**Exhibit 4.3**

 

 

 

INDENTURE

 

Dated as of October 31, 2006

 

Among

 

MICHAELS STORES, INC.,

 

THE GUARANTORS NAMED ON THE SIGNATURE PAGES HERETO

 

and

 

WELLS FARGO BANK, NATIONAL ASSOCIATION,as Trustee

 

13% SUBORDINATED DISCOUNT NOTES DUE 2016

 

 

 

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CROSS-REFERENCE TABLE*

 
| **Trust Indenture Act Section** | ** ** | **Indenture  Section** | ** ** |
|---------------------------------|------------|------------------------|------------|
| 310(a)(1)                       |       | 7.10                   |       |
| (a)(2)                          |       | 7.10                   |       |
| (a)(3)                          |       | N.A.                   |       |
| (a)(4)                          |       | N.A.                   |       |
| (a)(5)                          |       | 7.10                   |       |
| (b)                             |       | 7.03, 7.10             |       |
| (c)                             |       | N.A.                   |       |
| 311(a)                          |       | 7.11                   |       |
| (b)                             |       | 7.11                   |       |
| (c)                             |       | N.A.                   |       |
| 312(a)                          |       | 2.05                   |       |
| (b)                             |       | 7.06, 14.03            |       |
| (c)                             |       | 14.03                  |       |
| 313(a)                          |       | 2.05, 7.06             |       |
| (b)(1)                          |       | N.A.                   |       |
| (b)(2)                          |       | 7.06;7.07              |       |
| (c)                             |       | 7.06;14.02             |       |
| (d)                             |       | 7.06                   |       |
| 314(a)                          |       | 4.03;14.02;14.05       |       |
| (b)                             |       | N.A.                   |       |
| (c)(1)                          |       | 14.04                  |       |
| (c)(2)                          |       | 14.04                  |       |
| (c)(3)                          |       | N.A.                   |       |
| (d)                             |       | N.A.                   |       |
| (e)                             |       | 14.05                  |       |
| (f)                             |       | N.A.                   |       |
| 315(a)                          |       | 7.01                   |       |
| (b)                             |       | 7.05;14.02             |       |
| (c)                             |       | 7.01                   |       |
| (d)                             |       | 7.01                   |       |
| (e)                             |       | 6.14                   |       |
| 316(a)(last sentence)           |       | 2.09                   |       |
| (a)(1)(A)                       |       | 6.05                   |       |
| (a)(1)(B)                       |       | 6.04                   |       |
| (a)(2)                          |       | N.A                    |       |
| (b)                             |       | 6.07                   |       |
| (c)                             |       | 2.12;9.04              |       |
| 317(a)(1)                       |       | 6.08                   |       |
| (a)(2)                          |       | 6.12                   |       |
| (b)                             |       | 2.04                   |       |
| 318(a)                          |       | 14.01                  |       |
| (b)                             |       | N.A.                   |       |
| (c)                             |       | 14.01                  |       |

 

----

N.A.means not applicable.

*  This Cross-Reference Table is not part ofthis Indenture.

 

----

 

TABLE OF CONTENTS

 
|                                       |                                                    |   | **Page** |
|--------------------------------------------|---------------------------------------------------------|--------|----------|
|                                       |                                                    |   |     |
| ARTICLE 1                                  |
|                                       |
| DEFINITIONS AND INCORPORATION BY REFERENCE |
|                                       |
| Section  1.01                              | Definitions                                             |   | 1        |
| Section  1.02                              | Other  Definitions                                      |   | 33       |
| Section  1.03                              | Incorporation  by Reference of Trust Indenture Act      |   | 34       |
| Section  1.04                              | Rules  of Construction.                                 |   | 34       |
| Section  1.05                              | Acts  of Holders                                        |   | 35       |
|                                       |                                                    |   |     |
| ARTICLE 2                                  |
|                                       |                                                    |   |     |
| THE NOTES                                  |
|                                       |                                                    |   |     |
| Section  2.01                              | Form  and Dating; Terms                                 |   | 36       |
| Section  2.02                              | Execution  and Authentication                           |   | 38       |
| Section  2.03                              | Registrar  and Paying Agent                             |   | 38       |
| Section  2.04                              | Paying  Agent To Hold Money in Trust                    |   | 39       |
| Section  2.05                              | Holder  Lists                                           |   | 39       |
| Section  2.06                              | Transfer  and Exchange                                  |   | 39       |
| Section  2.07                              | Replacement  Notes                                      |   | 51       |
| Section  2.08                              | Outstanding  Notes                                      |   | 51       |
| Section  2.09                              | Treasury  Notes                                         |   | 51       |
| Section  2.10                              | Temporary  Notes                                        |   | 51       |
| Section  2.11                              | Cancellation                                            |   | 52       |
| Section  2.12                              | Defaulted  Interest                                     |   | 52       |
| Section  2.13                              | CUSIP  Numbers                                          |   | 52       |
|                                       |                                                    |   |     |
| ARTICLE 3                                  |
|                                       |                                                    |   |     |
| REDEMPTION                                 |
|                                       |                                                    |   |     |
| Section  3.01                              | Notices  to Trustee                                     |   | 53       |
| Section  3.02                              | Selection  of Notes To Be Redeemed or Purchased         |   | 53       |
| Section  3.03                              | Notice  of Redemption                                   |   | 53       |
| Section  3.04                              | Effect  of Notice of Redemption                         |   | 54       |
| Section  3.05                              | Deposit  of Redemption or Purchase Price                |   | 54       |
| Section  3.06                              | Notes  Redeemed or Purchased in Part                    |   | 55       |
| Section  3.07                              | Optional  Redemption                                    |   | 55       |
| Section  3.08                              | Mandatory  Redemption                                   |   | 56       |
| Section  3.09                              | Offers  To Repurchase by Application of Excess Proceeds |   | 56       |

 

i

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|                  |                                                                                              |   | **Page** |
|-----------------------|---------------------------------------------------------------------------------------------------|--------|----------|
|                  |                                                                                              |   |     |
| ARTICLE 4             |
|                  |                                                                                              |   |     |
| COVENANTS             |
|                  |                                                                                              |   |     |
| Section  4.01         | Payment  of Notes                                                                                 |   | 58       |
| Section  4.02         | Maintenance  of Office or Agency                                                                  |   | 58       |
| Section  4.03         | Reports  and Other Information                                                                    |   | 59       |
| Section  4.04         | Compliance  Certificate                                                                           |   | 60       |
| Section  4.05         | Taxes                                                                                             |   | 61       |
| Section  4.06         | Stay,  Extension and Usury Laws                                                                   |   | 61       |
| Section  4.07         | Limitation  on Restricted Payments                                                                |   | 61       |
| Section  4.08         | Dividend  and Other Payment Restrictions Affecting Restricted Subsidiaries                        |   | 68       |
| Section  4.09         | Limitation  on Incurrence of Indebtedness and Issuance of Disqualified Stock and  Preferred Stock |   | 69       |
| Section  4.10         | Asset  Sales                                                                                      |   | 75       |
| Section  4.11         | Transactions  with Affiliates                                                                     |   | 77       |
| Section  4.12         | Liens                                                                                             |   | 79       |
| Section  4.13         | Corporate  Existence                                                                              |   | 80       |
| Section  4.14         | Offer  to Repurchase Upon Change of Control                                                       |   | 80       |
| Section  4.15         | Limitation  on Guarantees of Indebtedness by Restricted Subsidiaries                              |   | 82       |
| Section  4.16         | Discharge  and Suspension of Covenants                                                            |   | 83       |
|                  |                                                                                              |   |     |
| ARTICLE 5             |
|                  |                                                                                              |   |     |
| SUCCESSORS            |
|                  |                                                                                              |   |     |
| Section  5.01         | Merger,  Consolidation or Sale of All or Substantially All Assets                                 |   | 84       |
| Section  5.02         | Successor  Corporation Substituted                                                                |   | 85       |
|                  |                                                                                              |   |     |
| ARTICLE 6             |
|                  |                                                                                              |   |     |
| DEFAULTS AND REMEDIES |
|                  |                                                                                              |   |     |
| Section  6.01         | Events  of Default                                                                                |   | 86       |
| Section  6.02         | Acceleration                                                                                      |   | 88       |
| Section  6.03         | Other  Remedies                                                                                   |   | 89       |
| Section  6.04         | Waiver  of Past Defaults                                                                          |   | 89       |
| Section  6.05         | Control  by Majority                                                                              |   | 89       |
| Section  6.06         | Limitation  on Suits                                                                              |   | 89       |
| Section  6.07         | Rights  of Holders of Notes To Receive Payment                                                    |   | 90       |
| Section  6.08         | Collection  Suit by Trustee                                                                       |   | 90       |
| Section  6.09         | Restoration  of Rights and Remedies                                                               |   | 90       |
| Section  6.10         | Rights  and Remedies Cumulative                                                                   |   | 90       |
| Section  6.11         | Delay  or Omission Not Waiver                                                                     |   | 91       |
| Section  6.12         | Trustee  May File Proofs of Claim                                                                 |   | 91       |
| Section  6.13         | Priorities                                                                                        |   | 91       |
| Section  6.14         | Undertaking  for Costs                                                                            |   | 92       |

 

ii

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|                                     |                                                                                            |   | **Page** |
|------------------------------------------|-------------------------------------------------------------------------------------------------|--------|----------|
|                                     |                                                                                            |   |     |
| ARTICLE 7                                |
|                                     |                                                                                            |   |     |
| TRUSTEE                                  |
|                                     |                                                                                            |   |     |
| Section  7.01                            | Duties  of Trustee                                                                              |   | 92       |
| Section  7.02                            | Rights  of Trustee                                                                              |   | 93       |
| Section  7.03                            | Individual  Rights of Trustee                                                                   |   | 94       |
| Section  7.04                            | Trustee’s  Disclaimer                                                                      |   | 94       |
| Section  7.05                            | Notice  of Defaults                                                                             |   | 94       |
| Section  7.06                            | Reports  by Trustee to Holders of the Notes                                                     |   | 95       |
| Section  7.07                            | Compensation  and Indemnity                                                                     |   | 95       |
| Section  7.08                            | Replacement  of Trustee                                                                         |   | 96       |
| Section  7.09                            | Successor  Trustee by Merger, etc.                                                              |   | 96       |
| Section  7.10                            | Eligibility;  Disqualification                                                                  |   | 97       |
| Section  7.11                            | Preferential  Collection of Claims Against Issuer                                               |   | 97       |
|                                     |                                                                                            |   |     |
| ARTICLE 8                                |
|                                     |                                                                                            |   |     |
| LEGAL DEFEASANCE AND COVENANT DEFEASANCE |
|                                     |                                                                                            |   |     |
| Section  8.01                            | Option  To Effect Legal Defeasance or Covenant Defeasance                                       |   | 97       |
| Section  8.02                            | Legal  Defeasance and Discharge                                                                 |   | 97       |
| Section  8.03                            | Covenant  Defeasance                                                                            |   | 98       |
| Section  8.04                            | Conditions  to Legal or Covenant Defeasance                                                     |   | 98       |
| Section  8.05                            | Deposited  Money and Government Securities To Be Held in Trust; Other Miscellaneous  Provisions |   | 99       |
| Section  8.06                            | Repayment  to Issuer                                                                            |   | 100      |
| Section  8.07                            | Reinstatement                                                                                   |   | 100      |
|                                     |                                                                                            |   |     |
| ARTICLE 9                                |
|                                     |                                                                                            |   |     |
| AMENDMENT, SUPPLEMENT AND WAIVER         |
|                                     |                                                                                            |   |     |
| Section  9.01                            | Without  Consent of Holders of Notes                                                            |   | 100      |
| Section  9.02                            | With  Consent of Holders of Notes                                                               |   | 102      |
| Section  9.03                            | Compliance  with Trust Indenture Act                                                            |   | 103      |
| Section  9.04                            | Revocation  and Effect of Consents                                                              |   | 103      |
| Section  9.05                            | Notation  on or Exchange of Notes                                                               |   | 104      |
| Section  9.06                            | Trustee  To Sign Amendments, etc                                                                |   | 104      |
| Section  9.07                            | Payment  for Consent                                                                            |   | 104      |
|                                     |                                                                                            |   |     |
| ARTICLE 10                               |
|                                     |                                                                                            |   |     |
| SUBORDINATION                            |
|                                     |                                                                                            |   |     |
| Section  10.01                           | Agreement  To Subordinate                                                                       |   | 104      |
| Section  10.02                           | Liquidation,  Dissolution, Bankruptcy                                                           |   | 105      |
| Section  10.03                           | Default  on Senior Indebtedness of the Issuer                                                   |   | 105      |
| Section  10.04                           | Acceleration  of Payment of Notes                                                               |   | 106      |
| Section  10.05                           | When  Distribution Must Be Paid Over                                                            |   | 107      |

 

iii

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|                        |                                                                                   |   | **Page** |
|-----------------------------|----------------------------------------------------------------------------------------|--------|----------|
|                        |                                                                                   |   |     |
| Section  10.06              | Subrogation                                                                            |   | 107      |
| Section  10.07              | Relative  Rights                                                                       |   | 107      |
| Section  10.08              | Subordination  May Not Be Impaired by Issuer                                           |   | 107      |
| Section  10.09              | Rights  of Trustee and Paying Agent                                                    |   | 107      |
| Section  10.10              | Distribution  or Notice to Representative                                              |   | 108      |
| Section  10.11              | Article 10  Not To Prevent Events of Default or Limit Right To Accelerate         |   | 108      |
| Section  10.12              | Trust  Moneys Not Subordinated                                                         |   | 108      |
| Section  10.13              | Trustee  Entitled To Rely                                                              |   | 108      |
| Section  10.14              | Trustee  To Effectuate Subordination                                                   |   | 109      |
| Section  10.15              | Trustee  Not Fiduciary for Holders of Senior Indebtedness of the Issuer           |   | 109      |
| Section  10.16              | Reliance  by Holders of Senior Indebtedness of the Issuer on Subordination Provisions  |   | 109      |
|                        |                                                                                   |   |     |
| ARTICLE 11                  |
|                        |                                                                                   |   |     |
| GUARANTEES                  |
|                        |                                                                                   |   |     |
| Section  11.01              | Guarantee                                                                              |   | 110      |
| Section  11.02              | Limitation  on Guarantor Liability                                                     |   | 111      |
| Section  11.03              | Execution  and Delivery                                                                |   | 112      |
| Section  11.04              | Subrogation                                                                            |   | 112      |
| Section  11.05              | Benefits  Acknowledged                                                                 |   | 112      |
| Section  11.06              | Release  of Guarantees                                                                 |   | 112      |
|                        |                                                                                   |   |     |
| ARTICLE 12                  |
|                        |                                                                                   |   |     |
| SUBORDINATION OF GUARANTEES |
|                        |                                                                                   |   |     |
| Section  12.01              | Agreement  To Subordinate                                                              |   | 113      |
| Section  12.02              | Liquidation,  Dissolution, Bankruptcy                                                  |   | 113      |
| Section  12.03              | Default  on Senior Indebtedness of a Guarantor                                         |   | 114      |
| Section  12.04              | Demand  for Payment                                                                    |   | 115      |
| Section  12.05              | When  Distribution Must Be Paid Over                                                   |   | 115      |
| Section  12.06              | Subrogation                                                                            |   | 116      |
| Section  12.07              | Relative  Rights                                                                       |   | 116      |
| Section  12.08              | Subordination  May Not Be Impaired by a Guarantor                                      |   | 116      |
| Section  12.09              | Rights  of Trustee and Paying Agent                                                    |   | 116      |
| Section  12.10              | Distribution  or Notice to Representative                                              |   | 117      |
| Section  12.11              | Article 12  Not To Prevent Events of Default or Limit Right To Demand Payment     |   | 117      |
| Section  12.12              | Trust  Moneys Not Subordinated                                                         |   | 117      |
| Section  12.13              | Trustee  Entitled To Rely                                                              |   | 117      |
| Section  12.14              | Trustee  To Effectuate Subordination                                                   |   | 118      |
| Section  12.15              | Trustee  Not Fiduciary for Holders of Senior Indebtedness of Guarantors           |   | 118      |
| Section  12.16              | Reliance  by Holders of Senior Indebtedness of a Guarantor on Subordination Provisions |   | 118      |

 

iv

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|                       |                                                                      |   | **Page** |
|----------------------------|---------------------------------------------------------------------------|--------|----------|
|                       |                                                                      |   |     |
| ARTICLE 13                 |
|                       |                                                                      |   |     |
| SATISFACTION AND DISCHARGE |
|                       |                                                                      |   |     |
| Section  13.01             | Satisfaction  and Discharge                                               |   | 119      |
| Section  13.02             | Application  of Trust Money                                               |   | 120      |
|                       |                                                                      |   |     |
| ARTICLE 14                 |
|                       |                                                                      |   |     |
| MISCELLANEOUS              |
|                       |                                                                      |   |     |
| Section  14.01             | Trust  Indenture Act Controls                                             |   | 120      |
| Section  14.02             | Notices                                                                   |   | 120      |
| Section  14.03             | Communication  by Holders of Notes with Other Holders of Notes            |   | 122      |
| Section  14.04             | Certificate  and Opinion as to Conditions Precedent                       |   | 122      |
| Section  14.05             | Statements  Required in Certificate or Opinion                            |   | 122      |
| Section  14.06             | Rules  by Trustee and Agents                                              |   | 122      |
| Section  14.07             | No  Personal Liability of Directors, Officers, Employees and Stockholders |   | 123      |
| Section  14.08             | Governing  Law                                                            |   | 123      |
| Section  14.09             | Waiver  of Jury Trial                                                     |   | 123      |
| Section  14.10             | Force  Majeure                                                            |   | 123      |
| Section  14.11             | No  Adverse Interpretation of Other Agreements                            |   | 123      |
| Section  14.12             | Successors                                                                |   | 123      |
| Section  14.13             | Severability                                                              |   | 123      |
| Section  14.14             | Counterpart  Originals                                                    |   | 124      |
| Section  14.15             | Table  of Contents, Headings, etc.                                        |   | 124      |
| Section  14.16             | Qualification  of Indenture                                               |   | 124      |
|                       |                                                                      |   |     |
| EXHIBITS                   |                                                                      |   |     |
|                       |                                                                      |   |     |
| Exhibit  A                 | Form  of Subordinated Discount Note                                       |   |     |
| Exhibit  B                 | Form  of Certificate of Transfer                                          |   |     |
| Exhibit  C                 | Form  of Certificate of Exchange                                          |   |     |
| Exhibit  D                 | Form  of Supplemental Indenture to Be Delivered by Subsequent Guarantors  |   |     |

 

v

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INDENTURE,dated as of October 31, 2006, among Michaels Stores, Inc., a Delawarecorporation (“Michaels”), the Guarantors (as defined herein) listed onthe signature pages hereto and Wells Fargo Bank, National Association, asTrustee.

 

WITNESSETH

 

WHEREAS,Michaels has duly authorized the creation of an issue of $469,449,000 aggregateprincipal amount at maturity of 13% Subordinated Discount Notes due 2016 (the “InitialNotes”);

 

WHEREAS,Michaels and each of the Guarantors has duly authorized the execution anddelivery of this Indenture.

 

NOW,THEREFORE, Michaels, the Guarantors and the Trustee agree as follows for thebenefit of each other and for the equal and ratable benefit of the Holders ofthe Notes.

 

# ARTICLE1

#  

# DEFINITIONSAND INCORPORATION BY REFERENCE

#  

## Section 1.01                                Definitions.

 

“144AGlobal Note” means a Global Note substantially in the form of Exhibit Ahereto bearing the Global Note Legend and the Private Placement Legend anddeposited with or on behalf of, and registered in the name of, the Depositaryor its nominee that will be issued in a denomination equal to the outstandingprincipal amount at maturity of the Notes sold in reliance on Rule 144A.

 

“AccretedValue” means, as of any date of determination, the sum of (1) the initialAccreted Value (which is $532.54 per $1,000 in principal amount at maturity ofNotes) and (2) the portion of the excess of the principal amount at maturity ofeach Note over such initial Accreted Value which shall have been amortizedthrough such date, such amount to be so amortized on a daily basis andcompounded semiannually on May 1 and November 1 at the rate of 13% per annumfrom the date of original issuance of the Notes through the date ofdetermination, increased by the rate of any Additional Interest accruing,computed on the basis of a 360-day year of twelve 30-day months. The AccretedValue of any Note on or after November 1, 2011 shall be equal to 100% of itsstated principal amount at maturity; it being understood that if AdditionalInterest accrued each Note will accrete to 100% of its stated principal amountat maturity on an earlier date and the final Accreted Value will exceed 100%.

 

“AcquiredIndebtedness” means, with respect to any specified Person,

 

(1)                                  Indebtedness of any other Person existing atthe time such other Person is merged or amalgamated with or into or became aRestricted Subsidiary of such specified Person, including Indebtedness incurredin connection with, or in contemplation of, such other Person merging oramalgamating with or into, or becoming a Restricted Subsidiary of, suchspecified Person, and

 

(2)                                  Indebtedness secured by a Lien encumberingany asset acquired by such specified Person.

 

“AdditionalInterest” means all additional interest then owing pursuant to theRegistration Rights Agreement.

 

----

 

“AdditionalNotes” means additional Notes (other than the Initial Notes and other thanExchange Notes issued in exchange for such Initial Notes) issued from time totime under this Indenture in accordance with Sections 2.01 and 4.09 hereof.

 

“Affiliate”of any specified Person means any other Person directly or indirectlycontrolling or controlled by or under direct or indirect common control withsuch specified Person.  For purposes ofthis definition, “control” (including, with correlative meanings, the terms “controlling,”“controlled by” and “under common control with”), as used with respect to anyPerson, shall mean the possession, directly or indirectly, of the power todirect or cause the direction of the management or policies of such Person,whether through the ownership of voting securities, by agreement or otherwise.

 

“Agent”means any Registrar or Paying Agent.

 

“ApplicablePremium” means, with respect to any Note on any Redemption Date, thegreater of:

 

(1)                                  1.0% of the Accreted Value of such Note; and

 

(2)                                  the excess, if any, of (a) the present valueat such Redemption Date of the redemption price of such Note at November1, 2011 (such redemption price being set forth in Section 3.07 hereof) computedusing a discount rate equal to the Treasury Rate as of such Redemption Dateplus 50 basis points; over (b) the Accreted Value of such Note.

 

“ApplicableProcedures” means, with respect to any transfer or exchange of or forbeneficial interests in any Global Note, the rules and procedures of theDepositary, Euroclear and/or Clearstream that apply to such transfer orexchange.

 

“AssetSale” means:

 

(1)                                  the sale, conveyance, transfer or otherdisposition, whether in a single transaction or a series of relatedtransactions, of property or assets (including by way of a Sale and Lease-BackTransaction) of the Issuer or any of its Restricted Subsidiaries (each referredto in this definition as a “disposition”); or

 

(2)                                  the issuance or sale of Equity Interests ofany Restricted Subsidiary, whether in a single transaction or a series ofrelated transactions (other than directors’ qualifying shares and shares issuedto foreign nationals as required under applicable law);

 

ineach case, other than:

 

(a)                                  any disposition of Cash Equivalents orInvestment Grade Securities or obsolete or worn out property or equipment inthe ordinary course of business or any disposition of inventory or goods (orother assets) held for sale in the ordinary course of business (it beingunderstood that the sale of inventory or goods (or other assets) in bulk inconnection with the closing of any number of retail locations in the ordinarycourse of business shall be considered a sale in the ordinary course ofbusiness);

 

(b)                                 the disposition of all or substantially allof the assets of the Issuer in a manner permitted pursuant to the provisionsdescribed under Section 5.01 hereof or any disposition that constitutes aChange of Control pursuant to this Indenture;

 

2

----

 

(c)                                  the making of any Restricted Payment that ispermitted to be made, and is made, under Section 4.07 hereof or the making ofany Permitted Investment;

 

(d)                                 any disposition of assets or issuance or saleof Equity Interests of any Restricted Subsidiary in any transaction or seriesof transactions with an aggregate fair market value of less than$25.0 million;

 

(e)                                  any disposition of property or assets orissuance of securities by a Restricted Subsidiary of the Issuer to the Issueror by the Issuer or a Restricted Subsidiary of the Issuer to another RestrictedSubsidiary of the Issuer;

 

(f)                                    to the extent allowable under Section 1031 ofthe Internal Revenue Code of 1986, any exchange of like property (excluding anyboot thereon) for use in a Similar Business;

 

(g)                                 the lease, assignment, sublease, license orsublicense of any real or personal property in the ordinary course of business;

 

(h)                                 any issuance or sale of Equity Interests in,or Indebtedness or other securities of, an Unrestricted Subsidiary;

 

(i)                                     foreclosures on or expropriations of assets;

 

(j)                                     sales of accounts receivable, orparticipations therein, in connection with any Receivables Facility, or thedisposition of an account receivable in connection with the collection orcompromise thereof in the ordinary course of business;

 

(k)                                  the granting of a Lien that is permittedunder Section 4.12;

 

(l)                                     the issuance by a Restricted Subsidiary ofPreferred Stock or Disqualified Stock that is permitted by Section 4.09; and

 

(m)                               any financing transaction with respect to property built or acquired bythe Issuer or any Restricted Subsidiary after the Issue Date, including Saleand Lease-Back Transactions and asset securitizations permitted by thisIndenture.

 

“BankProducts” means any services or facilities on account of credit or debitcards, purchase cards or merchant services constituting a line of credit.

 

“BankruptcyLaw” means Title 11, U.S. Code or any similar federal or state law for therelief of debtors.

 

“BusinessDay” means each day which is not a Legal Holiday.

 

“CapitalStock” means:

 

(1)                                  in the case of a corporation, shares in thecapital of such corporation;

 

(2)                                  in the case of an association or businessentity, any and all shares, interests, participations, rights or otherequivalents (however designated) of capital stock;

 

3

----

 

(3)                                  in the case of a partnership or limitedliability company, partnership or membership interests (whether general orlimited); and

 

(4)                                  any other interest or participation thatconfers on a Person the right to receive a share of the profits and losses of,or distributions of assets of, the issuing Person.

 

“CapitalizedLease Obligation” means, at the time any determination thereof is to bemade, the amount of the liability in respect of a capital lease that would atsuch time be required to be capitalized and reflected as a liability on abalance sheet (excluding the footnotes thereto) prepared in accordance withGAAP.

 

“CashEquivalents” means:

 

(1)                                  United States dollars and Canadian dollars;

 

(2)                                  (a)                                  euro, or any national currency of anyparticipating member state of the EMU; or

 

(b)                                 in the case of any Foreign Subsidiary that isa Restricted Subsidiary, such local currencies held by them from time to timein the ordinary course of business;

 

(3)                                  securities issued or directly and fully andunconditionally guaranteed or insured by the U.S. government or any agency orinstrumentality thereof the securities of which are unconditionally guaranteedas a full faith and credit obligation of such government with maturities of 24months or less from the date of acquisition;

 

(4)                                  certificates of deposit, time deposits andeurodollar time deposits with maturities of one year or less from the date ofacquisition, bankers’ acceptances with maturities not exceeding one year andovernight bank deposits, in each case with any commercial bank having capitaland surplus of not less than $250.0 million in the case of U.S. banks and,in the case of any Foreign Subsidiary that is a Restricted Subsidiary, $100.0million (or the U.S. dollar equivalent as of the date of determination) in thecase of non U.S. banks, and in each case in a currency permitted under clause(1) or (2) above;

 

(5)                                  repurchase obligations for underlyingsecurities of the types described in clauses (3) and (4) entered into with anyfinancial institution meeting the qualifications specified in clause (4) above,and in each case in a currency permitted under clause (1) or (2) above;

 

(6)                                  commercial paper rated at least P-2 by Moody’sor at least A-2 by S&P and in each case maturing within 24 months after thedate of creation thereof, and in each case in a currency permitted under clause(1) or (2) above;

 

(7)                                  marketable short-term money market andsimilar securities having a rating of at least P-2 or A-2 from either Moody’sor S&P, respectively (or, if at any time neither Moody’s nor S&P shallbe rating such obligations, an equivalent rating from another Rating Agency)and in each case maturing within 24 months after the date of creation thereofand in a currency permitted under clause (1) or (2) above;

 

(8)                                  readily marketable direct obligations issuedby any state, commonwealth or territory of the United States or any politicalsubdivision or taxing authority thereof having an 

 

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InvestmentGrade Rating from either Moody’s or S&P with maturities of 24 monthsor less from the date of acquisition;

 

(9)                                  Indebtedness or Preferred Stock issued byPersons with a rating of A or higher from S&P or A2 or higher from Moody’swith maturities of 24 months or less from the date of acquisition and ineach case in a currency permitted under clause (1) or (2) above;

 

(10)                            Investments with average maturities of 12 months or less from the dateof acquisition in money market funds rated AAA- (or the equivalent thereof) orbetter by S&P or Aaa3 (or the equivalent thereof) or better by Moody’s andin each case in a currency permitted under clause (1) or (2) above;

 

(11)                            investment funds investing substantially all of their assets insecurities of the types described in clauses (1) through (10) above; and

 

(12)                            credit card receivables and debit card receivables so long as such areconsidered cash equivalents under GAAP and are so reflected on the Issuer’sbalance sheet.

 

Notwithstandingthe foregoing, Cash Equivalents shall include amounts denominated in currenciesother than those set forth in clauses (1) and (2) above, providedthat such amounts are converted into any currency listed in clauses (1)and (2) as promptly as practicable and in any event within ten Business Daysfollowing the receipt of such amounts.

 

“CashManagement Services” means any of the following to the extent notconstituting a line of credit: ACH transactions, treasury and/or cashmanagement services, including, without limitation, controlled disbursementservices, foreign exchange facilities, deposit and other accounts and merchantservices.

 

“Changeof Control” means the occurrence of any of the following after the IssueDate:

 

(1)                                  the sale, lease or transfer, in one or a seriesof related transactions (other than by way of merger or consolidation), of allor substantially all of the assets of the Issuer and its Subsidiaries, taken asa whole, to any Person other than one or more Permitted Holders; or

 

(2)                                  the Issuer becomes aware of (by way of areport or any other filing pursuant to Section 13(d) of the Exchange Act,proxy, vote, written notice or otherwise) the acquisition by (A) any Person(other than one or more Permitted Holders) or (B) Persons (other than one ormore Permitted Holders) that are together (1) a group (within the meaning ofSection 13(d)(3) or Section 14(d)(2) of the Exchange Act, or any successorprovision), or (2) are acting, for the purpose of acquiring, holding ordisposing of securities (within the meaning of Rule 13d-5(b)(1) under theExchange Act), as a group, in a single transaction or in a related series oftransactions, by way of merger, consolidation or other business combination orpurchase of beneficial ownership (within the meaning of Rule 13d-3 underthe Exchange Act, or any successor provision) of 50% or more of the totalvoting power of the Voting Stock of the Issuer or any of its direct or indirectparent companies holding directly or indirectly 100% of the total voting powerof the Voting Stock of the Issuer.

 

“Clearstream”means Clearstream Banking, Société Anonyme.

 

“ConsolidatedDepreciation and Amortization Expense” means with respect to any Person forany period, the total amount of depreciation and amortization expense,including the amortization 

 

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of deferred financing fees ofsuch Person and its Restricted Subsidiaries for such period on a consolidatedbasis and otherwise determined in accordance with GAAP.

 

“ConsolidatedInterest Expense” means, with respect to any Person for any period, withoutduplication, the sum of:

 

(1)                                  consolidated interest expense of such Personand its Restricted Subsidiaries for such period, to the extent such expense wasdeducted (and not added back) in computing Consolidated Net Income (including(a) amortization of original issue discount resulting from the issuance ofIndebtedness at less than par, (b) all commissions, discounts and other feesand charges owed with respect to letters of credit or bankers acceptances, (c)non-cash interest payments (but excluding any non-cash interestexpense attributable to the movement in the mark to market valuation of HedgingObligations or other derivative instruments pursuant to GAAP), (d) the interestcomponent of Capitalized Lease Obligations, and (e) net payments, if any, made(less net payments, if any, received) pursuant to interest rate HedgingObligations with respect to Indebtedness, and excluding (v) penalties andinterest related to taxes, (w) any Additional Interest with respect to theInitial Notes and any “additional interest” with respect to the Senior Notes orthe Senior Subordinated Notes, (x) amortization of deferred financing fees,debt issuance costs, discounted liabilities, commissions, fees and expenses,(y) any expensing of bridge, commitment and other financing fees and (z)commissions, discounts, yield and other fees and charges (including anyinterest expense) related to any Receivables Facility); plus (2) consolidatedcapitalized interest of such Person and its Restricted Subsidiaries for suchperiod, whether paid or accrued; less

 

(3)                                  interest income for such period.

 

Forpurposes of this definition, interest on a Capitalized Lease Obligation shallbe deemed to accrue at an interest rate reasonably determined by such Person tobe the rate of interest implicit in such Capitalized Lease Obligation inaccordance with GAAP.

 

Forpurposes of determining Consolidated Interest Expense for any period endingprior to the first anniversary of the Issue Date, after giving pro forma effectto the Transactions, Consolidated Interest Expense shall be $92.5 million forthe fiscal quarter ended January 28, 2006, $91.4 million for the fiscal quarterended April 29, 2006, and $92.5 million for the fiscal quarter ended July 29,2006.

 

“ConsolidatedNet Income” means, with respect to any Person for any period, the aggregateof the Net Income, of such Person and its Restricted Subsidiaries for suchperiod, on a consolidated basis, and otherwise determined in accordance withGAAP; provided, however, that, without duplication,

 

(1)                                  any after-tax effect of extraordinary,non-recurring or unusual gains or losses (less all fees and expensesrelating thereto) or expenses, Transaction Expenses to the extent incurred onor prior to December 31, 2007, severance, relocation costs, costs related tothe Perfect Store Initiative, Hybrid Distribution Network Costs, Public CompanyCosts, integration costs, pre-opening, opening, consolidation and closing costsfor facilities (including stores), signing, retention or completion bonuses,transition costs, costs incurred in connection with acquisitions after theIssue Date, restructuring costs, Specified Legal Expenses, and curtailments ormodifications to pension and post-retirement employee benefit plans shall beexcluded,

 

(2)                                  the Net Income for such period shall notinclude the cumulative effect of a change in accounting principles during suchperiod,

 

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(3)                                  any net after-tax gains or losses ondisposal of disposed, abandoned or discontinued operations shall be excluded,

 

(4)                                  any after-tax effect of gains or losses(less all fees and expenses relating thereto) attributable to assetdispositions other than in the ordinary course of business, as determined ingood faith by the Issuer, shall be excluded,

 

(5)                                  the Net Income for such period of any Personthat is not a Subsidiary, or is an Unrestricted Subsidiary, or that isaccounted for by the equity method of accounting, shall be excluded; providedthat Consolidated Net Income of the Issuer shall be increased by the amount ofdividends or distributions or other payments that are actually paid in cash (orto the extent converted into cash) to the referent Person or a RestrictedSubsidiary thereof in respect of such period, by such Person,

 

(6)                                  solely for the purpose of determining theamount available for Restricted Payments under clause (3)(a) of Section4.07(a) hereof, the Net Income for such period of any Restricted Subsidiary(other than any Guarantor) shall be excluded to the extent that the declarationor payment of dividends or similar distributions by that Restricted Subsidiaryof its Net Income is not at the date of determination permitted without anyprior governmental approval (which has not been obtained) or, directly orindirectly, by the operation of the terms of its charter or any agreement,instrument, judgment, decree, order, statute, rule, or governmental regulationapplicable to that Restricted Subsidiary or its stockholders, unless suchrestriction with respect to the payment of dividends or similar distributionshas been legally waived, provided that Consolidated Net Income of theIssuer will be increased by the amount of dividends or other distributions orother payments actually paid in cash (or to the extent converted into cash) tothe Issuer or a Restricted Subsidiary thereof in respect of such period, to theextent not already included therein,

 

(7)                                  effects of adjustments (including the effectsof such adjustments pushed down to the Issuer and its Restricted Subsidiaries)in the merchandise inventory, property and equipment, goodwill, intangibleassets, deferred revenue and debt line items in such Person’s consolidatedfinancial statements pursuant to GAAP resulting from the application ofpurchase accounting in relation to the Transactions or any consummatedacquisition or the amortization or write-off of any amounts thereof, net oftaxes, shall be excluded,

 

(8)                                  any after-tax effect of income (loss)from the early extinguishment or conversion of Indebtedness or HedgingObligations or other derivative instruments shall be excluded,

 

(9)                                  any impairment charge or asset write-offor write-down, in each case, pursuant to GAAP and the amortization ofintangibles arising pursuant to GAAP shall be excluded,

 

(10)                            any non-cash compensation charge or expense, including any suchcharge or expense arising from the grant of stock appreciation or similarrights, stock options, restricted stock or other equity-incentive programsshall be excluded,

 

(11)                            any fees and expenses incurred during such period, or any amortizationthereof for such period, in connection with any acquisition, Investment, AssetSale, issuance or repayment of Indebtedness, issuance of Equity Interests,refinancing transaction or amendment or modification of any debt instrument (ineach case, including any such transaction consummated prior to the Issue Dateand any such transaction undertaken but not completed) and any charges ornon-recurring merger costs incurred during such period as a result of any suchtransaction shall be excluded,

 

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(12)                            accruals and reserves that are established within twelve months afterthe Issue Date that are so required to be established as a result of theTransactions in accordance with GAAP shall be excluded,

 

(13)                            any net gain or loss resulting from currency translation gains orlosses related to currency remeasurements of Indebtedness (including any netloss or gain resulting from hedge agreements for currency exchange risk) andany foreign currency translation gains or losses shall be excluded, and

 

(14)                            any unrealized net gains and losses resulting from Hedging Obligationsand the application of Statement of Financial Accounting Standards No. 133shall be excluded.

 

Inaddition, to the extent not already included in the Net Income of such Personand its Restricted Subsidiaries, notwithstanding anything to the contrary inthe foregoing, Consolidated Net Income shall include the amount of proceedsreceived from business interruption insurance and reimbursements of anyexpenses and charges that are covered by indemnification or other reimbursementprovisions in connection with any Permitted Investment or any sale, conveyance,transfer or other disposition of assets permitted under this Indenture.

 

Notwithstandingthe foregoing, for the purpose of Section 4.07 hereof only (other than clause(3)(d) of Section 4.07(a) hereof), there shall be excluded from ConsolidatedNet Income any income arising from any sale or other disposition of RestrictedInvestments made by the Issuer and its Restricted Subsidiaries, any repurchasesand redemptions of Restricted Investments from the Issuer and its RestrictedSubsidiaries, any repayments of loans and advances which constitute RestrictedInvestments by the Issuer or any of its Restricted Subsidiaries, any sale ofthe stock of an Unrestricted Subsidiary or any distribution or dividend from anUnrestricted Subsidiary, in each case only to the extent such amounts increasethe amount of Restricted Payments permitted under clause (3)(d) of Section4.07(a) hereof.

 

“ContingentObligations” means, with respect to any Person, any obligation of suchPerson guaranteeing any leases, dividends or other obligations that do not constituteIndebtedness (“primary obligations”) of any other Person (the “primaryobligor”) in any manner, whether directly or indirectly, including, withoutlimitation, any obligation of such Person, whether or not contingent,

 

(1)                                  to purchase any such primary obligation orany property constituting direct or indirect security therefor,

 

(2)                                  to advance or supply funds

 

(a)                                  for the purchase or payment of any suchprimary obligation, or

 

(b)                                 to maintain working capital or equity capitalof the primary obligor or otherwise to maintain the net worth or solvency ofthe primary obligor, or

 

(3)                                  to purchase property, securities or servicesprimarily for the purpose of assuring the owner of any such primary obligationof the ability of the primary obligor to make payment of such primaryobligation against loss in respect thereof.

 

“CorporateTrust Office of the Trustee” shall be at the address of the Trusteespecified in Section 14.02 hereof or such other address as to which the Trusteemay give notice to the Holders and the Issuer.

 

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“Custodian”means the Trustee, as custodian with respect to the Notes in global form, orany successor entity thereto.

 

“Default”means any event that is, or with the passage of time or the giving of notice orboth would be, an Event of Default.

 

“DefinitiveNote” means a certificated Note registered in the name of the Holderthereof and issued in accordance with Section 2.06(c) hereof, substantially inthe form of Exhibit A hereto, as the case may be, except that suchNote shall not bear the Global Note Legend and shall not have the “Schedule ofExchanges of Interests in the Global Note” attached thereto.

 

“Depositary”means, with respect to the Notes issuable or issued in whole or in part inglobal form, the Person specified in Section 2.03 hereof as the Depositary withrespect to the Notes, and any and all successors thereto appointed asDepositary hereunder and having become such pursuant to the applicableprovision of this Indenture.

 

“DesignatedNon-cash Consideration” means the fair market value of non-cashconsideration received by the Issuer or a Restricted Subsidiary in connectionwith an Asset Sale that is so designated as Designated Non-cash Considerationpursuant to an Officer’s Certificate, setting forth the basis of suchvaluation, executed by the principal financial officer of the Issuer, less theamount of Cash Equivalents received in connection with a subsequent sale,redemption, repurchase of or collection or payment on, such Designated Non-cashConsideration.

 

“DesignatedPreferred Stock” means Preferred Stock of the Issuer or any parent companythereof (in each case other than Disqualified Stock) that is issued for cash(other than to a Restricted Subsidiary or an employee stock ownership plan ortrust established by the Issuer or any of its Subsidiaries) and is sodesignated as Designated Preferred Stock, pursuant to an Officer’s Certificateexecuted by the principal financial officer of the Issuer or the applicableparent company thereof, as the case may be, on the issuance date thereof, thecash proceeds of which are excluded from the calculation set forth in clause(3) of Section 4.07(a) hereof.

 

“DesignatedSenior Indebtedness” means:

 

(1)                                  any Indebtedness outstanding under the SeniorCredit Facilities; and

 

(2)                                  any other Senior Indebtedness permitted underthis Indenture, the principal amount of which is $50.0 million or more andthat has been specifically designated by the Issuer as “Designated SeniorIndebtedness” for purposes of this Indenture in the instrument evidencing orgoverning such Senior Indebtedness.

 

“DisqualifiedStock” means, with respect to any Person, any Capital Stock of such Personwhich, by its terms, or by the terms of any security into which it is convertibleor for which it is putable or exchangeable, or upon the happening of any event,matures or is mandatorily redeemable (other than solely as a result of a changeof control or asset sale) pursuant to a sinking fund obligation or otherwise,or is redeemable at the option of the holder thereof (other than solely as aresult of a change of control or asset sale), in whole or in part, in each caseprior to the date 91 days after the earlier of the maturity date of the Notesor the date the Notes are no longer outstanding; provided, however,that if such Capital Stock is issued to any plan for the benefit of employeesof the Issuer or its Subsidiaries or by any such plan to such employees, suchCapital Stock shall not constitute Disqualified Stock solely because it may berequired to be repurchased by the Issuer or its Subsidiaries in order tosatisfy applicable statutory or regulatory obligations.

 

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“EBITDA”means, with respect to any Person for any period, the Consolidated Net Incomeof such Person for such period

 

(1)                                  increased (without duplication) by:

 

(a)                                  provision for taxes based on income orprofits or capital, including, without limitation, state, franchise and similartaxes (such as the Pennsylvania capital tax and Texas margin tax) and foreignwithholding taxes of such Person paid or accrued during such period deducted(and not added back) in computing Consolidated Net Income; *plus*

 

(b)                                 Fixed Charges of such Person for such periodplus bank fees and costs of surety bonds in connection with financingactivities plus amounts excluded from Consolidated Interest Expense as setforth in clauses (v), (w), (x), (y) and (z) in the definition thereof, to theextent the same were deducted (and not added back) in calculating suchConsolidated Net Income; *plus*

 

(c)                                  Consolidated Depreciation and AmortizationExpense of such Person for such period to the extent the same was deducted (andnot added back) in computing Consolidated Net Income; *plus*

 

(d)                                 any expenses or charges (other thandepreciation or amortization expense) related to any Equity Offering, PermittedInvestment, acquisition, disposition, recapitalization or the incurrence ofIndebtedness permitted to be incurred by this Indenture (including a refinancingthereof) (whether or not successful), including (i) such fees, expenses orcharges related to the offering of the Initial Notes, the Senior Notes, theSenior Subordinated Notes and the Senior Credit Facilities and (ii) anyamendment or other modification of the Initial Notes, the Senior Notes, theSenior Subordinated Notes and the Senior Credit Facilities, in each case,deducted (and not added back) in computing Consolidated Net Income; *plus*

 

(e)                                  the amount of any restructuring charge orreserve deducted (and not added back) in such period in computing ConsolidatedNet Income; *plus*

 

(f)                                    any other non cash charges, including (i) anywrite offs or write downs, (ii) equity-based awards compensation expense, (iii)losses on sales, disposals or abandonment of, or any impairment charges orasset write off related to, intangible assets, long-lived assets andinvestments in debt and equity securities, (iv) all losses from investmentsrecorded using the equity method, and (v) other non-cash charges, non-cash expensesor non-cash losses reducing Consolidated Net Income for such period (providedthat if any such non-cash charges represent an accrual or reserve for potentialcash items in any future period, the cash payment in respect thereof in suchfuture period shall be subtracted from EBITDA to such extent, and excludingamortization of a prepaid cash item that was paid in a prior period); *plus*

 

(g)                                 the amount of any minority interest expenseconsisting of Subsidiary income attributable to minority equity interests ofthird parties in any non-Wholly Owned Subsidiary deducted (and not added back)in such period in calculating Consolidated Net Income; *plus*

 

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(h)                                 the amount of management, monitoring,consulting and advisory fees (including termination fees) and relatedindemnities and expenses paid or accrued in such period to the Investors orHighfields Capital to the extent otherwise permitted under Section 4.11 hereofand deducted (and not added back) in such period in computing Consolidated NetIncome; *plus*

 

(i)                                     the amount of net cost savings projected bythe Issuer in good faith to be realized as a result of specified actions takenduring such period (calculated on a *proforma* basis as though such cost savings had been realized on thefirst day of such period), net of the amount of actual benefits realized duringsuch period from such actions; provided that (x) such cost savingsare reasonably identifiable and factually supportable, (y) such actionsare taken within 36 months after the Issue Date and (z) the aggregateamount of cost savings added pursuant to this clause (i) shall not exceed$25.0 million for any four consecutive quarter period (which adjustments may beincremental to *pro forma*adjustments made pursuant to the definition of “Fixed Charge Coverage Ratio”); *plus*

 

(j)                                     the amount of loss on sale of receivables andrelated assets to the Receivables Subsidiary in connection with a ReceivablesFacility; *plus*

 

(k)                                  any costs or expense incurred by the Issuer ora Restricted Subsidiary pursuant to any management equity plan or stock optionplan or any other management or employee benefit plan or agreement or any stocksubscription or shareholder agreement, to the extent that such cost or expensesare funded with cash proceeds contributed to the capital of the Issuer or netcash proceeds of an issuance of Equity Interest of the Issuer (other thanDisqualified Stock) solely to the extent that such net cash proceeds areexcluded from the calculation set forth in clause (3) of Section 4.07(a)hereof; *plus*

 

(l)                                     any net loss from disposed or discontinuedoperations; *plus*

 

(m)                               cash receipts (or any netting arrangements resulting in reduced cashexpenditures) not representing EBITDA or Net Income in any period to the extentnon-cash gains relating to such income were deducted in the calculation ofEBITDA pursuant to clause (2) below for any previous period and not added back,

 

(2)                                  decreased (without duplication) by:

 

(a)                                  non-cash gains increasing ConsolidatedNet Income of such Person for such period, excluding any non-cash gains to theextent they represent the reversal of an accrual or reserve for a potentialcash item that reduced EBITDA in any prior period and any non-cash gains withrespect to cash actually received in a prior period so long as such cash didnot increase EBITDA in such prior period, *plus*

 

(b)                                 any net income from disposed or discontinuedoperations; and

 

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(3)                                  increased or decreased by (without duplication),as applicable, any adjustments resulting from the application of FASBInterpretation No. 45 (Guarantees).

 

For purposes of calculating EBITDA for any period,the impact of changes in estimate for inventory cost capitalization and theinitial adoption of an accounting policy for gift card breakage made in thefourth quarter of fiscal 2005 shall be excluded.

 

“EMU”means economic and monetary union as contemplated in the Treaty on EuropeanUnion.

 

“EquityInterests” means Capital Stock and all warrants, options or other rights toacquire Capital Stock, but excluding any debt security that is convertibleinto, or exchangeable for, Capital Stock.

 

“EquityOffering” means any public or private sale of common stock or PreferredStock of the Issuer or any of its direct or indirect parent companies(excluding Disqualified Stock), other than:

 

(1)                                  public offerings with respect to the Issuer’sor any direct or indirect parent company’s common stock registered on Form S-8;

 

(2)                                  issuances to any Subsidiary of the Issuer;and

 

(3)                                  any such public or private sale thatconstitutes an Excluded Contribution.

 

“euro”means the single currency of participating member states of the EMU.

 

“Euroclear”means Euroclear S.A./N.V., as operator of the Euroclear system.

 

“ExchangeAct” means the Securities Exchange Act of 1934, as amended, and the rulesand regulations of the SEC promulgated thereunder.

 

“ExchangeNotes” means the Notes issued in the Exchange Offer pursuant to Section2.06(f) hereof.

 

“ExchangeOffer” has the meaning set forth in the Registration Rights Agreement.

 

“ExchangeOffer Registration Statement” has the meaning set forth in the RegistrationRights Agreement.

 

“ExcludedContribution” means net cash proceeds, marketable securities or QualifiedProceeds received by the Issuer from

 

(1)                                  contributions to its common equity capital,and

 

(2)                                  the sale (other than to a Subsidiary of theIssuer or to any management equity plan or stock option plan or any othermanagement or employee benefit plan or agreement of the Issuer) of CapitalStock (other than Disqualified Stock and Designated Preferred Stock) of theIssuer,

 

ineach case designated as Excluded Contributions pursuant to an Officer’sCertificate executed by the principal financial officer of the Issuer on thedate such capital contributions are made or the date such

 

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Equity Interests are sold, asthe case may be, which are excluded from the calculation set forth in clause(3) of Section 4.07(a) hereof.

 

“FixedCharge Coverage Ratio” means, with respect to any Person for any period,the ratio of EBITDA of such Person for such period to the Fixed Charges of suchPerson for such period.  In the eventthat the Issuer or any Restricted Subsidiary incurs, assumes, guarantees,redeems, retires or extinguishes any Indebtedness (other than Indebtednessincurred or repaid under any revolving credit facility in the ordinary courseof business for working capital purposes) or issues or redeems DisqualifiedStock or Preferred Stock subsequent to the commencement of the period for whichthe Fixed Charge Coverage Ratio is being calculated but prior to orsimultaneously with the event for which the calculation of the Fixed ChargeCoverage Ratio is made (the “Fixed Charge Coverage Ratio Calculation Date”),then the Fixed Charge Coverage Ratio shall be calculated giving *pro forma* effect to such incurrence,assumption, guarantee, redemption, retirement or extinguishment ofIndebtedness, or such issuance or redemption of Disqualified Stock or PreferredStock, as if the same had occurred at the beginning of the applicable four-quarterperiod.

 

Forpurposes of making the computation referred to above, Investments,acquisitions, dispositions, amalgamations, mergers and consolidations (as determinedin accordance with GAAP) that have been made by the Issuer or any of itsRestricted Subsidiaries during the four-quarter reference period orsubsequent to such reference period and on or prior to or simultaneously withthe Fixed Charge Coverage Ratio Calculation Date shall be calculated on a *pro forma* basis assuming that all suchInvestments, acquisitions, dispositions, amalgamations, mergers andconsolidations (and the change in any associated fixed charge obligations andthe change in EBITDA resulting therefrom) had occurred on the first day of thefour-quarter reference period.  Ifsince the beginning of such period any Person that subsequently became aRestricted Subsidiary or was merged, amalgamated or consolidated with or intothe Issuer or any of its Restricted Subsidiaries since the beginning of suchperiod shall have made any Investment, acquisition, disposition, amalgamation,merger or consolidation that would have required adjustment pursuant to thisdefinition, then the Fixed Charge Coverage Ratio shall be calculated giving *pro forma* effect thereto for such periodas if such Investment, acquisition, disposition, merger or consolidation hadoccurred at the beginning of the applicable four-quarter period.

 

Forpurposes of this definition, whenever *proforma* effect is to be given to an Investment, acquisition,disposition, amalgamation, merger or consolidation (including the Transactions)and the amount of income or earnings relating thereto, the *pro forma* calculations shall be made ingood faith by a responsible financial or accounting officer of the Issuer (andmay include, for the avoidance of doubt, cost savings and operating expensereductions resulting from such Investment, acquisition, amalgamation, merger orconsolidation (including the Transactions) which is being given pro formaeffect that have been or are expected to be realized).  If any Indebtedness bears a floating rate ofinterest and is being given *pro forma*effect, the interest on such Indebtedness shall be calculated as if the rate ineffect on the Fixed Charge Coverage Ratio Calculation Date had been theapplicable rate for the entire period (taking into account any HedgingObligations applicable to such Indebtedness). Interest on a Capitalized Lease Obligation shall be deemed to accrue atan interest rate reasonably determined by a responsible financial or accountingofficer of the Issuer to be the rate of interest implicit in such CapitalizedLease Obligation in accordance with GAAP. Interest on Indebtedness that may optionally be determined at aninterest rate based upon a factor of a prime or similar rate, a eurocurrencyinterbank offered rate, or other rate, shall be deemed to have been based uponthe rate actually chosen, or, if none, then based upon such optional rate chosenas the Issuer may designate.

 

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“FixedCharges” means, with respect to any Person for any period, the sum, withoutduplication, of:

 

(1)                                  Consolidated Interest Expense of such Personfor such period;

 

(2)                                  all cash dividends or other distributionspaid (excluding items eliminated in consolidation) on any series of PreferredStock during such period; and

 

(3)                                  all cash dividends or other distributionspaid (excluding items eliminated in consolidation) on any series ofDisqualified Stock during such period.

 

“ForeignSubsidiary” means, with respect to any Person, any Restricted Subsidiary ofsuch Person that is not organized or existing under the laws of the UnitedStates, any state thereof, the District of Columbia, or any territory thereofand any Restricted Subsidiary of such Foreign Subsidiary.

 

“GAAP”means generally accepted accounting principles in the United States which arein effect on the Issue Date.  Forpurposes of this Indenture, the term “consolidated” with respect to any Personmeans such Person consolidated with its Restricted Subsidiaries and does notinclude any Unrestricted Subsidiary.

 

“GlobalNote Legend” means the legend set forth in Section 2.06(g)(ii) hereof,which is required to be placed on all Global Notes issued under this Indenture.

 

“GlobalNotes” means, individually and collectively, each of the Restricted GlobalNotes and the Unrestricted Global Notes, substantially in the form of ExhibitA hereto, issued in accordance with Section 2.01, 2.06(b), 2.06(d) or2.06(f) hereof.

 

“GovernmentSecurities” means securities that are:

 

(1)                                  direct obligations of the United States ofAmerica for the timely payment of which its full faith and credit is pledged;or

 

(2)                                  obligations of a Person controlled orsupervised by and acting as an agency or instrumentality of the United Statesof America the timely payment of which is unconditionally guaranteed as a fullfaith and credit obligation by the United States of America,

 

which,in either case, are not callable or redeemable at the option of the issuersthereof, and shall also include a depository receipt issued by a bank (asdefined in Section 3(a)(2) of the Securities Act), as custodian with respect toany such Government Securities or a specific payment of principal of orinterest on any such Government Securities held by such custodian for theaccount of the holder of such depository receipt; provided that (exceptas required by law) such custodian is not authorized to make any deduction fromthe amount payable to the holder of such depository receipt from any amountreceived by the custodian in respect of the Government Securities or thespecific payment of principal of or interest on the Government Securitiesevidenced by such depository receipt.

 

“guarantee”means a guarantee (other than by endorsement of negotiable instruments forcollection in the ordinary course of business), direct or indirect, in anymanner (including letters of credit and reimbursement agreements in respectthereof), of all or any part of any Indebtedness or other obligations.

 

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“Guarantee”means the guarantee by any Guarantor of the Issuer’s Obligations under thisIndenture and the Notes.

 

“Guarantor”means each Restricted Subsidiary that Guarantees the Notes in accordance withthe terms of this Indenture.

 

“HedgingObligations” means, with respect to any Person, the obligations of suchPerson under any interest rate swap agreement, interest rate cap agreement,interest rate collar agreement, commodity swap agreement, commodity capagreement, commodity collar agreement, foreign exchange contract, currency swapagreement or similar agreement providing for the transfer or mitigation ofinterest rate, commodity price or currency risks either generally or underspecific contingencies.

 

“HighfieldsCapital” means Highfields Capital I LP, Highfields Capital II LP andHighfields Capital III LP and each Affiliate thereof (excluding portfoliocompanies of any of the foregoing).

 

“Holder”means the Person in whose name a Note is registered on the Registrar’s books.

 

“HybridDistribution Network Costs” shall mean costs associated with theimplementation of enhancements to the Issuer’s and its Restricted Subsidiaries’distribution network intended to increase the Issuer’s and its RestrictedSubsidiaries’ basic merchandise inventories that are shipped throughdistribution centers.

 

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

 

(1)                                  any indebtedness (including principal andpremium) of such Person, whether or not contingent:

 

(a)                                  in respect of borrowed money;

 

(b)                                 evidenced by bonds, notes, debentures orsimilar instruments or letters of credit or bankers’ acceptances (or, withoutduplication, reimbursement agreements in respect thereof);

 

(c)                                  representing the balance deferred and unpaidof the purchase price of any property (including Capitalized LeaseObligations), except (i) any such balance that constitutes an obligation inrespect of a commercial letter of credit, a trade payable or similar obligationto a trade creditor, in each case accrued in the ordinary course of businessand (ii) any earn-out obligations until such obligation becomes a liability onthe balance sheet of such Person in accordance with GAAP and is not paid afterbecoming due and payable; or

 

(d)                                 representing any Hedging Obligations;

 

ifand to the extent that any of the foregoing Indebtedness (other than letters ofcredit (other than commercial letters of credit) and Hedging Obligations) wouldappear as a liability upon a balance sheet (excluding the footnotes thereto) ofsuch Person prepared in accordance with GAAP;

 

(2)                                  to the extent not otherwise included, anyobligation by such Person to be liable for, or to pay, as obligor, guarantor orotherwise, on the obligations of the type referred to in clause (1) of a thirdPerson (whether or not such items would appear upon the balance sheet of the 

 

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suchobligor or guarantor), other than by endorsement of negotiable instruments forcollection in the ordinary course of business; and

 

(3)                                  to the extent not otherwise included, theobligations of the type referred to in clause (1) of a third Person secured bya Lien on any asset owned by such first Person, whether or not suchIndebtedness is assumed by such first Person;

 

provided, however, that notwithstanding theforegoing, Indebtedness shall be deemed not to include (a) ContingentObligations incurred in the ordinary course of business or (b) obligationsunder or in respect of Receivables Facilities.

 

“Indenture”means this Indenture, as amended or supplemented from time to time.

 

“IndependentFinancial Advisor” means an accounting, appraisal, investment banking firmor consultant to Persons engaged in Similar Businesses of nationally recognizedstanding that is, in the good faith judgment of the Issuer, qualified toperform the task for which it has been engaged.

 

“IndirectParticipant” means a Person who holds a beneficial interest in a GlobalNote through a Participant.

 

“InitialNotes” is defined in the recitals hereto.

 

“InitialPurchasers” means Deutsche Bank Securities Inc., J.P. Morgan SecuritiesInc., Banc of America Securities LLC and Credit Suisse Securities (USA) LLC.

 

“InterestPayment Date” means May 1 and November 1of each year to stated maturity.

 

“InvestmentGrade Rating” means a rating equal to or higher than Baa3 (or theequivalent) by Moody’s and BBB- (or the equivalent) by S&P, or, ineither case, an equivalent rating by any other Rating Agency.

 

“InvestmentGrade Securities” means:

 

(1)                                  securities issued or directly and fullyguaranteed or insured by the United States government or any agency orinstrumentality thereof (other than Cash Equivalents);

 

(2)                                  debt securities or debt instruments with anInvestment Grade Rating, but excluding any debt securities or instrumentsconstituting loans or advances among the Issuer and its Subsidiaries;

 

(3)                                  investments in any fund that investsexclusively in investments of the type described in clauses (1) and (2) whichfund may also hold immaterial amounts of cash pending investment ordistribution; and

 

(4)                                   corresponding instruments in countries otherthan the United States customarily utilized for high quality investments.

 

“Investments”means, with respect to any Person, all investments by such Person in otherPersons (including Affiliates) in the form of loans (including guarantees),advances or capital contributions (excluding accounts receivable, credit cardand debit card receivables, trade credit, advances to customers, commission,travel and similar advances to officers and employees, in each case made in theordinary 

 

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course of business), purchasesor other acquisitions for consideration of Indebtedness, Equity Interests orother securities issued by any other Person and investments that are requiredby GAAP to be classified on the balance sheet (excluding the footnotes) of theIssuer in the same manner as the other investments included in this definitionto the extent such transactions involve the transfer of cash or otherproperty.  For purposes of the definitionof “Unrestricted Subsidiary” and Section 4.07 hereof:

 

(1)                                  “Investments” shall include the portion(proportionate to the Issuer’s equity interest in such Subsidiary) of the fairmarket value of the net assets of a Subsidiary of the Issuer at the time thatsuch Subsidiary is designated an Unrestricted Subsidiary; provided, however,that upon a redesignation of such Subsidiary as a Restricted Subsidiary, theIssuer shall be deemed to continue to have a permanent “Investment” in anUnrestricted Subsidiary in an amount (if positive) equal to:

 

(a)                                  the Issuer’s “Investment” in such Subsidiaryat the time of such redesignation; less

 

(b)                                 the portion (proportionate to the Issuer’sEquity Interest in such Subsidiary) of the fair market value of the net assetsof such Subsidiary at the time of such redesignation; and

 

(2)                                   any property transferred to or from anUnrestricted Subsidiary shall be valued at its fair market value at the time ofsuch transfer, in each case as determined in good faith by the Issuer.

 

“Investors”means Bain Capital, LLC and Blackstone Group Holdings L.L.C., each of theirrespective Affiliates and any investment funds advised or managed by any of theforegoing, but not including, however, any portfolio companies of any of theforegoing.

 

“IssueDate” means October 31, 2006.

 

“Issuer”means Michaels; provided that when used in the context of determiningthe fair market value of an asset or liability under this Indenture, “Issuer”shall be deemed to mean the board of directors of the Issuer when the fairmarket value is equal to or in excess of $100.0 million (unless otherwiseexpressly stated).

 

“IssuerOrder” means a written request or order signed on behalf of the Issuer byan Officer of the Issuer, who must be the principal executive officer, theprincipal financial officer, the treasurer or the principal accounting officerof the Issuer, and delivered to the Trustee.

 

“LegalHoliday” means a Saturday, a Sunday or a day on which commercial bankinginstitutions are not required to be open in the State of New York.

 

“Letterof Transmittal” means the letter of transmittal to be prepared by theIssuer and sent to all Holders of the Notes for use by such Holders inconnection with the Exchange Offer.

 

“Lien”means, with respect to any asset, any mortgage, lien (statutory or otherwise),pledge, hypothecation, charge, security interest, preference, priority orencumbrance of any kind in respect of such asset, whether or not filed,recorded or otherwise perfected under applicable law, including any conditionalsale or other title retention agreement, any lease in the nature thereof, anyoption or other agreement to sell or give a security interest in and any filingof or agreement to give any financing statement 

 

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under the Uniform CommercialCode (or equivalent statutes) of any jurisdiction; provided that in noevent shall an operating lease be deemed to constitute a Lien.

 

“Michaels”is defined in the preamble hereto.

 

“Moody’s”means Moody’s Investors Service, Inc. and any successor to its rating agencybusiness.

 

“NetIncome” means, with respect to any Person, the net income (loss) of suchPerson, determined in accordance with GAAP and before any reduction in respectof Preferred Stock dividends.

 

“NetProceeds” means the aggregate cash proceeds received by the Issuer or anyof its Restricted Subsidiaries in respect of any Asset Sale, including any cashreceived upon the sale or other disposition of any Designated Non-cashConsideration received in any Asset Sale, net of the direct costs relating tosuch Asset Sale and the sale or disposition of such Designated Non-cashConsideration, including legal, accounting and investment banking fees, andbrokerage and sales commissions, any relocation expenses incurred as a resultthereof, taxes paid or payable as a result thereof (after taking into accountany available tax credits or deductions and any tax sharing arrangements),amounts required to be applied to the repayment of principal, premium, if any,and interest on Senior Indebtedness required (other than required by clause (1)of Section 4.10(b) hereof) to be paid as a result of such transaction and anydeduction of appropriate amounts to be provided by the Issuer or any of itsRestricted Subsidiaries as a reserve in accordance with GAAP against anyliabilities associated with the asset disposed of in such transaction andretained by the Issuer or any of its Restricted Subsidiaries after such sale orother disposition thereof, including pension and other post-employmentbenefit liabilities and liabilities related to environmental matters or againstany indemnification obligations associated with such transaction.

 

“Non-U.S.Person” means a Person who is not a U.S. Person.

 

“Notes”means the Initial Notes and more particularly means any Note authenticated anddelivered under this Indenture.  For allpurposes of this Indenture, the term “Notes” shall also include any AdditionalNotes that may be issued under a supplemental indenture.

 

“Obligations”means any principal, interest (including any interest accruing subsequent tothe filing of a petition in bankruptcy, reorganization or similar proceeding atthe rate provided for in the documentation with respect thereto, whether or notsuch interest is an allowed claim under applicable state, federal or foreignlaw), penalties, fees, indemnifications, reimbursements (includingreimbursement obligations with respect to letters of credit and banker’sacceptances), damages and other liabilities, and guarantees of payment of suchprincipal, interest, penalties, fees, indemnifications, reimbursements, damagesand other liabilities, payable under the documentation governing anyIndebtedness.

 

“OfferingMemorandum” means the offering memorandum, dated October 27, 2006, relatingto the sale of the Initial Notes.

 

“Officer”means the Chairman of the Board, the Chief Executive Officer, the President,any Executive Vice President, Senior Vice President or Vice President, theTreasurer or the Secretary of the Issuer.

 

“Officer’sCertificate” means a certificate signed on behalf of the Issuer by anOfficer of the Issuer, who must be the principal executive officer, theprincipal financial officer, the treasurer or the principal accounting officerof the Issuer, that meets the requirements set forth in this Indenture.

 

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“Opinionof Counsel” means a written opinion from legal counsel.  The counsel may be an employee of or counselto the Issuer.

 

“Participant”means, with respect to the Depositary, Euroclear or Clearstream, a Person whohas an account with the Depositary, Euroclear or Clearstream, respectively(and, with respect to DTC, shall include Euroclear and Clearstream).

 

“ParticipatingBroker-Dealer” has the meaning set forth in the Registration RightsAgreement.

 

“PerfectStore Initiative” shall mean the initiative related to the Issuer’s and itsRestricted Subsidiaries’ store standardization and remodeling program, pursuantto which retail store layouts will be modified into a configuration intended toenhance the customer in-store experience.

 

“PermittedAsset Swap” means the concurrent purchase and sale or exchange of RelatedBusiness Assets or a combination of Related Business Assets and CashEquivalents between the Issuer or any of its Restricted Subsidiaries andanother Person; provided that any Net Proceeds received must be appliedin accordance with Section 4.10 hereof.

 

“PermittedHolders” means each of the Investors and members of management of theIssuer (or its direct parent) who are holders of Equity Interests of the Issuer(or any of its direct or indirect parent companies) on the Issue Date and anygroup (within the meaning of Section 13(d)(3) or Section 14(d)(2) of theExchange Act or any successor provision) of which any of the foregoing aremembers; provided that, in the case of such group and without givingeffect to the existence of such group or any other group, such Investors andmembers of management, collectively, have beneficial ownership of more than 50%of the total voting power of the Voting Stock of the Issuer or any of itsdirect or indirect parent companies. Any person or group whose acquisition ofbeneficial ownership (within the meaning of Rule 13d-3 under the Exchange Act,or any successor provision) constitutes a Change of Control in respect of whicha Change of Control Offer is made in accordance with the requirements ofSection 4.14 (or would result in a Change of Control Offer in the absence ofthe waiver of such requirement by Holders in accordance with Section 4.14 willthereafter, together with its Affiliates, constitute an additional PermittedHolder.

 

“PermittedInvestments” means:

 

(1)                                  any Investment in the Issuer or any of itsRestricted Subsidiaries;

 

(2)                                  any Investment in cash and Cash Equivalentsor Investment Grade Securities;

 

(3)                                  any Investment by the Issuer or any of its RestrictedSubsidiaries in a Person that is engaged in a Similar Business if as a resultof such Investment:

 

(a)                                  such Person becomes a Restricted Subsidiary;or

 

(b)                                 such Person, in one transaction or a seriesof related transactions, is merged, amalgamated or consolidated with or into,or transfers or conveys substantially all of its assets to, or is liquidatedinto, the Issuer or a Restricted Subsidiary,

 

and,in each case, any Investment held by such Person; provided that suchInvestment was not acquired by such Person in contemplation of suchacquisition, merger, consolidation or transfer;

 

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(4)                                  any Investment in securities or other assetsnot constituting cash, Cash Equivalents or Investment Grade Securities andreceived in connection with an Asset Sale made pursuant to the provisions ofSection 4.10(a) hereof or any other disposition of assets not constituting anAsset Sale;

 

(5)                                  any Investment existing on the Issue Date andany extension, modification, replacement or renewal of any such Investmentsexisting on the Issue Date, but only to the extent not involving additionaladvances, contributions or other Investments of cash or other assets or otherincreases thereof other than as a result of the accrual or accretion ofinterest or original issue discount or the issuance of pay-in-kind securities,in each case, pursuant to the terms of such Investment as in effect on theIssue Date (or as subsequently amended or otherwise modified in a manner not disadvantageousto the Holders of the Notes in any material respect);

 

(6)                                  any Investment acquired by the Issuer or anyof its Restricted Subsidiaries:

 

(a)                                  in exchange for any other Investment oraccounts receivable held by the Issuer or any such Restricted Subsidiary inconnection with or as a result of a bankruptcy, workout, reorganization orrecapitalization of the issuer of such other Investment or accounts receivable;or

 

(b)                                 as a result of a foreclosure by the Issuer orany of its Restricted Subsidiaries with respect to any secured Investment orother transfer of title with respect to any secured Investment in default;

 

(7)                                  Hedging Obligations permitted under clause(10) of Section 4.09(b) hereof;

 

(8)                                  any Investment in a Similar Business havingan aggregate fair market value, taken together with all other Investments madepursuant to this clause (8) that are at that time outstanding, not toexceed $75.0 million (with the fair market value of each Investment beingmeasured at the time made and without giving effect to subsequent changes invalue);

 

(9)                                  Investments the payment for which consists ofEquity Interests (exclusive of Disqualified Stock) of the Issuer, or any of itsdirect or indirect parent companies; provided, however, that suchEquity Interests will not increase the amount available for Restricted Paymentsunder clause (3) of Section 4.07(a) hereof;

 

(10)                            guarantees (including Guarantees) of Indebtedness of the Issuer or anyRestricted Subsidiary permitted under Section 4.09 hereof, performanceguarantees and Contingent Obligations in the ordinary course of business andthe creation of liens on the assets of the Issuer or any of its RestrictedSubsidiaries in compliance with Section 4.12 hereof;

 

(11)                            any transaction to the extent it constitutes an Investment that ispermitted and made in accordance with the provisions of Section 4.11(b) hereof(except transactions described in clauses (2), (5) and (9) of Section 4.11(b)hereof);

 

(12)                            Investments consisting of purchases and acquisitions of inventory,supplies, material or equipment;

 

(13)                            additional Investments having an aggregate fair market value, takentogether with all other Investments made pursuant to this clause (13) that areat that time outstanding (without giving effect to the sale of an UnrestrictedSubsidiary to the extent the proceeds of such sale do 

 

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notconsist of, or have not been subsequently sold or transferred for, cash ormarketable securities), not to exceed $100.0 million (with the fair marketvalue of each Investment being measured at the time made and without givingeffect to subsequent changes in value);

 

(14)                            Investments relating to a Receivables Subsidiary that, in the goodfaith determination of the Issuer are necessary or advisable to effect anyReceivables Facility;

 

(15)                            advances to, or guarantees of Indebtedness of, employees not in excessof $15.0 million outstanding at any one time, in the aggregate;

 

(16)                            loans and advances to officers, directors and employees for business-relatedtravel expenses, moving expenses and other similar expenses, in each caseincurred in the ordinary course of business or consistent with past practicesor to fund such Person’s purchase of Equity Interests of the Issuer or anydirect or indirect parent company thereof; and

 

(17)                            Investments consisting of licensing of intellectual property pursuantto joint marketing arrangements with other Persons.

 

“PermittedJunior Securities” means:

 

(1)                                  Equity Interests in any direct or indirectparent of the Issuer; or

 

(2)                                  unsecured debt securities that aresubordinated to all Senior Indebtedness (and any debt securities issued inexchange for Senior Indebtedness) to substantially the same extent as, or to agreater extent than, the Notes and the related Guarantees are subordinated toSenior Indebtedness under this Indenture and which do not mature or becomesubject to a mandatory redemption obligation prior to the final maturity of theNotes;

 

provided that the term “Permitted Junior Securities”shall not include any securities distributed pursuant to a plan ofreorganization if the Indebtedness under the Senior Credit Facilities istreated as part of the same class as the Notes for purposes of such plan ofreorganization; provided**further**that to the extent that any SeniorIndebtedness of the Issuer or the Guarantors outstanding on the date ofconsummation of any such plan of reorganization is not paid in full in cash onsuch date, the holders of any such Senior Indebtedness not so paid in full in cashhave consented to the terms of such plan of reorganization.

 

“PermittedLiens” means, with respect to any Person:

 

(1)                                  pledges, deposits or security by such Personunder workmen’s compensation laws, unemployment insurance , employers’ healthtax and other social security laws or similar legislation, or good faithdeposits in connection with bids, tenders, contracts (other than for thepayment of Indebtedness) or leases to which such Person is a party, or depositsto secure public or statutory obligations of such Person or deposits of cash orU.S. government bonds to secure surety or appeal bonds to which such Person isa party, or deposits as security for contested taxes or import duties or forthe payment of rent, in each case incurred in the ordinary course of business;

 

(2)                                  Liens imposed by law, such as carriers’,warehousemen’s, materialmen’s, repairmen’s and mechanics’ Liens, in each casefor sums not yet overdue for a period of more than 30 days or being contestedin good faith by appropriate actions or other Liens arising out of judgments orawards against such Person with respect to which such Person shall then beproceeding 

 

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withan appeal or other proceedings for review if adequate reserves with respectthereto are maintained on the books of such Person in accordance with GAAP;

 

(3)                                  Liens for taxes, assessments or othergovernmental charges not yet overdue for a period of more than 30 days or whichare being contested in good faith by appropriate actions diligently conducted,if adequate reserves with respect thereto are maintained on the books of suchPerson in accordance with GAAP, or for property taxes on property that theIssuer or one of its Subsidiaries has determined to abandon if the sole recoursefor such tax, assessment, charge, levy or claim is to such property;

 

(4)                                  Liens in favor of issuers of performance,surety, bid, indemnity, warranty, release, appeal or similar bonds or withrespect to other regulatory requirements or letters of credit or bankers’acceptances issued, and completion guarantees provided for, in each casepursuant to the request of and for the account of such Person in the ordinarycourse of its business or consistent with past practice prior to the IssueDate;

 

(5)                                  minor survey exceptions, minor encumbrances,ground leases, easements or reservations of, or rights of others for, licenses,rights-of-way, servitudes, sewers, electric lines, drains, telegraph andtelephone and cable television lines, gas and oil pipelines and other similarpurposes, or zoning, building codes or other restrictions (including, withoutlimitation, minor defects or irregularities in title and similar encumbrances)as to the use of real properties or Liens incidental, to the conduct of the businessof such Person or to the ownership of its properties which were not incurred inconnection with Indebtedness and which do not in the aggregate materiallyimpair their use in the operation of the business of such Person;

 

(6)                                  Liens securing Indebtedness permitted to beincurred pursuant to clause (4), (12)(b), (18) or (19) of Section 4.09(b)hereof; provided that Liens securing Indebtedness permitted to beincurred pursuant to clause (18) of Section 4.09(b) hereof extend only tothe assets of Foreign Subsidiaries and Liens securing Indebtedness permitted tobe incurred pursuant to clause (19) of Section 4.09(b) hereof are solely onacquired property or the assets of the acquired entity, as the case may be;

 

(7)                                  Liens existing on the Issue Date;

 

(8)                                  Liens existing on property or shares of stockof a Person at the time such Person becomes a Subsidiary; provided, however,such Liens are not created or incurred in connection with, or in contemplationof, such other Person becoming such a Subsidiary; provided, further,however, that such Liens may not extend to any other property owned bythe Issuer or any of its Restricted Subsidiaries;

 

(9)                                  Liens existing on property at the time theIssuer or a Restricted Subsidiary acquired the property, including any acquisitionby means of a merger, amalgamation or consolidation with or into the Issuer orany of its Restricted Subsidiaries; provided, however, that suchLiens are not created or incurred in connection with, or in contemplation of,such acquisition, merger, amalgamation or consolidation; provided, further,however, that the Liens may not extend to any other property owned bythe Issuer or any of its Restricted Subsidiaries;

 

(10)                            Liens securing Indebtedness or other obligations of a RestrictedSubsidiary owing to the Issuer or another Restricted Subsidiary permitted to beincurred in accordance with Section 4.09 hereof;

 

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(11)                            Liens securing Hedging Obligations so long as the related Indebtednessis permitted to be incurred under this Indenture;

 

(12)                            Liens on specific items of inventory or other goods and proceeds of anyPerson securing such Person’s obligations in respect of bankers’ acceptances orletters of credit issued or created for the account of such Person tofacilitate the purchase, shipment or storage of such inventory or other goods;

 

(13)                            leases, subleases, licenses or sublicenses granted to others in theordinary course of business which do not materially interfere with the ordinaryconduct of the business of the Issuer or any of its Restricted Subsidiaries anddo not secure any Indebtedness;

 

(14)                            Liens arising from Uniform Commercial Code (or equivalent statutes)financing statement filings regarding operating leases, consignments oraccounts entered into by the Issuer and its Restricted Subsidiaries in theordinary course of business;

 

(15)                            Liens in favor of the Issuer or any Guarantor;

 

(16)                            Liens on equipment of the Issuer or any of its Restricted Subsidiariesgranted in the ordinary course of business to the Issuer’s clients;

 

(17)                            Liens on accounts receivable and related assets incurred in connectionwith a Receivables Facility;

 

(18)                            Liens to secure any refinancing, refunding, extension, renewal orreplacement (or successive refinancing, refunding, extensions, renewals orreplacements) as a whole, or in part, of any Indebtedness secured by any Lienreferred to in the foregoing clauses (6), (7), (8) and (9); provided, however,that (a) such new Lien shall be limited to all or part of the same propertythat secured the original Lien (plus improvements on such property), and (b)the Indebtedness secured by such Lien at such time is not increased to anyamount greater than the sum of (i) the outstanding principal amount or, ifgreater, committed amount of the Indebtedness described under clauses (6), (7),(8) and (9) at the time the original Lien became a Permitted Lien under thisIndenture, and (ii) an amount necessary to pay any fees and expenses, includingpremiums, related to such refinancing, refunding, extension, renewal orreplacement;

 

(19)                            deposits made or other security provided to secure liabilities toinsurance carriers under insurance or self-insurance arrangements in theordinary course of business;

 

(20)                            Liens securing judgments for the payment of money not constituting anEvent of Default under clause (5) of Section 6.01(a) hereof so long as suchLiens are adequately bonded and any appropriate legal proceedings that may havebeen duly initiated for the review of such judgment have not been finallyterminated or the period within which such proceedings may be initiated has notexpired;

 

(21)                            Liens in favor of customs and revenue authorities arising as a matterof law to secure payment of customs duties in connection with the importation ofgoods in the ordinary course of business;

 

(22)                            Liens (i) of a collection bank arising under Section 4-210of the Uniform Commercial Code on items in the course of collection,(ii) attaching to commodity trading accounts or other commodity brokerageaccounts incurred in the ordinary course of business, and (iii) in favor 

 

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ofbanking institutions arising as a matter of law encumbering deposits (includingthe right of set-off) and which are within the general parameters customary inthe banking industry;

 

(23)                            Liens deemed to exist in connection with Investments in repurchaseagreements or other Cash Equivalents permitted under Section 4.09 hereof; providedthat such Liens do not extend to any assets other than those that are thesubject of such repurchase agreement or other Cash Equivalent;

 

(24)                            Liens encumbering reasonable customary initial deposits and margindeposits and similar Liens attaching to commodity trading accounts or otherbrokerage accounts incurred in the ordinary course of business and not forspeculative purposes;

 

(25)                            Liens that are contractual rights of set-off (i) relating to theestablishment of depository relations with banks not given in connection withthe issuance of Indebtedness, (ii) relating to pooled deposit or sweep accountsof the Issuer or any of its Restricted Subsidiaries to permit satisfaction ofoverdraft or similar obligations incurred in the ordinary course of business ofthe Issuer and its Restricted Subsidiaries or (iii) relating to purchase ordersand other agreements entered into with customers of the Issuer or any of itsRestricted Subsidiaries in the ordinary course of business;

 

(26)                            Liens solely on any cash earnest money deposits made by the Issuer orany of its Restricted Subsidiaries in connection with any letter of intent orpurchase agreement permitted under this Indenture;

 

(27)                            the rights reserved or vested in any Person by the terms of any lease,license, franchise, grant or permit held by the Issuer or any of its RestrictedSubsidiaries or by a statutory provision, to terminate any such lease, license,franchise, grant or permit, or to require annual or periodic payments as acondition to the continuance thereof;

 

(28)                            restrictive covenants affecting the use to which real property may beput; provided, however, that the covenants are complied with;

 

(29)                            security given to a public utility or any municipality or governmentalauthority when required by such utility or authority in connection with theoperations of that Person in the ordinary course of business;

 

(30)                            zoning by-laws and other land use restrictions, including, withoutlimitation, site plan agreements, development agreements and contract zoningagreements;

 

(31)                            Liens arising out of conditional sale, title retention, consignment orsimilar arrangements for sale of goods entered into by the Issuer or anyRestricted Subsidiary in the ordinary course of business;

 

(32)                            Liens arising from Personal Property Security Act financing statementfilings regarding leases entered into by the Issuer or any of its RestrictedSubsidiaries in the ordinary course of business;

 

(33)                            rights of a supplier of unpaid goods to have access to and repossesssuch goods under the Bankruptcy and Insolvency Act (Canada) and under theprovisions in the legislation of Canadian provinces;

 

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(34)                            the reservations, limitations, provisos and conditions, if any,expressed in any original grants from the crown under Canadian law and anystatutory exceptions to title under Canadian law; and

 

(35)                            customary transfer restrictions and purchase options in joint ventureand similar agreements.

 

Forpurposes of this definition, the term “Indebtedness” shall be deemed to includeinterest on such Indebtedness.

 

“Person”means any individual, corporation, limited liability company, partnership,joint venture, association, joint stock company, trust, unincorporatedorganization, government or any agency or political subdivision thereof or anyother entity.

 

“PreferredStock” means any Equity Interest with preferential rights of payment ofdividends or upon liquidation, dissolution, or winding up.

 

“Proofof Claim” shall mean a proof of claim or debt filed in accordance with andpursuant to any applicable provisions of the Bankruptcy Law, the Federal Rulesof Bankruptcy Procedure and/or a final order of the U.S. bankruptcy court.

 

“ProperProof of Claim” shall mean, at any time, a Proof of Claim in an amount notless than the sum of the aggregate outstanding Accreted Value of the Notes atsuch time plus accrued but unpaid interest, if any, on the Notes at such time.

 

“PublicCompany Costs” shall mean costs relating to compliance with theSarbanes-Oxley Act of 2002, as amended, and other expenses arising out of orincidental to the Issuer’s status as a public company, including costs, feesand expenses (including legal, accounting and other professional fees) relatingto compliance with provisions of the Securities Act and the Exchange Act, asapplicable to companies with equity securities held by the public, the rules ofnational securities exchange companies with listed equity securities, directors’compensation, fees and expense reimbursement, shareholder meetings and reportsto shareholders, directors and officers’ insurance and other executive costs,legal and other professional fees, and listing fees, in each case incurred oraccrued prior to the Issue Date and that will not continue to be incurredimmediately after the Issue Date.

 

“PrivatePlacement Legend” means the legend set forth in Section 2.06(g)(i) hereofto be placed on all Notes issued under this Indenture, except where otherwisepermitted by the provisions of this Indenture.

 

“QIB”means a “qualified institutional buyer” as defined in Rule 144A.

 

“QualifiedProceeds” means assets that are used or useful in, or Capital Stock of anyPerson engaged in, a Similar Business; provided that the fair marketvalue of any such assets or Capital Stock shall be determined by the Issuer ingood faith.

 

“RatingAgencies” means Moody’s and S&P or if Moody’s or S&P or both shallnot make a rating on the Notes publicly available, a nationally recognizedstatistical rating agency or agencies, as the case may be, selected by theIssuer which shall be substituted for Moody’s or S&P or both, as the casemay be.

 

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“ReceivablesFacility” means any of one or more receivables financing facilities asamended, supplemented, modified, extended, renewed, restated or refunded fromtime to time, the Obligations of which are non-recourse (except forcustomary representations, warranties, covenants and indemnities made inconnection with such facilities) to the Issuer or any of its RestrictedSubsidiaries (other than a Receivables Subsidiary) pursuant to which the Issueror any of its Restricted Subsidiaries sells its accounts receivable to either(a) a Person that is not a Restricted Subsidiary or (b) a ReceivablesSubsidiary that in turn sells its accounts receivable to a Person that is not aRestricted Subsidiary.

 

“ReceivablesFees” means distributions or payments made directly or by means ofdiscounts with respect to any accounts receivable or participation interesttherein issued or sold in connection with, and other fees paid to a Person thatis not a Restricted Subsidiary in connection with, any Receivables Facility.

 

“ReceivablesSubsidiary” means any Subsidiary formed for the purpose of, and that solelyengages only in one or more Receivables Facilities and other activitiesreasonably related thereto.

 

“RecordDate” for the interest or Additional Interest, if any, payable on anyapplicable Interest Payment Date means the April 15 or October 15 (whether ornot a Business Day) next preceding such Interest Payment Date.

 

“RegistrationRights Agreement” means the Registration Rights Agreement related to theNotes dated as of the Issue Date, among the Issuer, the Guarantors and theInitial Purchasers, as such agreement may be amended, modified or supplementedfrom time to time and, with respect to any Additional Notes, one or moreregistration rights agreements between the Issuer and the other partiesthereto, as such agreement(s) may be amended, modified or supplemented fromtime to time, relating to rights given by the Issuer to the purchasers ofAdditional Notes to register such Additional Notes under the Securities Act.

 

“RegulationS” means Regulation S promulgated under the Securities Act.

 

“RegulationS Global Note” means a Regulation S Temporary Global Note orRegulation S Permanent Global Note, as applicable.

 

“RegulationS Permanent Global Note” means a permanent Global Note in the form of Exhibit Abearing the Global Note Legend and the Private Placement Legend and depositedwith or on behalf of and registered in the name of the Depositary or itsnominee, issued in a denomination equal to the outstanding principal amount atmaturity of the Regulation S Temporary Global Note upon expiration of theRestricted Period.

 

“RegulationS Temporary Global Note” means a temporary Global Note in the form of Exhibit Abearing the Global Note Legend, the Private Placement Legend and the RegulationS Temporary Global Note Legend and deposited with or on behalf of andregistered in the name of the Depositary or its nominee, issued in a denominationequal to the outstanding principal amount at maturity of the Notes initiallysold in reliance on Rule 903.

 

“RegulationS Temporary Global Note Legend” means the legend set forth in Section2.06(g)(iii) hereof.

 

“RelatedBusiness Assets” means assets (other than cash or Cash Equivalents) used oruseful in a Similar Business, provided that any assets received by theIssuer or a Restricted Subsidiary in exchange for assets transferred by theIssuer or a Restricted Subsidiary shall not be deemed to be Related 

 

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Business Assets if they consistof securities of a Person, unless upon receipt of the securities of suchPerson, such Person would become a Restricted Subsidiary.

 

“Representative”means any trustee, agent or representative (if any) for an issue of SeniorIndebtedness of the Issuer or any Guarantor.

 

“ResponsibleOfficer” means, when used with respect to the Trustee, any officer withinthe corporate trust department of the Trustee, including any vice president,assistant vice president, assistant treasurer, trust officer or any otherofficer of the Trustee who customarily performs functions similar to thoseperformed by the Persons who at the time shall be such officers, respectively,or to whom any corporate trust matter is referred because of such Person’sknowledge of and familiarity with the particular subject and who shall havedirect responsibility for the administration of this Indenture.

 

“RestrictedDefinitive Note” means a Definitive Note bearing the Private PlacementLegend.

 

“RestrictedGlobal Note” means a Global Note bearing the Private Placement Legend.

 

“RestrictedInvestment” means an Investment other than a Permitted Investment.

 

“RestrictedPeriod” means the 40-day distribution compliance period as defined inRegulation S.

 

“RestrictedSubsidiary” means, at any time, any direct or indirect Subsidiary of theIssuer (including any Foreign Subsidiary) that is not then an UnrestrictedSubsidiary; provided, however, that upon the occurrence of anUnrestricted Subsidiary ceasing to be an Unrestricted Subsidiary, suchSubsidiary shall be included in the definition of “Restricted Subsidiary.”

 

“RevolvingCredit Facility” means the credit facility provided under the SeniorSecured Asset-Based Revolving Credit Agreement, to be entered into as of theIssue Date by and among the Issuer, the lenders party thereto in theircapacities as lenders thereunder and Bank of America, N.A., as AdministrativeAgent, including any notes, mortgages, guarantees, collateral documents,instruments and agreements executed in connection therewith, and anyamendments, supplements, modifications, extensions, replacements, renewals,restatements, refundings or refinancings thereof and any one or more indenturesor credit facilities or commercial paper facilities with banks or otherinstitutional lenders or investors that extend, replace, refund, refinance,renew or defease any part of the loans, notes, other credit facilities orcommitments thereunder, including any such replacement, refunding orrefinancing facility or indenture that increases the amount borrowablethereunder or alters the maturity thereof or adds Restricted Subsidiaries asadditional borrowers or guarantors thereunder and whether by the same or anyother agent, lender or group of lenders.

 

“Rule144” means Rule 144 promulgated under the Securities Act.

 

“Rule144A” means Rule 144A promulgated under the Securities Act.

 

“Rule903” means Rule 903 promulgated under the Securities Act.

 

“Rule904” means Rule 904 promulgated under the Securities Act.

 

“S&P”means Standard & Poor’s, a division of The McGraw-Hill Companies,Inc., and any successor to its rating agency business.

 

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“Saleand Lease-Back Transaction” means any arrangement providing for theleasing by the Issuer or any of its Restricted Subsidiaries of any real ortangible personal property, which property has been or is to be sold ortransferred by the Issuer or such Restricted Subsidiary to a third Person incontemplation of such leasing.

 

“SEC”means the U.S. Securities and Exchange Commission.

 

“SecuredIndebtedness” means any Indebtedness of the Issuer or any of its RestrictedSubsidiaries secured by a Lien.

 

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

 

“SeniorCredit Facilities” means the Revolving Credit Facility and the Term LoanFacility.

 

“SeniorIndebtedness” means:

 

(1)                                  all Indebtedness of the Issuer or anyGuarantor outstanding under the Senior Credit Facilities, the Senior Notes orthe Senior Subordinated Notes and related guarantees (including interestaccruing on or after the filing of any petition in bankruptcy or any similarproceeding or for reorganization of the Issuer or any Guarantor (at the rateprovided for in the documentation with respect thereto, regardless of whetheror not a claim for post-filing interest is allowed in such proceedings)),and any and all other fees, expense reimbursement obligations, indemnificationamounts, penalties, and other amounts (whether existing on the Issue Date orthereafter created or incurred) and all obligations of the Issuer or anyGuarantor to reimburse any bank or other Person in respect of amounts paid underletters of credit, acceptances or other similar instruments;

 

(2)                                  all Hedging Obligations (and guaranteesthereof) owing to a lender or any affiliate of a lender under any Senior CreditFacility (or a Person who was such a lender or an affiliate at the time suchHedging Obligations were entered into);

 

(3)                                  any other Indebtedness of the Issuer or anyGuarantor permitted to be incurred under the terms of this Indenture, unlessthe instrument under which such Indebtedness is incurred expressly provides thatit is on a parity with or subordinated in right of payment to the Notes or anyGuarantee; and

 

(4)                                  all Obligations with respect to the itemslisted in the preceding clauses (1), (2) and (3);

 

provided, however, that Senior Indebtednessshall not include:

 

(a)                                  any obligation of such Person to the Issueror any of its Subsidiaries;

 

(b)                                 any liability for federal, state, local orother taxes owed or owing by such Person;

 

(c)                                  any accounts payable or other liability totrade creditors arising in the ordinary course of business; providedthat obligations incurred pursuant to the Senior Credit Facilities shall not beexcluded pursuant to this clause (c); or

 

28

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(d)                                 that portion of any Indebtedness which at thetime of incurrence is incurred in violation of this Indenture; provided,however that such Indebtedness shall be deemed not to have been incurredin violation of this Indenture for purposes of this clause if such Indebtednessconsists of Designated Senior Indebtedness, and the holder(s) of suchIndebtedness and their Representative shall have received a certificate from anofficer of the Issuer to the effect that the incurrence of such Indebtednessdoes not (or, in the case of a revolving credit facility thereunder, theincurrence of the entire committed amount thereof at the date on which theinitial borrowing thereunder is made would not) violate the provisions of thisIndenture.

 

“SeniorNotes” means the $750,000,000 aggregate principal amount of the Issuer’s10% senior notes due 2014 issued on the Issue Date.

 

“SeniorSubordinated Notes” means the $400,000,000 aggregate principal amount ofthe Issuer’s 11 3/8% senior subordinated notes due 2016 issued on the IssueDate.

 

“ShelfRegistration Statement” means the Shelf Registration Statement as definedin the Registration Rights Agreement.

 

“SignificantSubsidiary” means any Restricted Subsidiary that would be a “significantsubsidiary” as defined in Article 1, Rule 1-02 of Regulation S-X,promulgated pursuant to the Securities Act, as such regulation is in effect onthe Issue Date.

 

“SimilarBusiness” means any business conducted or proposed to be conducted by theIssuer and its Restricted Subsidiaries on the Issue Date or any business thatis a reasonable extension, development or expansion of any of the foregoing oris similar, reasonably related, incidental or ancillary thereto (including, forthe avoidance of doubt, any sourcing companies created in connection with anyof the foregoing).

 

“SpecifiedLegal Expenses” means all attorneys’ and experts’ fees and expenses and allother costs and expenses paid or payable in connection with investigating ordefending or preparing to investigate or defend any threatened, pending,completed or future claim, demand, action, suit, proceeding, inquiry orinvestigation (whether civil, criminal, administrative or investigative)arising out of or related to (i) the Issuer’s compensation practices (includingoption grants) prior to the Issue Date, (ii) any disclosure or alleged lack ofdisclosure on the part of the Issuer or any of its directors or officersregarding the beneficial ownership of any securities of the Issuer prior to theIssue Date by any such director or officer (or any trust established for thebenefit of any such director or officer or any family member thereof), (iii)any transaction prior to the Issue Date involving any securities of the Issueralleged to have been engaged in by any such Person, (iv) any allegeddeficiencies in the Issuer’s financial reporting, internal control overfinancial reporting or disclosure controls prior to the Issue Date andprocedures relating to any of the foregoing, and (v) any alleged bad faith,breach of fiduciary duty or other act or omission on the part of any directoror officer of the Issuer relating to any of the foregoing, together in eachcase with all damages, losses, liabilities, judgments, fines, penalties andamounts paid in settlement arising out of or incurred in connection with any ofthe foregoing (including all amounts paid to or on behalf of other Persons inconnection with any of the foregoing pursuant to any indemnificationagreements, arrangements or obligations).

 

“SponsorManagement Agreement” means the management agreements between certain ofthe management companies associated with the Investors and Highfields Capital,and the Issuer, as in effect on the Issue Date and as amended, supplemented,amended and restated, replaced or otherwise modified from time to time;provided, however, that the terms of any such amendment, supplement, 

 

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amendment and restatement orreplacement agreement are not, taken as a whole, less favorable to the holdersof the Notes in any material respect than the original agreement in effect onthe Issue Date.

 

“SubordinatedIndebtedness” means, with respect to the Notes,

 

(1)                                  any Indebtedness of the Issuer which is byits terms subordinated in right of payment to the Notes, and

 

(2)                                  any Indebtedness of any Guarantor which is byits terms subordinated in right of payment to the Guarantee of such entity ofthe Notes.

 

“Subsidiary”means, with respect to any Person:

 

(1)                                  any corporation, association, or otherbusiness entity (other than a partnership, joint venture, limited liability companyor similar entity) of which more than 50% of the total voting power of sharesof Capital Stock entitled (without regard to the occurrence of any contingency)to vote in the election of directors, managers or trustees thereof is at thetime of determination owned or controlled, directly or indirectly, by suchPerson or one or more of the other Subsidiaries of that Person or a combinationthereof or is consolidated under GAAP with such Person at such time; and

 

(2)                                  any partnership, joint venture, limitedliability company or similar entity of which

 

(x)                                   more than 50% of the capital accounts,distribution rights, total equity and voting interests or general or limitedpartnership interests, as applicable, are owned or controlled, directly orindirectly, by such Person or one or more of the other Subsidiaries of thatPerson or a combination thereof whether in the form of membership, general,special or limited partnership or otherwise, and

 

(y)                                  such Person or any Restricted Subsidiary ofsuch Person is a controlling general partner or otherwise controls such entity.

 

“TermLoan Facility” means the credit facility provided under the Senior SecuredTerm Loan Agreement, to be entered into as of the Issue Date by and among theIssuer, the lenders party thereto in their capacities as lenders thereunder andDeutsche Bank AG New York Branch, as Administrative Agent, including any notes,mortgages, guarantees, collateral documents, instruments and agreementsexecuted in connection therewith, and any amendments, supplements,modifications, extensions, replacements, renewals, restatements, refundings orrefinancings thereof and any one or more indentures or credit facilities orcommercial paper facilities with banks or other institutional lenders orinvestors that extend, replace, refund, refinance, renew or defease any part ofthe loans, notes, other credit facilities or commitments thereunder, includingany such replacement, refunding or refinancing facility or indenture thatincreases the amount borrowable thereunder or alters the maturity thereof oradds Restricted Subsidiaries as additional borrowers or guarantors thereunderand whether by the same or any other agent, lender or group of lenders.

 

“TotalAssets” means the total assets of the Issuer and its Restricted Subsidiarieson a consolidated basis, as shown on the most recent balance sheet of theIssuer or such other Person as may be expressly stated.

 

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“TransactionAgreement” means the Agreement and Plan of Merger, dated as of June 30,2006 among Bain Paste Mergerco, Inc., Blackstone Paste Mergerco, Inc., BainPaste Finco, LLC, Blackstone Paste Finco, LLC and the Issuer, as the same maybe amended prior to the Issue Date.

 

“TransactionExpenses” means any fees or expenses incurred or paid by the Issuer or anyRestricted Subsidiary in connection with the Transactions, including paymentsto officers, employees and directors as change of control payments, severancepayments, special or retention bonuses and charges for repurchase or rolloverof, or modifications to, stock options.

 

“Transactions”means the transactions contemplated by the Transaction Agreement, the issuanceof the Initial Notes, the Senior Notes and the Senior Subordinated Notes andborrowings under the Senior Credit Facilities as in effect on the Issue Date.

 

“TreasuryRate” means, as of any Redemption Date, the yield to maturity as of suchRedemption Date of United States Treasury securities with a constant maturity(as compiled and published in the most recent Federal Reserve StatisticalRelease H.15 (519) that has become publicly available at least two BusinessDays prior to the Redemption Date (or, if such Statistical Release is no longerpublished, any publicly available source of similar market data)) most nearlyequal to the period from the Redemption Date to November 1, 2011; provided,however, that if the period from the Redemption Date to November 1, 2011is less than one year, the weekly average yield on actually traded UnitedStates Treasury securities adjusted to a constant maturity of one year will beused.

 

“TrustIndenture Act” means the Trust Indenture Act of 1939, as amended (15 U.S.C.§§ 77aaa-77bbbb).

 

“Trustee”means Wells Fargo Bank, National Association, as trustee, until a successorreplaces it in accordance with the applicable provisions of this Indenture andthereafter means the successor serving hereunder.

 

“UnrestrictedDefinitive Note” means one or more Definitive Notes that do not bear andare not required to bear the Private Placement Legend.

 

“UnrestrictedGlobal Note” means a permanent Global Note, substantially in the form of Exhibit A,that bears the Global Note Legend and that has the “Schedule of Exchanges ofInterests in the Global Note” attached thereto, and that is deposited with oron behalf of and registered in the name of the Depositary, representing Notesthat do not bear the Private Placement Legend.

 

“UnrestrictedSubsidiary” means:

 

(1)                                  any Subsidiary of the Issuer which at thetime of determination is an Unrestricted Subsidiary (as designated by theIssuer, as provided below); and

 

(2)                                  any Subsidiary of an Unrestricted Subsidiary.

 

TheIssuer may designate any Subsidiary of the Issuer (including any existingSubsidiary and any newly acquired or newly formed Subsidiary) to be anUnrestricted Subsidiary unless such Subsidiary or any of its Subsidiaries ownsany Equity Interests or Indebtedness of, or owns or holds any Lien on, anyproperty of, the Issuer or any Subsidiary of the Issuer (other than solely anySubsidiary of the Subsidiary to be so designated); provided that

 

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(1)                                  any Unrestricted Subsidiary must be an entityof which the Equity Interests entitled to cast at least a majority of the votesthat may be cast by all Equity Interests having ordinary voting power for theelection of directors or Persons performing a similar function are owned,directly or indirectly, by the Issuer;

 

(2)                                  such designation complies with Section 4.07hereof; and

 

(3)                                  each of:

 

(a)                                  the Subsidiary to be so designated; and

 

(b)                                 its Subsidiaries

 

has not at the time of designation, and does notthereafter, create, incur, issue, assume, guarantee or otherwise becomedirectly or indirectly liable with respect to any Indebtedness pursuant towhich the lender has recourse to any of the assets of the Issuer or anyRestricted Subsidiary.

 

TheIssuer may designate any Unrestricted Subsidiary to be a Restricted Subsidiary;provided that, immediately after giving effect to such designation, no Defaultshall have occurred and be continuing and either:

 

(1)                                  the Issuer could incur at least $1.00 ofadditional Indebtedness pursuant to the Fixed Charge Coverage Ratio testdescribed in Section 4.09(a) hereof; or

 

(2)                                  the Fixed Charge Coverage Ratio for theIssuer and its Restricted Subsidiaries would be greater than such ratio for theIssuer and its Restricted Subsidiaries immediately prior to such designation,

 

ineach case on a *pro forma* basistaking into account such designation.

 

Anysuch designation by the Issuer shall be notified by the Issuer to the Trusteeby promptly filing with the Trustee a copy of the resolution of the board ofdirectors of the Issuer or any committee thereof giving effect to suchdesignation and an Officer’s Certificate certifying that such designationcomplied with the foregoing provisions.

 

“U.S.Person” means a U.S. person as defined in Rule 902(k) under the SecuritiesAct.

 

“VotingStock” of any Person as of any date means the Capital Stock of such Personthat is at the time entitled to vote in the election of the board of directorsof such Person.

 

“WeightedAverage Life to Maturity” means, when applied to any Indebtedness,Disqualified Stock or Preferred Stock, as the case may be, at any date, thequotient obtained by dividing:

 

(1)                                  the sum of the products of the number ofyears from the date of determination to the date of each successive scheduledprincipal payment of such Indebtedness or redemption or similar payment withrespect to such Disqualified Stock or Preferred Stock multiplied by the amountof such payment; by

 

(2)                                  the sum of all such payments.

 

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“Wholly-OwnedSubsidiary” of any Person means a Subsidiary of such Person, 100% of theoutstanding Equity Interests of which (other than directors’ qualifying sharesand shares issued to foreign nationals as required under applicable law) shallat the time be owned by such Person or by one or more Wholly Owned Subsidiariesof such Person or by such Person and one or more Wholly-Owned Subsidiaries ofsuch Person.

 

## Section 1.02                                          OtherDefinitions.

 
| **Term**                                       | ** ** | **Defined in   Section** | ** ** |
|------------------------------------------------|------------|------------------------------------|------------|
|                                           |       |                               |       |
| “Acceptable  Commitment”             |       | 4.10(b)                            |       |
| “Affiliate  Transaction”             |       | 4.11(a)                            |       |
| “AHYDO  Amount”                      |       | 3.08                               |       |
| “Asset  Sale Offer”                  |       | 4.10(c)                            |       |
| “Authentication  Order”              |       | 2.02                               |       |
| “Blockage  Notice”                   |       | 10.03                              |       |
| “Change  of Control Offer”           |       | 4.14(a)                            |       |
| “Change  of Control Payment”         |       | 4.14(a)                            |       |
| “Change  of Control Payment Date”    |       | 4.14(a)                            |       |
| “Covenant  Defeasance”               |       | 8.03                               |       |
| “Covenant  Suspension Event”         |       | 4.16(a)                            |       |
| “DTC”                                |       | 2.03                               |       |
| “Event  of Default”                  |       | 6.01(a)                            |       |
| “Excess  Proceeds”                   |       | 4.10(c)                            |       |
| “Guarantee  Blockage Notice”         |       | 12.03                              |       |
| “Guarantee  Payment Blockage Period” |       | 12.03                              |       |
| “Guarantor  Non-Payment Default”     |       | 12.03                              |       |
| “Guarantor  Payment Default”         |       | 12.03                              |       |
| “incur”  or “incurrence”   |       | 4.09(a)                            |       |
| “Legal  Defeasance”                  |       | 8.02                               |       |
| “Non-Payment  Default”               |       | 10.03                              |       |
| “Note  Register”                     |       | 2.03                               |       |
| “Offer  Amount”                      |       | 3.09(b)                            |       |
| “Offer  Period”                      |       | 3.09(b)                            |       |
| “Pari  Passu Indebtedness”           |       | 4.10(c)                            |       |
| “pay  its Guarantee”                 |       | 12.03                              |       |
| “pay  the Notes”                     |       | 10.03                              |       |
| “Paying  Agent”                      |       | 2.03                               |       |
| “Payment  Blockage Period”           |       | 10.03                              |       |
| “Payment  Default”                   |       | 10.03                              |       |
| “Purchase  Date”                     |       | 3.09(b)                            |       |
| “Redemption  Date”                   |       | 3.07(a)                            |       |
| “Refinancing  Indebtedness”          |       | 4.09(b)                            |       |
| “Refunding  Capital Stock”           |       | 4.07(b)                            |       |
| “Registrar”                          |       | 2.03                               |       |
| “Restricted  Payments”               |       | 4.07(a)                            |       |
| “Reversion  Date”                    |       | 4.16(b)                            |       |
| “Second  Commitment”                 |       | 4.10(b)                            |       |
| “Successor  Company”                 |       | 5.01(a)                            |       |
| “Successor  Person”                  |       | 5.01(c)                            |       |

 

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| **Term**                            | ** ** | **Defined in   Section** | ** ** |
|-------------------------------------|------------|------------------------------------|------------|
|                                |       |                               |       |
| “Suspended  Covenants”    |       | 4.16(a)                            |       |
| “Suspension  Period”      |       | 4.16(b)                            |       |
| “Treasury  Capital Stock” |       | 4.07(b)                            |       |

 

## Section 1.03                                          Incorporationby Reference of Trust Indenture Act.

 

Wheneverthis Indenture refers to a provision of the Trust Indenture Act, the provisionis incorporated by reference in and made a part of this Indenture.

 

Thefollowing Trust Indenture Act terms used in this Indenture have the followingmeanings:

 

“indenturesecurities” means the Notes;

 

“indenturesecurity Holder” means a Holder of a Note;

 

“indentureto be qualified” means this Indenture;

 

“indenturetrustee” or “institutional trustee” means the Trustee; and

 

“obligor” on the Notes and the Guarantees means theIssuer and the Guarantors, respectively, and any successor obligor upon theNotes and the Guarantees, respectively.

 

Allother terms used in this Indenture that are defined by the Trust Indenture Act,defined by Trust Indenture Act reference to another statute or defined by SECrule under the Trust Indenture Act have the meanings so assigned to them.

 

## Section 1.04                                          Rules of Construction.

##  

Unlessthe context otherwise requires:

 

### (a)                                  a term has the meaning assigned to it;

###  

### (b)                                 an accounting term not otherwise defined hasthe meaning assigned to it in accordance with GAAP;

###  

### (c)                                  “or” is not exclusive;

###  

### (d)                                 words in the singular include the plural, andin the plural include the singular;

###  

### (e)                                  “will” shall be interpreted to express acommand;

###  

### (f)                                    provisions apply to successive events andtransactions;

###  

### (g)                                 references to sections of, or rules under,the Securities Act shall be deemed to include substitute, replacement orsuccessor sections or rules adopted by the SEC from time to time;

###  

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### (h)                                 unless the context otherwise requires, anyreference to an “Article,” “Section” or “clause” refers to an Article, Sectionor clause, as the case may be, of this Indenture;

###  

(i)                                     words used herein implying any gender shallapply to both genders;

 

(j)                                     the words “including,” “includes” and similarwords shall be deemed to be followed by “without limitation”;

 

(k)                                  the principal amount of any non-interestbearing or other discount security at any date shall be the principal amountthereof that would be shown on a balance sheet of the Issuer dated such dateprepared in accordance with GAAP;

 

(l)                                     the principal amount of any Preferred Stockshall be (i) the maximum liquidation value of such Preferred Stock or (ii) themaximum mandatory redemption or mandatory repurchase price with respect to suchPreferred Stock, whichever is greater; and

 

### (m)                               the words “herein,” “hereof” and “hereunder”and other words of similar import refer to this Indenture as a whole and notany particular Article, Section, clause or other subdivision.

###  

## Section 1.05                                          Actsof Holders.

 

(a)                                  Any request, demand, authorization,direction, notice, consent, waiver or other action provided by this Indentureto be given or taken by Holders may be embodied in and evidenced by one or moreinstruments of substantially similar tenor signed by such Holders in person orby an agent duly appointed in writing. Except as herein otherwise expressly provided, such action shall becomeeffective when such instrument or instruments are delivered to the Trustee and,where it is hereby expressly required, to the Issuer.  Proof of execution of any such instrument orof a writing appointing any such agent, or the holding by any Person of a Note,shall be sufficient for any purpose of this Indenture and (subject to Section7.01) conclusive in favor of the Trustee and the Issuer, if made in the mannerprovided in this Section 1.05.

 

(b)                                 The fact and date of the execution by anyPerson of any such instrument or writing may be proved by the affidavit of awitness of such execution or by the certificate of any notary public or otherofficer authorized by law to take acknowledgments of deeds, certifying that theindividual signing such instrument or writing acknowledged to him the executionthereof.  Where such execution is by oron behalf of any legal entity other than an individual, such certificate oraffidavit shall also constitute proof of the authority of the Person executingthe same.  The fact and date of theexecution of any such instrument or writing, or the authority of the Personexecuting the same, may also be proved in any other manner that the Trusteedeems sufficient.

 

(c)                                  The ownership of Notes shall be proved by theNote Register.

 

(d)                                 Any request, demand, authorization,direction, notice, consent, waiver or other action by the Holder of any Noteshall bind every future Holder of the same Note and the Holder of every Noteissued upon the registration of transfer thereof or in exchange therefor or inlieu thereof, in respect of any action taken, suffered or omitted by theTrustee or the Issuer in reliance thereon, whether or not notation of suchaction is made upon such Note.

 

(e)                                  The Issuer may, in the circumstancespermitted by the Trust Indenture Act, set a record date for purposes ofdetermining the identity of Holders entitled to give any request, demand,authorization, 

 

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direction, notice, consent,waiver or take any other act, or to vote or consent to any action by vote orconsent authorized or permitted to be given or taken by Holders.  Unless otherwise specified, if not set by theIssuer prior to the first solicitation of a Holder made by any Person inrespect of any such action, or in the case of any such vote, prior to suchvote, any such record date shall be the later of 30 days prior to the firstsolicitation of such consent or the date of the most recent list of Holdersfurnished to the Trustee prior to such solicitation.

 

(f)                                    Without limiting the foregoing, a Holderentitled to take any action hereunder with regard to any particular Note may doso with regard to all or any part of the principal amount at maturity of suchNote or by one or more duly appointed agents, each of which may do so pursuantto such appointment with regard to all or any part of such principal amount atmaturity.  Any notice given or actiontaken by a Holder or its agents with regard to different parts of suchprincipal amount at maturity pursuant to this paragraph shall have the sameeffect as if given or taken by separate Holders of each such different part.

 

(g)                                 Without limiting the generality of theforegoing, a Holder, including DTC, that is the Holder of a Global Note, maymake, give or take, by a proxy or proxies duly appointed in writing, anyrequest, demand, authorization, direction, notice, consent, waiver or otheraction provided in this Indenture to be made, given or taken by Holders, andany Person that is the Holder of a Global Note, including DTC, may provide itsproxy or proxies to the beneficial owners of interests in any such Global Notethrough such depositary’s standing instructions and customary practices.

 

(h)                                 The Issuer may fix a record date for thepurpose of determining the Persons who are beneficial owners of interests inany Global Note held by DTC entitled under the procedures of such depositary tomake, give or take, by a proxy or proxies duly appointed in writing, anyrequest, demand, authorization, direction, notice, consent, waiver or otheraction provided in this Indenture to be made, given or taken by Holders.  If such a record date is fixed, the Holderson such record date or their duly appointed proxy or proxies, and only suchPersons, shall be entitled to make, give or take such request, demand,authorization, direction, notice, consent, waiver or other action, whether ornot such Holders remain Holders after such record date.  No such request, demand, authorization,direction, notice, consent, waiver or other action shall be valid or effectiveif made, given or taken more than 90 days after such record date.

 

# ARTICLE2

#  

# THENOTES

#  

## Section 2.01                                          Formand Dating; Terms.

 

(a)                                  General.  The Notes and the Trustee’scertificate of authentication shall be substantially in the form of ExhibitA hereto.  The Notes may havenotations, legends or endorsements required by law, stock exchange rules orusage.  Each Note shall be dated the dateof its authentication.  The Notes shallbe in denominations of $1,000 and integral multiples of $1,000 in excess of$1,000.

 

(b)                                 Global Notes. Notes issued in global form shall be substantially in the form of ExhibitA attached hereto (including the Global Note Legend thereon and the “Scheduleof Exchanges of Interests in the Global Note” attached thereto).  Notes issued in definitive form shall besubstantially in the form of Exhibit A attached hereto (but without theGlobal Note Legend thereon and without the “Schedule of Exchanges of Interestsin the Global Note” attached thereto). Each Global Note shall represent such of the outstanding Notes as shallbe specified in the “Schedule of Exchanges of Interests in the Global Note”attached thereto and each shall provide that it shall represent up to theaggregate principal 

 

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amount at maturity of Notesfrom time to time endorsed thereon and that the aggregate principal amount atmaturity of outstanding Notes represented thereby may from time to time bereduced or increased, as applicable, to reflect exchanges and redemptions.  Any endorsement of a Global Note to reflectthe amount of any increase or decrease in the aggregate principal amount atmaturity of outstanding Notes represented thereby shall be made by the Trusteeor the Custodian, at the direction of the Trustee, in accordance withinstructions given by the Holder thereof as required by Section 2.06 hereof.

 

(c)                                  Temporary Global Notes. Notes offered and sold in reliance on Regulation S shall be issuedinitially in the form of the Regulation S Temporary Global Note, which shall bedeposited on behalf of the purchasers of the Notes represented thereby with theTrustee, as custodian for the Depositary, and registered in the name of theDepositary or the nominee of the Depositary for the accounts of designatedagents holding on behalf of Euroclear or Clearstream, duly executed by theIssuer and authenticated by the Trustee as hereinafter provided.  The Restricted Period shall be terminatedupon the receipt by the Trustee of:

 

(i)                                     a written certificate from the Depositary,together with copies of certificates from Euroclear and Clearstream certifyingthat they have received certification of non-United States beneficial ownershipof 100% of the aggregate principal amount at maturity of the Regulation STemporary Global Note (except to the extent of any beneficial owners thereofwho acquired an interest therein during the Restricted Period pursuant toanother exemption from registration under the Securities Act and who shall takedelivery of a beneficial ownership interest in a 144A Global Note bearing aPrivate Placement Legend, all as contemplated by Section 2.06(b) hereof); and

 

(ii)                                  an Officer’s Certificate from the Issuer.

 

Followingthe termination of the Restricted Period, beneficial interests in theRegulation S Temporary Global Note shall be exchanged for beneficialinterests in the Regulation S Permanent Global Note pursuant to the ApplicableProcedures.  Simultaneously with theauthentication of the Regulation S Permanent Global Note, the Trustee shallcancel the Regulation S Temporary Global Note. The aggregate principal amount at maturity of the Regulation S TemporaryGlobal Note and the Regulation S Permanent Global Note may from time to time beincreased or decreased by adjustments made on the records of the Trustee andthe Depositary or its nominee, as the case may be, in connection with transfersof interest as hereinafter provided.

 

(d)                                 Terms.  The aggregate principal amountat maturity of Notes that may be authenticated and delivered under thisIndenture is unlimited.

 

Theterms and provisions contained in the Notes shall constitute, and are herebyexpressly made, a part of this Indenture and the Issuer, the Guarantors and theTrustee, by their execution and delivery of this Indenture, expressly agree tosuch terms and provisions and to be bound thereby.  However, to the extent any provision of anyNote conflicts with the express provisions of this Indenture, the provisions ofthis Indenture shall govern and be controlling.

 

TheNotes shall be subject to repurchase by the Issuer pursuant to an Asset SaleOffer as provided in Section 4.10 hereof or a Change of Control Offer asprovided in Section 4.14 hereof.  TheNotes shall not be redeemable, other than as provided in Article 3.

 

AdditionalNotes ranking *pari**passu* with the Initial Notes may becreated and issued from time to time by the Issuer without notice to or consentof the Holders and shall be consolidated with and form a single class with theInitial Notes and shall have the same terms as to status, redemption or 

 

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otherwise as the Initial Notes;provided that the Issuer’s ability to issue Additional Notes shall besubject to the Issuer’s compliance with Section 4.09 hereof.  Any Additional Notes shall be issued with thebenefit of an indenture supplemental to this Indenture.

 

(e)                                  Euroclear and Clearstream ProceduresApplicable.  The provisions of the “Operating Proceduresof the Euroclear System” and “Terms and Conditions Governing Use of Euroclear”and the “General Terms and Conditions of Clearstream Banking” and “CustomerHandbook” of Clearstream shall be applicable to transfers of beneficialinterests in the Regulation S Temporary Global Note and the Regulation SPermanent Global Notes that are held by Participants through Euroclear orClearstream.

 

## Section 2.02                                          Executionand Authentication.

 

Atleast one Officer shall execute the Notes on behalf of the Issuer by manual orfacsimile signature.

 

Ifan Officer whose signature is on a Note no longer holds that office at the timea Note is authenticated, the Note shall nevertheless be valid.

 

ANote shall not be entitled to any benefit under this Indenture or be valid orobligatory for any purpose until authenticated substantially in the form of Exhibit Aattached hereto by the manual or facsimile signature of the Trustee.  The signature shall be conclusive evidencethat the Note has been duly authenticated and delivered under this Indenture.

 

Onthe Issue Date, the Trustee shall, upon receipt of an Issuer Order (an “AuthenticationOrder”), authenticate and deliver the Initial Notes.  In addition, at any time, from time to time,the Trustee shall upon an Authentication Order authenticate and deliver anyAdditional Notes and Exchange Notes for an aggregate principal amount atmaturity specified in such Authentication Order for such Additional Notes orExchange Notes issued hereunder.

 

TheTrustee may appoint an authenticating agent acceptable to the Issuer to authenticateNotes.  An authenticating agent mayauthenticate Notes whenever the Trustee may do so.  Each reference in this Indenture toauthentication by the Trustee includes authentication by such agent.  An authenticating agent has the same rightsas an Agent to deal with Holders or an Affiliate of the Issuer.

 

## Section 2.03                                          Registrarand Paying Agent.

 

TheIssuer shall maintain an office or agency in the Borough of Manhattan, City ofNew York,  where Notes may be presentedfor registration of transfer or for exchange (“Registrar”) and an office oragency in the Borough of Manhattan, City of New York, where Notes may bepresented for payment (“Paying Agent”). The Registrar shall keep a register of the Notes (“Note Register”)and of their transfer and exchange.  TheIssuer may appoint one or more co-registrars and one or more additional payingagents.  The term “Registrar” includesany co-registrar and the term “Paying Agent” includes any additional payingagent.  The Issuer may change any PayingAgent or Registrar without prior notice to any Holder.  The Issuer shall notify the Trustee inwriting of the name and address of any Agent not a party to thisIndenture.  If the Issuer fails toappoint or maintain another entity as Registrar or Paying Agent, the Trusteeshall act as such.  The Issuer or any ofits Subsidiaries may act as Paying Agent or Registrar.

 

TheIssuer initially appoints The Depository Trust Company (“DTC”) to act asDepositary with respect to the Global Notes.

 

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TheIssuer initially appoints the Trustee to act as the Paying Agent and Registrarfor the Notes and to act as Custodian with respect to the Global Notes.

 

## Section 2.04                                          PayingAgent To Hold Money in Trust.

 

TheIssuer shall require each Paying Agent other than the Trustee to agree inwriting that the Paying Agent shall hold in trust for the benefit of Holders orthe Trustee all money held by the Paying Agent for the payment of AccretedValue, premium, if any, or Additional Interest, if any, or interest on theNotes, and will notify the Trustee of any default by the Issuer in making anysuch payment. While any such default continues, the Trustee may require aPaying Agent to pay all money held by it to the Trustee.  The Issuer at any time may require a PayingAgent to pay all money held by it to the Trustee.  Upon payment over to the Trustee, the PayingAgent (if other than the Issuer or a Subsidiary) shall have no furtherliability for the money.  If the Issueror a Subsidiary acts as Paying Agent, it shall segregate and hold in a separatetrust fund for the benefit of the Holders all money held by it as PayingAgent.  Upon any bankruptcy orreorganization proceedings relating to the Issuer, the Trustee shall serve asPaying Agent for the Notes.

 

## Section 2.05                                          HolderLists.

 

TheTrustee shall preserve in as current a form as is reasonably practicable themost recent list available to it of the names and addresses of all Holders andshall otherwise comply with Trust Indenture Act Section 312(a).  If the Trustee is not the Registrar, theIssuer shall furnish to the Trustee at least two Business Days before eachInterest Payment Date and at such other times as the Trustee may request inwriting, a list in such form and as of such date as the Trustee may reasonablyrequire of the names and addresses of the Holders of Notes and the Issuer shallotherwise comply with Trust Indenture Act Section 312(a).

 

## Section 2.06                                          Transferand Exchange.

 

(a)                                  Transfer and Exchange of Global Notes. Except as otherwise set forth in this Section 2.06, a Global Note may betransferred, in whole and not in part, only to another nominee of theDepositary or to a successor Depositary or a nominee of such successorDepositary.  A beneficial interest in aGlobal Note may not be exchanged for a Definitive Note unless (i) theDepositary (x) notifies the Issuer that it is unwilling or unable to continueas Depositary for such Global Note or (y) has ceased to be a clearing agencyregistered under the Exchange Act and, in either case, a successor Depositaryis not appointed by the Issuer within 120 days or (ii) there shall haveoccurred and be continuing a Default with respect to the Notes.  Upon the occurrence of any of the precedingevents in (i) or (ii) above, Definitive Notes delivered in exchange for anyGlobal Note or beneficial interests therein will be registered in the names,and issued in any approved denominations, requested by or on behalf of theDepositary (in accordance with its customary procedures).  Global Notes also may be exchanged orreplaced, in whole or in part, as provided in Sections 2.07 and 2.10hereof.  Every Note authenticated anddelivered in exchange for, or in lieu of, a Global Note or any portion thereof,pursuant to this Section 2.06 or Section 2.07 or 2.10 hereof, shall beauthenticated and delivered in the form of, and shall be, a Global Note, exceptfor Definitive Notes issued subsequent to any of the preceding events in (i) or(ii) above and pursuant to Section 2.06(c) hereof.  A Global Note may not be exchanged foranother Note other than as provided in this Section 2.06(a); provided, however,beneficial interests in a Global Note may be transferred and exchanged asprovided in Section 2.06(b), (c) or (f) hereof.

 

(b)                                 Transfer and Exchange of Beneficial Interestsin the Global Notes.  The transfer and exchange of beneficialinterests in the Global Notes shall be effected through the Depositary, inaccordance with the provisions of this Indenture and the Applicable Procedures.  Beneficial interests in the 

 

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Restricted Global Notes shallbe subject to restrictions on transfer comparable to those set forth herein tothe extent required by the Securities Act. Transfers of beneficial interests in the Global Notes also shall requirecompliance with either subparagraph (i) or (ii) below, as applicable, as wellas one or more of the other following subparagraphs, as applicable:

 

(i)                                     Transfer of Beneficial Interests in the SameGlobal Note.  Beneficial interests in any Restricted GlobalNote may be transferred to Persons who take delivery thereof in the form of abeneficial interest in the same Restricted Global Note in accordance with thetransfer restrictions set forth in the Private Placement Legend; provided,however, that prior to the expiration of the Restricted Period,transfers of beneficial interests in the Regulation S Temporary Global Note maynot be made to a U.S. Person or for the account or benefit of a U.S. Person(other than an Initial Purchaser). Beneficial interests in any Unrestricted Global Note may be transferredto Persons who take delivery thereof in the form of a beneficial interest in anUnrestricted Global Note.  No writtenorders or instructions shall be required to be delivered to the Registrar toeffect the transfers described in this Section 2.06(b)(i).

 

(ii)                                  All Other Transfers and Exchanges ofBeneficial Interests in Global Notes.  In connection with alltransfers and exchanges of beneficial interests that are not subject to Section2.06(b)(i) hereof, the transferor of such beneficial interest must deliver tothe Registrar either (A) (1) a written order from a Participant or anIndirect Participant given to the Depositary in accordance with the ApplicableProcedures directing the Depositary to credit or cause to be credited abeneficial interest in another Global Note in an amount equal to the beneficialinterest to be transferred or exchanged and (2) instructions given inaccordance with the Applicable Procedures containing information regarding theParticipant account to be credited with such increase or (B) (1) awritten order from a Participant or an Indirect Participant given to theDepositary in accordance with the Applicable Procedures directing theDepositary to cause to be issued a Definitive Note in an amount equal to thebeneficial interest to be transferred or exchanged and (2) instructions givenby the Depositary to the Registrar containing information regarding the Personin whose name such Definitive Note shall be registered to effect the transferor exchange referred to in (1) above; provided that in no event shallDefinitive Notes be issued upon the transfer or exchange of beneficialinterests in the Regulation S Temporary Global Note prior to (A) the expirationof the Restricted Period and (B) the receipt by the Registrar of anycertificates required pursuant to Rule 903. Upon consummation of an Exchange Offer by the Issuer in accordance withSection 2.06(f) hereof, the requirements of this Section 2.06(b)(ii) shall bedeemed to have been satisfied upon receipt by the Registrar of the instructionscontained in the Letter of Transmittal delivered by the Holder of suchbeneficial interests in the Restricted Global Notes.  Upon satisfaction of all of the requirementsfor transfer or exchange of beneficial interests in Global Notes contained inthis Indenture and the Notes or otherwise applicable under the Securities Act,the Trustee shall adjust the principal amount at maturity of the relevantGlobal Note(s) pursuant to Section 2.06(h) hereof.

 

(iii)                               Transfer of Beneficial Interests to AnotherRestricted Global Note.  A beneficial interest in any RestrictedGlobal Note may be transferred to a Person who takes delivery thereof in theform of a beneficial interest in another Restricted Global Note if the transfercomplies with the requirements of Section 2.06(b)(ii) hereof and the Registrarreceives the following:

 

(A)                          if the transferee will take delivery in theform of a beneficial interest in the 144A Global Note, then the transferor mustdeliver a certificate in the form of Exhibit B hereto, includingthe certifications in item (1) thereof; or

 

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(B)                            if the transferee will take delivery in theform of a beneficial interest in the Regulation S Global Note, then thetransferor must deliver a certificate in the form of Exhibit B hereto,including the certifications in item (2) thereof.

 

(iv)                              Transfer and Exchange of Beneficial Interestsin a Restricted Global Note for Beneficial Interests in an Unrestricted GlobalNote.  A beneficial interest in any RestrictedGlobal Note may be exchanged by any holder thereof for a beneficial interest inan Unrestricted Global Note or transferred to a Person who takes deliverythereof in the form of a beneficial interest in an Unrestricted Global Note ifthe exchange or transfer complies with the requirements of Section 2.06(b)(ii)hereof and:

 

(A)                          such exchange or transfer is effectedpursuant to the Exchange Offer in accordance with the Registration RightsAgreement and the holder of the beneficial interest to be transferred, in thecase of an exchange, or the transferee, in the case of a transfer, certifies inthe applicable Letter of Transmittal that it is not (1) a ParticipatingBroker-Dealer, (2) a Person participating in the distribution of theExchange Notes or (3) a Person who is an affiliate (as defined in Rule144) of the Issuer;

 

(B)                            such transfer is effected pursuant to theShelf Registration Statement in accordance with the Registration RightsAgreement;

 

(C)                            such transfer is effected by a ParticipatingBroker-Dealer pursuant to the Exchange Offer Registration Statement inaccordance with the Registration Rights Agreement; or

 

(D)                           the Registrar receives the following:

 

(1)                  ifthe holder of such beneficial interest in a Restricted Global Note proposes toexchange such beneficial interest for a beneficial interest in an UnrestrictedGlobal Note, a certificate from such Holder substantially in the form of Exhibit Chereto, including the certifications in item (1)(a) thereof; or

 

(2)                  ifthe holder of such beneficial interest in a Restricted Global Note proposes totransfer such beneficial interest to a Person who shall take delivery thereofin the form of a beneficial interest in an Unrestricted Global Note, acertificate from such holder in the form of Exhibit B hereto,including the certifications in item (4) thereof;

 

and,in each such case set forth in this subparagraph (D), if the Registrar sorequests or if the Applicable Procedures so require, an Opinion of Counsel inform reasonably acceptable to the Registrar to the effect that such exchange ortransfer is in compliance with the Securities Act and that the restrictions ontransfer contained herein and in the Private Placement Legend are no longerrequired in order to maintain compliance with the Securities Act.

 

If any such transfer iseffected pursuant to subparagraph (B) or (D) above at a time when an UnrestrictedGlobal Note has not yet been issued, the Issuer shall issue and, upon receiptof an Authentication Order in accordance with Section 2.02 hereof, the Trusteeshall authenticate one or more Unrestricted Global Notes in an aggregateprincipal amount at maturity equal to the aggregate principal amount atmaturity of beneficial interests transferred pursuant to subparagraph (B) or(D) above.

 

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Beneficial interests in an Unrestricted Global Notecannot be exchanged for, or transferred to Persons who take delivery thereof inthe form of, a beneficial interest in a Restricted Global Note.

 

(c)                                  Transfer or Exchange of Beneficial Interestsfor Definitive Notes.

 

(i)                                     Beneficial Interests in Restricted GlobalNotes to Restricted Definitive Notes.  If any holder of a beneficialinterest in a Restricted Global Note proposes to exchange such beneficialinterest for a Restricted Definitive Note or to transfer such beneficialinterest to a Person who takes delivery thereof in the form of a RestrictedDefinitive Note, then, upon the occurrence of any of the events in paragraph(i) or (ii) of Section 2.06(a) hereof and receipt by the Registrar of thefollowing documentation:

####  

(A)                              if the holder of such beneficial interest in a Restricted Global Noteproposes to exchange such beneficial interest for a Restricted Definitive Note,a certificate from such holder substantially in the form of Exhibit Chereto, including the certifications in item (2)(a) thereof;

 

(B)                                if such beneficial interest is being transferred to a QIB in accordancewith Rule 144A, a certificate substantially in the form of Exhibit Bhereto, including the certifications in item (1) thereof;

 

(C)                                if such beneficial interest is being transferred to a Non-U.S. Personin an offshore transaction in accordance with Rule 903 or Rule 904, acertificate substantially in the form of Exhibit B hereto,including the certifications in item (2) thereof;

 

(D)                               if such beneficial interest is being transferred pursuant to anexemption from the registration requirements of the Securities Act inaccordance with Rule 144, a certificate substantially in the form of Exhibit Bhereto, including the certifications in item (3)(a) thereof;

 

(E)                                 if such beneficial interest is beingtransferred to the Issuer or any of its Restricted Subsidiaries, a certificatesubstantially in the form of Exhibit B hereto, including thecertifications in item (3)(b) thereof; or

 

(F)                                 if such beneficial interest is beingtransferred pursuant to an effective registration statement under theSecurities Act, a certificate substantially in the form of Exhibit Bhereto, including the certifications in item (3)(c) thereof,

 

theTrustee shall cause the aggregate principal amount at maturity of theapplicable Global Note to be reduced accordingly pursuant to Section 2.06(h)hereof, and the Issuer shall execute and the Trustee shall authenticate andmail to the Person designated in the instructions a Definitive Note in theapplicable principal amount at maturity. Any Definitive Note issued in exchange for a beneficial interest in aRestricted Global Note pursuant to this Section 2.06(c) shall be registered insuch name or names and in such authorized denomination or denominations as theholder of such beneficial interest shall instruct the Registrar throughinstructions from the Depositary and the Participant or IndirectParticipant.  The Trustee shall mail suchDefinitive Notes to the Persons in whose names such Notes are soregistered.  Any Definitive Note issuedin exchange for a beneficial interest in a Restricted Global Note pursuant tothis Section 2.06(c)(i) shall bear the Private Placement Legend and shall besubject to all restrictions on transfer contained therein.

 

(ii)                                  Beneficial Interests in Regulation STemporary Global Note to Definitive Notes.   Notwithstanding Sections2.06(c)(i)(A) and (C) hereof, a beneficial interest in the Regulation STemporary Global Note may not be exchanged for a Definitive Note or transferredto a Person who takes delivery 

 

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thereof in the form of aDefinitive Note prior to (A) the expiration of the Restricted Period and (B)the receipt by the Registrar of any certificates required pursuant to Rule903(b)(3)(ii)(B) of the Securities Act, except in the case of a transferpursuant to an exemption from the registration requirements of the SecuritiesAct other than Rule 903 or Rule 904.

####  

(iii)                               Beneficial Interests in Restricted GlobalNotes to Unrestricted Definitive Notes.  A holder of a beneficialinterest in a Restricted Global Note may exchange such beneficial interest foran Unrestricted Definitive Note or may transfer such beneficial interest to aPerson who takes delivery thereof in the form of an Unrestricted Definitive Noteonly upon the occurrence of any of the events in subsection (i) or (ii) ofSection 2.06(a) hereof and if:

####  

(A)                              such exchange or transfer is effected pursuant to the Exchange Offer inaccordance with the Registration Rights Agreement and the holder of suchbeneficial interest, in the case of an exchange, or the transferee, in the caseof a transfer, certifies in the applicable Letter of Transmittal that it is not(1) a Participating Broker-Dealer, (2) a Person participating in thedistribution of the Exchange Notes or (3) a Person who is an affiliate (asdefined in Rule 144) of the Issuer;

 

(B)                                such transfer is effected pursuant to the Shelf Registration Statementin accordance with the Registration Rights Agreement;

 

(C)                                such transfer is effected by a Participating Broker-Dealer pursuant tothe Exchange Offer Registration Statement in accordance with the RegistrationRights Agreement; or

 

(D)                               the Registrar receives the following:

 

(1)                                  if the holder of such beneficial interest ina Restricted Global Note proposes to exchange such beneficial interest for anUnrestricted Definitive Note, a certificate from such holder substantially inthe form of Exhibit C hereto, including the certifications in item(1)(b) thereof; or

 

(2)                                  if the holder of such beneficial interest ina Restricted Global Note proposes to transfer such beneficial interest to aPerson who shall take delivery thereof in the form of an UnrestrictedDefinitive Note, a certificate from such holder substantially in the form of Exhibit Bhereto, including the certifications in item (4) thereof;

 

and,in each such case set forth in this subparagraph (D), if the Registrar sorequests or if the Applicable Procedures so require, an Opinion of Counsel inform reasonably acceptable to the Registrar to the effect that such exchange ortransfer is in compliance with the Securities Act and that the restrictions ontransfer contained herein and in the Private Placement Legend are no longerrequired in order to maintain compliance with the Securities Act.

 

(iv)                              Beneficial Interests in Unrestricted GlobalNotes to Unrestricted Definitive Notes.  If any holder of a beneficialinterest in an Unrestricted Global Note proposes to exchange such beneficialinterest for a Definitive Note or to transfer such beneficial interest to aPerson who takes delivery thereof in the form of a Definitive Note, then, uponthe occurrence of any of the events in subsection (i) or (ii) of Section2.06(a) hereof and satisfaction of the conditions set forth in Section2.06(b)(ii) hereof, the Trustee shall cause the aggregate principal amount atmaturity of the applicable Global Note to be reduced accordingly pursuant toSection 2.06(h) hereof, and the Issuer shall execute and the Trustee shallauthenticate and mail to the Person designated in the instructions a DefinitiveNote in the applicable principal amount at maturity.  Any Definitive Note issued in exchange for abeneficial interest pursuant to this 

 

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Section 2.06(c)(iv) shall beregistered in such name or names and in such authorized denomination ordenominations as the holder of such beneficial interest shall instruct theRegistrar through instructions from or through the Depositary and theParticipant or Indirect Participant.  TheTrustee shall mail such Definitive Notes to the Persons in whose names suchNotes are so registered.  Any DefinitiveNote issued in exchange for a beneficial interest pursuant to this Section2.06(c)(iv) shall not bear the Private Placement Legend.

####  

(d)                                 Transfer and Exchange of Definitive Notes forBeneficial Interests.

 

(i)                                     Restricted Definitive Notes to BeneficialInterests in Restricted Global Notes.  If any Holder of a RestrictedDefinitive Note proposes to exchange such Note for a beneficial interest in aRestricted Global Note or to transfer such Restricted Definitive Note to aPerson who takes delivery thereof in the form of a beneficial interest in aRestricted Global Note, then, upon receipt by the Registrar of the followingdocumentation:

####  

(A)                              if the Holder of such Restricted Definitive Note proposes to exchangesuch Note for a beneficial interest in a Restricted Global Note, a certificatefrom such Holder substantially in the form of Exhibit C hereto,including the certifications in item (2)(b) thereof;

 

(B)                                if such Restricted Definitive Note is being transferred to a QIB inaccordance with Rule 144A, a certificate substantially in the form of Exhibit Bhereto, including the certifications in item (1) thereof;

 

(C)                                if such Restricted Definitive Note is being transferred to a Non-U.S.Person in an offshore transaction in accordance with Rule 903 or Rule 904, acertificate substantially in the form of Exhibit B hereto,including the certifications in item (2) thereof;

 

(D)                               if such Restricted Definitive Note is being transferred pursuant to anexemption from the registration requirements of the Securities Act inaccordance with Rule 144, a certificate substantially in the form of Exhibit Bhereto, including the certifications in item (3)(a) thereof;

 

(E)                                 if such Restricted Definitive Note is beingtransferred to the Issuer or any of its Restricted Subsidiaries, a certificatesubstantially in the form of Exhibit B hereto, including thecertifications in item (3)(b) thereof; or

 

(F)                                 if such Restricted Definitive Note is beingtransferred pursuant to an effective registration statement under theSecurities Act, a certificate substantially in the form of Exhibit Bhereto, including the certifications in item (3)(c) thereof,

 

theTrustee shall cancel the Restricted Definitive Note, increase or cause to beincreased the aggregate principal amount at maturity of, in the case of clause(A) above, the applicable Restricted Global Note, in the case of clause (B)above, the applicable 144A Global Note, and in the case of clause (C) above,the applicable Regulation S Global Note.

 

(ii)                                  Restricted Definitive Notes to BeneficialInterests in Unrestricted Global Notes.  A Holder of a RestrictedDefinitive Note may exchange such Note for a beneficial interest in anUnrestricted Global Note or transfer such Restricted Definitive Note to aPerson who takes delivery thereof in the form of a beneficial interest in anUnrestricted Global Note only if:

####  

(A)                              such exchange or transfer is effected pursuant to the Exchange Offer inaccordance with the Registration Rights Agreement and the Holder, in the caseof an exchange, or the 

 

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transferee,in the case of a transfer, certifies in the applicable Letter of Transmittalthat it is not (1) a Participating Broker-Dealer, (2) a Person participating inthe distribution of the Exchange Notes or (3) a Person who is an affiliate (asdefined in Rule 144) of the Issuer;

 

(B)                                such transfer is effected pursuant to the Shelf Registration Statementin accordance with the Registration Rights Agreement;

 

(C)                                such transfer is effected by a Participating Broker-Dealer pursuant tothe Exchange Offer Registration Statement in accordance with the RegistrationRights Agreement; or

 

(D)                               the Registrar receives the following:

 

(1)                                  if the Holder of such Definitive Notesproposes to exchange such Notes for a beneficial interest in the UnrestrictedGlobal Note, a certificate from such Holder substantially in the form of Exhibit Chereto, including the certifications in item (1)(c) thereof; or

 

(2)                                  if the Holder of such Definitive Notesproposes to transfer such Notes to a Person who shall take delivery thereof inthe form of a beneficial interest in the Unrestricted Global Note, acertificate from such Holder substantially in the form of Exhibit Bhereto, including the certifications in item (4) thereof;

 

and,in each such case set forth in this subparagraph (D), if the Registrar sorequests or if the Applicable Procedures so require, an Opinion of Counsel inform reasonably acceptable to the Registrar to the effect that such exchange ortransfer is in compliance with the Securities Act and that the restrictions ontransfer contained herein and in the Private Placement Legend are no longerrequired in order to maintain compliance with the Securities Act.

 

Uponsatisfaction of the conditions of any of the subparagraphs in this Section2.06(d)(ii), the Trustee shall cancel the Definitive Notes and increase orcause to be increased the aggregate principal amount at maturity of theUnrestricted Global Note.

 

(iii)                               Unrestricted Definitive Notes to BeneficialInterests in Unrestricted Global Notes.  A Holder of an UnrestrictedDefinitive Note may exchange such Note for a beneficial interest in anUnrestricted Global Note or transfer such Definitive Notes to a Person whotakes delivery thereof in the form of a beneficial interest in an UnrestrictedGlobal Note at any time.  Upon receipt ofa request for such an exchange or transfer, the Trustee shall cancel theapplicable Unrestricted Definitive Note and increase or cause to be increasedthe aggregate principal amount at maturity of one of the Unrestricted GlobalNotes.

####  

Ifany such exchange or transfer from a Definitive Note to a beneficial interestis effected pursuant to subparagraph (ii)(B), (ii)(D) or (iii) above at a timewhen an Unrestricted Global Note has not yet been issued, the Issuer shallissue and, upon receipt of an Authentication Order in accordance with Section2.02 hereof, the Trustee shall authenticate one or more Unrestricted GlobalNotes in an aggregate principal amount at maturity equal to the principalamount at maturity of Definitive Notes so transferred.

 

(e)                                  Transfer and Exchange of Definitive Notes forDefinitive Notes.  Upon request by a Holder of Definitive Notesand such Holder’s compliance with the provisions of this Section 2.06(e), theRegistrar shall register the transfer or exchange of Definitive Notes.  Prior to such registration of transfer orexchange, the requesting Holder shall present or surrender to the Registrar theDefinitive Notes duly endorsed or accompanied by a written instruction oftransfer in form satisfactory to the Registrar

 

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duly executed by such Holder orby its attorney, duly authorized in writing. In addition, the requesting Holder shall provide any additionalcertifications, documents and information, as applicable, required pursuant tothe following provisions of this Section 2.06(e):

 

(i)                                     Restricted Definitive Notes to RestrictedDefinitive Notes.  Any Restricted Definitive Note may betransferred to and registered in the name of Persons who take delivery thereofin the form of a Restricted Definitive Note if the Registrar receives thefollowing:

####  

(A)                              if the transfer will be made pursuant to a QIB in accordance with Rule144A, then the transferor must deliver a certificate substantially in the formof Exhibit B hereto, including the certifications in item (1)thereof;

 

(B)                                if the transfer will be made pursuant to Rule 903 or Rule 904 then thetransferor must deliver a certificate in the form of Exhibit Bhereto, including the certifications in item (2) thereof; or

 

(C)                                if the transfer will be made pursuant to any other exemption from theregistration requirements of the Securities Act, then the transferor mustdeliver a certificate in the form of Exhibit B hereto, includingthe certifications required by item (3) thereof, if applicable.

 

(ii)                                  Restricted Definitive Notes to UnrestrictedDefinitive Notes.  Any Restricted Definitive Note may beexchanged by the Holder thereof for an Unrestricted Definitive Note ortransferred to a Person or Persons who take delivery thereof in the form of anUnrestricted Definitive Note if:

####  

(A)                              such exchange or transfer is effected pursuant to the Exchange Offer inaccordance with the Registration Rights Agreement and the Holder, in the caseof an exchange, or the transferee, in the case of a transfer, certifies in theapplicable Letter of Transmittal that it is not (1) a Participating Broker-Dealer,(2) a Person participating in the distribution of the Exchange Notes or (3) aPerson who is an affiliate (as defined in Rule 144) of the Issuer;

 

(B)                                any such transfer is effected pursuant to the Shelf RegistrationStatement in accordance with the Registration Rights Agreement;

 

(C)                                any such transfer is effected by a Participating Broker-Dealer pursuantto the Exchange Offer Registration Statement in accordance with theRegistration Rights Agreement; or

 

(D)                               the Registrar receives the following:

 

(1)                                  if the Holder of such Restricted DefinitiveNotes proposes to exchange such Notes for an Unrestricted Definitive Note, acertificate from such Holder substantially in the form of Exhibit Chereto, including the certifications in item (1)(d) thereof; or

 

(2)                                  if the Holder of such Restricted DefinitiveNotes proposes to transfer such Notes to a Person who shall take deliverythereof in the form of an Unrestricted Definitive Note, a certificate from suchHolder substantially in the form of Exhibit B hereto, including thecertifications in item (4) thereof;

 

and,in each such case set forth in this subparagraph (D), if the Registrar sorequests, an Opinion of Counsel in form reasonably acceptable to the Registrarto the effect that such exchange or transfer is in compliance with theSecurities Act and that the restrictions on transfer contained 

 

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hereinand in the Private Placement Legend are no longer required in order to maintaincompliance with the Securities Act.

 

(iii)                               Unrestricted Definitive Notes to UnrestrictedDefinitive Notes.  A Holder of Unrestricted Definitive Notes maytransfer such Notes to a Person who takes delivery thereof in the form of anUnrestricted Definitive Note.  Uponreceipt of a request to register such a transfer, the Registrar shall registerthe Unrestricted Definitive Notes pursuant to the instructions from the Holderthereof.

####  

(f)                                    Exchange Offer.  Uponthe occurrence of the Exchange Offer in accordance with the Registration RightsAgreement, the Issuer shall issue and, upon receipt of an Authentication Orderin accordance with Section 2.02 hereof, the Trustee shall authenticate (i) oneor more Unrestricted Global Notes in an aggregate principal amount at maturityequal to the principal amount at maturity of the beneficial interests in theRestricted Global Notes tendered for acceptance by Persons that certify in theapplicable Letters of Transmittal that (x) they are not ParticipatingBroker-Dealers, (y) they are not participating in a distribution of theExchange Notes and (z) they are not affiliates (as defined in Rule 144) of theIssuer, and accepted for exchange in the Exchange Offer and(ii) Unrestricted Definitive Notes in an aggregate principal amount atmaturity equal to the principal amount at maturity of the Restricted DefinitiveNotes tendered for acceptance by Persons that certify in the applicable Lettersof Transmittal that (x) they are not Participating Broker-Dealers, (y) they arenot participating in a distribution of the Exchange Notes and (z) they are notaffiliates (as defined in Rule 144) of the Issuer, and accepted for exchange inthe Exchange Offer.  Concurrently withthe issuance of such Notes, the Trustee shall cause the aggregate principalamount at maturity of the applicable Restricted Global Notes to be reducedaccordingly, and the Issuer shall execute and the Trustee shall authenticateand mail to the Persons designated by the Holders of Definitive Notes soaccepted Unrestricted Definitive Notes in the applicable principal amount atmaturity.  Any Notes that remainoutstanding after the consummation of the Exchange Offer, and Exchange Notesissued in connection with the Exchange Offer, shall be treated as a singleclass of securities under this Indenture.

 

(g)                                 Legends.  The following legends shallappear on the face of all Global Notes and Definitive Notes issued under thisIndenture unless specifically stated otherwise in the applicable provisions ofthis Indenture:

 

(i)                                     Private Placement Legend.

 

(A)                              Except as permitted by subparagraph (B) below, each Global Note andeach Definitive Note (and all Notes issued in exchange therefor or substitutionthereof) shall bear the legend in substantially the following form:

 

“THISSECURITY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, ASAMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLDWITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONSEXCEPT AS SET FORTH BELOW. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTSTHAT (A) IT IS A “QUALIFIED INSTITUTIONAL BUYER” (AS DEFINED IN RULE 144A UNDERTHE SECURITIES ACT), (B) IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS SECURITYIN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACTOR (C) IT IS AN ACCREDITED INVESTOR (AS DEFINED IN RULE 501(a)(1), (2), (3), OR(7) UNDER THE SECURITIES ACT (AN “ACCREDITED INVESTOR”), (2) AGREES THAT ITWILL NOT WITHIN TWO YEARS AFTER THE ORIGINAL ISSUANCE 

 

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OFTHIS SECURITY RESELL OR OTHERWISE TRANSFER THIS SECURITY EXCEPT (A) TO THEISSUER OR ANY SUBSIDIARY THEREOF, (B) INSIDE THE UNITED STATES TO A QUALIFIEDINSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, (C)INSIDE THE UNITED STATES TO AN ACCREDITED INVESTOR THAT, PRIOR TO SUCHTRANSFER, FURNISHES (OR HAS FURNISHED ON ITS BEHALF BY A U.S. BROKER-DEALER) TOTHE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTSRELATING TO THE RESTRICTIONS ON TRANSFER OF THIS SECURITY (THE FORM OF WHICHLETTER CAN BE OBTAINED FROM THE TRUSTEE FOR THIS SECURITY), (D)OUTSIDE THEUNITED STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THESECURITIES ACT (IF AVAILABLE), (E) PURSUANT TO THE EXEMPTION FROM REGISTRATIONPROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE), (F) IN ACCORDANCEWITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT(AND BASED UPON AN OPINION OF COUNSEL IF THE ISSUER SO REQUESTS), OR (G)PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND(3) AGREES THAT IT WILL GIVE TO EACH PERSON TO WHOM THIS SECURITY ISTRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND.  IN CONNECTION WITH ANY TRANSFER OF THISSECURITY WITHIN TWO YEARS AFTER THE ORIGINAL ISSUANCE OF THIS SECURITY, IF THEPROPOSED TRANSFEREE IS AN ACCREDITED INVESTOR, THE HOLDER MUST, PRIOR TO SUCHTRANSFER, FURNISH TO THE TRUSTEE AND THE ISSUER SUCH CERTIFICATIONS, LEGALOPINIONS OR OTHER INFORMATION AS EITHER OF THEM MAY REASONABLY REQUIRE TOCONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN ATRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIESACT.  AS USED HEREIN, THE TERMS “OFFSHORETRANSACTION,” “UNITED STATES” AND “U.S. PERSON” HAVE THE MEANING GIVEN TO THEMBY REGULATION S UNDER THE SECURITIES ACT.”

 

(B)                                Notwithstanding the foregoing, any Global Note or Definitive Noteissued pursuant to subparagraph (b)(iv), (c)(iii), (c)(iv), (d)(ii), (d)(iii),(e)(ii), (e)(iii) or (f) of this Section 2.06 (and all Notes issued in exchangetherefor or substitution thereof) shall not bear the Private Placement Legend.

 

(ii)                                  Global Note Legend.  EachGlobal Note shall bear a legend in substantially the following form:

####  

“THISGLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE GOVERNINGTHIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL OWNERSHEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPTTHAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANTTO SECTION 2.06(h) OF THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE EXCHANGED 

 

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INWHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE, (III) THISGLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TOSECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO ASUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE ISSUER.  UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE ORIN PART FOR NOTES IN DEFINITIVE FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPTAS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OFTHE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THEDEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCHSUCCESSOR DEPOSITARY.  UNLESS THISCERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORYTRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) (“DTC”) TO THE ISSUER ORITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANYCERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHERNAME AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANYPAYMENT IS MADE TO CEDE & CO. OR SUCH OTHER ENTITY AS MAY BE REQUESTED BYAN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOFFOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THEREGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.”

 

(iii)                               Regulation S Temporary Global Note Legend.  TheRegulation S Temporary Global Note shall bear a legend in substantially thefollowing form:

####  

“THERIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL NOTE, AND THE CONDITIONSAND PROCEDURES GOVERNING ITS EXCHANGE FOR CERTIFICATED NOTES, ARE AS SPECIFIEDIN THE INDENTURE (AS DEFINED HEREIN).”

 

(h)                                 Cancellation and/or Adjustment of GlobalNotes.  At such time as all beneficial interests in aparticular Global Note have been exchanged for Definitive Notes or a particularGlobal Note has been redeemed, repurchased or canceled in whole and not inpart, each such Global Note shall be returned to or retained and canceled bythe Trustee in accordance with Section 2.11 hereof.  At any time prior to such cancellation, ifany beneficial interest in a Global Note is exchanged for or transferred to aPerson who will take delivery thereof in the form of a beneficial interest inanother Global Note or for Definitive Notes, the principal amount at maturityof Notes represented by such Global Note shall be reduced accordingly and anendorsement shall be made on such Global Note by the Trustee or by theDepositary at the direction of the Trustee to reflect such reduction; and ifthe beneficial interest is being exchanged for or transferred to a Person whowill take delivery thereof in the form of a beneficial interest in anotherGlobal Note, such other Global Note shall be increased accordingly and anendorsement shall be made on such Global Note by the Trustee or by the Depositaryat the direction of the Trustee to reflect such increase.

 

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(i)                                     General Provisions Relating to Transfers andExchanges.

 

#### (i)                  To permit registrations of transfers andexchanges, the Issuer shall execute and the Trustee shall authenticate GlobalNotes and Definitive Notes upon receipt of an Authentication Order inaccordance with Section 2.02 hereof or at the Registrar’s request.

####  

#### (ii)               No service charge shall be made to a holderof a beneficial interest in a Global Note or to a Holder of a Definitive Notefor any registration of transfer or exchange, but the Issuer may requirepayment of a sum sufficient to cover any transfer tax or similar governmentalcharge payable in connection therewith (other than any such transfer taxes orsimilar governmental charge payable upon exchange or transfer pursuant toSections 2.07, 2.10, 3.06, 3.09, 4.10, 4.14 and 9.05 hereof).

####  

#### (iii)            Neither the Registrar nor the Issuer shall berequired to register the transfer of or exchange any Note selected forredemption in whole or in part, except the unredeemed portion of any Note beingredeemed in part.

####  

#### (iv)           All Global Notes and Definitive Notes issued upon any registration oftransfer or exchange of Global Notes or Definitive Notes shall be the validobligations of the Issuer, evidencing the same debt, and entitled to the samebenefits under this Indenture, as the Global Notes or Definitive Notessurrendered upon such registration of transfer or exchange.

####  

#### (v)              The Issuer shall not be required (A) toissue, to register the transfer of or to exchange any Notes during a periodbeginning at the opening of business 15 days before the day of any selection ofNotes for redemption under Section 3.02 hereof and ending at the close ofbusiness on the day of selection, (B) to register the transfer of or toexchange any Note so selected for redemption in whole or in part, except theunredeemed portion of any Note being redeemed in part or (C) to register thetransfer of or to exchange a Note between a Record Date and the next succeedingInterest Payment Date.

####  

#### (vi)           Prior to due presentment for the registration of a transfer of anyNote, the Trustee, any Agent and the Issuer may deem and treat the Person inwhose name any Note is registered as the absolute owner of such Note for thepurpose of receiving payment of Accreted Value of (and premium, if any) andinterest (including Additional Interest, if any) on such Notes and for allother purposes, and none of the Trustee, any Agent or the Issuer shall beaffected by notice to the contrary.

####  

#### (vii)        Upon surrender for registration of transfer of any Note at the officeor agency of the Issuer designated pursuant to Section 4.02 hereof, the Issuershall execute, and the Trustee shall authenticate and mail, in the name of thedesignated transferee or transferees, one or more replacement Notes of anyauthorized denomination or denominations of a like aggregate principal amountat maturity.

####  

#### (viii)     At the option of the Holder, Notes may be exchanged for other Notes ofany authorized denomination or denominations of a like aggregate principalamount at maturity upon surrender of the Notes to be exchanged at such officeor agency.  Whenever any Global Notes orDefinitive Notes are so surrendered for exchange, the Issuer shall execute, andthe Trustee shall authenticate and mail, the replacement Global Notes andDefinitive Notes which the Holder making the exchange is entitled to inaccordance with the provisions of Section 2.02 hereof.

####  

#### (ix)             All certifications, certificates and Opinionsof Counsel required to be submitted to the Registrar pursuant to this Section2.06 to effect a registration of transfer or exchange may be submitted byfacsimile.

####  

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## Section 2.07                                          ReplacementNotes.

 

Ifany mutilated Note is surrendered to the Trustee, the Registrar or the Issuerand the Trustee receives evidence to their satisfaction of the ownership anddestruction, loss or theft of any Note, the Issuer shall issue and the Trustee,upon receipt of an Authentication Order, shall authenticate a replacement Noteif the Trustee’s requirements are met. If required by the Trustee or the Issuer, an indemnity bond must besupplied by the Holder that is sufficient in the judgment of the Trustee andthe Issuer to protect the Issuer, the Trustee, any Agent and any authenticatingagent from any loss that any of them may suffer if a Note is replaced.  The Issuer may charge for its expenses inreplacing a Note.

 

Everyreplacement Note is a contractual obligation of the Issuer and shall beentitled to all of the benefits of this Indenture equally and proportionatelywith all other Notes duly issued hereunder.

 

## Section 2.08                                          OutstandingNotes.

 

TheNotes outstanding at any time are all the Notes authenticated by the Trusteeexcept for those canceled by it, those delivered to it for cancellation, thosereductions in the interest in a Global Note effected by the Trustee inaccordance with the provisions hereof, and those described in this Section 2.08as not outstanding.  Except as set forthin Section 2.09 hereof, a Note does not cease to be outstanding because theIssuer or an Affiliate of the Issuer holds the Note.

 

Ifa Note is replaced pursuant to Section 2.07 hereof, it ceases to be outstandingunless the Trustee receives proof satisfactory to it that the replaced Note isheld by a bona fide purchaser.

 

Ifthe principal amount at maturity of any Note is considered paid under Section4.01 hereof, it ceases to be outstanding and Accreted Value and interest on itcease to accrue.

 

Ifthe Paying Agent (other than the Issuer, a Subsidiary or an Affiliate of anythereof) holds, on a redemption date or maturity date, money sufficient to payNotes payable on that date, then on and after that date such Notes shall bedeemed to be no longer outstanding and shall cease to accrete in value oraccrue interest, as applicable.

 

## Section 2.09                                          TreasuryNotes.

 

Indetermining whether the Holders of the required principal amount at maturity ofNotes have concurred in any direction, waiver or consent, Notes owned by theIssuer, or by any Affiliate of the Issuer, shall be considered as though notoutstanding, except that for the purposes of determining whether the Trusteeshall be protected in relying on any such direction, waiver or consent, onlyNotes that a Responsible Officer of the Trustee knows are so owned shall be sodisregarded.  Notes so owned which havebeen pledged in good faith shall not be disregarded if the pledgee establishesto the satisfaction of the Trustee the pledgee’s right to deliver any suchdirection, waiver or consent with respect to the Notes and that the pledgee isnot the Issuer or any obligor upon the Notes or any Affiliate of the Issuer orof such other obligor.

 

## Section 2.10                                          TemporaryNotes.

 

Untilcertificates representing Notes are ready for delivery, the Issuer may prepareand the Trustee, upon receipt of an Authentication Order, shall authenticatetemporary Notes.  Temporary Notes shallbe substantially in the form of certificated Notes but may have variations thatthe Issuer considers appropriate for temporary Notes and as shall be reasonablyacceptable to the Trustee.  Withoutunreasonable 

 

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delay, the Issuer shall prepareand the Trustee shall authenticate definitive Notes in exchange for temporaryNotes.

 

Holdersand beneficial holders, as the case may be, of temporary Notes shall beentitled to all of the benefits accorded to Holders, or beneficial holders,respectively, of Notes under this Indenture.

 

## Section 2.11                                          Cancellation.

 

TheIssuer at any time may deliver Notes to the Trustee for cancellation. TheRegistrar and Paying Agent shall forward to the Trustee any Notes surrenderedto them for registration of transfer, exchange or payment.  The Trustee or, at the direction of theTrustee, the Registrar or the Paying Agent and no one else shall cancel allNotes surrendered for registration of transfer, exchange, payment, replacementor cancellation and shall dispose of cancelled Notes (subject to the recordretention requirement of the Exchange Act) in its customary manner.  Certification of the disposal of allcancelled Notes shall be delivered to the Issuer upon its request therefor.  The Issuer may not issue new Notes to replaceNotes that it has paid or that have been delivered to the Trustee forcancellation.

 

## Section 2.12                                          DefaultedInterest.

 

Ifthe Issuer defaults in a payment of interest on the Notes, it shall pay thedefaulted interest in any lawful manner plus, to the extent lawful, interestpayable on the defaulted interest to the Persons who are Holders on asubsequent special record date, in each case at the rate provided in the Notesand in Section 4.01 hereof.  The Issuershall notify the Trustee in writing of the amount of defaulted interestproposed to be paid on each Note and the date of the proposed payment, and atthe same time the Issuer shall deposit with the Trustee an amount of moneyequal to the aggregate amount proposed to be paid in respect of such defaulted interestor shall make arrangements satisfactory to the Trustee for such deposit priorto the date of the proposed payment, such money when deposited to be held intrust for the benefit of the Persons entitled to such defaulted interest asprovided in this Section 2.12.  TheTrustee shall fix or cause to be fixed each such special record date andpayment date; provided that no such special record date shall be lessthan 10 days prior to the related payment date for such defaultedinterest.  The Trustee shall promptlynotify the Issuer of such special record date. At least 15 days before the special record date, the Issuer (or, uponthe written request of the Issuer, the Trustee in the name and at the expenseof the Issuer) shall mail or cause to be mailed, first-class postage prepaid,to each Holder a notice at his or her address as it appears in the NoteRegister that states the special record date, the related payment date and theamount of such interest to be paid.

 

Subjectto the foregoing provisions of this Section 2.12 and for greater certainty,each Note delivered under this Indenture upon registration of transfer of or inexchange for or in lieu of any other Note shall carry the rights to interestaccrued and unpaid, and to accrue, which were carried by such other Note.

 

## Section 2.13                                          CUSIP Numbers

##  

TheIssuer in issuing the Notes may use CUSIP numbers (if then generally in use)and, if so, the Trustee shall use CUSIP numbers in notices of redemption as aconvenience to Holders; *provided*,that any such notice may state that no representation is made as to thecorrectness of such numbers either as printed on the Notes or as contained inany notice of redemption and that reliance may be placed only on the otheridentification numbers printed on the Notes, and any such redemption shall notbe affected by any defect in or omission of such numbers.  The Issuer will as promptly as practicablenotify the Trustee of any change in the CUSIP numbers.

 

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# ARTICLE3

#  

# REDEMPTION

#  

## Section 3.01                                          Noticesto Trustee.

 

Ifthe Issuer elects to redeem Notes pursuant to Section 3.07 hereof, it shallfurnish to the Trustee, at least 2 Business Days before notice of redemption isrequired to be mailed or caused to be mailed to Holders pursuant to Section3.03 hereof but not more than 60 days before a redemption date, an Officer’sCertificate setting forth (i) the paragraph or subparagraph of such Notesand/or Section of this Indenture pursuant to which the redemption shall occur,(ii) the redemption date, (iii) the Accreted Value of the Notes (or, inrelation to Section 3.08, portion of each Note) to be redeemed and (iv) theredemption price.

 

## Section 3.02                                          Selectionof Notes To Be Redeemed or Purchased.

 

Ifless than all of the Notes are to be redeemed or purchased in an offer topurchase at any time, the Trustee shall select the Notes to be redeemed orpurchased (a) if the Notes are listed on any national securities exchange,in compliance with the requirements of the principal national securitiesexchange on which the Notes are listed or (b) on a *pro rata* basis or, to the extent thatselection on a *pro rata* basis isnot practicable, by lot or by such other method the Trustee considers fair andappropriate.  In the event of partial redemptionor purchase by lot, the particular Notes to be redeemed or purchased shall beselected, unless otherwise provided herein, not less than 30 nor more than 60days prior to the redemption date by the Trustee from the outstanding Notes notpreviously called for redemption or purchase.

 

TheTrustee shall promptly notify the Issuer in writing of the Notes selected forredemption or purchase and, in the case of any Note selected for partialredemption or purchase, the Accreted Value thereof to be redeemed orpurchased.  Notes and portions of Notesselected shall be in amounts of $1,000 or whole multiples of $1,000; no Notesof $1,000 or less can be redeemed in part, except that if all of the Notes of aHolder are to be redeemed or purchased, the entire outstanding amount of Notesheld by such Holder, even if not a multiple of $1,000, shall be redeemed orpurchased.  Except as provided in thepreceding sentence, provisions of this Indenture that apply to Notes called forredemption or purchase also apply to portions of Notes called for redemption orpurchase.

 

## Section 3.03                                          Noticeof Redemption.

 

Subjectto Section 3.09 hereof, the Issuer shall mail or cause to be mailed byfirst-class mail, postage prepaid, notices of redemption at least 30 days butnot more than 60 days before the redemption date to each Holder of Notes to beredeemed at such Holder’s registered address or shall otherwise deliver on suchtimeframe such notice in accordance with the procedures of DTC, except thatredemption notices may be mailed more than 60 days prior to a redemption dateif the notice is issued in connection with Article 8 or Article 13 hereof.  Except as set forth in Section 3.07(b)hereof, notices of redemption may not be conditional.

 

Thenotice shall identify the Notes to be redeemed and shall state:

 

### (a)                                  the redemption date;

###  

### (b)                                 the redemption price;

###  

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### (c)                                  if any Note is to be redeemed in part only,the portion of the principal amount at maturity of that Note that is to beredeemed and that, after the redemption date upon surrender of such Note, a newNote or Notes in principal amount at maturity equal to the unredeemed portionof the principal amount at maturity of the original Note representing the sameindebtedness to the extent not redeemed will be issued in the name of theHolder of the Notes upon cancellation of the original Note;

###  

### (d)                                 the name and address of the Paying Agent;

###  

### (e)                                  that Notes called for redemption must besurrendered to the Paying Agent to collect the redemption price;

###  

### (f)                                    that, unless the Issuer defaults in makingsuch redemption payment, interest on Notes called for redemption ceases toaccrue on and after the redemption date;

###  

### (g)                                 the paragraph or subparagraph of the Notesand/or Section of this Indenture pursuant to which the Notes called forredemption are being redeemed;

###  

### (h)                                 that no representation is made as to thecorrectness or accuracy of the CUSIP number, if any, listed in such notice orprinted on the Notes; and

###  

### (i)                                     if in connection with a redemption pursuantto Section 3.07(b) hereof, any condition to such redemption.

###  

Atthe Issuer’s request, the Trustee shall give the notice of redemption in theIssuer’s name and at its expense; provided that the Issuer shall havedelivered to the Trustee, at least 2 Business Days before notice of redemptionis required to be mailed or caused to be mailed to Holders pursuant to thisSection 3.03 (unless a shorter notice shall be agreed to by the Trustee), anOfficer’s Certificate requesting that the Trustee give such notice and settingforth the information to be stated in such notice as provided in the precedingparagraph.

 

## Section 3.04                                          Effectof Notice of Redemption.

 

Oncenotice of redemption is mailed in accordance with Section 3.03 hereof, Notescalled for redemption become irrevocably due and payable on the redemption dateat the redemption price (except as provided for in Section 3.07(b)hereof).  The notice, if mailed in amanner herein provided, shall be conclusively presumed to have been given, whetheror not the Holder receives such notice. In any case, failure to give such notice by mail or any defect in thenotice to the Holder of any Note designated for redemption in whole or in partshall not affect the validity of the proceedings for the redemption of anyother Note.  Subject to Section 3.05hereof, on and after the redemption date, interest ceases to accrue on Notes orportions of Notes called for redemption.

 

## Section 3.05                                          Depositof Redemption or Purchase Price.

 

Priorto 10:00 a.m. (New York City time) on the redemption or purchase date, theIssuer shall deposit with the Trustee or with the Paying Agent money sufficientto pay the redemption or purchase price of and accrued and unpaid interest(including Additional Interest, if any) on all Notes to be redeemed orpurchased on that date.  The Trustee orthe Paying Agent shall promptly return to the Issuer any money deposited withthe Trustee or the Paying Agent by the Issuer in excess of the amounts necessaryto pay the redemption price of, and accrued and unpaid interest on, all Notesto be redeemed or purchased.

 

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Ifthe Issuer complies with the provisions of the preceding paragraph, on andafter the redemption or purchase date, the Accreted Value or interest, asapplicable, shall cease to accrue on the Notes or the portions of the principalamount at maturity of the Notes called for redemption or purchase.  If a Note is redeemed or purchased on or aftera Record Date but on or prior to the related Interest Payment Date, then anyaccrued and unpaid interest to the redemption or purchase date shall be paid tothe Person in whose name such Note was registered at the close of business onsuch Record Date.  If any Note called forredemption or purchase shall not be so paid upon surrender for redemption orpurchase because of the failure of the Issuer to comply with the precedingparagraph, the interest accruing or the accretion in value from the redemptionor purchase date shall be paid in addition to the Accreted Value called forredemption or purchase, and to the extent lawful on any interest accrued to theredemption or purchase date not paid on such unpaid Accreted Value, in eachcase at the rate provided in the Notes and in Section 4.01 hereof.

 

## Section 3.06                                          NotesRedeemed or Purchased in Part.

 

Uponsurrender of a Note that is redeemed or purchased in part, the Issuer shallissue and the Trustee shall authenticate for the Holder at the expense of theIssuer a new Note equal in principal amount at maturity to the unredeemed orunpurchased portion of the principal amount at maturity of the Note surrenderedrepresenting the same indebtedness to the extent not redeemed or purchased; providedthat each new Note will be in a principal amount at maturity of $1,000 or anintegral multiple of $1,000.  It isunderstood that, notwithstanding anything in this Indenture to the contrary,only an Authentication Order and not an Opinion of Counsel or Officer’sCertificate is required for the Trustee to authenticate such new Note.

 

## Section 3.07                                          OptionalRedemption.

 

(a)                                  At any time prior to November 1, 2011, theIssuer may redeem all or a part of the Notes, upon not less than 30 nor morethan 60 days’ prior notice mailed by first-class mail to the registeredaddress of each Holder of Notes or otherwise delivered in accordance with theprocedures of DTC, at a redemption price equal to 100% of the Accreted Value ofthe Notes redeemed plus the Applicable Premium as of the date of redemption(the “Redemption Date”).

 

(b)                                 Until November 1, 2009, the Issuer may, atits option, on one or more occasions redeem up to 35% of the aggregateprincipal amount at maturity of Notes (including the aggregate principal amountat maturity of Notes issued after the Issue Date), upon notice provided asdescribed in Section 3.03 hereof, at a redemption price equal to 113.000% ofthe Accreted Value thereof, as of the applicable Redemption Date, with the netcash proceeds of one or more Equity Offerings; provided that at least50% of the sum of the aggregate principal amount at maturity of Notesoriginally issued under this Indenture and any Additional Notes that are issuedunder this Indenture after the Issue Date remains outstanding immediately afterthe occurrence of each such redemption; providedfurther thateach such redemption occurs within 90 days of the date of closing of each suchEquity Offering.  Notice of anyredemption upon any Equity Offering may be given prior to such redemption, andany such redemption or notice may, at the Issuer’s discretion, be subject toone or more conditions precedent, including, but not limited to, completion ofthe related Equity Offering.

 

(c)                                  Except pursuant to Sections 3.07(a) and (b),the Notes will not be redeemable at the Issuer’s option before November 1,2011.

 

(d)                                 On and after November 1, 2011, the Issuer mayredeem the Notes, in whole or in part, at the redemption prices (expressed aspercentages of Accreted Value of the Notes to be redeemed) set forth below,plus accrued and unpaid interest thereon, if any, and Additional Interest (tothe extent not 

 

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already included in AccretedValue), if any, to the applicable Redemption Date, subject to the right ofHolders of record on the relevant Record Date to receive interest due on therelevant Interest Payment Date, if redeemed during the twelve-monthperiod beginning on November 1 of each of the years indicated below:

 
| **Year**             | ** ** | **Percentage** | ** ** |
|----------------------|------------|----------------|------------|
|                 |       |           |       |
| 2011                 |       | 106.500        | %          |
| 2012                 |       | 104.333        | %          |
| 2013                 |       | 102.167        | %          |
| 2014 and  thereafter |       | 100.000        | %          |

 

(e)                                  Any redemption pursuant to this Section 3.07shall be made pursuant to the provisions of Sections 3.01 through 3.06 hereof.

 

## Section 3.08                                          MandatoryRedemption.

 

OnMay 1, 2012, and, if necessary, any Interest Payment Date thereafter prior toNovember 1, 2016, the Issuer will be required to redeem a portion of each Noteoutstanding on such date equal to the AHYDO Amount on such date.

 

Theredemption price for each portion of a Note so redeemed will equal 100% of theAccreted Value of such portion as of the Redemption Date.

 

“AHYDOAmount” means the amount sufficient, but not in excess of the amountnecessary, to ensure that a Note will not be an “applicable high yield discountobligation” within the meaning of Section 163(i)(1) of the Internal RevenueCode of 1986.

 

Anyredemption pursuant to this Section 3.08 shall be made pursuant to theprovisions of Sections 3.01 through 3.06 hereof (other than Section 3.02).

 

## Section 3.09                                          Offers To Repurchase by Application of ExcessProceeds.

 

(a)                                  In the event that, pursuant to Section 4.10hereof, the Issuer shall be required to commence an Asset Sale Offer, it shallfollow the procedures specified below.

 

(b)                                 The Asset Sale Offer shall remain open for aperiod of 20 Business Days following its commencement and no longer, except tothe extent that a longer period is required by applicable law (the “OfferPeriod”).  No later than fiveBusiness Days after the termination of the Offer Period (the “Purchase Date”),the Issuer shall apply all Excess Proceeds (the “Offer Amount”) to thepurchase of Notes and, if required, Pari Passu Indebtedness (on a *pro rata* basis, if applicable), or, ifless than the Offer Amount has been tendered, all Notes and Pari PassuIndebtedness tendered in response to the Asset Sale Offer.  Payment for any Notes so purchased shall bemade in the same manner as interest payments are made.

 

(c)                                  If the Purchase Date is on or after a RecordDate and on or before the related Interest Payment Date, any accrued and unpaidinterest and Additional Interest, if any, up to but excluding the PurchaseDate, shall be paid to the Person in whose name a Note is registered at theclose of business on such Record Date, and no additional interest shall bepayable to Holders who tender Notes pursuant to the Asset Sale Offer.

 

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(d)                                 Upon the commencement of an Asset Sale Offer,the Issuer shall send, by first-class mail, a notice to each of the Holders,with a copy to the Trustee.  The notice shallcontain all instructions and materials necessary to enable such Holders totender Notes pursuant to the Asset Sale Offer. The Asset Sale Offer shall be made to all Holders and holders of PariPassu Indebtedness.  The notice, whichshall govern the terms of the Asset Sale Offer, shall state:

 

(i)                                     that the Asset Sale Offer is being madepursuant to this Section 3.09 and Section 4.10 hereof and the length of timethe Asset Sale Offer shall remain open;

 

(ii)                                  the Offer Amount, the purchase price and thePurchase Date;

 

(iii)                               that any Note not tendered or accepted for payment shall continue toaccrue interest;

 

(iv)                              that, unless the Issuer defaults in making such payment, any Noteaccepted for payment pursuant to the Asset Sale Offer shall cease to accrue interestafter the Purchase Date;

 

(v)                                 that Holders electing to have a Notepurchased pursuant to an Asset Sale Offer may elect to have Notes purchased inintegral multiples of $1,000 only;

 

(vi)                              that Holders electing to have a Note purchased pursuant to any AssetSale Offer shall be required to surrender the Note, with the form entitled “Optionof Holder to Elect Purchase” attached to the Note completed, or transfer suchNote by book-entry transfer, to the Issuer, the Depositary, if appointed by theIssuer, or a Paying Agent at the address specified in the notice at least threedays before the Purchase Date;

 

(vii)                           that Holders shall be entitled to withdraw their election if theIssuer, the Depositary or the Paying Agent, as the case may be, receives, notlater than the expiration of the Offer Period, a telegram, facsimiletransmission or letter setting forth the name of the Holder, the principalamount at maturity of the Note the Holder delivered for purchase and astatement that such Holder is withdrawing his election to have such principalamount at maturity of such Note purchased;

 

(viii)                        that, if the sum of the aggregate Accreted Value of Notes and theaggregate principal amount or accreted value of Pari Passu Indebtednesssurrendered by the holders thereof exceeds the Offer Amount, the Trustee shallselect the Notes and such Pari Passu Indebtedness to be purchased on a *pro rata* basis based on the accreted value(including Accreted Value) or principal amount of the Notes or such Pari PassuIndebtedness tendered (with such adjustments as may be deemed appropriate bythe Trustee so that only Notes in denominations of $1,000, or integralmultiples thereof, shall be purchased); and

 

(ix)                                that Holders whose Notes were purchased only in part shall be issuednew Notes equal in principal amount at maturity to the unpurchased portion ofthe principal amount at maturity of the Notes surrendered (or transferred bybook-entry transfer) representing the same indebtedness to the extent notrepurchased.

 

(e)                                  On or before the Purchase Date, the Issuershall, to the extent lawful, (1) accept for payment, on a *pro rata* basis to the extent necessary,the Offer Amount of Notes or portions thereof validly tendered pursuant to theAsset Sale Offer, or if less than the Offer Amount has been tendered, all Notestendered and (2) deliver or cause to be delivered to the Trustee the Notesproperly accepted together 

 

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with an Officer’s Certificatestating the aggregate principal amount at maturity of Notes or portions thereofso tendered.

 

(f)                                    The Issuer, the Depositary or the PayingAgent, as the case may be, shall promptly mail or deliver to each tenderingHolder an amount equal to the purchase price of the Notes properly tendered bysuch Holder and accepted by the Issuer for purchase, and the Issuer shallpromptly issue a new Note, and the Trustee, upon receipt of an AuthenticationOrder, shall authenticate and mail or deliver (or cause to be transferred bybook-entry) such new Note to such Holder (it being understood that,notwithstanding anything in this Indenture to the contrary, no Opinion ofCounsel or Officer’s Certificate is required for the Trustee to authenticateand mail or deliver such new Note) in a principal amount at maturity equal toany unpurchased portion of the principal amount at maturity of the Notesurrendered representing the same indebtedness to the extent not repurchased; providedthat each such new Note shall be in a principal amount at maturity of $1,000 oran integral multiple thereof.  Any Notenot so accepted shall be promptly mailed or delivered by the Issuer to theHolder thereof.  The Issuer shallpublicly announce the results of the Asset Sale Offer on or as soon aspracticable after the Purchase Date.

 

Otherthan as specifically provided in this Section 3.09 or Section 4.10 hereof, anypurchase pursuant to this Section 3.09 shall be made pursuant to theapplicable provisions of Sections 3.01 through 3.06 hereof.

 

# ARTICLE4

#  

# COVENANTS

#  

## Section 4.01                                          Paymentof Notes.

 

TheIssuer shall pay or cause to be paid the Accreted Value of, premium, if any,Additional Interest, if any, and interest on the Notes on the dates and in themanner provided in the Notes.  AccretedValue, premium, if any, Additional Interest, if any, and interest shall beconsidered paid on the date due if the Paying Agent, if other than the Issueror a Subsidiary, holds as of noon Eastern Time on the due date money depositedby the Issuer in immediately available funds and designated for and sufficientto pay all Accreted Value, premium, if any, and interest then due.  If a payment date is not a Business Day,payment may be made on the next succeeding day that is a Business Day.

 

TheIssuer shall pay all Additional Interest, if any, in the same manner on thedates and in the amounts set forth in the Registration Rights Agreement.

 

TheIssuer shall pay interest (including post-petition interest in any proceedingunder any Bankruptcy Law) on overdue Accreted Value at the rate equal to thethen applicable interest rate on the Notes to the extent lawful; it shall payinterest (including post-petition interest in any proceeding under anyBankruptcy Law) on overdue installments of interest and, to the extent notalready included in Accreted Value, Additional Interest (without regard to anyapplicable grace period) at the same rate to the extent lawful.

 

## Section 4.02                                          Maintenanceof Office or Agency.

 

TheIssuer shall maintain in the Borough of Manhattan in the City of New York anoffice or agency (which may be an office of the Trustee or an affiliate of theTrustee, Registrar or co-registrar) where Notes may be surrendered forregistration of transfer or for exchange or presented for payment and wherenotices and demands to or upon the Issuer in respect of the Notes and thisIndenture may be served.  The Issuershall give prompt written notice to the Trustee of the location, and anychange in the location,

 

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of such office or agency.  If at any time the Issuer shall fail tomaintain any such required office or agency or shall fail to furnish theTrustee with the address thereof, such presentations, surrenders, notices anddemands may be made or served at the Corporate Trust Office of the Trustee.

 

TheIssuer may also from time to time designate one or more other offices oragencies where the Notes may be presented or surrendered for any or all suchpurposes and may from time to time rescind such designations; providedthat no such designation or rescission shall in any manner relieve the Issuerof its obligation to maintain an office or agency in the Borough of Manhattanin the City of New York for such purposes. The Issuer shall give prompt written notice to the Trustee of any suchdesignation or rescission and of any change in the location of any such otheroffice or agency.

 

TheIssuer hereby initially designates the office of the Trustee located at 45Broadway, 12th Floor, New York, New York 10006, Attention:  Worldwide Securities Services, as one suchoffice or agency of the Issuer in accordance with Section 2.03 hereof.

 

## Section 4.03                                          Reportsand Other Information.

 

(a)                                  Notwithstanding that the Issuer may not besubject to the reporting requirements of Section 13 or 15(d) of the ExchangeAct or otherwise report on an annual and quarterly basis on forms provided forsuch annual and quarterly reporting pursuant to rules and regulationspromulgated by the SEC, the Issuer shall file with the SEC (and make availableto the Trustee and Holders of the Notes (without exhibits), without cost to anyHolder, within 15 days after the Issuer files them with the SEC) from andafter the Issue Date,

 

###### (1)                                  within 90 days after the end of eachfiscal year, annual reports on Form 10-K, or any successor or comparableform, containing the information required to be contained therein, or requiredin such successor or comparable form;

######  

###### (2)                                  within 45 days after the end of each of thefirst three fiscal quarters of each fiscal year, commencing with the firstfiscal quarter of the fiscal year commencing February 4, 2007, reports onForm 10-Q containing all quarterly information that would be required tobe contained in Form 10-Q, or any successor or comparable form;

######  

###### (3)                                  promptly from time to time after theoccurrence of an event required to be therein reported, such other reports onForm 8-K, or any successor or comparable form; and

######  

###### (4)                                  any other information, documents and otherreports which the Issuer would be required to file with the SEC if it weresubject to Section 13 or 15(d) of the Exchange Act beginning on and after theIssue Date;

######  

ineach case, in a manner that complies in all material respects with therequirements specified in such form; provided that the Issuer shall notbe so obligated to file such reports with the SEC (i) if the SEC does notpermit such filing or (ii) prior to the consummation of an exchange offer orthe effectiveness of a shelf registration statement as required by theRegistration Rights Agreement, so long as if clause (i) or (ii) isapplicable the Issuer makes available such information to prospectivepurchasers of Notes, in addition to providing such information to the Trusteeand the Holders of the Notes, in each case within 15 days after the time theIssuer would be required to file such information with the SEC, if it weresubject to Sections 13 or 15(d) of the Exchange Act.  To the extent any such information is not sofiled or furnished, as applicable, within the time periods specified above andsuch information is subsequently filed or furnished, as applicable, the Issuershall be deemed to have satisfied its obligations with respect thereto at suchtime and any Default with respect thereto shall be deemed to have been cured; providedthat such 

 

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cureshall not otherwise affect the rights of the Holders under Article 6 hereto ifHolders of at least 25% in principal amount at maturity of the then totaloutstanding Notes have declared the Accreted Value, premium, if any, interestand any other monetary obligations on all the then outstanding Notes to be dueand payable immediately and such declaration shall not have been rescinded orcancelled prior to such cure.  Inaddition, to the extent not satisfied by the foregoing, for so long as anyNotes are outstanding, the Issuer shall furnish to Holders and to securitiesanalysts and prospective investors, upon their request, the informationrequired to be delivered pursuant to Rule 144A(d)(4) under the Securities Act.

 

(b)                                 In the event that any direct or indirectparent company of the Issuer becomes a guarantor of the Notes, the Issuer maysatisfy its obligations under this Section 4.03 with respect to financialinformation relating to the Issuer by furnishing financial information relatingto such parent; provided that the same is accompanied by consolidatinginformation that explains in reasonable detail the differences between theinformation relating to such parent, on the one hand, and the informationrelating to the Issuer and its Restricted Subsidiaries on a standalone basis,on the other hand.

 

(c)                                  Notwithstanding the foregoing, therequirements of this Section 4.03 shall be deemed satisfied prior to thecommencement of the Exchange Offer or the effectiveness of the ShelfRegistration Statement by the filing with the SEC of the Exchange OfferRegistration Statement or Shelf Registration Statement or any other filing, andany amendments thereto, with such financial information that satisfiesRegulation S-X of the Securities Act.

 

(d)                                 Delivery of such reports, information anddocuments to the Trustee is for informational purposes only and the Trustee’sreceipt of such shall not constitute constructive notice of any informationcontained therein or determinable from information contained therein, includingthe Issuer’s compliance with any of its covenants hereunder (as to which theTrustee is entitled to rely exclusively on Officer’s Certificates).

 

## Section 4.04                                          ComplianceCertificate.

 

(a)                                  The Issuer and each Guarantor (to the extentthat such Guarantor is so required under the Trust Indenture Act) shall deliverto the Trustee, within 120 days after the end of each fiscal year ending afterthe Issue Date, a certificate from the principal executive officer, principalfinancial officer or principal accounting officer stating that a review of theactivities of the Issuer and its Restricted Subsidiaries during the precedingfiscal year has been made under the supervision of the signing Officer with aview to determining whether the Issuer has kept, observed, performed andfulfilled its obligations under this Indenture, and further stating, as to suchOfficer signing such certificate, that to the best of his or her knowledge theIssuer has kept, observed, performed and fulfilled each and every condition andcovenant contained in this Indenture during such fiscal year and is not indefault in the performance or observance of any of the terms, provisions,covenants and conditions of this Indenture (or, if a Default shall haveoccurred, describing all such Defaults of which he or she may have knowledgeand what action the Issuer is taking or proposes to take with respect thereto).

 

(b)                                 When any Default has occurred and iscontinuing under this Indenture, or if the Trustee or the holder of any otherevidence of Indebtedness of the Issuer or any Subsidiary gives any notice ortakes any other action with respect to a claimed Default, the Issuer shallpromptly (which shall be no more than five (5) Business Days) deliver to theTrustee by registered or certified mail or by facsimile transmission an Officer’sCertificate specifying such event and what action the Issuer proposes to takewith respect thereto.

 

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## Section 4.05                                          Taxes.

 

TheIssuer shall pay or discharge, and shall cause each of its RestrictedSubsidiaries to pay or discharge, prior to delinquency, all material taxes,lawful assessments, and governmental levies except such as are contested ingood faith and by appropriate actions or where the failure to effect such paymentor discharge is not adverse in any material respect to the Holders of theNotes.

 

## Section 4.06                                          Stay,Extension and Usury Laws.

 

TheIssuer and each of the Guarantors covenant (to the extent that they maylawfully do so) that they shall not at any time insist upon, plead, or in anymanner whatsoever claim or take the benefit or advantage of, any stay,extension or usury law wherever enacted, now or at any time hereafter in force,that may affect the covenants or the performance of this Indenture; and theIssuer and each of the Guarantors (to the extent that they may lawfully do so)hereby expressly waive all benefit or advantage of any such law, and covenant(to the extent that they may lawfully do so) that they shall not, by resort toany such law, hinder, delay or impede the execution of any power herein grantedto the Trustee, but shall suffer and permit the execution of every such poweras though no such law has been enacted.

 

## Section 4.07                                          Limitationon Restricted Payments.

 

(a)                                  The Issuer shall not, and shall not permitany of its Restricted Subsidiaries to, directly or indirectly:

 

(I)                                    declare or pay any dividend or make anypayment having the effect thereof or any distribution on account of the Issuer’s,or any of its Restricted Subsidiaries’ Equity Interests, including any dividendor distribution payable in connection with any merger or consolidation otherthan:

 

(A)                              dividends or distributions by the Issuer payable solely in EquityInterests (other than Disqualified Stock) of the Issuer; or

 

(B)                                dividends or distributions by a Restricted Subsidiary so long as, inthe case of any dividend or distribution payable on or in respect of any classor series of securities issued by a Restricted Subsidiary other than a Wholly-OwnedSubsidiary, the Issuer or a Restricted Subsidiary receives at least its *pro rata* share of such dividend ordistribution in accordance with its Equity Interests in such class or series ofsecurities;

 

(II)                                purchase, redeem, defease or otherwise acquire or retire for value anyEquity Interests of the Issuer or any direct or indirect parent of the Issuer,including in connection with any merger or consolidation;

 

(III)                            make any principal payment on, or redeem, repurchase, defease orotherwise acquire or retire for value, in each case prior to any scheduledrepayment, sinking fund payment or maturity, any Subordinated Indebtedness,other than:

 

(A)                              Indebtedness permitted under clauses (7) and (8) of Section 4.09(b)hereof; or

 

(B)                                the purchase, repurchase or other acquisition of SubordinatedIndebtedness purchased in anticipation of satisfying a sinking fund obligation,principal installment 

 

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orfinal maturity, in each case due within one year of the date of purchase,repurchase or acquisition; or

 

(IV)                            make any Restricted Investment

 

(allsuch payments and other actions set forth in clauses (I) through (IV) abovebeing collectively referred to as “Restricted Payments”), unless, at thetime of such Restricted Payment:

 

(1)                                  no Default shall have occurred and becontinuing or would occur as a consequence thereof;

 

(2)                                  immediately after giving effect to suchtransaction on a *pro forma* basis,the Issuer could incur $1.00 of additional Indebtedness under Section 4.09(a)hereof; and

 

(3)                                  such Restricted Payment, together with theaggregate amount of all other Restricted Payments made by the Issuer and itsRestricted Subsidiaries after the Issue Date (including Restricted Paymentspermitted by clauses (1), (6)(c), (9) and (14) of Section 4.07(b) hereof, butexcluding all other Restricted Payments permitted by Section 4.07(b) hereof),is less than the sum of (without duplication):

 

(a)                                  50% of the Consolidated Net Income of theIssuer for the period (taken as one accounting period) beginning July 30, 2006to the end of the Issuer’s most recently ended fiscal quarter for whichinternal financial statements are available at the time of such RestrictedPayment, or, in the case such Consolidated Net Income for such period is adeficit, minus 100% of such deficit; *plus*

 

(b)                                 100% of the aggregate net cash proceeds andthe fair market value, as determined in good faith by the Issuer, of marketablesecurities or other property received by the Issuer since immediately after theIssue Date (other than net cash proceeds to the extent such net cash proceedshave been used to incur Indebtedness, Disqualified Stock or Preferred Stockpursuant to clause (12)(a) of Section 4.09(b) hereof) from the issue or saleof:

 

(i)                                     (A) Equity Interests of the Issuer, includingTreasury Capital Stock, but excluding cash proceeds and the fair market value,as determined in good faith by the Issuer, of marketable securities or otherproperty received from the sale of:

 

(x)                                   Equity Interests to members of management,directors or consultants of the Issuer, any direct or indirect parent companyof the Issuer and the Issuer’s Subsidiaries after the Issue Date to the extentsuch amounts have been applied to Restricted Payments made in accordance withclause (4) of Section 4.07(b) hereof; and

 

(y)                                 Designated Preferred Stock; and

 

(B)to the extent such net cash proceeds are actually contributed to the Issuer,Equity Interests of the Issuer’s direct or indirect parent companies (excludingcontributions of the proceeds from the sale of Designated Preferred Stock ofsuch companies or contributions to the extent such amounts have been applied toRestricted 

 

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Paymentsmade in accordance with clause (4) of Section 4.07(b) hereof); or

 

(ii)                                  debt securities of the Issuer that have beenconverted into or exchanged for Equity Interests of the Issuer;

 

provided, however,that this clause (b) shall not include the proceeds from (W) Refunding CapitalStock, (X) Equity Interests or convertible debt securities of the Issuer soldto a Restricted Subsidiary, (Y) Disqualified Stock or debt securities that havebeen converted into Disqualified Stock or (Z) Excluded Contributions; *plus*

 

(c)                                  100% of the aggregate amount of cash and thefair market value, as determined in good faith by the Issuer, of marketablesecurities or other property contributed to the capital of the Issuer followingthe Issue Date other than (X) net cash proceeds to the extent such net cashproceeds have been used to incur Indebtedness or issue Disqualified Stock orPreferred Stock pursuant to clause (12)(a) of Section 4.09(b) hereof), (Y) by aRestricted Subsidiary and (Z) from any Excluded Contributions; *plus*

 

(d)                                 100% of the aggregate amount received in cashand the fair market value, as determined in good faith by the Issuer, ofmarketable securities or other property received by means of:

 

(i)                                     the sale or other disposition (other than tothe Issuer or a Restricted Subsidiary) of Restricted Investments made by theIssuer or its Restricted Subsidiaries and repurchases and redemptions of suchRestricted Investments from the Issuer or its Restricted Subsidiaries andrepayments of loans or advances, and releases of guarantees, which constituteRestricted Investments by the Issuer or its Restricted Subsidiaries, in eachcase after the Issue Date; or

 

(ii)                                  the sale (other than to the Issuer or aRestricted Subsidiary) of the stock of an Unrestricted Subsidiary or adistribution from an Unrestricted Subsidiary (other than in each case to theextent the Investment in such Unrestricted Subsidiary was made by the Issuer ora Restricted Subsidiary pursuant to clause (7) of Section 4.07(b) hereofor to the extent such Investment constituted a Permitted Investment) or adividend from an Unrestricted Subsidiary after the Issue Date; *plu*s

 

(e)                                  in the case of the redesignation of anUnrestricted Subsidiary as a Restricted Subsidiary or the merger, amalgamationor consolidation of an Unrestricted Subsidiary into the Issuer or a RestrictedSubsidiary or the transfer of all or substantially all of the assets of anUnrestricted Subsidiary to the Issuer or a Restricted Subsidiary after theIssue Date, the fair market value of the Investment in such UnrestrictedSubsidiary (or the assets transferred), as determined by the Issuer in goodfaith or, if such fair market value may exceed $125.0 million, in writing by anIndependent Financial Advisor, at the time of the redesignation of suchUnrestricted Subsidiary as a Restricted Subsidiary or at the time of suchmerger, amalgamation, consolidation or transfer of assets to the extent theInvestment in such Unrestricted Subsidiary was made by the Issuer or aRestricted Subsidiary pursuant to clause (7) of Section 4.07(b) hereof or tothe extent such Investment constituted a Permitted Investment.

 

(b)                                 Section 4.07(a) hereof shall not prohibit:

 

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(1)                                  the payment of any dividend within 60 daysafter the date of declaration thereof, if at the date of declaration suchpayment would have complied with the provisions of this Indenture;

 

(2)                                  (a) the redemption, repurchase, retirement orother acquisition of any Equity Interests (“Treasury Capital Stock”) ofthe Issuer or any Equity Interests of any direct or indirect parent company ofthe Issuer or any Subordinated Indebtedness of the Issuer or a RestrictedSubsidiary, in exchange for, or out of the proceeds of, the substantiallyconcurrent sale or issuance (other than to a Restricted Subsidiary) of, EquityInterests of the Issuer or any direct or indirect parent company of the Issuerto the extent contributed to the Issuer (in each case, other than any DisqualifiedStock) (“Refunding Capital Stock”), (b) the declaration and payment ofdividends on Treasury Capital Stock out of the proceeds of the substantiallyconcurrent sale or issuance (other than to a Subsidiary of the Issuer or to anemployee stock ownership plan or any trust established by the Issuer or any ofits Subsidiaries) of Refunding Capital Stock, and (c) if immediately prior tothe retirement of Treasury Capital Stock, the declaration and payment ofdividends thereon was permitted under clause (6) of this Section 4.07(b), thedeclaration and payment of dividends on the Refunding Capital Stock (other thanRefunding Capital Stock the proceeds of which were used to redeem, repurchase,retire or otherwise acquire any Equity Interests of any direct or indirectparent company of the Issuer) in an aggregate amount per year no greater thanthe aggregate amount of dividends per annum that were declarable and payable onsuch Treasury Capital Stock immediately prior to such retirement;

 

(3)                                  the redemption, repurchase or otheracquisition or retirement of Subordinated Indebtedness of the Issuer or aGuarantor made by exchange for, or out of the proceeds of, the substantiallyconcurrent sale of, new Indebtedness of the Issuer or a Guarantor, as the casemay be, which is incurred in compliance with Section 4.09 hereof so long as:

 

(a)                                  the principal amount (or accreted value, ifapplicable) of such new Indebtedness does not exceed the principal amount of(or accreted value, if applicable), plus any accrued and unpaid interest on,the Subordinated Indebtedness being so redeemed, repurchased, exchanged,acquired or retired for value, plus the amount of any premium required to bepaid under the terms of the instrument governing the Subordinated Indebtednessbeing so redeemed, repurchased, exchanged, acquired or retired and anyreasonable fees and expenses incurred in connection with such redemption,repurchase, exchange, acquisition or retirement and the issuance of such newIndebtedness;

 

(b)                                 such new Indebtedness is subordinated to theNotes or the applicable Guarantee at least to the same extent as suchSubordinated Indebtedness so repurchased, exchanged, redeemed, acquired orretired for value;

 

(c)                                  such new Indebtedness has a final scheduledmaturity date equal to or later than the final scheduled maturity date of theSubordinated Indebtedness being so redeemed, repurchased, exchanged, acquiredor retired; and

 

(d)                                 such new Indebtedness has a Weighted AverageLife to Maturity equal to or greater than the remaining Weighted Average Lifeto Maturity of the Subordinated Indebtedness being so redeemed, repurchased,exchanged, acquired or retired;

 

(4)                                  a Restricted Payment to pay for therepurchase, retirement or other acquisition or retirement for value of EquityInterests (other than Disqualified Stock) of the Issuer or any of its direct orindirect parent companies held by any future, present or former employee,director or 

 

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consultantof the Issuer, any of its Subsidiaries or any of its direct or indirect parentcompanies, or any of their respective estates, spouses or former spousespursuant to any management equity plan or stock option plan or any othermanagement or employee benefit plan or agreement (including, for the avoidanceof doubt, any principal and interest payable on any notes issued by the Issueror any direct or indirect parent company in connection with any suchrepurchase, retirement or other acquisition or retirement); provided, however,that the aggregate Restricted Payments made under this clause (4) do not exceedin any calendar year $15.0 million (which shall increase to $30.0 millionsubsequent to the consummation of an underwritten public Equity Offering by theIssuer or any direct or indirect parent company of the Issuer) with unusedamounts in any calendar year being carried over to succeeding calendar yearssubject to a maximum (without giving effect to the following proviso) of $30.0million in any calendar year (which shall increase to $60.0 million subsequentto the consummation of an underwritten public Equity Offering by the Issuer orany direct or indirect parent company of the Issuer); provided further thatsuch amount in any calendar year may be increased by an amount not to exceed:

 

(a)                                  the cash proceeds from the sale of EquityInterests (other than Disqualified Stock) of the Issuer and, to the extentcontributed to the Issuer, Equity Interests of any of the Issuer’s direct orindirect parent companies, in each case to members of management, directors orconsultants of the Issuer, any of its Subsidiaries or any of its direct orindirect parent companies that occurs after the Issue Date, to the extent thecash proceeds from the sale of such Equity Interests have not otherwise been appliedto the payment of Restricted Payments by virtue of clause (3) of Section4.07(a) hereof, plus, in respect of any sale of Equity Interests in connectionwith an exercise of stock options, an amount equal to the amount required to bewithheld by the Issuer or any of its direct or indirect parent companies inconnection with such exercise under applicable law to the extent such amount isrepaid to the Issuer or its direct or indirect parent company, as applicable,constituted a Restricted Payment and has not otherwise been applied to thepayment of Restricted Payments by virtue of clause (3) of Section 4.07(a)hereof; *plus*

 

(b)                                 the cash proceeds of key man life insurancepolicies received by the Issuer or its Restricted Subsidiaries after the IssueDate; *less*

 

(c)                                  the amount of any Restricted Paymentspreviously made with the cash proceeds described in clauses (a) and (b) of thisclause (4);

 

and provided**further that cancellation of Indebtedness owing to the Issuerfrom employees, directors or consultants of the Issuer, any of the Issuer’sdirect or indirect parent companies or any of the Issuer’s RestrictedSubsidiaries in connection with a repurchase of Equity Interests of the Issueror any of its direct or indirect parent companies will not be deemed toconstitute a Restricted Payment for purposes of this Section 4.07 or any otherprovision of this Indenture;

 

(5)                                  the declaration and payment of dividends toholders of any class or series of Disqualified Stock of the Issuer or any ofits Restricted Subsidiaries issued in accordance with Section 4.09 hereof tothe extent such dividends are included in the definition of “Fixed Charges”;

 

(6)                                  (a) the declaration and payment of dividendsto holders of any class or series of Designated Preferred Stock (other thanDisqualified Stock) issued by the Issuer after the Issue Date;

 

(b)                                 the declaration and payment of dividends to adirect or indirect parent company of the Issuer, the proceeds of which will beused to fund the payment of dividends to holders of 

 

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anyclass or series of Designated Preferred Stock (other than Disqualified Stock)of such parent company issued after the Issue Date, provided that theamount of dividends paid pursuant to this clause (b) shall not exceed theaggregate amount of cash actually contributed to the Issuer from the sale ofsuch Designated Preferred Stock; or

 

(c)                                  the declaration and payment of dividends onRefunding Capital Stock that is Preferred Stock in excess of the dividends declarableand payable thereon pursuant to clause (2) of this Section 4.07(b);

 

provided, however,in the case of each of (a), (b) and (c) of this clause (6), that for the mostrecently ended four full fiscal quarters for which internal financialstatements are available immediately preceding the date of issuance of suchDesignated Preferred Stock or the declaration of such dividends on RefundingCapital Stock that is Preferred Stock, after giving effect to such issuance ordeclaration on a *pro forma* basis,the Issuer and its Restricted Subsidiaries on a consolidated basis would havehad a Fixed Charge Coverage Ratio of at least 2.00 to 1.00;

 

(7)                                  Investments in Unrestricted Subsidiarieshaving an aggregate fair market value, taken together with all other Investmentsmade pursuant to this clause (7) that are at the time outstanding, withoutgiving effect to the sale of an Unrestricted Subsidiary to the extent theproceeds of such sale do not consist of, or have not been subsequently sold ortransferred for, cash or marketable securities, not to exceed $75.0 million(with the fair market value of each Investment being measured at the time madeand without giving effect to subsequent changes in value);

 

(8)                                  repurchases of Equity Interests deemed tooccur upon exercise of stock options or warrants if such Equity Interestsrepresent a portion of the exercise price of such options or warrants;

 

(9)                                  the declaration and payment of dividends onthe Issuer’s common stock (or the payment of dividends to any direct or indirectparent entity to fund a payment of dividends on such entity’s common stock),following the first public offering of the Issuer’s common stock or the commonstock of any of its direct or indirect parent companies after the Issue Date,of up to 6% per annum of the net cash proceeds received by or contributed tothe Issuer in or from any public offering, other than public offerings withrespect to the Issuer’s common stock registered on Form S-8 and otherthan any public sale constituting an Excluded Contribution;

 

(10)                            Restricted Payments that are made with Excluded Contributions;

 

(11)                            other Restricted Payments in an aggregate amount taken together withall other Restricted Payments made pursuant to this clause (11) that are at thetime outstanding (without giving effect to the sale of an Investment to theextent the proceeds of such sale do not consist of, or have not beensubsequently sold or transferred for, cash or marketable securities) not toexceed $75.0 million;

 

(12)                            distributions or payments of Receivables Fees;

 

(13)                            any Restricted Payment used to fund the Transactions and the fees andexpenses related thereto or owed to Affiliates, in each case with respect toany Restricted Payment to or owed to an Affiliate, to the extent permitted bySection 4.11 hereof;

 

(14)                            the repurchase, redemption or other acquisition or retirement for valueof any Subordinated Indebtedness pursuant to the provisions similar to thosedescribed under Sections 

 

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4.10and Section 4.14 hereof; provided that all Notes tendered by Holders inconnection with a Change of Control Offer or Asset Sale Offer, as applicable,have been repurchased, redeemed or acquired for value;

 

(15)                            the declaration and payment of dividends or distributions by the Issuerto, or the making of loans to, any direct or indirect parent company in amountsrequired for any direct or indirect parent companies to pay, in each casewithout duplication,

 

(a)                                  franchise taxes and other fees, taxes andexpenses required to maintain their corporate existence;

 

(b)                                 federal, state and local income taxes, to theextent such income taxes are attributable to the income of the Issuer and itsRestricted Subsidiaries and, to the extent of the amount actually received fromits Unrestricted Subsidiaries, in amounts required to pay such taxes to theextent attributable to the income of such Unrestricted Subsidiaries; *provided* that in each case the amount ofsuch payments in any fiscal year does not exceed the excess (if any) of (A) theamount that the Issuer and its Restricted Subsidiaries would be required to payin respect of federal, state and local income taxes for such fiscal year werethe Issuer, its Restricted Subsidiaries and its Unrestricted Subsidiaries (tothe extent described above) to pay such taxes separately from any such parentcompany over (B) the aggregate federal, state and local income taxes paid bythe Issuer and its Restricted Subsidiaries;

 

(c)                                  customary salary, bonus and other benefitspayable to officers and employees of any direct or indirect parent company ofthe Issuer to the extent such salaries, bonuses and other benefits areattributable to the ownership or operation of the Issuer and its RestrictedSubsidiaries;

 

(d)                                 general corporate operating and overheadcosts and expenses of any direct or indirect parent company of the Issuer tothe extent such costs and expenses are attributable to the ownership oroperation of the Issuer and its Restricted Subsidiaries; and

 

(e)                                  fees and expenses other than to Affiliates ofthe Issuer related to any unsuccessful equity or debt offering of such parentcompany;

 

(16)                            the distribution, by dividend or otherwise, of shares of Capital Stockof, or Indebtedness owed to the Issuer or a Restricted Subsidiary by, UnrestrictedSubsidiaries (other than Unrestricted Subsidiaries, the primary assets of whichare Cash Equivalents);

 

(17)                            cash payments in lieu of the issuance of fractional shares inconnection with the exercise of warrants, options or other securitiesconvertible into exchangeable for Capital Stock of the Issuer or any direct orindirect parent company of the Issuer; provided, that any such cash paymentshall not be for the purpose of evading the limitation of this Section 4.07;and

 

(18)                            the payment of dividends and other distributions in an amount equal toany reduction in taxes actually realized by the Issuer and its RestrictedSubsidiaries in the form of refunds or credits or from deductions when appliedto offset income or gain as a direct result of (i) transaction fees andexpenses, (ii) commitment and other financing fees or (iii) severance, changein control and other compensation expense incurred in connection with theexercise, repurchase, rollover or payout of stock options or bonuses, in eachcase in connection with the Transactions.

 

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provided, however, that at the time of, andafter giving effect to, any Restricted Payment permitted underclauses (11), (16) and (18) of this Section 4.07(b), no Default shall haveoccurred and be continuing or would occur as a consequence thereof.

 

(c)                                  The Issuer shall not permit any UnrestrictedSubsidiary to become a Restricted Subsidiary except pursuant to the second tolast sentence of the definition of “Unrestricted Subsidiary.”  For purposes of designating any RestrictedSubsidiary as an Unrestricted Subsidiary, all outstanding Investments by theIssuer and its Restricted Subsidiaries (except to the extent repaid) in theSubsidiary so designated shall be deemed to be Investments in an amountdetermined as set forth in the last sentence of the definition of “Investments.”  Such designation shall be permitted only if aRestricted Payment in such amount would be permitted at such time, whetherpursuant to Section 4.07(a) hereof or under clause (7), (10), (11) or (16) ofSection 4.07(b) hereof, or pursuant to the definition of “PermittedInvestments,” and if such Subsidiary otherwise meets the definition of anUnrestricted Subsidiary.

 

## Section 4.08                                          Dividendand Other Payment RestrictionsAffecting Restricted Subsidiaries.

 

(a)                                  The Issuer shall not, and shall not permitany of its Restricted Subsidiaries that are not Guarantors to, directly orindirectly, create or otherwise cause or suffer to exist or become effectiveany consensual encumbrance or consensual restriction on the ability of any suchRestricted Subsidiary to:

 

###### (1)                                  (A)                              pay dividends or make any other distributions to the Issuer or any ofits Restricted Subsidiaries on its Capital Stock or with respect to any otherinterest or participation in, or measured by, its profits, or

######  

(B)                                pay any Indebtedness owed to the Issuer or any of its RestrictedSubsidiaries;

 

###### (2)                                  make loans or advances to the Issuer or anyof its Restricted Subsidiaries; or

######  

###### (3)                                  sell, lease or transfer any of its propertiesor assets to the Issuer or any of its Restricted Subsidiaries.

######  

(b)                                 The restrictions in Section 4.08(a) hereofshall not apply to encumbrances or restrictions existing under or by reason of:

 

###### (1)                                  contractual encumbrances or restrictions ineffect on the Issue Date, including pursuant to the Senior Credit Facilitiesand the related documentation and the indenture governing the Senior Notes andthe related documentation and the indenture governing the Senior SubordinatedNotes and the related documentation;

######  

###### (2)                                  this Indenture and the Notes;

######  

###### (3)                                  purchase money obligations for propertyacquired in the ordinary course of business that impose restrictions of thenature discussed in clause (3) of Section 4.08(a) hereof on the property soacquired;

######  

###### (4)                                  applicable law or any applicable rule,regulation or order;

######  

###### (5)                                  any agreement or other instrument of a Personacquired by the Issuer or any of its Restricted Subsidiaries in existence atthe time of such acquisition (but not created in contemplation 

######  

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###### thereof),which encumbrance or restriction is not applicable to any Person, or theproperties or assets of any Person, other than the Person so acquired and itsSubsidiaries, or the property or assets of the Person so acquired and itsSubsidiaries;

######  

###### (6)                                  contracts for the sale of assets, includingcustomary restrictions with respect to a Subsidiary of the Issuer pursuant toan agreement that has been entered into for the sale or disposition of all orsubstantially all of the Capital Stock or assets of such Subsidiary;

######  

###### (7)                                  Secured Indebtedness otherwise permitted tobe incurred pursuant to Section 4.09 hereof and Section 4.12 hereof that limitthe right of the debtor to dispose of the assets securing such Indebtedness;

######  

###### (8)                                  restrictions on cash or other deposits or networth imposed by customers under contracts entered into in the ordinary courseof business;

######  

###### (9)                                  other Indebtedness, Disqualified Stock orPreferred Stock of Foreign Subsidiaries permitted to be incurred or issuedsubsequent to the Issue Date pursuant to the provisions of Section 4.09 hereof;

######  

###### (10)                            customary provisions in any joint ventureagreement and other similar agreement relating solely to such joint venture;

######  

###### (11)                            customary provisions contained in leases,subleases, licenses or sublicenses and other agreements, in each case, enteredinto in the ordinary course of business;

######  

###### (12)                            any encumbrances or restrictions of the typereferred to in clauses (1), (2) and (3) of Section 4.08(a) hereof imposed byany amendments, modifications, restatements, renewals, increases, supplements,refundings, replacements or refinancings of the contracts, instruments orobligations referred to in clauses (1) through (11) of this Section 4.08(b); providedthat such amendments, modifications, restatements, renewals, increases,supplements, refundings, replacements or refinancings are, in the good faithjudgment of the Issuer, no more restrictive in any material respect withrespect to such encumbrances and other restrictions taken as a whole than thoseprior to such amendment, modification, restatement, renewal, increase,supplement, refunding, replacement or refinancing;

######  

###### (13)                            any other agreement governing Indebtednessentered into after the Issue Date that contains encumbrances and otherrestrictions that are, in the good faith judgment of the Issuer, no morerestrictive in any material respect taken as a whole with respect to anyRestricted Subsidiary than those encumbrances and other restrictions that arein effect on the Issue Date with respect to that Restricted Subsidiary pursuantto agreements in effect on the Issue Date; and

######  

###### (14)                            restrictions created in connection with anyReceivables Facility that, in the good faith determination of the Issuer arenecessary or advisable to effect such Receivables Facility.

######  

## Section 4.09                                          Limitationon Incurrence of Indebtedness and Issuance of Disqualified Stock and Preferred Stock.

 

(a)                                  The Issuer shall not, and shall not permitany of its Restricted Subsidiaries to, directly or indirectly, create, incur,issue, assume, guarantee or otherwise become directly or indirectly liable,contingently or otherwise (collectively, “incur” and collectively, an “incurrence”)with respect to any Indebtedness (including Acquired Indebtedness) and theIssuer shall not issue any shares of Disqualified 

 

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Stock and shall not permit anyRestricted Subsidiary to issue any shares of Disqualified Stock or PreferredStock; provided, however, that the Issuer may incur Indebtedness(including Acquired Indebtedness) or issue shares of Disqualified Stock, andany of its Restricted Subsidiaries may incur Indebtedness (including AcquiredIndebtedness), issue shares of Disqualified Stock and issue shares of PreferredStock, if the Fixed Charge Coverage Ratio on a consolidated basis for theIssuer and its Restricted Subsidiaries’ most recently ended four fiscalquarters for which internal financial statements are available immediatelypreceding the date on which such additional Indebtedness is incurred or suchDisqualified Stock or Preferred Stock is issued would have been at least 2.00to 1.00, determined on a *pro forma*basis (including a *pro forma*application of the net proceeds therefrom), as if the additional Indebtednesshad been incurred, or the Disqualified Stock or Preferred Stock had beenissued, as the case may be, and the application of the proceeds therefrom hadoccurred at the beginning of such four-quarter period; provided that theamount of Indebtedness (including Acquired Indebtedness), Disqualified Stockand Preferred Stock that may be incurred or issued, as applicable, pursuant tothe foregoing by Restricted Subsidiaries that are not Guarantors shall notexceed $150.0 million at any one time outstanding.

 

(b)                                 Section 4.09(a) hereof shall not apply to:

 

###### (1)                                  (x) Indebtedness incurred pursuant to theRevolving Credit Facility by the Issuer or any Restricted Subsidiary; providedthat immediately after giving effect to any such incurrence, the aggregateprincipal amount of all Indebtedness incurred under this clause (x) and thenoutstanding does not exceed the greater of (A) $1,200.0 million *less* up to $150.0 million in the aggregateof all principal payments with respect to such Indebtedness made following theIssue Date pursuant to clause (1) of Section 4.10(b) *less* the aggregate principal amount of outstandingobligations under or in respect of Receivables Facilities and (B) (i) 90.0% ofthe eligible credit card and debit card receivables of the Issuer and itsRestricted Subsidiaries plus (ii) 90.0% of the net appraised orderlyliquidation value of the eligible inventory of the Issuer and its RestrictedSubsidiaries and (y) Indebtedness incurred pursuant to the Term Loan Facilityby the Issuer or any Restricted Subsidiary; provided that after givingeffect to any such incurrence, the aggregate principal amount of allIndebtedness incurred under this clause (y) and then outstanding does notexceed $2,400.0 million *less* upto $250.0 million in the aggregate of all principal payments with respect tosuch Indebtedness made following the Issue Date pursuant to clause (1) ofSection 4.10(b);

######  

###### (2)                                  the incurrence by the Issuer and anyGuarantor of Indebtedness represented by (a) the Notes (including any Guaranteeand including the Exchange Notes) (other than any Additional Notes), (b) theSenior Notes (including any guarantee thereof) and exchange notes issued inrespect of the Senior Notes and any guarantee thereof and (c) the SeniorSubordinated Notes (including any guarantee thereof) and exchange notes issuedin respect of the Senior Subordinated Notes and any guarantee thereof;

######  

###### (3)                                  Indebtedness of the Issuer and its RestrictedSubsidiaries in existence on the Issue Date (other than Indebtedness describedin clauses (1) and (2) of this Section 4.09(b));

######  

###### (4)                                  (i) Indebtedness (including Capitalized LeaseObligations) incurred or Disqualified Stock and Preferred Stock issued by theIssuer or any of its Restricted Subsidiaries, to finance the purchase, lease orimprovement of property (real or personal) or equipment that is used or usefulin a Similar Business, whether through the direct purchase of assets or theCapital Stock of any Person owning such assets and (ii) any Indebtednessincurred or Disqualified Stock or Preferred Stock issued to refund, refinanceor replace any other Indebtedness incurred or Disqualified Stock or PreferredStock issued pursuant to this clause (4); provided that the aggregate 

######  

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###### amountof Indebtedness incurred and Disqualified Stock and Preferred Stock issuedpursuant to clauses (i) and (ii) of this clause (4) does not exceed $125.0million at any one time outstanding;

######  

###### (5)                                  Indebtedness incurred by the Issuer or any ofits Restricted Subsidiaries constituting reimbursement obligations with respectto letters of credit issued in the ordinary course of business, includingletters of credit in respect of workers’ compensation claims, health,disability or other employee benefits or property, casualty or liabilityinsurance or self-insurance, or other Indebtedness with respect toreimbursement type obligations regarding workers’ compensation claims; provided,however, that upon the drawing of such letters of credit or the incurrenceof such Indebtedness, such obligations are reimbursed within 30 days followingsuch drawing or incurrence;

######  

###### (6)                                  Indebtedness arising from agreements of theIssuer or its Restricted Subsidiaries providing for indemnification, adjustmentof purchase price or similar obligations, in each case, incurred or assumed inconnection with the disposition of any business, assets or a Subsidiary, otherthan guarantees of Indebtedness incurred by any Person acquiring all or anyportion of such business, assets or a Subsidiary for the purpose of financingsuch acquisition; provided, however, that

######  

(A)                              such Indebtedness is not reflected on the balance sheet of the Issuer,or any of its Restricted Subsidiaries prepared in accordance with GAAP(contingent obligations referred to in a footnote to financial statements andnot otherwise reflected on the balance sheet will not be deemed to be reflectedon such balance sheet for purposes of this clause (6)(A)); and

 

(B)                                the maximum assumable liability in respect of all such Indebtednessshall at no time exceed the gross proceeds including non-cash proceeds (thefair market value of such non-cash proceeds being measured at the time receivedand without giving effect to any subsequent changes in value) actually receivedby the Issuer and its Restricted Subsidiaries in connection with suchdisposition;

 

###### (7)                                  Indebtedness of the Issuer to a RestrictedSubsidiary; provided that any such Indebtedness owing to a RestrictedSubsidiary that is not a Guarantor is expressly subordinated in right ofpayment to the Notes*;*providedfurther that any subsequent issuance or transfer of any Capital Stock orany other event which results in any Restricted Subsidiary ceasing to be aRestricted Subsidiary or any other subsequent transfer of any such Indebtedness(except to the Issuer or another Restricted Subsidiary or any pledge of suchIndebtedness constituting a Permitted Lien) shall be deemed, in each case, tobe an incurrence of such Indebtedness not permitted by this clause (7);

######  

###### (8)                                  Indebtedness of a Restricted Subsidiary tothe Issuer or another Restricted Subsidiary; provided that if aGuarantor incurs such Indebtedness to a Restricted Subsidiary that is not aGuarantor, such Indebtedness is expressly subordinated in right of payment tothe Guarantee of the Notes of such Guarantor; providedfurtherthat any subsequent issuance or transfer of any Capital Stock or any otherevent which results in any such Restricted Subsidiary ceasing to be aRestricted Subsidiary or any subsequent transfer of any such Indebtedness(except to the Issuer or another Restricted Subsidiary or any pledge of suchIndebtedness constituting a Permitted Lien) shall be deemed, in each case, tobe an incurrence of such Indebtedness not permitted by this clause (8);

######  

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###### (9)                                  shares of Preferred Stock of a RestrictedSubsidiary issued to the Issuer or another Restricted Subsidiary, providedthat any subsequent issuance or transfer of any Capital Stock or any otherevent which results in any such Restricted Subsidiary ceasing to be aRestricted Subsidiary or any other subsequent transfer of any such shares ofPreferred Stock (except to the Issuer or another of its Restricted Subsidiariesor any pledge of such Capital Stock constituting a Permitted Lien) shall bedeemed in each case to be an issuance of such shares of Preferred Stock notpermitted by this clause (9);

######  

###### (10)                            (x) Hedging Obligations (excluding HedgingObligations entered into for speculative purposes) for the purpose of limitinginterest rate risk, exchange rate risk or commodity pricing risk, and (y)Indebtedness in respect of Cash Management Services provided by any lenderparty to a Senior Credit Facility or any affiliate of such lender (or anyPerson that was a lender or an affiliate of a lender at the time the applicableagreement pursuant to which such Cash Management Services are provided wasentered into);

######  

###### (11)                            obligations in respect of performance, bid,appeal and surety bonds and performance and completion guarantees orobligations in respect of letters of credit related thereto provided by theIssuer or any of its Restricted Subsidiaries in the ordinary course ofbusiness;

######  

###### (12)                            (a) Indebtedness or Disqualified Stock of theIssuer and Indebtedness, Disqualified Stock or Preferred Stock of the Issuer orany Restricted Subsidiary equal to 100.0% of the net cash proceeds received bythe Issuer since immediately after the Issue Date from the issue or sale ofEquity Interests of the Issuer or cash contributed to the capital of the Issuer(in each case, other than proceeds of Disqualified Stock or sales of EquityInterests to the Issuer or any of its Subsidiaries) as determined in accordancewith clauses (3)(b) and (3)(c) of Section 4.07(a) hereof to the extentsuch net cash proceeds or cash have not been applied pursuant to such clausesto make Restricted Payments or to make other Investments, payments or exchangespursuant to Section 4.07(b) hereof or to make Permitted Investments (other thanPermitted Investments specified in clauses (1) and (3) of thedefinition thereof) and (b) Indebtedness or Disqualified Stock of theIssuer and Indebtedness, Disqualified Stock or Preferred Stock of the Issuer orany Restricted Subsidiary not otherwise permitted hereunder in an aggregateprincipal amount or liquidation preference, which when aggregated with theprincipal amount and liquidation preference of all other Indebtedness,Disqualified Stock and Preferred Stock then outstanding and incurred pursuantto this clause (12)(b), does not at any one time outstandingexceed $125.0 million (it being understood that any Indebtedness incurredor Disqualified Stock or Preferred Stock issued pursuant to thisclause (12)(b) shall cease to be deemed incurred or outstanding forpurposes of this clause (12)(b) but shall be deemed incurred for thepurposes of Section 4.09(a) hereof from and after the first date on which theIssuer or such Restricted Subsidiary could have incurred such Indebtedness,Disqualified Stock or Preferred Stock under Section 4.09(a) hereof withoutreliance on this clause (12)(b));

######  

###### (13)                            the incurrence by the Issuer or anyRestricted Subsidiary of Indebtedness or issuance by the Issuer or anyRestricted Subsidiary of Disqualified Stock or Preferred Stock which serves torefund or refinance any Indebtedness incurred or Disqualified Stock orPreferred Stock issued as permitted under Section 4.09(a) hereof and clauses(2), (3) and (12)(a) of this Section 4.09(b), this clause (13) and clause (14)of this Section 4.09(b) or any Indebtedness incurred or Disqualified Stock orPreferred Stock issued to so refund or refinance such Indebtedness,Disqualified Stock or Preferred Stock including additional Indebtednessincurred or Disqualified Stock or Preferred Stock issued to pay premiums(including tender premiums), defeasance costs 

 

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###### andfees in connection therewith (the “Refinancing Indebtedness”) prior toits respective maturity; provided, however, that such RefinancingIndebtedness:

######  

(A)                              has a Weighted Average Life to Maturity at the time such RefinancingIndebtedness is incurred which is not less than the remaining Weighted AverageLife to Maturity of the Indebtedness, Disqualified Stock or Preferred Stockbeing refunded or refinanced,

 

(B)                                to the extent such Refinancing Indebtedness refinances(i) Indebtedness subordinated or *paripassu* to 0the Notes or any Guarantee thereof, such RefinancingIndebtedness is subordinated or *pari passu*to the Notes or the Guarantee at least to the same extent as the Indebtednessbeing refinanced or refunded or (ii) Disqualified Stock or Preferred Stock,such Refinancing Indebtedness must be Disqualified Stock or Preferred Stock,respectively, and

 

(C)                                shall not include:

 

(i)                                     Indebtedness, Disqualified Stock or PreferredStock of a Subsidiary of the Issuer that is not a Guarantor that refinancesIndebtedness, Disqualified Stock or Preferred Stock of the Issuer;

 

(ii)                                  Indebtedness, Disqualified Stock or PreferredStock of a Subsidiary of the Issuer that is not a Guarantor that refinancesIndebtedness, Disqualified Stock or Preferred Stock of a Guarantor; or

 

(iii)                               Indebtedness, Disqualified Stock or Preferred Stock of the Issuer or aRestricted Subsidiary that refinances Indebtedness, Disqualified Stock orPreferred Stock of an Unrestricted Subsidiary;

 

and providedfurther that subclause(A) of this clause (13) will not apply to any refunding or refinancing ofany Indebtedness outstanding under any Senior Indebtedness;

 

###### (14)                            Indebtedness, Disqualified Stock or PreferredStock of (x) the Issuer or a Restricted Subsidiary incurred or issuedto finance an acquisition or (y) Personsthat are acquired by the Issuer or any Restricted Subsidiary or merged into oramalgamated or consolidated with the Issuer or a Restricted Subsidiary inaccordance with the terms of this Indenture; provided that after givingeffect to such acquisition, merger, amalgamation or consolidation, either

######  

(a)                                     the Issuer would be permitted to incur atleast $1.00 of additional Indebtedness pursuant to the Fixed Charge CoverageRatio test set forth in Section 4.09(a) hereof, or

 

(b)                                    the Fixed Charge Coverage Ratio of the Issuerand the Restricted Subsidiaries is greater than immediately prior to suchacquisition, merger, amalgamation or consolidation;

 

###### (15)                            Indebtedness arising from the honoring by abank or other financial institution of a check, draft or similar instrumentdrawn against insufficient funds in the ordinary course of business, providedthat such Indebtedness is extinguished within five Business Days of itsincurrence;

######  

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###### (16)                            Indebtedness of the Issuer or any of itsRestricted Subsidiaries supported by a letter of credit issued pursuant to aSenior Credit Facility, in a principal amount not in excess of the statedamount of such letter of credit;

######  

###### (17)                            (a) any guarantee by the Issuer or aRestricted Subsidiary of Indebtedness or other obligations of any RestrictedSubsidiary so long as the incurrence of such Indebtedness incurred by suchRestricted Subsidiary is permitted under the terms of this Indenture, or

######  

(b)                                 any guarantee by a Restricted Subsidiary ofIndebtedness of the Issuer provided that such guarantee is incurred inaccordance with Section 4.15 hereof;

 

###### (18)                            Indebtedness of Foreign Subsidiaries of theIssuer incurred not to exceed together with any other Indebtedness incurredunder this clause (18) at any one time outstanding, the greater of (x) $100.0million and (y) 10.0% of the Total Assets of the Foreign Subsidiaries (it beingunderstood that any Indebtedness incurred pursuant to this clause (18) shallcease to be deemed incurred or outstanding for purposes of this clause (18) butshall be deemed incurred for the purposes of Section 4.09(a) hereof from andafter the first date on which the applicable Foreign Subsidiary could haveincurred such Indebtedness under Section 4.09(a) hereof without reliance onthis clause (18));

######  

###### (19)                            (i) Indebtedness, Disqualified Stock or Preferred Stock of a RestrictedSubsidiary incurred or issued to finance or assumed in connection with anacquisition and (ii) Indebtedness incurred to refund, refinance or replace anyother Indebtedness, Disqualified Stock and Preferred Stock permitted under thisclause (19), in each case, in a principal amount not to exceed, together withall other Indebtedness, Disqualified Stock and/or Preferred Stock issued underthis clause (19), $100.0 million in the aggregate at any one time outstanding(it being understood that any Indebtedness, Disqualified Stock or PreferredStock incurred pursuant to this clause (19) shall cease to be deemed incurredor outstanding for purposes of this clause (19) but shall be deemed incurredfor the purposes of Section 4.09(a) hereof from and after the first date onwhich such Restricted Subsidiary could have incurred such Indebtedness orissued such Disqualified Stock or Preferred Stock under Section 4.09(a) hereofwithout reliance on this clause (19));

######  

###### (20)                            Indebtedness of the Issuer or any of itsRestricted Subsidiaries consisting of (i) the financing of insurancepremiums or (ii) take-or-pay obligations contained in supply arrangements, ineach case incurred in the ordinary course of business; and

######  

###### (21)                            Indebtedness consisting of Indebtednessissued by the Issuer or any of its Restricted Subsidiaries to current or formerofficers, directors, employees and consultants thereof, their respectiveestates, spouses or former spouses, in each case to finance the purchase orredemption of Equity Interests of the Issuer or any direct or indirect parentcompany of the Issuer to the extent described in clause (4) of Section4.07(b) hereof.

######  

(c)                                  For purposes of determining compliance withthis Section 4.09:

 

###### (1)                                  in the event that an item of Indebtedness,Disqualified Stock or Preferred Stock (or any portion thereof) meets thecriteria of more than one of the categories of permitted Indebtedness,Disqualified Stock or Preferred Stock described in clauses (1) through (21) ofSection 4.09(b) hereof or is entitled to be incurred pursuant to Section4.09(a) hereof, the Issuer, in its sole discretion, shall classify orreclassify such item of Indebtedness, Disqualified Stock or Preferred Stock (orany portion thereof) and shall only be required to include the amount and typeof such Indebtedness, Disqualified Stock or Preferred Stock in one of the aboveclauses; provided

 

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###### thatall Indebtedness outstanding under the Senior Credit Facilities on the IssueDate shall at all times be deemed to be outstanding in reliance on clause (1)of Section 4.09(b) hereof; and

######  

###### (2)                                  at the time of incurrence, the Issuer shallbe entitled to divide and classify an item of Indebtedness in more than one ofthe types of Indebtedness described in Sections 4.09(a) and 4.09(b) hereof.

######  

Accrualof interest, the accretion of accreted value and the payment of interest in theform of additional Indebtedness, Disqualified Stock or Preferred Stock shallnot be deemed to be an incurrence of Indebtedness, Disqualified Stock orPreferred Stock for purposes of this Section 4.09.

 

Forpurposes of determining compliance with any U.S. dollar-denominatedrestriction on the incurrence of Indebtedness, the U.S. dollar-equivalentprincipal amount of Indebtedness denominated in a foreign currency shall becalculated based on the relevant currency exchange rate in effect on the datesuch Indebtedness was incurred, in the case of term debt, or first committed,in the case of revolving credit debt; provided that if such Indebtednessis incurred to refinance other Indebtedness denominated in a foreign currency,and such refinancing would cause the applicable U.S. dollar denominatedrestriction to be exceeded if calculated at the relevant currency exchange ratein effect on the date of such refinancing, such U.S. dollar-denominatedrestriction shall be deemed not to have been exceeded so long as the principalamount of such refinancing Indebtedness does not exceed the principal amount ofsuch Indebtedness being refinanced.

 

Theprincipal amount of any Indebtedness incurred to refinance other Indebtedness,if incurred in a different currency from the Indebtedness being refinanced,shall be calculated based on the currency exchange rate applicable to thecurrencies in which such respective Indebtedness is denominated that is ineffect on the date of such refinancing.

 

## Section 4.10                                          AssetSales.

 

(a)                                  The Issuer shall not, and shall not permitany of its Restricted Subsidiaries to, consummate an Asset Sale, unless:

 

(1)                                  the Issuer or such Restricted Subsidiary, asthe case may be, receives consideration at the time of such Asset Sale at leastequal to the fair market value (as determined in good faith by the Issuer) ofthe assets sold or otherwise disposed of; and

 

(2)                                  except in the case of a Permitted Asset Swap,at least 75% of the consideration therefor received by the Issuer or suchRestricted Subsidiary, as the case may be, is in the form of Cash Equivalents; providedthat the amount of:

 

(A)                              any liabilities (as shown on the Issuer’s or such Restricted Subsidiary’smost recent balance sheet or in the footnotes thereto) of the Issuer or suchRestricted Subsidiary, other than liabilities that are by their termssubordinated to the Notes, that are assumed by the transferee of any suchassets and for which the Issuer and all of its Restricted Subsidiaries havebeen validly released by all creditors in writing,

 

(B)                                any securities received by the Issuer or such Restricted Subsidiaryfrom such transferee that are converted by the Issuer or such Restricted Subsidiaryinto Cash Equivalents (to the extent of the Cash Equivalents received) within180 days following the closing of such Asset Sale, and

 

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(C)                                any Designated Non-cash Consideration received by the Issuer or suchRestricted Subsidiary in such Asset Sale having an aggregate fair market value,taken together with all other Designated Non-cash Consideration receivedpursuant to this clause (C) that is at that time outstanding, not toexceed 7.5% of Total Assets at the time of the receipt of such DesignatedNon-cash Consideration, with the fair market value of each item of DesignatedNon-cash Consideration being measured at the time received and without givingeffect to subsequent changes in value,

 

shallbe deemed to be Cash Equivalents for purposes of this provision and for noother purpose.

 

(b)                                 Within 450 days after the receipt of any NetProceeds of any Asset Sale, the Issuer or such Restricted Subsidiary, at itsoption, may apply the Net Proceeds from such Asset Sale,

 

(1)                                  to permanently reduce:

 

(A)                              Obligations under Senior Indebtedness, and to correspondingly reducecommitments with respect thereto;

 

(B)                                Obligations under Indebtedness not constituting Senior Indebtedness andnot constituting Subordinated Indebtedness (and to correspondingly reducecommitments with respect thereto), provided that the Issuer shallequally and ratably reduce Obligations under the Notes as provided underSection 3.07 hereof through open-market purchases (to the extent such purchasesare at or above 100% of the Accreted Value thereof) or by making an offer (inaccordance with the procedures set forth under Section 4.10(c) hereof) to allHolders to purchase their Notes at 100% of the Accreted Value thereof, plus theamount of accrued but unpaid interest, if any, and Additional Interest, if any,on the amount of Notes that would otherwise be prepaid; or

 

(C)                                Indebtedness of a Restricted Subsidiary that is not a Guarantor, otherthan Indebtedness owed to the Issuer or another Restricted Subsidiary;

 

(2)                                  to make (A) an Investment in any one ormore businesses, provided that such Investment in any business is in theform of the acquisition of Capital Stock and results in the Issuer or anotherof its Restricted Subsidiaries, as the case may be, owning an amount of theCapital Stock of such business such that it constitutes a RestrictedSubsidiary, (B) capital expenditures or (C) acquisitions of other assets, inthe case of each of (A), (B) and (C), used or useful in a Similar Business; or

 

(3)                                  to make an Investment in (A) any one ormore businesses, provided that such Investment in any business is in theform of the acquisition of Capital Stock and results in the Issuer or anotherof its Restricted Subsidiaries, as the case may be, owning an amount of theCapital Stock of such business such that it constitutes a RestrictedSubsidiary, (B) properties or (C) other assets that, in the case ofeach of (A), (B) and (C), replace the businesses, properties and/or assets thatare the subject of such Asset Sale;

 

provided that, in the case of clauses (2) and (3)above, a binding commitment shall be treated as a permitted application of theNet Proceeds from the date of such commitment so long as the Issuer or suchother Restricted Subsidiary enters into such commitment with the good faithexpectation that such Net Proceeds shall be applied to satisfy such commitmentwithin 180 days of such commitment (an “Acceptable Commitment”) and, inthe event any Acceptable Commitment is later cancelled or terminated for anyreason before the Net Proceeds are applied in connection therewith, the Issueror such Restricted Subsidiary enters 

 

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intoanother Acceptable Commitment (a “Second Commitment”) within 180 daysof such cancellation or termination; providedfurther that if anySecond Commitment is later cancelled or terminated for any reason before suchNet Proceeds are applied, then such Net Proceeds shall constitute ExcessProceeds.

 

(c)                                  Any Net Proceeds from the Asset Sale that arenot invested or applied as provided and within the time period set forth inSection 4.10(b) shall be deemed to constitute “Excess Proceeds.”  When the aggregate amount of Excess Proceedsexceeds $50.0 million, the Issuer shall make an offer to all Holders ofthe Notes and, if required by the terms of any Indebtedness that is *pari passu* with the Notes (“Pari PassuIndebtedness”), to the holders of such Pari Passu Indebtedness (an “AssetSale Offer”), to purchase the maximum Accreted Value of the Notes andprincipal amount or accreted value of such Pari Passu Indebtedness that is anintegral multiple of $1,000 that may be purchased out of the Excess Proceeds atan offer price in cash in an amount equal to 100% of the Accreted Value (orprincipal amount or accreted value) thereof, plus accrued and unpaid interest,if any, and Additional Interest (to the extent not already included in AccretedValue), if any, to the date fixed for the closing of such offer, in accordancewith the procedures set forth in this Indenture.  The Issuer shall commence an Asset Sale Offerwith respect to Excess Proceeds within ten Business Days after the date thatExcess Proceeds exceed $50.0 million by mailing the notice requiredpursuant to the terms of this Indenture, with a copy to the Trustee orotherwise in accordance with the procedures of DTC.

 

Tothe extent that the aggregate amount of Notes and such Pari Passu Indebtednesstendered pursuant to an Asset Sale Offer is less than the Excess Proceeds, theIssuer may use any remaining Excess Proceeds for general corporate purposes,subject to compliance with this Indenture. If the Accreted Value of Notes together with the aggregate accretedvalue or principal amount of the Pari Passu Indebtedness surrendered in anAsset Sale Offer exceeds the amount of Excess Proceeds, the Trustee shallselect the Notes and such Pari Passu Indebtedness to be purchased on a *pro rata* basis based on the Accreted Valueof the Notes and the accreted value or principal amount of such Pari PassuIndebtedness tendered in accordance with Section 3.09.  Upon completion of any such Asset Sale Offer,the amount of Excess Proceeds shall be reset to zero (regardless of whetherthere are any remaining Excess Proceeds upon such completion).

 

(d)                                 Pending the final application of any NetProceeds pursuant to this Section 4.10, the holder of such Net Proceeds mayapply such Net Proceeds temporarily to reduce Indebtedness outstanding under arevolving credit facility or otherwise invest such Net Proceeds in any mannernot prohibited by this Indenture.

 

(e)                                  The Issuer shall comply with the requirementsof Rule 14e-1 under the Exchange Act and any other securities laws andregulations thereunder to the extent such laws or regulations are applicable inconnection with the repurchase of the Notes pursuant to an Asset SaleOffer.  To the extent that the provisionsof any securities laws or regulations conflict with the provisions of thisIndenture, the Issuer shall comply with the applicable securities laws andregulations and shall not be deemed to have breached its obligations describedin this Indenture by virtue thereof.

 

## Section 4.11                                          Transactionswith Affiliates.

 

(a)                                  The Issuer shall not, and shall not permitany of its Restricted Subsidiaries to, make any payment to, or sell, lease,transfer or otherwise dispose of any of its properties or assets to, orpurchase any property or assets from, or enter into or make or amend anytransaction, contract, agreement, understanding, loan, advance or guaranteewith, or for the benefit of, any Affiliate of the Issuer (each of theforegoing, an “Affiliate Transaction”) involving aggregate payments orconsideration in excess of $10.0 million, unless:

 

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###### (1)                                  such Affiliate Transaction is on terms thatare not materially less favorable to the Issuer or its relevant RestrictedSubsidiary than those that would have been obtained in a comparable transactionby the Issuer or such Restricted Subsidiary with an unrelated Person on an arm’s-lengthbasis; and

######  

###### (2)                                  the Issuer delivers to the Trustee withrespect to any Affiliate Transaction or series of related AffiliateTransactions involving aggregate payments or consideration in excess of$30.0 million, a resolution adopted by the majority of the board ofdirectors of the Issuer approving such Affiliate Transaction and set forth inan Officer’s Certificate certifying that such Affiliate Transaction complieswith clause (1) of this Section 4.11(a).

######  

(b)                                 Section 4.11(a) hereof shall not apply to thefollowing:

 

###### (1)                                  transactions between or among the Issuer orany of its Restricted Subsidiaries;

######  

###### (2)                                  Restricted Payments permitted by Section 4.07hereof and Investments constituting Permitted Investments;

######  

###### (3)                                  the payment of management, consulting,monitoring and advisory fees and termination fees and related indemnities andexpenses pursuant to the Sponsor Management Agreement as in effect on the IssueDate;

######  

###### (4)                                  the payment of reasonable and customary feesand compensation paid to, and indemnities and reimbursements provided on behalfof, officers, directors, employees or consultants of the Issuer, any of itsdirect or indirect parent companies or any of its Restricted Subsidiaries;

######  

###### (5)                                  transactions in which the Issuer or any of itsRestricted Subsidiaries, as the case may be, delivers to the Trustee a letterfrom an Independent Financial Advisor stating that such transaction is fair tothe Issuer or such Restricted Subsidiary from a financial point of view orstating that the terms are not materially less favorable to the Issuer or itsrelevant Restricted Subsidiary than those that would have been obtained in acomparable transaction by the Issuer or such Restricted Subsidiary with anunrelated Person on an arm’s-length basis;

######  

###### (6)                                  any agreement as in effect as of the IssueDate, or any amendment thereto (so long as any such amendment is notdisadvantageous in any material respect to the Holders when taken as a whole ascompared to the applicable agreement as in effect on the Issue Date);

######  

###### (7)                                  the existence of, or the performance by theIssuer or any of its Restricted Subsidiaries of its obligations under the termsof, any stockholders agreement (including any registration rights agreement orpurchase agreement related thereto) to which it is a party as of the Issue Dateand any similar agreements which it may enter into thereafter; provided,however, that the existence of, or the performance by the Issuer or anyof its Restricted Subsidiaries of obligations under, any future amendment toany such existing agreement or any similar agreement entered into after theIssue Date shall only be permitted by this clause (7) to the extent that theterms of any such amendment or new agreement are not otherwise disadvantageousin any material respect to the Holders when taken as a whole as compared to theoriginal agreement in effect on the Issue Date;

######  

###### (8)                                  the Transactions and the payment of all feesand expenses related to the Transactions, including Transaction Expenses, ineach case as disclosed in the Offering Memorandum;

######  

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###### (9)                                  transactions with customers, clients,suppliers, or purchasers or sellers of goods or services, in each case in theordinary course of business and otherwise in compliance with the terms of thisIndenture which are fair to the Issuer and its Restricted Subsidiaries, in thereasonable determination of the board of directors of the Issuer or the seniormanagement thereof, or are on terms at least as favorable as would reasonablyhave been obtained at such time from an unaffiliated party;

######  

###### (10)                            the issuance of Equity Interests (other thanDisqualified Stock) of the Issuer to any direct or indirect parent of theIssuer or to any Permitted Holder or to any director, officer, employee orconsultant of the Issuer, any Subsidiary or any direct or indirect parent ofthe Issuer;

######  

###### (11)                            sales of accounts receivable, orparticipations therein, in connection with any Receivables Facility;

######  

###### (12)                            payments by the Issuer or any of its RestrictedSubsidiaries to any of the Investors made for any financial advisory,financing, underwriting or placement services or in respect of other investmentbanking activities, including, without limitation, in connection withacquisitions or divestitures which payments are approved by a majority of theboard of directors of the Issuer in good faith or are otherwise permitted bythis Indenture;

######  

###### (13)                            payments or loans (or cancellation of loans)to employees or consultants of the Issuer, any of its direct or indirect parentcompanies or any of its Restricted Subsidiaries and employment agreements,stock option plans and other similar arrangements with such employees orconsultants which, in each case, are approved by the Issuer in good faith; and

######  

###### (14)                            investments by the Investors in securities ofthe Issuer or any of its Restricted Subsidiaries so long as (i) the investmentis being offered generally to other investors on the same or more favorableterms and (ii) the investment constitutes less than 5% of the proposed oroutstanding issue amount of such class of securities.

######  

## Section 4.12                                          Liens.

 

TheIssuer shall not, and shall not permit any Guarantor to, directly orindirectly, create, incur, assume or suffer to exist any Lien (except PermittedLiens) that secures obligations under any Indebtedness (or any relatedguarantee) ranking *pari passu*withor subordinated to the Notes or any Guarantee, on any asset or property of theIssuer or any Guarantor, or any income or profits therefrom, or assign orconvey any right to receive income therefrom, unless:

 

(1)                                  in the case of Liens securing SubordinatedIndebtedness, the Notes and related Guarantees are secured by a Lien on suchproperty, assets or proceeds that is senior in priority to such Liens; or

 

(2)                                   in all other cases, the Notes or theGuarantees are equally and ratably secured, except that the foregoing shall notapply to or restrict (a) Liens securing the Notes and the related Guarantees,(b) Liens securing Senior Indebtedness of the Issuer or any Guarantor and (c)Liens securing both Indebtedness permitted to be incurred under Senior CreditFacilities, including any letter of credit facility relating thereto, that waspermitted by the terms of this Indenture to be incurred and obligations of theIssuer or any Guarantor in respect of any Bank Products or Cash ManagementServices provided by any lender party to any Senior Credit Facility or anyaffiliate of such lender (or any Person that was a lender or an affiliate of alender at the time the applicable 

 

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agreementspursuant to which such Bank Products or Cash Management Services are providedwere entered into).

 

AnyLien created for the benefit of the Holders of the Notes pursuant to thisSection 4.12 shall be deemed automatically and unconditionally released anddischarged upon the release and discharge of each of the Liens described inclauses (1) and (2) of this Section 4.12.

 

## Section 4.13                                          CorporateExistence.

 

Subjectto Article 5 hereof, the Issuer shall do or cause to be done all thingsnecessary to preserve and keep in full force and effect its corporateexistence, and the corporate, partnership or other existence of each of itsRestricted Subsidiaries, in accordance with the respective organizational documents(as the same may be amended from time to time) of the Issuer or any suchRestricted Subsidiary.

 

## Section 4.14                                          Offerto Repurchase Upon Change of Control.

 

(a)                                  If a Change of Control occurs, unless theIssuer has previously or concurrently mailed a redemption notice with respectto all the outstanding Notes as described under Section 3.07 hereof, the Issuershall make an offer to purchase all of the Notes pursuant to the offerdescribed below (the “Change of Control Offer”) at a price in cash (the “Changeof Control Payment”) equal to 101% of the Accreted Value thereof plusaccrued and unpaid interest, if any, and Additional Interest (to the extent notalready included in Accreted Value), if any, to the date of purchase, subjectto the right of Holders of record of the Notes on the relevant Record Date toreceive interest due, if any, on the relevant Interest Payment Date.  Within 30 days following any Change ofControl, the Issuer shall send notice of such Change of Control Offer byfirst-class mail, with a copy to the Trustee, to each Holder of Notes to theaddress of such Holder appearing in the security register or otherwise inaccordance with the procedures of DTC, with the following information:

 

###### (1)                                  that a Change of Control Offer is being madepursuant to this Section 4.14 and that all Notes properly tendered pursuant tosuch Change of Control Offer will be accepted for payment by the Issuer;

######  

###### (2)                                  the purchase price and the purchase date,which will be no earlier than 30 days nor later than 60 days from the date suchnotice is mailed (the “Change of Control Payment Date”);

######  

###### (3)                                  that any Note not properly tendered willremain outstanding and continue to accrue interest or accrete in value, asapplicable;

######  

###### (4)                                  that unless the Issuer defaults in the paymentof the Change of Control Payment, all Notes accepted for payment pursuant tothe Change of Control Offer will cease to accrue interest or accrete in value,as applicable, on the Change of Control Payment Date;

######  

###### (5)                                  that Holders electing to have any Notespurchased pursuant to a Change of Control Offer will be required to surrendersuch Notes, with the form entitled “Option of Holder to Elect Purchase” on thereverse of such Notes completed, to the paying agent specified in the notice atthe address specified in the notice prior to the close of business on the thirdBusiness Day preceding the Change of Control Payment Date;

######  

###### (6)                                  that Holders shall be entitled to withdrawtheir tendered Notes and their election to require the Issuer to purchase suchNotes, provided that the paying agent receives, not later 

 

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###### thanthe close of business on the second Business Day prior to the Change of ControlPayment Date, a telegram, telex, facsimile transmission or letter setting forththe name of the Holder of the Notes, the Accreted Value of Notes tendered forpurchase, and a statement that such Holder is withdrawing its tendered Notesand its election to have such Notes purchased;

######  

###### (7)                                  that if the Issuer is redeeming less than allof the Notes, the Holders of the remaining Notes will be issued new Notes andsuch new Notes will be equal in principal amount at maturity to the principalamount at maturity of the unpurchased portion of the Notes surrendered.  The principal amount at maturity of theunpurchased portion of the Notes must be equal to $1,000 or an integralmultiple thereof; and

######  

###### (8)                                  the other instructions, as determined by theIssuer, consistent with this Section 4.14, that a Holder must follow.

######  

Thenotice, if mailed in a manner herein provided, shall be conclusively presumedto have been given, whether or not the Holder receives such notice.  If (a) the notice is mailed in a mannerherein provided and (b) any Holder fails to receive such notice or a Holder receivessuch notice but it is defective, such Holder’s failure to receive such noticeor such defect shall not affect the validity of the proceedings for thepurchase of the Notes as to all other Holders that properly received suchnotice without defect.  The Issuer shallcomply with the requirements of Rule 14e-1 under the Exchange Act and anyother securities laws and regulations thereunder to the extent such laws orregulations are applicable in connection with the repurchase by the Issuer ofNotes pursuant to a Change of Control Offer. To the extent that the provisions of any securities laws or regulationsconflict with the provisions of this Section 4.14, the Issuer shall comply withthe applicable securities laws and regulations and shall not be deemed to havebreached its obligations under this Section 4.14 by virtue thereof.

 

(b)                                 On the Change of Control Payment Date, theIssuer shall, to the extent permitted by law,

 

###### (1)                                  accept for payment all Notes issued by it orportions thereof properly tendered pursuant to the Change of Control Offer;

######  

###### (2)                                  deposit with the Paying Agent an amount equalto the aggregate Change of Control Payment in respect of all Notes or portionsthereof so tendered; and

######  

###### (3)                                  deliver, or cause to be delivered, to theTrustee for cancellation the Notes so accepted together with an Officer’sCertificate to the Trustee stating that such Notes or portions thereof havebeen tendered to and purchased by the Issuer.

######  

(c)                                  In the event a Change of Control occurs at atime when the Issuer is prohibited by the terms of any Senior Indebtedness frompurchasing Notes, then notwithstanding anything to the contrary in thisIndenture, the Issuer (x) shall have 90 days following such Change of Controlto mail the notice of a Change of Control Offer to Holders and (y) shallundertake, within 90 days following such Change of Control, to (1) repayin full all Obligations, and terminate all commitments, under the Senior CreditFacilities and all other Senior Indebtedness, the terms of which require repaymentand/or termination of commitments upon a Change of Control or offer to repay infull all Obligations, and terminate all commitments, under the Senior CreditFacilities and all other such Senior Indebtedness and to repay the Obligationsowed to (and terminate all commitments of) each lender which has accepted suchoffer or (2) obtain the requisite consents under the agreements governing suchSenior Indebtedness to permit the repurchase of the Notes.

 

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(d)                                 The Issuer shall first comply with Section4.14(c) hereof before it shall be required to repurchase Notes pursuant to theprovisions of this Section 4.14.  TheIssuer’s failure to comply with Section 4.14(c) hereof may (with notice andlapse of time) constitute an Event of Default described in clause (3) ofSection 6.01(a) hereof, but shall not constitute an Event of Default describedin clause (1), of Section 6.01(a) hereof.

 

(e)                                  The Issuer shall not be required to make aChange of Control Offer following a Change of Control if a third party makesthe Change of Control Offer in the manner, at the times and otherwise incompliance with the requirements set forth in this Section 4.14 applicable to aChange of Control Offer made by the Issuer and purchases all Notes validlytendered and not withdrawn under such Change of Control Offer.  Notwithstanding anything to the contraryherein, a Change of Control Offer may be made in advance of a Change ofControl, conditional upon such Change of Control, if a definitive agreement isin place for the Change of Control at the time of making of the Change ofControl Offer.

 

(f)                                    Other than as specifically provided in thisSection 4.14, any purchase pursuant to this Section 4.14 shall be made pursuantto the provisions of Sections 3.02, 3.05 and 3.06 hereof.

 

## Section 4.15                                          Limitationon Guarantees of Indebtedness by Restricted Subsidiaries.

 

TheIssuer shall not permit any of its Wholly-Owned Subsidiaries that areRestricted Subsidiaries (and non-Wholly-Owned Subsidiaries if suchnon-Wholly-Owned Subsidiaries guarantee other capital markets debt securities),other than a Guarantor or a Foreign Subsidiary, to guarantee the payment of anyIndebtedness of the Issuer or any other Guarantor unless:

 

(1)                                  such Restricted Subsidiary within 30 daysexecutes and delivers a supplemental indenture to this Indenture, the form ofwhich is attached as Exhibit D hereto, providing for a Guarantee by suchRestricted Subsidiary, except that with respect to a guarantee of Indebtednessof the Issuer or any Guarantor:

 

(a)                                  if the Notes or such Guarantor’s Guaranteeare subordinated in right of payment to such Indebtedness, the Guarantee underthe supplemental indenture shall be subordinated to such Restricted Subsidiary’sguarantee with respect to such Indebtedness substantially to the same extent asthe Notes are subordinated to such Indebtedness; and

 

(b)                                 if such Indebtedness is by its express termssubordinated in right of payment to the Notes or such Guarantor’s Guarantee,any such guarantee by such Restricted Subsidiary with respect to suchIndebtedness shall be subordinated in right of payment to such Guaranteesubstantially to the same extent as such Indebtedness is subordinated to theNotes;

 

(2)                                  such Restricted Subsidiary waives and shallnot in any manner whatsoever claim or take the benefit or advantage of, anyrights of reimbursement, indemnity or subrogation or any other rights againstthe Issuer or any other Restricted Subsidiary as a result of any payment bysuch Restricted Subsidiary under its Guarantee; and

 

(3)                                  such Restricted Subsidiary shall deliver tothe Trustee an Opinion of Counsel to the effect that:

 

(a)                                  such Guarantee has been duly executed andauthorized; and

 

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(b)                                 such Guarantee constitutes a valid, bindingand enforceable obligation of such Restricted Subsidiary, except insofar asenforcement thereof may be limited by bankruptcy, insolvency or similar laws(including, without limitation, all laws relating to fraudulent transfers) andexcept insofar as enforcement thereof is subject to general principles ofequity;

 

provided that this Section 4.15 shall not beapplicable to any guarantee of any Restricted Subsidiary that existed at thetime such Person became a Restricted Subsidiary and was not incurred inconnection with, or in contemplation of, such Person becoming a RestrictedSubsidiary.

 

TheIssuer may elect, in its sole discretion, to cause any Subsidiary that is nototherwise required to be a Guarantor to become a Guarantor, in which case, suchSubsidiary shall only be required to comply with clauses (1) (other than withrespect to any time period) and (2) of this Section 4.15.

 

## Section 4.16                                          Dischargeand Suspension of Covenants.

 

(a)                                  During any period of time that (i) the Noteshave Investment Grade Ratings from both Rating Agencies and (ii) noDefault has occurred and is continuing under this Indenture (the occurrence ofthe events described in the foregoing clauses (i) and (ii) being collectivelyreferred to as a “Covenant Suspension Event”), the Issuer and theRestricted Subsidiaries shall not be subject to Section 4.07 hereof, Section4.08 hereof, Section 4.09 hereof, Section 4.10 hereof, Section 4.11 hereof,Section 4.14 hereof, Section 4.15 hereof and clause (4) of Section 5.01(a)hereof (the “Suspended Covenants”).

 

(b)                                 In the event that the Issuer and theRestricted Subsidiaries are not subject to the Suspended Covenants under thisIndenture for any period of time as a result of the foregoing, and on anysubsequent date (the “Reversion Date”) (a) one or both of the RatingAgencies withdraw their Investment Grade Rating or downgrade the ratingassigned to the Notes below an Investment Grade Rating or (b) the Issuer or anyof its Affiliates enters into an agreement to effect a transaction that wouldresult in a Change of Control and one or more of the Rating Agencies indicatethat if consummated, such transaction (alone or together with any relatedrecapitalization or refinancing transactions) would cause such Rating Agency towithdraw its Investment Grade Rating or downgrade the ratings assigned to theNotes below an Investment Grade Rating, then the Issuer and the RestrictedSubsidiaries shall thereafter again be subject to the Suspended Covenants underthis Indenture with respect to future events. The period beginning on the dayof a Covenant Suspension Event and ending on a Reversion Date is called a “SuspensionPeriod”.

 

(c)                                  On each Reversion Date, all Indebtednessincurred, or Disqualified Stock or Preferred Stock issued, during theSuspension Period will be deemed to have been outstanding on the Issue Date, sothat it is classified as permitted under Section 4.09(b)(3) hereof.Calculations made after the Reversion Date of the amount available to be madeas Restricted Payments under Section 4.07 hereof will be made as though Section4.07 hereof had been in effect since the Issue Date and throughout theSuspension Period. Accordingly, Restricted Payments made during the SuspensionPeriod will reduce the amount available to be made as Restricted Payments underSection 4.07(a) hereof (but will not reduce any amounts available to be made asRestricted Payments under Section 4.07(b) hereof). However, no Default or Eventof Default will be deemed to have occurred on the Reversion Date (orthereafter) under any Suspended Covenant solely as a result of any actionstaken by the Issuer or its Restricted Subsidiaries, or events occurring, duringthe Suspension Period. For purposes of Section 4.10 hereof, on the ReversionDate, the unutilized Excess Proceeds amount will be reset to zero.

 

(d)                                 The Issuer shall deliver promptly to theTrustee an Officer’s Certificate notifying it of any such occurrence under thisSection 4.16.

 

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# ARTICLE5

#  

# SUCCESSORS

#  

## Section 5.01                                          Merger,Consolidation or Sale of All or Substantially All Assets.

 

(a)                                  The Issuer shall not consolidate or mergewith or into or wind up into (whether or not the Issuer is the survivingcorporation), or sell, assign, transfer, lease, convey or otherwise dispose ofall or substantially all of its properties or assets, in one or more relatedtransactions, to any Person unless:

 

###### (1)                                  either: (x) the Issuer is the surviving corporation; or (y) the Person formed byor surviving any such consolidation or merger (if other than the Issuer) or towhich such sale, assignment, transfer, lease, conveyance or other dispositionwill have been made is a corporation organized or existing under the laws ofthe jurisdiction of organization of the Issuer or the laws of the UnitedStates, any state thereof, the District of Columbia or any territory thereof(the Issuer or such Person, as the case may be, being herein called the “SuccessorCompany”);

######  

###### (2)                                  the Successor Company, if other than the Issuer,expressly assumes all the obligations of the Issuer under the Notes pursuant tosupplemental indentures or other documents or instruments in form reasonablysatisfactory to the Trustee;

######  

###### (3)                                  immediately after such transaction, noDefault exists;

######  

###### (4)                                  immediately after giving *pro forma* effect to such transaction andany related financing transactions, as if such transactions had occurred at thebeginning of the applicable four-quarter period,

######  

(A)                              the Successor Company would be permitted to incur at least $1.00 ofadditional Indebtedness pursuant to the Fixed Charge Coverage Ratio test setforth in Section 4.09(a) hereof, or

 

(B)                                the Fixed Charge Coverage Ratio for the Successor Company and itsRestricted Subsidiaries would be greater than the Fixed Charge Coverage Ratiofor the Issuer and its Restricted Subsidiaries immediately prior to suchtransaction;

 

###### (5)                                  each Guarantor, unless it is the other partyto the transactions described above, in which case Section 5.01(c)(1)(B)hereof shall apply, shall have by supplemental indenture confirmed that itsGuarantee shall apply to such Person’s obligations under this Indenture, theNotes and the Registration Rights Agreement; and

######  

###### (6)                                  the Issuer shall have delivered to theTrustee an Officer’s Certificate and an Opinion of Counsel, each stating thatsuch consolidation, merger or transfer and such supplemental indentures, ifany, comply with this Indenture.

######  

(b)                                 The Successor Company shall succeed to, andbe substituted for the Issuer, as the case may be, under this Indenture, theGuarantees and the Notes, as applicable. Clauses (3), (4), (5) and (6) of Section 5.01(a) hereof shall not applyto the merger contemplated by the Transaction Agreement.  Notwithstanding clauses (3) and (4) ofSection 5.01(a) hereof,

 

(x)                                   any Restricted Subsidiary may consolidatewith or merge into or transfer all or part of its properties and assets to theIssuer, and

 

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(y)                                 the Issuer may merge with an Affiliate of theIssuer, as the case may be, solely for the purpose of reincorporating theIssuer in a State of the United States so long as the amount of Indebtedness ofthe Issuer and its Restricted Subsidiaries is not increased thereby.

 

(c)                                  No Guarantor shall, and the Issuer shall notpermit any Guarantor to, consolidate or merge with or into or wind up into(whether or not the Issuer or Guarantor is the surviving corporation), or sell,assign, transfer, lease, convey or otherwise dispose of all or substantiallyall of its properties or assets, in one or more related transactions, to anyPerson unless:

 

(1)                                  (A) such Guarantor is the survivingcorporation or the Person formed by or surviving any such consolidation ormerger (if other than such Guarantor) or to which such sale, assignment, transfer,lease, conveyance or other disposition will have been made is a corporationorganized or existing under the laws of the jurisdiction of organization ofsuch Guarantor (including, for the avoidance of doubt, with respect to anyGuarantor organized under the laws of Canada or a province or territorythereof, any other province or territory of Canada), as the case may be, or thelaws of the United States, any state thereof, the District of Columbia or anyterritory thereof (such Guarantor or such Person, as the case may be, beingherein called the “Successor Person”);

 

(B)                                the Successor Person, if other than such Guarantor, expressly assumesall the obligations of such Guarantor under this Indenture and such Guarantor’srelated Guarantee pursuant to supplemental indentures or other documents orinstruments in form reasonably satisfactory to the Trustee;

 

(C)                                immediately after such transaction, no Default exists; and

 

(D)                               the Issuer shall have delivered to the Trustee an Officer’s Certificateand an Opinion of Counsel, each stating that such consolidation, merger ortransfer and such supplemental indentures, if any, comply with this Indenture;or

 

(2)                                  the transaction is made in compliance withclauses (1) and (2) of Section 4.10(a) hereof.

 

(d)                                 Subject to certain limitations described inthis Indenture, the Successor Person shall succeed to, and be substituted for,such Guarantor under this Indenture and such Guarantor’s Guarantee.  Notwithstanding the foregoing, any Guarantormay merge into or with or wind up into or transfer all or part of itsproperties and assets to another Guarantor or the Issuer.

 

## Section 5.02                                          SuccessorCorporation Substituted.

 

Uponany consolidation or merger, or any sale, assignment, transfer, lease,conveyance or other disposition of all or substantially all of the assets ofthe Issuer in accordance with Section 5.01 hereof, the successor corporationformed by such consolidation or into or with which the Issuer is merged or towhich such sale, assignment, transfer, lease, conveyance or other dispositionis made shall succeed to, and be substituted for (so that from and after thedate of such consolidation, merger, sale, lease, conveyance or otherdisposition, the provisions of this Indenture referring to the Issuer shallrefer instead to the successor corporation and not to the Issuer), and mayexercise every right and power of the Issuer under this Indenture with the sameeffect as if such successor Person had been named as the Issuer herein; providedthat the predecessor Issuer shall not be relieved from the obligation to paythe Accreted Value of and interest and Additional Interest (to the extent notalready included in Accreted Value), if any, on the 

 

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Notes except in the case of asale, assignment, transfer, lease, conveyance or other disposition of all ofthe Issuer’s assets that meets the requirements of Section 5.01 hereof.

 

# ARTICLE6

#  

# DEFAULTSAND REMEDIES

#  

## Section 6.01                                          Eventsof Default.

 

(a)                                  An “Event of Default” wherever usedherein, means any one of the following events (whatever the reason for suchEvent of Default and whether it shall be voluntary or involuntary or beeffected by operation of law or pursuant to any judgment, decree or order ofany court or any order, rule or regulation of any administrative orgovernmental body):

 

###### (1)                                  default in payment when due and payable, uponredemption, acceleration or otherwise, of Accreted Value of, or premium, ifany, on the Notes (whether or not prohibited by the subordination provisions ofthis Indenture);

######  

###### (2)                                  default for 30 days or more in the paymentwhen due of interest or Additional Interest on or with respect to the Notes(whether or not prohibited by the subordination provisions of this Indenture);

######  

###### (3)                                  failure by the Issuer or any Guarantor for 60days after receipt of written notice given by the Trustee or the Holders of notless than 25% in principal amount at maturity of the Notes to comply with anyof its obligations, covenants or agreements (other than a default referred toin clauses (1) and (2) above) contained in this Indenture or the Notes(whether or not prohibited by the subordination provisions of this Indenture);

######  

###### (4)                                  default under any mortgage, indenture orinstrument under which there is issued or by which there is secured orevidenced any Indebtedness for money borrowed by the Issuer or any of itsRestricted Subsidiaries or the payment of which is guaranteed by the Issuer orany of its Restricted Subsidiaries, other than Indebtedness owed to the Issueror a Restricted Subsidiary, whether such Indebtedness or guarantee now existsor is created after the issuance of the Notes, if both:

######  

(a)                                  such default either results from the failureto pay any principal of such Indebtedness at its stated final maturity (aftergiving effect to any applicable grace periods) or relates to an obligationother than the obligation to pay principal of any such Indebtedness at itsstated final maturity and results in the holder or holders of such Indebtednesscausing such Indebtedness to become due prior to its stated maturity; and

 

(b)                                 the principal amount of such Indebtedness,together with the principal amount of any other such Indebtedness in defaultfor failure to pay any principal at its stated final maturity (after givingeffect to any applicable grace periods), or the maturity of which has been soaccelerated, aggregate $50.0 million or more at any one time outstanding;

 

###### (5)                                  failure by the Issuer or any SignificantSubsidiary, or any group of Restricted Subsidiaries that, taken together (as ofthe latest audited consolidated financial statements for the Issuer), wouldconstitute a Significant Subsidiary, to pay final judgments aggregating inexcess of $50.0 million, which final judgments remain unpaid, undischarged andunstayed for a period of 

######  

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###### morethan 60 days after such judgment becomes final, and in the event such judgmentis covered by insurance, an enforcement proceeding has been commenced by anycreditor upon such judgment or decree which is not promptly stayed;

######  

###### (6)                                  the Issuer or any of its RestrictedSubsidiaries that is a Significant Subsidiary or any group of RestrictedSubsidiaries that, taken together (as of the latest audited consolidatedfinancial statements for the Issuer), would constitute a SignificantSubsidiary, pursuant to or within the meaning of any Bankruptcy Law:

######  

(i)                                     commences proceedings to be adjudicatedbankrupt or insolvent;

 

(ii)                                  consents to the institution of bankruptcy orinsolvency proceedings against it, or the filing by it of a petition or answeror consent seeking reorganization or relief under applicable Bankruptcy Law;

 

(iii)                               consents to the appointment of a receiver, liquidator, assignee,trustee, sequestrator or other similar official of it or for all orsubstantially all of its property;

 

(iv)                              makes a general assignment for the benefit of its creditors; or

 

(v)                                 generally is not paying its debts as theybecome due;

 

###### (7)                                  a court of competent jurisdiction enters anorder or decree under any Bankruptcy Law that:

######  

(i)                                     is for relief against the Issuer or any ofits Restricted Subsidiaries that is a Significant Subsidiary or any group ofRestricted Subsidiaries that, taken together, would constitute a SignificantSubsidiary, in a proceeding in which the Issuer or any such RestrictedSubsidiaries, that is a Significant Subsidiary or any group of RestrictedSubsidiaries that, taken together (as of the latest audited consolidatedfinancial statements for the Issuer), would constitute a Significant Subsidiary,is to be adjudicated bankrupt or insolvent;

 

(ii)                                  appoints a receiver, liquidator, assignee,trustee, sequestrator or other similar official of the Issuer or any of itsRestricted Subsidiaries that is a Significant Subsidiary or any group of RestrictedSubsidiaries that, taken together (as of the latest audited consolidatedfinancial statements for the Issuer), would constitute a SignificantSubsidiary, or for all or substantially all of the property of the Issuer orany of its Restricted Subsidiaries that is a Significant Subsidiary or anygroup of Restricted Subsidiaries that, taken together (as of the latest auditedconsolidated financial statements for the Issuer), would constitute aSignificant Subsidiary; or

 

(iii)                               orders the liquidation of the Issuer or any of its RestrictedSubsidiaries that is a Significant Subsidiary or any group of RestrictedSubsidiaries that, taken together (as of the latest audited consolidatedfinancial statements for the Issuer), would constitute a Significant Subsidiary;

 

andthe order or decree remains unstayed and in effect for 60 consecutive days; or

 

###### (8)                                  the Guarantee of any Significant Subsidiary,or any group of Restricted Subsidiaries that, taken together (as of the latestaudited consolidated financial statements for the Issuer), 

######  

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###### wouldconstitute a Significant Subsidiary, shall for any reason cease to be in fullforce and effect or any responsible officer of any Guarantor that is aSignificant Subsidiary, or any group of Restricted Subsidiaries that, takentogether (as of the latest audited consolidated financial statements for theIssuer), would constitute a Significant Subsidiary, as the case may be, deniesthat it has any further liability under its or their Guarantee(s) or givesnotice to such effect, other than by reason of the termination of thisIndenture or the release of any such Guarantee in accordance with thisIndenture.

######  

(b)                                 In the event of any Event of Defaultspecified in clause (4) of Section 6.01(a) hereof, such Event of Default andall consequences thereof (excluding any resulting payment default, other thanas a result of acceleration of the Notes) shall be annulled, waived andrescinded, automatically and without any action by the Trustee or the Holders,if within 20 days after such Event of Default arose:

 

###### (1)                                  the Indebtedness or guarantee that is thebasis for such Event of Default has been discharged; or

######  

###### (2)                                  holders thereof have rescinded or waived theacceleration, notice or action (as the case may be) giving rise to such Eventof Default; or

######  

###### (3)                                  the default that is the basis for such Eventof Default has been cured.

######  

## Section 6.02                                          Acceleration.

 

Ifany Event of Default (other than an Event of Default specified in clause (6) or(7) of Section 6.01(a) hereof with respect to the Issuer) occurs and iscontinuing under this Indenture, the Trustee or the Holders of at least 25% inprincipal amount at maturity of the then total outstanding Notes may declarethe Accreted Value, premium, if any, interest, if any, and any other monetaryobligations on all the then outstanding Notes to be due and payableimmediately; provided, however, that so long as any Indebtednesspermitted to be incurred under this Indenture as part of the Senior CreditFacilities shall be outstanding, no such acceleration shall be effective untilthe earlier of:

 

(1) acceleration of any such Indebtedness underthe Senior Credit Facilities; or

 

(2) five Business Days after the giving ofwritten notice of such acceleration to the Issuer and the Representative undereach of the Senior Credit Facilities.

 

Uponthe effectiveness of such declaration, such Accreted Value and interest shallbe due and payable immediately.  TheTrustee shall have no obligation to accelerate the Notes if and so long as acommittee of its Responsible Officers in good faith determines acceleration isnot in the best interest of the Holders of the Notes.

 

Notwithstandingthe foregoing, in the case of an Event of Default arising under clause (6) or(7) of Section 6.01(a) hereof with respect to the Issuer, all outstanding Notesshall be due and payable immediately without further action or notice.

 

TheHolders of a majority in aggregate principal amount at maturity of the thenoutstanding Notes by written notice to the Trustee may on behalf of all of theHolders rescind an acceleration and its consequences:

 

(1)                                  if the rescission would not conflict with anyjudgment or decree;

 

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(2)                                  if all existing Events of Default have beencured, waived, annulled or rescinded except nonpayment of Accreted Value,interest, Additional Interest, if any, or premium that has become due solelybecause of the acceleration;

 

(3)                                  to the extent the payment of such interest islawful, interest on overdue installments of interest and overdue AccretedValue, which has become due otherwise than by such declaration of acceleration,has been paid; and

 

(4)                                  if the Issuer has paid the Trustee itsreasonable compensation and reimbursed the Trustee for its expenses,disbursements and advances.

 

## Section 6.03                                          OtherRemedies.

 

Ifan Event of Default occurs and is continuing, the Trustee may pursue anyavailable remedy to collect the payment of Accreted Value, premium, if any, andinterest on the Notes or to enforce the performance of any provision of theNotes or this Indenture.

 

TheTrustee may maintain a proceeding even if it does not possess any of the Notesor does not produce any of them in the proceeding.  A delay or omission by the Trustee or anyHolder of a Note in exercising any right or remedy accruing upon an Event ofDefault shall not impair the right or remedy or constitute a waiver of oracquiescence in the Event of Default. All remedies are cumulative to the extent permitted by law.

 

## Section 6.04                                          Waiverof Past Defaults.

 

Holdersof not less than a majority in aggregate principal amount at maturity of thethen outstanding Notes by notice to the Trustee may on behalf of the Holders ofall of the Notes waive any existing Default and its consequences hereunder,except a continuing Default in the payment of the Accreted Value of, premium,if any, Additional Interest, if any, or interest on, any Note held by anon-consenting Holder (including in connection with an Asset Sale Offer or aChange of Control Offer); provided, subject to Section 6.02 hereof, thatthe Holders of a majority in aggregate principal amount at maturity of the thenoutstanding Notes may rescind an acceleration and its consequences, includingany related payment default that resulted from such acceleration.  Upon any such waiver, such Default shallcease to exist, and any Event of Default arising therefrom shall be deemed tohave been cured for every purpose of this Indenture; but no such waiver shallextend to any subsequent or other Default or impair any right consequentthereto.

 

## Section 6.05                                          Controlby Majority.

 

Holdersof a majority in principal amount at maturity of the then total outstandingNotes may direct the time, method and place of conducting any proceeding forany remedy available to the Trustee or of exercising any trust or powerconferred on the Trustee.  The Trustee,however, may refuse to follow any direction that conflicts with law or thisIndenture or that the Trustee determines is unduly prejudicial to the rights ofany other Holder of a Note or that would involve the Trustee in personalliability.

 

## Section 6.06                                          Limitationon Suits.

 

Subjectto Section 6.07 hereof, no Holder of a Note may pursue any remedy with respectto this Indenture or the Notes unless:

 

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###### (1)                                  such Holder has previously given the Trusteenotice that an Event of Default is continuing;

######  

###### (2)                                  Holders of at least 25% in principal amountat maturity of the total outstanding Notes have requested the Trustee to pursuethe remedy;

######  

###### (3)                                  Holders of the Notes have offered the Trusteesecurity or indemnity reasonably satisfactory to it against any loss, liabilityor expense;

######  

###### (4)                                  the Trustee has not complied with suchrequest within 60 days after the receipt thereof and the offer of security orindemnity; and

######  

###### (5)                                  Holders of a majority in principal amount atmaturity of the total outstanding Notes have not given the Trustee a directioninconsistent with such request within such 60-day period.

######  

AHolder of a Note may not use this Indenture to prejudice the rights of anotherHolder of a Note or to obtain a preference or priority over another Holder of aNote.

 

## Section 6.07                                          Rightsof Holders of Notes To Receive Payment.

 

Notwithstandingany other provision of this Indenture, the right of any Holder of a Note toreceive payment of Accreted Value, premium, if any, Additional Interest, ifany, and interest on the Note, on or after the respective due dates expressedin the Note (including in connection with an Asset Sale Offer or a Change ofControl Offer), or to bring suit for the enforcement of any such payment on orafter such respective dates, shall not be impaired or affected without theconsent of such Holder.

 

## Section 6.08                                          CollectionSuit by Trustee.

 

Ifan Event of Default specified in Section 6.01(a)(1) or (2) hereof occurs and iscontinuing, the Trustee is authorized to recover judgment in its own name andas trustee of an express trust against the Issuer for the whole amount ofAccreted Value of, premium, if any, and Additional Interest (to the extent notalready included in Accreted Value), if any, and interest remaining unpaid onthe Notes and interest on overdue Accreted Value and, to the extent lawful,interest and such further amount as shall be sufficient to cover the costs andexpenses of collection, including the reasonable compensation, expenses,disbursements and advances of the Trustee, its agents and counsel.

 

## Section 6.09                                          Restorationof Rights and Remedies.

 

Ifthe Trustee or any Holder has instituted any proceeding to enforce any right orremedy under this Indenture and such proceeding has been discontinued orabandoned for any reason, or has been determined adversely to the Trustee or tosuch Holder, then and in every such case, subject to any determination in suchproceedings, the Issuer, the Trustee and the Holders shall be restoredseverally and respectively to their former positions hereunder and thereafterall rights and remedies of the Trustee and the Holders shall continue as thoughno such proceeding has been instituted.

 

## Section 6.10                                          Rightsand Remedies Cumulative.

 

Exceptas otherwise provided with respect to the replacement or payment of mutilated,destroyed, lost or stolen Notes in Section 2.07 hereof, no right or remedyherein conferred upon or reserved to the Trustee or to the Holders is intendedto be exclusive of any other right or remedy, and every 

 

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right and remedy shall, to theextent permitted by law, be cumulative and in addition to every other right andremedy given hereunder or now or hereafter existing at law or in equity orotherwise.  The assertion or employmentof any right or remedy hereunder, or otherwise, shall not prevent the concurrentassertion or employment of any other appropriate right or remedy.

 

## Section 6.11                                          Delayor Omission Not Waiver.

 

Nodelay or omission of the Trustee or of any Holder of any Note to exercise anyright or remedy accruing upon any Event of Default shall impair any such rightor remedy or constitute a waiver of any such Event of Default or anacquiescence therein.  Every right andremedy given by this Article or by law to the Trustee or to the Holders may beexercised from time to time, and as often as may be deemed expedient, by theTrustee or by the Holders, as the case may be.

 

## Section 6.12                                          TrusteeMay File Proofs of Claim.

 

TheTrustee is authorized to file such proofs of claim and other papers ordocuments as may be necessary or advisable in order to have the claims of theTrustee (including any claim for the reasonable compensation, expenses,disbursements and advances of the Trustee, its agents and counsel) and theHolders of the Notes allowed in any judicial proceedings relative to the Issuer(or any other obligor upon the Notes including the Guarantors), its creditorsor its property and shall be entitled and empowered to participate as a memberin any official committee of creditors appointed in such matter and to collect,receive and distribute any money or other property payable or deliverable onany such claims and any custodian in any such judicial proceeding is herebyauthorized by each Holder to make such payments to the Trustee, and in theevent that the Trustee shall consent to the making of such payments directly tothe Holders, to pay to the Trustee any amount due to it for the reasonablecompensation, expenses, disbursements and advances of the Trustee, its agentsand counsel, and any other amounts due the Trustee under Section 7.07 hereof.  To the extent that the payment of any suchcompensation, expenses, disbursements and advances of the Trustee, its agentsand counsel, and any other amounts due the Trustee under Section 7.07 hereofout of the estate in any such proceeding, shall be denied for any reason,payment of the same shall be secured by a Lien on, and shall be paid out of,any and all distributions, dividends, money, securities and other propertiesthat the Holders may be entitled to receive in such proceeding whether in liquidationor under any plan of reorganization or arrangement or otherwise.  Nothing herein contained shall be deemed toauthorize the Trustee to authorize or consent to or accept or adopt on behalfof any Holder any plan of reorganization, arrangement, adjustment orcomposition affecting the Notes or the rights of any Holder, or to authorizethe Trustee to vote in respect of the claim of any Holder in any suchproceeding.

 

## Section 6.13                                          Priorities.

 

Ifthe Trustee collects any money pursuant to this Article 6, it shall pay out themoney in the following order:

 

(i)                                     to the Trustee, its agents and attorneys foramounts due under Section 7.07 hereof, including payment of all compensation,expenses and liabilities incurred, and all advances made, by the Trustee and thecosts and expenses of collection;

 

(ii)                                  to holders of Senior Indebtedness of theIssuer and, if such money or property has been collected from a Guarantor, toholders of Senior Indebtedness of such Guarantor, in each case to the extentrequired by Article 10 and/or Article 12 hereof, as applicable;

 

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(iii)                               to Holders of Notes for amounts due and unpaid on the Notes forAccreted Value, premium, if any, and Additional Interest (to the extent notalready included in Accreted Value), if any, and interest, ratably, withoutpreference or priority of any kind, according to the amounts due and payable onthe Notes for Accreted Value, premium, if any, and Additional Interest (to theextent not already included in Accreted Value), if any, and interest,respectively; and

 

(iv)                              to the Issuer or to such party as a court of competent jurisdictionshall direct including a Guarantor, if applicable.

 

TheTrustee may fix a record date and payment date for any payment to Holders ofNotes pursuant to this Section 6.13.

 

## Section 6.14                                          Undertakingfor Costs.

 

Inany suit for the enforcement of any right or remedy under this Indenture or inany suit against the Trustee for any action taken or omitted by it as aTrustee, a court in its discretion may require the filing by any party litigantin the suit of an undertaking to pay the costs of the suit, and the court inits discretion may assess reasonable costs, including reasonable attorneys’fees and expenses, against any party litigant in the suit, having due regard tothe merits and good faith of the claims or defenses made by the partylitigant.  This Section 6.14 does notapply to a suit by the Trustee, a suit by a Holder of a Note pursuant toSection 6.07 hereof, or a suit by Holders of more than 10% in principal amountat maturity of the then outstanding Notes.

 

# ARTICLE7

#  

# TRUSTEE

#  

## Section 7.01                                          Dutiesof Trustee.

 

(a)                                  If an Event of Default has occurred and iscontinuing, the Trustee shall exercise such of the rights and powers vested init by this Indenture, and use the same degree of care and skill in itsexercise, as a prudent person would exercise or use under the circumstances inthe conduct of such person’s own affairs.

 

(b)                                 Except during the continuance of an Event ofDefault:

 

(i)                                     the duties of the Trustee shall be determinedsolely by the express provisions of this Indenture and the Trustee need performonly those duties that are specifically set forth in this Indenture and noothers, and no implied covenants or obligations shall be read into thisIndenture against the Trustee; and

 

(ii)                                  in the absence of bad faith on its part, theTrustee may conclusively rely, as to the truth of the statements and thecorrectness of the opinions expressed therein, upon certificates or opinionsfurnished to the Trustee and conforming to the requirements of thisIndenture.  However, in the case of anysuch certificates or opinions which by any provision hereof are specificallyrequired to be furnished to the Trustee, the Trustee shall examine thecertificates and opinions to determine whether or not they conform to therequirements of this Indenture (but need not confirm or investigate theaccuracy of mathematical calculations or other facts stated therein).

 

(c)                                  The Trustee may not be relieved fromliabilities for its own negligent action, its own negligent failure to act, orits own willful misconduct, except that:

 

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(i)                                     this paragraph (c) does not limit the effectof paragraph (b) of this Section 7.01;

 

(ii)                                  the Trustee shall not be liable for any errorof judgment made in good faith by a Responsible Officer, unless it is proved ina court of competent jurisdiction that the Trustee was negligent inascertaining the pertinent facts; and

 

(iii)                               the Trustee shall not be liable with respect to any action it takes oromits to take in good faith in accordance with a direction received by itpursuant to Section 6.05 hereof.

 

(d)                                 Whether or not therein expressly so provided,every provision of this Indenture that in any way relates to the Trustee issubject to this Section 7.01.

 

(e)                                  The Trustee shall be under no obligation toexercise any of its rights or powers under this Indenture at the request ordirection of any of the Holders of the Notes unless the Holders have offered tothe Trustee indemnity or security reasonably satisfactory to it against anyloss, liability or expense.

 

(f)                                    The Trustee shall not be liable for intereston any money received by it except as the Trustee may agree in writing with theIssuer.  Money held in trust by theTrustee need not be segregated from other funds except to the extent requiredby law.

 

## Section 7.02                                          Rightsof Trustee.

 

(a)                                  The Trustee may conclusively rely upon anydocument believed by it to be genuine and to have been signed or presented bythe proper Person.  The Trustee need notinvestigate any fact or matter stated in the document, but the Trustee, in itsdiscretion, may make such further inquiry or investigation into such facts ormatters as it may see fit, and, if the Trustee shall determine to make suchfurther inquiry or investigation, it shall be entitled to examine the books,records and premises of the Issuer, personally or by agent or attorney at thesole cost of the Issuer and shall incur no liability or additional liability ofany kind by reason of such inquiry or investigation.

 

(b)                                 Before the Trustee acts or refrains fromacting, it may require an Officer’s Certificate or an Opinion of Counsel orboth.  The Trustee shall not be liablefor any action it takes or omits to take in good faith in reliance on suchOfficer’s Certificate or Opinion of Counsel. The Trustee may consult with counsel of its selection and the advice ofsuch counsel or any Opinion of Counsel shall be full and complete authorizationand protection from liability in respect of any action taken, suffered oromitted by it hereunder in good faith and in reliance thereon.

 

(c)                                  The Trustee may act through its attorneys andagents and shall not be responsible for the misconduct or negligence of anyagent or attorney appointed with due care.

 

(d)                                 The Trustee shall not be liable for anyaction it takes or omits to take in good faith that it believes to beauthorized or within the rights or powers conferred upon it by this Indenture.

 

(e)                                  Unless otherwise specifically provided inthis Indenture, any demand, request, direction or notice from the Issuer shallbe sufficient if signed by an Officer of the Issuer.

 

(f)                                    None of the provisions of this Indentureshall require the Trustee to expend or risk its own funds or otherwise to incurany liability, financial or otherwise, in the performance of any of its dutieshereunder, or in the exercise of any of its rights or powers if it shall havereasonable grounds for 

 

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believing that repayment ofsuch funds or indemnity satisfactory to it against such risk or liability isnot assured to it.

 

(g)                                 The Trustee shall not be deemed to haveknowledge or notice of any Default or Event of Default unless a ResponsibleOfficer of the Trustee has actual knowledge thereof or unless written notice ofany event which is in fact such a Default or Event of Default is received bythe Trustee at the Corporate Trust Office of the Trustee, and such noticereferences the Notes and this Indenture.

 

(h)                                 In no event shall the Trustee be responsibleor liable for special, indirect, or consequential loss or damage of any kindwhatsoever (including, but not limited to, loss of profit) irrespective ofwhether the Trustee has been advised of the likelihood of such loss or damageand regardless of the form of action.

 

(i)                                     The rights, privileges, protections,immunities and benefits given to the Trustee, including, without limitation,its right to be indemnified, are extended to, and shall be enforceable by, theTrustee in each of its capacities hereunder, and each agent, custodian andother Person employed to act hereunder.

 

(j)                                     In the event the Issuer is required to payAdditional Interest, the Issuer will provide written notice to the Trustee ofthe Issuer’s obligation to pay Additional Interest no later than 15 days priorto the next Interest Payment Date, which notice shall set forth the amount ofthe Additional Interest to be paid by the Issuer.  The Trustee shall not at any time be underany duty or responsibility to any Holders to determine whether the AdditionalInterest is payable and the amount thereof.

 

## Section 7.03                                          IndividualRights of Trustee.

 

TheTrustee in its individual or any other capacity may become the owner or pledgeeof Notes and may otherwise deal with the Issuer or any Affiliate of the Issuerwith the same rights it would have if it were not Trustee.  However, in the event that the Trusteeacquires any conflicting interest it must eliminate such conflict within 90days, apply to the SEC for permission to continue as trustee or resign.  Any Agent may do the same with like rightsand duties.  The Trustee is also subjectto Sections 7.10 and 7.11 hereof.

 

## Section 7.04                                          Trustee’sDisclaimer.

 

TheTrustee shall not be responsible for and makes no representation as to thevalidity or adequacy of this Indenture or the Notes, it shall not beaccountable for the Issuer’s use of the proceeds from the Notes or any moneypaid to the Issuer or upon the Issuer’s direction under any provision of thisIndenture, it shall not be responsible for the use or application of any moneyreceived by any Paying Agent other than the Trustee, and it shall not beresponsible for any statement or recital herein or any statement in the Notesor any other document in connection with the sale of the Notes or pursuant tothis Indenture other than its certificate of authentication.

 

## Section 7.05                                          Noticeof Defaults.

 

Ifa Default occurs and is continuing and if it is known to the Trustee, theTrustee shall mail to Holders of Notes a notice of the Default within 90 daysafter it occurs.  Except in the case of aDefault relating to the payment of Accreted Value, premium, if any, or intereston any Note, the Trustee may withhold from the Holders notice of any continuingDefault if and so long as a committee of its Responsible Officers in good faithdetermines that withholding the notice is in the interests of the Holders ofthe Notes.

 

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## Section 7.06                                          Reportsby Trustee to Holders of the Notes.

 

Within60 days after each May 15, beginning with the May 15 following thedate of this Indenture, and for so long as Notes remain outstanding, theTrustee shall mail to the Holders of the Notes a brief report dated as of suchreporting date that complies with Trust Indenture Act Section 313(a) (but if noevent described in Trust Indenture Act Section 313(a) has occurred within thetwelve months preceding the reporting date, no report need be transmitted).  The Trustee also shall comply with TrustIndenture Act Section 313(b)(2). The Trustee shall also transmit by mail all reports as required by TrustIndenture Act Section 313(c).

 

Acopy of each report at the time of its mailing to the Holders of Notes shall bemailed to the Issuer and filed with the SEC and each stock exchange on whichthe Notes are listed in accordance with Trust Indenture Act Section313(d).  The Issuer shall promptly notifythe Trustee when the Notes are listed on any stock exchange or delisted therefrom.

 

## Section 7.07                                          Compensationand Indemnity.

 

TheIssuer shall pay to the Trustee from time to time such compensation for itsacceptance of this Indenture and services hereunder as the parties shall agreein writing from time to time.  TheTrustee’s compensation shall not be limited by any law on compensation of atrustee of an express trust.  The Issuershall reimburse the Trustee promptly upon request for all reasonabledisbursements, advances and expenses incurred or made by it in addition to thecompensation for its services.  Suchexpenses shall include the reasonable compensation, disbursements and expensesof the Trustee’s agents and counsel.

 

TheIssuer and the Guarantors, jointly and severally, shall indemnify the Trusteefor, and hold the Trustee harmless against, any and all loss, damage, claims,liability or expense (including attorneys’ fees) incurred by it in connectionwith the acceptance or administration of this trust and the performance of itsduties hereunder (including the costs and expenses of enforcing this Indentureagainst the Issuer or any of the Guarantors (including this Section 7.07) ordefending itself against any claim whether asserted by any Holder, the Issueror any Guarantor, or liability in connective with the acceptance, exercise orperformance of any of its powers or duties hereunder).  The Trustee shall notify the Issuer promptlyof any claim for which it may seek indemnity. Failure by the Trustee to so notify the Issuer shall not relieve theIssuer of its obligations hereunder.  TheIssuer shall defend the claim and the Trustee may have separate counsel and theIssuer shall pay the fees and expenses of such counsel.  The Issuer need not reimburse any expense orindemnify against any loss, liability or expense incurred by the Trusteethrough the Trustee’s own willful misconduct, negligence or bad faith.

 

Theobligations of the Issuer under this Section 7.07 shall survive thesatisfaction and discharge of this Indenture or the earlier resignation orremoval of the Trustee.

 

Tosecure the payment obligations of the Issuer and the Guarantors in this Section7.07, the Trustee shall have a Lien prior to the Notes on all money or propertyheld or collected by the Trustee, except that held in trust to pay AccretedValue and interest on particular Notes. Such Lien shall survive the satisfaction and discharge of thisIndenture.

 

Whenthe Trustee incurs expenses or renders services after an Event of Defaultspecified in Section 6.01(a)(6) or (7) hereof occurs, the expenses and the compensationfor the services (including the fees and expenses of its agents and counsel)are intended to constitute expenses of administration under any Bankruptcy Law.

 

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TheTrustee shall comply with the provisions of Trust Indenture Act Section313(b)(2) to the extent applicable.

 

## Section 7.08                                          Replacementof Trustee.

 

Aresignation or removal of the Trustee and appointment of a successor Trusteeshall become effective only upon the successor Trustee’s acceptance ofappointment as provided in this Section 7.08. The Trustee may resign in writing at any time and be discharged from thetrust hereby created by so notifying the Issuer.  The Holders of a majority in principal amountat maturity of the then outstanding Notes may remove the Trustee by sonotifying the Trustee and the Issuer in writing.  The Issuer may remove the Trustee if:

 

### (a)                                  the Trustee fails to comply with Section 7.10hereof;

###  

### (b)                                 the Trustee is adjudged a bankrupt or aninsolvent or an order for relief is entered with respect to the Trustee underany Bankruptcy Law;

###  

### (c)                                  a custodian or public officer takes charge ofthe Trustee or its property; or

###  

### (d)                                 the Trustee becomes incapable of acting.

###  

Ifthe Trustee resigns or is removed or if a vacancy exists in the office ofTrustee for any reason, the Issuer shall promptly appoint a successorTrustee.  Within one year after thesuccessor Trustee takes office, the Holders of a majority in principal amountat maturity of the then outstanding Notes may appoint a successor Trustee toreplace the successor Trustee appointed by the Issuer.

 

Ifa successor Trustee does not take office within 60 days after the retiringTrustee resigns or is removed, the retiring Trustee (at the Issuer’s expense),the Issuer or the Holders of at least 10% in principal amount at maturity ofthe then outstanding Notes may petition any court of competent jurisdiction forthe appointment of a successor Trustee.

 

Ifthe Trustee, after written request by any Holder who has been a Holder for atleast six months, fails to comply with Section 7.10 hereof, such Holder maypetition any court of competent jurisdiction for the removal of the Trustee andthe appointment of a successor Trustee.

 

Asuccessor Trustee shall deliver a written acceptance of its appointment to theretiring Trustee and to the Issuer. Thereupon, the resignation or removal of the retiring Trustee shallbecome effective, and the successor Trustee shall have all the rights, powersand duties of the Trustee under this Indenture. The successor Trustee shall mail a notice of its succession toHolders.  The retiring Trustee shallpromptly transfer all property held by it as Trustee to the successor Trustee; providedall sums owing to the Trustee hereunder have been paid and subject to the Lienprovided for in Section 7.07 hereof. Notwithstanding replacement of the Trustee pursuant to this Section7.08, the Issuer’s obligations under Section 7.07 hereof shall continue for thebenefit of the retiring Trustee.

 

## Section 7.09                                          Successor Trustee by Merger, etc.

##  

Ifthe Trustee consolidates, merges or converts into, or transfers all orsubstantially all of its corporate trust business to, another corporation, thesuccessor corporation without any further act shall be the successor Trustee.

 

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## Section 7.10                                          Eligibility;Disqualification.

 

Thereshall at all times be a Trustee hereunder that is a corporation organized anddoing business under the laws of the United States of America or of any statethereof that is authorized under such laws to exercise corporate trustee power,that is subject to supervision or examination by federal or state authoritiesand that has a combined capital and surplus of at least $50,000,000 as setforth in its most recent published annual report of condition.

 

ThisIndenture shall always have a Trustee who satisfies the requirements of TrustIndenture Act Sections 310(a)(1), (2) and (5). The Trustee is subject to Trust Indenture Act Section 310(b).

 

## Section 7.11                                          PreferentialCollection of Claims Against Issuer.

 

TheTrustee is subject to Trust Indenture Act Section 311(a), excluding anycreditor relationship listed in Trust Indenture Act Section 311(b).  A Trustee who has resigned or been removedshall be subject to Trust Indenture Act Section 311(a) to the extent indicatedtherein.

 

# ARTICLE8

#  

# LEGALDEFEASANCE AND COVENANT DEFEASANCE

#  

## Section 8.01                                          OptionTo Effect Legal Defeasance or Covenant Defeasance.

 

TheIssuer may, at its option and at any time, elect to have either Section 8.02 or8.03 hereof applied to all outstanding Notes upon compliance with theconditions set forth below in this Article 8.

 

## Section 8.02                                          LegalDefeasance and Discharge.

 

Uponthe Issuer’s exercise under Section 8.01 hereof of the option applicable tothis Section 8.02, the Issuer and the Guarantors shall, subject to thesatisfaction of the conditions set forth in Section 8.04 hereof, be deemed tohave been discharged from their obligations with respect to all outstandingNotes and Guarantees on the date the conditions set forth below are satisfied (“LegalDefeasance”).  For this purpose,Legal Defeasance means that the Issuer shall be deemed to have paid anddischarged the entire Indebtedness represented by the outstanding Notes, which shallthereafter be deemed to be “outstanding” only for the purposes of Section 8.05hereof and the other Sections of this Indenture referred to in (a) and (b)below, and to have satisfied all its other obligations under such Notes andthis Indenture including that of the Guarantors (and the Trustee, on demand ofand at the expense of the Issuer, shall execute proper instrumentsacknowledging the same), except for the following provisions which shallsurvive until otherwise terminated or discharged hereunder:

 

### (a)                                  the rights of Holders of Notes to receivepayments in respect of the Accreted Value of, premium, if any, and interest onthe Notes when such payments are due solely out of the trust created pursuantto this Indenture referred to in Section 8.04 hereof;

###  

### (b)                                 the Issuer’s obligations with respect toNotes concerning issuing temporary Notes, registration of such Notes,mutilated, destroyed, lost or stolen Notes and the maintenance of an office oragency for payment and money for security payments held in trust;

###  

### (c)                                  the rights, powers, trusts, duties andimmunities of the Trustee, and the Issuer’s obligations in connectiontherewith; and

###  

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### (d)                                 this Section 8.02.

###  

Subjectto compliance with this Article 8, the Issuer may exercise its option underthis Section 8.02 notwithstanding the prior exercise of its option underSection 8.03 hereof.

 

## Section 8.03                                          CovenantDefeasance.

 

Uponthe Issuer’s exercise under Section 8.01 hereof of the option applicable to thisSection 8.03, the Issuer and the Guarantors shall, subject to the satisfactionof the conditions set forth in Section 8.04 hereof, be released from theirobligations under the covenants contained in Sections 4.03, 4.04, 4.05, 4.07,4.08, 4.09, 4.10, 4.11, 4.12, 4.13, 4.14, 4.15 and 4.17 hereof and clauses (4)and (5) of Section 5.01(a), Sections 5.01(c) and 5.01(d) hereof with respect tothe outstanding Notes on and after the date the conditions set forth in Section8.04 hereof are satisfied (“Covenant Defeasance”), and the Notes shallthereafter be deemed not “outstanding” for the purposes of any direction,waiver, consent or declaration or act of Holders (and the consequences of anythereof) in connection with such covenants, but shall continue to be deemed “outstanding”for all other purposes hereunder (it being understood that such Notes shall notbe deemed outstanding for accounting purposes). For this purpose, Covenant Defeasance means that, with respect to theoutstanding Notes, the Issuer may omit to comply with and shall have noliability in respect of any term, condition or limitation set forth in any suchcovenant, whether directly or indirectly, by reason of any reference elsewhereherein to any such covenant or by reason of any reference in any such covenantto any other provision herein or in any other document and such omission tocomply shall not constitute a Default or an Event of Default under Section 6.01hereof, but, except as specified above, the remainder of this Indenture andsuch Notes shall be unaffected thereby. In addition, upon the Issuer’s exercise under Section 8.01 hereof of theoption applicable to this Section 8.03 hereof, subject to the satisfaction ofthe conditions set forth in Section 8.04 hereof, Sections 6.01(a)(3), 6.01(a)(4),6.01(a)(5), 6.01(a)(6) (solely with respect to Restricted Subsidiaries subjectthereto), 6.01(a)(7) (solely with respect to Restricted Subsidiaries subjectthereto) and 6.01(a)(8) hereof shall not constitute Events of Default.

 

## Section 8.04                                          Conditionsto Legal or Covenant Defeasance.

 

Inorder to exercise either Legal Defeasance or Covenant Defeasance with respectto the Notes:

 

###### (1)                                  the Issuer must irrevocably deposit with theTrustee, in trust, for the benefit of the Holders of the Notes, cash in U.S.dollars, Government Securities, or a combination thereof, in such amounts aswill be sufficient, in the opinion of a nationally recognized firm ofindependent public accountants, to pay the Accreted Value of, premium, if any,and interest due on the Notes on the stated maturity date or on the redemptiondate, as the case may be, of such Accreted Value of premium, if any, orinterest on such Notes and the Issuer must specify whether such Notes are beingdefeased to maturity or to a particular redemption date;

######  

###### (2)                                  in the case of Legal Defeasance, the Issuershall have delivered to the Trustee an Opinion of Counsel reasonably acceptableto the Trustee confirming that, subject to customary assumptions andexclusions,

######  

(a)                                  the Issuer has received from, or there hasbeen published by, the United States Internal Revenue Service a ruling, or

 

(b)                                 since the issuance of the Notes, there hasbeen a change in the applicable U.S. federal income tax law,

 

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in either case to the effect that, and based thereonsuch Opinion of Counsel shall confirm that, subject to customary assumptionsand exclusions, the Holders of the Notes will not recognize income, gain orloss for U.S. federal income tax purposes, as applicable, as a result of suchLegal Defeasance and will be subject to U.S. federal income tax on the sameamounts, in the same manner and at the same times as would have been the caseif such Legal Defeasance had not occurred;

 

###### (3)                                  in the case of Covenant Defeasance, theIssuer shall have delivered to the Trustee an Opinion of Counsel reasonablyacceptable to the Trustee confirming that, subject to customary assumptions andexclusions, the Holders of the Notes will not recognize income, gain or lossfor U.S. federal income tax purposes as a result of such Covenant Defeasanceand will be subject to such tax on the same amounts, in the same manner and atthe same times as would have been the case if such Covenant Defeasance had notoccurred;

######  

###### (4)                                  no Default (other than that resulting fromborrowing funds to be applied to make such deposit and any similar andsimultaneous deposit relating to other Indebtedness including the Senior Notesand the Senior Subordinated Notes, and in each case the granting of Liens inconnection therewith) shall have occurred and be continuing on the date of suchdeposit;

######  

###### (5)                                  such Legal Defeasance or Covenant Defeasanceshall not result in a breach or violation of, or constitute a default under theSenior Credit Facilities, the Senior Notes or the indenture pursuant to whichthe Senior Notes are issued, the Senior Notes or the indenture pursuant towhich the Senior Notes are issued or any other material agreement or instrument(other than this Indenture) to which the Issuer or any Guarantor is a party orby which the Issuer or any Guarantor is bound (other than that resulting fromany borrowing of funds to be applied to make the deposit required to effectsuch Legal Defeasance or Covenant Defeasance and any similar and simultaneousdeposit relating to other Indebtedness, including the Senior Notes and theSenior Subordinated Notes, and the granting of Liens in connection therewith);

######  

###### (6)                                  the Issuer shall have delivered to theTrustee an Opinion of Counsel to the effect that, as of the date of suchopinion and subject to customary assumptions and exclusions following thedeposit, the trust funds will not be subject to the effect of Section 547 ofTitle 11 of the United States Code;

######  

###### (7)                                  the Issuer shall have delivered to theTrustee an Officer’s Certificate stating that the deposit was not made by theIssuer with the intent of defeating, hindering, delaying or defrauding anycreditors of the Issuer or any Guarantor or others; and

######  

###### (8)                                  the Issuer shall have delivered to theTrustee an Officer’s Certificate and an Opinion of Counsel (which Opinion ofCounsel may be subject to customary assumptions and exclusions) each statingthat all conditions precedent provided for or relating to the Legal Defeasanceor the Covenant Defeasance, as the case may be, have been complied with.

######  

## Section 8.05                                          DepositedMoney and Government SecuritiesTo Be Held in Trust; Other Miscellaneous Provisions.

 

Subjectto Section 8.06 hereof, all money and Government Securities (including theproceeds thereof) deposited with the Trustee (or other qualifying trustee,collectively for purposes of this Section 8.05, the “Trustee”) pursuantto Section 8.04 hereof in respect of the outstanding Notes shall be held intrust and applied by the Trustee, in accordance with the provisions of suchNotes and this Indenture, to the payment, either directly or through any PayingAgent (including the Issuer or a Guarantor acting 

 

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as Paying Agent) as the Trusteemay determine, to the Holders of such Notes of all sums due and to become duethereon in respect of Accreted Value, premium, if any, and Additional Interest(to the extent not already included in Accreted Value), if any, and interest,but such money need not be segregated from other funds except to the extentrequired by law. Money and Government Securities so held in trust are notsubject to Article 10 or Article 12 hereof, except as contemplated by Section10.12 or Section 12.12, as the case may be.

 

TheIssuer shall pay and indemnify the Trustee against any tax, fee or other chargeimposed on or assessed against the cash or Government Securities depositedpursuant to Section 8.04 hereof or the principal and interest received inrespect thereof other than any such tax, fee or other charge which by law isfor the account of the Holders of the outstanding Notes.

 

Anythingin this Article 8 to the contrary notwithstanding, the Trustee shall deliver orpay to the Issuer from time to time upon the request of the Issuer any money orGovernment Securities held by it as provided in Section 8.04 hereof which, inthe opinion of a nationally recognized firm of independent public accountantsexpressed in a written certification thereof delivered to the Trustee (whichmay be the opinion delivered under Section 8.04(1) hereof), are in excessof the amount thereof that would then be required to be deposited to effect anequivalent Legal Defeasance or Covenant Defeasance.

 

## Section 8.06                                          Repaymentto Issuer.

 

Anymoney deposited with the Trustee or any Paying Agent, or then held by theIssuer, in trust for the payment of the Accreted Value of, premium andAdditional Interest, if any, or interest on any Note and remaining unclaimedfor two years after such Accreted Value, and premium and Additional Interest,if any, or interest has become due and payable shall be paid to the Issuer onits request or (if then held by the Issuer) shall be discharged from suchtrust; and the Holder of such Note shall thereafter look only to the Issuer forpayment thereof, and all liability of the Trustee or such Paying Agent withrespect to such trust money, and all liability of the Issuer as trusteethereof, shall thereupon cease.

 

## Section 8.07                                          Reinstatement.

 

Ifthe Trustee or Paying Agent is unable to apply any United States dollars orGovernment Securities in accordance with Section 8.02 or 8.03 hereof, as thecase may be, by reason of any order or judgment of any court or governmentalauthority enjoining, restraining or otherwise prohibiting such application,then the Issuer’s obligations under this Indenture and the Notes shall berevived and reinstated as though no deposit had occurred pursuant to Section8.02 or 8.03 hereof until such time as the Trustee or Paying Agent is permittedto apply all such money in accordance with Section 8.02 or 8.03 hereof, as thecase may be; provided that, if the Issuer makes any payment of AccretedValue of, premium and Additional Interest, if any, or interest on any Notefollowing the reinstatement of its obligations, the Issuer shall be subrogatedto the rights of the Holders of such Notes to receive such payment from themoney held by the Trustee or Paying Agent.

 

# ARTICLE9

#  

# AMENDMENT,SUPPLEMENT AND WAIVER

#  

## Section 9.01                                          WithoutConsent of Holders of Notes.

 

NotwithstandingSection 9.02 hereof, the Issuer, any Guarantor (with respect to a Guarantee towhich it is party or this Indenture) and the Trustee may amend or supplementthis Indenture and any Guarantee or Notes without the consent of any Holder:

 

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###### (1)                                  to cure any ambiguity, omission, mistake,defect or inconsistency;

######  

###### (2)                                  to provide for uncertificated Notes of suchseries in addition to or in place of certificated Notes;

######  

###### (3)                                  to comply with Section 5.01 hereof;

######  

###### (4)                                  to provide for the assumption of the Issuer’sor any Guarantor’s obligations to the Holders in a transaction that complieswith this Indenture;

######  

###### (5)                                  to make any change that would provide anyadditional rights or benefits to the Holders or that does not adversely affectthe legal rights under this Indenture of any such Holder;

######  

###### (6)                                  to add covenants for the benefit of theHolders or to surrender any right or power conferred upon the Issuer or anyGuarantor;

######  

###### (7)                                  to comply with requirements of the SEC inorder to effect or maintain the qualification of this Indenture under the TrustIndenture Act;

######  

###### (8)                                  to evidence and provide for the acceptanceand appointment under this Indenture of a successor Trustee thereunder pursuantto the requirements thereof;

######  

###### (9)                                  to provide for the issuance of exchange notesor private exchange notes, which are identical to exchange notes except thatthey are not freely transferable;

######  

###### (10)                            to add a Guarantor under this Indenture;

######  

###### (11)                            to conform the text of this Indenture,Guarantees or the Notes to any provision of the “Description of SubordinatedDiscount Notes” section of the Offering Memorandum to the extent that suchprovision in such “Description of Subordinated Discount Notes” section wasintended to be a verbatim recitation of a provision of this Indenture,Guarantee or Notes; or

######  

###### (12)                            to make any amendment to the provisions ofthis Indenture relating to the transfer and legending of Notes as permitted bythis Indenture, including, without limitation to facilitate the issuance andadministration of the Notes; provided, however, that (i)compliance with this Indenture as so amended would not result in Notes beingtransferred in violation of the Securities Act or any applicable securities lawand (ii) such amendment does not materially and adversely affect the rights ofHolders to transfer Notes.

######  

Uponthe request of the Issuer accompanied by a resolution of its board of directorsauthorizing the execution of any such amended or supplemental indenture, andupon receipt by the Trustee of the documents described in Section 7.02 hereof,the Trustee shall join with the Issuer and the Guarantors in the execution ofany amended or supplemental indenture authorized or permitted by the terms ofthis Indenture and to make any further appropriate agreements and stipulationsthat may be therein contained, but the Trustee shall not be obligated to enterinto such amended or supplemental indenture that affects its own rights, dutiesor immunities under this Indenture or otherwise.  Notwithstanding the foregoing, no Opinion ofCounsel shall be required in connection with the addition of a Guarantor underthis Indenture upon execution and delivery by such Guarantor and the Trustee ofa supplemental indenture to this Indenture, the form of which is attached as ExhibitD hereto, and delivery of an Officer’s Certificate.

 

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## Section 9.02                                          WithConsent of Holders of Notes.

 

Exceptas provided below in this Section 9.02, the Issuer and the Trustee may amend orsupplement this Indenture, the Notes and the Guarantees with the consent of theHolders of at least a majority in principal amount at maturity of the Notes(including Additional Notes, if any) then outstanding voting as a single class(including, without limitation, consents obtained in connection with a tenderoffer or exchange offer for, or purchase of, the Notes), and, subject toSections 6.04 and 6.07 hereof, any existing Default or Event of Default (otherthan a Default or Event of Default in the payment of the Accreted Value of,premium and Additional Interest, if any, or interest on the Notes, except apayment default resulting from an acceleration that has been rescinded) orcompliance with any provision of this Indenture, the Guarantees or the Notesmay be waived with the consent of the Holders of a majority in principal amountat maturity of the then outstanding Notes (including Additional Notes, if any)voting as a single class (including consents obtained in connection with atender offer or exchange offer for, or purchase of, the Notes).  Section 2.08 hereof and Section 2.09 hereofshall determine which Notes are considered to be “outstanding” for the purposesof this Section 9.02.

 

Uponthe request of the Issuer accompanied by a resolution of its board of directorsauthorizing the execution of any such amended or supplemental indenture, andupon the filing with the Trustee of evidence satisfactory to the Trustee of theconsent of the Holders of Notes as aforesaid, and upon receipt by the Trusteeof the documents described in Section 7.02 hereof, the Trustee shall joinwith the Issuer in the execution of such amended or supplemental indentureunless such amended or supplemental indenture directly affects the Trustee’sown rights, duties or immunities under this Indenture or otherwise, in whichcase the Trustee may in its discretion, but shall not be obligated to, enterinto such amended or supplemental indenture.

 

Itshall not be necessary for the consent of the Holders of Notes under thisSection 9.02 to approve the particular form of any proposed amendment orwaiver, but it shall be sufficient if such consent approves the substancethereof.

 

Afteran amendment, supplement or waiver under this Section 9.02 becomes effective,the Issuer shall mail to the Holders of Notes affected thereby a notice brieflydescribing the amendment, supplement or waiver. Any failure of the Issuer to mail such notice, or any defect therein,shall not, however, in any way impair or affect the validity of any suchamended or supplemental indenture or waiver.

 

Withoutthe consent of each affected Holder of Notes, an amendment or waiver under thisSection 9.02 may not (with respect to any Notes held by a non-consentingHolder):

 

###### (1)                                  reduce the principal amount at maturity ofsuch Notes whose Holders must consent to an amendment, supplement or waiver;

######  

###### (2)                                  reduce the principal at maturity of or changethe fixed final maturity of any such Note or alter or waive the provisions withrespect to the redemption of such Notes (other than provisions relating toSection 3.09, Section 4.10 and Section 4.14 hereof to the extent that any suchamendment or waiver does not have the effect of reducing the principal atmaturity of or changing the fixed final maturity of any such Note or alteringor waiving the provisions with respect to the redemption of such Notes);

######  

###### (3)                                  reduce the rate of or change the time forpayment of interest on any Note;

######  

###### (4)                                  waive a Default in the payment of AccretedValue of or premium, if any, or interest on the Notes, except a rescission ofacceleration of the Notes by the Holders of at least a 

 

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###### majorityin aggregate principal amount at maturity of the Notes and a waiver of thepayment default that resulted from such acceleration, or in respect of acovenant or provision contained in this Indenture or any Guarantee which cannotbe amended or modified without the consent of all affected Holders;

######  

###### (5)                                  make any Note payable in money other thanthat stated therein;

######  

###### (6)                                  make any change in the provisions of thisIndenture relating to waivers of past Defaults or the rights of Holders toreceive payments of Accreted Value of or premium, if any, or interest on theNotes;

######  

###### (7)                                  make any change to this paragraph of thisSection 9.02;

######  

###### (8)                                  impair the right of any Holder to receivepayment of Accreted Value of, or interest on, such Holder’s Notes on or afterthe due dates therefor or to institute suit for the enforcement of any paymenton or with respect to such Holder’s Notes;

######  

###### (9)                                  make any change to Article 10, Article 12 orany other of the subordination provisions of this Indenture (or the componentdefinitions used therein) that would adversely affect the Holders;

######  

###### (10)                            change the method of calculation of AccretedValue; or

######  

###### (11)                            except as expressly permitted by thisIndenture, modify the Guarantees of any Significant Subsidiary, or any group ofRestricted Subsidiaries that, taken together (as of the latest auditedconsolidated financial statements for the Issuer), would constitute aSignificant Subsidiary, in any manner adverse to the Holders of the Notes.

######  

Notwithstandinganything in this Indenture to the contrary, no amendment to or waiver of thesubordination provisions of this Indenture (or the component definitions usedtherein) may be made without the consent of the holders of a majority of theIndebtedness in respect of the Senior Credit Facilities of the Issuer and theGuarantors (or their Representative(s)).

 

## Section 9.03                                          Compliancewith Trust Indenture Act.

 

Everyamendment or supplement to this Indenture or the Notes shall be set forth in anamended or supplemental indenture that complies with the Trust Indenture Act asthen in effect.

 

## Section 9.04                                          Revocationand Effect of Consents.

 

Untilan amendment, supplement or waiver becomes effective, a consent to it by aHolder of a Note is a continuing consent by the Holder of a Note and everysubsequent Holder of a Note or portion of a Note that evidences the same debtas the consenting Holder’s Note, even if notation of the consent is not made onany Note.  However, any such Holder of aNote or subsequent Holder of a Note may revoke the consent as to its Note ifthe Trustee receives written notice of revocation before the date the waiver,supplement or amendment becomes effective. An amendment, supplement or waiver becomes effective in accordance withits terms and thereafter binds every Holder.

 

TheIssuer may, but shall not be obligated to, fix a record date for the purpose ofdetermining the Holders entitled to consent to any amendment, supplement, orwaiver.  If a record date is fixed, then,notwithstanding the preceding paragraph, those Persons who were Holders at suchrecord date 

 

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(or their duly designatedproxies), and only such Persons, shall be entitled to consent to suchamendment, supplement, or waiver or to revoke any consent previously given,whether or not such Persons continue to be Holders after such record date.  No such consent shall be valid or effectivefor more than 120 days after such record date unless the consent of therequisite number of Holders has been obtained.

 

## Section 9.05                                          Notationon or Exchange of Notes.

 

TheTrustee may place an appropriate notation about an amendment, supplement orwaiver on any Note thereafter authenticated. The Issuer in exchange for all Notes may issue and the Trustee shall,upon receipt of an Authentication Order, authenticate new Notes that reflectthe amendment, supplement or waiver.

 

Failureto make the appropriate notation or issue a new Note shall not affect thevalidity and effect of such amendment, supplement or waiver.

 

## Section 9.06                                          TrusteeTo Sign Amendments, etc.

 

TheTrustee shall sign any amendment, supplement or waiver authorized pursuant tothis Article 9 if the amendment or supplement does not adversely affect therights, duties, liabilities or immunities of the Trustee.  The Issuer may not sign an amendment,supplement or waiver until the board of directors approves it.  In executing any amendment, supplement orwaiver, the Trustee shall be provided with and (subject to Section 7.01 hereof)shall be fully protected in relying upon, in addition to the documents requiredby Section 14.04 hereof, an Officer’s Certificate and an Opinion of Counselstating that the execution of such amended or supplemental indenture isauthorized or permitted by this Indenture and that such amendment, supplementor waiver is the legal, valid and binding obligation of the Issuer and anyGuarantors party thereto, enforceable against them in accordance with itsterms, subject to customary exceptions, and complies with the provisions hereof(including Section 9.03). Notwithstanding the foregoing, no Opinion of Counsel will be requiredfor the Trustee to execute any amendment or supplement adding a new Guarantorunder this Indenture.

 

## Section 9.07                                          Paymentfor Consent.

 

TheIssuer shall not, and shall not permit any of its Subsidiaries to, directly orindirectly, pay or cause to be paid any consideration, whether by way ofinterest, fee or otherwise, to or for the benefit of any Holder for or as aninducement to any consent, waiver or amendment of any of the terms orprovisions of this Indenture or the Notes unless such consideration is offeredto all Holders and is paid to all Holders that so consent, waive or agree toamend in the time frame set forth in the solicitation documents relating tosuch consent, waiver or agreement.

 

# ARTICLE10

#  

# SUBORDINATION

#  

## Section 10.01                                    AgreementTo Subordinate.

 

TheIssuer agrees, and each Holder by accepting a Note agrees, that the payment ofall Obligations owing in respect of the Notes is subordinated in right ofpayment, to the extent and in the manner provided in this Article 10, to theprior payment in full in cash of all existing and future Senior Indebtedness ofthe Issuer and that the subordination is for the benefit of and enforceable bythe holders of such Senior Indebtedness. All provisions of this Article 10 shall be subject toSection 10.12.

 

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## Section 10.02                                    Liquidation, Dissolution, Bankruptcy.

 

Uponany payment or distribution of the assets of the Issuer to creditors upon atotal or partial liquidation or a total or partial dissolution of the Issuer orin a reorganization, insolvency or bankruptcy of or similar proceeding relatingto the Issuer or its property:

 

(i)                                     the holders of Senior Indebtedness of theIssuer shall be entitled to receive payment in full in cash of such SeniorIndebtedness before Holders shall be entitled to receive any payment ordistribution of any kind or character with respect to any Obligations on, orrelating to, the Notes; and

 

(ii)                                  until the Senior Indebtedness of the Issueris paid in full in cash, any payment or distribution to which Holders would beentitled but for the subordination provisions of this Article 10 shall be madeto holders of such Senior Indebtedness as their interests may appear, exceptthat Holders may receive Permitted Junior Securities.

 

Tothe extent any payment of Senior Indebtedness of the Issuer (whether by or onbehalf of the Issuer, as proceeds of security or enforcement of any right ofsetoff or otherwise) is declared to be fraudulent or preferential, set aside orrequired to be paid to any receiver, trustee in bankruptcy, liquidatingtrustee, agent or other similar Person under any bankruptcy, insolvency,receivership, fraudulent conveyance or similar law, then, if such payment isrecovered by, or paid over to, such receiver, trustee in bankruptcy,liquidating trustee, agent or similar Person, the Senior Indebtedness of theIssuer or part thereof originally intended to be satisfied shall be deemed tobe reinstated and outstanding as if such payment had not occurred.  It is further agreed that any diminution(whether pursuant to court decree or otherwise, including without limitationfor any of the reasons described in the preceding sentence) of the Issuer’sobligation to make any distribution or payment pursuant to any SeniorIndebtedness of the Issuer, except to the extent such diminution occurs byreason of the repayment (which has not been disgorged or returned) of suchSenior Indebtedness of the Issuer in cash, shall have no force or effect forpurposes of the subordination provisions contained in Article 10, with anyturnover of payments as otherwise calculated pursuant to this Article 10 to bemade as if no such diminution had occurred. The Issuer shall promptly give written notice to the Trustee of any suchdissolution, winding-up, liquidation, or reorganization of the Issuer; providedthat any delay or failure to give such notice shall have no effect on thesubordination provisions contained in this Article 10.

 

## Section 10.03                                    Defaulton Senior Indebtedness of the Issuer.

 

TheIssuer shall not pay Accreted Value of, premium, if any, or interest on theNotes (or pay any other Obligations relating to the Notes, including AdditionalInterest, fees, costs, expenses, indemnities and rescission or damage claims)or make any deposit pursuant to Article 8 or Article 13 hereof and may notpurchase, redeem or otherwise retire or acquire for cash or property any Notes(collectively, “pay the Notes”) (except in the form of Permitted JuniorSecurities (other than Disqualified Stock)) if either of the following occurs(a “Payment Default”):

 

(i)                                     any Obligation on any Designated SeniorIndebtedness of the Issuer is not paid in full in cash when due; or

 

(ii)                                  any other default on Designated SeniorIndebtedness of the Issuer occurs and the maturity of such Designated SeniorIndebtedness is accelerated in accordance with its terms;

 

unless,in either case, the Payment Default has been cured or waived and any suchacceleration has been rescinded or such Designated Senior Indebtedness has beenpaid in full in cash; provided, 

 

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however, that the Issuer shall be entitled to paythe Notes without regard to the foregoing if the Issuer and the Trustee receivewritten notice approving such payment from the Representatives of allDesignated Senior Indebtedness with respect to which the Payment Default hasoccurred and is continuing.

 

Duringthe continuance of any default (other than a Payment Default) (a “Non-PaymentDefault”) with respect to any Designated Senior Indebtedness of the Issuerpursuant to which the maturity thereof may be accelerated without furthernotice (except such notice as may be required to effect such acceleration) orthe expiration of any applicable grace periods, the Issuer shall not pay theNotes (except in the form of Permitted Junior Securities (other than DisqualifiedStock)) for a period (a “Payment Blockage Period”) commencing upon thereceipt by the Trustee (with a copy to the Issuer) of written notice (a “BlockageNotice”) of such Non-Payment Default from the Representative of suchDesignated Senior Indebtedness specifying an election to effect a PaymentBlockage Period and ending 179 days thereafter. The Payment BlockagePeriod shall end earlier if such Payment Blockage Period is terminated(i) by written notice to the Trustee and the Issuer from the Person orPersons who gave such Blockage Notice; (ii) because the default givingrise to such Blockage Notice is cured, waived or otherwise no longercontinuing; or (iii) because such Designated Senior Indebtedness has beendischarged or repaid in full in cash.

 

Notwithstandingthe provisions described in the immediately preceding paragraph (but subject tothe provisions contained in the first paragraph of this Section 10.03 andSection 10.02 hereof), unless the holders of such Designated SeniorIndebtedness or the Representative of such Designated Senior Indebtedness shallhave accelerated the maturity of such Designated Senior Indebtedness or aPayment Default has occurred and is continuing, the Issuer shall be permittedto resume paying the Notes after the end of such Payment Blockage Period.  The Notes shall not be subject to more thanone Payment Blockage Period in any consecutive 360-day period irrespective ofthe number of Non-Payment Defaults with respect to Designated SeniorIndebtedness during such period; provided that if any Blockage Notice isdelivered to the Trustee by or on behalf of the holders of Designated SeniorIndebtedness of the Issuer (other than the holders of Indebtedness under theSenior Credit Facilities), a Representative of holders of Indebtedness underthe Senior Credit Facilities may in the aggregate give one other BlockageNotice within such period.  However, inno event shall the total number of days during which any Payment BlockagePeriod or Periods on the Notes is in effect exceed 179 days in the aggregateduring any consecutive 360-day period, and there must be at least 181days during any consecutive 360-day period during which no PaymentBlockage Period is in effect. Notwithstanding the foregoing, however, no Non-Payment Default thatexisted or was continuing on the date of commencement of any Payment BlockagePeriod with respect to any Designated Senior Indebtedness and that was thebasis for the initiation of such Payment Blockage Period shall be, or be made,the basis for a subsequent Payment Blockage Period by the Representative ofsuch Designated Senior Indebtedness unless such default shall have been waivedfor a period of not less than 90 consecutive days (it being acknowledged thatany subsequent action, or any breach of any financial covenants during theperiod after the date of delivery of such initial Blockage Notice, that, ineither case, would give rise to a Non-Payment Default pursuant to anyprovisions under which a Non-Payment Default previously existed or wascontinuing shall constitute a new Non-Payment Default for this purpose).

 

## Section 10.04                                    Accelerationof Payment of Notes.

 

Ifpayment of the Notes is accelerated because of an Event of Default, the Issuershall promptly notify the holders of the Designated Senior Indebtedness of theIssuer or the Representative of such Designated Senior Indebtedness of theacceleration; provided that any failure to give such notice shall haveno effect whatsoever on the provisions of this Article 10. So long as thereshall remain outstanding any Senior Indebtedness under the Senior CreditFacilities, a Blockage Notice may be given only 

 

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by the respectiveRepresentatives thereunder unless otherwise agreed to in writing by the requisitelenders named therein. If any Designated Senior Indebtedness of the Issuer isoutstanding, the Issuer may not pay the Notes until five Business Days afterthe Representatives of all such Designated Senior Indebtedness receive noticeof such acceleration and, thereafter, may pay the Notes only if this Indentureotherwise permits payment at that time.

 

## Section 10.05                                    WhenDistribution Must Be Paid Over.

 

Ifa distribution is made to Holders that, due to this Article 10, should not havebeen made to them, such Holders are required to hold it in trust for theholders of Senior Indebtedness of the Issuer and pay it over to them as theirinterests may appear.

 

## Section 10.06                                    Subrogation.

 

Afterall Senior Indebtedness of the Issuer is paid in full in cash and until theNotes are paid in full, Holders shall be subrogated to the rights of holders ofsuch Senior Indebtedness to receive distributions applicable to such SeniorIndebtedness.  A distribution made underthis Article 10 to holders of such Senior Indebtedness which otherwise wouldhave been made to Holders is not, as between the Issuer and Holders, a paymentby the Issuer on such Senior Indebtedness.

 

## Section 10.07                                    RelativeRights.

 

ThisArticle 10 defines the relative rights of Holders and holders of SeniorIndebtedness of the Issuer.  Nothing inthis Indenture shall:

 

(i)                                     impair, as between the Issuer and Holders,the obligation of the Issuer, which is absolute and unconditional, to payAccreted Value of and interest on the Notes in accordance with their terms;

 

(ii)                                  prevent the Trustee or any Holder fromexercising its available remedies upon a Default, subject to the rights ofholders of Senior Indebtedness of the Issuer to receive payments ordistributions otherwise payable to Holders and such other rights of suchholders of Senior Indebtedness as set forth herein; or

 

(iii)                               affect the relative rights of Holders and creditors of the Issuer otherthan their rights in relation to holders of Senior Indebtedness.

 

## Section 10.08                                    SubordinationMay Not Be Impaired by Issuer.

 

Noright of any holder of Senior Indebtedness of the Issuer to enforce thesubordination of the Indebtedness evidenced by the Notes shall be impaired byany act or failure to act by the Issuer or by its failure to comply with thisIndenture.

 

## Section 10.09                                    Rightsof Trustee and Paying Agent.

 

NotwithstandingSection 10.03 hereof, the Trustee or any Paying Agent may continue to makepayments on the Notes and shall not be charged with knowledge of the existenceof facts that would prohibit the making of any payments unless a ResponsibleOfficer of the Trustee receives notice satisfactory to him that payments maynot be made under this Article 10; provided that notwithstanding theforegoing, the subordination of the Obligations under the Notes to SeniorIndebtedness of the Issuer shall not be affected and the Holders receiving anypayments in contravention of Section 10.02 and/or 10.03 (and 

 

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such respective payments) shallotherwise be subject to the provisions of this Article 10.  The Issuer, the Registrar, the Paying Agent,a Representative or a holder of Senior Indebtedness of the Issuer shall beentitled to give the notice; provided, however, that, if an issueof Senior Indebtedness of the Issuer has a Representative, only theRepresentative shall be entitled to give the notice.

 

TheTrustee in its individual or any other capacity shall be entitled to holdSenior Indebtedness of the Issuer with the same rights it would have if it werenot Trustee.  The Registrar and thePaying Agent shall be entitled to do the same with like rights.  The Trustee shall be entitled to all therights set forth in this Article 10 with respect to any Senior Indebtedness ofthe Issuer which may at any time be held by it, to the same extent as any otherholder of such Senior Indebtedness; and nothing in Article 7 shall deprive theTrustee of any of its rights as such holder. Nothing in this Article 10 shall apply to claims of, or payments to, theTrustee under or pursuant to Section 7.07 hereof or any other Section of thisIndenture.

 

## Section 10.10                                    Distributionor Notice to Representative.

 

Whenevera distribution is to be made or a notice given to holders of SeniorIndebtedness of the Issuer, the distribution may be made and the notice givento their Representative (if any).

 

## Section 10.11                                    Article 10Not To Prevent Events of Default or Limit Right To Accelerate.

 

Thefailure to make a payment pursuant to the Notes by reason of any provision inthis Article 10 shall not be construed as preventing the occurrence of aDefault.  Nothing in this Article 10shall have any effect on the right of the Holders or the Trustee to acceleratethe maturity of the Notes.

 

## Section 10.12                                    TrustMoneys Not Subordinated.

 

Notwithstandinganything contained herein to the contrary, payments from money or the proceedsof Government Securities held in trust by the Trustee for the payment ofAccreted Value of and interest on the Notes pursuant to Article 8 or Article 13hereof shall not be subordinated to the prior payment of any SeniorIndebtedness of the Issuer or subject to the restrictions set forth in thisArticle 10, and none of the Holders shall be obligated to pay over any suchamount to the Issuer or any holder of Senior Indebtedness of the Issuer or anyother creditor of the Issuer, provided that the subordination provisionsof this Article 10 were not violated at the time the applicable amounts weredeposited in trust pursuant to Article 8 or Article 13 hereof, as the case maybe, and such deposit was otherwise made in accordance with Article 8 or Article13 hereof.

 

## Section 10.13                                    TrusteeEntitled To Rely.

 

Uponany payment or distribution pursuant to this Article 10, the Trustee and theHolders shall be entitled to rely (a) upon any order or decree of a courtof competent jurisdiction in which any proceedings of the nature referred to inSection 10.02 hereof are pending, (b) upon a certificate of theliquidating trustee or agent or other Person making such payment or distributionto the Trustee or to the Holders or (c) upon the Representatives of SeniorIndebtedness of the Issuer for the purpose of ascertaining the Persons entitledto participate in such payment or distribution, the holders of such SeniorIndebtedness and other Indebtedness of the Issuer, the amount thereof orpayable thereon, the amount or amounts paid or distributed thereon and allother facts pertinent thereto or to this Article 10.  In the event that the Trustee determines, ingood faith, that evidence is required with respect to the right of any Personas a holder of Senior Indebtedness of the Issuer to participate in any paymentor distribution pursuant to this Article 10, the Trustee shall be entitled torequest such Person to furnish evidence to the reasonable satisfaction of theTrustee as to the amount of such Senior Indebtedness held by such Person, theextent to 

 

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which such Person is entitledto participate in such payment or distribution and other facts pertinent to therights of such Person under this Article 10, and, if such evidence is notfurnished, the Trustee shall be entitled to defer any payment to such Personpending judicial determination as to the right of such Person to receive suchpayment.  The provisions of Sections 7.01and 7.02 hereof shall be applicable to all actions or omissions of actions bythe Trustee pursuant to this Article 10.

 

## Section 10.14                                    TrusteeTo Effectuate Subordination.

 

AHolder by its acceptance of a Note agrees to be bound by this Article 10 andauthorizes and expressly directs the Trustee, on its behalf, to take suchaction as may be necessary or appropriate to effectuate the subordinationbetween the Holders and the holders of Senior Indebtedness of the Issuer as providedin this Article 10 and appoints the Trustee as its attorney-in-fact for suchpurpose.

 

Ifthe Trustee does not file a Proper Proof of Claim in any proceeding prior to 15days before the expiration of the time to file a Proof of Claim in suchproceeding, then the holders of Designated Senior Indebtedness of the Issuer(or their Representative) are hereby authorized to have the right to file andare (or is) hereby authorized to file, in the name of the Trustee, a Proof ofClaim for and on behalf of the Holders; provided that (i) if the holders of theDesignated Senior Indebtedness of the Issuer (or their Representative) file anyProof of Claim as contemplated above and the Trustee shall subsequently file aProper Proof of Claim in such proceeding before the expiration of the time tofile a Proof of Claim in such proceeding, such subsequent Proper Proof of Claimfiled by the Trustee shall supersede any such Proof of Claim theretofore filedby the holders of the Designated Senior Indebtedness of the Issuer (or theirRepresentative), and such Proof of Claim theretofore filed by the holders ofthe Designated Senior Indebtedness of the Issuer (or their Representative)shall thereupon deemed to be withdrawn, and (ii) the foregoing provisions ofthis paragraph shall not be construed to authorize the holders of theDesignated Senior Indebtedness (or their Representative) to authorize orconsent to or accept or adopt on behalf of any Holder any plan ofreorganization, arrangement, adjustment or composition affecting the Notes, orto authorize the holders of the Designated Senior Indebtedness (or theirRepresentative) to vote in respect of the claim of any Holder in any suchproceeding. This paragraph is intended solely to permit the holders ofDesignated Senior Indebtedness of the Issuer to preserve their “turnover right”pursuant to the applicable subordination provisions in this Article 10 incircumstances where a Proper Proof of Claim has not been filed by the Trusteebefore the expiration of the time to file a Proof of Claim in a bankruptcyproceeding, and nothing herein shall impair the rights of the Trustee underSection 6.13 and 7.07.

 

## Section 10.15                                    TrusteeNot Fiduciary for Holders of Senior Indebtedness of the Issuer.

 

TheTrustee shall not be deemed to owe any fiduciary duty to the holders of SeniorIndebtedness of the Issuer and shall not be liable to any such holders if itshall mistakenly pay over or distribute to Holders or the Issuer or any otherPerson, money or assets to which any holders of Senior Indebtedness of theIssuer shall be entitled by virtue of this Article 10 or otherwise.

 

## Section 10.16                                    Relianceby Holders of Senior Indebtedness of the Issuer on Subordination Provisions.

 

EachHolder by accepting a Note acknowledges and agrees that the subordinationprovisions of this Article 10 are, and are intended to be, an inducement and aconsideration to each holder of any Senior Indebtedness of the Issuer, whethersuch Senior Indebtedness was created or acquired before or after the issuanceof the Notes, to acquire and continue to hold, or to continue to hold, suchSenior Indebtedness and such holder of such Senior Indebtedness shall be deemedconclusively to have relied on such subordination provisions in acquiring andcontinuing to hold, or in continuing to hold, such Senior Indebtedness.

 

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Withoutin any way limiting the generality of the foregoing paragraph, the holders ofSenior Indebtedness of the Issuer may, at any time and from time to time, withoutthe consent of or notice to the Trustee or the Holders, without incurringresponsibility to the Trustee or the Holders and without impairing or releasingthe subordination provided in this Article 10 or the obligations hereunderof the Holders to the holders of the Senior Indebtedness of the Issuer, do anyone or more of the following:  (i) change the manner, place orterms of payment or extend the time of payment of, or renew or alter, SeniorIndebtedness of the Issuer, or otherwise amend or supplement in any mannerSenior Indebtedness of the Issuer, or any instrument evidencing the same or anyagreement under which Senior Indebtedness of the Issuer is outstanding;(ii) sell, exchange, release or otherwise deal with any property pledged,mortgaged or otherwise securing Senior Indebtedness of the Issuer;(iii) release any Person liable in any manner for the payment orcollection of Senior Indebtedness of the Issuer; and (iv) exercise orrefrain from exercising any rights against the Issuer and any other Person.

 

# ARTICLE11

#  

# GUARANTEES

#  

## Section 11.01                                    Guarantee.

 

Subjectto this Article 11, each of the Guarantors hereby, jointly and severally,unconditionally guarantees, subject to Article 12, to each Holder of a Noteauthenticated and delivered by the Trustee and to the Trustee and itssuccessors and assigns, irrespective of the validity and enforceability of thisIndenture, the Notes or the obligations of the Issuer hereunder or thereunder,that: (a) the Accreted Value of, and interest, premium and Additional Interest(to the extent not already included in Accreted Value), if any, on the Notesshall be promptly paid in full when due, whether at maturity, by acceleration,redemption or otherwise, and interest on the overdue Accreted Value of andinterest on the Notes, if any, if lawful, and all other Obligations of theIssuer to the Holders or the Trustee hereunder or thereunder shall be promptlypaid in full or performed, all in accordance with the terms hereof and thereof;and (b) in case of any extension of time of payment or renewal of anyNotes or any of such other obligations, that same shall be promptly paid infull when due or performed in accordance with the terms of the extension orrenewal, whether at stated maturity, by acceleration or otherwise.  Failing payment when due of any amount soguaranteed or any performance so guaranteed for whatever reason, the Guarantorsshall be jointly and severally obligated to pay the same immediately.  Each Guarantor agrees that this is aguarantee of payment and not a guarantee of collection.

 

TheGuarantors hereby agree that their obligations hereunder shall beunconditional, irrespective of the validity, regularity or enforceability ofthe Notes or this Indenture, the absence of any action to enforce the same, anywaiver or consent by any Holder of the Notes with respect to any provisionshereof or thereof, the recovery of any judgment against the Issuer, any actionto enforce the same or any other circumstance which might otherwise constitutea legal or equitable discharge or defense of a guarantor.  Each Guarantor hereby waives diligence,presentment, demand of payment, filing of claims with a court in the event ofinsolvency or bankruptcy of the Issuer, any right to require a proceeding firstagainst the Issuer, protest, notice and all demands whatsoever and covenantsthat this Guarantee shall not be discharged except by complete performance ofthe obligations contained in the Notes and this Indenture.

 

EachGuarantor also agrees to pay any and all costs and expenses (includingreasonable attorneys’ fees) incurred by the Trustee or any Holder in enforcingany rights under this Section 11.01.

 

Ifany Holder or the Trustee is required by any court or otherwise to return tothe Issuer, the Guarantors or any custodian, trustee, liquidator or othersimilar official acting in relation to either the 

 

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Issuer or the Guarantors, anyamount paid either to the Trustee or such Holder, this Guarantee, to the extenttheretofore discharged, shall be reinstated in full force and effect.

 

EachGuarantor agrees that it shall not be entitled to any right of subrogation inrelation to the Holders in respect of any obligations guaranteed hereby untilpayment in full of all obligations guaranteed hereby.  Each Guarantor further agrees that, asbetween the Guarantors, on the one hand, and the Holders and the Trustee, onthe other hand, (x) the maturity of the obligations guaranteed hereby may beaccelerated as provided in Article 6 hereof for the purposes of this Guarantee,notwithstanding any stay, injunction or other prohibition preventing suchacceleration in respect of the obligations guaranteed hereby, and (y) in theevent of any declaration of acceleration of such obligations as provided inArticle 6 hereof, such obligations (whether or not due and payable) shallforthwith become due and payable by the Guarantors for the purpose of thisGuarantee.  The Guarantors shall have theright to seek contribution from any non-paying Guarantor so long as theexercise of such right does not impair the rights of the Holders under theGuarantees.

 

EachGuarantee shall remain in full force and effect and continue to be effectiveshould any petition be filed by or against the Issuer for liquidation, reorganization,should the Issuer become insolvent or make an assignment for the benefit ofcreditors or should a receiver or trustee be appointed for all or anysignificant part of the Issuer’s assets, and shall, to the fullest extentpermitted by law, continue to be effective or be reinstated, as the case maybe, if at any time payment and performance of the Notes are, pursuant toapplicable law, rescinded or reduced in amount, or must otherwise be restoredor returned by any obligee on the Notes or Guarantees, whether as a “voidablepreference,” “fraudulent transfer” or otherwise, all as though such payment orperformance had not been made.  In theevent that any payment or any part thereof, is rescinded, reduced, restored orreturned, the Notes shall, to the fullest extent permitted by law, bereinstated and deemed reduced only by such amount paid and not so rescinded,reduced, restored or returned.

 

Incase any provision of any Guarantee shall be invalid, illegal or unenforceable,the validity, legality, and enforceability of the remaining provisions shallnot in any way be affected or impaired thereby.

 

TheGuarantee issued by any Guarantor shall be a general unsecured subordinatedobligation of such Guarantor and shall be subordinated in right of payment toall existing and future Senior Indebtedness of such Guarantor, if any.

 

Eachpayment to be made by a Guarantor in respect of its Guarantee shall be madewithout set-off, counterclaim, reduction or diminution of any kind or nature.

 

Theobligations of each Guarantor to the Holders and to the Trustee pursuant to theGuarantee of such Guarantor and this Indenture are expressly subordinate andsubject in right of payment to the prior payment in full of all SeniorIndebtedness of such Guarantor, to the extent and in the manner provided inArticle 12.

 

## Section 11.02                                    Limitationon Guarantor Liability.

 

EachGuarantor, and by its acceptance of Notes, each Holder, hereby confirms that itis the intention of all such parties that the Guarantee of such Guarantor notconstitute a fraudulent transfer or conveyance for purposes of Bankruptcy Law,the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act orany similar federal or state law to the extent applicable to any Guarantee.  To effectuate the foregoing intention, theTrustee, the Holders and the Guarantors hereby irrevocably agree that theobligations of each Guarantor shall be limited to the maximum amount as will,after giving effect 

 

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to such maximum amount and allother contingent and fixed liabilities of such Guarantor (including, withoutlimitation, all Senior Indebtedness of such Guarantor) that are relevant undersuch laws and after giving effect to any collections from, rights to receivecontribution from or payments made by or on behalf of any other Guarantor inrespect of the obligations of such other Guarantor under this Article 11,result in the obligations of such Guarantor under its Guarantee notconstituting a fraudulent conveyance or fraudulent transfer under applicablelaw.  Each Guarantor that makes a paymentunder its Guarantee shall be entitled upon payment in full of all guaranteedobligations under this Indenture to a contribution from each other Guarantor inan amount equal to such other Guarantor’s *prorata* portion of such payment based on the respective net assets ofall the Guarantors at the time of such payment determined in accordance withGAAP.

 

## Section 11.03                                    Executionand Delivery.

 

Toevidence its Guarantee set forth in Section 11.01 hereof, each Guarantor herebyagrees that this Indenture shall be executed on behalf of such Guarantor by itsPresident, one of its Vice Presidents or one of its Assistant Vice Presidents.

 

EachGuarantor hereby agrees that its Guarantee set forth in Section 11.01 hereofshall remain in full force and effect notwithstanding the absence of theendorsement of any notation of such Guarantee on the Notes.

 

Ifan Officer whose signature is on this Indenture no longer holds that office atthe time the Trustee authenticates the Note, the Guarantee shall be validnevertheless.

 

Thedelivery of any Note by the Trustee, after the authentication thereofhereunder, shall constitute due delivery of the Guarantee set forth in thisIndenture on behalf of the Guarantors.

 

Ifrequired by Section 4.15 hereof, the Issuer shall cause any newly created oracquired Restricted Subsidiary to comply with the provisions of Section 4.15hereof and this Article 11, to the extent applicable.

 

## Section 11.04                                    Subrogation.

 

EachGuarantor shall be subrogated to all rights of Holders of Notes against theIssuer in respect of any amounts paid by any Guarantor pursuant to theprovisions of Section 11.01 hereof; provided that, if an Event ofDefault has occurred and is continuing, no Guarantor shall be entitled toenforce or receive any payments arising out of, or based upon, such right ofsubrogation until all amounts then due and payable by the Issuer under thisIndenture or the Notes shall have been paid in full.

 

## Section 11.05                                    BenefitsAcknowledged.

 

EachGuarantor acknowledges that it will receive direct and indirect benefits fromthe financing arrangements contemplated by this Indenture and that theguarantee and waivers made by it pursuant to its Guarantee are knowingly madein contemplation of such benefits.

 

## Section 11.06                                    Releaseof Guarantees.

 

AGuarantee by a Guarantor shall be automatically and unconditionally releasedand discharged, and no further action by such Guarantor, the Issuer or theTrustee is required for the release of such Guarantor’s Guarantee, upon:

 

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(1)                                  (A) any sale, exchange, disposition or transfer (by merger or otherwise) of(x) the Capital Stock of such Guarantor, after which the applicable Guarantoris no longer a Restricted Subsidiary, or (y) all or substantially all theassets of such Guarantor which sale, exchange, disposition or transfer in eachcase is made in compliance with Sections 4.10(a)(1) and (2);

 

(B)                                the release or discharge of the guarantee by such Guarantor of theSenior Credit Facilities or the guarantee which resulted in the creation ofsuch Guarantee, except a discharge or release by or as a result of paymentunder such guarantee;

 

(C)                                the proper designation of any Restricted Subsidiary that is a Guarantoras an Unrestricted Subsidiary; or

 

(D)                               the Issuer exercising Legal Defeasance or Covenant Defeasance inaccordance with Article 8 hereof or the Issuer’s obligations under thisIndenture being discharged in accordance with the terms of this Indenture; and

 

(2)                                   the Issuer delivering to the Trustee anOfficer’s Certificate and an Opinion of Counsel, each stating that allconditions precedent provided for in this Indenture relating to suchtransaction have been complied with.

 

# ARTICLE12

#  

# SUBORDINATIONOF GUARANTEES

#  

## Section 12.01                                    AgreementTo Subordinate.

 

EachGuarantor agrees, and each Holder by accepting a Note agrees, that theObligations of such Guarantor under its Guarantee are subordinated in right ofpayment, to the extent and in the manner provided in this Article 12, to theprior payment in full in cash of all existing and future Senior Indebtedness ofsuch Guarantor and that the subordination is for the benefit of and enforceableby the holders of such Senior Indebtedness.  All provisions of this Article 12 shallbe subject to Section 12.12.

 

## Section 12.02                                    Liquidation,Dissolution, Bankruptcy.

 

Uponany payment or distribution of the assets of a Guarantor to creditors upon atotal or partial liquidation or a total or partial dissolution of suchGuarantor or in a reorganization, insolvency or bankruptcy of or similarproceeding relating to such Guarantor or its property:

 

(i)                                     the holders of Senior Indebtedness of suchGuarantor shall be entitled to receive payment in full in cash of such SeniorIndebtedness before Holders shall be entitled to receive any payment ordistribution of any kind or character with respect to any Obligations on, orrelating to, such Guarantor’s Guarantee; and

 

(ii)                                  until the Senior Indebtedness of suchGuarantor is paid in full in cash, any payment or distribution to which Holderswould be entitled but for the subordination provisions of this Article 12 shallbe made to holders of such Senior Indebtedness as their interests may appear,except that Holders may receive Permitted Junior Securities.

 

Tothe extent any payment of Senior Indebtedness of any Guarantor (whether by oron behalf of such Guarantor, as proceeds of security or enforcement of anyright of setoff or otherwise) is declared to be 

 

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fraudulentor preferential, set aside or required to be paid to any receiver, trustee inbankruptcy, liquidating trustee, agent or other similar Person under anybankruptcy, insolvency, receivership, fraudulent conveyance or similar law,then, if such payment is recovered by, or paid over to, such receiver, trusteein bankruptcy, liquidating trustee, agent or similar Person, the SeniorIndebtedness of such Guarantor or part thereof originally intended to be satisfiedshall be deemed to be reinstated and outstanding as if such payment had notoccurred.  It is further agreed that anydiminution (whether pursuant to court decree or otherwise, including withoutlimitation for any of the reasons described in the preceding sentence) of anyGuarantor’s obligation to make any distribution or payment pursuant to anySenior Indebtedness of such Guarantor, except to the extent such diminutionoccurs by reason of the repayment (which has not been disgorged or returned) ofsuch Senior Indebtedness of such Guarantor in cash, shall have no force oreffect for purposes of the subordination provisions contained in Article 12,with any turnover of payments as otherwise calculated pursuant to this Article12 to be made as if no such diminution had occurred.  The Issuer shall promptly give written noticeto the Trustee of any such dissolution, winding-up, liquidation, orreorganization of any Guarantor, provided that any delay or failure to givesuch notice shall have no effect on the subordination provisions contained inthis Article 12.

 

## Section 12.03                                    Defaulton Senior Indebtedness of a Guarantor.

 

AGuarantor shall not make any payment pursuant to its Guarantee (or pay anyother Obligations relating to its Guarantee, including Additional Interest,fees, costs, expenses, indemnities and rescission or damage claims) and may notpurchase, redeem or otherwise retire or acquire for cash or property any Notes(collectively, “pay its Guarantee”) (except in the form of PermittedJunior Securities (other than Disqualified Stock)) if either of the followingoccurs (a “Guarantor Payment Default”):

 

(i)                                     any Obligation on any Designated SeniorIndebtedness of such Guarantor is not paid in full in cash when due; or

 

(ii)                                  any other default on Designated SeniorIndebtedness of such Guarantor occurs and the maturity of such DesignatedSenior Indebtedness is accelerated in accordance with its terms;

 

unless,in either case, the Guarantor Payment Default has been cured or waived and anysuch acceleration has been rescinded or such Designated Senior Indebtedness hasbeen paid in full in cash; provided, however, that such Guarantorshall be entitled to pay its Guarantee without regard to the foregoing if suchGuarantor and the Trustee receive written notice approving such payment fromthe Representatives of all Designated Senior Indebtedness with respect to whichthe Guarantor Payment Default has occurred and is continuing.

 

Duringthe continuance of any default (other than a Guarantor Payment Default) (a “GuarantorNon-Payment Default”) with respect to any Designated Senior Indebtedness ofa Guarantor pursuant to which the maturity thereof may be accelerated withoutfurther notice (except such notice as may be required to effect suchacceleration) or the expiration of any applicable grace periods, such Guarantorshall not pay its Guarantee (except in the form of Permitted Junior Securities(other than Disqualified Stock)) for a period (a “Guarantee Payment BlockagePeriod”) commencing upon the receipt by the Trustee (with a copy to suchGuarantor and the Issuer) of written notice (a “Guarantee Blockage Notice”)of such Guarantor Non-Payment Default from the Representative of suchDesignated Senior Indebtedness specifying an election to effect a GuaranteePayment Blockage Period and ending 179 days thereafter.  The Guarantee Payment Blockage Period shallend earlier if such Guarantee Payment Blockage Period is terminated (i) bywritten notice to the Trustee, the relevant Guarantor and the Issuer from thePerson or Persons who gave such Guarantee Blockage Notice; (ii) becausethe default giving rise to such Guarantee 

 

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Blockage Notice is cured,waived or otherwise no longer continuing; or (iii) because such DesignatedSenior Indebtedness has been discharged or repaid in full in cash.

 

Notwithstandingthe provisions described in the immediately preceding paragraph (but subject tothe provisions contained in the first paragraph of this Section 12.03 andSection 12.02 hereof), unless the holders of such Designated SeniorIndebtedness or the Representative of such Designated Senior Indebtedness shallhave accelerated the maturity of such Designated Senior Indebtedness or aGuarantor Payment Default has occurred and is continuing, the relevantGuarantor shall be permitted to resume paying its Guarantee after the end ofsuch Guarantee Payment Blockage Period. Each Guarantee shall not be subject to more than one Guarantee Payment BlockagePeriod in any consecutive 360-day period irrespective of the number ofNon-Payment Defaults with respect to Designated Senior Indebtedness during suchperiod; provided that if any Guarantee Blockage Notice is delivered tothe Trustee by or on behalf of the holders of Designated Senior Indebtedness ofsuch Guarantor (other than the holders of Indebtedness under the Senior CreditFacilities), a Representative of holders of Indebtedness under the SeniorCredit Facilities may in the aggregate give one other Guarantee Blockage Noticewithin such period.  However, in no eventshall the total number of days during which any Guarantee Payment BlockagePeriod or Periods on a Guarantee is in effect exceed 179 days in the aggregateduring any consecutive 360-day period, and there must be at least 181days during any consecutive 360-day period during which no GuaranteePayment Blockage Period is in effect. Notwithstanding the foregoing, however, no Guarantor Non-Payment Defaultthat existed or was continuing on the date of commencement of any GuaranteePayment Blockage Period with respect to any Designated Senior Indebtedness andthat was the basis for the initiation of such Guarantee Payment Blockage Periodshall be, or be made, the basis for a subsequent Guarantee Payment BlockagePeriod by the Representative of such Designated Senior Indebtedness unless suchdefault shall have been waived for a period of not less than 90 consecutivedays (it being acknowledged that any subsequent action, or any breach of anyfinancial covenants during the period after the date of delivery of suchinitial Guarantee Blockage Notice, that, in either case, would give rise to aGuarantor Non-Payment Default pursuant to any provisions under which aGuarantor Non-Payment Default previously existed or was continuing shall constitutea new Guarantor Non-Payment Default for this purpose).

 

## Section 12.04                                    Demandfor Payment.

 

Ifpayment of the Notes is accelerated because of an Event of Default and a demandfor payment is made on a Guarantor pursuant to Article 11 hereof, the Issuer orsuch Guarantor shall promptly notify the holders of the Designated SeniorIndebtedness of such Guarantor or the Representative of such Designated SeniorIndebtedness of such demand; provided that any failure to give suchnotice shall have no effect whatsoever on the provisions of this Article12.  So long as there shall remainoutstanding any Senior Indebtedness under the Senior Credit Facilities and therelevant Guarantor is a guarantor thereof, a Guarantee Blockage Notice may begiven only by the respective Representatives thereunder unless otherwise agreedto in writing by the requisite lenders named therein.  If any Designated Senior Indebtedness of aGuarantor is outstanding, such Guarantor may not pay its Guarantee until fiveBusiness Days after the Representatives of all such Designated SeniorIndebtedness receive notice of such acceleration and, thereafter, may pay itsGuarantee only if this Indenture otherwise permits payment at that time.

 

## Section 12.05                                    WhenDistribution Must Be Paid Over.

 

Ifa distribution is made to Holders that, due to this Article 12, should not havebeen made to them, such Holders are required to hold it in trust for theholders of Senior Indebtedness of the relevant Guarantor and pay it over tothem as their interests may appear.

 

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## Section 12.06                                    Subrogation.

 

Afterall Senior Indebtedness of a Guarantor is paid in full in cash and until theNotes are paid in full, Holders shall be subrogated to the rights of holders ofsuch Senior Indebtedness to receive distributions applicable to such SeniorIndebtedness.  A distribution made underthis Article 12 to holders of such Senior Indebtedness which otherwise wouldhave been made to Holders is not, as between the relevant Guarantor andHolders, a payment by such Guarantor on such Senior Indebtedness.

 

## Section 12.07                                    RelativeRights.

 

ThisArticle 12 defines the relative rights of Holders and holders of SeniorIndebtedness of a Guarantor.  Nothing inthis Indenture shall:

 

(i)                                     impair, as between such Guarantor andHolders, the obligation of such Guarantor, which is absolute and unconditional,to make payments under its Guarantee in accordance with its terms;

 

(ii)                                  prevent the Trustee or any Holder fromexercising its available remedies upon a default by such Guarantor under itsobligations with respect to its Guarantee, subject to the rights of holders ofSenior Indebtedness of such Guarantor to receive payments or distributionsotherwise payable to Holders and such other rights of such holders of SeniorIndebtedness as set forth herein; or

 

(iii)                               affect the relative rights of Holders and creditors of such Guarantorother than their rights in relation to holders of Senior Indebtedness.

 

## Section 12.08                                    SubordinationMay Not Be Impaired by a Guarantor.

 

Noright of any holder of Senior Indebtedness of a Guarantor to enforce thesubordination of the Obligations of such Guarantor under its Guarantee shall beimpaired by any act or failure to act by such Guarantor or by its failure tocomply with this Indenture.

 

## Section 12.09                                    Rightsof Trustee and Paying Agent.

 

NotwithstandingSection 12.03 hereof, the Trustee or any Paying Agent may continue to makepayments on the Notes and shall not be charged with knowledge of the existenceof facts that would prohibit the making of any payments unless a ResponsibleOfficer of the Trustee receives notice satisfactory to him that payments maynot be made under this Article 12; providedhowever thatnotwithstanding the foregoing, the subordination of the Guarantees to SeniorIndebtedness of the Guarantors shall not be affected and the Holders receivingany payments in contravention of Section 12.02 and/or 12.03 (and suchrespective payments) shall otherwise be subject to the provisions of thisArticle 12.  A Guarantor, the Registrar,the Paying Agent, a Representative or a holder of Senior Indebtedness of suchGuarantor shall be entitled to give the notice; provided, however,that, if an issue of Senior Indebtedness of such Guarantor has aRepresentative, only the Representative shall be entitled to give the notice.

 

TheTrustee in its individual or any other capacity shall be entitled to holdSenior Indebtedness of a Guarantor with the same rights it would have if itwere not Trustee.  The Registrar and thePaying Agent shall be entitled to do the same with like rights.  The Trustee shall be entitled to all therights set forth in this Article 12 with respect to any Senior Indebtedness ofa Guarantor which may at any time be held by it, to the same extent as anyother holder of such Senior Indebtedness; and nothing in Article 7 shalldeprive the Trustee of any of its rights as such holder.  Nothing in this Article 12 shall apply 

 

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to claims of, or payments to,the Trustee under or pursuant to Section 7.07 hereof or any other Section ofthis Indenture.

 

## Section 12.10                                    Distributionor Notice to Representative.

 

Whenevera distribution is to be made or a notice given to holders of SeniorIndebtedness of a Guarantor, the distribution may be made and the notice givento their Representative (if any).

 

## Section 12.11                                    Article 12Not To Prevent Events of Default or Limit Right To Demand Payment.

 

Thefailure of a Guarantor to make a payment pursuant its Guarantee by reason ofany provision in this Article 12 shall not be construed as preventing theoccurrence of a default by such Guarantor under its Guarantee.  Nothing in this Article 12 shall have anyeffect on the right of the Holders or the Trustee to make a demand for paymenton a Guarantor pursuant to Article 11 hereof.

 

## Section 12.12                          TrustMoneys Not Subordinated.

 

Notwithstandinganything contained herein to the contrary, payments from money or the proceedsof Government Securities held in trust by the Trustee for the payment ofAccreted Value of and interest on the Notes pursuant to Article 8 or Article 13hereof shall not be subordinated to the prior payment of any SeniorIndebtedness of any Guarantor or subject to the restrictions set forth in thisArticle 12, and none of the Holders shall be obligated to pay over any suchamount to such Guarantor or any holder of Senior Indebtedness of such Guarantoror any other creditor of such Guarantor, provided that the subordinationprovisions of this Article 12 were not violated at the time the applicableamounts were deposited in trust pursuant to Article 8 or Article 13 hereof, asthe case may be, and such deposit was otherwise made in accordance with Article8 or Article 13 hereof.

 

## Section 12.13                                    TrusteeEntitled To Rely.

 

Uponany payment or distribution pursuant to this Article 12, the Trustee and theHolders shall be entitled to rely (a) upon any order or decree of a courtof competent jurisdiction in which any proceedings of the nature referred to inSection 12.02 hereof are pending, (b) upon a certificate of theliquidating trustee or agent or other Person making such payment ordistribution to the Trustee or to the Holders or (c) upon theRepresentatives of Senior Indebtedness of a Guarantor for the purpose of ascertainingthe Persons entitled to participate in such payment or distribution, theholders of such Senior Indebtedness and other Indebtedness of such Guarantor,the amount thereof or payable thereon, the amount or amounts paid ordistributed thereon and all other facts pertinent thereto or to this Article12.  In the event that the Trusteedetermines, in good faith, that evidence is required with respect to the rightof any Person as a holder of Senior Indebtedness of a Guarantor to participatein any payment or distribution pursuant to this Article 12, the Trustee shallbe entitled to request such Person to furnish evidence to the reasonablesatisfaction of the Trustee as to the amount of such Senior Indebtedness heldby such Person, the extent to which such Person is entitled to participate insuch payment or distribution and other facts pertinent to the rights of suchPerson under this Article 12, and, if such evidence is not furnished, theTrustee shall be entitled to defer any payment to such Person pending judicialdetermination as to the right of such Person to receive such payment.  The provisions of Sections 7.01 and 7.02hereof shall be applicable to all actions or omissions of actions by theTrustee pursuant to this Article 12.

 

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## Section 12.14                                    TrusteeTo Effectuate Subordination.

 

AHolder by its acceptance of a Note agrees to be bound by this Article 12 andauthorizes and expressly directs the Trustee, on its behalf, to take suchaction as may be necessary or appropriate to effectuate the subordinationbetween the Holders and the holders of Senior Indebtedness of a Guarantor asprovided in this Article 12 and appoints the Trustee as its attorney-in-factfor such purpose.

 

Ifthe Trustee does not file a Proper Proof of Claim in any proceeding prior to 15days before the expiration of the time to file a Proof of Claim in suchproceeding, then the holders of Designated Senior Indebtedness of any Guarantor(or their Representative) are hereby authorized to have the right to file andare (or is) hereby authorized to file, in the name of the Trustee, a Proof ofClaim for and on behalf of the Holders; provided that (i) if the holders of theDesignated Senior Indebtedness of such Guarantor (or their Representative) fileany Proof of Claim as contemplated above and the Trustee shall subsequentlyfile a Proper Proof of Claim in such proceeding before the expiration of thetime to file a Proof of Claim in such proceeding, such subsequent Proper Proofof Claim filed by the Trustee shall supersede any such Proof of Claimtheretofore filed by the holders of the Designated Senior Indebtedness of suchGuarantor (or their Representative), and such Proof of Claim theretofore filedby the holders of the Designated Senior Indebtedness of such Guarantor (ortheir Representative) shall thereupon deemed to be withdrawn, and (ii) theforegoing provisions of this paragraph shall not be construed to authorize theholders of the Designated Senior Indebtedness (or their Representative) toauthorize or consent to or accept or adopt on behalf of any Holder any plan ofreorganization, arrangement, adjustment or composition affecting the Notes, orto authorize the holders of the Designated Senior Indebtedness (or theirRepresentative) to vote in respect of the claim of any Holder in any suchproceeding. This paragraph is intended solely to permit the holders ofDesignated Senior Indebtedness of any Guarantor to preserve their “turnoverright” pursuant to the applicable subordination provisions in this Article 12in circumstances where a Proper Proof of Claim has not been filed by theTrustee before the expiration of the time to file a Proof of Claim in abankruptcy proceeding, and nothing herein shall impair the rights of theTrustee under Section 6.13 and 7.07.

 

## Section 12.15                                    TrusteeNot Fiduciary for Holders of Senior Indebtedness of Guarantors.

 

TheTrustee shall not be deemed to owe any fiduciary duty to the holders of SeniorIndebtedness of a Guarantor and shall not be liable to any such holders if itshall mistakenly pay over or distribute to Holders or such Guarantor or anyother Person, money or assets to which any holders of Senior Indebtedness ofsuch Guarantor shall be entitled by virtue of this Article 12 or otherwise.

 

## Section 12.16                          Reliance by Holders of Senior Indebtedness ofa Guarantor on Subordination Provisions

##  

EachHolder by accepting a Note acknowledges and agrees that the subordinationprovisions in this Article 12 are, and are intended to be, an inducement and aconsideration to each holder of any Senior Indebtedness of a Guarantor, whethersuch Senior Indebtedness was created or acquired before or after the issuanceof the Notes, to acquire and continue to hold, or to continue to hold, suchSenior Indebtedness and such holder of such Senior Indebtedness shall be deemedconclusively to have relied on such subordination provisions in acquiring andcontinuing to hold, or in continuing to hold, such Senior Indebtedness.

 

Withoutin any way limiting the generality of the foregoing paragraph, the holders ofSenior Indebtedness of a Guarantor may, at any time and from time to time,without the consent of or notice to the Trustee or the Holders, withoutincurring responsibility to the Trustee or the Holders and without impairing orreleasing the subordination provided in this Article 12 or the obligationshereunder of the 

 

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Holders to the holders of theSenior Indebtedness of such Guarantor, do any one or more of the following:  (i) changethe manner, place or terms of payment or extend the time of payment of, orrenew or alter, Senior Indebtedness of such Guarantor, or otherwise amend orsupplement in any manner Senior Indebtedness of such Guarantor, or any instrumentevidencing the same or any agreement under which Senior Indebtedness of suchGuarantor is outstanding; (ii) sell, exchange, release or otherwise dealwith any property pledged, mortgaged or otherwise securing Senior Indebtednessof such Guarantor; (iii) release any Person liable in any manner for thepayment or collection of Senior Indebtedness of such Guarantor; and(iv) exercise or refrain from exercising any rights against such Guarantorand any other Person.

 

# ARTICLE13

#  

# SATISFACTIONAND DISCHARGE

#  

## Section 13.01                                    Satisfactionand Discharge.

 

ThisIndenture shall be discharged and shall cease to be of further effect as to allNotes, when either:

 

(1)                                  all Notes theretofore authenticated anddelivered, except lost, stolen or destroyed Notes which have been replaced orpaid and Notes for whose payment money has theretofore been deposited in trust,have been delivered to the Trustee for cancellation; or

 

(2)                                  (A) all Notes not theretofore delivered to the Trustee for cancellation havebecome due and payable by reason of the making of a notice of redemption orotherwise, shall become due and payable within one year or are to be called forredemption within one year under arrangements satisfactory to the Trustee forthe giving of notice of redemption by the Trustee in the name, and at theexpense, of the Issuer and the Issuer or any Guarantor have irrevocablydeposited or caused to be deposited with the Trustee as trust funds in trustsolely for the benefit of the Holders of the Notes, cash in U.S. dollars,Government Securities, or a combination thereof, in such amounts as will besufficient without consideration of any reinvestment of interest to pay anddischarge the entire indebtedness on the Notes not theretofore delivered to theTrustee for cancellation for Accreted Value of, premium, if any, and accruedinterest to the date of maturity or redemption;

 

(B)                                no Default (other than that resulting from borrowing funds to beapplied to make such deposit and any similar and simultaneous deposit relatingto other Indebtedness, including the Senior Notes and the Senior SubordinatedNotes, and the granting of Liens in connection therewith) with respect to thisIndenture or the Notes shall have occurred and be continuing on the date ofsuch deposit or shall occur as a result of such deposit and such deposit willnot result in a breach or violation of, or constitute a default under theSenior Credit Facilities, Senior Notes (or the indenture under which the SeniorNotes are issued), Senior Subordinated Notes (or the indenture under which theSenior Subordinated Notes are issued) or any other material agreement orinstrument (other than this Indenture) to which the Issuer or any Guarantor isa party or by which the Issuer or any Guarantor is bound (other than thatresulting from any borrowing of funds to be applied to make such deposit andany similar and simultaneous deposit relating to other Indebtedness, includingthe Senior Notes and the Senior Subordinated Notes, and the granting of Liensin connection therewith);

 

(C)                                the Issuer has paid or caused to be paid all sums payable by it underthis Indenture; and

 

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(D)                               the Issuer has delivered irrevocable instructions to the Trustee toapply the deposited money toward the payment of the Notes at maturity or theredemption date, as the case may be.

 

Inaddition, the Issuer must deliver an Officer’s Certificate and an Opinion ofCounsel to the Trustee stating that all conditions precedent to satisfactionand discharge have been satisfied.

 

Notwithstandingthe satisfaction and discharge of this Indenture, if money shall have beendeposited with the Trustee pursuant to subclause (A) of clause (2) of thisSection 13.01, the provisions of Section 13.02 and Section 8.06 hereof shallsurvive such satisfaction and discharge.

 

## Section 13.02                                    Applicationof Trust Money.

 

Subjectto the provisions of Section 8.06 hereof, all money deposited with the Trusteepursuant to Section 13.01 hereof shall be held in trust and applied by it, inaccordance with the provisions of the Notes and this Indenture, to the payment,either directly or through any Paying Agent (including the Issuer acting as itsown Paying Agent) as the Trustee may determine, to the Persons entitledthereto, of the Accreted Value (and premium and Additional Interest (to theextent not already included in Accreted Value), if any) and interest for whosepayment such money has been deposited with the Trustee; but such money need notbe segregated from other funds except to the extent required by law.

 

Ifthe Trustee or Paying Agent is unable to apply any money or GovernmentSecurities in accordance with Section 13.01 hereof by reason of any legalproceeding or by reason of any order or judgment of any court or governmentalauthority enjoining, restraining or otherwise prohibiting such application, theIssuer’s and any Guarantor’s obligations under this Indenture and the Notesshall be revived and reinstated as though no deposit had occurred pursuant toSection 13.01 hereof; provided that if the Issuer has made any paymentof Accreted Value of, premium and Additional Interest, if any, or interest onany Notes because of the reinstatement of its obligations, the Issuer shall besubrogated to the rights of the Holders of such Notes to receive such paymentfrom the money or Government Securities held by the Trustee or Paying Agent.

 

# ARTICLE14

#  

# MISCELLANEOUS

#  

## Section 14.01                                    TrustIndenture Act Controls.

 

Ifany provision of this Indenture limits, qualifies or conflicts with the dutiesimposed by Trust Indenture Act Section 318(c), the imposed duties shallcontrol.

 

## Section 14.02                                    Notices.

 

Anynotice or communication by the Issuer, any Guarantor or the Trustee to theothers is duly given if in writing and delivered in person or mailed byfirst-class mail (registered or certified, return receipt requested), fax orovernight air courier guaranteeing next day delivery, to the others’ address:

 

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Ifto the Issuer and/or any Guarantor:

 

c/oMichaels Stores, Inc. 8000 Bent Branch DriveIrving, TX 75063Attention: General Counsel

 

witha copy to:

 

Ropes& Gray LLPOne International Place

Boston,MA 02110

Attention:Byung W. Choi, Esq.

 

Telephone:                                 (617) 951-7000

Facsimile:                                            (617) 951-7050

 

Ifto the Trustee:

 

Wells Fargo Bank, National Association1445 Ross Avenue - 2nd FloorDallas, Texas 75202-2812Fax No.: 214-777-4086 Attention:                 Patrick Giordano

CorporateTrust Services

 

TheIssuer, any Guarantor or the Trustee, by notice to the others, may designateadditional or different addresses for subsequent notices or communications.

 

Allnotices and communications (other than those sent to Holders) shall be deemedto have been duly given: at the time delivered by hand, if personallydelivered; five calendar days after being deposited in the mail, postageprepaid, if mailed by first-class mail; when receipt acknowledged, if faxed;and the next Business Day after timely delivery to the courier, if sent by overnightair courier guaranteeing next day delivery; and, subject to compliance with theTrust Indenture Act, on the first date on which publication is made, if givenby publication; provided that any notice or communication delivered tothe Trustee shall be deemed effective upon actual receipt thereof.

 

Anynotice or communication to a Holder shall be mailed by first-class mail,certified or registered, return receipt requested, or by overnight air courierguaranteeing next day delivery to its address shown on the register kept by theRegistrar.  Any notice or communicationshall also be so mailed to any Person described in Trust Indenture Act Section313(c), to the extent required by the Trust Indenture Act.  Failure to mail a notice or communication toa Holder or any defect in it shall not affect its sufficiency with respect toother Holders.

 

Ifa notice or communication is mailed or otherwise delivered in the mannerprovided above within the time prescribed, it is duly given, whether or not theaddressee receives it.

 

Ifthe Issuer mails a notice or communication to Holders, it shall mail a copy tothe Trustee and each Agent at the same time.

 

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## Section 14.03                                    Communicationby Holders of Notes with Other Holders of Notes.

 

Holdersmay communicate pursuant to Trust Indenture Act Section 312(b) with otherHolders with respect to their rights under this Indenture or the Notes.  The Issuer, the Trustee, the Registrar andanyone else shall have the protection of Trust Indenture Act Section 312(c).

 

## Section 14.04                                    Certificateand Opinion as to Conditions Precedent.

 

Uponany request or application by the Issuer or any of the Guarantors to theTrustee to take any action under this Indenture, the Issuer or such Guarantor,as the case may be, shall furnish to the Trustee:

 

### (a)                                  An Officer’s Certificate in form andsubstance reasonably satisfactory to the Trustee (which shall include thestatements set forth in Section 14.05 hereof) stating that, in the opinion of thesigners, all conditions precedent and covenants, if any, provided for in thisIndenture relating to the proposed action have been satisfied; and

###  

### (b)                                 An Opinion of Counsel in form and substancereasonably satisfactory to the Trustee (which shall include the statements setforth in Section 14.05 hereof) stating that, in the opinion of such counsel,all such conditions precedent and covenants have been satisfied.

###  

## Section 14.05                                    StatementsRequired in Certificate or Opinion.

 

Eachcertificate or opinion with respect to compliance with a condition or covenantprovided for in this Indenture (other than a certificate provided pursuant toSection 4.04 hereof or Trust Indenture Act Section 314(a)(4)) shall comply withthe provisions of Trust Indenture Act Section 314(e) and shall include:

 

### (a)                                  a statement that the Person making suchcertificate or opinion has read such covenant or condition;

###  

### (b)                                 a brief statement as to the nature and scopeof the examination or investigation upon which the statements or opinions containedin such certificate or opinion are based;

###  

### (c)                                  a statement that, in the opinion of suchPerson, he or she has made such examination or investigation as is necessary toenable him to express an informed opinion as to whether or not such covenant orcondition has been complied with (and, in the case of an Opinion of Counsel,may be limited to reliance on an Officer’s Certificate as to matters of fact);and

###  

### (d)                                 a statement as to whether or not, in theopinion of such Person, such condition or covenant has been complied with; *provided, however*, that with respect tomatters of fact an Opinion of Counsel may rely on an Officer’s Certificate orcertificates of public officials.

###  

## Section 14.06                                    Rulesby Trustee and Agents.

 

TheTrustee may make reasonable rules for action by or at a meeting ofHolders.  The Registrar or Paying Agentmay make reasonable rules and set reasonable requirements for its functions.

 

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## Section 14.07                                    NoPersonal Liability of Directors,Officers, Employees and Stockholders.

 

Nopast, present or future director, officer, employee, incorporator, member,partner or stockholder of the Issuer or any Guarantor or any of their direct orindirect parent companies shall have any liability for any obligations of theIssuer or the Guarantors under the Notes, the Guarantees or this Indenture orfor any claim based on, in respect of, or by reason of such obligations ortheir creation.  Each Holder by acceptingNotes waives and releases all such liability. The waiver and release are part of the consideration for issuance of theNotes.

 

## Section 14.08                                    GoverningLaw.

 

THISINDENTURE, THE NOTES AND ANY GUARANTEE WILL BE GOVERNED BY AND CONSTRUED INACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

 

## Section 14.09                                    Waiverof Jury Trial.

 

EACHOF THE ISSUER, THE GUARANTORS AND THE TRUSTEE HEREBY IRREVOCABLY WAIVES, TO THEFULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURYIN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS INDENTURE, THE NOTESOR THE TRANSACTIONS CONTEMPLATED HEREBY.

 

## Section 14.10                                    ForceMajeure.

 

Inno event shall the Trustee be responsible or liable for any failure or delay inthe performance of its obligations under this Indenture arising out of or causedby, directly or indirectly, forces beyond its reasonable control, includingwithout limitation strikes, work stoppages, accidents, acts of war orterrorism, civil or military disturbances, nuclear or natural catastrophes oracts of God, and interruptions, loss or malfunctions of utilities,communications or computer (software or hardware) services.

 

## Section 14.11                                    NoAdverse Interpretation of Other Agreements.

 

ThisIndenture may not be used to interpret any other indenture, loan or debtagreement of the Issuer or its Restricted Subsidiaries or of any otherPerson.  Any such indenture, loan or debtagreement may not be used to interpret this Indenture.

 

## Section 14.12                                    Successors.

 

Allagreements of the Issuer in this Indenture and the Notes shall bind its successors.  All agreements of the Trustee in thisIndenture shall bind its successors.  Allagreements of each Guarantor in this Indenture shall bind its successors,except as otherwise provided in Section 11.06 hereof.

 

## Section 14.13                                    Severability.

 

Incase any provision in this Indenture or in the Notes shall be invalid, illegalor unenforceable, the validity, legality and enforceability of the remainingprovisions shall not in any way be affected or impaired thereby.

 

123

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## Section 14.14                                    CounterpartOriginals.

 

Theparties may sign any number of copies of this Indenture.  Each signed copy shall be an original, butall of them together represent the same agreement.  This Indenture may be executed in multiplecounterparts which, when taken together, shall constitute one instrument.

 

## Section 14.15                                    Table of Contents, Headings, etc.

##  

TheTable of Contents, Cross-Reference Table and headings of the Articles andSections of this Indenture have been inserted for convenience of referenceonly, are not to be considered a part of this Indenture and shall in no waymodify or restrict any of the terms or provisions hereof.

 

## Section 14.16                                    Qualificationof Indenture.

 

TheIssuer and the Guarantors shall qualify this Indenture under the TrustIndenture Act in accordance with the terms and conditions of the RegistrationRights Agreement and shall pay all reasonable costs and expenses (includingattorneys’ fees and expenses for the Issuer, the Guarantors and the Trustee)incurred in connection therewith, including, but not limited to, costs andexpenses of qualification of this Indenture and the Notes and printing thisIndenture and the Notes.  The Trusteeshall be entitled to receive from the Issuer and the Guarantors any such Officer’sCertificates, Opinions of Counsel or other documentation as it may reasonablyrequest in connection with any such qualification of this Indenture under theTrust Indenture Act.

 

[Signatures on following page]

 

124

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|   | MICHAELS  STORES, INC. |
|--------|------------------------|
|   |                   |
|   |                   |
|   | By:                    |  /s/ Lisa  K. Klinger |
|   |                   | Name: | Lisa  K. Klinger |
|   |                   | Title: | Vice President – Treasurer  and Investor Relations |

 

Signature Page to Senior Subordinated Indenture

 

----

 
|   | AARON  BROTHERS, INC.               |
|--------|-------------------------------------|
|   | MICHAELS  FINANCE COMPANY, INC.     |
|   | MICHAELS  STORES PROCUREMENT        |
|   | COMPANY, INC.                       |
|   | MICHAELS  OF CANADA, ULC            |
|   | MICHAELS  STORES CARD SERVICES, LLC |
|   | ARTISTREE,  INC.                    |
|   |                                |
|   |                                |
|   | By:                                 |  /s/ Lisa  K. Klinger |
|   |                                | Name: | Lisa  K. Klinger |
|   |                                | Title: | Vice President and Treasurer |

 

Signature Page to Senior Subordinated Indenture

 

----

 
|   | WELLS  FARGO BANK, NATIONAL ASSOCIATION, |
|--------|------------------------------------------|
|   | as  Trustee                              |
|   |                                     |
|   |                                     |
|   | By:                                      |  /s/ Frank  McDonald |
|   |                                     | Name: | Frank  McDonald |
|   |                                     | Title: | Vice President |

 

Signature Page to Senior Subordinated Indenture

 

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EXHIBIT A

 

[Face of Note]

 

[Insertthe Global Note Legend, if applicable pursuant to the provisions of theIndenture]

 

[Insertthe Private Placement Legend, if applicable pursuant to the provisions of theIndenture]

 

[Insertthe Regulation S Temporary Global Note Legend, if applicable pursuant to theprovisions of the Indenture]

 

[**THIS NOTE IS ISSUED WITH ORIGINAL ISSUE DISCOUNT FORPURPOSES OF SECTION 1271 ET SEQ. OF THE INTERNAL REVENUE CODE.  THE ISSUE DATE IS OCTOBER 31, 2006.  INFORMATION REGARDING THE ISSUE PRICE, THEYIELD TO MATURITY AND THE AMOUNT OF ORIGINAL ISSUE DISCOUNT UNDER THIS NOTE CANBE PROMPTLY OBTAINED BY SENDING A WRITTEN REQUEST TO THE GENERAL COUNSEL OF THEISSUER AT 8000 BENT BRANCH DRIVE, IRVING, TX 75063.]**

 

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CUSIP  [                    ]

ISIN [               ](1)

 

[[RULE 144A][REGULATION S] GLOBAL NOTErepresenting up to$                            ]

 

13% Subordinated Discount Notes due 2016

 
| No. | [$                 ] |
|-----|-----------------------------------------------------------------------------------------------------------|

 

MICHAELS STORES, INC.

 

promisesto pay to CEDE & CO. or registered assigns, the principal sum [set forth onthe Schedule of Exchanges of Interests in the Global Note attached hereto] [of                                                 United States Dollars] on November 1, 2016.

 

InterestPayment Dates:  May 1 and November 1,with cash interest payments commencing on May 1, 2012

 

RecordDates:  April 15 and October 15

 

----

(1)                                  Rule 144A CUSIP:594087 AN 8

Rule 144A ISIN:US594087AN84

Regulation S CUSIP: U59329 AE 9

Regulation S ISIN: USU59329AE98

 

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INWITNESS HEREOF, the Issuer has caused this instrument to be duly executed.

 

Dated:[       ], 2006

 
|   | MICHAELS  STORES, INC. |
|--------|------------------------|
|   |                   |
|   |                   |
|   | By:                    |   |
|   |                   | Name: |
|   |                   | Title: |

 

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Thisis one of the Notes referred to in the within-mentioned Indenture:

 
|   | WELLS  FARGO BANK, NATIONAL ASSOCIATION, |
|--------|------------------------------------------|
|   | as  Trustee                              |
|   |                                     |
|   |                                     |
|   | By:                                      |   |
|   |                                     | Authorized Signatory |

 

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[Back of Subordinated Discount Note]

 

13% Subordinated Discount Notes due 2016

 

Capitalizedterms used herein shall have the meanings assigned to them in the Indenturereferred to below unless otherwise indicated.

 

1.                                       INTEREST. Michaels Stores, Inc., a Delaware corporation, promises to pay intereston this Note until maturity and shall pay the Additional Interest, if any,payable pursuant to the Registration Rights Agreement referred to below, all inthe manner referred to in this paragraph. Until November 1, 2011, the Notes will accrete at the rate of 13% perannum, compounded semiannually on May 1 and November 1 of each year to butnot including November 1, 2011 (the “Full Accretion Date”), using a360-day year comprised of 30-day months, from an initial Accreted Value of$532.54 per $1,000 principal amount at maturity on the Issue Date to $1,000 per$1,000 principal amount at maturity on the Full Accretion Date, as reflected inthe definition of Accreted Value.  TheIssuer will pay cash interest plus the amount of any Additional Interest (tothe extent not already included in Accreted Value), if any, semi-annually inarrears on May 1 and November 1 of each year, commencing on May 1, 2012, or ifany such day is not a Business Day, on the next succeeding Business Day (each,an “Interest Payment Date”).  Cashinterest on the Notes will accrue from the most recent date to which interesthas been paid or, if no interest has been paid, from November 1, 2011.  The Issuer will pay interest (includingpost-petition interest in any proceeding under any Bankruptcy Law) on overdueAccreted Value and premium, if any, from time to time on demand at the interestrate on the Notes; it shall pay interest (including post-petition interest inany proceeding under any Bankruptcy Law) on overdue installments of interestand Additional Interest (to the extent not already included in Accreted Value),if any, (without regard to any applicable grace periods) from time to time ondemand at the interest rate on the Notes. Interest will be computed on the basis of a 360-day year comprised oftwelve 30-day months.  Notwithstandinganything herein to the contrary, the principal amount at maturity of any Noteshall be reduced by the portion of the principal amount at maturity of suchNote redeemed by the Issuer pursuant to Section 6 of this Note.

 

2.                                       METHOD OF PAYMENT.  Commencing May 1, 2012, the Issuer willpay interest on the Notes and Additional Interest (to the extent not alreadyincluded in Accreted Value), if any, to the Persons who are registered Holdersof Notes at the close of business on the April 15 or October 15 (whether or nota Business Day), as the case may be, next preceding the Interest Payment Date,even if such Notes are canceled after such record date and on or before suchInterest Payment Date, except as provided in Section 2.12 of the Indenture withrespect to defaulted interest.  Paymentof interest and Additional Interest, if any, may be made by check mailed to theHolders at their addresses set forth in the register of Holders, providedthat payment by wire transfer of immediately available funds will be requiredwith respect to Accreted Value of and interest, premium and AdditionalInterest, if any, on, all Global Notes and all other Notes the Holders of whichshall have provided wire transfer instructions to the Issuer or the PayingAgent.  Such payment shall be in suchcoin or currency of the United States of America as at the time of payment islegal tender for payment of public and private debts.

 

3.                                       PAYING AGENT AND REGISTRAR.  Initially, Wells Fargo Bank, NationalAssociation, the Trustee under the Indenture, will act as Paying Agent andRegistrar.  The Issuer may change anyPaying Agent or Registrar without notice to the Holders.  The Issuer or any of its Subsidiaries may actin any such capacity.

 

4.                                       INDENTURE. The Issuer issued the Notes under an Indenture, dated as of October 31,2006 (the “Indenture”), among Michaels Stores, Inc., the Guarantorsnamed therein and the Trustee.  This Noteis one of a duly authorized issue of notes of the Issuer designated as its 13%Subordinated 

 

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Discount Notes due 2016.  The Issuer shall be entitled to issueAdditional Notes pursuant to Section 2.01 and 4.09 of the Indenture.  The terms of the Notes include those statedin the Indenture and those made part of the Indenture by reference to the TrustIndenture Act of 1939, as amended (the “Trust Indenture Act”).  The Notes are subject to all such terms, andHolders are referred to the Indenture and such Act for a statement of suchterms.  To the extent any provision ofthis Note conflicts with the express provisions of the Indenture, theprovisions of the Indenture shall govern and be controlling.

 

5.                                       OPTIONAL REDEMPTION.

 

(a)                                  Except as described below under clauses 5(b)and 5(c) hereof, the Notes will not be redeemable at the Issuer’s option beforeNovember 1, 2011.

 

(b)                                 At any time prior to November 1, 2011, theIssuer may redeem all or a part of the Notes, upon not less than 30 nor morethan 60 days’ prior notice mailed by first-class mail to the registeredaddress of each Holder of Notes or otherwise delivered in accordance with theprocedures of DTC, at a redemption price equal to 100% of the Accreted Value ofthe Notes redeemed plus the Applicable Premium as of the date of redemption(the “Redemption Date”).

 

(c)                                  Until November 1, 2009, the Issuer may, atits option, on one or more occasions redeem up to 35% of the aggregateprincipal amount at maturity of Notes (including the aggregate principal amountat maturity of Notes issued after the Issue Date) at a redemption price equalto 113.000% of the Accreted Value thereof as of the applicable Redemption Date,with the net cash proceeds of one or more Equity Offerings; providedthat at least 50% of the sum of the aggregate principal amount at maturity ofNotes originally issued under the Indenture and any Additional Notes that areissued under the Indenture after the Issue Date remains outstanding immediatelyafter the occurrence of each such redemption; providedfurtherthat each such redemption occurs within 90 days of the date of closing of eachsuch Equity Offering.  Notice of anyredemption upon any Equity Offering may be given prior to such redemption, andany such redemption or notice may, at the Issuer’s discretion, be subject toone or more conditions precedent, including, but not limited to, completion ofthe related Equity Offering.

 

(d)                                 On and after November 1, 2011, the Issuer mayredeem the Notes, in whole or in part, at the redemption prices (expressed aspercentages of the Accreted Value of the Notes to be redeemed) set forth below,plus accrued and unpaid interest thereon, if any, and Additional Interest (tothe extent not already included in Accreted Value), if any, to the applicableRedemption Date, subject to the right of Holders of record on the relevantRecord Date to receive interest due on the relevant Interest Payment Date, ifredeemed during the twelve-month period beginning on November 1 of eachof the years indicated below:

 
| **Year**             | ** ** | **Percentage** | ** ** |
|----------------------|------------|----------------|------------|
|                 |       |           |       |
| 2011                 |       | 106.500        | %          |
| 2012                 |       | 104.333        | %          |
| 2013                 |       | 102.167        | %          |
| 2014 and  thereafter |       | 100.000        | %          |

 

(e)                                  Any redemption pursuant to thisparagraph 5 shall be made pursuant to the provisions of Sections 3.01through 3.06 of the Indenture.

 

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6.                                       MANDATORY REDEMPTION.  On May 1, 2012, and, if necessary, anyInterest Payment Date thereafter prior to November 1, 2016, the Issuer will berequired to redeem a portion of each Note outstanding on such date equal to theAHYDO Amount on such date.

 

Theredemption price for each portion of a Note so redeemed will equal 100% of theAccreted Value of such portion as of the Redemption Date.

 

“AHYDOAmount” means the amount sufficient, but not in excess of the amountnecessary, to ensure that a Note will not be an “applicable high yield discountobligation” within the meaning of Section 163(i)(1) of the Internal RevenueCode of 1986.

 

7.                                       NOTICE OF REDEMPTION.  Subject to Section 3.03 of the Indenture,notice of redemption will be mailed by first-class mail at least 30 days butnot more than 60 days before the redemption date (except that redemptionnotices may be mailed more than 60 days prior to a redemption date if thenotice is issued in connection with Article 8 or Article 13 of the Indenture)to each Holder whose Notes are to be redeemed at its registered address.  Notes in denominations larger than $1,000 maybe redeemed in part but only in whole multiples of $1,000, unless all of theNotes held by a Holder are to be redeemed. On and after the redemption date interest ceases to accrue on Notes orportions thereof called for redemption.

 

8.                                       OFFERS TO REPURCHASE.

 

(a)                                  Upon the occurrence of a Change of Control,the Issuer shall make an offer (a “Change of Control Offer”) to eachHolder to repurchase all or any part (equal to $1,000 or an integral multiplethereof) of each Holder’s Notes at a purchase price equal to 101% of theAccreted Value thereof plus accrued and unpaid interest and Additional Interest(to the extent not already included in Accreted Value) thereon, if any, to thedate of purchase (the “Change of Control Payment”).  The Change of Control Offer shall be made inaccordance with Section 4.14 of the Indenture.

 

(b)                                 If the Issuer or any of its RestrictedSubsidiaries consummates an Asset Sale, within 10 Business Days of each datethat Excess Proceeds exceed $50.0 million, the Issuer shall commence, an offerto all Holders of the Notes and, if required by the terms of any Indebtednessthat is *pari passu* with the Notes(“Pari Passu Indebtedness”), to the holders of such Pari PassuIndebtedness (an “Asset Sale Offer”), to purchase the maximum AccretedValue of Notes (including any Additional Notes) and principal amount oraccreted value of such other Pari Passu Indebtedness that may be purchased outof the Excess Proceeds at an offer price in cash in an amount equal to 100% ofthe Accrued Value (or principal amount or accreted value) thereof plus accruedand unpaid interest and Additional Interest (to the extent not already includedin Accreted Value) thereon, if any, to the date fixed for the closing of suchoffer, in accordance with the procedures set forth in the Indenture.  To the extent that the aggregate amount ofNotes (including any Additional Notes) and such Pari Passu Indebtednesstendered pursuant to an Asset Sale Offer is less than the Excess Proceeds, theIssuer may use any remaining Excess Proceeds for general corporate purposes,subject to other covenants contained in the Indenture.  If the sum of the aggregate Accreted Value ofNotes and the aggregate principal amount or accreted value of the Pari PassuIndebtedness surrendered by such holders thereof exceeds the amount of ExcessProceeds, the Trustee shall select the Notes and such Pari Passu Indebtedness tobe purchased on a *pro rata* basisbased on the Accreted Value of the Notes or the accreted value or principalamount of such Pari Passu Indebtedness tendered.  Upon completion of any such Asset Sale Offer,the amount of Excess Proceeds shall be reset at zero.  Holders of Notes that are the subject of anoffer to purchase will receive an Asset Sale Offer from the Issuer prior to anyrelated purchase date and may elect to have such Notes purchased by completingthe form entitled “Option of Holder to Elect Purchase” attached to the Notes.

 

A-7

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9.                                       DENOMINATIONS, TRANSFER, EXCHANGE.  The Notes are in registered form withoutcoupons in denominations of principal amount at maturity of $1,000 and integralmultiples of $1,000.  The transfer ofNotes may be registered and Notes may be exchanged as provided in theIndenture.  The Registrar and the Trusteemay require a Holder, among other things, to furnish appropriate endorsementsand transfer documents and the Issuer may require a Holder to pay any taxes andfees required by law or permitted by the Indenture.  The Issuer need not exchange or register thetransfer of any Note or portion of a Note selected for redemption, except forthe unredeemed portion of any Note being redeemed in part.  Also, the Issuer need not exchange orregister the transfer of any Notes for a period of 15 days before a selectionof Notes to be redeemed.

 

10.                                 SUBORDINATION.  The Notes and the Guarantees are subordinatedto Senior Indebtedness of the Issuer and the Guarantors on the terms andsubject to the conditions set forth in the Indenture.  To the extent provided in the Indenture,Senior Indebtedness must be paid before the Notes and Guarantees may be paid.  The Issuer agrees, and each Holder byaccepting a Note agrees, to the subordination provisions contained in theIndenture and authorizes the Trustee to give them effect and appoints theTrustee as attorney-in-fact for such purpose.

 

11.                                 PERSONS DEEMED OWNERS.  The registered Holder of a Note may betreated as its owner for all purposes.

 

12.                                 AMENDMENT, SUPPLEMENT AND WAIVER.  The Indenture, the Guarantees or the Notesmay be amended or supplemented as provided in the Indenture.

 

13.                                 DEFAULTS AND REMEDIES.  The Events of Default relating to the Notesare defined in Section 6.01 of the Indenture. If any Event of Default occurs and is continuing, the Trustee or theHolders of at least 25% in principal amount at maturity of the then outstandingNotes may declare the Accreted Value, premium, if any, interest, if any, andany other monetary obligations on all the then outstanding Notes to be due andpayable immediately; provided, however, that so long as anyIndebtedness permitted to be incurred under the Indenture as part of the SeniorCredit Facilities shall be outstanding, no such acceleration shall be effectiveuntil the earlier of: (1) acceleration of any such Indebtedness under theSenior Credit Facilities; or (2) five Business Days after the giving of writtennotice of such acceleration to the Issuer and the Representative under each ofthe Senior Credit Facilities. Notwithstanding the foregoing, in the case of anEvent of Default arising from certain events of bankruptcy or insolvency, alloutstanding Notes will become due and payable immediately without furtheraction or notice.  Holders may notenforce the Indenture, the Notes or the Guarantees except as provided in theIndenture.  Subject to certainlimitations, Holders of a majority in aggregate principal amount at maturity ofthe then outstanding Notes may direct the Trustee in its exercise of any trustor power.  The Trustee may withhold fromHolders of the Notes notice of any continuing Default (except a Defaultrelating to the payment of Accreted Value, premium, if any, Additional Interest,if any, or interest) if it determines that withholding notice is in theirinterest.  The Holders of a majority inaggregate principal amount at maturity of the Notes then outstanding by noticeto the Trustee may on behalf of the Holders of all of the Notes waive anyexisting Default or and its consequences under the Indenture except acontinuing Default in payment of the Accreted Value of, premium, if any,Additional Interest, if any, or interest on, any of the Notes held by anon-consenting Holder.  The Issuer andeach Guarantor (to the extent that such Guarantor is so required under theTrust Indenture Act) is required to deliver to the Trustee annually a statementregarding compliance with the Indenture, and the Issuer is required within five(5) Business Days after becoming aware of any Default, to deliver to theTrustee a statement specifying such Default and what action the Issuer proposesto take with respect thereto.

 

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14.                                 AUTHENTICATION.  This Note shall not be entitled to anybenefit under the Indenture or be valid or obligatory for any purpose untilauthenticated by the manual signature of the Trustee.

 

15.                                 ADDITIONAL RIGHTS OF HOLDERS OF RESTRICTEDGLOBAL NOTES AND RESTRICTED DEFINITIVE NOTES. In addition to the rights provided to Holders of Notes under theIndenture, Holders of Restricted Global Notes and Restricted Definitive Notesshall have all the rights set forth in the Registration Rights Agreement, datedas of October 31, 2006, among Michaels Stores, Inc., the Guarantors namedtherein and the other parties named on the signature pages thereof (the “RegistrationRights Agreement”), including the right to receive Additional Interest (asdefined in the Registration Rights Agreement).

 

16.                                 GOVERNING LAW.  THE LAWS OF THE STATE OF NEW YORK SHALLGOVERN AND BE USED TO CONSTRUE THE INDENTURE, THE NOTES AND THE GUARANTEES.

 

17.                                 CUSIP NUMBERS.  Pursuant to a recommendation promulgated bythe Committee on Uniform Security Identification Procedures, the Issuer hascaused CUSIP numbers to be printed on the Notes and the Trustee may use CUSIPnumbers in notices of redemption as a convenience to Holders.  No representation is made as to the accuracyof such numbers either as printed on the Notes or as contained in any notice ofredemption and reliance may be placed only on the other identification numbersplaced thereon.

 

TheIssuer will furnish to any Holder upon written request and without charge acopy of the Indenture and/or the Registration Rights Agreement.  Requests may be made to the Issuer at thefollowing address:

 

8000Bent Branch DriveIrving, TX 75063Attention: General Counsel

 

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ASSIGNMENT FORM

 

Toassign this Note, fill in the form below:

 
| (I)  or (we) assign and transfer this Note to: |                               |
|------------------------------------------------|------------------------------------|
|                                           | (Insert assignee’ legal name) |

 

 

(Insert assignee’s soc. sec. or tax I.D. no.)

 
|                                                       |
|------------------------------------------------------------|
|                                                       |
|                                                       |
|                                                       |
| (Print or type assignee’s name, address and zip code) |

 
| and  irrevocably appoint                                                                             |   |
|------------------------------------------------------------------------------------------------------|--------|
| to  transfer this Note on the books of the Issuer. The agent may substitute  another to act for him. |

 

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

 

----

*Participant in a recognized Signature Guarantee Medallion Program (or other signatureguarantor acceptable to the Trustee).

 

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OPTION OF HOLDER TO ELECT PURCHASE

 

Ifyou want to elect to have this Note purchased by the Issuer pursuant toSection 4.10 or 4.14 of the Indenture, check the appropriate box below:

 

o Section 4.10           o Section 4.14

 

Ifyou want to elect to have only part of this Note purchased by the Issuerpursuant to Section 4.10 or Section 4.14 of the Indenture, state the amount youelect to have purchased:

 

$                    

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

 

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*Participant in a recognized Signature Guarantee Medallion Program (or other signatureguarantor acceptable to the Trustee).

 

A-11

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SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE*

 

Theinitial outstanding principal amount at maturity of this Global Note is $                    .  The following exchanges of a part of thisGlobal Note for an interest in another Global Note or for a Definitive Note, orexchanges of a part of another Global or Definitive Note for an interest inthis Global Note, have been made:

 
| **Date of Exchange** | ** ** | **Amount of   decrease  in Principal   Amount at   Maturity** | ** ** | **Amount of increase  in Principal  Amount at Maturity   of this  Global Note** | ** ** | **Principal Amount   at Maturity of  this Global Note  following such  decrease or   increase** | ** ** | **Signature of  authorized officer  of Trustee or   Note Custodian** | ** ** |
|----------------------|------------|---------------------------------------------------------------|------------|---------------------------------------------------------------------------------|------------|-------------------------------------------------------------------------------------------------|------------|----------------------------------------------------------------------|------------|
|                 |       |                                                          |       |                                                                            |       |                                                                                            |       |                                                                 |       |
|                 |       |                                                          |       |                                                                            |       |                                                                                            |       |                                                                 |       |
|                 |       |                                                          |       |                                                                            |       |                                                                                            |       |                                                                 |       |

 

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*Thisschedule should be included only if the Note is issued in global form.

 

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EXHIBIT B

 

FORM OF CERTIFICATE OF TRANSFER

 

MichaelsStores, Inc. 8000 Bent Branch DriveIrving, TX 75063Attention: General Counsel

 

WellsFargo Bank, National Association1445 Ross Avenue - 2nd FloorDallas, Texas 75202-2812Fax No.: 214-777-4086 Attention:                 Patrick Giordano

CorporateTrust Services

 

Re:  13% Subordinated Discount Notes due 2016

 

Referenceis hereby made to the Indenture, dated as of October 31, 2006 (the “Indenture”),among Michaels Stores, Inc., the Guarantors named therein and the Trustee.  Capitalized terms used but not defined hereinshall have the meanings given to them in the Indenture.

 

                              (the “Transferor”) owns and proposes to transfer the Note[s] or interestin such Note[s] specified in Annex A hereto, in the principal amount at maturityof $                      in such Note[s] or interests (the “Transfer”), to                               (the “Transferee”), as further specified in Annex A hereto.  In connection with the Transfer, theTransferor hereby certifies that:

 

[CHECK ALL THAT APPLY]

 

1.                                       o  CHECKIF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST IN THE 144A GLOBALNOTE OR A DEFINITIVE NOTE PURSUANT TO RULE 144A.  The Transfer is being effected pursuant to andin accordance with Rule 144A under the United States Securities Act of 1933, asamended (the “Securities Act”), and, accordingly, the Transferor herebyfurther certifies that the beneficial interest or Definitive Note is beingtransferred to a Person that the Transferor reasonably believes is purchasingthe beneficial interest or Definitive Note for its own account, or for one ormore accounts with respect to which such Person exercises sole investmentdiscretion, and such Person and each such account is a “qualified institutionalbuyer” within the meaning of Rule 144A in a transaction meeting therequirements of Rule 144A and such Transfer is in compliance with anyapplicable blue sky securities laws of any state of the United States.

 

2.                                       o  CHECKIF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST IN THE REGULATION SGLOBAL NOTE OR A DEFINITIVE NOTE PURSUANT TO REGULATION S.  The Transfer is being effected pursuant toand in accordance with Rule 903 or Rule 904 under the Securities Act and,accordingly, the Transferor hereby further certifies that (i) the Transfer isnot being made to a person in the United States and (x) at the time the buyorder was originated, the Transferee was outside the United States or suchTransferor and any Person acting on its behalf reasonably believed and believesthat the Transferee was outside the United States or (y) the transaction wasexecuted in, on or through the facilities of a designated offshore securitiesmarket and neither such Transferor nor any Person acting on its behalf knowsthat the transaction was prearranged with a buyer in the United States, (ii) nodirected selling efforts have been made in contravention of the requirements ofRule 903(b) 

 

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or Rule 904(b) of Regulation Sunder the Securities Act (iii) the transaction is not part of a plan or schemeto evade the registration requirements of the Securities Act and (iv) if theproposed transfer is being made prior to the expiration of the RestrictedPeriod, the transfer is not being made to a U.S. Person or for the account orbenefit of a U.S. Person (other than an Initial Purchaser).  Upon consummation of the proposed transfer inaccordance with the terms of the Indenture, the transferred beneficial interestor Definitive Note will be subject to the restrictions on Transfer enumeratedin the Indenture and the Securities Act.

 

3.                                       o  CHECKAND COMPLETE IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST IN THEDEFINITIVE NOTE PURSUANT TO ANY PROVISION OF THE SECURITIES ACT OTHER THAN RULE144A OR REGULATION S.  The Transfer isbeing effected in compliance with the transfer restrictions applicable tobeneficial interests in Restricted Global Notes and Restricted Definitive Notesand pursuant to and in accordance with the Securities Act and any applicable bluesky securities laws of any state of the United States, and accordingly theTransferor hereby further certifies that (check one):

 

(a)                                  o  such Transfer is being effected pursuant toand in accordance with Rule 144 under the Securities Act;

 

or

 

(b)                                 o  such Transfer is being effected to the Issueror a subsidiary thereof;

 

or

 

(c)                                  o  such Transfer is being effected pursuant toan effective registration statement under the Securities Act and in compliancewith the prospectus delivery requirements of the Securities Act.

 

4.                                       o  CHECKIF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST IN AN UNRESTRICTEDGLOBAL NOTE OR OF AN UNRESTRICTED DEFINITIVE NOTE.

 

(a)                                  o  CHECKIF TRANSFER IS PURSUANT TO RULE 144. (i) The Transfer is being effectedpursuant to and in accordance with Rule 144 under the Securities Act and incompliance with the transfer restrictions contained in the Indenture and anyapplicable blue sky securities laws of any state of the United States and (ii)the restrictions on transfer contained in the Indenture and the PrivatePlacement Legend are not required in order to maintain compliance with theSecurities Act.  Upon consummation of theproposed Transfer in accordance with the terms of the Indenture, thetransferred beneficial interest or Definitive Note will no longer be subject tothe restrictions on transfer enumerated in the Private Placement Legend printedon the Restricted Global Notes, on Restricted Definitive Notes and in theIndenture.

 

(b)                                 o  CHECKIF TRANSFER IS PURSUANT TO REGULATION S. (i) The Transfer is being effectedpursuant to and in accordance with Rule 903 or Rule 904 under the SecuritiesAct and in compliance with the transfer restrictions contained in the Indentureand any applicable blue sky securities laws of any state of the United Statesand (ii) the restrictions on transfer contained in the Indenture and thePrivate Placement Legend are not required in order to maintain compliance withthe Securities Act.  Upon consummation ofthe proposed Transfer in accordance with the terms of the Indenture, thetransferred beneficial interest or Definitive Note will no longer be subject tothe restrictions on transfer enumerated in the Private Placement Legend printedon the Restricted Global Notes, on Restricted Definitive Notes and in theIndenture.

 

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(c)                                  o  CHECKIF TRANSFER IS PURSUANT TO OTHER EXEMPTION. (i) The Transfer is being effected pursuant to and in compliancewith an exemption from the registration requirements of the Securities Actother than Rule 144, Rule 903 or Rule 904 and in compliance with the transferrestrictions contained in the Indenture and any applicable blue sky securitieslaws of any State of the United States and (ii) the restrictions on transfercontained in the Indenture and the Private Placement Legend are not required inorder to maintain compliance with the Securities Act.  Upon consummation of the proposed Transfer inaccordance with the terms of the Indenture, the transferred beneficial interestor Definitive Note will not be subject to the restrictions on transferenumerated in the Private Placement Legend printed on the Restricted GlobalNotes or Restricted Definitive Notes and in the Indenture.

 

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Thiscertificate and the statements contained herein are made for your benefit andthe benefit of the Issuer.

 
|   | [Insert  Name of Transferor] |
|--------|------------------------------|
|   |                         |
|   |                         |
|   | By:                          |   |
|   |                         | Name: |
|   |                         | Title: |
|   |                         |
|   |                         |
| Dated: |                         |   |   |
|        |                              |  |  |  |

 

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ANNEX A TO CERTIFICATE OF TRANSFER

 

1.                                       The Transferor owns and proposes to transferthe following:

 

[CHECK ONE OF (a) OR (b)]

 

(a)                                  o a beneficial interest in the:

 

(i)                                     o 144A Global Note (CUSIP 594087AN8, or

 

(ii)                                  o Regulation S Global Note (CUSIP U59329AE9,or

 

(b)                                 o a Restricted Definitive Note.

 

2.                                       After the Transfer the Transferee will hold:

 

[CHECK ONE]

 

(a)                                  o a beneficial interest in the:

 

(i)                                     o 144A Global Note (CUSIP 594087AN8, or

 

(ii)                                  oRegulation S Global Note (CUSIP U59329AE9, or

 

(iii)                               oUnrestricted Global Note (CUSIP [                                                                                            ]; or

 

(b)                                 o a Restricted Definitive Note; or

 

(c)                                  o anUnrestricted Definitive Note, in accordance with the terms of the Indenture.

 

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EXHIBIT C

 

FORM OF CERTIFICATE OF EXCHANGE

 

MichaelsStores, Inc. 8000 Bent Branch DriveIrving, TX 75063Attention: General Counsel

 

WellsFargo Bank, National Association1445 Ross Avenue - 2nd FloorDallas, Texas 75202-2812Fax No.: 214-777-4086 Attention:                 Patrick Giordano

CorporateTrust Services

 

Re:  13% Subordinated Discount Notes due 2016

 

Referenceis hereby made to the Indenture, dated as of October 31, 2006 (the “Indenture”),among Michaels Stores, Inc., the Guarantors named therein and the Trustee.  Capitalized terms used but not defined hereinshall have the meanings given to them in the Indenture.

 

                      (the “Owner”) owns and proposes to exchange the Note[s] or interest insuch Note[s] specified herein, in the principal amount at maturity of $                    in such Note[s] or interests (the “Exchange”).  In connection with the Exchange, the Ownerhereby certifies that:

 

1)                                      EXCHANGE OF RESTRICTED DEFINITIVE NOTES ORBENEFICIAL INTERESTS IN A RESTRICTED GLOBAL NOTE FOR UNRESTRICTED DEFINITIVENOTES OR BENEFICIAL INTERESTS IN AN UNRESTRICTED GLOBAL NOTE

 

a)                                      o  CHECKIF EXCHANGE IS FROM BENEFICIAL INTEREST IN A RESTRICTED GLOBAL NOTE TOBENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL NOTE.  In connection with the Exchange of the Owner’sbeneficial interest in a Restricted Global Note for a beneficial interest in anUnrestricted Global Note in an equal principal amount at maturity, the Ownerhereby certifies (i) the beneficial interest is being acquired for the Owner’sown account without transfer, (ii) such Exchange has been effected incompliance with the transfer restrictions applicable to the Global Notes andpursuant to and in accordance with the United States Securities Act of 1933, asamended (the “Securities Act”), (iii) the restrictions on transfercontained in the Indenture and the Private Placement Legend are not required inorder to maintain compliance with the Securities Act and (iv) the beneficialinterest in an Unrestricted Global Note is being acquired in compliance withany applicable blue sky securities laws of any state of the United States.

 

b)                                     o  CHECKIF EXCHANGE IS FROM BENEFICIAL INTEREST IN A RESTRICTED GLOBAL NOTE TOUNRESTRICTED DEFINITIVE NOTE.  Inconnection with the Exchange of the Owner’s beneficial interest in a RestrictedGlobal Note for an Unrestricted Definitive Note, the Owner hereby certifies (i)the Definitive Note is being acquired for the Owner’s own account withouttransfer, (ii) such Exchange has been effected in compliance with thetransfer restrictions applicable to the Restricted Global Notes and pursuant toand in accordance with the Securities Act, (iii) the restrictions on transfercontained in the Indenture and the 

 

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PrivatePlacement Legend are not required in order to maintain compliance with theSecurities Act and (iv) the Definitive Note is being acquired in compliancewith any applicable blue sky securities laws of any state of the United States.

 

c)                                      o  CHECKIF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE TO BENEFICIAL INTEREST IN ANUNRESTRICTED GLOBAL NOTE.  In connectionwith the Owner’s Exchange of a Restricted Definitive Note for a beneficialinterest in an Unrestricted Global Note, the Owner hereby certifies (i) thebeneficial interest is being acquired for the Owner’s own account withouttransfer, (ii) such Exchange has been effected in compliance with the transferrestrictions applicable to Restricted Definitive Notes and pursuant to and inaccordance with the Securities Act, (iii) the restrictions on transfer containedin the Indenture and the Private Placement Legend are not required in order tomaintain compliance with the Securities Act and (iv) the beneficial interest isbeing acquired in compliance with any applicable blue sky securities laws ofany state of the United States.

 

d)                                     o  CHECKIF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE TO UNRESTRICTED DEFINITIVENOTE.  In connection with the Owner’sExchange of a Restricted Definitive Note for an Unrestricted Definitive Note,the Owner hereby certifies (i) the Unrestricted Definitive Note is beingacquired for the Owner’s own account without transfer, (ii) such Exchange hasbeen effected in compliance with the transfer restrictions applicable toRestricted Definitive Notes and pursuant to and in accordance with the SecuritiesAct, (iii) the restrictions on transfer contained in the Indenture and thePrivate Placement Legend are not required in order to maintain compliance withthe Securities Act and (iv) the Unrestricted Definitive Note is being acquiredin compliance with any applicable blue sky securities laws of any state of theUnited States.

 

2)                                      EXCHANGE OF RESTRICTED DEFINITIVE NOTES ORBENEFICIAL INTERESTS IN RESTRICTED GLOBAL NOTES FOR RESTRICTED DEFINITIVE NOTESOR BENEFICIAL INTERESTS IN RESTRICTED GLOBAL NOTES

 

a)                                      o  CHECKIF EXCHANGE IS FROM BENEFICIAL INTEREST IN A RESTRICTED GLOBAL NOTE TORESTRICTED DEFINITIVE NOTE.  Inconnection with the Exchange of the Owner’s beneficial interest in a RestrictedGlobal Note for a Restricted Definitive Note with an equal principal amount atmaturity, the Owner hereby certifies that the Restricted Definitive Note isbeing acquired for the Owner’s own account without transfer.  Upon consummation of the proposed Exchange inaccordance with the terms of the Indenture, the Restricted Definitive Noteissued will continue to be subject to the restrictions on transfer enumeratedin the Private Placement Legend printed on the Restricted Definitive Note andin the Indenture and the Securities Act.

 

b)                                     o  CHECKIF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE TO BENEFICIAL INTEREST IN ARESTRICTED GLOBAL NOTE.  In connectionwith the Exchange of the Owner’s Restricted Definitive Note for a beneficialinterest in the [CHECK ONE]  o 144A Global Note  oRegulation S Global Note, with an equal principal amount at maturity, the Ownerhereby certifies (i) the beneficial interest is being acquired for the Owner’sown account without transfer and (ii) such Exchange has been effected incompliance with the transfer restrictions applicable to the Restricted GlobalNotes and pursuant to and in accordance with the Securities Act, and incompliance with any applicable blue sky securities laws of any state of theUnited States.  Upon consummation of theproposed Exchange in accordance with the terms of the Indenture, the beneficialinterest issued will be subject to the restrictions on transfer 

 

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enumeratedin the Private Placement Legend printed on the relevant Restricted Global Noteand in the Indenture and the Securities Act.

 

Thiscertificate and the statements contained herein are made for your benefit andthe benefit of the Issuer and are dated                                             .

 
|   | [Insert  Name of Transferor] |
|--------|------------------------------|
|   |                         |
|   |                         |
|   | By:                          |   |
|   |                         | Name: |
|   |                         | Title: |
|   |                         |
|   |                         |
| Dated: |                         |   |   |
|        |                              |  |  |  |

 

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EXHIBIT D

 

[FORM OF SUPPLEMENTAL INDENTURETO BE DELIVERED BY SUBSEQUENT GUARANTORS]

 

SupplementalIndenture (this “Supplemental Indenture”), dated as of                     ,among                                     (the “Guaranteeing Subsidiary”), a subsidiary of Michaels Stores, Inc.,a Delaware Corporation (the “Issuer”), and Wells Fargo Bank, NationalAssociation, as trustee (the “Trustee”).

 

W I T N E S S E T H

 

WHEREAS,each of Michaels Stores, Inc. and the Guarantors (as defined in the Indenture referredto below) has heretofore executed and delivered to the Trustee an indenture(the “Indenture”), dated as of October 31, 2006, providing for theissuance of an unlimited aggregate principal amount at maturity of 13%Subordinated Discount Notes due 2016 (the “Notes”);

 

WHEREAS,the Indenture provides that under certain circumstances the GuaranteeingSubsidiary shall execute and deliver to the Trustee a supplemental indenturepursuant to which the Guaranteeing Subsidiary shall unconditionally guaranteeall of the Issuer’s Obligations under the Notes and the Indenture on the termsand conditions set forth herein and under the Indenture (the “Guarantee”);and

 

WHEREAS,pursuant to Section 9.01 of the Indenture, the Trustee is authorized to executeand deliver this Supplemental Indenture.

 

NOWTHEREFORE, in consideration of the foregoing and for other good and valuableconsideration, the receipt of which is hereby acknowledged, the partiesmutually covenant and agree for the equal and ratable benefit of the Holders ofthe Notes as follows:

 

(1)                                  Capitalized Terms. Capitalized terms used herein without definition shall have the meaningsassigned to them in the Indenture.

 

(2)                                  Agreement to Guarantee.  TheGuaranteeing Subsidiary hereby agrees as follows:

 

(a)                                  Along with all Guarantors named in theIndenture, to jointly and severally unconditionally guarantee to each Holder ofa Note authenticated and delivered by the Trustee and to the Trustee and itssuccessors and assigns, irrespective of the validity and enforceability of theIndenture, the Notes or the obligations of the Issuer hereunder or thereunder,that:

 

(i)                                     the Accreted Value of and interest, premiumand Additional Interest (to the extent not already included in Accreted Value),if any, on the Notes will be promptly paid in full when due, whether atmaturity, by acceleration, redemption or otherwise, and interest on the overdueAccreted Value of and interest on the Notes, if any, if lawful, and all otherobligations of the Issuer to the Holders or the Trustee hereunder or thereunderwill be promptly paid in full or performed, all in accordance with the termshereof and thereof; and

 

(ii)                                  in case of any extension of time of paymentor renewal of any Notes or any of such other obligations, that same will bepromptly paid in full when due or performed in accordance with the terms of theextension or renewal, whether at stated maturity, by acceleration orotherwise.  Failing payment when due ofany amount so guaranteed 

 

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orany performance so guaranteed for whatever reason, the Guarantors and theGuaranteeing Subsidiary shall be jointly and severally obligated to pay thesame immediately.  This is a guarantee ofpayment and not a guarantee of collection.

 

(b)                                 The obligations hereunder shall beunconditional, irrespective of the validity, regularity or enforceability ofthe Notes or the Indenture, the absence of any action to enforce the same, anywaiver or consent by any Holder of the Notes with respect to any provisionshereof or thereof, the recovery of any judgment against the Issuer, any actionto enforce the same or any other circumstance which might otherwise constitutea legal or equitable discharge or defense of a guarantor.

 

(c)                                  The following is hereby waived:  diligence, presentment, demand of payment,filing of claims with a court in the event of insolvency or bankruptcy of theIssuer, any right to require a proceeding first against the Issuer, protest,notice and all demands whatsoever.

 

(d)                                 This Guarantee shall not be discharged exceptby complete performance of the obligations contained in the Notes, theIndenture and this Supplemental Indenture, and the Guaranteeing Subsidiaryaccepts all obligations of a Guarantor under the Indenture.

 

(e)                                  If any Holder or the Trustee is required byany court or otherwise to return to the Issuer, the Guarantors (including theGuaranteeing Subsidiary), or any custodian, trustee, liquidator or othersimilar official acting in relation to either the Issuer or the Guarantors, anyamount paid either to the Trustee or such Holder, this Guarantee, to the extenttheretofore discharged, shall be reinstated in full force and effect.

 

(f)                                    The Guaranteeing Subsidiary shall not beentitled to any right of subrogation in relation to the Holders in respect ofany obligations guaranteed hereby until payment in full of all obligationsguaranteed hereby.

 

(g)                                 As between the Guaranteeing Subsidiary, onthe one hand, and the Holders and the Trustee, on the other hand, (x) thematurity of the obligations guaranteed hereby may be accelerated as provided inArticle 6 of the Indenture for the purposes of this Guarantee, notwithstandingany stay, injunction or other prohibition preventing such acceleration inrespect of the obligations guaranteed hereby, and (y) in the event of anydeclaration of acceleration of such obligations as provided in Article 6 of theIndenture, such obligations (whether or not due and payable) shall forthwithbecome due and payable by the Guaranteeing Subsidiary for the purpose of thisGuarantee.

 

(h)                                 The Guaranteeing Subsidiary shall have theright to seek contribution from any non-paying Guarantor so long as theexercise of such right does not impair the rights of the Holders under thisGuarantee.

 

(i)                                     Pursuant to Section 11.02 of the Indenture,after giving effect to all other contingent and fixed liabilities that arerelevant under any applicable Bankruptcy or fraudulent conveyance laws, andafter giving effect to any collections from, rights to receive contributionfrom or payments made by or on behalf of any other Guarantor in respect of theobligations of such other Guarantor under Article 11 of the Indenture, this newGuarantee shall be limited to the maximum amount permissible such that theobligations of such Guaranteeing Subsidiary under this Guarantee will notconstitute a fraudulent transfer or conveyance.

 

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(j)                                     This Guarantee shall remain in full force andeffect and continue to be effective should any petition be filed by or againstthe Issuer for liquidation, reorganization, should the Issuer become insolventor make an assignment for the benefit of creditors or should a receiver ortrustee be appointed for all or any significant part of the Issuer’s assets,and shall, to the fullest extent permitted by law, continue to be effective orbe reinstated, as the case may be, if at any time payment and performance ofthe Notes are, pursuant to applicable law, rescinded or reduced in amount, ormust otherwise be restored or returned by any obligee on the Notes andGuarantee, whether as a “voidable preference”, “fraudulent transfer” orotherwise, all as though such payment or performance had not been made.  In the event that any payment or any partthereof, is rescinded, reduced, restored or returned, the Note shall, to thefullest extent permitted by law, be reinstated and deemed reduced only by suchamount paid and not so rescinded, reduced, restored or returned.

 

(k)                                  In case any provision of this Guarantee shallbe invalid, illegal or unenforceable, the validity, legality, andenforceability of the remaining provisions shall not in any way be affected orimpaired thereby.

 

(l)                                     This Guarantee shall be a general unsecuredsubordinated obligation of such Guaranteeing Subsidiary in accordance withArticle 12 of the Indenture.

 

(m)                               Each payment to be made by the Guaranteeing Subsidiary in respect ofthis Guarantee shall be made without set-off, counterclaim, reduction ordiminution of any kind or nature.

 

(3)                                  Execution and Delivery.  TheGuaranteeing Subsidiary agrees that the Guarantee shall remain in full forceand effect notwithstanding the absence of the endorsement of any notation ofsuch Guarantee on the Notes.

 

(4)                                  Merger, Consolidation or Sale of All or SubstantiallyAll Assets.

 

(a)                                  The Guaranteeing Subsidiary may notconsolidate or merge with or into or wind up into (whether or not the Issuer orGuaranteeing Subsidiary is the surviving corporation), or sell, assign,transfer, lease, convey or otherwise dispose of all or substantially all of itsproperties or assets, in one or more related transactions, to any Personunless:

 

(i)                                     (A) the Guaranteeing Subsidiary is thesurviving corporation or the Person formed by or surviving any suchconsolidation or merger (if other than the Guaranteeing Subsidiary) or to whichsuch sale, assignment, transfer, lease, conveyance or other disposition willhave been made is a corporation organized or existing under the laws of thejurisdiction of organization of the Guaranteeing Subsidiary, as the case maybe, or the laws of the United States, any state thereof, the District ofColumbia, or any territory thereof (the Guaranteeing Subsidiary or such Person,as the case may be, being herein called the “Successor Person”);

 

(B)                                the Successor Person, if other than the Guaranteeing Subsidiary,expressly assumes all the obligations of the Guaranteeing Subsidiary under theIndenture and the Guaranteeing Subsidiary’s related Guarantee pursuant tosupplemental indentures or other documents or instruments in form reasonablysatisfactory to the Trustee;

 

(C)                                immediately after such transaction, no Default exists; and

 

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(D)                               the Issuer shall have delivered to the Trustee an Officer’s Certificateand an Opinion of Counsel, each stating that such consolidation, merger ortransfer and such supplemental indentures, if any, comply with the Indenture;or

 

(ii)                                  the transaction is made in compliance withSections 4.10(a)(1) and (2) of the Indenture;

 

(b)                                 Subject to certain limitations described inthe Indenture, the Successor Person will succeed to, and be substituted for,the Guaranteeing Subsidiary under the Indenture and the Guaranteeing Subsidiary’sGuarantee.  Notwithstanding theforegoing, the Guaranteeing Subsidiary may merge into or transfer all or partof its properties and assets to another Guarantor or the Issuer.

 

(5)                                  Releases.

 

TheGuarantee of the Guaranteeing Subsidiary shall be automatically andunconditionally released and discharged, and no further action by theGuaranteeing Subsidiary, the Issuer or the Trustee is required for the releaseof the Guaranteeing Subsidiary’s Guarantee, upon:

 

(1)                                  (A) any sale, exchange, disposition or transfer (by merger or otherwise) of(x) the Capital Stock of the Guaranteeing Subsidiary, after which theGuaranteeing Subsidiary is no longer a Restricted Subsidiary, or (y) all orsubstantially all the assets of the Guaranteeing Subsidiary which sale,exchange, disposition or transfer in each case is made in compliance withSections 4.10(a)(1) and (2) of the Indenture;

 

(B)                                the release or discharge of the guarantee by the GuaranteeingSubsidiary of the Senior Credit Facilities or the guarantee which resulted inthe creation of the Guarantee, except a discharge or release by or as a resultof payment under such guarantee;

 

(C)                                the proper designation of the Guaranteeing Subsidiary as anUnrestricted Subsidiary; or

 

(D)                               the Issuer exercising Legal Defeasance or Covenant Defeasance inaccordance with Article 8 of the Indenture or the Issuer’s obligations underthe Indenture being discharged in accordance with the terms of the Indenture;and

 

(2)                                  the Issuer delivering to the Trustee anOfficer’s Certificate and an Opinion of Counsel, each stating that allconditions precedent provided for in the Indenture relating to such transactionhave been complied with.

 

(6)                                  No Recourse Against Others.  Nopast, present or future director, officer, employee, incorporator, member,partner or stockholder of the Guaranteeing Subsidiary or any of its direct orindirect parent companies shall have any liability for any obligations of theIssuer or the Guarantors (including the Guaranteeing Subsidiary) under theNotes, any Guarantees, the Indenture or this Supplemental Indenture or for anyclaim based on, in respect of, or by reason of, such obligations or theircreation.  Each Holder by accepting Noteswaives and releases all such liability. The waiver and release are part of the consideration for issuance of theNotes.

 

(7)                                  Governing Law.  THISSUPPLEMENTAL INDENTURE WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THELAWS OF THE STATE OF NEW YORK.

 

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(8)                                  Counterparts.  Theparties may sign any number of copies of this Supplemental Indenture.  Each signed copy shall be an original, butall of them together represent the same agreement.

 

(9)                                  Effect of Headings.  TheSection headings herein are for convenience only and shall not affect theconstruction hereof.

 

(10)                            The Trustee.  The Trustee shall not beresponsible in any manner whatsoever for or in respect of the validity orsufficiency of this Supplemental Indenture or for or in respect of the recitalscontained herein, all of which recitals are made solely by the Guaranteeing Subsidiary.

 

(11)                            Subrogation.  The Guaranteeing Subsidiaryshall be subrogated to all rights of Holders of Notes against the Issuer inrespect of any amounts paid by the Guaranteeing Subsidiary pursuant to theprovisions of Section 2 hereof and Section 11.01 of the Indenture; providedthat, if an Event of Default has occurred and is continuing, the GuaranteeingSubsidiary shall not be entitled to enforce or receive any payments arising outof, or based upon, such right of subrogation until all amounts then due andpayable by the Issuer under the Indenture or the Notes shall have been paid infull.

 

(12)                            Benefits Acknowledged.  TheGuaranteeing Subsidiary’s Guarantee is subject to the terms and conditions setforth in the Indenture.  The GuaranteeingSubsidiary acknowledges that it will receive direct and indirect benefits fromthe financing arrangements contemplated by the Indenture and this SupplementalIndenture and that the guarantee and waivers made by it pursuant to thisGuarantee are knowingly made in contemplation of such benefits.

 

(13)                            Successors.  All agreements of theGuaranteeing Subsidiary in this Supplemental Indenture shall bind itsSuccessors, except as otherwise provided in Section 2(k) hereof or elsewhere inthis Supplemental Indenture.  All agreementsof the Trustee in this Supplemental Indenture shall bind its successors.

 

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INWITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture tobe duly executed, all as of the date first above written.

 
|   | [GUARANTEEING  SUBSIDIARY]        |
|--------|-----------------------------------|
|   |                              |
|   |                              |
|   | By:                               |   |
|   |                              | Name: |
|   |                              | Title: |
|   |                              |
|   |                              |
|   | WELLS  FARGO BANK,                |
|   | NATIONAL  ASSOCIATION, as Trustee |
|   |                              |
|   |                              |
|   | By:                               |   |
|   |                              | Name: |
|   |                              | Title: |

 

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