Debt may, at any time and from to
time, without the consent of or notice to the Trustee or the Holders of the
Senior Notes, without incurring responsibility to such Holders of the Senior
Notes and without impairing or releasing the subordination provided in this
Article XII or the obligations hereunder of such Holders of the Senior Notes to
the holders of Permitted Debt, do any one or more of the following, so long as
such Permitted Debt shall

66

--------------------------------------------------------------------------------

 

remain Permitted Debt thereafter: (i) change the manner, place or terms of
payment or extend the time of payment of, or renew or alter, Permitted Debt, or
otherwise amend or supplement in any manner Permitted Debt or any instrument
evidencing the same or any agreement under which Permitted Debt is outstanding,
(ii) sell, exchange, release or otherwise deal with any property pledged,
mortgaged or otherwise securing Permitted Debt, (iii) release any Person liable
in any manner for the payment of Permitted Debt and (iv) exercise or refrain
from exercising any rights against the Company and any other Person.
          Section 12.8 Notice to Trustee.
          The Company shall give prompt written notice to a Responsible Officer
of the Trustee of any fact known to the Company that would prohibit the making
of any payment to or by the Trustee in respect of the Senior Notes.
Notwithstanding the provisions of this Article XII or any other provision of
this Indenture, the Trustee shall not be charged with knowledge of the existence
of any facts that would prohibit the making of any payment to or by the Trustee
in respect of the Senior Notes, unless and until a Responsible Officer of the
Trustee shall have received written notice thereof from the Company or a holder
of Permitted Debt or from any trustee, agent or representative therefor;
provided, that if the Trustee shall not have received the notice provided for in
this Section 12.8 at least two Business Days prior to the date upon which by the
terms hereof any monies may become payable for any purpose (including, the
payment of the principal of and any premium on or interest (including any
Additional Interest) on any Senior Note), then, anything herein contained to the
contrary notwithstanding, the Trustee shall have full power and authority to
receive such monies and to apply the same to the purpose for which they were
received and shall not be affected by any notice to the contrary that may be
received by it within two Business Days prior to such date.
          The Trustee shall be entitled to rely on the delivery to it of a
written notice by a Person representing himself, herself or itself to be a
holder of Permitted Debt (or a trustee, agent, representative or
attorney-in-fact therefor) to establish that such notice has been given by a
holder of Permitted Debt (or a trustee, agent, representative or
attorney-in-fact therefor). In the event that the Trustee determines in good
faith that further evidence is required with respect to the right of any Person
as a holder of Permitted Debt to participate in any payment or distribution
pursuant to this Article XII, the Trustee may request such Person to furnish
evidence to the reasonable satisfaction of the Trustee as to the amount of
Permitted Debt held by such Person, the extent to which such Person is entitled
to participate in such payment or distribution and any other facts pertinent to
the rights of such Person under this Article XII, and if such evidence is not
furnished, the Trustee may defer any payment to such Person pending judicial
determination as to the right of such Person to receive such payment.
          Section 12.9 Reliance on Judicial Order or Certificate of Liquidating
Agent.
          Upon any payment or distribution of assets of the Company referred to
in this Article XII. the Trustee and the Holders of the Senior Notes shall be
entitled to conclusively rely upon any order or decree entered by any court of
competent jurisdiction in which such Proceeding is pending, or a certificate of
the trustee in bankruptcy, receiver, liquidating trustee, custodian, assignee
for the benefit of creditors, agent or other Person making such payment or
distribution, delivered to the Trustee or to the Holders of Senior Notes, for
the purpose of ascertaining the

67

--------------------------------------------------------------------------------

 

Persons entitled to participate in such payment or distribution, the holders of
the Permitted Debt and other indebtedness of the Company, the amount thereof or
payable thereon, the amount or amounts paid or distributed thereon and all other
facts pertinent thereto or to this Article XII.
          Section 12.10 Trustee Not Fiduciary for Holders of Permitted Debt.
          The Trustee, in its capacity as trustee under this Indenture, shall
not be deemed to owe any fiduciary duty to the holders of Permitted Debt and
shall not be liable to any such holders if it shall in good faith mistakenly pay
over or distribute to Holders of Senior Notes or to the Company or to any other
Person cash, property or securities to which any holders of Permitted Debt shall
be entitled by virtue of this Article XII or otherwise.
          Section 12.11 Rights of Trustee as Holder of Permitted Debt:
Preservation of Trustee’ s Rights.
          The Trustee in its individual capacity shall be entitled to all the
rights set forth in this Article XII with respect to any Permitted Debt that may
at any time be held by it, to the same extent as any other holder of Permitted
Debt, and nothing in this Indenture shall deprive the Trustee of any of its
rights as such holder.
          Section 12.12 Article Applicable to Paying Agents.
          If at any time any Paying Agent other than the Trustee shall have been
appointed by the Company and be then acting hereunder, the term “Trustee” as
used in this Article XII shall in such case (unless the context otherwise
requires) be construed as extending to and including such Paying Agent within
its meaning as fully for all intents and purposes as if such Paying Agent were
named in this Article XII in addition to or in place of the Trustee; provided,
that Sections 12.8 and 12.11 shall not apply to the Company or any Affiliate of
the Company if the Company or such Affiliate acts as Paying Agent.
ARTICLE XIII
DEFEASANCE
          Section 13.1 Defeasance and Discharge.
          In the event of the exercise of the option provided in Section 10.5(b)
by a Holder of the Senior Notes as a result of the receipt of a
Change-of-Control Election on or prior to June 30, 2011, and the result that
this Section 13.1 shall be applied to the Outstanding Senior Notes (the
“Defeasance Senior Notes”), the Company shall, within thirty (30) days following
its receipt of the Change-of-Control Election, satisfy the conditions set forth
in Section 13.2. The Company shall be deemed to have been discharged from its
obligations with respect to the Defeasance Senior Notes as provided in this
Section 13.1 on and after the date the conditions set forth in the Section 13.2
are satisfied (hereinafter called “Defeasance”). For this purpose, such
Defeasance means that the Company shall be deemed to have paid and discharged
the entire indebtedness represented by the Defeasance Senior Notes and to have
satisfied all of its other obligations under the Defeasance Senior Notes and
this Indenture insofar as the Defeasance Senior Notes are concerned (and the
Trustee, upon written request and at the expense of the

68

--------------------------------------------------------------------------------

 

Company, shall execute proper instruments acknowledging the same), subject to
the following, which shall survive until otherwise terminated or discharged
hereunder (1) the rights of Holders of the Defeasance Senior Notes to receive,
solely from the trust fund described in Section 13.2 and as more fully set forth
in such Section 13.2, payments in respect of the principal of, premium, if any,
and interest on the Defeasance Senior Notes when payments are due, (2) the
Company’s obligations with respect to the Defeasance Senior Notes under
Sections 2.4, 3.5, 3.6, and 10.2, (3) the rights, powers, trusts, duties and
immunities of the Trustee hereunder and (4) this Article XIII.
          Section 13.2 Conditions to Defeasance.
                 The following shall be the conditions to application of
Section 13.1 to the Defeasance Senior Notes:
               (1) The Company shall irrevocably have deposited or caused to be
deposited with the Trustee (or another trustee that satisfies the requirements
contemplated by Section 6.1 and agree to comply with the provisions of this
Article XIII applicable to it) as trust funds in trust for the purpose of making
the following payments, specifically pledged as security for, and dedicated
solely to, the benefit of the Holders of Defeasance Senior Notes, (A) money in
an amount in Dollars, (B) Government Obligations that through the scheduled
payment of principal and interest in respect thereof in accordance with their
terms will provide, not later than one day before the due date of any payment,
money in an amount in Dollars, or (C) a combination thereof, in each case
sufficient, in the opinion of a nationally recognized firm of independent public
accountants expressed in a written certification thereof delivered to the
Trustee, to pay and discharge, and which shall be applied by the Trustee (or any
such other qualifying Trustee) to pay and discharge, one hundred percent (100%)
of the principal amount of the Defeasance Senior Notes on June 30, 2011 (the
“Defeasance Maturity Date”) plus interest on the Defeasance Senior Notes due and
payable on the Interest Payment Dates occurring prior to and including the
Defeasance Maturity Date and Breakage Costs, if any, less Breakage Gains, if
any, in accordance with the terms of this Indenture and the Defeasance Senior
Notes.
               (2) Such Defeasance shall not cause the Trustee to have a
conflicting interest within the meaning of the Trust Indenture Act.
               (3) Such Defeasance shall not result in the trust arising from
such deposit constituting an “investment company” within the meaning of the
Investment Company Act of 1940, unless such trust shall be qualified or exempt
from regulation thereunder.
               (4) The Company shall have delivered to the Trustee an Officers’
Certificate and an Opinion of Counsel, each stating that all conditions
precedent with respect to such Defeasance have been complied with.

69

--------------------------------------------------------------------------------

 

          Section 13.3 Deposited Money and U.S. Government Obligations to be
Held in Trust; Other Miscellaneous Provisions.
               Subject to the provisions of Section 10.2(e), all money and
Government Obligations (including the proceeds thereof) deposited with the
Trustee or other qualifying trustee (solely for purposes of this Section 13.3
and Section 13.4, the Trustee and any such other trustee are referred to
collectively as the “Trustee”) pursuant to Section 13.2 in respect of the
Defeasance Senior Notes shall be held in trust and applied by the Trustee, in
accordance with the provisions of the Defeasance Senior Notes and this
Indenture, to the payment, either directly or through any such Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may
determine, to the Holders of the Defeasance Senior Notes, of all sums due and to
become due thereon in respect of principal, premium, if any, and interest, but
money so held in trust need not be segregated from other funds except to the
extent required by law.
               The Company shall pay and indemnify the Trustee against any tax,
fee or other charge imposed on or assessed against the Government Obligations
deposited pursuant to Section 13.2 or the principal and interest received in
respect thereof other than any such tax, fee or other charge that by law is for
the account of the Holders of Defeasance Senior Notes.
               Anything in this Article XIII to the contrary notwithstanding,
the Trustee shall deliver or pay to the Company from time to time upon Company
Request any money or Government Obligations held by it as provided in
Section 13.2 with respect to the Defeasance Senior Notes that, in the opinion of
a nationally recognized firm of independent public accountants expressed in a
written certification thereof delivered to the Trustee, are in excess of the
amount thereof that would then be required to be deposited to effect an
equivalent Defeasance with respect to the Defeasance Senior Notes.
          Section 13.4 Reinstatement.
               If the Trustee or the Paying Agent is unable to apply any money
in accordance with this Article XIII with respect to the Defeasance Senior Notes
by reason of any order or judgment of any court or governmental authority
enjoining, restraining or otherwise prohibiting such application, then the
Company’s obligations under this Indenture and the Defeasance Senior Notes shall
be revived and reinstated as though no deposit had occurred pursuant to this
Article XIII with respect to the Defeasance Senior Notes until such time as the
Trustee or Paying Agent is permitted to apply all money held in trust pursuant
to Section 13.3 with respect to the Defeasance Senior Notes in accordance with
this Article XIII; provided, however, that if the Company makes any payment of
principal of, premium, if any, or interest on any Defeasance Senior Note
following the reinstatement of its obligations, the Company shall be subrogated
to the rights of the Holders of Defeasance Senior Notes to receive such payment
from the money so held in trust.
[signature page follows]

70

--------------------------------------------------------------------------------

 

          IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed as of the day and year first above written.

                  COMSTOCK HOMEBUILDING     COMPANIES, INC.
 
           
 
  By:   /s/ Christopher Clemente
 
   
 
  Name:   Christopher Clemente
 
   
 
  Title:   Chairman and Chief Executive Officer    
 
     
 
   
 
                WELLS FARGO BANK, N.A., as Trustee
 
           
 
  By:   /s/ Tracy M. McLamb    
 
     
 
   
 
  Name:   Tracy M. McLamb    
 
     
 
   
 
  Title:   Vice President    
 
     
 
   

[Indenture]

 

--------------------------------------------------------------------------------

 

Schedule A
DETERMINATION OF LIBOR
          With respect to the Senior Notes, the London interbank offered rate
(“LIBOR”) shall be determined by the Calculation Agent in accordance with the
following provisions (in each case rounded to the nearest .000001%):
(1) On the second LIBOR Business Day (as defined below) prior to an Interest
Payment Date occurring after the expiration of the Fixed Rate Period (each such
day, a “LIBOR Determination Date”), LIBOR for any given security shall for the
following interest payment period equal the rate, as obtained by the Calculation
Agent from Bloomberg Financial Markets Commodities News, for three (3)-month
Eurodollar deposits that appears on Dow Jones Telerate Page 3750 (as defined in
the International Swaps and Derivatives Association, Inc. 2000 Interest Rate and
Currency Exchange Definitions, as the same may be amended from time to time), or
such other page as may replace such Page 3750 (as any such replacement may be
amended from time to time), as of 11:00 A.M. (London time) on such LIBOR
Determination Date.
(2) If, on any LIBOR Determination Date, such rate does not appear on Dow Jones
Telerate Page 3750 or such other page as may replace such Page 3750, the
Calculation Agent shall determine the arithmetic mean of the offered quotations
of the Reference Banks (as defined below) to leading banks in the London
interbank market for three (3)-month Eurodollar deposits in an amount determined
by the Calculation Agent by reference to requests for quotations as of
approximately 11:00 A.M. (London time) on the LIBOR Determination Date made by
the Calculation Agent to the Reference Banks. If, on any LIBOR Determination
Date, at least two of the Reference Banks provide such quotations, LIBOR shall
equal such arithmetic mean of such quotations. If, on any LIBOR Determination
Date, only one or none of the Reference Banks provide such quotations, LIBOR
shall be deemed to be the arithmetic mean of the offered quotations that leading
banks in the City of New York selected by the Calculation Agent are quoting on
the relevant LIBOR Determination Date for three (3)-month Eurodollar deposits in
an amount determined by the Calculation Agent by reference to the principal
London offices of leading banks in the London interbank market; provided, that
if the Calculation Agent is required but is unable to determine a rate in
accordance with at least one of the procedures provided above or adequate and
fair means do not exist for ascertaining the applicable interest rate on the
basis set forth above (due to changes arising in the interbank Eurocurrency
market or otherwise), then the Senior Notes shall not bear interest in respect
of LIBOR but shall instead bear interest with reference to a floating rate equal
to the Base Rate (as defined below).
(3) As used herein: “Reference Banks” means four (4) major banks in the London
interbank market selected by the Calculation Agent; “LIBOR Business Day” means a
day on which commercial banks are open for business (including dealings in
foreign exchange and foreign currency deposits) in London; the “Base Rate” on
any day shall equal the greater of the arithmetic mean of (i) the “prime rate”
for dollar denominated loans quoted by leading banks in the City of New York
selected by the Calculation Agent and (ii) the Federal Funds Rate (as defined
below) plus 0.50% per annum; and the “Federal Funds Rate” on any day equals the
rate per annum equal to the weighted average (rounded upwards to the nearest
0.000001) of the rate on overnight federal funds transactions with members of
the Federal Reserve System only arranged by federal funds brokers, as published
as of such day by the Federal Reserve Bank of New York.