**Exhibit 4.1**

** **

 

 

INDENTURE

 

Datedas of October 31, 2006

 

Among

 

MICHAELSSTORES, INC.,

 

THEGUARANTORS NAMED ON THE SIGNATURE PAGES HERETO

 

and

 

WELLSFARGO BANK, NATIONAL ASSOCIATION,

 

asTrustee

 

10% SENIOR NOTES DUE 2014

 

 

 

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CROSS-REFERENCETABLE*

 
| **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, 12.03      |   |
| (c)                             |             |                  | 12.03            |   |
| 313(a)                          |             |                  | 2.05, 7.06       |   |
| (b)                             | (1)              |                  | N.A.             |   |
| (b)                             | (2)              |                  | 7.06;7.07        |   |
| (c)                             |             |                  | 7.06;12.02       |   |
| (d)                             |             |                  | 7.06             |   |
| 314(a)                          |             |                  | 4.03;12.02;12.05 |   |
| (b)                             |             |                  | N.A.             |   |
| (c)                             | (1)              |                  | 12.04            |   |
| (c)                             | (2)              |                  | 12.04            |   |
| (c)                             | (3)              |                  | N.A.             |   |
| (d)                             |             |                  | N.A.             |   |
| (e)                             |             |                  | 12.05            |   |
| (f)                             |             |                  | N.A.             |   |
| 315(a)                          |             |                  | 7.01             |   |
| (b)                             |             |                  | 7.05;12.02       |   |
| (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)                          |             |                  | 12.01            |   |
| (b)                             |             |                  | N.A.             |   |
| (c)                             |             |                  | 12.01            |   |

 

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N.A. means not applicable.

*  ThisCross-Reference Table is not part of this Indenture.

 

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TABLEOF CONTENTS

 
| ** **                                 | ** **                                              | **Page** |
|--------------------------------------------|---------------------------------------------------------|----------|
|                                       |                                                    |     |
| ARTICLE 1                                  |                                                    |
|                                       |                                                    |
| DEFINITIONS AND INCORPORATION BY REFERENCE |                                                    |
|                                       |                                                    |
| Section 1.01                               | Definitions                                             | 1        |
| Section 1.02                               | Other  Definitions                                      | 32       |
| Section 1.03                               | Incorporation  by Reference of Trust Indenture Act      | 32       |
| Section 1.04                               | Rules of  Construction                                  | 33       |
| Section 1.05                               | Acts of  Holders                                        | 34       |
|                                       |                                                    |     |
| ARTICLE 2                                  |                                                    |
|                                       |                                                    |
| THE NOTES                                  |                                                    |
|                                       |                                                    |     |
| Section 2.01                               | Form and  Dating; Terms                                 | 35       |
| Section 2.02                               | Execution  and Authentication                           | 37       |
| Section 2.03                               | Registrar  and Paying Agent                             | 37       |
| Section 2.04                               | Paying Agent  To Hold Money in Trust                    | 37       |
| Section 2.05                               | Holder Lists                                            | 38       |
| Section 2.06                               | Transfer and  Exchange                                  | 38       |
| Section 2.07                               | Replacement  Notes                                      | 49       |
| Section 2.08                               | Outstanding  Notes                                      | 50       |
| Section 2.09                               | Treasury  Notes                                         | 50       |
| Section 2.10                               | Temporary  Notes                                        | 50       |
| Section 2.11                               | Cancellation                                            | 50       |
| Section 2.12                               | Defaulted  Interest                                     | 51       |
| Section 2.13                               | CUSIP  Numbers                                          | 51       |
|                                       |                                                    |     |
| ARTICLE 3                                  |                                                    |
|                                       |                                                    |
| REDEMPTION                                 |                                                    |
|                                       |                                                    |     |
| Section 3.01                               | Notices to  Trustee                                     | 51       |
| Section 3.02                               | Selection of  Notes To Be Redeemed or Purchased         | 52       |
| Section 3.03                               | Notice of  Redemption                                   | 52       |
| Section 3.04                               | Effect of  Notice of Redemption                         | 53       |
| Section 3.05                               | Deposit of  Redemption or Purchase Price                | 53       |
| Section 3.06                               | Notes  Redeemed or Purchased in Part                    | 54       |
| Section 3.07                               | Optional  Redemption                                    | 54       |
| Section 3.08                               | Mandatory  Redemption                                   | 55       |
| Section 3.09                               | Offers To  Repurchase by Application of Excess Proceeds | 55       |

 

i

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| ** **            | **Page**                                                                                          |
|-----------------------|---------------------------------------------------------------------------------------------------|
|                  |                                                                                              |
| ARTICLE 4             |                                                                                              |
|                  |                                                                                              |
| COVENANTS             |                                                                                              |
|                  |                                                                                              |   |
| Section 4.01          | Payment of  Notes                                                                                 | 57 |
| Section 4.02          | Maintenance  of Office or Agency                                                                  | 57 |
| Section 4.03          | Reports and  Other Information                                                                    | 57 |
| Section 4.04          | Compliance  Certificate                                                                           | 59 |
| Section 4.05          | Taxes                                                                                             | 59 |
| Section 4.06          | Stay,  Extension and Usury Laws                                                                   | 59 |
| Section 4.07          | Limitation  on Restricted Payments                                                                | 59 |
| Section 4.08          | Dividend and  Other Payment Restrictions Affecting Restricted Subsidiaries                        | 67 |
| Section 4.09          | Limitation  on Incurrence of Indebtedness and Issuance of Disqualified Stock and  Preferred Stock | 68 |
| Section 4.10          | Asset Sales                                                                                       | 74 |
| Section 4.11          | Transactions  with Affiliates                                                                     | 76 |
| Section 4.12          | Liens                                                                                             | 78 |
| Section 4.13          | Corporate  Existence                                                                              | 79 |
| Section 4.14          | Offer to  Repurchase Upon Change of Control                                                       | 79 |
| Section 4.15          | Limitation  on Guarantees of Indebtedness by Restricted Subsidiaries                              | 81 |
| Section 4.16          | Discharge  and Suspension of Covenants                                                            | 81 |
|                  |                                                                                              |   |
| ARTICLE 5             |                                                                                              |
|                  |                                                                                              |
| SUCCESSORS            |                                                                                              |
|                  |                                                                                              |   |
| Section 5.01          | Merger,  Consolidation or Sale of All or Substantially All Assets                                 | 82 |
| Section 5.02          | Successor  Corporation Substituted                                                                | 84 |
|                  |                                                                                              |   |
| ARTICLE 6             |                                                                                              |
|                  |                                                                                              |
| DEFAULTS AND REMEDIES |                                                                                              |
|                  |                                                                                              |   |
| Section 6.01          | Events of  Default                                                                                | 84 |
| Section 6.02          | Acceleration                                                                                      | 86 |
| Section 6.03          | Other  Remedies                                                                                   | 87 |
| Section 6.04          | Waiver of  Past Defaults                                                                          | 87 |
| Section 6.05          | Control by  Majority                                                                              | 88 |
| Section 6.06          | Limitation  on Suits                                                                              | 88 |
| Section 6.07          | Rights of  Holders of Notes To Receive Payment                                                    | 88 |
| Section 6.08          | Collection  Suit by Trustee                                                                       | 88 |
| Section 6.09          | Restoration  of Rights and Remedies                                                               | 89 |
| Section 6.10          | Rights and  Remedies Cumulative                                                                   | 89 |
| Section 6.11          | Delay or  Omission Not Waiver                                                                     | 89 |
| Section 6.12          | Trustee May  File Proofs of Claim                                                                 | 89 |
| Section 6.13          | Priorities                                                                                        | 90 |
| Section 6.14          | Undertaking  for Costs                                                                            | 90 |

 

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| ** **                               | **Page**                                                                                        |
|------------------------------------------|-------------------------------------------------------------------------------------------------|
|                                     |                                                                                            |
| ARTICLE 7                                |                                                                                            |
|                                     |                                                                                            |
| TRUSTEE                                  |                                                                                            |
|                                     |                                                                                            |   |
| Section 7.01                             | Duties of  Trustee                                                                              | 90 |
| Section 7.02                             | Rights of  Trustee                                                                              | 91 |
| Section 7.03                             | Individual  Rights of Trustee                                                                   | 92 |
| Section 7.04                             | Trustee’s  Disclaimer                                                                      | 92 |
| Section 7.05                             | Notice of  Defaults                                                                             | 93 |
| Section 7.06                             | Reports by  Trustee to Holders of the Notes                                                     | 93 |
| Section 7.07                             | Compensation  and Indemnity                                                                     | 93 |
| Section 7.08                             | Replacement  of Trustee                                                                         | 94 |
| Section 7.09                             | Successor  Trustee by Merger, etc                                                               | 95 |
| Section 7.10                             | Eligibility;  Disqualification                                                                  | 95 |
| Section 7.11                             | Preferential  Collection of Claims Against Issuer                                               | 95 |
|                                     |                                                                                            |   |
| ARTICLE 8                                |                                                                                            |
|                                     |                                                                                            |
| LEGAL DEFEASANCE AND COVENANT DEFEASANCE |                                                                                            |
|                                     |                                                                                            |   |
| Section 8.01                             | Option To  Effect Legal Defeasance or Covenant Defeasance                                       | 95 |
| Section 8.02                             | Legal  Defeasance and Discharge                                                                 | 95 |
| Section 8.03                             | Covenant  Defeasance                                                                            | 96 |
| Section 8.04                             | Conditions  to Legal or Covenant Defeasance                                                     | 96 |
| Section 8.05                             | Deposited  Money and Government Securities To Be Held in Trust; Other Miscellaneous  Provisions | 98 |
| Section 8.06                             | Repayment to  Issuer                                                                            | 98 |
| Section 8.07                             | Reinstatement                                                                                   | 98 |
|                                     |                                                                                            |   |
| ARTICLE 9                                |                                                                                            |
|                                     |                                                                                            |
| AMENDMENT, SUPPLEMENT AND WAIVER         |                                                                                            |
|                                     |                                                                                            |   |
| Section 9.01                             | Without  Consent of Holders of Notes                                                            | 99 |
| Section 9.02                             | With Consent  of Holders of Notes                                                               | 100 |
| Section 9.03                             | Compliance  with Trust Indenture Act                                                            | 101 |
| Section 9.04                             | Revocation  and Effect of Consents                                                              | 101 |
| Section 9.05                             | Notation on  or Exchange of Notes                                                               | 102 |
| Section 9.06                             | Trustee To  Sign Amendments, etc                                                                | 102 |
| Section 9.07                             | Payment for  Consent                                                                            | 102 |
|                                     |                                                                                            |   |
| ARTICLE 10                               |                                                                                            |
|                                     |                                                                                            |
| GUARANTEES                               |                                                                                            |
|                                     |                                                                                            |
| Section  10.01                           | Guarantee                                                                                       | 102 |
| Section  10.02                           | Limitation  on Guarantor Liability                                                              | 104 |
| Section  10.03                           | Execution  and Delivery                                                                         | 104 |
| Section  10.04                           | Subrogation                                                                                     | 105 |
| Section  10.05                           | Benefits  Acknowledged                                                                          | 105 |

 

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| ** **                 | ** **                                                                | **Page** |
|----------------------------|---------------------------------------------------------------------------|----------|
|                       |                                                                      |     |
| Section  10.06             | Release of  Guarantees                                                    | 105      |
|                       |                                                                      |     |
| ARTICLE 11                 |                                                                      |
|                       |                                                                      |
| SATISFACTION AND DISCHARGE |                                                                      |
|                       |                                                                      |     |
| Section  11.01             | Satisfaction  and Discharge                                               | 105      |
| Section  11.02             | Application  of Trust Money                                               | 106      |
|                       |                                                                      |     |
| ARTICLE 12                 |                                                                      |
|                       |                                                                      |
| MISCELLANEOUS              |                                                                      |
|                       |                                                                      |     |
| Section  12.01             | Trust  Indenture Act Controls                                             | 107      |
| Section  12.02             | Notices                                                                   | 107      |
| Section  12.03             | Communication  by Holders of Notes with Other Holders of Notes            | 108      |
| Section  12.04             | Certificate  and Opinion as to Conditions Precedent                       | 108      |
| Section  12.05             | Statements  Required in Certificate or Opinion                            | 109      |
| Section  12.06             | Rules by  Trustee and Agents                                              | 109      |
| Section  12.07             | No Personal  Liability of Directors, Officers, Employees and Stockholders | 109      |
| Section  12.08             | Governing  Law                                                            | 109      |
| Section  12.09             | Waiver of  Jury Trial                                                     | 109      |
| Section  12.10             | Force  Majeure                                                            | 110      |
| Section  12.11             | No Adverse  Interpretation of Other Agreements                            | 110      |
| Section  12.12             | Successors                                                                | 110      |
| Section  12.13             | Severability                                                              | 110      |
| Section  12.14             | Counterpart  Originals                                                    | 110      |
| Section  12.15             | Table of  Contents, Headings, etc                                         | 110      |
| Section  12.16             | Qualification  of Indenture                                               | 110      |
|                       |                                                                      |     |
| EXHIBITS                   |                                                                      |     |
|                       |                                                                      |     |
| Exhibit A                  | Form of  Senior 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  |     |

 

iv

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INDENTURE, dated as ofOctober 31, 2006, among Michaels Stores, Inc., a Delaware corporation (“Michaels”),the Guarantors (as defined herein) listed on the signature pages hereto andWells Fargo Bank, National Association, as Trustee.

 

WITNESSETH

 

WHEREAS, Michaels has dulyauthorized the creation of an issue of $750,000,000 aggregate principal amountof 10% Senior Notes due 2014 (the “Initial Notes”);

 

WHEREAS, Michaels and eachof the Guarantors has duly authorized the execution and delivery of thisIndenture.

 

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

 

# ARTICLE1

#  

# DEFINITIONSAND INCORPORATION BY REFERENCE

#  

## Section 1.01           Definitions.

 

“144A Global Note”means a Global Note substantially in the form of Exhibit A heretobearing 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 that will be issued in a denomination equal to the outstandingprincipal amount of the Notes sold in reliance on Rule 144A.

 

“Acquired Indebtedness”means, with respect to any specified Person,

 

(1)           Indebtedness of any other Person existing at the time such other Personis merged or amalgamated with or into or became a Restricted Subsidiary of suchspecified Person, including Indebtedness incurred in connection with, or incontemplation of, such other Person merging or amalgamating with or into, orbecoming a Restricted Subsidiary of, such specified Person, and

 

(2)           Indebtedness secured by a Lien encumbering any asset acquired by suchspecified Person.

 

“Additional Interest”means all additional interest then owing pursuant to the Registration RightsAgreement.

 

“Additional Notes”means additional Notes (other than the Initial Notes and other than ExchangeNotes issued in exchange for such Initial Notes) issued from time to time underthis Indenture in accordance with Sections 2.01 and 4.09 hereof.

 

“Affiliate” of anyspecified Person means any other Person directly or indirectly controlling orcontrolled by or under direct or indirect common control with such specifiedPerson.  For purposes of this definition,“control” (including, with correlative meanings, the terms “controlling,” “controlledby” and “under common control with”), as used with respect to any Person, shallmean the possession, directly or indirectly, of the power to direct or causethe direction of the management or policies of such Person, whether through theownership of voting securities, by agreement or otherwise.

 

----

 

“Agent” means anyRegistrar or Paying Agent.

 

“Applicable Premium”means, with respect to any Note on any Redemption Date, the greater of:

 

(1)           1.0% of the principal amount of such Note; and

 

(2)           the excess, if any, of (a) the present value at such Redemption Date of(i) the redemption price of such Note at November 1, 2010 (such redemptionprice being set forth in Section 3.07 hereof), plus (ii) all required interestpayments due on such Note through November 1, 2010 (excluding accrued butunpaid interest to the Redemption Date), computed using a discount rate equalto the Treasury Rate as of such Redemption Date plus 50 basis points; over (b)the then outstanding principal amount of such Note.

 

“Applicable Procedures”means, with respect to any transfer or exchange of or for beneficial interestsin any Global Note, the rules and procedures of the Depositary, Euroclearand/or Clearstream that apply to such transfer or exchange.

 

“Asset Sale” means:

 

(1)           the sale, conveyance, transfer or other disposition, whether in asingle transaction or a series of related transactions, of property or assets(including by way of a Sale and Lease-Back Transaction) of the Issuer or any ofits Restricted Subsidiaries (each referred to in this definition as a “disposition”);or

 

(2)           the issuance or sale of Equity Interests of any Restricted Subsidiary,whether in a single transaction or a series of related transactions (other thandirectors’ qualifying shares and shares issued to foreign nationals as requiredunder applicable law);

 

in each case, other than:

 

(a)           any disposition of Cash Equivalents or Investment Grade Securities orobsolete or worn out property or equipment in the ordinary course of businessor any disposition of inventory or goods (or other assets) held for sale in theordinary course of business (it being understood that the sale of inventory orgoods (or other assets) in bulk in connection with the closing of any number ofretail locations in the ordinary course of business shall be considered a salein the ordinary course of business);

 

(b)           the disposition of all or substantially all of the assets of the Issuerin a manner permitted pursuant to the provisions described under Section 5.01hereof or any disposition that constitutes a Change of Control pursuant to thisIndenture;

 

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

 

(d)           any disposition of assets or issuance or sale of Equity Interests ofany Restricted Subsidiary in any transaction or series of transactions with anaggregate fair market value of less than $25.0 million;

 

2

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(e)           any disposition of property or assets or issuance of securities by aRestricted Subsidiary of the Issuer to the Issuer or by the Issuer or aRestricted Subsidiary of the Issuer to another Restricted Subsidiary of theIssuer;

 

(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 or sublicense of any real orpersonal property in the ordinary course of business;

 

(h)           any issuance or sale of Equity Interests in, or Indebtedness or othersecurities 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 permitted under 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.

 

“Bank Products” meansany services or facilities on account of credit or debit cards, purchase cardsor merchant services constituting a line of credit.

 

“Bankruptcy Law”means Title 11, U.S. Code or any similar federal or state law for the relief ofdebtors.

 

“Business Day” meanseach day which is not a Legal Holiday.

 

“Capital Stock”means:

 

(1)           in the case of a corporation, shares in the capital of suchcorporation;

 

(2)           in the case of an association or business entity, any and all shares,interests, participations, rights or other equivalents (however designated) ofcapital stock;

 

(3)           in the case of a partnership or limited liability company, partnershipor membership interests (whether general or limited); and

 

(4)           any other interest or participation that confers on a Person the rightto receive a share of the profits and losses of, or distributions of assets of,the issuing Person.

 

“Capitalized LeaseObligation” means, at the time any determination thereof is to be made, theamount of the liability in respect of a capital lease that would at such timebe required to be

 

3

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capitalized and reflected as a liability on abalance sheet (excluding the footnotes thereto) prepared in accordance withGAAP.

 

“Cash Equivalents”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 is a Restricted Subsidiary,such local currencies held by them from time to time in the ordinary course ofbusiness;

 

(3)           securities issued or directly and fully and unconditionally guaranteedor insured by the U.S. government or any agency or instrumentality thereof thesecurities of which are unconditionally guaranteed as a full faith and creditobligation of such government with maturities of 24 months or less from thedate of acquisition;

 

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

 

(5)           repurchase obligations for underlying securities of the types describedin clauses (3) and (4) entered into with any financial institution meeting thequalifications specified in clause (4) above, and in each case in a currencypermitted under clause (1) or (2) above;

 

(6)           commercial paper rated at least P-2 by Moody’s or at least A-2 byS&P and in each case maturing within 24 months after the date of creationthereof, and in each case in a currency permitted under clause (1) or (2)above;

 

(7)           marketable short-term money market and similar securities having arating of at least P-2 or A-2 from either Moody’s or S&P, respectively (or,if at any time neither Moody’s nor S&P shall be rating such obligations, anequivalent rating from another Rating Agency) and in each case maturing within24 months after the date of creation thereof and in a currency permitted underclause (1) or (2) above;

 

(8)           readily marketable direct obligations issued by any state, commonwealthor territory of the United States or any political subdivision or taxingauthority thereof having an Investment Grade Rating from either Moody’s or S&Pwith maturities of 24 months or less from the date of acquisition;

 

(9)           Indebtedness or Preferred Stock issued by Persons with a rating of A orhigher from S&P or A2 or higher from Moody’s with maturities of24 months or less from the date of acquisition and in each case in acurrency 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

 

4

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(or the equivalent thereof)or better by Moody’s and in 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.

 

Notwithstanding theforegoing, 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.

 

“Cash Management Services”means any of the following to the extent not constituting a line of credit: ACHtransactions, treasury and/or cash management services, including, withoutlimitation, controlled disbursement services, foreign exchange facilities,deposit and other accounts and merchant services.

 

“Change of Control”means the occurrence of any of the following after the Issue Date:

 

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

 

(2)           the Issuer becomes aware of (by way of a report or any other filingpursuant to Section 13(d) of the Exchange Act, proxy, vote, written notice orotherwise) the acquisition by (A) any Person (other than one or more PermittedHolders) or (B) Persons (other than one or more Permitted Holders) that aretogether (1) a group (within the meaning of Section 13(d)(3) or Section14(d)(2) of the Exchange Act, or any successor provision), or (2) are acting,for the purpose of acquiring, holding or disposing of securities (within themeaning of Rule 13d-5(b)(1) under the Exchange Act), as a group, in a singletransaction or in a related series of transactions, by way of merger,consolidation or other business combination or purchase of beneficial ownership(within the meaning of Rule 13d-3 under the Exchange Act, or any successorprovision) of 50% or more of the total voting power of the Voting Stock of theIssuer or any of its direct or indirect parent companies holding directly orindirectly 100% of the total voting power of the Voting Stock of the Issuer.

 

“Clearstream” meansClearstream 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 of deferred financing fees of such Person and itsRestricted Subsidiaries for such period on a consolidated basis and otherwisedetermined in accordance with GAAP.

 

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

 

(1)           consolidated interest expense of such Person and its RestrictedSubsidiaries for such period, to the extent such expense was deducted (and notadded back) in computing Consolidated Net Income (including (a) amortization oforiginal issue discount resulting from the 

 

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issuance of Indebtedness atless than par, (b) all commissions, discounts and other fees and charges owedwith respect to letters of credit or bankers acceptances, (c) non-cash interestpayments (but excluding any non-cash interest expense attributable to themovement in the mark to market valuation of Hedging Obligations or otherderivative instruments pursuant to GAAP), (d) the interest component of CapitalizedLease Obligations, and (e) net payments, if any, made (less net payments, ifany, received) pursuant to interest rate Hedging Obligations with respect toIndebtedness, and excluding (v) penalties and interest related to taxes, (w)any Additional Interest with respect to the Initial Notes and any “additionalinterest” with respect to the Senior Subordinated Notes or the SubordinatedDiscount Notes, (x) amortization of deferred financing fees, debt issuancecosts, discounted liabilities, commissions, fees and expenses, (y) anyexpensing of bridge, commitment and other financing fees and (z) commissions,discounts, yield and other fees and charges (including any interest expense)related to any Receivables Facility); plus (2) consolidated capitalized interestof such Person and its Restricted Subsidiaries for such period, whether paid oraccrued; less

 

(3)           interest income for such period.

 

For purposes of thisdefinition, interest on a Capitalized Lease Obligation shall be deemed toaccrue at an interest rate reasonably determined by such Person to be the rateof interest implicit in such Capitalized Lease Obligation in accordance withGAAP.

 

For purposes of determiningConsolidated Interest Expense for any period ending prior to the firstanniversary of the Issue Date, after giving pro forma effect to theTransactions, Consolidated Interest Expense shall be $92.5 million for thefiscal 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.

 

“Consolidated LeverageRatio” means, as at any date of determination, the ratio of (1) theConsolidated Total Indebtedness of the Issuer and its Restricted Subsidiariesas of the end of the most recent fiscal quarter for which internal financialstatements are available immediately preceding the date on which such event forwhich such calculation is being made shall occur to (2) the Issuer’s EBITDA forthe most recently ended four full fiscal quarters for which internal financialstatements are available immediately preceding the date on which such event forwhich such calculation is being made shall occur, in each case with such proforma adjustments to Consolidated Total Indebtedness and EBITDA as areappropriate and consistent with the pro forma adjustment provisions set forthin the definition of Fixed Charge Coverage Ratio.

 

“Consolidated Net Income”means, with respect to any Person for any period, the aggregate of the NetIncome, of such Person and its Restricted Subsidiaries for such period, on aconsolidated basis, and otherwise determined in accordance with GAAP; provided,however, that, without duplication,

 

(1)           any after-tax effect of extraordinary, non-recurring or unusual gainsor losses (less all fees and expenses relating thereto) or expenses,Transaction Expenses to the extent incurred on or prior to December 31, 2007,severance, relocation costs, costs related to the Perfect Store Initiative,Hybrid Distribution Network Costs, Public Company Costs, integration costs,pre-opening, opening, consolidation and closing costs for facilities (includingstores), signing, retention or completion bonuses, transition costs, costsincurred in connection with acquisitions after the Issue Date, restructuringcosts, Specified Legal Expenses, and curtailments or modifications to pensionand post-retirement employee benefit plans shall be excluded,

 

(2)           the Net Income for such period shall not include the cumulative effectof a change in accounting principles during such period,

 

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(3)           any net after-tax gains or losses on disposal of disposed, abandoned ordiscontinued operations shall be excluded,

 

(4)           any after-tax effect of gains or losses (less all fees and expensesrelating thereto) attributable to asset dispositions other than in the ordinarycourse of business, as determined in good faith by the Issuer, shall beexcluded,

 

(5)           the Net Income for such period of any Person that is not a Subsidiary,or is an Unrestricted Subsidiary, or that is accounted for by the equity methodof accounting, shall be excluded; provided that Consolidated Net Incomeof the Issuer shall be increased by the amount of dividends or distributions orother payments that are actually paid in cash (or to the extent converted intocash) to the referent Person or a Restricted Subsidiary thereof in respect ofsuch period, by such Person,

 

(6)           solely for the purpose of determining the amount available forRestricted Payments under clause (3)(a) of Section 4.07(a) hereof, the NetIncome for such period of any Restricted Subsidiary (other than any Guarantor)shall be excluded to the extent that the declaration or payment of dividends orsimilar distributions by that Restricted Subsidiary of its Net Income is not atthe date of determination permitted without any prior governmental approval(which has not been obtained) or, directly or indirectly, by the operation ofthe terms of its charter or any agreement, instrument, judgment, decree, order,statute, rule, or governmental regulation applicable to that RestrictedSubsidiary or its stockholders, unless such restriction with respect to thepayment of dividends or similar distributions has been legally waived, providedthat Consolidated Net Income of the Issuer will be increased by the amount ofdividends or other distributions or other payments actually paid in cash (or tothe extent converted into cash) to the Issuer or a Restricted Subsidiarythereof in respect of such period, to the extent not already included therein,

 

(7)           effects of adjustments (including the effects of such adjustmentspushed down to the Issuer and its Restricted Subsidiaries) in the merchandiseinventory, property and equipment, goodwill, intangible assets, deferredrevenue and debt line items in such Person’s consolidated financial statementspursuant to GAAP resulting from the application of purchase accounting inrelation to the Transactions or any consummated acquisition or the amortizationor write-off of any amounts thereof, net of taxes, shall be excluded,

 

(8)           any after-tax effect of income (loss) from the early extinguishment orconversion of Indebtedness or Hedging Obligations or other derivativeinstruments shall be excluded,

 

(9)           any impairment charge or asset write-off or write-down, in each case,pursuant to GAAP and the amortization of intangibles arising pursuant to GAAPshall be excluded,

 

(10)         any non-cash compensation charge or expense, including any such chargeor expense arising from the grant of stock appreciation or similar rights,stock options, restricted stock or other equity-incentive programs shall beexcluded,

 

(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.

 

In addition, to the extentnot already included in the Net Income of such Person and its RestrictedSubsidiaries, notwithstanding anything to the contrary in the foregoing,Consolidated Net Income shall include the amount of proceeds received frombusiness interruption insurance and reimbursements of any expenses and chargesthat are covered by indemnification or other reimbursement provisions in connectionwith any Permitted Investment or any sale, conveyance, transfer or otherdisposition of assets permitted under this Indenture.

 

Notwithstanding theforegoing, 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.

 

“Consolidated SecuredDebt Ratio” means, as of any date of determination, the ratio of(1) Consolidated Total Indebtedness of the Issuer and its RestrictedSubsidiaries that is secured by Liens as of the end of the most recent fiscalquarter for which internal financial statements are available immediatelypreceding the date on which such event for which such calculation is being madeshall occur to (2) the Issuer’s EBITDA for the most recently ended fourfull fiscal quarters for which internal financial statements are availableimmediately preceding the date on which such event for which such calculationis being made shall occur, in each case with such *pro forma* adjustments to Consolidated Total Indebtedness andEBITDA as are appropriate and consistent with the *pro forma* adjustment provisions set forth in the definitionof Fixed Charge Coverage Ratio.

 

“Consolidated TotalIndebtedness” means, as at any date of determination, an amount equal to(x) the sum of (1) the aggregate amount of all outstanding Indebtedness of theIssuer and its Restricted Subsidiaries on a consolidated basis consisting ofIndebtedness for borrowed money, Obligations in respect of Capitalized LeaseObligations and debt obligations evidenced by promissory notes and similarinstruments (and excluding, for the avoidance of doubt, all obligationsrelating to Receivables Facilities) and (2) the aggregate amount of alloutstanding Disqualified Stock of the Issuer and all Preferred Stock of itsRestricted Subsidiaries on a consolidated basis, with the amount of suchDisqualified Stock and Preferred Stock equal to the greater of their respectivevoluntary or involuntary liquidation preferences and maximum fixed repurchaseprices, in each case determined on a consolidated basis in accordance withGAAP, less (y) the aggregate amount of unrestricted cash and Cash Equivalentsincluded on the consolidated balance sheet of the Issuer and any RestrictedSubsidiaries as of such date; provided that Indebtedness of the Issuer and itsRestricted Subsidiaries under any revolving credit facility as at any date ofdetermination shall be determined using the Average Monthly Balance of suchIndebtedness for the 

 

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most recently ended four fiscal quarters forwhich internal financial statements are available as of such date of determination(the “Reference Period”). For purposes hereof, (a) the “maximum fixedrepurchase price” of any Disqualified Stock or Preferred Stock that does nothave a fixed repurchase price shall be calculated in accordance with the termsof such Disqualified Stock or Preferred Stock as if such Disqualified Stock orPreferred Stock were purchased on any date on which Consolidated TotalIndebtedness shall be required to be determined pursuant to this Indenture, andif such price is based upon, or measured by, the fair market value of suchDisqualified Stock or Preferred Stock, such fair market value shall bedetermined reasonably and in good faith by the Issuer, (b) “Average MonthlyBalance” means, with respect to any Indebtedness incurred by the Issuer or itsRestricted Subsidiaries under a revolving credit facility, the quotient of (x)the sum of each Individual Monthly Balance for each fiscal month ended on orprior to such date of determination and included in the Reference Perioddivided by (y) 12, and (c) “Individual Monthly Balance” means, with respect toany Indebtedness incurred by the Issuer or its Restricted Subsidiaries under arevolving credit facility during any fiscal month of the Issuer, the quotientof (x) the sum of the aggregate outstanding principal amount of all suchIndebtedness at the end of each day of such fiscal month divided by (y) thenumber of days in such fiscal month.

 

“Contingent Obligations”means, with respect to any Person, any obligation of such Person guaranteeingany leases, dividends or other obligations that do not constitute Indebtedness(“primary obligations”) of any other Person (the “primary obligor”)in any manner, whether directly or indirectly, including, without limitation,any obligation of such Person, whether or not contingent,

 

(1)           to purchase any such primary obligation or any property constitutingdirect or indirect security therefor,

 

(2)           to advance or supply funds

 

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

 

(b)           to maintain working capital or equity capital of the primary obligor orotherwise to maintain the net worth or solvency of the primary obligor, or

 

(3)           to purchase property, securities or services primarily for the purposeof assuring the owner of any such primary obligation of the ability of theprimary obligor to make payment of such primary obligation against loss inrespect thereof.

 

“Corporate Trust Officeof the Trustee” shall be at the address of the Trustee specified in Section12.02 hereof or such other address as to which the Trustee may give notice tothe Holders and the Issuer.

 

“Custodian” means theTrustee, as custodian with respect to the Notes in global form, or anysuccessor entity thereto.

 

“Default” means anyevent that is, or with the passage of time or the giving of notice or bothwould be, an Event of Default.

 

“Definitive Note”means a certificated Note registered in the name of the Holder thereof andissued in accordance with Section 2.06(c) hereof, substantially in the form of Exhibit Ahereto, as the case may be, except that such Note shall not bear the GlobalNote Legend and shall not have the “Schedule of Exchanges of Interests in theGlobal Note” attached thereto.

 

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“Depositary” means,with respect to the Notes issuable or issued in whole or in part in globalform, 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.

 

“Designated Non-cashConsideration” means the fair market value of non-cash considerationreceived by the Issuer or a Restricted Subsidiary in connection with an AssetSale that is so designated as Designated Non-cash Consideration pursuant to anOfficer’s Certificate, setting forth the basis of such valuation, executed bythe principal financial officer of the Issuer, less the amount of CashEquivalents received in connection with a subsequent sale, redemption, repurchaseof or collection or payment on, such Designated Non-cash Consideration.

 

“Designated PreferredStock” means Preferred Stock of the Issuer or any parent company thereof(in each case other than Disqualified Stock) that is issued for cash (otherthan to a Restricted Subsidiary or an employee stock ownership plan or trustestablished by the Issuer or any of its Subsidiaries) and is so designated asDesignated Preferred Stock, pursuant to an Officer’s Certificate executed bythe principal financial officer of the Issuer or the applicable parent companythereof, as the case may be, on the issuance date thereof, the cash proceeds ofwhich are excluded from the calculation set forth in clause (3) of Section4.07(a) hereof.

 

“Disqualified Stock”means, with respect to any Person, any Capital Stock of such Person which, byits terms, or by the terms of any security into which it is convertible or forwhich 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.

 

“EBITDA” means, withrespect to any Person for any period, the Consolidated Net Income of suchPerson for such period

 

(1)           increased (without duplication) by:

 

(a)           provision for taxes based on income or profits or capital, including,without limitation, state, franchise and similar taxes (such as thePennsylvania capital tax and Texas margin tax) and foreign withholding taxes ofsuch Person paid or accrued during such period deducted (and not added back) incomputing Consolidated Net Income; *plus*

 

(b)           Fixed Charges of such Person for such period plus bank fees and costsof surety bonds in connection with financing activities plus amounts excludedfrom Consolidated Interest Expense as set forth in clauses (v), (w), (x), (y)and (z) in the definition thereof, to the extent the same were deducted (andnot added back) in calculating such Consolidated Net Income; *plus*

 

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(c)           Consolidated Depreciation and Amortization Expense of such Person forsuch period to the extent the same was deducted (and not added back) incomputing Consolidated Net Income; *plus*

 

(d)           any expenses or charges (other than depreciation or amortizationexpense) related to any Equity Offering, Permitted Investment, acquisition,disposition, recapitalization or the incurrence of Indebtedness permitted to beincurred by this Indenture (including a refinancing thereof) (whether or notsuccessful), including (i) such fees, expenses or charges related to theoffering of the Initial Notes, the Senior Subordinated Notes, the SubordinatedDiscount Notes and the Senior Credit Facilities and (ii) any amendment or othermodification of the Initial Notes, the Senior Subordinated Notes, theSubordinated Discount 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 or reserve deducted (and notadded back) in such period in computing Consolidated Net 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 and investmentsin debt and equity securities, (iv) all losses from investments recorded usingthe equity method, and (v) other non-cash charges, non-cash expenses ornon-cash losses reducing Consolidated Net Income for such period (provided thatif any such non-cash charges represent an accrual or reserve for potential cashitems in any future period, the cash payment in respect thereof in such futureperiod 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 expense consisting of Subsidiaryincome attributable to minority equity interests of third parties in anynon-Wholly Owned Subsidiary deducted (and not added back) in such period in calculatingConsolidated Net Income; *plus*

 

(h)           the amount of management, monitoring, consulting and advisory fees(including termination fees) and related indemnities and expenses paid oraccrued in such period to the Investors or Highfields Capital to the extentotherwise permitted under Section 4.11 hereof and deducted (and not added back)in such period in computing Consolidated Net Income; *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 savings are reasonably identifiable and factually supportable,(y) such actions are taken within 36 months after the Issue Date and (z) theaggregate amount of cost savings added pursuant to this clause (i) shall notexceed $25.0 million for any four consecutive quarter period (which adjustmentsmay be incremental to *pro forma*adjustmentsmade 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*

 

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(k)           any costs or expense incurred by the Issuer or a Restricted Subsidiarypursuant to any management equity plan or stock option plan or any other managementor employee benefit plan or agreement or any stock subscription or shareholderagreement, to the extent that such cost or expenses are funded with cashproceeds contributed to the capital of the Issuer or net cash proceeds of anissuance of Equity Interest of the Issuer (other than Disqualified Stock)solely to the extent that such net cash proceeds are excluded from thecalculation 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 Consolidated Net Income of such Person forsuch period, excluding any non-cash gains to the extent they represent thereversal of an accrual or reserve for a potential cash item that reduced EBITDAin any prior period and any non-cash gains with respect to cash actuallyreceived in a prior period so long as such cash did not increase EBITDA in suchprior period, *plus*

 

(b)           any net income from disposed or discontinued operations; and

 

(3)           increased or decreased by (without duplication), as applicable, anyadjustments resulting from the application of FASB Interpretation No. 45(Guarantees).

 

Forpurposes of calculating EBITDA for any period, the impact of changes inestimate for inventory cost capitalization and the initial adoption of anaccounting policy for gift card breakage made in the fourth quarter of fiscal2005 shall be excluded.

 

“EMU” means economicand monetary union as contemplated in the Treaty on European Union.

 

“Equity Interests”means Capital Stock and all warrants, options or other rights to acquireCapital Stock, but excluding any debt security that is convertible into, orexchangeable for, Capital Stock.

 

“Equity Offering”means any public or private sale of common stock or Preferred Stock of theIssuer or any of its direct or indirect parent companies (excludingDisqualified Stock), other than:

 

(1)           public offerings with respect to the Issuer’s or any direct or indirectparent 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 that constitutes an ExcludedContribution.

 

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

 

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

 

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“Exchange Act” meansthe Securities Exchange Act of 1934, as amended, and the rules and regulationsof the SEC promulgated thereunder.

 

“Exchange Notes”means the Notes issued in the Exchange Offer pursuant to Section 2.06(f)hereof.

 

“Exchange Offer” hasthe meaning set forth in the Registration Rights Agreement.

 

“Exchange OfferRegistration Statement” has the meaning set forth in the RegistrationRights Agreement.

 

“Excluded Contribution”means net cash proceeds, marketable securities or Qualified Proceeds receivedby the Issuer from

 

(1)           contributions to its common equity capital, and

 

(2)           the sale (other than to a Subsidiary of the Issuer or to any managementequity plan or stock option plan or any other management or employee benefitplan or agreement of the Issuer) of Capital Stock (other than DisqualifiedStock and Designated Preferred Stock) of the Issuer,

 

in each case designated as ExcludedContributions pursuant to an Officer’s Certificate executed by the principalfinancial officer of the Issuer on the date such capital contributions are madeor the date such Equity Interests are sold, as the case may be, which areexcluded from the calculation set forth in clause (3) of Section 4.07(a)hereof.

 

“Fixed Charge CoverageRatio” means, with respect to any Person for any period, the ratio ofEBITDA of such Person for such period to the Fixed Charges of such Person forsuch period.  In the event that theIssuer or any Restricted Subsidiary incurs, assumes, guarantees, redeems,retires or extinguishes any Indebtedness (other than Indebtedness incurred orrepaid under any revolving credit facility in the ordinary course of businessfor working capital purposes) or issues or redeems Disqualified Stock orPreferred Stock subsequent to the commencement of the period for which theFixed Charge Coverage Ratio is being calculated but prior to or simultaneouslywith the event for which the calculation of the Fixed Charge Coverage Ratio ismade (the “Fixed Charge Coverage Ratio Calculation Date”), then theFixed 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.

 

For purposes of making thecomputation referred to above, Investments, acquisitions, dispositions,amalgamations, mergers and consolidations (as determined in accordance withGAAP) that have been made by the Issuer or any of its Restricted Subsidiariesduring the four-quarter reference period or subsequent to such reference periodand on or prior to or simultaneously with the Fixed Charge Coverage RatioCalculation Date shall be calculated on a *proforma* basis assuming that all such Investments, acquisitions,dispositions, amalgamations, mergers and consolidations (and the change in anyassociated fixed charge obligations and the change in EBITDA resultingtherefrom) had occurred on the first day of the four-quarter referenceperiod.  If since the beginning of suchperiod any Person that subsequently became a Restricted Subsidiary or wasmerged, amalgamated or consolidated with or into the Issuer or any of itsRestricted Subsidiaries since the beginning of such period shall have made anyInvestment, acquisition, disposition, amalgamation, merger or consolidationthat would have required adjustment pursuant to this definition, then the FixedCharge Coverage Ratio shall be calculated giving *pro forma* effect thereto 

 

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for such period as if such Investment, acquisition,disposition, merger or consolidation had occurred at the beginning of theapplicable four-quarter period.

 

For purposes of thisdefinition, whenever *pro forma*effect is to be given to an Investment, acquisition, disposition, amalgamation,merger or consolidation (including the Transactions) and the amount of incomeor earnings relating thereto, the *pro forma*calculations shall be made in good faith by a responsible financial oraccounting officer of the Issuer (and may include, for the avoidance of doubt,cost savings and operating expense reductions resulting from such Investment,acquisition, amalgamation, merger or consolidation (including the Transactions)which is being given pro forma effect that have been or are expected to berealized).  If any Indebtedness bears afloating rate of interest and is being given *proforma* effect, the interest on such Indebtedness shall be calculatedas if the rate in effect on the Fixed Charge Coverage Ratio Calculation Datehad been the applicable rate for the entire period (taking into account anyHedging Obligations applicable to such Indebtedness).  Interest on a Capitalized Lease Obligationshall be deemed to accrue at an interest rate reasonably determined by a responsiblefinancial or accounting officer of the Issuer to be the rate of interestimplicit in such Capitalized Lease Obligation in accordance with GAAP.  Interest on Indebtedness that may optionallybe determined at an interest rate based upon a factor of a prime or similarrate, a eurocurrency interbank offered rate, or other rate, shall be deemed tohave been based upon the rate actually chosen, or, if none, then based uponsuch optional rate chosen as the Issuer may designate.

 

“Fixed Charges”means, with respect to any Person for any period, the sum, without duplication,of:

 

(1)           Consolidated Interest Expense of such Person for such period;

 

(2)           all cash dividends or other distributions paid (excluding itemseliminated in consolidation) on any series of Preferred Stock during suchperiod; and

 

(3)           all cash dividends or other distributions paid (excluding itemseliminated in consolidation) on any series of Disqualified Stock during suchperiod.

 

“Foreign Subsidiary”means, with respect to any Person, any Restricted Subsidiary of such Personthat is not organized or existing under the laws of the United States, anystate thereof, the District of Columbia, or any territory thereof and anyRestricted Subsidiary of such Foreign Subsidiary.

 

“GAAP” meansgenerally accepted accounting principles in the United States which are ineffect on the Issue Date.  For purposesof this Indenture, the term “consolidated” with respect to any Person meanssuch Person consolidated with its Restricted Subsidiaries and does not includeany Unrestricted Subsidiary.

 

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

 

“Global Notes” means,individually and collectively, each of the Restricted Global Notes and theUnrestricted Global Notes, substantially in the form of Exhibit Ahereto, issued in accordance with Section 2.01, 2.06(b), 2.06(d) or 2.06(f)hereof.

 

“Government Securities”means securities that are:

 

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

 

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(2)           obligations of a Person controlled or supervised by and acting as anagency or instrumentality of the United States of America the timely payment ofwhich is unconditionally guaranteed as a full faith and credit obligation bythe United States of America,

 

which, in either case, are not callable orredeemable at the option of the issuers thereof, and shall also include adepository receipt issued by a bank (as defined in Section 3(a)(2) of theSecurities Act), as custodian with respect to any such Government Securities ora specific payment of principal of or interest on any such GovernmentSecurities held by such custodian for the account of the holder of suchdepository receipt; provided that (except as required by law) suchcustodian is not authorized to make any deduction from the amount payable tothe holder of such depository receipt from any amount received by the custodianin respect of the Government Securities or the specific payment of principal ofor interest on the Government Securities evidenced by such depository receipt.

 

“guarantee” means aguarantee (other than by endorsement of negotiable instruments for collection inthe ordinary course of business), direct or indirect, in any manner (includingletters of credit and reimbursement agreements in respect thereof), of all orany part of any Indebtedness or other obligations.

 

“Guarantee” means theguarantee by any Guarantor of the Issuer’s Obligations under this Indenture andthe Notes.

 

“Guarantor” meanseach Restricted Subsidiary that Guarantees the Notes in accordance with theterms of this Indenture.

 

“Hedging Obligations”means, with respect to any Person, the obligations of such Person under anyinterest rate swap agreement, interest rate cap agreement, interest rate collaragreement, commodity swap agreement, commodity cap agreement, commodity collaragreement, foreign exchange contract, currency swap agreement or similaragreement providing for the transfer or mitigation of interest rate, commodityprice or currency risks either generally or under specific contingencies.

 

“Highfields Capital”means Highfields Capital I LP, Highfields Capital II LP and Highfields CapitalIII LP and each Affiliate thereof (excluding portfolio companies of any of theforegoing).

 

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

 

“Hybrid DistributionNetwork Costs” shall mean costs associated with the implementation ofenhancements to the Issuer’s and its Restricted Subsidiaries’ distributionnetwork intended to increase the Issuer’s and its Restricted Subsidiaries’basic merchandise inventories that are shipped through distribution centers.

 

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

 

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

 

(a)           in respect of borrowed money;

 

(b)           evidenced by bonds, notes, debentures or similar instruments or lettersof credit or bankers’ acceptances (or, without duplication, reimbursementagreements in respect thereof);

 

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(c)           representing the balance deferred and unpaid of the purchase price ofany property (including Capitalized Lease Obligations), except (i) any suchbalance that constitutes an obligation in respect of a commercial letter ofcredit, a trade payable or similar obligation to a trade creditor, in each caseaccrued in the ordinary course of business and (ii) any earn-out obligationsuntil such obligation becomes a liability on the balance sheet of such Personin accordance with GAAP and is not paid after becoming 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, any obligation by such Person tobe liable for, or to pay, as obligor, guarantor or otherwise, on theobligations of the type referred to in clause (1) of a third Person (whether ornot such items would appear upon the balance sheet of the such obligor orguarantor), other than by endorsement of negotiable instruments for collectionin the ordinary course of business; and

 

(3)           to the extent not otherwise included, the obligations of the type referredto in clause (1) of a third Person secured by a Lien on any asset owned by suchfirst Person, whether or not such Indebtedness 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” meansthis Indenture, as amended or supplemented from time to time.

 

“Independent Financial Advisor”means an accounting, appraisal, investment banking firm or consultant toPersons engaged in Similar Businesses of nationally recognized standing thatis, in the good faith judgment of the Issuer, qualified to perform the task forwhich it has been engaged.

 

“Indirect Participant”means a Person who holds a beneficial interest in a Global Note through aParticipant.

 

“Initial Notes” isdefined in the recitals hereto.

 

“Initial Purchasers”means Deutsche Bank Securities Inc., J.P. Morgan Securities Inc., Banc ofAmerica Securities LLC and Credit Suisse Securities (USA) LLC.

 

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

 

“Investment Grade Rating”means a rating equal to or higher than Baa3 (or the equivalent) by Moody’s andBBB- (or the equivalent) by S&P, or, in either case, an equivalent ratingby any other Rating Agency.

 

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“Investment GradeSecurities” means:

 

(1)           securities issued or directly and fully guaranteed or insured by theUnited States government or any agency or instrumentality thereof (other thanCash Equivalents);

 

(2)           debt securities or debt instruments with an Investment Grade Rating,but excluding any debt securities or instruments constituting loans or advancesamong the Issuer and its Subsidiaries;

 

(3)           investments in any fund that invests exclusively in investments of thetype described in clauses (1) and (2) which fund may also hold immaterialamounts of cash pending investment or distribution; 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 other Persons(including Affiliates) in the form of loans (including guarantees), advances orcapital contributions (excluding accounts receivable, credit card and debitcard receivables, trade credit, advances to customers, commission, travel andsimilar advances to officers and employees, in each case made in the ordinarycourse of business), purchases or other acquisitions for consideration ofIndebtedness, Equity Interests or other securities issued by any other Personand investments that are required by GAAP to be classified on the balance sheet(excluding the footnotes) of the Issuer in the same manner as the otherinvestments included in this definition to the extent such transactions involvethe transfer of cash or other property. For purposes of the definition of “Unrestricted Subsidiary” and Section4.07 hereof:

 

(1)           “Investments” shall include the portion (proportionate to the Issuer’sequity interest in such Subsidiary) of the fair market value of the net assetsof a Subsidiary of the Issuer at the time that such Subsidiary is designated anUnrestricted Subsidiary; provided, however, that upon aredesignation of such Subsidiary as a Restricted Subsidiary, the Issuer shallbe deemed to continue to have a permanent “Investment” in an UnrestrictedSubsidiary in an amount (if positive) equal to:

 

(a)           the Issuer’s “Investment” in such Subsidiary at the time of suchredesignation; less

 

(b)           the portion (proportionate to the Issuer’s Equity Interest in suchSubsidiary) of the fair market value of the net assets of such Subsidiary atthe 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” meansBain 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.

 

“Issue Date” meansOctober 31, 2006.

 

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“Issuer” meansMichaels; provided that when used in the context of determining the fairmarket value of an asset or liability under this Indenture, “Issuer” shall bedeemed to mean the board of directors of the Issuer when the fair market valueis equal to or in excess of $100.0 million (unless otherwise expressly stated).

 

“Issuer Order” meansa written request or order signed on behalf of the Issuer by an Officer of theIssuer, who must be the principal executive officer, the principal financialofficer, the treasurer or the principal accounting officer of the Issuer, anddelivered to the Trustee.

 

“Legal Holiday” meansa Saturday, a Sunday or a day on which commercial banking institutions are notrequired to be open in the State of New York.

 

“Letter of Transmittal”means the letter of transmittal to be prepared by the Issuer and sent to allHolders of the Notes for use by such Holders in connection with the ExchangeOffer.

 

“Lien” means, withrespect to any asset, any mortgage, lien (statutory or otherwise), pledge,hypothecation, charge, security interest, preference, priority or encumbranceof any kind in respect of such asset, whether or not filed, recorded orotherwise perfected under applicable law, including any conditional sale orother title retention agreement, any lease in the nature thereof, any option orother agreement to sell or give a security interest in and any filing of oragreement to give any financing statement under the Uniform Commercial Code (orequivalent statutes) of any jurisdiction; provided that in no eventshall an operating lease be deemed to constitute a Lien.

 

“Michaels” is definedin the preamble hereto.

 

“Moody’s” means Moody’sInvestors Service, Inc. and any successor to its rating agency business.

 

“Net Income” means,with respect to any Person, the net income (loss) of such Person, determined inaccordance with GAAP and before any reduction in respect of Preferred Stockdividends.

 

“Net Proceeds” meansthe aggregate cash proceeds received by the Issuer or any of its RestrictedSubsidiaries in respect of any Asset Sale, including any cash received upon thesale or other disposition of any Designated Non-cash Consideration received inany Asset Sale, net of the direct costs relating to such Asset Sale and thesale or disposition of such Designated Non-cash Consideration, including legal,accounting and investment banking fees, and brokerage and sales commissions,any relocation expenses incurred as a result thereof, taxes paid or payable asa result thereof (after taking into account any available tax credits ordeductions and any tax sharing arrangements), amounts required to be applied tothe repayment of principal, premium, if any, and interest on Indebtedness(other than Subordinated Indebtedness) secured by a Lien on the assets disposedof required (other than required by clause (1) of Section 4.10(b) hereof) to bepaid as a result of such transaction and any deduction of appropriate amountsto be provided by the Issuer or any of its Restricted Subsidiaries as a reservein accordance with GAAP against any liabilities associated with the assetdisposed of in such transaction and retained by the Issuer or any of itsRestricted Subsidiaries after such sale or other disposition thereof, includingpension and other post-employment benefit liabilities and liabilities relatedto environmental matters or against any indemnification obligations associatedwith such transaction.

 

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

 

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“Notes” means theInitial Notes and more particularly means any Note authenticated and deliveredunder this Indenture.  For all purposesof this Indenture, the term “Notes” shall also include any Additional Notesthat may be issued under a supplemental indenture.

 

“Obligations” meansany principal, interest (including any interest accruing subsequent to thefiling of a petition in bankruptcy, reorganization or similar proceeding at therate 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.

 

“Offering Memorandum”means the offering memorandum, dated October 25, 2006, relating to the sale ofthe Initial Notes.

 

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

 

“Officer’s Certificate”means a certificate signed on behalf of the Issuer by an Officer of the Issuer,who must be the principal executive officer, the principal financial officer,the treasurer or the principal accounting officer of the Issuer, that meets therequirements set forth in this Indenture.

 

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

 

“Participant” means,with respect to the Depositary, Euroclear or Clearstream, a Person who has anaccount with the Depositary, Euroclear or Clearstream, respectively (and, withrespect to DTC, shall include Euroclear and Clearstream).

 

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

 

“Perfect Store Initiative”shall mean the initiative related to the Issuer’s and its RestrictedSubsidiaries’ store standardization and remodeling program, pursuant to whichretail store layouts will be modified into a configuration intended to enhancethe customer in-store experience.

 

“Permitted Asset Swap”means the concurrent purchase and sale or exchange of Related Business Assetsor a combination of Related Business Assets and Cash Equivalents between theIssuer or any of its Restricted Subsidiaries and another Person; providedthat any Net Proceeds received must be applied in accordance with Section 4.10hereof.

 

“Permitted Holders”means each of the Investors and members of management of the Issuer (or itsdirect parent) who are holders of Equity Interests of the Issuer (or any of itsdirect or indirect parent companies) on the Issue Date and any group (withinthe meaning of Section 13(d)(3) or Section 14(d)(2) of the Exchange Act or anysuccessor provision) of which any of the foregoing are members; providedthat, in the case of such group and without giving effect to the existence ofsuch group or any other group, such Investors and members of management,collectively, have beneficial ownership of more than 50% of the total votingpower of the Voting Stock of the Issuer or any of its direct or indirect parentcompanies. Any person or group whose acquisition of beneficial ownership(within the meaning of Rule 13d-3 under the Exchange Act, or any successorprovision) constitutes a Change of Control in respect of 

 

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which a Change of Control Offer is made inaccordance with the requirements of Section 4.14 (or would result in a Changeof Control Offer in the absence of the waiver of such requirement by Holders inaccordance with Section 4.14 will thereafter, together with its Affiliates,constitute an additional Permitted Holder.

 

“Permitted Investments”means:

 

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

 

(2)           any Investment in cash and Cash Equivalents or Investment GradeSecurities;

 

(3)           any Investment by the Issuer or any of its Restricted Subsidiaries in aPerson that is engaged in a Similar Business if as a result of such Investment:

 

(a)           such Person becomes a Restricted Subsidiary; or

 

(b)           such Person, in one transaction or a series of related transactions, ismerged, amalgamated or consolidated with or into, or transfers or conveyssubstantially all of its assets to, or is liquidated into, the Issuer or aRestricted Subsidiary,

 

and, in each case, anyInvestment held by such Person; provided that such Investment was notacquired by such Person in contemplation of such acquisition, merger,consolidation or transfer;

 

(4)           any Investment in securities or other assets not constituting cash,Cash Equivalents or Investment Grade Securities and received in connection withan Asset Sale made pursuant to the provisions of Section 4.10(a) hereof or anyother disposition of assets not constituting an Asset Sale;

 

(5)           any Investment existing on the Issue Date and any extension,modification, replacement or renewal of any such Investments existing on theIssue Date, but only to the extent not involving additional advances,contributions or other Investments of cash or other assets or other increasesthereof other than as a result of the accrual or accretion of interest ororiginal issue discount or the issuance of pay-in-kind securities, in eachcase, pursuant to the terms of such Investment as in effect on the Issue Date(or as subsequently amended or otherwise modified in a manner notdisadvantageous to the Holders of the Notes in any material respect);

 

(6)           any Investment acquired by the Issuer or any of its RestrictedSubsidiaries:

 

(a)           in exchange for any other Investment or accounts receivable held by theIssuer or any such Restricted Subsidiary in connection with or as a result of abankruptcy, workout, reorganization or recapitalization of the issuer of suchother Investment or accounts receivable; or

 

(b)           as a result of a foreclosure by the Issuer or any of its RestrictedSubsidiaries with respect to any secured Investment or other transfer of titlewith 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 having an aggregate fair marketvalue, taken together with all other Investments made pursuant to this clause(8) that are at that time 

 

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outstanding, not to exceed$75.0 million (with the fair market value of each Investment being measured atthe time made and without giving effect to subsequent changes in value);

 

(9)           Investments the payment for which consists of Equity Interests(exclusive of Disqualified Stock) of the Issuer, or any of its direct orindirect parent companies; provided, however, that such EquityInterests will not increase the amount available for Restricted Payments underclause (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)         if the Consolidated Leverage Ratio of the Issuer is less than 6.00 to1.00 on a *pro forma*basis aftergiving effect to such transaction, additional Investments having an aggregatefair market value, taken together with all other Investments made pursuant tothis clause (13) that are at that time outstanding (without giving effect tothe sale of an Unrestricted Subsidiary to the extent the proceeds of such saledo not consist of, or have not been subsequently sold or transferred for, cashor marketable 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.

 

“Permitted Liens”means, with respect to any Person:

 

(1)           pledges, deposits or security by such Person under workmen’s compensationlaws, unemployment insurance , employers’ health tax and other social securitylaws or similar legislation, or good faith deposits in connection with bids,tenders, contracts (other than for the payment of Indebtedness) or leases towhich such Person is a party, or deposits to secure public or statutoryobligations of such Person or deposits of cash or U.S. government bonds tosecure surety or appeal bonds to which such Person is a party, or deposits assecurity for contested taxes 

 

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or import duties or for thepayment 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 case for sums not yet overdue for aperiod of more than 30 days or being contested in good faith by appropriateactions or other Liens arising out of judgments or awards against such Personwith respect to which such Person shall then be proceeding with an appeal orother proceedings for review if adequate reserves with respect thereto aremaintained on the books of such Person in accordance with GAAP;

 

(3)           Liens for taxes, assessments or other governmental charges not yetoverdue for a period of more than 30 days or which are being contested in goodfaith by appropriate actions diligently conducted, if adequate reserves withrespect thereto are maintained on the books of such Person in accordance withGAAP, or for property taxes on property that the Issuer or one of itsSubsidiaries has determined to abandon if the sole recourse for 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 with respect to other regulatoryrequirements or letters of credit or bankers’ acceptances issued, andcompletion guarantees provided for, in each case pursuant to the request of andfor the account of such Person in the ordinary course of its business orconsistent with past practice prior to the Issue Date;

 

(5)           minor survey exceptions, minor encumbrances, ground leases, easementsor reservations of, or rights of others for, licenses, rights-of-way,servitudes, sewers, electric lines, drains, telegraph and telephone and cabletelevision lines, gas and oil pipelines and other similar purposes, or zoning,building codes or other restrictions (including, without limitation, minordefects or irregularities in title and similar encumbrances) as to the use of realproperties or Liens incidental, to the conduct of the business of such Personor to the ownership of its properties which were not incurred in connectionwith Indebtedness and which do not in the aggregate materially impair their usein the operation of the business of such Person;

 

(6)           Liens securing Indebtedness permitted to be incurred pursuant to clause(4), (12)(b), (18) or (19) of Section 4.09(b) hereof; provided thatLiens securing Indebtedness permitted to be incurred pursuant to clause (18) ofSection 4.09(b) hereof extend only to the assets of Foreign Subsidiaries andLiens securing Indebtedness permitted to be incurred pursuant to clause (19) ofSection 4.09(b) hereof are solely on acquired property or the assets of theacquired entity, as the case may be;

 

(7)           Liens existing on the Issue Date;

 

(8)           Liens existing on property or shares of stock of a Person at the timesuch Person becomes a Subsidiary; provided, however, such Liensare not created or incurred in connection with, or in contemplation of, suchother Person becoming such a Subsidiary; provided, further, however,that such Liens may not extend to any other property owned by the Issuer or anyof its Restricted Subsidiaries;

 

(9)           Liens existing on property at the time the Issuer or a RestrictedSubsidiary acquired the property, including any acquisition by means of amerger, amalgamation or consolidation with or into the Issuer or any of itsRestricted Subsidiaries; provided, however, that such Liens arenot created or incurred in connection with, or in contemplation of, suchacquisition, 

 

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merger, amalgamation orconsolidation; provided, further, however, that the Liensmay not extend to any other property owned by the Issuer or any of itsRestricted 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;

 

(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 the ordinarycourse 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;

 

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

 

(22)         Liens (i) of a collection bank arising under Section 4-210 of theUniform 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 favorof banking institutions arising as a matter of law encumbering deposits(including the right of set-off) and which are within the general parameterscustomary in the 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;

 

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(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;

 

(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.

 

For purposes of thisdefinition, the term “Indebtedness” shall be deemed to include interest on suchIndebtedness.

 

“Person” means anyindividual, corporation, limited liability company, partnership, joint venture,association, joint stock company, trust, unincorporated organization, governmentor any agency or political subdivision thereof or any other entity.

 

“Preferred Stock”means any Equity Interest with preferential rights of payment of dividends orupon liquidation, dissolution, or winding up.

 

“Public Company Costs”shall mean costs relating to compliance with the Sarbanes-Oxley Act of 2002, asamended, and other expenses arising out of or incidental to the Issuer’s statusas a public company, including costs, fees and expenses (including legal,accounting and other professional fees) relating to compliance with provisionsof the Securities Act and the Exchange Act, as applicable to companies withequity securities held by the public, the rules of national securities exchangecompanies with listed equity securities, directors’ compensation, fees andexpense reimbursement, shareholder meetings and reports to shareholders,directors and officers’ insurance and other executive costs, legal and otherprofessional fees, and listing fees, in each case incurred or accrued prior tothe Issue Date and that will not continue to be incurred immediately after theIssue Date.

 

“Private Placement Legend”means the legend set forth in Section 2.06(g)(i) hereof to be placed on allNotes issued under this Indenture, except where otherwise permitted by theprovisions of this Indenture.

 

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

 

“Qualified Proceeds”means assets that are used or useful in, or Capital Stock of any Person engagedin, a Similar Business; provided that the fair market value of any suchassets or Capital Stock shall be determined by the Issuer in good faith.

 

“Rating Agencies”means Moody’s and S&P or if Moody’s or S&P or both shall not make arating on the Notes publicly available, a nationally recognized statisticalrating agency or agencies, as the case may be, selected by the Issuer whichshall be substituted for Moody’s or S&P or both, as the case may be.

 

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“Receivables Facility”means any of one or more receivables financing facilities as amended,supplemented, modified, extended, renewed, restated or refunded from time totime, the Obligations of which are non-recourse (except for customaryrepresentations, warranties, covenants and indemnities made in connection withsuch facilities) to the Issuer or any of its Restricted Subsidiaries (otherthan a Receivables Subsidiary) pursuant to which the Issuer or any of itsRestricted Subsidiaries sells its accounts receivable to either (a) a Personthat is not a Restricted Subsidiary or (b) a Receivables Subsidiary that inturn sells its accounts receivable to a Person that is not a RestrictedSubsidiary.

 

“Receivables Fees”means distributions or payments made directly or by means of discounts withrespect to any accounts receivable or participation interest therein issued orsold in connection with, and other fees paid to a Person that is not aRestricted Subsidiary in connection with, any Receivables Facility.

 

“Receivables Subsidiary”means any Subsidiary formed for the purpose of, and that solely engages only inone or more Receivables Facilities and other activities reasonably relatedthereto.

 

“Record Date” for theinterest or Additional Interest, if any, payable on any applicable InterestPayment Date means the April 15 or October 15 (whether or not a Business Day)next preceding such Interest Payment Date.

 

“Registration RightsAgreement” means the Registration Rights Agreement related to the Notesdated as of the Issue Date, among the Issuer, the Guarantors and the InitialPurchasers, as such agreement may be amended, modified or supplemented fromtime 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.

 

“Regulation S” meansRegulation S promulgated under the Securities Act.

 

“Regulation S Global Note”means a Regulation S Temporary Global Note or Regulation S PermanentGlobal Note, as applicable.

 

“Regulation S PermanentGlobal 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 ofthe Regulation S Temporary Global Note upon expiration of the RestrictedPeriod.

 

“Regulation S TemporaryGlobal 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 adenomination equal to the outstanding principal amount of the Notes initiallysold in reliance on Rule 903.

 

“Regulation S TemporaryGlobal Note Legend” means the legend set forth in Section 2.06(g)(iii)hereof.

 

“Related Business Assets”means assets (other than cash or Cash Equivalents) used or useful in a SimilarBusiness, provided that any assets received by the Issuer or aRestricted Subsidiary in exchange for assets transferred by the Issuer or aRestricted Subsidiary shall not be deemed to be Related 

 

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Business Assets if they consist of securitiesof a Person, unless upon receipt of the securities of such Person, such Personwould become a Restricted Subsidiary.

 

“Responsible Officer”means, when used with respect to the Trustee, any officer within the corporatetrust department of the Trustee, including any vice president, assistant vicepresident, assistant treasurer, trust officer or any other officer of theTrustee who customarily performs functions similar to those performed by thePersons who at the time shall be such officers, respectively, or to whom anycorporate trust matter is referred because of such Person’s knowledge of andfamiliarity with the particular subject and who shall have directresponsibility for the administration of this Indenture.

 

“Restricted DefinitiveNote” means a Definitive Note bearing the Private Placement Legend.

 

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

 

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

 

“Restricted Period”means the 40-day distribution compliance period as defined in Regulation S.

 

“Restricted Subsidiary”means, at any time, any direct or indirect Subsidiary of the Issuer (includingany Foreign Subsidiary) that is not then an Unrestricted Subsidiary; provided,however, that upon the occurrence of an Unrestricted Subsidiary ceasingto be an Unrestricted Subsidiary, such Subsidiary shall be included in thedefinition of “Restricted Subsidiary.”

 

“Revolving CreditFacility” means the credit facility provided under the Senior SecuredAsset-Based Revolving Credit Agreement, to be entered into as of the Issue Dateby and among the Issuer, the lenders party thereto in their capacities aslenders thereunder and Bank of America, N.A., as Administrative Agent,including any notes, mortgages, guarantees, collateral documents, instrumentsand agreements executed in connection therewith, and any amendments,supplements, modifications, extensions, replacements, renewals, restatements,refundings or refinancings thereof and any one or more indentures or creditfacilities or commercial paper facilities with banks or other institutionallenders or investors that extend, replace, refund, refinance, renew or defeaseany part of the loans, notes, other credit facilities or commitmentsthereunder, including any such replacement, refunding or refinancing facilityor indenture that increases the amount borrowable thereunder or alters thematurity thereof or adds Restricted Subsidiaries as additional borrowers orguarantors thereunder and whether by the same or any other agent, lender orgroup of lenders.

 

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

 

“Rule 144A” meansRule 144A promulgated under the Securities Act.

 

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

 

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

 

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

 

“Sale and Lease-BackTransaction” means any arrangement providing for the leasing by the Issueror any of its Restricted Subsidiaries of any real or tangible personalproperty, which property 

 

27

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has been or is to be sold or transferred bythe Issuer or such Restricted Subsidiary to a third Person in contemplation ofsuch leasing.

 

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

 

“Secured Indebtedness”means any Indebtedness of the Issuer or any of its Restricted Subsidiariessecured by a Lien.

 

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

 

“Senior Credit Facilities”means the Revolving Credit Facility and the Term Loan Facility.

 

“Senior SubordinatedNotes” means the $400,000,000 aggregate principal amount of the Issuer’s 113/8% senior subordinated notes due 2016 issued on the Issue Date.

 

“Shelf RegistrationStatement” means the Shelf Registration Statement as defined in theRegistration Rights Agreement.

 

“Significant Subsidiary”means any Restricted Subsidiary that would be a “significant subsidiary” as definedin Article 1, Rule 1-02 of Regulation S-X, promulgated pursuant to theSecurities Act, as such regulation is in effect on the Issue Date.

 

“Similar Business”means any business conducted or proposed to be conducted by the Issuer and itsRestricted Subsidiaries on the Issue Date or any business that is a reasonableextension, development or expansion of any of the foregoing or is similar,reasonably related, incidental or ancillary thereto (including, for theavoidance of doubt, any sourcing companies created in connection with any ofthe foregoing).

 

“Specified Legal Expenses”means all attorneys’ and experts’ fees and expenses and all other costs andexpenses paid or payable in connection with investigating or defending orpreparing to investigate or defend any threatened, pending, completed or futureclaim, demand, action, suit, proceeding, inquiry or investigation (whethercivil, criminal, administrative or investigative) arising out of or related to(i) the Issuer’s compensation practices (including option grants) prior to theIssue Date, (ii) any disclosure or alleged lack of disclosure on the part ofthe Issuer or any of its directors or officers regarding the beneficialownership of any securities of the Issuer prior to the Issue Date by any suchdirector or officer (or any trust established for the benefit of any suchdirector or officer or any family member thereof), (iii) any transaction priorto the Issue Date involving any securities of the Issuer alleged to have beenengaged in by any such Person, (iv) any alleged deficiencies in the Issuer’sfinancial reporting, internal control over financial reporting or disclosurecontrols prior to the Issue Date and procedures relating to any of theforegoing, and (v) any alleged bad faith, breach of fiduciary duty or other actor omission on the part of any director or officer of the Issuer relating toany of the foregoing, together in each case with all damages, losses,liabilities, judgments, fines, penalties and amounts paid in settlement arisingout of or incurred in connection with any of the foregoing (including allamounts paid to or on behalf of other Persons in connection with any of theforegoing pursuant to any indemnification agreements, arrangements orobligations).

 

“Sponsor Management Agreement”means the management agreements between certain of the management companiesassociated with the Investors and Highfields Capital, and the Issuer, as ineffect on the Issue Date and as amended, supplemented, amended and restated,replaced or otherwise 

 

28

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modified from time to time; provided,however, that the terms of any such amendment, supplement, amendment andrestatement or replacement agreement are not, taken as a whole, less favorableto the holders of the Notes in any material respect than the original agreementin effect on the Issue Date.

 

“Subordinated DiscountNotes” means the $469,449,000 aggregate principal amount at maturity of theIssuer’s 13% subordinated discount notes due 2016 issued on the Issue Date.

 

“SubordinatedIndebtedness” means, with respect to the Notes,

 

(1)           any Indebtedness of the Issuer which is by its terms subordinated inright of payment to the Notes, and

 

(2)           any Indebtedness of any Guarantor which is by its terms subordinated inright of payment to the Guarantee of such entity of the Notes.

 

“Subsidiary” means,with respect to any Person:

 

(1)           any corporation, association, or other business entity (other than apartnership, joint venture, limited liability company or similar entity) ofwhich more than 50% of the total voting power of shares of Capital Stockentitled (without regard to the occurrence of any contingency) to vote in theelection of directors, managers or trustees thereof is at the time ofdetermination owned or controlled, directly or indirectly, by such Person orone or more of the other Subsidiaries of that Person or a combination thereofor is consolidated under GAAP with such Person at such time; and

 

(2)           any partnership, joint venture, limited liability company or similarentity 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 of such Person is acontrolling general partner or otherwise controls such entity.

 

“Term Loan Facility”means the credit facility provided under the Senior Secured Term LoanAgreement, to be entered into as of the Issue Date by and among the Issuer, thelenders party thereto in their capacities as lenders thereunder and DeutscheBank 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 or refinancingsthereof and any one or more indentures or credit facilities or commercial paperfacilities with banks or other institutional lenders or investors that extend,replace, refund, refinance, renew or defease any part of the loans, notes,other credit facilities or commitments thereunder, including any suchreplacement, refunding or refinancing facility or indenture that increases theamount borrowable thereunder or alters the maturity thereof or adds RestrictedSubsidiaries as additional borrowers or guarantors thereunder and whether bythe same or any other agent, lender or group of lenders.

 

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“Total Assets” meansthe total assets of the Issuer and its Restricted Subsidiaries on aconsolidated basis, as shown on the most recent balance sheet of the Issuer orsuch other Person as may be expressly stated.

 

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

 

“Transaction Expenses”means any fees or expenses incurred or paid by the Issuer or any RestrictedSubsidiary in connection with the Transactions, including payments to officers,employees and directors as change of control payments, severance payments,special or retention bonuses and charges for repurchase or rollover of, ormodifications to, stock options.

 

“Transactions” meansthe transactions contemplated by the Transaction Agreement, the issuance of theInitial Notes, the Senior Subordinated Notes and the Subordinated DiscountNotes and borrowings under the Senior Credit Facilities as in effect on theIssue Date.

 

“Treasury Rate”means, as of any Redemption Date, the yield to maturity as of such RedemptionDate of United States Treasury securities with a constant maturity (as compiledand published in the most recent Federal Reserve Statistical Release H.15 (519)that has become publicly available at least two Business Days prior to theRedemption Date (or, if such Statistical Release is no longer published, anypublicly available source of similar market data)) most nearly equal to theperiod from the Redemption Date to November 1, 2010; provided, however,that if the period from the Redemption Date to November 1, 2010 is less thanone year, the weekly average yield on actually traded United States Treasurysecurities adjusted to a constant maturity of one year will be used.

 

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

 

“Trustee” means WellsFargo Bank, National Association as trustee, until a successor replaces it inaccordance with the applicable provisions of this Indenture and thereaftermeans the successor serving hereunder.

 

“Unrestricted DefinitiveNote” means one or more Definitive Notes that do not bear and are notrequired to bear the Private Placement Legend.

 

“Unrestricted Global 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.

 

“Unrestricted Subsidiary”means:

 

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

 

(2)           any Subsidiary of an Unrestricted Subsidiary.

 

The Issuer may designate anySubsidiary of the Issuer (including any existing Subsidiary and any newlyacquired or newly formed Subsidiary) to be an Unrestricted Subsidiary unlesssuch Subsidiary or any of its Subsidiaries owns any Equity Interests orIndebtedness of, or owns or holds any Lien 

 

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on, any property of, the Issuer or anySubsidiary of the Issuer (other than solely any Subsidiary of the Subsidiary tobe so designated); provided that

 

(1)           any Unrestricted Subsidiary must be an entity of which the EquityInterests entitled to cast at least a majority of the votes that may be cast byall Equity Interests having ordinary voting power for the election of directorsor Persons performing a similar function are owned, directly or indirectly, bythe Issuer;

 

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

 

(3)           each of:

 

(a)           the Subsidiary to be so designated; and

 

(b)           its Subsidiaries

 

hasnot at the time of designation, and does not thereafter, create, incur, issue,assume, guarantee or otherwise become directly or indirectly liable withrespect to any Indebtedness pursuant to which the lender has recourse to any ofthe assets of the Issuer or any Restricted Subsidiary.

 

The Issuer may designate anyUnrestricted Subsidiary to be a Restricted Subsidiary; provided that,immediately after giving effect to such designation, no Default shall haveoccurred and be continuing and either:

 

(1)           the Issuer could incur at least $1.00 of additional Indebtednesspursuant to the Fixed Charge Coverage Ratio test described in Section 4.09(a)hereof; or

 

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

 

in each case on a *pro forma* basis taking into account such designation.

 

Any such designation by theIssuer shall be notified by the Issuer to the Trustee by promptly filing withthe Trustee a copy of the resolution of the board of directors of the Issuer orany committee thereof giving effect to such designation and an Officer’sCertificate certifying that such designation complied with the foregoingprovisions.

 

“U.S. Person” means aU.S. person as defined in Rule 902(k) under the Securities Act.

 

“Voting Stock” of anyPerson as of any date means the Capital Stock of such Person that is at thetime entitled to vote in the election of the board of directors of such Person.

 

“Weighted Average Life toMaturity” means, when applied to any Indebtedness, Disqualified Stock orPreferred Stock, as the case may be, at any date, the quotient obtained bydividing:

 

(1)           the sum of the products of the number of years from the date ofdetermination to the date of each successive scheduled principal payment ofsuch Indebtedness or redemption or similar payment with respect to suchDisqualified Stock or Preferred Stock multiplied by the amount of such payment;by

 

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(2)           the sum of all such payments.

 

“Wholly-Owned Subsidiary”of any Person means a Subsidiary of such Person, 100% of the outstanding EquityInterests of which (other than directors’ qualifying shares and shares issuedto foreign nationals as required under applicable law) shall at the time beowned by such Person or by one or more Wholly Owned Subsidiaries of such Personor by such Person and one or more Wholly-Owned Subsidiaries of such Person.

 

## Section 1.02           OtherDefinitions.

 
| **Term**                                    | ** ** | **Defined in  Section** | ** ** |
|---------------------------------------------|------------|-------------------------|------------|
|                                        |       |                    |       |
| “Acceptable  Commitment”          |       | 4.10(b)                 |       |
| “Affiliate  Transaction”          |       | 4.11(a)                 |       |
| “Asset Sale  Offer”               |       | 4.10(c)                 |       |
| “Authentication  Order”           |       | 2.02                    |       |
| “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)                 |       |
| “incur”or  “incurrence” |       | 4.09(a)                 |       |
| “Legal  Defeasance”               |       | 8.02                    |       |
| “Note  Register”                  |       | 2.03                    |       |
| “Offer  Amount”                   |       | 3.09(b)                 |       |
| “Offer  Period”                   |       | 3.09(b)                 |       |
| “Pari Passu  Indebtedness”        |       | 4.10(c)                 |       |
| “Paying  Agent”                   |       | 2.03                    |       |
| “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)                 |       |
| “Suspended  Covenants”            |       | 4.16(a)                 |       |
| “Suspension  Period”              |       | 4.16(b)                 |       |
| “Treasury  Capital Stock”         |       | 4.07(b)                 |       |

 

 

## Section1.03           Incorporation by Reference of Trust IndentureAct.

 

Whenever this Indenturerefers to a provision of the Trust Indenture Act, the provision is incorporatedby reference in and made a part of this Indenture.

 

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The following TrustIndenture Act terms used in this Indenture have the following meanings:

 

“indenture securities” meansthe Notes;

 

“indenture security Holder”means a Holder of a Note;

 

“indenture to be qualified”means this Indenture;

 

“indenture trustee” or “institutionaltrustee” means the Trustee; and

 

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

 

All other terms used in thisIndenture that are defined by the Trust Indenture Act, defined by TrustIndenture Act reference to another statute or defined by SEC rule under theTrust Indenture Act have the meanings so assigned to them.

 

## Section1.04           Rules of Construction.

##  

Unless the context otherwiserequires:

 

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

###  

### (b)           an accounting term not otherwise defined has the meaning assigned to itin accordance with GAAP;

###  

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

###  

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

###  

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

###  

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

###  

### (g)           references to sections of, or rules under, the Securities Act shall bedeemed to include substitute, replacement or successor sections or rulesadopted by the SEC from time to time;

###  

### (h)           unless the context otherwise requires, any reference to an “Article,” “Section”or “clause” refers to an Article, Section or clause, as the case may be, ofthis 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-interest bearing or other discountsecurity at any date shall be the principal amount thereof that would be shownon a balance sheet of the Issuer dated such date prepared in accordance withGAAP;

 

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(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 similarimport refer to this Indenture as a whole and not any particular Article,Section, clause or other subdivision.

###  

## Section1.05           Acts of Holders.

##  

(a)           Any request, demand, authorization, direction, notice, consent, waiveror other action provided by this Indenture to be given or taken by Holders maybe embodied in and evidenced by one or more instruments of substantiallysimilar tenor signed by such Holders in person or by an agent duly appointed inwriting.  Except as herein otherwiseexpressly provided, such action shall become effective when such instrument orinstruments are delivered to the Trustee and, where it is hereby expresslyrequired, to the Issuer.  Proof ofexecution of any such instrument or of a writing appointing any such agent, orthe holding by any Person of a Note, shall be sufficient for any purpose ofthis Indenture and (subject to Section 7.01) conclusive in favor of the Trusteeand the Issuer, if made in the manner provided in this Section 1.05.

 

(b)           The fact and date of the execution by any Person of any such instrumentor writing may be proved by the affidavit of a witness of such execution or bythe certificate of any notary public or other officer authorized by law to takeacknowledgments of deeds, certifying that the individual signing suchinstrument or writing acknowledged to him the execution thereof.  Where such execution is by or on behalf ofany legal entity other than an individual, such certificate or affidavit shallalso constitute proof of the authority of the Person executing the same.  The fact and date of the execution of anysuch instrument or writing, or the authority of the Person executing the same,may also be proved in any other manner that the Trustee deems sufficient.

 

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

 

(d)           Any request, demand, authorization, direction, notice, consent, waiveror other action by the Holder of any Note shall bind every future Holder of thesame Note and the Holder of every Note issued upon the registration of transferthereof or in exchange therefor or in lieu thereof, in respect of any actiontaken, suffered or omitted by the Trustee or the Issuer in reliance thereon,whether or not notation of such action is made upon such Note.

 

(e)           The Issuer may, in the circumstances permitted by the Trust IndentureAct, set a record date for purposes of determining the identity of Holdersentitled to give any request, demand, authorization, direction, notice,consent, waiver or take any other act, or to vote or consent to any action byvote or consent 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 of such Note or byone or more duly appointed agents, each of which may do so pursuant to suchappointment with regard to all or any part of such principal amount.  Any notice given or action taken by a Holderor 

 

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its agents with regard to different parts ofsuch principal amount pursuant to this paragraph shall have the same effect asif given or taken by separate Holders of each such different part.

 

(g)           Without limiting the generality of the foregoing, a Holder, includingDTC, that is the Holder of a Global Note, may make, give or take, by a proxy orproxies duly appointed in writing, any request, demand, authorization,direction, notice, consent, waiver or other action provided in this Indentureto be made, given or taken by Holders, and any Person that is the Holder of aGlobal Note, including DTC, may provide its proxy or proxies to the beneficialowners of interests in any such Global Note through such depositary’s standinginstructions and customary practices.

 

(h)           The Issuer may fix a record date for the purpose of determining thePersons who are beneficial owners of interests in any Global Note held by DTCentitled under the procedures of such depositary to make, give or take, by aproxy or proxies duly appointed in writing, any request, demand, authorization,direction, notice, consent, waiver or other action provided in this Indentureto be made, given or taken by Holders.  Ifsuch a record date is fixed, the Holders on such record date or their dulyappointed proxy or proxies, and only such Persons, shall be entitled to make,give or take such request, demand, authorization, direction, notice, consent,waiver or other action, whether or not such Holders remain Holders after suchrecord date.  No such request, demand,authorization, direction, notice, consent, waiver or other action shall bevalid or effective if made, given or taken more than 90 days after such recorddate.

 

# ARTICLE2

#  

# THENOTES

#  

## Section2.01           Form and 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 amount of Notes from time to time endorsed thereon and thatthe aggregate principal amount of outstanding Notes represented thereby mayfrom time to time be reduced or increased, as applicable, to reflect exchangesand redemptions.  Any endorsement of aGlobal Note to reflect the amount of any increase or decrease in the aggregateprincipal amount of outstanding Notes represented thereby shall be made by theTrustee or 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 

 

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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 of the Regulation S Temporary GlobalNote (except to the extent of any beneficial owners thereof who acquired aninterest therein during the Restricted Period pursuant to another exemptionfrom registration under the Securities Act and who shall take delivery of abeneficial ownership interest in a 144A Global Note bearing a Private PlacementLegend, all as contemplated by Section 2.06(b) hereof); and

 

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

 

Following the termination ofthe Restricted Period, beneficial interests in the Regulation S TemporaryGlobal Note shall be exchanged for beneficial interests in the Regulation SPermanent Global Note pursuant to the Applicable Procedures.  Simultaneously with the authentication of theRegulation S Permanent Global Note, the Trustee shall cancel the Regulation STemporary Global Note.  The aggregateprincipal amount of the Regulation S Temporary Global Note and the Regulation SPermanent Global Note may from time to time be increased or decreased byadjustments made on the records of the Trustee and the Depositary or itsnominee, as the case may be, in connection with transfers of interest ashereinafter provided.

 

(d)           Terms.  The aggregate principal amountof Notes that may be authenticated and delivered under this Indenture isunlimited.

 

The terms and provisionscontained in the Notes shall constitute, and are hereby expressly made, a partof this Indenture and the Issuer, the Guarantors and the Trustee, by theirexecution and delivery of this Indenture, expressly agree to such terms andprovisions and to be bound thereby. However, to the extent any provision of any Note conflicts with theexpress provisions of this Indenture, the provisions of this Indenture shallgovern and be controlling.

 

The Notes shall be subjectto repurchase by the Issuer pursuant to an Asset Sale Offer as provided inSection 4.10 hereof or a Change of Control Offer as provided in Section 4.14hereof.  The Notes shall not be redeemable,other than as provided in Article 3.

 

Additional Notes ranking *pari**passu*with the Initial Notes may be created and issued from time to time by theIssuer without notice to or consent of the Holders and shall be consolidatedwith and form a single class with the Initial Notes and shall have the sameterms as to status, redemption or otherwise as the Initial Notes; providedthat the Issuer’s ability to issue Additional Notes shall be subject to theIssuer’s compliance with Section 4.09 hereof. Any Additional Notes shall be issued with the benefit of an indenturesupplemental 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.

 

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## Section2.02           Execution and Authentication.

##  

At least one Officer shallexecute the Notes on behalf of the Issuer by manual or facsimile signature.

 

If an Officer whosesignature is on a Note no longer holds that office at the time a Note isauthenticated, the Note shall nevertheless be valid.

 

A Note shall not be entitledto any benefit under this Indenture or be valid or obligatory for any purposeuntil authenticated substantially in the form of Exhibit A attachedhereto 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.

 

On the Issue Date, theTrustee shall, upon receipt of an Issuer Order (an “Authentication Order”),authenticate and deliver the Initial Notes. In addition, at any time, from time to time, the Trustee shall upon anAuthentication Order authenticate and deliver any Additional Notes and ExchangeNotes for an aggregate principal amount specified in such Authentication Orderfor such Additional Notes or Exchange Notes issued hereunder.

 

The Trustee may appoint anauthenticating agent acceptable to the Issuer to authenticate Notes.  An authenticating agent may authenticateNotes whenever the Trustee may do so. Each reference in this Indenture to authentication by the Trustee includesauthentication by such agent.  Anauthenticating agent has the same rights as an Agent to deal with Holders or anAffiliate of the Issuer.

 

## Section2.03           Registrar and Paying Agent.

##  

The Issuer shall maintain anoffice or agency in the Borough of Manhattan, City of New York, where Notes maybe presented for registration of transfer or for exchange (“Registrar”)and an office or agency in the Borough of Manhattan, City of New York, whereNotes may be presented for payment (“Paying Agent”).  The Registrar shall keep a register of theNotes (“Note Register”) and of their transfer and exchange.  The Issuer may appoint one or moreco-registrars and one or more additional paying agents.  The term “Registrar” includes anyco-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.

 

The Issuer initiallyappoints The Depository Trust Company (“DTC”) to act as Depositary withrespect to the Global Notes.

 

The Issuer initially appointsthe Trustee to act as the Paying Agent and Registrar for the Notes and to actas Custodian with respect to the Global Notes.

 

## Section2.04           Paying Agent To Hold Money in Trust.

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The Issuer shall requireeach Paying Agent other than the Trustee to agree in writing that the PayingAgent shall hold in trust for the benefit of Holders or the Trustee all moneyheld by the Paying Agent for the payment of principal, premium, if any, orAdditional Interest, if any, or interest on the Notes, and will notify theTrustee of any default by the Issuer in making any such payment. While any suchdefault continues, the Trustee may require a Paying Agent to pay all money heldby it to the Trustee.  The Issuer at anytime may require a Paying Agent to pay all money held by it to theTrustee.  Upon 

 

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payment over to the Trustee, the Paying Agent(if other than the Issuer or a Subsidiary) shall have no further liability forthe money.  If the Issuer or a Subsidiaryacts as Paying Agent, it shall segregate and hold in a separate trust fund forthe benefit of the Holders all money held by it as Paying Agent.  Upon any bankruptcy or reorganizationproceedings relating to the Issuer, the Trustee shall serve as Paying Agent forthe Notes.

 

## Section2.05           Holder Lists.

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The Trustee shall preservein as current a form as is reasonably practicable the most recent listavailable to it of the names and addresses of all Holders and shall otherwisecomply with Trust Indenture Act Section 312(a). If the Trustee is not the Registrar, the Issuer shall furnish to theTrustee at least two Business Days before each Interest Payment Date and atsuch other times as the Trustee may request in writing, a list in such form andas of such date as the Trustee may reasonably require of the names andaddresses of the Holders of Notes and the Issuer shall otherwise comply withTrust Indenture Act Section 312(a).

 

## Section2.06           Transfer and Exchange.

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(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 Restricted GlobalNotes shall be subject to restrictions on transfer comparable to those setforth herein to the extent required by the Securities Act.  Transfers of beneficial interests in theGlobal Notes also shall require compliance with either subparagraph (i) or (ii)below, as applicable, as well as one or more of the other followingsubparagraphs, 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 

 

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Initial Purchaser).  Beneficial interests in any UnrestrictedGlobal Note may be transferred to Persons who take delivery thereof in the formof a beneficial interest in an Unrestricted Global Note.  No written orders or instructions shall berequired to be delivered to the Registrar to effect the transfers described inthis 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 the Depositaryto cause to be issued a Definitive Note in an amount equal to the beneficialinterest to be transferred or exchanged and (2) instructions given by theDepositary to the Registrar containing information regarding the Person inwhose name such Definitive Note shall be registered to effect the transfer orexchange 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 of the relevant Global 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 the form of a beneficialinterest in the 144A Global Note, then the transferor must deliver acertificate in the form of Exhibit B hereto, including thecertifications in item (1) thereof; or

 

(B)           if the transferee will take delivery in the form of a beneficialinterest in the Regulation S Global Note, then the transferor must deliver acertificate in the form of Exhibit B hereto, including thecertifications 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:

 

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(A)          such exchange or transfer is effected pursuant to the Exchange Offer inaccordance with the Registration Rights Agreement and the holder of thebeneficial interest to be transferred, in the case of an exchange, or thetransferee, in the case of a transfer, certifies in the applicable Letter ofTransmittal that it is not (1) a Participating Broker-Dealer, (2) aPerson participating in the distribution of the Exchange Notes or (3) aPerson who is an affiliate (as defined 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 in a Restricted Global Noteproposes to exchange such beneficial interest for a beneficial interest in anUnrestricted Global Note, a certificate from such Holder substantially in theform of Exhibit C hereto, including the certifications in item(1)(a) thereof; or

 

(2)           if the holder of such beneficial interest in a Restricted Global Noteproposes to transfer such beneficial interest to a Person who shall takedelivery thereof in the form of a beneficial interest in an Unrestricted GlobalNote, a certificate from such holder in the form of Exhibit Bhereto, including the certifications in item (4) thereof;

 

and, in each such case setforth in this subparagraph (D), if the Registrar so requests or if theApplicable Procedures so require, an Opinion of Counsel in form reasonablyacceptable to the Registrar to the effect that such exchange or transfer is incompliance with the Securities Act and that the restrictions on transfercontained herein and in the Private Placement Legend are no longer required inorder to maintain compliance with the Securities Act.

 

Ifany such transfer is effected pursuant to subparagraph (B) or (D) above at atime when 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 equal to the aggregate principal amountof beneficial interests transferred pursuant to subparagraph (B) or (D) above.

 

Beneficialinterests in an Unrestricted Global Note cannot be exchanged for, ortransferred to Persons who take delivery thereof in the form of, a beneficialinterest in a Restricted Global Note.

 

(c)           Transfer or Exchange of Beneficial Interests for 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:

 

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(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 being transferred to the Issuer or anyof its Restricted Subsidiaries, a certificate substantially in the form of ExhibitB hereto, including the certifications in item (3)(b) thereof; or

 

(F)           if such beneficial interest is being transferred pursuant to aneffective registration statement under the Securities Act, a certificatesubstantially in the form of Exhibit B hereto, including thecertifications in item (3)(c) thereof,

 

the Trustee shall cause the aggregateprincipal amount of the applicable Global Note to be reduced accordinglypursuant to Section 2.06(h) hereof, and the Issuer shall execute and theTrustee shall authenticate and mail to the Person designated in theinstructions a Definitive Note in the applicable principal amount.  Any Definitive Note issued in exchange for abeneficial interest in a Restricted Global Note pursuant to this Section2.06(c) shall be registered in such name or names and in such authorizeddenomination or denominations as the holder of such beneficial interest shallinstruct the Registrar through instructions from 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 in a Restricted Global Notepursuant to this Section 2.06(c)(i) shall bear the Private Placement Legend andshall be subject 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 thereof in the form of a Definitive Note priorto (A) the expiration of the Restricted Period and (B) the receipt by theRegistrar of any certificates required pursuant to Rule 903(b)(3)(ii)(B) of theSecurities Act, except in the case of a transfer pursuant to an exemption fromthe registration requirements of the Securities Act other than Rule 903 or Rule904.

####  

#### (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 DefinitiveNote only 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 

 

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case of an exchange, or thetransferee, 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 beneficial interest in a Restricted Global Noteproposes to exchange such beneficial interest for an Unrestricted DefinitiveNote, a certificate from such holder substantially in the form of Exhibit Chereto, including the certifications in item (1)(b) thereof; or

 

(2)           if the holder of such beneficial interest in a Restricted Global Noteproposes to transfer such beneficial interest to a Person who shall takedelivery thereof in the form of an Unrestricted Definitive Note, a certificatefrom such holder substantially in the form of Exhibit B hereto,including the certifications in item (4) thereof;

 

and, in each such case setforth in this subparagraph (D), if the Registrar so requests or if theApplicable Procedures so require, an Opinion of Counsel in form reasonablyacceptable to the Registrar to the effect that such exchange or transfer is incompliance with the Securities Act and that the restrictions on transfercontained herein and in the Private Placement Legend are no longer required inorder 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 ofthe applicable Global Note to be reduced accordingly pursuant to Section2.06(h) hereof, and the Issuer shall execute and the Trustee shall authenticateand mail to the Person designated in the instructions a Definitive Note in theapplicable principal amount.  AnyDefinitive Note issued in exchange for a beneficial interest pursuant to thisSection 2.06(c)(iv) shall be registered in such name or names and in suchauthorized denomination or denominations as the holder of such beneficialinterest shall instruct the Registrar through instructions from or through theDepositary and the Participant or Indirect Participant.  The Trustee shall mail such Definitive Notesto the Persons in whose names such Notes are so registered.  Any Definitive Note issued in exchange for abeneficial interest pursuant to this Section 2.06(c)(iv) shall not bear thePrivate Placement Legend.

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(d)           Transfer and Exchange of Definitive Notes for Beneficial 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 

 

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#### 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 being transferred to the Issueror any of its Restricted Subsidiaries, a certificate substantially in the formof Exhibit B hereto, including the certifications in item (3)(b)thereof; or

 

(F)           if such Restricted Definitive Note is being transferred pursuant to aneffective registration statement under the Securities Act, a certificatesubstantially in the form of Exhibit B hereto, including thecertifications in item (3)(c) thereof,

 

the Trustee shall cancel the RestrictedDefinitive Note, increase or cause to be increased the aggregate principalamount of, in the case of clause (A) above, the applicable Restricted GlobalNote, in the case of clause (B) above, the applicable 144A Global Note, and inthe 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 Restricted DefinitiveNote may exchange such Note for a beneficial interest in an Unrestricted GlobalNote or transfer such Restricted Definitive Note to a Person who takes deliverythereof in the form of a beneficial interest in an Unrestricted Global Noteonly 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 ParticipatingBroker-Dealer, (2) a Person participating in the distribution of the ExchangeNotes or (3) a Person who is an affiliate (as defined in Rule 144) of theIssuer;

 

(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

 

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(D)          the Registrar receives the following:

 

(1)           if the Holder of such Definitive Notes proposes to exchange such Notesfor a beneficial interest in the Unrestricted Global Note, a certificate fromsuch Holder substantially in the form of Exhibit C hereto, includingthe certifications in item (1)(c) thereof; or

 

(2)           if the Holder of such Definitive Notes proposes to transfer such Notesto a Person who shall take delivery thereof in the form of a beneficialinterest in the Unrestricted Global Note, a certificate from such Holdersubstantially in the form of Exhibit B hereto, including thecertifications in item (4) thereof;

 

and, in each such case setforth in this subparagraph (D), if the Registrar so requests or if theApplicable Procedures so require, an Opinion of Counsel in form reasonablyacceptable to the Registrar to the effect that such exchange or transfer is incompliance with the Securities Act and that the restrictions on transfercontained herein and in the Private Placement Legend are no longer required inorder to maintain compliance with the Securities Act.

 

Upon satisfaction of theconditions of any of the subparagraphs in this Section 2.06(d)(ii), the Trusteeshall cancel the Definitive Notes and increase or cause to be increased theaggregate principal amount of the Unrestricted 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 the applicableUnrestricted Definitive Note and increase or cause to be increased theaggregate principal amount of one of the Unrestricted Global Notes.

####  

If any such exchange ortransfer from a Definitive Note to a beneficial interest is effected pursuantto subparagraph (ii)(B), (ii)(D) or (iii) 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 equal to the principal amount of Definitive Notes sotransferred.

 

(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 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;

 

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(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 be exchangedby the Holder thereof for an Unrestricted Definitive Note or transferred to aPerson or Persons who take delivery thereof in the form of an UnrestrictedDefinitive 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 ParticipatingBroker-Dealer, (2) a Person participating in the distribution of the ExchangeNotes or (3) a Person who is an affiliate (as defined in Rule 144) of theIssuer;

 

(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 Definitive Notes proposes to exchangesuch Notes for an Unrestricted Definitive Note, a certificate from such Holdersubstantially in the form of Exhibit C hereto, including thecertifications in item (1)(d) thereof; or

 

(2)           if the Holder of such Restricted Definitive Notes proposes to transfersuch Notes to a Person who shall take delivery thereof in the form of anUnrestricted Definitive Note, a certificate from such Holder substantially inthe form of Exhibit B hereto, including the certifications in item(4) thereof;

 

and, in each such case setforth in this subparagraph (D), if the Registrar so requests, an Opinion ofCounsel in form reasonably acceptable to the Registrar to the effect that suchexchange or transfer is in compliance with the Securities Act and that therestrictions on transfer contained herein and in the Private Placement Legendare no longer required in order to maintain compliance 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 equal to theprincipal amount of the beneficial interests in the Restricted Global Notestendered for acceptance by Persons that certify in the applicable Letters ofTransmittal 

 

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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 equalto the principal amount of the Restricted Definitive Notes tendered foracceptance by Persons that certify in the applicable Letters of Transmittalthat (x) they are not Participating Broker-Dealers, (y) they are notparticipating 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 of the applicable Restricted Global Notes to be reduced accordingly, andthe Issuer shall execute and the Trustee shall authenticate and mail to thePersons designated by the Holders of Definitive Notes so accepted UnrestrictedDefinitive Notes in the applicable principal amount.  Any Notes that remain outstanding after theconsummation of the Exchange Offer, and Exchange Notes issued in connectionwith the Exchange Offer, shall be treated as a single class of securities underthis 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:

 

“THIS SECURITY HAS NOT BEENREGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIESACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES ORTO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH BELOW.BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A “QUALIFIEDINSTITUTIONAL BUYER” (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT), (B) ITIS NOT A U.S. PERSON AND IS ACQUIRING THIS SECURITY IN AN OFFSHORE TRANSACTIONIN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT OR (C) IT IS AN ACCREDITEDINVESTOR (AS DEFINED IN RULE 501(a)(1), (2), (3), OR (7) UNDER THE SECURITIESACT (AN “ACCREDITED INVESTOR”), (2) AGREES THAT IT WILL NOT WITHIN TWO YEARSAFTER THE ORIGINAL ISSUANCE OF THIS SECURITY RESELL OR OTHERWISE TRANSFER THISSECURITY EXCEPT (A) TO THE ISSUER OR ANY SUBSIDIARY THEREOF, (B) INSIDE THEUNITED STATES TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144AUNDER THE SECURITIES ACT, (C) INSIDE THE UNITED STATES TO AN ACCREDITEDINVESTOR THAT, PRIOR TO SUCH TRANSFER, FURNISHES (OR HAS FURNISHED ON ITSBEHALF BY A U.S. BROKER-DEALER) TO THE TRUSTEE A SIGNED LETTER CONTAININGCERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFEROF THIS SECURITY (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM THE TRUSTEE FORTHIS SECURITY), (D)OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION INCOMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT (IF AVAILABLE), (E) PURSUANT 

 

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TO THE EXEMPTION FROMREGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE), (F)IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THESECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL IF THE ISSUER SOREQUESTS), OR (G) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THESECURITIES ACT AND (3) AGREES THAT IT WILL GIVE TO EACH PERSON TO WHOM THISSECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THISLEGEND.  IN CONNECTION WITH ANY TRANSFEROF THIS SECURITY WITHIN TWO YEARS AFTER THE ORIGINAL ISSUANCE OF THIS SECURITY,IF THE PROPOSED TRANSFEREE IS AN ACCREDITED INVESTOR, THE HOLDER MUST, PRIOR TOSUCH TRANSFER, 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:

####  

“THIS GLOBAL NOTE IS HELD BYTHE DEPOSITARY (AS DEFINED IN THE INDENTURE GOVERNING THIS NOTE) OR ITS NOMINEEIN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOTTRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEEMAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO SECTION 2.06(h)OF THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE EXCHANGED IN WHOLE BUT NOT INPART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE, (III) THIS GLOBAL NOTE MAYBE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO SECTION 2.11 OF THEINDENTURE AND (IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO A SUCCESSORDEPOSITARY 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 

 

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PRESENTED BY AN AUTHORIZEDREPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEWYORK) (“DTC”) TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGEOR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE &CO. OR SUCH OTHER NAME AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OFDTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR SUCH OTHER ENTITY AS MAY BEREQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OROTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFULINASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTERESTHEREIN.”

 

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

####  

“THE RIGHTS ATTACHING TOTHIS REGULATION S TEMPORARY GLOBAL NOTE, AND THE CONDITIONS AND PROCEDURESGOVERNING ITS EXCHANGE FOR CERTIFICATED NOTES, ARE AS SPECIFIED IN THEINDENTURE (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 of Notesrepresented by such Global Note shall be reduced accordingly and an endorsementshall be made on such Global Note by the Trustee or by the Depositary at thedirection of the Trustee to reflect such reduction; and if the beneficialinterest is being exchanged for or transferred to a Person who will takedelivery thereof in the form of a beneficial interest in another Global Note,such other Global Note shall be increased accordingly and an endorsement shallbe made on such Global Note by the Trustee or by the Depositary at thedirection of the Trustee to reflect such increase.

 

(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 holder of a beneficial interest ina Global Note or to a Holder of a Definitive Note for any registration oftransfer or exchange, but the Issuer may require payment of a sum sufficient tocover any transfer tax or similar governmental charge payable in connectiontherewith (other than any such transfer taxes or similar governmental chargepayable upon exchange or transfer pursuant to Sections 2.07, 2.10, 3.06, 3.09,4.10, 4.14 and 9.05 hereof).

####  

#### (iii)          Neither the Registrar nor the Issuer shall be required to register thetransfer of or exchange any Note selected for redemption in whole or in part,except the unredeemed portion of any Note being redeemed in part.

 

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#### (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) to issue, to register the transferof or to exchange any Notes during a period beginning at the opening ofbusiness 15 days before the day of any selection of Notes for redemption underSection 3.02 hereof and ending at the close of business on the day ofselection, (B) to register the transfer of or to exchange any Note so selectedfor redemption in whole or in part, except the unredeemed portion of any Notebeing redeemed in part or (C) to register the transfer of or to exchange a Notebetween a Record Date and the next succeeding Interest 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 principal of (and premium, if any) and interest(including Additional Interest, if any) on such Notes and for all otherpurposes, and none of the Trustee, any Agent or the Issuer shall be affected bynotice 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 any authorizeddenomination or denominations of a like aggregate principal amount.

####  

#### (viii)        At the option of the Holder, Notes may be exchanged for other Notes ofany authorized denomination or denominations of a like aggregate principalamount upon surrender of the Notes to be exchanged at such office oragency.  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 Opinions of Counsel required to besubmitted to the Registrar pursuant to this Section 2.06 to effect a registrationof transfer or exchange may be submitted by facsimile.

####  

## Section2.07           Replacement Notes.

##  

If any mutilated Note issurrendered to the Trustee, the Registrar or the Issuer and the Trusteereceives evidence to their satisfaction of the ownership and destruction, lossor theft of any Note, the Issuer shall issue and the Trustee, upon receipt ofan Authentication Order, shall authenticate a replacement Note if the Trustee’srequirements are met.  If required by theTrustee or the Issuer, an indemnity bond must be supplied by the Holder that issufficient in the judgment of the Trustee and the Issuer to protect the Issuer,the Trustee, any Agent and any authenticating agent from any loss that any ofthem may suffer if a Note is replaced. The Issuer may charge for its expenses in replacing a Note.

 

Every replacement Note is acontractual obligation of the Issuer and shall be entitled to all of thebenefits of this Indenture equally and proportionately with all other Notesduly issued hereunder.

 

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## Section2.08           Outstanding Notes.

##  

The Notes outstanding at anytime are all the Notes authenticated by the Trustee except for those canceledby it, those delivered to it for cancellation, those reductions in the interestin a Global Note effected by the Trustee in accordance with the provisionshereof, and those described in this Section 2.08 as not outstanding.  Except as set forth in Section 2.09 hereof, aNote does not cease to be outstanding because the Issuer or an Affiliate of theIssuer holds the Note.

 

If a Note is replacedpursuant to Section 2.07 hereof, it ceases to be outstanding unless the Trusteereceives proof satisfactory to it that the replaced Note is held by a bona fidepurchaser.

 

If the principal amount ofany Note is considered paid under Section 4.01 hereof, it ceases to beoutstanding and interest on it ceases to accrue.

 

If the Paying Agent (otherthan the Issuer, a Subsidiary or an Affiliate of any thereof) holds, on aredemption date or maturity date, money sufficient to pay Notes payable on thatdate, then on and after that date such Notes shall be deemed to be no longeroutstanding and shall cease to accrue interest.

 

## Section2.09           Treasury Notes.

##  

In determining whether theHolders of the required principal amount of Notes have concurred in anydirection, waiver or consent, Notes owned by the Issuer, or by any Affiliate ofthe Issuer, shall be considered as though not outstanding, except that for thepurposes of determining whether the Trustee shall be protected in relying onany such direction, waiver or consent, only Notes that a Responsible Officer ofthe Trustee knows are so owned shall be so disregarded.  Notes so owned which have been pledged ingood faith shall not be disregarded if the pledgee establishes to thesatisfaction of the Trustee the pledgee’s right to deliver any such direction,waiver or consent with respect to the Notes and that the pledgee is not theIssuer or any obligor upon the Notes or any Affiliate of the Issuer or of suchother obligor.

 

## Section2.10           Temporary Notes.

##  

Until certificatesrepresenting Notes are ready for delivery, the Issuer may prepare and theTrustee, upon receipt of an Authentication Order, shall authenticate temporaryNotes.  Temporary Notes shall besubstantially 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 delay, the Issuer shall prepare and the Trustee shall authenticatedefinitive Notes in exchange for temporary Notes.

 

Holders and beneficialholders, as the case may be, of temporary Notes shall be entitled to all of thebenefits accorded to Holders, or beneficial holders, respectively, of Notes underthis Indenture.

 

## Section2.11           Cancellation.

##  

The Issuer at any time maydeliver Notes to the Trustee for cancellation. The Registrar and Paying Agentshall forward to the Trustee any Notes surrendered to them for registration oftransfer, exchange or payment.  TheTrustee or, at the direction of the Trustee, the Registrar or the Paying Agentand no one else shall cancel all Notes surrendered for registration oftransfer, exchange, payment, replacement or cancellation and shall dispose ofcancelled Notes (subject to the record retention requirement 

 

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of the Exchange Act) in its customarymanner.  Certification of the disposal ofall cancelled 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.

 

## Section2.12           Defaulted Interest.

##  

If the Issuer defaults in apayment of interest on the Notes, it shall pay the defaulted interest in anylawful manner plus, to the extent lawful, interest payable on the defaultedinterest to the Persons who are Holders on a subsequent special record date, ineach case at the rate provided in the Notes and in Section 4.01 hereof.  The Issuer shall notify the Trustee inwriting of the amount of defaulted interest proposed to be paid on each Noteand the date of the proposed payment, and at the same time the Issuer shalldeposit with the Trustee an amount of money equal to the aggregate amountproposed to be paid in respect of such defaulted interest or shall makearrangements satisfactory to the Trustee for such deposit prior to the date ofthe proposed payment, such money when deposited to be held in trust for thebenefit of the Persons entitled to such defaulted interest as provided in thisSection 2.12.  The Trustee shall fix orcause to be fixed each such special record date and payment date; providedthat no such special record date shall be less than 10 days prior to therelated payment date for such defaulted interest.  The Trustee shall promptly notify the Issuerof such special record date.  At least 15days before the special record date, the Issuer (or, upon the written requestof the Issuer, the Trustee in the name and at the expense of the Issuer) shallmail or cause to be mailed, first-class postage prepaid, to each Holder anotice at his or her address as it appears in the Note Register that states thespecial record date, the related payment date and the amount of such interest tobe paid.

 

Subject to the foregoingprovisions of this Section 2.12 and for greater certainty, each Note deliveredunder this Indenture upon registration of transfer of or in exchange for or inlieu of any other Note shall carry the rights to interest accrued and unpaid,and to accrue, which were carried by such other Note.

 

## Section2.13           CUSIP Numbers

##  

The Issuer in issuing theNotes may use CUSIP numbers (if then generally in use) and, if so, the Trusteeshall use CUSIP numbers in notices of redemption as a convenience to Holders; *provided*, that any such notice may statethat no representation is made as to the correctness of such numbers either asprinted on the Notes or as contained in any notice of redemption and thatreliance may be placed only on the other identification numbers printed on theNotes, and any such redemption shall not be affected by any defect in oromission of such numbers.  The Issuerwill as promptly as practicable notify the Trustee of any change in the CUSIPnumbers.

 

# ARTICLE3

#  

# REDEMPTION

#  

## Section3.01           Notices to Trustee.

##  

If the Issuer elects toredeem Notes pursuant to Section 3.07 hereof, it shall furnish to the Trustee,at least 2 Business Days before notice of redemption is required to be mailedor caused to be mailed to Holders pursuant to Section 3.03 hereof but not morethan 60 days before a redemption date, an Officer’s Certificate setting forth(i) the paragraph or subparagraph of such Notes and/or Section of thisIndenture pursuant to which the redemption shall occur, (ii) the redemptiondate, (iii) the principal amount of the Notes to be redeemed and (iv) theredemption price.

 

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## Section3.02           Selection of Notes To Be Redeemed orPurchased.

##  

If less than all of theNotes are to be redeemed or purchased in an offer to purchase at any time, theTrustee shall select the Notes to be redeemed or purchased (a) if theNotes are listed on any national securities exchange, in compliance with therequirements of the principal national securities exchange on which the Notesare listed or (b) on a *pro rata*basis or, to the extent that selection on a *prorata* basis is not practicable, by lot or by such other method theTrustee considers fair and appropriate. In the event of partial redemption or purchase by lot, the particularNotes to be redeemed or purchased shall be selected, unless otherwise providedherein, not less than 30 nor more than 60 days prior to the redemption date bythe Trustee from the outstanding Notes not previously called for redemption orpurchase.

 

The Trustee shall promptlynotify the Issuer in writing of the Notes selected for redemption or purchaseand, in the case of any Note selected for partial redemption or purchase, theprincipal amount thereof to be redeemed or purchased.  Notes and portions of Notes selected shall bein amounts of $1,000 or whole multiples of $1,000; no Notes of $1,000 or lesscan be redeemed in part, except that if all of the Notes of a Holder are to beredeemed or purchased, the entire outstanding amount of Notes held by suchHolder, even if not a multiple of $1,000, shall be redeemed or purchased.  Except as provided in the preceding sentence,provisions of this Indenture that apply to Notes called for redemption orpurchase also apply to portions of Notes called for redemption or purchase.

 

## Section3.03           Notice of Redemption.

##  

Subject to Section 3.09hereof, the Issuer shall mail or cause to be mailed by first-class mail,postage prepaid, notices of redemption at least 30 days but not more than 60days before the redemption date to each Holder of Notes to be redeemed at suchHolder’s registered address or shall otherwise deliver on such timeframe suchnotice in accordance with the procedures of DTC, except that redemption noticesmay be mailed more than 60 days prior to a redemption date if the notice isissued in connection with Article 8 or Article 11 hereof.  Except as set forth in Section 3.07(b)hereof, notices of redemption may not be conditional.

 

The notice shall identifythe Notes to be redeemed and shall state:

 

### (a)           the redemption date;

###  

### (b)           the redemption price;

###  

### (c)           if any Note is to be redeemed in part only, the portion of theprincipal amount of that Note that is to be redeemed and that, after theredemption date upon surrender of such Note, a new Note or Notes in principalamount equal to the unredeemed portion of the original Note representing thesame indebtedness 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 be surrendered to the PayingAgent 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;

 

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### (g)           the paragraph or subparagraph of the Notes and/or Section of thisIndenture pursuant to which the Notes called for redemption are being redeemed;

###  

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

###  

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

###  

At the Issuer’s request, theTrustee shall give the notice of redemption in the Issuer’s name and at itsexpense; provided that the Issuer shall have delivered to the Trustee,at least 2 Business Days before notice of redemption is required to be mailedor caused to be mailed to Holders pursuant to this Section 3.03 (unless ashorter notice shall be agreed to by the Trustee), an Officer’s Certificaterequesting that the Trustee give such notice and setting forth the informationto be stated in such notice as provided in the preceding paragraph.

 

## Section3.04           Effect of Notice of Redemption.

##  

Once notice of redemption ismailed in accordance with Section 3.03 hereof, Notes called for redemptionbecome irrevocably due and payable on the redemption date at the redemptionprice (except as provided for in Section 3.07(b) hereof).  The notice, if mailed in a manner hereinprovided, shall be conclusively presumed to have been given, whether or not theHolder receives such notice.  In anycase, failure to give such notice by mail or any defect in the notice to theHolder of any Note designated for redemption in whole or in part shall notaffect the validity of the proceedings for the redemption of any otherNote.  Subject to Section 3.05 hereof, onand after the redemption date, interest ceases to accrue on Notes or portionsof Notes called for redemption.

 

## Section3.05           Deposit of Redemption or Purchase Price.

##  

Prior to 10:00 a.m. (NewYork City time) on the redemption or purchase date, the Issuer shall depositwith the Trustee or with the Paying Agent money sufficient to pay theredemption or purchase price of and accrued and unpaid interest (includingAdditional Interest, if any) on all Notes to be redeemed or purchased on thatdate.  The Trustee or the Paying Agentshall promptly return to the Issuer any money deposited with the Trustee or thePaying Agent by the Issuer in excess of the amounts necessary to pay theredemption price of, and accrued and unpaid interest on, all Notes to beredeemed or purchased.

 

If the Issuer complies withthe provisions of the preceding paragraph, on and after the redemption orpurchase date, interest shall cease to accrue on the Notes or the portions ofNotes called for redemption or purchase. If a Note is redeemed or purchased on or after a Record Date but on orprior to the related Interest Payment Date, then any accrued and unpaidinterest to the redemption or purchase date shall be paid to the Person inwhose name such Note was registered at the close of business on such RecordDate.  If any Note called for redemptionor purchase shall not be so paid upon surrender for redemption or purchasebecause of the failure of the Issuer to comply with the preceding paragraph,interest shall be paid on the unpaid principal, from the redemption or purchasedate until such principal is paid, and to the extent lawful on any interestaccrued to the redemption or purchase date not paid on such unpaid principal,in each case at the rate provided in the Notes and in Section 4.01 hereof.

 

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## Section3.06           Notes Redeemed or Purchased in Part.

##  

Upon surrender of a Notethat is redeemed or purchased in part, the Issuer shall issue and the Trusteeshall authenticate for the Holder at the expense of the Issuer a new Note equalin principal amount to the unredeemed or unpurchased portion of the Notesurrendered representing the same indebtedness to the extent not redeemed orpurchased; provided that each new Note will be in a principal amount of$1,000 or an integral multiple of $1,000. It is understood that, notwithstanding anything in this Indenture to thecontrary, only an Authentication Order and not an Opinion of Counsel or Officer’sCertificate is required for the Trustee to authenticate such new Note.

 

## Section3.07           Optional Redemption.

##  

(a)           At any time prior to November 1, 2010, the Issuer may redeem all or apart of the Notes, upon not less than 30 nor more than 60 days’ prior noticemailed by first-class mail to the registered address of each Holder of Notes orotherwise delivered in accordance with the procedures of DTC, at a redemptionprice equal to 100% of the principal amount of the Notes redeemed plus theApplicable Premium as of, and accrued and unpaid interest and Additional Interest,if any, to the date of redemption (the “Redemption Date”), subject tothe rights of Holders of record on the relevant Record Date to receive interestdue on the relevant Interest Payment Date.

 

(b)           Until November 1, 2009, the Issuer may, at its option, on one or moreoccasions redeem up to 35% of the aggregate principal amount of Notes(including the aggregate principal amount of Notes issued after the IssueDate), upon notice provided as described in Section 3.03 hereof, at aredemption price equal to 110.000% of the aggregate principal amount thereof,plus accrued and unpaid interest thereon and Additional Interest, if any, tothe applicable Redemption Date, subject to the right of Holders of record onthe relevant Record Date to receive interest due on the relevant InterestPayment Date, with the net cash proceeds of one or more Equity Offerings; providedthat at least 50% of the sum of the aggregate principal amount 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 beredeemable at the Issuer’s option before November 1, 2010.

 

(d)           On and after November 1, 2010, the Issuer may redeem the Notes, inwhole or in part, at the redemption prices (expressed as percentages ofprincipal amount of the Notes to be redeemed) set forth below, plus accrued andunpaid interest thereon and Additional Interest, 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 each of theyears indicated below:

 
| **Year**            | ** ** | **Percentage** | ** ** |
|---------------------|------------|----------------|------------|
|                |       |           |       |
| 2010                |       | 105.000        | %          |
| 2011                |       | 102.500        | %          |
| 2012 and thereafter |       | 100.000        | %          |

 

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

 

## Section3.08           Mandatory Redemption.

##  

The Issuer shall not berequired to make mandatory redemption or sinking fund payments with respect tothe Notes.

 

## Section3.09           Offers To Repurchase by Application of ExcessProceeds.

##  

(a)           In the event that, pursuant to Section 4.10 hereof, the Issuer shall berequired to commence an Asset Sale Offer, it shall follow the proceduresspecified below.

 

(b)           The Asset Sale Offer shall remain open for a period of 20 Business Daysfollowing its commencement and no longer, except to the extent that a longerperiod is required by applicable law (the “Offer Period”).  No later than five Business Days after thetermination of the Offer Period (the “Purchase Date”), the Issuer shallapply all Excess Proceeds (the “Offer Amount”) to the purchase of Notesand, if required, Pari Passu Indebtedness (on a *pro rata* basis, if applicable), or, if less than the OfferAmount has been tendered, all Notes and Pari Passu Indebtedness tendered inresponse to the Asset Sale Offer. Payment for any Notes so purchased shall be made in the same manner as interestpayments are made.

 

(c)           If the Purchase Date is on or after a Record Date and on or before therelated Interest Payment Date, any accrued and unpaid interest and AdditionalInterest, if any, up to but excluding the Purchase Date, shall be paid to thePerson in whose name a Note is registered at the close of business on suchRecord Date, and no additional interest shall be payable to Holders who tenderNotes pursuant to the Asset Sale Offer.

 

(d)           Upon the commencement of an Asset Sale Offer, the Issuer shall send, byfirst-class mail, a notice to each of the Holders, with a copy to theTrustee.  The notice shall contain allinstructions and materials necessary to enable such Holders to tender Notespursuant to the Asset Sale Offer.  TheAsset Sale Offer shall be made to all Holders and holders of Pari PassuIndebtedness.  The notice, which shallgovern 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 the Purchase 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 accrueinterest after the Purchase Date;

 

(v)           that Holders electing to have a Note purchased pursuant to an AssetSale Offer may elect to have Notes purchased in integral multiples of $1,000only;

 

(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, 

 

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the Depositary, if appointedby the Issuer, or a Paying Agent at the address specified in the notice atleast three days 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 of the Note the Holder delivered for purchase and a statement that suchHolder is withdrawing his election to have such Note purchased;

 

(viii)        that, if the aggregate principal amount of Notes and Pari PassuIndebtedness surrendered by the holders thereof exceeds the Offer Amount, theTrustee shall select the Notes and such Pari Passu Indebtedness to be purchasedon a *pro rata* basis based on theaccreted value or principal amount of the Notes or such Pari Passu Indebtednesstendered (with such adjustments as may be deemed appropriate by the Trustee sothat only Notes in denominations of $1,000, or integral multiples thereof,shall be purchased); and

 

(ix)           that Holders whose Notes were purchased only in part shall be issuednew Notes equal in principal amount to the unpurchased portion of the Notessurrendered (or transferred by book-entry transfer) representing the sameindebtedness to the extent not repurchased.

 

(e)           On or before the Purchase Date, the Issuer shall, to the extent lawful,(1) accept for payment, on a *pro rata*basis to the extent necessary, the Offer Amount of Notes or portions thereofvalidly tendered pursuant to the Asset Sale Offer, or if less than the OfferAmount has been tendered, all Notes tendered and (2) deliver or cause to bedelivered to the Trustee the Notes properly accepted together with an Officer’sCertificate stating the aggregate principal amount 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 equal to anyunpurchased portion of the Note surrendered representing the same indebtednessto the extent not repurchased; provided that each such new Note shall bein a principal amount of $1,000 or an integral multiple thereof.  Any Note not so accepted shall be promptlymailed or delivered by the Issuer to the Holder thereof.  The Issuer shall publicly announce theresults of the Asset Sale Offer on or as soon as practicable after the PurchaseDate.

 

Other than as specificallyprovided in this Section 3.09 or Section 4.10 hereof, any purchase pursuant tothis Section 3.09 shall be made pursuant to the applicable provisions ofSections 3.01 through 3.06 hereof.

 

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# ARTICLE4

#  

# COVENANTS

#  

## Section4.01           Payment of Notes.

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The Issuer shall pay orcause to be paid the principal of, premium, if any, Additional Interest, ifany, and interest on the Notes on the dates and in the manner provided in theNotes.  Principal, premium, if any,Additional Interest, if any, and interest shall be considered paid on the datedue if the Paying Agent, if other than the Issuer or a Subsidiary, holds as ofnoon Eastern Time on the due date money deposited by the Issuer in immediatelyavailable funds and designated for and sufficient to pay all principal,premium, if any, and interest then due. If a payment date is not a Business Day, payment may be made on the nextsucceeding day that is a Business Day.

 

The Issuer shall pay allAdditional Interest, if any, in the same manner on the dates and in the amountsset forth in the Registration Rights Agreement.

 

The Issuer shall pay interest(including post-petition interest in any proceeding under any Bankruptcy Law)on overdue principal at the rate equal to the then applicable interest rate onthe Notes to the extent lawful; it shall pay interest (including post-petitioninterest in any proceeding under any Bankruptcy Law) on overdue installments ofinterest and Additional Interest (without regard to any applicable graceperiod) at the same rate to the extent lawful.

 

## Section4.02           Maintenance of Office or Agency.

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The Issuer shall maintain inthe Borough of Manhattan in the City of New York an office or agency (which maybe an office of the Trustee or an affiliate of the Trustee, Registrar orco-registrar) where Notes may be surrendered for registration of transfer orfor exchange or presented for payment and where notices and demands to or uponthe Issuer in respect of the Notes and this Indenture may be served.  The Issuer shall give prompt written noticeto the Trustee of the location, and any change in the location, of such office oragency.  If at any time the Issuer shallfail to maintain any such required office or agency or shall fail to furnishthe Trustee with the address thereof, such presentations, surrenders, noticesand demands may be made or served at the Corporate Trust Office of the Trustee.

 

The Issuer may also fromtime to time designate one or more other offices or agencies where the Notesmay be presented or surrendered for any or all such purposes and may from timeto time rescind such designations; provided that no such designation orrescission shall in any manner relieve the Issuer of its obligation to maintainan office or agency in the Borough of Manhattan in the City of New York forsuch purposes.  The Issuer shall give promptwritten notice to the Trustee of any such designation or rescission and of anychange in the location of any such other office or agency.

 

The Issuer hereby initiallydesignates the office of the Trustee located at 45 Broadway, 12th Floor, NewYork, New York 10006, Attention:  Worldwide Securities Services, as onesuch office or agency of the Issuer in accordance with Section 2.03hereof.

 

## Section4.03           Reports and Other Information.

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(a)           Notwithstanding that the Issuer may not be subject to the reportingrequirements of Section 13 or 15(d) of the Exchange Act or otherwise report onan annual and quarterly basis on forms provided for such annual and quarterlyreporting pursuant to rules and regulations promulgated by the SEC, the Issuershall file with the SEC (and make available to the Trustee and Holders of theNotes 

 

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(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 each fiscal year, annual reportson Form 10-K, or any successor or comparable form, containing theinformation required to be contained therein, or required in such successor orcomparable form;

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###### (2)           within 45 days after the end of each of the first three fiscal quartersof each fiscal year, commencing with the first fiscal quarter of the fiscalyear commencing February 4, 2007, reports on Form 10-Q containing allquarterly information that would be required to be contained in Form 10-Q, orany successor or comparable form;

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###### (3)           promptly from time to time after the occurrence of an event required tobe therein reported, such other reports on Form 8-K, or any successor orcomparable form; and

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###### (4)           any other information, documents and other reports which the Issuerwould be required to file with the SEC if it were subject to Section 13 or15(d) of the Exchange Act beginning on and after the Issue Date;

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in each case, in a manner that complies inall material respects with the requirements specified in such form; providedthat the Issuer shall not be so obligated to file such reports with the SEC (i)if the SEC does not permit such filing or (ii) prior to the consummation of anexchange offer or the effectiveness of a shelf registration statement asrequired by the Registration Rights Agreement, so long as if clause (i) or(ii) is applicable the Issuer makes available such information toprospective purchasers of Notes, in addition to providing such information tothe Trustee and the Holders of the Notes, in each case within 15 days after thetime the Issuer would be required to file such information with the SEC, if itwere subject 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 cure shall not otherwise affect the rights of the Holders underArticle 6 hereto if Holders of at least 25% in principal amount of the thentotal outstanding Notes have declared the principal, 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 indirect parent company of the Issuerbecomes a guarantor of the Notes, the Issuer may satisfy its obligations underthis Section 4.03 with respect to financial information relating to the Issuerby furnishing financial information relating to such parent; providedthat the same is accompanied by consolidating information that explains inreasonable detail the differences between the information relating to suchparent, on the one hand, and the information relating to the Issuer and itsRestricted Subsidiaries on a standalone basis, on the other hand.

 

(c)           Notwithstanding the foregoing, the requirements of this Section 4.03shall be deemed satisfied prior to the commencement of the Exchange Offer orthe effectiveness of the Shelf Registration Statement by the filing with theSEC of the Exchange Offer Registration Statement or Shelf RegistrationStatement or any other filing, and any amendments thereto, with such financialinformation that satisfies Regulation S-X of the Securities Act.

 

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(d)           Delivery of such reports, information and documents to the Trustee isfor informational purposes only and the Trustee’s receipt of such shall notconstitute constructive notice of any information contained therein ordeterminable from information contained therein, including the Issuer’scompliance with any of its covenants hereunder (as to which the Trustee isentitled to rely exclusively on Officer’s Certificates).

 

## Section4.04           Compliance Certificate.

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(a)           The Issuer and each Guarantor (to the extent that such Guarantor is sorequired under the Trust Indenture Act) shall deliver to the Trustee, within120 days after the end of each fiscal year ending after the Issue Date, acertificate from the principal executive officer, principal financial officeror principal accounting officer stating that a review of the activities of theIssuer and its Restricted Subsidiaries during the preceding fiscal year hasbeen made under the supervision of the signing Officer with a view todetermining whether the Issuer has kept, observed, performed and fulfilled itsobligations under this Indenture, and further stating, as to such Officersigning such certificate, that to the best of his or her knowledge the Issuerhas 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 is continuing under this Indenture,or if the Trustee or the holder of any other evidence of Indebtedness of theIssuer or any Subsidiary gives any notice or takes any other action withrespect to a claimed Default, the Issuer shall promptly (which shall be no morethan five (5) Business Days) deliver to the Trustee by registered or certifiedmail or by facsimile transmission an Officer’s Certificate specifying suchevent and what action the Issuer proposes to take with respect thereto.

 

## Section4.05           Taxes.

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The Issuer shall pay ordischarge, and shall cause each of its Restricted Subsidiaries to pay ordischarge, prior to delinquency, all material taxes, lawful assessments, andgovernmental levies except such as are contested in good faith and byappropriate actions or where the failure to effect such payment or discharge isnot adverse in any material respect to the Holders of the Notes.

 

## Section4.06           Stay, Extension and Usury Laws.

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The Issuer and each of theGuarantors covenant (to the extent that they may lawfully do so) that they shallnot at any time insist upon, plead, or in any manner whatsoever claim or takethe 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 theperformance of this Indenture; and the Issuer and each of the Guarantors (tothe extent that they may lawfully do so) hereby expressly waive all benefit oradvantage of any such law, and covenant (to the extent that they may lawfullydo so) that they shall not, by resort to any such law, hinder, delay or impedethe execution of any power herein granted to the Trustee, but shall suffer andpermit the execution of every such power as though no such law has beenenacted.

 

## Section4.07           Limitation on Restricted Payments.

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(a)           The Issuer shall not, and shall not permit any of its RestrictedSubsidiaries to, directly or indirectly:

 

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(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 or final maturity, in each case due within one year ofthe date of purchase, repurchase or acquisition; or

 

(IV)         make any Restricted Investment

 

(all such payments and other actions setforth in clauses (I) through (IV) above being collectively referred to as “RestrictedPayments”), unless, at the time of such Restricted Payment:

 

(1)           no Default shall have occurred and be continuing or would occur as aconsequence thereof;

 

(2)           immediately after giving effect to such transaction 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 the aggregate amount of allother Restricted Payments made by the Issuer and its Restricted Subsidiariesafter the Issue Date (including Restricted Payments permitted by clauses (1),(6)(c), (9) and (14) of Section 4.07(b) hereof, but excluding all otherRestricted Payments permitted by Section 4.07(b) hereof), is less than the sumof (without duplication):

 

(a)           if the Consolidated Leverage Ratio of the Issuer is less than 6.00 to1.00 on a *pro forma*basis aftergiving effect to such transaction, 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 

 

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financial statements areavailable at the time of such Restricted Payment, or, in the case suchConsolidated Net Income for such period is a deficit, minus 100% of suchdeficit; *plus*

 

(b)           100% of the aggregate net cash proceeds and the fair market value, asdetermined in good faith by the Issuer, of marketable securities or otherproperty received by the Issuer since immediately after the Issue Date (otherthan net cash proceeds to the extent such net cash proceeds have been used toincur Indebtedness, Disqualified Stock or Preferred Stock pursuant to clause(12)(a) of Section 4.09(b) hereof) from the issue or sale of:

 

(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 netcash proceeds are actually contributed to the Issuer, Equity Interests of theIssuer’s direct or indirect parent companies (excluding contributions of theproceeds from the sale of Designated Preferred Stock of such companies orcontributions to the extent such amounts have been applied to RestrictedPayments made in accordance with clause (4) of Section 4.07(b) hereof); or

 

(ii)           debt securities of the Issuer that have been converted into orexchanged for Equity Interests of the Issuer;

 

provided, however, that this clause (b) shallnot include the proceeds from (W) Refunding Capital Stock, (X) Equity Interestsor convertible debt securities of the Issuer sold to a Restricted Subsidiary,(Y) Disqualified Stock or debt securities that have been converted intoDisqualified Stock or (Z) Excluded Contributions; *plus*

 

(c)           100% of the aggregate amount of cash and the fair market value, asdetermined in good faith by the Issuer, of marketable securities or otherproperty contributed to the capital of the Issuer following the Issue Dateother than (X) net cash proceeds to the extent such net cash proceeds have beenused to incur Indebtedness or issue Disqualified Stock or Preferred Stockpursuant to clause (12)(a) of Section 4.09(b) hereof), (Y) by a RestrictedSubsidiary and (Z) from any Excluded Contributions; *plus*

 

(d)           100% of the aggregate amount received in cash and the fair marketvalue, as determined in good faith by the Issuer, of marketable securities orother property received by means of:

 

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(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 such RestrictedInvestments from the Issuer or its Restricted Subsidiaries and repayments ofloans or advances, and releases of guarantees, which constitute RestrictedInvestments by the Issuer or its Restricted Subsidiaries, in each case afterthe Issue Date; or

 

(ii)           the sale (other than to the Issuer or a Restricted Subsidiary) of thestock of an Unrestricted Subsidiary or a distribution from an UnrestrictedSubsidiary (other than in each case to the extent the Investment in suchUnrestricted Subsidiary was made by the Issuer or a Restricted Subsidiarypursuant to clause (7) of Section 4.07(b) hereof or to the extent suchInvestment constituted a Permitted Investment) or a dividend from anUnrestricted Subsidiary after the Issue Date; *plu*s

 

(e)           in the case of the redesignation of an Unrestricted Subsidiary as aRestricted Subsidiary or the merger, amalgamation or consolidation of anUnrestricted Subsidiary into the Issuer or a Restricted Subsidiary or thetransfer of all or substantially all of the assets of an UnrestrictedSubsidiary to the Issuer or a Restricted Subsidiary after the Issue Date, thefair market value of the Investment in such Unrestricted Subsidiary (or theassets transferred), as determined by the Issuer in good faith or, if such fairmarket value may exceed $125.0 million, in writing by an Independent FinancialAdvisor, at the time of the redesignation of such Unrestricted Subsidiary as aRestricted Subsidiary or at the time of such merger, amalgamation,consolidation or transfer of assets to the extent the Investment in suchUnrestricted Subsidiary was made by the Issuer or a Restricted Subsidiarypursuant to clause (7) of Section 4.07(b) hereof or to the extent suchInvestment constituted a Permitted Investment.

 

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

 

(1)           the payment of any dividend within 60 days after the date ofdeclaration thereof, if at the date of declaration such payment would havecomplied with the provisions of this Indenture;

 

(2)           (a) the redemption, repurchase, retirement or other acquisition of anyEquity Interests (“Treasury Capital Stock”) of the Issuer or any EquityInterests of any direct or indirect parent company of the Issuer or anySubordinated Indebtedness of the Issuer or a Restricted Subsidiary, in exchangefor, or out of the proceeds of, the substantially concurrent sale or issuance(other than to a Restricted Subsidiary) of, Equity Interests of the Issuer orany direct or indirect parent company of the Issuer to the extent contributedto the Issuer (in each case, other than any Disqualified Stock) (“RefundingCapital Stock”), (b) the declaration and payment of dividends on TreasuryCapital Stock out of the proceeds of the substantially concurrent sale orissuance (other than to a Subsidiary of the Issuer or to an employee stockownership plan or any trust established by the Issuer or any of itsSubsidiaries) of Refunding Capital Stock, and (c) if immediately prior to theretirement of Treasury Capital Stock, the declaration and payment of dividendsthereon was permitted under clause (6) of this Section 4.07(b), the declarationand payment of dividends on the Refunding Capital Stock (other than RefundingCapital Stock the proceeds of which were used to redeem, repurchase, retire orotherwise acquire any Equity Interests of any direct or indirect parent companyof the Issuer) in an aggregate amount per year no greater than the aggregate 

 

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amount of dividends perannum that were declarable and payable on such Treasury Capital Stockimmediately prior to such retirement;

 

(3)           the redemption, repurchase or other acquisition or retirement ofSubordinated Indebtedness of the Issuer or a Guarantor made by exchange for, orout of the proceeds of, the substantially concurrent sale of, new Indebtednessof the Issuer or a Guarantor, as the case may be, which is incurred incompliance with Section 4.09 hereof so long as:

 

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

 

(b)           such new Indebtedness is subordinated to the Notes or the applicableGuarantee at least to the same extent as such Subordinated Indebtedness sorepurchased, exchanged, redeemed, acquired or retired for value;

 

(c)           such new Indebtedness has a final scheduled maturity date equal to orlater than the final scheduled maturity date of the Subordinated Indebtednessbeing so redeemed, repurchased, exchanged, acquired or retired; and

 

(d)           such new Indebtedness has a Weighted Average Life to Maturity equal toor greater than the remaining Weighted Average Life to Maturity of theSubordinated Indebtedness being so redeemed, repurchased, exchanged, acquiredor retired;

 

(4)           a Restricted Payment to pay for the repurchase, retirement or otheracquisition or retirement for value of Equity Interests (other thanDisqualified Stock) of the Issuer or any of its direct or indirect parentcompanies held by any future, present or former employee, director orconsultant of the Issuer, any of its Subsidiaries or any of its direct orindirect parent companies, or any of their respective estates, spouses orformer spouses pursuant to any management equity plan or stock option plan orany other management or employee benefit plan or agreement (including, for theavoidance of doubt, any principal and interest payable on any notes issued bythe Issuer or 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 Equity Interests (other thanDisqualified Stock) of the Issuer and, to the extent contributed to the Issuer,Equity Interests of any of the Issuer’s direct or indirect parent companies, ineach case to members of management, directors or consultants of the Issuer, anyof its Subsidiaries or any of its direct 

 

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or indirect parent companiesthat occurs after the Issue Date, to the extent the cash proceeds from the saleof such Equity Interests have not otherwise been applied to the payment ofRestricted Payments by virtue of clause (3) of Section 4.07(a) hereof, plus, inrespect of any sale of Equity Interests in connection with an exercise of stockoptions, an amount equal to the amount required to be withheld by the Issuer orany of its direct or indirect parent companies in connection with such exerciseunder applicable law to the extent such amount is repaid to the Issuer or itsdirect or indirect parent company, as applicable, constituted a RestrictedPayment and has not otherwise been applied to the payment of RestrictedPayments by virtue of clause (3) of Section 4.07(a) hereof; *plus*

 

(b)           the cash proceeds of key man life insurance policies received by theIssuer or its Restricted Subsidiaries after the Issue Date; *less*

 

(c)           the amount of any Restricted Payments previously made with the cashproceeds described in clauses (a) and (b) of this clause (4);

 

andprovided**furtherthat cancellation of Indebtedness owing to the Issuer from employees, directorsor consultants of the Issuer, any of the Issuer’s direct or indirect parentcompanies or any of the Issuer’s Restricted Subsidiaries in connection with arepurchase of Equity Interests of the Issuer or any of its direct or indirectparent companies will not be deemed to constitute a Restricted Payment forpurposes of this Section 4.07 or any other provision of this Indenture;

 

(5)           the declaration and payment of dividends to holders of any class orseries of Disqualified Stock of the Issuer or any of its RestrictedSubsidiaries issued in accordance with Section 4.09 hereof to the extent suchdividends are included in the definition of “Fixed Charges”;

 

(6)           (a) the declaration and payment of dividends to holders of any class orseries of Designated Preferred Stock (other than Disqualified Stock) issued bythe Issuer after the Issue Date;

 

(b)           the declaration and payment of dividends to a direct or indirect parentcompany of the Issuer, the proceeds of which will be used to fund the paymentof dividends to holders of any class or series of Designated Preferred Stock(other than Disqualified Stock) of such parent company issued after the IssueDate, provided that the amount of dividends paid pursuant to this clause(b) shall not exceed the aggregate amount of cash actually contributed to theIssuer from the sale of such Designated Preferred Stock; or

 

(c)           the declaration and payment of dividends on Refunding Capital Stockthat is Preferred Stock in excess of the dividends declarable and payablethereon 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 most recently ended four fullfiscal quarters for which internal financial statements are availableimmediately preceding the date of issuance of such Designated Preferred Stockor the declaration of such dividends on Refunding Capital Stock that isPreferred Stock, after giving effect to such issuance or declaration on a *pro forma* basis, the Issuer and itsRestricted Subsidiaries on a consolidated basis would have had a Fixed ChargeCoverage Ratio of at least 2.00 to 1.00;

 

(7)           if the Consolidated Leverage Ratio of the Issuer is less than 6.00 to1.00 on a *pro forma*basis aftergiving effect to such transaction, Investments in Unrestricted Subsidiarieshaving an aggregate fair market value, taken together with all otherInvestments made pursuant to 

 

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this clause (7) that are atthe time outstanding, without giving effect to the sale of an UnrestrictedSubsidiary to the extent the proceeds of such sale do not consist of, or havenot been subsequently sold or transferred for, cash or marketable securities,not to exceed $75.0 million (with the fair market value of each Investmentbeing measured at the time made and without giving effect to subsequent changesin value);

 

(8)           repurchases of Equity Interests deemed to occur upon exercise of stockoptions or warrants if such Equity Interests represent a portion of theexercise price of such options or warrants;

 

(9)           the declaration and payment of dividends on the Issuer’s common stock(or the payment of dividends to any direct or indirect parent entity to fund apayment of dividends on such entity’s common stock), following the first publicoffering of the Issuer’s common stock or the common stock of any of its director indirect parent companies after the Issue Date, of up to 6% per annum of thenet cash proceeds received by or contributed to the Issuer in or from anypublic offering, other than public offerings with respect to the Issuer’scommon stock registered on Form S-8 and other than any public sale constitutingan Excluded Contribution;

 

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

 

(11)         if the Consolidated Leverage Ratio of the Issuer is less than 6.00 to1.00 on a *pro forma*basis aftergiving effect to such transaction, other Restricted Payments in an aggregateamount taken together with all other Restricted Payments made pursuant to thisclause (11) that are at the time outstanding (without giving effect to the saleof an Investment to the extent the proceeds of such sale do not consist of, orhave not been subsequently sold or transferred for, cash or marketablesecurities) not to exceed $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 to anyRestricted 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 those describedunder Sections 4.10 and Section 4.14 hereof; provided that all Notestendered by Holders in connection with a Change of Control Offer or Asset SaleOffer, 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 and expenses required to maintaintheir corporate existence;

 

(b)           federal, state and local income taxes, to the extent such income taxesare attributable to the income of the Issuer and its Restricted Subsidiariesand, to the extent of the amount actually received from its UnrestrictedSubsidiaries, in amounts required to pay such taxes to the extent attributableto the income of such Unrestricted Subsidiaries; *provided* that in each case the amount of such payments inany fiscal year does not 

 

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exceed the excess (if any)of (A) the amount that the Issuer and its Restricted Subsidiaries would berequired to pay in respect of federal, state and local income taxes for suchfiscal year were the Issuer, its Restricted Subsidiaries and its UnrestrictedSubsidiaries (to the extent described above) to pay such taxes separately fromany such parent company over (B) the aggregate federal, state and local incometaxes paid by the Issuer and its Restricted Subsidiaries;

 

(c)           customary salary, bonus and other benefits payable to officers andemployees of any direct or indirect parent company of the Issuer to the extentsuch salaries, bonuses and other benefits are attributable to the ownership oroperation of the Issuer and its Restricted Subsidiaries;

 

(d)           general corporate operating and overhead costs and expenses of anydirect or indirect parent company of the Issuer to the extent such costs andexpenses are attributable to the ownership or operation of the Issuer and itsRestricted Subsidiaries; and

 

(e)           fees and expenses other than to Affiliates of the Issuer related to anyunsuccessful equity or debt offering of such parent company;

 

(16)         the distribution, by dividend or otherwise, of shares of Capital Stockof, or Indebtedness owed to the Issuer or a Restricted Subsidiary by,Unrestricted Subsidiaries (other than Unrestricted Subsidiaries, the primaryassets of which are 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;

 

(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 the exercise,repurchase, rollover or payout of stock options or bonuses, in each case inconnection with the Transactions; and

 

(19)         mandatory redemptions of Subordinated Discount Notes (and exchangenotes issued in respect thereof) pursuant to the indenture governing theSubordinated Discount Notes due to the existence of an AHYDO Amount (as definedin such indenture);

 

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 Unrestricted Subsidiary to become aRestricted Subsidiary except pursuant to the second to last sentence of thedefinition of “Unrestricted Subsidiary.” For purposes of designating any Restricted Subsidiary as an UnrestrictedSubsidiary, all outstanding Investments by the Issuer and its RestrictedSubsidiaries (except to the extent repaid) in the Subsidiary so designatedshall be deemed to be Investments in an amount determined as set forth in thelast sentence of the definition of “Investments.”  Such designation shall be permitted only if aRestricted Payment in such amount would be permitted at such time, whether pursuantto Section 4.07(a) hereof or under clause (7), 

 

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(10), (11) or (16) of Section 4.07(b) hereof,or pursuant to the definition of “Permitted Investments,” and if suchSubsidiary otherwise meets the definition of an Unrestricted Subsidiary.

 

## Section 4.08           Dividend and Other Payment Restrictions AffectingRestricted Subsidiaries.

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(a)           The Issuer shall not, and shall not permit any of its RestrictedSubsidiaries that are not Guarantors to, directly or indirectly, create orotherwise cause or suffer to exist or become effective any consensualencumbrance or consensual restriction on the ability of any such RestrictedSubsidiary to:

 

###### (1)           (A)          pay dividends or make any other distributionsto the Issuer or any of its Restricted Subsidiaries on its Capital Stock orwith respect to any other interest or participation in, or measured by, itsprofits, or

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

 

###### (2)           make loans or advances to the Issuer or any of its RestrictedSubsidiaries; or

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

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(b)           The restrictions in Section 4.08(a) hereof shall not apply toencumbrances or restrictions existing under or by reason of:

 

###### (1)           contractual encumbrances or restrictions in effect on the Issue Date,including pursuant to the Senior Credit Facilities and the relateddocumentation and the indenture governing the Senior Subordinated Notes and therelated documentation and the indenture governing the Subordinated DiscountNotes and the related documentation;

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

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###### (3)           purchase money obligations for property acquired in the ordinary courseof business that impose restrictions of the nature discussed in clause (3) ofSection 4.08(a) hereof on the property so acquired;

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

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###### (5)           any agreement or other instrument of a Person acquired by the Issuer orany of its Restricted Subsidiaries in existence at the time of such acquisition(but not created in contemplation thereof), which encumbrance or restriction isnot applicable to any Person, or the properties or assets of any Person, otherthan the Person so acquired and its Subsidiaries, or the property or assets ofthe Person so acquired and its Subsidiaries;

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###### (6)           contracts for the sale of assets, including customary restrictions withrespect to a Subsidiary of the Issuer pursuant to an agreement that has beenentered into for the sale or disposition of all or substantially all of theCapital Stock or assets of such Subsidiary;

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###### (7)           Secured Indebtedness otherwise permitted to be incurred pursuant toSection 4.09 hereof and Section 4.12 hereof that limit the right of the debtorto dispose of the assets securing such Indebtedness;

 

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###### (8)           restrictions on cash or other deposits or net worth imposed bycustomers under contracts entered into in the ordinary course of business;

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###### (9)           other Indebtedness, Disqualified Stock or Preferred Stock of ForeignSubsidiaries permitted to be incurred or issued subsequent to the Issue Datepursuant to the provisions of Section 4.09 hereof;

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

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###### (11)         customary provisions contained in leases, subleases, licenses orsublicenses and other agreements, in each case, entered into in the ordinarycourse of business;

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###### (12)         any encumbrances or restrictions of the type referred to in clauses(1), (2) and (3) of Section 4.08(a) hereof imposed by any amendments,modifications, restatements, renewals, increases, supplements, refundings,replacements or refinancings of the contracts, instruments or obligationsreferred 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;

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###### (13)         any other agreement governing Indebtedness entered into after the IssueDate that contains encumbrances and other restrictions that are, in the goodfaith judgment of the Issuer, no more restrictive in any material respect takenas a whole with respect to any Restricted Subsidiary than those encumbrancesand other restrictions that are in effect on the Issue Date with respect tothat Restricted Subsidiary pursuant to agreements in effect on the Issue Date;and

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###### (14)         restrictions created in connection with any Receivables Facility that,in the good faith determination of the Issuer are necessary or advisable toeffect such Receivables Facility.

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## Section 4.09           Limitation on Incurrence of Indebtedness andIssuance of Disqualified Stock and Preferred Stock.

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(a)           The Issuer shall not, and shall not permit any of its RestrictedSubsidiaries to, directly or indirectly, create, incur, issue, assume,guarantee or otherwise become directly or indirectly liable, contingently orotherwise (collectively, “incur” and collectively, an “incurrence”)with respect to any Indebtedness (including Acquired Indebtedness) and the Issuershall not issue any shares of Disqualified 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 the amountof Indebtedness (including Acquired Indebtedness), Disqualified Stock and PreferredStock that 

 

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may be incurred or issued, as applicable,pursuant to the foregoing by Restricted Subsidiaries that are not Guarantorsshall not exceed $150.0 million at any one time outstanding.

 

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

 

###### (1)           (x) Indebtedness incurred pursuant to the Revolving Credit Facility bythe Issuer or any Restricted Subsidiary; provided that immediately aftergiving effect to any such incurrence, the aggregate principal amount of allIndebtedness incurred under this clause (x) and then outstanding does notexceed the greater of (A) $1,200.0 million *less*up to $150.0 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) *less* theaggregate principal amount of outstanding obligations under or in respect ofReceivables Facilities and (B) (i) 90.0% of the eligible credit card and debitcard receivables of the Issuer and its Restricted Subsidiaries plus (ii) 90.0%of the net appraised orderly liquidation value of the eligible inventory of theIssuer and its Restricted Subsidiaries and (y) Indebtedness incurred pursuantto the Term Loan Facility by the Issuer or any Restricted Subsidiary; providedthat after giving effect to any such incurrence, the aggregate principal amountof all Indebtedness incurred under this clause (y) and then outstanding doesnot exceed $2,400.0 million *less*up to $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);

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###### (2)           the incurrence by the Issuer and any Guarantor of Indebtednessrepresented by (a) the Notes (including any Guarantee and including theExchange Notes) (other than any Additional Notes), (b) the Senior SubordinatedNotes (including any guarantee thereof) and exchange notes issued in respect ofthe Senior Subordinated Notes and any guarantee thereof and (c) theSubordinated Discount Notes (including any guarantee thereof) and exchangenotes issued in respect of the Subordinated Discount Notes and any guaranteethereof;

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###### (3)           Indebtedness of the Issuer and its Restricted Subsidiaries in existenceon the Issue Date (other than Indebtedness described in clauses (1) and (2) ofthis Section 4.09(b));

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###### (4)           (i) Indebtedness (including Capitalized Lease Obligations) incurred orDisqualified Stock and Preferred Stock issued by the Issuer or any of itsRestricted Subsidiaries, to finance the purchase, lease or improvement ofproperty (real or personal) or equipment that is used or useful in a SimilarBusiness, whether through the direct purchase of assets or the Capital Stock ofany Person owning such assets and (ii) any Indebtedness incurred orDisqualified Stock or Preferred Stock issued to refund, refinance or replaceany other Indebtedness incurred or Disqualified Stock or Preferred Stock issuedpursuant to this clause (4); *provided*thatthe aggregate amount of Indebtedness incurred and Disqualified Stock andPreferred Stock issued pursuant to clauses (i) and (ii) of this clause (4) doesnot exceed $125.0 million at any one time outstanding;

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###### (5)           Indebtedness incurred by the Issuer or any of its RestrictedSubsidiaries constituting reimbursement obligations with respect to letters ofcredit issued in the ordinary course of business, including letters of creditin respect of workers’ compensation claims, health, disability or otheremployee benefits or property, casualty or liability insurance orself-insurance, or other Indebtedness with respect to reimbursement typeobligations regarding workers’ compensation claims; provided, however,that upon the drawing of such letters of credit or the incurrence of suchIndebtedness, such obligations are reimbursed within 30 days following suchdrawing or incurrence;

 

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###### (6)           Indebtedness arising from agreements of the Issuer or its RestrictedSubsidiaries providing for indemnification, adjustment of purchase price orsimilar obligations, in each case, incurred or assumed in connection with thedisposition of any business, assets or a Subsidiary, other than guarantees ofIndebtedness incurred by any Person acquiring all or any portion of suchbusiness, assets or a Subsidiary for the purpose of financing such acquisition;provided, however, that

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(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 Restricted Subsidiary; providedthat any such Indebtedness owing to a Restricted Subsidiary that is not aGuarantor is expressly subordinated in right of payment to the Notes*;*providedfurther that anysubsequent issuance or transfer of any Capital Stock or any other event whichresults in any Restricted Subsidiary ceasing to be a Restricted Subsidiary orany other subsequent transfer of any such Indebtedness (except to the Issuer oranother Restricted Subsidiary or any pledge of such Indebtedness constituting aPermitted Lien) shall be deemed, in each case, to be an incurrence of suchIndebtedness not permitted by this clause (7);

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###### (8)           Indebtedness of a Restricted Subsidiary to the Issuer or anotherRestricted Subsidiary; provided that if a Guarantor incurs suchIndebtedness to a Restricted Subsidiary that is not a Guarantor, suchIndebtedness is expressly subordinated in right of payment to the Guarantee ofthe Notes of such Guarantor; providedfurther that any subsequentissuance or transfer of any Capital Stock or any other event which results inany such Restricted Subsidiary ceasing to be a Restricted Subsidiary or anysubsequent transfer of any such Indebtedness (except to the Issuer or anotherRestricted Subsidiary or any pledge of such Indebtedness constituting aPermitted Lien) shall be deemed, in each case, to be an incurrence of suchIndebtedness not permitted by this clause (8);

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###### (9)           shares of Preferred Stock of a Restricted Subsidiary issued to theIssuer or another Restricted Subsidiary, provided that any subsequentissuance or transfer of any Capital Stock or any other event which results inany such Restricted Subsidiary ceasing to be a Restricted Subsidiary or anyother subsequent transfer of any such shares of Preferred Stock (except to theIssuer or another of its Restricted Subsidiaries or any pledge of such CapitalStock constituting a Permitted Lien) shall be deemed in each case to be anissuance of such shares of Preferred Stock not permitted by this clause (9);

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###### (10)         (x) Hedging Obligations (excluding Hedging Obligations entered into forspeculative purposes) for the purpose of limiting interest rate risk, exchangerate risk or commodity pricing risk, and (y) Indebtedness in respect of CashManagement Services provided by any lender party to a Senior Credit Facility orany affiliate of such lender (or any Person that was a 

 

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###### lender or an affiliate of alender at the time the applicable agreement pursuant to which such CashManagement Services are provided was entered into);

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###### (11)         obligations in respect of performance, bid, appeal and surety bonds andperformance and completion guarantees or obligations in respect of letters ofcredit related thereto provided by the Issuer or any of its RestrictedSubsidiaries in the ordinary course of business;

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###### (12)         (a) Indebtedness or Disqualified Stock of the Issuer and Indebtedness,Disqualified Stock or Preferred Stock of the Issuer or any RestrictedSubsidiary equal to 100.0% of the net cash proceeds received by the Issuersince immediately after the Issue Date from the issue or sale of EquityInterests of the Issuer or cash contributed to the capital of the Issuer (ineach 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 extent such netcash proceeds or cash have not been applied pursuant to such clauses to makeRestricted 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 the definitionthereof) and (b) Indebtedness or Disqualified Stock of the Issuer andIndebtedness, Disqualified Stock or Preferred Stock of the Issuer or anyRestricted 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 outstanding exceed $125.0million (it being understood that any Indebtedness incurred or DisqualifiedStock or Preferred Stock issued pursuant to this clause (12)(b) shall cease tobe deemed incurred or outstanding for purposes of this clause (12)(b) but shallbe deemed incurred for the purposes of Section 4.09(a) hereof from and after the first date on which the Issueror 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));

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###### (13)         the incurrence by the Issuer or any Restricted Subsidiary ofIndebtedness or issuance by the Issuer or any Restricted Subsidiary ofDisqualified Stock or Preferred Stock which serves to refund or refinance anyIndebtedness incurred or Disqualified Stock or Preferred Stock issued aspermitted under Section 4.09(a) hereof and clauses (2), (3) and (12)(a) of thisSection 4.09(b), this clause (13) and clause (14) of this Section 4.09(b) orany Indebtedness incurred or Disqualified Stock or Preferred Stock issued to sorefund or refinance such Indebtedness, Disqualified Stock or Preferred Stockincluding additional Indebtedness incurred or Disqualified Stock or PreferredStock issued to pay premiums (including tender premiums), defeasance costs andfees in connection therewith (the “Refinancing Indebtedness”) prior toits respective maturity; provided, however, that such RefinancingIndebtedness:

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(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 the 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 

 

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Preferred Stock, suchRefinancing 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 Preferred Stock of a Subsidiary ofthe Issuer that is not a Guarantor that refinances Indebtedness, DisqualifiedStock 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;

 

andprovidedfurther that subclause (A) of this clause (13) willnot apply to any refunding or refinancing of any Indebtedness outstanding undera Senior Credit Facility;

 

###### (14)         Indebtedness, Disqualified Stock or Preferred Stock of (x) the Issueror a Restricted Subsidiary incurred or issuedtofinance an acquisition or (y) Persons that are acquired by the Issuer or anyRestricted Subsidiary or merged into or amalgamated or consolidated with the Issueror a Restricted Subsidiary in accordance with the terms of this Indenture; providedthat after giving effect to such acquisition, merger, amalgamation orconsolidation, either

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(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 a bank or other financialinstitution of a check, draft or similar instrument drawn against insufficientfunds in the ordinary course of business, provided that suchIndebtedness is extinguished within five Business Days of its incurrence;

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###### (16)         Indebtedness of the Issuer or any of its Restricted Subsidiariessupported by a letter of credit issued pursuant to a Senior Credit Facility, ina principal amount not in excess of the stated amount of such letter of credit;

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###### (17)         (a) any guarantee by the Issuer or a Restricted Subsidiary ofIndebtedness or other obligations of any Restricted Subsidiary so long as theincurrence of such Indebtedness incurred by such Restricted Subsidiary ispermitted under the terms of this Indenture, or

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(b)           any guarantee by a Restricted Subsidiary of Indebtedness of the Issuer providedthat such guarantee is incurred in accordance with Section 4.15 hereof;

 

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###### (18)         Indebtedness of Foreign Subsidiaries of the Issuer incurred not toexceed together with any other Indebtedness incurred under this clause (18) atany one time outstanding, the greater of (x) $100.0 million and (y) 10.0% ofthe Total Assets of the Foreign Subsidiaries (it being understood that anyIndebtedness incurred pursuant to this clause (18) shall cease to be deemedincurred or outstanding for purposes of this clause (18) but shall be deemedincurred for the purposes of Section 4.09(a) hereof from and after the firstdate on which the applicable Foreign Subsidiary could have incurred suchIndebtedness under Section 4.09(a) hereof without reliance on this clause(18));

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###### (19)         (i)  Indebtedness, DisqualifiedStock or Preferred Stock of a Restricted Subsidiary incurred or issued tofinance or assumed in connection with an acquisition and (ii) Indebtednessincurred to refund, refinance or replace any other Indebtedness, DisqualifiedStock and Preferred Stock permitted under this clause (19), in each case, in aprincipal amount not to exceed, together with all other Indebtedness,Disqualified Stock and/or Preferred Stock issued under this clause (19), $100.0million in the aggregate at any one time outstanding (it being understood thatany Indebtedness, Disqualified Stock or Preferred Stock incurred pursuant tothis clause (19) shall cease to be deemed incurred or outstanding for purposesof this clause (19) but shall be deemed incurred for the purposes of Section4.09(a) hereof from and after the first date on which such RestrictedSubsidiary could have incurred such Indebtedness or issued such DisqualifiedStock or Preferred Stock under Section 4.09(a) hereof without reliance on thisclause (19));

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###### (20)         Indebtedness of the Issuer or any of its Restricted Subsidiariesconsisting of (i) the financing of insurance premiums or (ii) take-or-payobligations contained in supply arrangements, in each case incurred in theordinary course of business; and

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###### (21)         Indebtedness consisting of Indebtedness issued by the Issuer or any ofits Restricted Subsidiaries to current or former officers, directors, employeesand consultants thereof, their respective estates, spouses or former spouses,in each case to finance the purchase or redemption of Equity Interests of theIssuer or any direct or indirect parent company of the Issuer to the extentdescribed in clause (4) of Section 4.07(b) hereof.

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(c)           For purposes of determining compliance with this Section 4.09:

 

###### (1)           in the event that an item of Indebtedness, Disqualified Stock or PreferredStock (or any portion thereof) meets the criteria of more than one of thecategories of permitted Indebtedness, Disqualified Stock or Preferred Stockdescribed in clauses (1) through (21) of Section 4.09(b) hereof or is entitledto be incurred pursuant to Section 4.09(a) hereof, the Issuer, in its solediscretion, shall classify or reclassify such item of Indebtedness,Disqualified Stock or Preferred Stock (or any portion thereof) and shall onlybe required to include the amount and type of such Indebtedness, DisqualifiedStock or Preferred Stock in one of the above clauses; provided that allIndebtedness outstanding under the Senior Credit Facilities on the Issue Dateshall at all times be deemed to be outstanding in reliance on clause (1) ofSection 4.09(b) hereof; and

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###### (2)           at the time of incurrence, the Issuer shall be entitled to divide andclassify an item of Indebtedness in more than one of the types of Indebtednessdescribed in Sections 4.09(a) and 4.09(b) hereof.

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Accrual of interest, the accretionof accreted value and the payment of interest in the form of additionalIndebtedness, Disqualified Stock or Preferred Stock shall not be deemed to bean incurrence of Indebtedness, Disqualified Stock or Preferred Stock forpurposes of this Section 4.09.

 

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For purposes of determiningcompliance with any U.S. dollar-denominated restriction on the incurrence ofIndebtedness, the U.S. dollar-equivalent principal amount of Indebtednessdenominated in a foreign currency shall be calculated based on the relevantcurrency exchange rate in effect on the date such Indebtedness was incurred, inthe case of term debt, or first committed, in the case of revolving creditdebt; provided that if such Indebtedness is incurred to refinance otherIndebtedness denominated in a foreign currency, and such refinancing wouldcause the applicable U.S. dollar denominated restriction to be exceeded ifcalculated at the relevant currency exchange rate in effect on the date of suchrefinancing, such U.S. dollar-denominated restriction shall be deemed not tohave been exceeded so long as the principal amount of such refinancingIndebtedness does not exceed the principal amount of such Indebtedness beingrefinanced.

 

The principal amount of anyIndebtedness incurred to refinance other Indebtedness, if incurred in adifferent currency from the Indebtedness being refinanced, shall be calculatedbased on the currency exchange rate applicable to the currencies in which suchrespective Indebtedness is denominated that is in effect on the date of suchrefinancing.

 

The Issuer shall not, andshall not permit any Guarantor to, directly or indirectly, incur anyIndebtedness (including Acquired Indebtedness) that is subordinated or juniorin right of payment to any Indebtedness of the Issuer or such Guarantor, as thecase may be, unless such Indebtedness is expressly subordinated in right ofpayment to the Notes or such Guarantor’s Guarantee to the extent and in thesame manner as such Indebtedness is subordinated to other Indebtedness of theIssuer or such Guarantor, as the case may be. For purposes of this Indenture, Indebtedness that is unsecured is notdeemed to be subordinated or junior to Secured Indebtedness merely because itis unsecured, and senior indebtedness is not deemed to be subordinated orjunior to any other senior indebtedness merely because it has a junior prioritywith respect to the same collateral.

 

## Section4.10           Asset Sales.

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(a)           The Issuer shall not, and shall not permit any of its RestrictedSubsidiaries to, consummate an Asset Sale, unless:

 

(1)           the Issuer or such Restricted Subsidiary, as the case may be, receivesconsideration at the time of such Asset Sale at least equal to the fair marketvalue (as determined in good faith by the Issuer) of the assets sold orotherwise disposed of; and

 

(2)           except in the case of a Permitted Asset Swap, at least 75% of theconsideration therefor received by the Issuer or such Restricted Subsidiary, asthe case may be, is in the form of Cash Equivalents; provided that theamount 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 RestrictedSubsidiary into Cash Equivalents (to the extent of the Cash Equivalentsreceived) within 180 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,

 

shall be deemed to be CashEquivalents for purposes of this provision and for no other purpose.

 

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

 

(1)           to permanently reduce:

 

(A)          Obligations under the Senior Credit Facilities and to correspondinglyreduce commitments with respect thereto;

 

(B)           Obligations under Indebtedness (other than Subordinated Indebtedness)that is secured by a Lien, which Lien is permitted by this Indenture, and tocorrespondingly reduce commitments with respect thereto;

 

(C)           Obligations under other Indebtedness (other than SubordinatedIndebtedness) (and to correspondingly reduce commitments with respect thereto),provided that the Issuer shall equally and ratably reduce Obligationsunder the Notes as provided under Section 3.07 hereof through open-marketpurchases (to the extent such purchases are at or above 100% of the principalamount thereof) or by making an offer (in accordance with the procedures setforth under Section 4.10(c) hereof) to all Holders to purchase their Notes at100% of the principal amount thereof, plus the amount of accrued but unpaidinterest, if any, and Additional Interest, if any, on the amount of Notes thatwould otherwise be prepaid; or

 

(D)          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 or more businesses, providedthat such Investment in any business is in the form of the acquisition ofCapital Stock and results in the Issuer or another of its RestrictedSubsidiaries, as the case may be, owning an amount of the Capital Stock of suchbusiness such that it constitutes a Restricted Subsidiary, (B) capitalexpenditures or (C) acquisitions of other assets, in the 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 or more businesses, providedthat such Investment in any business is in the form of the acquisition ofCapital Stock and results in the Issuer or another of its Restricted Subsidiaries,as the case may be, owning an amount of the Capital Stock of such business suchthat it constitutes a Restricted Subsidiary, (B) properties or(C) other assets that, in the case of each of (A), (B) and (C), replacethe businesses, properties and/or assets that are the subject of such AssetSale;

 

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 

 

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Restricted Subsidiary enters into suchcommitment with the good faith expectation that such Net Proceeds shall beapplied to satisfy such commitment within 180 days of such commitment (an “AcceptableCommitment”) and, in the event any Acceptable Commitment is later cancelledor terminated for any reason before the Net Proceeds are applied in connectiontherewith, the Issuer or such Restricted Subsidiary enters into anotherAcceptable Commitment (a “Second Commitment”) within 180 days ofsuch 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 are not invested or appliedas provided and within the time period set forth in Section 4.10(b) shall bedeemed to constitute “Excess Proceeds.” When the aggregate amount of Excess Proceeds exceeds $50.0 million,the Issuer shall make an offer to all Holders of the Notes and, if required bythe terms of any Indebtedness that is *paripassu* with the Notes (“Pari Passu Indebtedness”), to theholders of such Pari Passu Indebtedness (an “Asset Sale Offer”), topurchase the maximum aggregate principal amount of the Notes and such PariPassu Indebtedness that is an integral multiple of $1,000 that may be purchasedout of the Excess Proceeds at an offer price in cash in an amount equal to 100%of the principal amount thereof, plus accrued and unpaid interest andAdditional Interest, if any, to the date fixed for the closing of such offer,in accordance with 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.

 

To the extent that theaggregate amount of Notes and such Pari Passu Indebtedness tendered pursuant toan Asset Sale Offer is less than the Excess Proceeds, the Issuer may use anyremaining Excess Proceeds for general corporate purposes, subject to compliancewith this Indenture.  If the aggregateprincipal amount of Notes and 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 valueor principal amount of the Notes or such Pari Passu Indebtedness tendered inaccordance with Section 3.09.  Uponcompletion of any such Asset Sale Offer, the amount of Excess Proceeds shall bereset to zero (regardless of whether there are any remaining Excess Proceedsupon such completion).

 

(d)           Pending the final application of any Net Proceeds pursuant to thisSection 4.10, the holder of such Net Proceeds may apply such Net Proceedstemporarily to reduce Indebtedness outstanding under a revolving creditfacility or otherwise invest such Net Proceeds in any manner not prohibited bythis Indenture.

 

(e)           The Issuer shall comply with the requirements of Rule 14e-1 under theExchange Act and any other securities laws and regulations thereunder to theextent such laws or regulations are applicable in connection with therepurchase of the Notes pursuant to an Asset Sale Offer.  To the extent that the provisions of anysecurities laws or regulations conflict with the provisions of this Indenture,the Issuer shall comply with the applicable securities laws and regulations andshall not be deemed to have breached its obligations described in thisIndenture by virtue thereof.

 

## Section4.11           Transactions with Affiliates.

##  

(a)           The Issuer shall not, and shall not permit any of its RestrictedSubsidiaries to, make any payment to, or sell, lease, transfer or otherwisedispose of any of its properties or assets to, or purchase any property orassets from, or enter into or make or amend any transaction, contract,agreement, understanding, loan, advance or guarantee with, or for the benefitof, any Affiliate of the Issuer 

 

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(each of the foregoing, an “AffiliateTransaction”) involving aggregate payments or consideration in excess of$10.0 million, unless:

 

###### (1)           such Affiliate Transaction is on terms that are not materially lessfavorable to the Issuer or its relevant Restricted Subsidiary than those thatwould have been obtained in a comparable transaction by the Issuer or suchRestricted Subsidiary with an unrelated Person on an arm’s-length basis; and

######  

###### (2)           the Issuer delivers to the Trustee with respect to any AffiliateTransaction or series of related Affiliate Transactions involving aggregatepayments or consideration in excess of $30.0 million, a resolution adoptedby the majority of the board of directors of the Issuer approving suchAffiliate Transaction and set forth in an Officer’s Certificate certifying thatsuch Affiliate Transaction complies with clause (1) of this Section 4.11(a).

######  

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

 

###### (1)           transactions between or among the Issuer or any of its RestrictedSubsidiaries;

######  

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

######  

###### (3)           the payment of management, consulting, monitoring and advisory fees andtermination fees and related indemnities and expenses pursuant to the SponsorManagement Agreement as in effect on the Issue Date;

######  

###### (4)           the payment of reasonable and customary fees and compensation paid to,and indemnities and reimbursements provided on behalf of, officers, directors,employees or consultants of the Issuer, any of its direct or indirect parentcompanies or any of its Restricted Subsidiaries;

######  

###### (5)           transactions in which the Issuer or any of its Restricted Subsidiaries,as the case may be, delivers to the Trustee a letter from an IndependentFinancial Advisor stating that such transaction is fair to the Issuer or suchRestricted Subsidiary from a financial point of view or stating that the termsare 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;

######  

###### (6)           any agreement as in effect as of the Issue Date, or any amendmentthereto (so long as any such amendment is not disadvantageous in any materialrespect to the Holders when taken as a whole as compared to the applicableagreement as in effect on the Issue Date);

######  

###### (7)           the existence of, or the performance by the Issuer or any of itsRestricted Subsidiaries of its obligations under the terms of, any stockholdersagreement (including any registration rights agreement or purchase agreementrelated thereto) to which it is a party as of the Issue Date and any similaragreements which it may enter into thereafter; provided, however,that the existence of, or the performance by the Issuer or any of itsRestricted Subsidiaries of obligations under, any future amendment to any suchexisting agreement or any similar agreement entered into after the Issue Dateshall only be permitted by this clause (7) to the extent that the terms of anysuch amendment or new agreement are not otherwise disadvantageous in anymaterial respect to the Holders when taken as a whole as compared to theoriginal agreement in effect on the Issue Date;

 

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###### (8)           the Transactions and the payment of all fees and expenses related tothe Transactions, including Transaction Expenses, in each case as disclosed inthe Offering Memorandum;

######  

###### (9)           transactions with customers, clients, suppliers, or purchasers orsellers of goods or services, in each case in the ordinary course of businessand otherwise in compliance with the terms of this Indenture which are fair tothe Issuer and its Restricted Subsidiaries, in the reasonable determination ofthe board of directors of the Issuer or the senior management thereof, or areon terms at least as favorable as would reasonably have been obtained at suchtime from an unaffiliated party;

######  

###### (10)         the issuance of Equity Interests (other than Disqualified Stock) of theIssuer to any direct or indirect parent of the Issuer or to any PermittedHolder or to any director, officer, employee or consultant of the Issuer, anySubsidiary or any direct or indirect parent of the Issuer;

######  

###### (11)         sales of accounts receivable, or participations therein, in connectionwith any Receivables Facility;

######  

###### (12)         payments by the Issuer or any of its Restricted Subsidiaries to any ofthe Investors made for any financial advisory, financing, underwriting orplacement services or in respect of other investment banking activities,including, without limitation, in connection with acquisitions or divestitureswhich payments are approved by a majority of the board of directors of theIssuer in good faith or are otherwise permitted by this Indenture;

######  

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

######  

###### (14)         investments by the Investors in securities of the Issuer or any of itsRestricted Subsidiaries so long as (i) the investment is being offeredgenerally to other investors on the same or more favorable terms and (ii) theinvestment constitutes less than 5% of the proposed or outstanding issue amountof such class of securities.

######  

## Section4.12           Liens.

##  

The Issuer shall not, andshall not permit any Guarantor to, directly or indirectly, create, incur,assume or suffer to exist any Lien (except Permitted Liens) that securesobligations under any Indebtedness or any related guarantee, on any asset orproperty of the Issuer or any Guarantor, or any income or profits therefrom, orassign or convey any right to receive income therefrom, unless:

 

(1)           in the case of Liens securing Subordinated Indebtedness, the Notes andrelated Guarantees are secured by a Lien on such property, assets or proceedsthat 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 (x) Indebtedness permitted to be incurred under SeniorCredit Facilities, including any letter of credit facility relating thereto,that was permitted by the terms of this Indenture to be incurred pursuant toclause (1) of Section 4.09(b) hereof and (y) both (i) Indebtedness described inclause (x) or in respect of a Senior Credit Facility secured by Liens pursuantto subclause (c) below or pursuant to clause (6) of the definition of PermittedLiens and (ii)  

 

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obligations of the Issuer orany Guarantor in respect of any Bank Products or Cash Management Servicesprovided by any lender party to any Senior Credit Facility or any affiliate ofsuch lender (or any Person that was a lender or an affiliate of a lender at thetime the applicable agreements pursuant to which such Bank Products or CashManagement Services are provided were entered into) and (C) Liens incurredto secure Obligations in respect of any Indebtedness permitted to be incurredpursuant to Section 4.09 hereof; provided that, with respect to Lienssecuring Obligations permitted under this subclause (C), at the time ofincurrence and after giving *pro forma*effect thereto, the Consolidated Secured Debt Ratio would be no greater than4.0 to 1.0.

 

Any Lien created for thebenefit of the Holders of the Notes pursuant to this Section 4.12 shall bedeemed automatically and unconditionally released and discharged upon therelease and discharge of each of the Liens described in clauses (1) and (2) ofthis Section 4.12.

 

## Section4.13           Corporate Existence.

##  

Subject to Article 5 hereof,the Issuer shall do or cause to be done all things necessary to preserve andkeep in full force and effect its corporate existence, and the corporate,partnership or other existence of each of its Restricted Subsidiaries, inaccordance with the respective organizational documents (as the same may beamended from time to time) of the Issuer or any such Restricted Subsidiary.

 

## Section4.14           Offer to Repurchase Upon Change of Control.

##  

(a)           If a Change of Control occurs, unless the Issuer has previously orconcurrently mailed a redemption notice with respect to all the outstandingNotes as described under Section 3.07 hereof, the Issuer shall make an offer topurchase all of the Notes pursuant to the offer described below (the “Changeof Control Offer”) at a price in cash (the “Change of Control Payment”)equal to 101% of the aggregate principal amount thereof plus accrued and unpaidinterest and Additional Interest, if any, to the date of purchase, subject tothe right of Holders of record of the Notes on the relevant Record Date toreceive interest due 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 made pursuant to this Section4.14 and that all Notes properly tendered pursuant to such Change of ControlOffer will be accepted for payment by the Issuer;

######  

###### (2)           the purchase price and the purchase date, which will be no earlier than30 days nor later than 60 days from the date such notice is mailed (the “Changeof Control Payment Date”);

######  

###### (3)           that any Note not properly tendered will remain outstanding andcontinue to accrue interest;

######  

###### (4)           that unless the Issuer defaults in the payment of the Change of ControlPayment, all Notes accepted for payment pursuant to the Change of Control Offerwill cease to accrue interest on the Change of Control Payment Date;

######  

###### (5)           that Holders electing to have any Notes purchased pursuant to a Changeof Control Offer will be required to surrender such Notes, with the formentitled “Option of Holder to Elect Purchase” on the reverse of such Notescompleted, to the paying agent specified in the 

 

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###### notice at the addressspecified in the notice prior to the close of business on the third BusinessDay preceding the Change of Control Payment Date;

######  

###### (6)           that Holders shall be entitled to withdraw their tendered Notes andtheir election to require the Issuer to purchase such Notes, provided thatthe paying agent receives, not later than the close of business on the secondBusiness Day prior to the Change of Control Payment Date, a telegram, telex,facsimile transmission or letter setting forth the name of the Holder of theNotes, the principal amount of Notes tendered for purchase, and a statementthat such Holder is withdrawing its tendered Notes and its election to havesuch Notes purchased;

######  

###### (7)           that if the Issuer is redeeming less than all of the Notes, the Holdersof the remaining Notes will be issued new Notes and such new Notes will beequal in principal amount to the unpurchased portion of the Notessurrendered.  The unpurchased portion ofthe Notes must be equal to $1,000 or an integral multiple thereof; and

######  

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

######  

The notice, if mailed in amanner herein provided, shall be conclusively presumed to have been given,whether or not the Holder receives such notice. If (a) the notice is mailed in a manner herein provided and (b) anyHolder fails to receive such notice or a Holder receives such notice but it isdefective, such Holder’s failure to receive such notice or such defect shallnot affect the validity of the proceedings for the purchase of the Notes as toall other Holders that properly received such notice without defect.  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 by the Issuer of Notes pursuant to a Change ofControl Offer.  To the extent that theprovisions of any securities laws or regulations conflict with the provisionsof this Section 4.14, the Issuer shall comply with the applicable securitieslaws and regulations and shall not be deemed to have breached its obligationsunder this Section 4.14 by virtue thereof.

 

(b)           On the Change of Control Payment Date, the Issuer shall, to the extentpermitted by law,

 

###### (1)           accept for payment all Notes issued by it or portions thereof properlytendered pursuant to the Change of Control Offer;

######  

###### (2)           deposit with the Paying Agent an amount equal to the aggregate Changeof Control Payment in respect of all Notes or portions thereof so tendered; and

######  

###### (3)           deliver, or cause to be delivered, to the Trustee for cancellation theNotes so accepted together with an Officer’s Certificate to the Trustee statingthat such Notes or portions thereof have been tendered to and purchased by theIssuer.

######  

(c)           The Issuer shall not be required to make a Change of Control Offerfollowing a Change of Control if a third party makes the Change of ControlOffer in the manner, at the times and otherwise in compliance with the requirementsset forth in this Section 4.14 applicable to a Change of Control Offer made bythe Issuer and purchases all Notes validly tendered and not withdrawn undersuch Change of Control Offer. Notwithstanding anything to the contrary herein, a Change of ControlOffer may be made in advance of a Change of Control, conditional upon suchChange of Control, if a definitive agreement is in place for the Change ofControl at the time of making of the Change of Control Offer.

 

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(d)           Other than as specifically provided in this Section 4.14, any purchasepursuant to this Section 4.14 shall be made pursuant to the provisions ofSections 3.02, 3.05 and 3.06 hereof.

 

## Section4.15           Limitation on Guarantees of Indebtedness byRestricted Subsidiaries.

##  

The Issuer shall not permitany of its Wholly-Owned Subsidiaries that are Restricted Subsidiaries (andnon-Wholly-Owned Subsidiaries if such non-Wholly-Owned Subsidiaries guaranteeother capital markets debt securities), other than a Guarantor or a ForeignSubsidiary, to guarantee the payment of any Indebtedness of the Issuer or anyother Guarantor unless:

 

(1)           such Restricted Subsidiary within 30 days executes and delivers asupplemental indenture to this Indenture, the form of which is attached as ExhibitD hereto, providing for a Guarantee by such Restricted Subsidiary, exceptthat with respect to a guarantee of Indebtedness of the Issuer or anyGuarantor, if such Indebtedness is by its express terms subordinated in rightof payment to the Notes or such Guarantor’s Guarantee, any such guarantee bysuch Restricted Subsidiary with respect to such Indebtedness shall besubordinated in right of payment to such Guarantee substantially to the sameextent as such Indebtedness is subordinated to the Notes;

 

(2)           such Restricted Subsidiary waives and shall not in any mannerwhatsoever claim or take the benefit or advantage of, any rights ofreimbursement, indemnity or subrogation or any other rights against the Issueror any other Restricted Subsidiary as a result of any payment by suchRestricted Subsidiary under its Guarantee; and

 

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

 

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

 

(b)           such Guarantee constitutes a valid, binding and enforceable obligationof such Restricted Subsidiary, except insofar as enforcement thereof may belimited by bankruptcy, insolvency or similar laws (including, withoutlimitation, all laws relating to fraudulent transfers) and except insofar asenforcement thereof is subject to general principles of equity;

 

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.

 

The Issuer may elect, in itssole discretion, to cause any Subsidiary that is not otherwise required to be aGuarantor to become a Guarantor, in which case, such Subsidiary shall only berequired to comply with clauses (1) (other than with respect to any timeperiod) and (2) of this Section 4.15.

 

## Section4.16           Discharge and Suspension of Covenants.

##  

(a)           During any period of time that (i) the Notes have Investment GradeRatings from both Rating Agencies and (ii) no Default has occurred and iscontinuing under this Indenture (the occurrence of the events described in theforegoing clauses (i) and (ii) being collectively referred to as a “CovenantSuspension Event”), the Issuer and the Restricted Subsidiaries shall not besubject to Section 4.07 hereof, Section 4.08 hereof, Section 4.09 hereof,Section 4.10 hereof, Section 4.11 hereof, Section 4.14 hereof, Section 4.15 hereofand clause (4) of Section 5.01(a) hereof (the “Suspended Covenants”).

 

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(b)           In the event that the Issuer and the Restricted Subsidiaries are notsubject to the Suspended Covenants under this Indenture for any period of timeas a result of the foregoing, and on any subsequent date (the “ReversionDate”) (a) one or both of the Rating Agencies withdraw their InvestmentGrade Rating or downgrade the rating assigned to the Notes below an InvestmentGrade Rating or (b) the Issuer or any of its Affiliates enters into anagreement to effect a transaction that would result in a Change of Control andone or more of the Rating Agencies indicate that if consummated, suchtransaction (alone or together with any related recapitalization or refinancingtransactions) would cause such Rating Agency to withdraw its Investment GradeRating or downgrade the ratings assigned to the Notes below an Investment GradeRating, then the Issuer and the Restricted Subsidiaries shall thereafter againbe subject to the Suspended Covenants under this Indenture with respect tofuture events. The period beginning on the day of a Covenant Suspension Eventand ending on a Reversion Date is called a “Suspension Period”.

 

(c)           On each Reversion Date, all Indebtedness incurred, or DisqualifiedStock or Preferred Stock issued, during the Suspension Period will be deemed tohave been outstanding on the Issue Date, so that it is classified as permittedunder Section 4.09(b)(3) hereof. Calculations made after the Reversion Date ofthe amount available to be made as Restricted Payments under Section 4.07hereof will be made as though Section 4.07 hereof had been in effect since theIssue Date and throughout the Suspension Period. Accordingly, RestrictedPayments made during the Suspension Period will reduce the amount available tobe made as Restricted Payments under Section 4.07(a) hereof (but will notreduce any amounts available to be made as Restricted Payments under Section4.07(b) hereof). However, no Default or Event of Default will be deemed to haveoccurred on the Reversion Date (or thereafter) under any Suspended Covenantsolely as a result of any actions taken by the Issuer or its RestrictedSubsidiaries, or events occurring, during the Suspension Period. For purposesof Section 4.10 hereof, on the Reversion Date, the unutilized Excess Proceedsamount will be reset to zero.

 

(d)           The Issuer shall deliver promptly to the Trustee an Officer’sCertificate notifying it of any such occurrence under this Section 4.16.

 

# ARTICLE5

#  

# SUCCESSORS

#  

## Section5.01           Merger, Consolidation or Sale of All orSubstantially All Assets.

##  

(a)           The Issuer shall not consolidate or merge with or into or wind up into(whether or not the Issuer 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:

 

###### (1)           either:  (x) the Issuer is thesurviving corporation; or (y) the Person formed by or surviving any suchconsolidation or merger (if other than the Issuer) or to which such sale,assignment, transfer, lease, conveyance or other disposition will have beenmade is a corporation organized or existing under the laws of the jurisdictionof organization of the Issuer or the laws of the United States, any statethereof, the District of Columbia or any territory thereof (the Issuer or suchPerson, as the case may be, being herein called the “Successor Company”);

######  

###### (2)           the Successor Company, if other than the Issuer, expressly assumes allthe obligations of the Issuer under the Notes pursuant to supplementalindentures or other documents or instruments in form reasonably satisfactory tothe Trustee;

######  

###### (3)           immediately after such transaction, no Default exists;

 

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###### (4)           immediately after giving *pro forma*effect to such transaction and any related financing transactions, as if suchtransactions had occurred at the beginning of the applicable four-quarterperiod,

######  

(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 party to the transactionsdescribed above, in which case Section 5.01(c)(1)(B) hereof shall apply, shallhave by supplemental indenture confirmed that its Guarantee shall apply to suchPerson’s obligations under this Indenture, the Notes and the RegistrationRights Agreement; and

######  

###### (6)           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.

######  

(b)           The Successor Company shall succeed to, and be substituted for theIssuer, as the case may be, under this Indenture, the Guarantees and the Notes,as applicable.  Clauses (3), (4), (5) and(6) of Section 5.01(a) hereof shall not apply to the merger contemplated by theTransaction Agreement.  Notwithstandingclauses (3) and (4) of Section 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

 

(y)           the Issuer may merge with an Affiliate of the Issuer, as the case maybe, solely for the purpose of reincorporating the Issuer in a State of theUnited States so long as the amount of Indebtedness of the Issuer and itsRestricted Subsidiaries is not increased thereby.

 

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

 

(1)           (A) such Guarantor is the surviving corporation or the Personformed by or surviving any such consolidation or merger (if other than suchGuarantor) or to which such sale, assignment, transfer, lease, conveyance orother disposition will have been made is a corporation organized or existingunder the laws of the jurisdiction of organization of such Guarantor(including, for the avoidance of doubt, with respect to any Guarantor organizedunder the laws of Canada or a province or territory thereof, any other provinceor territory of Canada), as the case may be, or the laws of the United States,any state thereof, the District of Columbia or any territory thereof (suchGuarantor or such Person, as the case may be, being herein called the “SuccessorPerson”);

 

(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 

 

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to supplemental indenturesor other documents or instruments in form reasonably satisfactory to theTrustee;

 

(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 with clauses (1) and (2) ofSection 4.10(a) hereof.

 

(d)           Subject to certain limitations described in this Indenture, theSuccessor Person shall succeed to, and be substituted for, such Guarantor underthis Indenture and such Guarantor’s Guarantee. Notwithstanding the foregoing, any Guarantor may merge into or with orwind up into or transfer all or part of its properties and assets to anotherGuarantor or the Issuer.

 

## Section5.02           Successor Corporation Substituted.

##  

Upon any consolidation ormerger, or any sale, assignment, transfer, lease, conveyance or otherdisposition of all or substantially all of the assets of the Issuer inaccordance with Section 5.01 hereof, the successor corporation formed by suchconsolidation or into or with which the Issuer is merged or to which such sale,assignment, transfer, lease, conveyance or other disposition is made shallsucceed to, and be substituted for (so that from and after the date of suchconsolidation, merger, sale, lease, conveyance or other disposition, theprovisions of this Indenture referring to the Issuer shall refer instead to thesuccessor corporation and not to the Issuer), and may exercise every right andpower of the Issuer under this Indenture with the same effect as if suchsuccessor Person had been named as the Issuer herein; provided that thepredecessor Issuer shall not be relieved from the obligation to pay theprincipal of and interest and Additional Interest, if any, on the Notes exceptin the case of a sale, assignment, transfer, lease, conveyance or otherdisposition of all of the Issuer’s assets that meets the requirements ofSection 5.01 hereof.

 

# ARTICLE6

#  

# DEFAULTSAND REMEDIES

#  

## Section6.01           Events of Default.

##  

(a)           An “Event of Default” wherever used herein, means any one of thefollowing events (whatever the reason for such Event of Default and whether itshall be voluntary or involuntary or be effected by operation of law orpursuant to any judgment, decree or order of any court or any order, rule orregulation of any administrative or governmental body):

 

###### (1)           default in payment when due and payable, upon redemption, accelerationor otherwise, of principal of, or premium, if any, on the Notes;

######  

###### (2)           default for 30 days or more in the payment when due of interest orAdditional Interest on or with respect to the Notes;

######  

###### (3)           failure by the Issuer or any Guarantor for 60 days after receipt ofwritten notice given by the Trustee or the Holders of not less than 25% inprincipal amount of the Notes to 

 

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###### comply with any of itsobligations, covenants or agreements (other than a default referred to inclauses (1) and (2) above) contained in this Indenture or the Notes;

######  

###### (4)           default under any mortgage, indenture or instrument under which there isissued or by which there is secured or evidenced any Indebtedness for moneyborrowed by the Issuer or any of its Restricted Subsidiaries or the payment ofwhich is guaranteed by the Issuer or any of its Restricted Subsidiaries, otherthan Indebtedness owed to the Issuer or a Restricted Subsidiary, whether suchIndebtedness or guarantee now exists or is created after the issuance of theNotes, if both:

######  

(a)           such default either results from the failure to pay any principal ofsuch Indebtedness at its stated final maturity (after giving effect to anyapplicable grace periods) or relates to an obligation other than the obligationto pay principal of any such Indebtedness at its stated final maturity andresults in the holder or holders of such Indebtedness causing such Indebtednessto become due prior to its stated maturity; and

 

(b)           the principal amount of such Indebtedness, together with the principalamount of any other such Indebtedness in default for failure to pay anyprincipal at its stated final maturity (after giving effect to any applicablegrace periods), or the maturity of which has been so accelerated, aggregate$50.0 million or more at any one time outstanding;

 

###### (5)           failure by the Issuer or 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, to pay final judgments aggregating in excess of $50.0million, which final judgments remain unpaid, undischarged and unstayed for aperiod of more than 60 days after such judgment becomes final, and in the eventsuch judgment is covered by insurance, an enforcement proceeding has beencommenced by any creditor upon such judgment or decree which is not promptlystayed;

######  

###### (6)           the Issuer or any of its Restricted Subsidiaries that is a SignificantSubsidiary or any group of Restricted Subsidiaries that, taken together (as ofthe latest audited consolidated financial statements for the Issuer), wouldconstitute a Significant Subsidiary, pursuant to or within the meaning of anyBankruptcy Law:

######  

(i)            commences proceedings to be adjudicatedbankrupt or insolvent;

 

(ii)           consents to the institution of bankruptcy or insolvency proceedingsagainst it, or the filing by it of a petition or answer or consent seekingreorganization 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 they become due;

 

###### (7)           a court of competent jurisdiction enters an order or decree under anyBankruptcy Law that:

 

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(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 SignificantSubsidiary, is to be adjudicated bankrupt or insolvent;

 

(ii)           appoints a receiver, liquidator, assignee, trustee, sequestrator orother similar official of the Issuer or any of its Restricted Subsidiaries thatis a Significant Subsidiary or any group of Restricted Subsidiaries that, takentogether (as of the latest audited consolidated financial statements for theIssuer), would constitute a Significant Subsidiary, or for all or substantiallyall of the property of the Issuer or any of its Restricted Subsidiaries that isa Significant Subsidiary or any group of Restricted Subsidiaries that, takentogether (as of the latest audited consolidated financial statements for theIssuer), would constitute a Significant 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 SignificantSubsidiary;

 

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 RestrictedSubsidiaries that, taken together (as of the latest audited consolidatedfinancial statements for the Issuer), would constitute a SignificantSubsidiary, shall for any reason cease to be in full force and effect or anyresponsible officer of any Guarantor 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, as the case may be, denies that it has any furtherliability under its or their Guarantee(s) or gives notice to such effect, otherthan by reason of the termination of this Indenture or the release of any suchGuarantee in accordance with this Indenture.

######  

(b)           In the event of any Event of Default specified in clause (4) of Section6.01(a) hereof, such Event of Default and all consequences thereof (excludingany resulting payment default, other than as a result of acceleration of theNotes) shall be annulled, waived and rescinded, automatically and without anyaction by the Trustee or the Holders, if within 20 days after such Event ofDefault arose:

 

###### (1)           the Indebtedness or guarantee that is the basis for such Event ofDefault has been discharged; or

######  

###### (2)           holders thereof have rescinded or waived the acceleration, notice oraction (as the case may be) giving rise to such Event of Default; or

######  

###### (3)           the default that is the basis for such Event of Default has been cured.

######  

## Section6.02           Acceleration.

##  

If any Event of Default(other than an Event of Default specified in clause (6) or (7) ofSection 6.01(a) hereof with respect to the Issuer) occurs and iscontinuing under this Indenture, the Trustee 

 

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or the Holders of at least 25% in principalamount of the then total outstanding Notes may declare the principal, premium,if any, interest and any other monetary obligations on all the then outstandingNotes to be due and payable immediately. Upon the effectiveness of such declaration, such principal and interestshall be due and payable immediately. The Trustee shall have no obligation to accelerate the Notes if and solong as a committee of its Responsible Officers in good faith determinesacceleration is not in the best interest of the Holders of the Notes.

 

Notwithstanding theforegoing, 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.

 

The Holders of a majority inaggregate principal amount of the then outstanding Notes by written notice tothe Trustee may on behalf of all of the Holders rescind an acceleration and itsconsequences:

 

(1)           if the rescission would not conflict with any judgment or decree;

 

(2)           if all existing Events of Default have been cured, waived, annulled orrescinded except nonpayment of principal interest, Additional Interest, if any,or premium that has become due solely because of the acceleration;

 

(3)           to the extent the payment of such interest is lawful, interest onoverdue installments of interest and overdue principal, which has become dueotherwise than by such declaration of acceleration, has been paid; and

 

(4)           if the Issuer has paid the Trustee its reasonable compensation andreimbursed the Trustee for its expenses, disbursements and advances.

 

## Section6.03           Other Remedies.

##  

If an Event of Defaultoccurs and is continuing, the Trustee may pursue any available remedy tocollect the payment of principal, premium, if any, and interest on the Notes orto enforce the performance of any provision of the Notes or this Indenture.

 

The Trustee may maintain aproceeding even if it does not possess any of the Notes or does not produce anyof them in the proceeding.  A delay oromission by the Trustee or any Holder of a Note in exercising any right or remedyaccruing upon an Event of Default shall not impair the right or remedy orconstitute a waiver of or acquiescence in the Event of Default.  All remedies are cumulative to the extentpermitted by law.

 

## Section6.04           Waiver of Past Defaults.

##  

Holders of not less than amajority in aggregate principal amount of the then outstanding Notes by noticeto the Trustee may on behalf of the Holders of all of the Notes waive anyexisting Default and its consequences hereunder, except a continuing Default inthe payment of the principal of, premium, if any, Additional Interest, if any,or interest on, any Note held by a non-consenting Holder (including inconnection with an Asset Sale Offer or a Change of Control Offer); provided,subject to Section 6.02 hereof, that the Holders of a majority in aggregateprincipal amount of the then outstanding Notes may rescind an acceleration andits consequences, including any related payment default that resulted from suchacceleration.  Upon any such waiver, suchDefault shall cease to exist, and any Event of Default arising 

 

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therefrom shall be deemed to have been curedfor every purpose of this Indenture; but no such waiver shall extend to anysubsequent or other Default or impair any right consequent thereto.

 

## Section6.05           Control by Majority.

##  

Holders of a majority inprincipal amount of the then total outstanding Notes may direct the time,method and place of conducting any proceeding for any remedy available to theTrustee or of exercising any trust or power conferred on the Trustee.  The Trustee, however, may refuse to followany direction that conflicts with law or this Indenture or that the Trusteedetermines is unduly prejudicial to the rights of any other Holder of a Note orthat would involve the Trustee in personal liability.

 

## Section6.06           Limitation on Suits.

##  

Subject to Section 6.07hereof, no Holder of a Note may pursue any remedy with respect to thisIndenture or the Notes unless:

 

###### (1)           such Holder has previously given the Trustee notice that an Event ofDefault is continuing;

######  

###### (2)           Holders of at least 25% in principal amount of the total outstandingNotes have requested the Trustee to pursue the remedy;

######  

###### (3)           Holders of the Notes have offered the Trustee security or indemnityreasonably satisfactory to it against any loss, liability or expense;

######  

###### (4)           the Trustee has not complied with such request within 60 days after thereceipt thereof and the offer of security or indemnity; and

######  

###### (5)           Holders of a majority in principal amount of the total outstandingNotes have not given the Trustee a direction inconsistent with such requestwithin such 60-day period.

######  

A Holder of a Note may notuse this Indenture to prejudice the rights of another Holder of a Note or toobtain a preference or priority over another Holder of a Note.

 

## Section6.07           Rights of Holders of Notes To Receive Payment.

##  

Notwithstanding any otherprovision of this Indenture, the right of any Holder of a Note to receivepayment of principal, premium, if any, and Additional Interest, if any, andinterest on the Note, on or after the respective due dates expressed in theNote (including in connection with an Asset Sale Offer or a Change of ControlOffer), or to bring suit for the enforcement of any such payment on or aftersuch respective dates, shall not be impaired or affected without the consent ofsuch Holder.

 

## Section6.08           Collection Suit by Trustee.

##  

If an Event of Defaultspecified in Section 6.01(a)(1) or (2) hereof occurs and is continuing, theTrustee is authorized to recover judgment in its own name and as trustee of anexpress trust against the Issuer for the whole amount of principal of, premium,if any, and Additional Interest, if any, and interest remaining unpaid on theNotes and interest on overdue principal and, to the extent lawful, interest andsuch further amount as shall be sufficient to cover the costs and expenses ofcollection, including the reasonable compensation, expenses, disbursements andadvances of the Trustee, its agents and counsel.

 

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## Section6.09           Restoration of Rights and Remedies.

##  

If the Trustee or any Holderhas instituted any proceeding to enforce any right or remedy under thisIndenture and such proceeding has been discontinued or abandoned for anyreason, or has been determined adversely to the Trustee or to such Holder, thenand in every such case, subject to any determination in such proceedings, theIssuer, the Trustee and the Holders shall be restored severally andrespectively to their former positions hereunder and thereafter all rights andremedies of the Trustee and the Holders shall continue as though no suchproceeding has been instituted.

 

## Section6.10           Rights and Remedies Cumulative.

##  

Except as otherwise providedwith respect to the replacement or payment of mutilated, destroyed, lost orstolen Notes in Section 2.07 hereof, no right or remedy herein conferred uponor reserved to the Trustee or to the Holders is intended to be exclusive of anyother right or remedy, and every right and remedy shall, to the extentpermitted by law, be cumulative and in addition to every other right and remedygiven 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 theconcurrent assertion or employment of any other appropriate right or remedy.

 

## Section6.11           Delay or Omission Not Waiver.

##  

No delay or omission of theTrustee or of any Holder of any Note to exercise any right or remedy accruingupon any Event of Default shall impair any such right or remedy or constitute awaiver of any such Event of Default or an acquiescence therein.  Every right and remedy given by this Articleor by law to the Trustee or to the Holders may be exercised from time to time,and as often as may be deemed expedient, by the Trustee or by the Holders, asthe case may be.

 

## Section6.12           Trustee May File Proofs of Claim.

##  

The Trustee is authorized tofile such proofs of claim and other papers or documents as may be necessary oradvisable in order to have the claims of the Trustee (including any claim forthe reasonable compensation, expenses, disbursements and advances of theTrustee, its agents and counsel) and the Holders of the Notes allowed in anyjudicial proceedings relative to the Issuer (or any other obligor upon theNotes including the Guarantors), its creditors or its property and shall beentitled and empowered to participate as a member in any official committee ofcreditors appointed in such matter and to collect, receive and distribute anymoney or other property payable or deliverable on any such claims and anycustodian in any such judicial proceeding is hereby authorized by each Holderto make such payments to the Trustee, and in the event that the Trustee shallconsent to the making of such payments directly to the Holders, to pay to theTrustee any amount due to it for the reasonable compensation, expenses,disbursements and advances of the Trustee, its agents and counsel, and anyother 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 inliquidation or under any plan of reorganization or arrangement orotherwise.  Nothing herein containedshall be deemed to authorize the Trustee to authorize or consent to or acceptor adopt on behalf of any Holder any plan of reorganization, arrangement,adjustment or composition affecting the Notes or the rights of any Holder, orto authorize the Trustee to vote in respect of the claim of any Holder in anysuch proceeding.

 

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## Section6.13           Priorities.

##  

If the Trustee collects anymoney pursuant to this Article 6, it shall pay out the money in the followingorder:

 

(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 andthe costs and expenses of collection;

 

(ii)           to Holders of Notes for amounts due and unpaid on the Notes forprincipal, premium, if any, and Additional Interest, if any, and interest,ratably, without preference or priority of any kind, according to the amountsdue and payable on the Notes for principal, premium, if any, and AdditionalInterest, if any, and interest, respectively; and

 

(iii)          to the Issuer or to such party as a court of competent jurisdictionshall direct including a Guarantor, if applicable.

 

The Trustee may fix a recorddate and payment date for any payment to Holders of Notes pursuant to thisSection 6.13.

 

## Section6.14           Undertaking for Costs.

##  

In any suit for theenforcement of any right or remedy under this Indenture or in any suit againstthe Trustee for any action taken or omitted by it as a Trustee, a court in itsdiscretion may require the filing by any party litigant in the suit of anundertaking to pay the costs of the suit, and the court in its discretion mayassess reasonable costs, including reasonable attorneys’ fees and expenses,against any party litigant in the suit, having due regard to the merits andgood faith of the claims or defenses made by the party litigant.  This Section 6.14 does not apply to a suit bythe Trustee, a suit by a Holder of a Note pursuant to Section 6.07 hereof, or asuit by Holders of more than 10% in principal amount of the then outstandingNotes.

 

# ARTICLE7

#  

# TRUSTEE

#  

## Section7.01           Duties of Trustee.

##  

(a)           If an Event of Default has occurred and is continuing, the Trusteeshall exercise such of the rights and powers vested in it by this Indenture,and use the same degree of care and skill in its exercise, as a prudent personwould exercise or use under the circumstances in the conduct of such person’sown affairs.

 

(b)           Except during the continuance of an Event of Default:

 

(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, the Trustee may conclusivelyrely, as to the truth of the statements and the correctness of the opinionsexpressed therein, upon certificates or 

 

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opinions furnished to theTrustee and conforming to the requirements of this Indenture.  However, in the case of any such certificatesor opinions which by any provision hereof are specifically required to befurnished to the Trustee, the Trustee shall examine the certificates andopinions to determine whether or not they conform to the requirements of thisIndenture (but need not confirm or investigate the accuracy of mathematicalcalculations or other facts stated therein).

 

(c)           The Trustee may not be relieved from liabilities for its own negligentaction, its own negligent failure to act, or its own willful misconduct, exceptthat:

 

(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 error of judgment made in goodfaith by a Responsible Officer, unless it is proved in a court of competentjurisdiction that the Trustee was negligent in ascertaining the pertinentfacts; 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 thisIndenture that in any way relates to the Trustee is subject to this Section7.01.

 

(e)           The Trustee shall be under no obligation to exercise any of its rightsor powers under this Indenture at the request or direction of any of theHolders of the Notes unless the Holders have offered to the Trustee indemnityor security reasonably satisfactory to it against any loss, liability orexpense.

 

(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.

 

## Section7.02           Rights of Trustee.

##  

(a)           The Trustee may conclusively rely upon any document believed by it tobe genuine and to have been signed or presented by the proper Person.  The Trustee need not investigate any fact ormatter stated in the document, but the Trustee, in its discretion, may makesuch further inquiry or investigation into such facts or matters as it may seefit, and, if the Trustee shall determine to make such further inquiry orinvestigation, it shall be entitled to examine the books, records and premisesof the Issuer, personally or by agent or attorney at the sole cost of theIssuer and shall incur no liability or additional liability of any kind byreason of such inquiry or investigation.

 

(b)           Before the Trustee acts or refrains from acting, it may require anOfficer’s Certificate or an Opinion of Counsel or both.  The Trustee shall not be liable for anyaction it takes or omits to take in good faith in reliance on such Officer’sCertificate or Opinion of Counsel.  TheTrustee may consult with counsel of its selection and the advice of suchcounsel or any Opinion of Counsel shall be full and complete authorization andprotection from liability in respect of any action taken, suffered or omittedby it hereunder in good faith and in reliance thereon.

 

(c)           The Trustee may act through its attorneys and agents and shall not beresponsible for the misconduct or negligence of any agent or attorney appointedwith due care.

 

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(d)           The Trustee shall not be liable for any action it takes or omits totake in good faith that it believes to be authorized or within the rights orpowers conferred upon it by this Indenture.

 

(e)           Unless otherwise specifically provided in this Indenture, any demand,request, direction or notice from the Issuer shall be sufficient if signed byan 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 believing that repayment of such funds or indemnitysatisfactory to it against such risk or liability is not assured to it.

 

(g)           The Trustee shall not be deemed to have knowledge or notice of anyDefault or Event of Default unless a Responsible Officer of the Trustee hasactual knowledge thereof or unless written notice of any event which is in factsuch a Default or Event of Default is received by the Trustee at the CorporateTrust Office of the Trustee, and such notice references the Notes and thisIndenture.

 

(h)           In no event shall the Trustee be responsible or liable for special,indirect, or consequential loss or damage of any kind whatsoever (including,but not limited to, loss of profit) irrespective of whether the Trustee hasbeen advised of the likelihood of such loss or damage and regardless of theform 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 and otherPerson 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.

 

## Section7.03           Individual Rights of Trustee.

##  

The Trustee in itsindividual or any other capacity may become the owner or pledgee of Notes andmay otherwise deal with the Issuer or any Affiliate of the Issuer with the samerights it would have if it were not Trustee. However, in the event that the Trustee acquires any conflicting interestit must eliminate such conflict within 90 days, apply to the SEC for permissionto continue as trustee or resign.  AnyAgent may do the same with like rights and duties.  The Trustee is also subject to Sections 7.10and 7.11 hereof.

 

## Section7.04           Trustee’s Disclaimer.

##  

The Trustee shall not beresponsible for and makes no representation as to the validity or adequacy ofthis Indenture or the Notes, it shall not be accountable for the Issuer’s useof the proceeds from the Notes or any money paid to the Issuer or upon theIssuer’s direction under any provision of this Indenture, it shall not beresponsible for the use or application of any money received by any PayingAgent other than the Trustee, and it shall not be responsible for any statementor recital herein or any statement in the Notes or any other document inconnection with the sale of the Notes or pursuant to this Indenture other thanits certificate of authentication.

 

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## Section7.05           Notice of Defaults.

##  

If a Default occurs and iscontinuing and if it is known to the Trustee, the Trustee shall mail to Holdersof Notes a notice of the Default within 90 days after it occurs.  Except in the case of a Default relating tothe payment of principal, premium, if any, or interest on any Note, the Trusteemay withhold from the Holders notice of any continuing Default if and so longas a committee of its Responsible Officers in good faith determines thatwithholding the notice is in the interests of the Holders of the Notes.

 

## Section7.06           Reports by Trustee to Holders of the Notes.

##  

Within 60 days after eachMay 15, beginning with the May 15 following the date of thisIndenture, and for so long as Notes remain outstanding, the Trustee shall mailto the Holders of the Notes a brief report dated as of such reporting date thatcomplies with Trust Indenture Act Section 313(a) (but if no event described inTrust Indenture Act Section 313(a) has occurred within the twelve monthspreceding 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).

 

A copy of each report at thetime of its mailing to the Holders of Notes shall be mailed to the Issuer andfiled with the SEC and each stock exchange on which the Notes are listed inaccordance with Trust Indenture Act Section 313(d).  The Issuer shall promptly notify the Trusteewhen the Notes are listed on any stock exchange or delisted therefrom.

 

## Section7.07           Compensation and Indemnity.

##  

The Issuer shall pay to theTrustee from time to time such compensation for its acceptance of thisIndenture and services hereunder as the parties shall agree in writing fromtime to time.  The Trustee’s compensationshall not be limited by any law on compensation of a trustee of an expresstrust.  The Issuer shall reimburse theTrustee promptly upon request for all reasonable disbursements, advances andexpenses incurred or made by it in addition to the compensation for itsservices.  Such expenses shall includethe reasonable compensation, disbursements and expenses of the Trustee’s agentsand counsel.

 

The Issuer and theGuarantors, jointly and severally, shall indemnify the Trustee for, and holdthe Trustee harmless against, any and all loss, damage, claims, liability orexpense (including attorneys’ fees) incurred by it in connection with theacceptance or administration of this trust and the performance of its dutieshereunder (including the costs and expenses of enforcing this Indenture againstthe Issuer or any of the Guarantors (including this Section 7.07) or defendingitself against any claim whether asserted by any Holder, the Issuer or anyGuarantor, 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.

 

The obligations of the Issuerunder this Section 7.07 shall survive the satisfaction and discharge of thisIndenture or the earlier resignation or removal of the Trustee.

 

To secure the paymentobligations of the Issuer and the Guarantors in this Section 7.07, the Trusteeshall have a Lien prior to the Notes on all money or property held or collectedby the Trustee, 

 

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except that held in trust to pay principaland interest on particular Notes.  SuchLien shall survive the satisfaction and discharge of this Indenture.

 

When the Trustee incursexpenses or renders services after an Event of Default specified in Section6.01(a)(6) or (7) hereof occurs, the expenses and the compensation for theservices (including the fees and expenses of its agents and counsel) areintended to constitute expenses of administration under any Bankruptcy Law.

 

The Trustee shall complywith the provisions of Trust Indenture Act Section 313(b)(2) to the extentapplicable.

 

## Section7.08           Replacement of Trustee.

##  

A resignation or removal ofthe Trustee and appointment of a successor Trustee shall become effective onlyupon the successor Trustee’s acceptance of appointment as provided in thisSection 7.08.  The Trustee may resign inwriting at any time and be discharged from the trust hereby created by sonotifying the Issuer.  The Holders of amajority in principal amount of the then outstanding Notes may remove theTrustee by so notifying the Trustee and the Issuer in writing.  The Issuer may remove the Trustee if:

 

### (a)           the Trustee fails to comply with Section 7.10 hereof;

###  

### (b)           the Trustee is adjudged a bankrupt or an insolvent or an order forrelief is entered with respect to the Trustee under any Bankruptcy Law;

###  

### (c)           a custodian or public officer takes charge of the Trustee or itsproperty; or

###  

### (d)           the Trustee becomes incapable of acting.

###  

If the Trustee resigns or isremoved or if a vacancy exists in the office of Trustee for any reason, theIssuer shall promptly appoint a successor Trustee.  Within one year after the successor Trusteetakes office, the Holders of a majority in principal amount of the thenoutstanding Notes may appoint a successor Trustee to replace the successorTrustee appointed by the Issuer.

 

If a successor Trustee doesnot take office within 60 days after the retiring Trustee resigns or isremoved, the retiring Trustee (at the Issuer’s expense), the Issuer or theHolders of at least 10% in principal amount of the then outstanding Notes maypetition any court of competent jurisdiction for the appointment of a successorTrustee.

 

If the Trustee, afterwritten request by any Holder who has been a Holder for at least six months,fails to comply with Section 7.10 hereof, such Holder may petition any court ofcompetent jurisdiction for the removal of the Trustee and the appointment of asuccessor Trustee.

 

A successor Trustee shalldeliver a written acceptance of its appointment to the retiring Trustee and tothe Issuer.  Thereupon, the resignationor removal of the retiring Trustee shall become effective, and the successorTrustee shall have all the rights, powers and duties of the Trustee under thisIndenture.  The successor Trustee shallmail a notice of its succession to Holders. The retiring Trustee shall promptly transfer all property held by it asTrustee to the successor Trustee; provided all sums owing to the Trusteehereunder have been paid and subject to the Lien provided for in Section 7.07hereof.  Notwithstanding replacement ofthe Trustee pursuant to this Section 7.08, the Issuer’s obligations underSection 7.07 hereof shall continue for the benefit of the retiring Trustee.

 

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## Section7.09           Successor Trustee by Merger, etc.

##  

If the Trustee consolidates,merges or converts into, or transfers all or substantially all of its corporatetrust business to, another corporation, the successor corporation without anyfurther act shall be the successor Trustee.

 

## Section7.10           Eligibility; Disqualification.

##  

There shall at all times bea Trustee hereunder that is a corporation organized and doing business underthe laws of the United States of America or of any state thereof that isauthorized under such laws to exercise corporate trustee power, that is subjectto supervision or examination by federal or state authorities and that has acombined capital and surplus of at least $50,000,000 as set forth in its mostrecent published annual report of condition.

 

This Indenture shall alwayshave a Trustee who satisfies the requirements of Trust Indenture Act Sections310(a)(1), (2) and (5).  The Trustee issubject to Trust Indenture Act Section 310(b).

 

## Section7.11           Preferential Collection of Claims AgainstIssuer.

##  

The Trustee is subject toTrust Indenture Act Section 311(a), excluding any creditor relationship listedin Trust Indenture Act Section 311(b).  ATrustee who has resigned or been removed shall be subject to Trust IndentureAct Section 311(a) to the extent indicated therein.

 

# ARTICLE8

#  

# LEGALDEFEASANCE AND COVENANT DEFEASANCE

#  

## Section8.01           Option To Effect Legal Defeasance or CovenantDefeasance.

##  

The Issuer may, at itsoption and at any time, elect to have either Section 8.02 or 8.03 hereofapplied to all outstanding Notes upon compliance with the conditions set forthbelow in this Article 8.

 

## Section8.02           Legal Defeasance and Discharge.

##  

Upon the Issuer’s exerciseunder Section 8.01 hereof of the option applicable to this Section 8.02, theIssuer and the Guarantors shall, subject to the satisfaction of the conditionsset forth in Section 8.04 hereof, be deemed to have been discharged from theirobligations with respect to all outstanding Notes and Guarantees on the datethe conditions set forth below are satisfied (“Legal Defeasance”).  For this purpose, Legal Defeasance means thatthe Issuer shall be deemed to have paid and discharged the entire Indebtednessrepresented by the outstanding Notes, which shall thereafter be deemed to be “outstanding”only for the purposes of Section 8.05 hereof and the other Sections of thisIndenture referred to in (a) and (b) below, and to have satisfied all its otherobligations under such Notes and this Indenture including that of theGuarantors (and the Trustee, on demand of and at the expense of the Issuer,shall execute proper instruments acknowledging the same), except for thefollowing provisions which shall survive until otherwise terminated ordischarged hereunder:

 

### (a)           the rights of Holders of Notes to receive payments in respect of theprincipal of, premium, if any, and interest on the Notes when such payments aredue solely out of the trust created pursuant to this Indenture referred to inSection 8.04 hereof;

 

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### (b)           the Issuer’s obligations with respect to Notes concerning issuingtemporary Notes, registration of such Notes, mutilated, destroyed, lost orstolen Notes and the maintenance of an office or agency for payment and moneyfor security payments held in trust;

###  

### (c)           the rights, powers, trusts, duties and immunities of the Trustee, andthe Issuer’s obligations in connection therewith; and

###  

### (d)           this Section 8.02.

###  

Subject to compliance withthis Article 8, the Issuer may exercise its option under this Section 8.02notwithstanding the prior exercise of its option under Section 8.03 hereof.

 

## Section8.03           Covenant Defeasance.

##  

Upon the Issuer’s exerciseunder Section 8.01 hereof of the option applicable to this Section 8.03, theIssuer and the Guarantors shall, subject to the satisfaction of the conditionsset forth in Section 8.04 hereof, be released from their obligations under thecovenants 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 and 4.15 hereof and clauses (4) and (5) of Section 5.01(a),Sections 5.01(c) and 5.01(d) hereof with respect to the outstanding Notes onand after the date the conditions set forth in Section 8.04 hereof aresatisfied (“Covenant Defeasance”), and the Notes shall thereafter bedeemed not “outstanding” for the purposes of any direction, waiver, consent ordeclaration or act of Holders (and the consequences of any thereof) inconnection 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 RestrictedSubsidiaries subject thereto), 6.01(a)(7) (solely with respect to RestrictedSubsidiaries subject thereto) and 6.01(a)(8) hereof shall not constitute Eventsof Default.

 

## Section8.04           Conditions to Legal or Covenant Defeasance.

##  

In order to exercise eitherLegal Defeasance or Covenant Defeasance with respect to the Notes:

 

###### (1)           the Issuer must irrevocably deposit with the Trustee, in trust, for thebenefit of the Holders of the Notes, cash in U.S. dollars, GovernmentSecurities, or a combination thereof, in such amounts as will be sufficient, inthe opinion of a nationally recognized firm of independent public accountants,to pay the principal of, premium, if any, and interest due on the Notes on thestated maturity date or on the redemption date, as the case may be, of suchprincipal, premium, if any, or interest on such Notes and the Issuer must specifywhether such Notes are being defeased to maturity or to a particular redemptiondate;

 

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###### (2)           in the case of Legal Defeasance, the Issuer shall have delivered to theTrustee an Opinion of Counsel reasonably acceptable to the Trustee confirmingthat, subject to customary assumptions and exclusions,

######  

(a)           the Issuer has received from, or there has been published by, theUnited States Internal Revenue Service a ruling, or

 

(b)           since the issuance of the Notes, there has been a change in theapplicable U.S. federal income tax law,

 

ineither case to the effect that, and based thereon such Opinion of Counsel shallconfirm that, subject to customary assumptions and exclusions, the Holders ofthe Notes will not recognize income, gain or loss for U.S. federal income taxpurposes, as applicable, as a result of such Legal Defeasance and will besubject to U.S. federal income tax on the same amounts, in the same manner andat the same times as would have been the case if such Legal Defeasance had notoccurred;

 

###### (3)           in the case of Covenant Defeasance, the Issuer shall have delivered tothe Trustee an Opinion of Counsel reasonably acceptable to the Trusteeconfirming that, subject to customary assumptions and exclusions, the Holdersof the Notes will not recognize income, gain or loss for U.S. federal incometax purposes as a result of such Covenant Defeasance and will be subject tosuch tax on the same amounts, in the same manner and at the same times as wouldhave been the case if such Covenant Defeasance had not occurred;

######  

###### (4)           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 Subordinated Notes and theSubordinated Discount 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 Defeasance shall not result in abreach or violation of, or constitute a default under the Senior CreditFacilities, the Senior Subordinated Notes or the indenture pursuant to whichthe Senior Subordinated Notes are issued, the Subordinated Discount Notes orthe indenture pursuant to which the Subordinated Discount Notes are issued orany other material agreement or instrument (other than this Indenture) to whichthe Issuer or any Guarantor is a party or by which the Issuer or any Guarantoris 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 Subordinated Notesand the Subordinated Discount Notes, and the granting of Liens in connectiontherewith);

######  

###### (6)           the Issuer shall have delivered to the Trustee an Opinion of Counsel tothe effect that, as of the date of such opinion and subject to customaryassumptions and exclusions following the deposit, the trust funds will not besubject to the effect of Section 547 of Title 11 of the United StatesCode;

######  

###### (7)           the Issuer shall have delivered to the Trustee an Officer’s Certificatestating that the deposit was not made by the Issuer with the intent of defeating,hindering, delaying or defrauding any creditors of the Issuer or any Guarantoror others; and

 

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###### (8)           the Issuer shall have delivered to the Trustee an Officer’s Certificateand an Opinion of Counsel (which Opinion of Counsel may be subject to customaryassumptions and exclusions) each stating that all conditions precedent providedfor or relating to the Legal Defeasance or the Covenant Defeasance, as the casemay be, have been complied with.

######  

## Section8.05           Deposited Money and Government Securities ToBe Held in Trust; Other Miscellaneous Provisions.

##  

Subject to Section 8.06hereof, all money and Government Securities (including the proceeds thereof)deposited with the Trustee (or other qualifying trustee, collectively forpurposes of this Section 8.05, the “Trustee”) pursuant to Section 8.04hereof in respect of the outstanding Notes shall be held in trust and appliedby the Trustee, in accordance with the provisions of such Notes and thisIndenture, to the payment, either directly or through any Paying Agent(including the Issuer or a Guarantor acting as Paying Agent) as the Trustee maydetermine, to the Holders of such Notes of all sums due and to become duethereon in respect of principal, premium and Additional Interest, if any, andinterest, but such money need not be segregated from other funds except to theextent required by law.

 

The Issuer shall pay andindemnify the Trustee against any tax, fee or other charge imposed on orassessed against the cash or Government Securities deposited pursuant toSection 8.04 hereof or the principal and interest received in respect thereofother than any such tax, fee or other charge which by law is for the account ofthe Holders of the outstanding Notes.

 

Anything in this Article 8to the contrary notwithstanding, the Trustee shall deliver or pay to the Issuerfrom time to time upon the request of the Issuer any money or GovernmentSecurities held by it as provided in Section 8.04 hereof which, in the opinionof a nationally recognized firm of independent public accountants expressed ina written certification thereof delivered to the Trustee (which may be theopinion delivered under Section 8.04(1) hereof), are in excess of theamount thereof that would then be required to be deposited to effect anequivalent Legal Defeasance or Covenant Defeasance.

 

## Section8.06           Repayment to Issuer.

##  

Any money deposited with theTrustee or any Paying Agent, or then held by the Issuer, in trust for thepayment of the principal of, premium and Additional Interest, if any, orinterest on any Note and remaining unclaimed for two years after suchprincipal, and premium and Additional Interest, if any, or interest has becomedue and payable shall be paid to the Issuer on its request or (if then held bythe Issuer) shall be discharged from such trust; and the Holder of such Noteshall thereafter look only to the Issuer for payment thereof, and all liabilityof the Trustee or such Paying Agent with respect to such trust money, and allliability of the Issuer as trustee thereof, shall thereupon cease.

 

## Section8.07           Reinstatement.

##  

If the Trustee or PayingAgent is unable to apply any United States dollars or Government Securities inaccordance with Section 8.02 or 8.03 hereof, as the case may be, by reason ofany order or judgment of any court or governmental authority enjoining,restraining or otherwise prohibiting such application, then the Issuer’sobligations under this Indenture and the Notes shall be revived and reinstatedas though no deposit had occurred pursuant to Section 8.02 or 8.03 hereof untilsuch time as the Trustee or Paying Agent is permitted to apply all such moneyin accordance with Section 8.02 or 8.03 hereof, as the case may be; providedthat, if the Issuer makes any payment of principal of, premium and AdditionalInterest, if any, or interest on any Note following the reinstatement of itsobligations, the Issuer shall be subrogated to the rights of the Holders ofsuch Notes to receive such payment from the money held by the Trustee or PayingAgent.

 

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# ARTICLE9

#  

# AMENDMENT,SUPPLEMENT AND WAIVER

#  

## Section9.01           Without Consent of Holders of Notes.

##  

Notwithstanding Section 9.02hereof, the Issuer, any Guarantor (with respect to a Guarantee to which it is aparty or this Indenture) and the Trustee may amend or supplement this Indentureand any Guarantee or Notes without the consent of any Holder:

 

###### (1)           to cure any ambiguity, omission, mistake, defect or inconsistency;

######  

###### (2)           to provide for uncertificated Notes of such series in addition to or inplace of certificated Notes;

######  

###### (3)           to comply with Section 5.01 hereof;

######  

###### (4)           to provide for the assumption of the Issuer’s or any Guarantor’sobligations to the Holders in a transaction that complies with this Indenture;

######  

###### (5)           to make any change that would provide any additional rights or benefitsto the Holders or that does not adversely affect the legal rights under thisIndenture of any such Holder;

######  

###### (6)           to add covenants for the benefit of the Holders or to surrender anyright or power conferred upon the Issuer or any Guarantor;

######  

###### (7)           to comply with requirements of the SEC in order to effect or maintainthe qualification of this Indenture under the Trust Indenture Act;

######  

###### (8)           to evidence and provide for the acceptance and appointment under thisIndenture of a successor Trustee thereunder pursuant to the requirementsthereof;

######  

###### (9)           to provide for the issuance of exchange notes or private exchangenotes, which are identical to exchange notes except that they are not freelytransferable;

######  

###### (10)         to add a Guarantor under this Indenture;

######  

###### (11)         to conform the text of this Indenture, Guarantees or the Notes to anyprovision of the “Description of Senior Notes” section of the OfferingMemorandum to the extent that such provision in such “Description of SeniorNotes” section was intended to be a verbatim recitation of a provision of thisIndenture, Guarantee or Notes; or

######  

###### (12)         to make any amendment to the provisions of this Indenture relating tothe transfer and legending of Notes as permitted by this Indenture, including,without limitation to facilitate the issuance and administration of the Notes; provided,however, that (i) compliance with this Indenture as so amended would notresult in Notes being transferred in violation of the Securities Act or anyapplicable securities law and (ii) such amendment does not materially andadversely affect the rights of Holders to transfer Notes.

######  

Upon the request of theIssuer accompanied by a resolution of its board of directors authorizing theexecution of any such amended or supplemental indenture, and upon receipt bythe Trustee 

 

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of the documents described in Section 7.02hereof, the Trustee shall join with the Issuer and the Guarantors in theexecution of any amended or supplemental indenture authorized or permitted bythe terms of this Indenture and to make any further appropriate agreements andstipulations that may be therein contained, but the Trustee shall not be obligatedto enter into such amended or supplemental indenture that affects its ownrights, duties or 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.

 

## Section9.02           With Consent of Holders of Notes.

##  

Except as provided below inthis Section 9.02, the Issuer and the Trustee may amend or supplement thisIndenture, the Notes and the Guarantees with the consent of the Holders of atleast a majority in principal amount of the Notes (including Additional Notes,if any) then outstanding voting as a single class (including, withoutlimitation, consents obtained in connection with a tender offer or exchangeoffer for, or purchase of, the Notes), and, subject to Sections 6.04 and 6.07hereof, any existing Default or Event of Default (other than a Default or Eventof Default in the payment of the principal of, premium and Additional Interest,if any, or interest on the Notes, except a payment default resulting from anacceleration that has been rescinded) or compliance with any provision of thisIndenture, the Guarantees or the Notes may be waived with the consent of theHolders of a majority in principal amount of the then outstanding Notes(including Additional Notes, if any) voting as a single class (includingconsents obtained in connection with a tender offer or exchange offer for, orpurchase of, the Notes).  Section 2.08hereof and Section 2.09 hereof shall determine which Notes are considered to be“outstanding” for the purposes of this Section 9.02.

 

Upon the request of theIssuer accompanied by a resolution of its board of directors authorizing theexecution of any such amended or supplemental indenture, and upon the filingwith the Trustee of evidence satisfactory to the Trustee of the consent of theHolders of Notes as aforesaid, and upon receipt by the Trustee of the documentsdescribed in Section 7.02 hereof, the Trustee shall join with the Issuerin the execution of such amended or supplemental indenture unless such amendedor supplemental indenture directly affects the Trustee’s own rights, duties orimmunities under this Indenture or otherwise, in which case the Trustee may inits discretion, but shall not be obligated to, enter into such amended orsupplemental indenture.

 

It shall not be necessaryfor the consent of the Holders of Notes under this Section 9.02 to approvethe particular form of any proposed amendment or waiver, but it shall besufficient if such consent approves the substance thereof.

 

After an amendment, supplementor waiver under this Section 9.02 becomes effective, the Issuer shall mail tothe Holders of Notes affected thereby a notice briefly describing theamendment, supplement or waiver.  Anyfailure of the Issuer to mail such notice, or any defect therein, shall not,however, in any way impair or affect the validity of any such amended orsupplemental indenture or waiver.

 

Without the consent of eachaffected Holder of Notes, an amendment or waiver under this Section 9.02may not (with respect to any Notes held by a non-consenting Holder):

 

###### (1)           reduce the principal amount of such Notes whose Holders must consent toan amendment, supplement or waiver;

######  

###### (2)           reduce the principal of or change the fixed final maturity of any suchNote or alter or waive the provisions with respect to the redemption of suchNotes (other than provisions 

 

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###### relating to Section 3.09,Section 4.10 and Section 4.14 hereof to the extent that any such amendment orwaiver does not have the effect of reducing the principal of or changing thefixed final maturity of any such Note or altering or waiving the provisionswith respect to the redemption of such Notes);

######  

###### (3)           reduce the rate of or change the time for payment of interest on anyNote;

######  

###### (4)           waive a Default in the payment of principal of or premium, if any, orinterest on the Notes, except a rescission of acceleration of the Notes by theHolders of at least a majority in aggregate principal amount of the Notes and awaiver of the payment default that resulted from such acceleration, or inrespect of a covenant or provision contained in this Indenture or any Guaranteewhich cannot be amended or modified without the consent of all affectedHolders;

######  

###### (5)           make any Note payable in money other than that stated therein;

######  

###### (6)           make any change in the provisions of this Indenture relating to waiversof past Defaults or the rights of Holders to receive payments of principal ofor premium, if any, or interest on the Notes;

######  

###### (7)           make any change to this paragraph of this Section 9.02;

######  

###### (8)           impair the right of any Holder to receive payment of principal of, orinterest on, such Holder’s Notes on or after the due dates therefor or toinstitute suit for the enforcement of any payment on or with respect to such Holder’sNotes;

######  

###### (9)           make any change to or modify the ranking of the Notes that wouldadversely affect the Holders; or

######  

###### (10)         except as expressly permitted by this Indenture, modify the Guaranteesof any Significant Subsidiary, or any group of Restricted Subsidiaries that,taken together (as of the latest audited consolidated financial statements forthe Issuer), would constitute a Significant Subsidiary, in any manner adverseto the Holders of the Notes.

######  

## Section9.03           Compliance with Trust Indenture Act.

##  

Every amendment orsupplement to this Indenture or the Notes shall be set forth in an amended orsupplemental indenture that complies with the Trust Indenture Act as then ineffect.

 

## Section9.04           Revocation and Effect of Consents.

##  

Until an amendment, supplementor waiver becomes effective, a consent to it by a Holder of a Note is acontinuing consent by the Holder of a Note and every subsequent Holder of aNote or portion of a Note that evidences the same debt as the consenting Holder’sNote, even if notation of the consent is not made on any Note.  However, any such Holder of a Note orsubsequent Holder of a Note may revoke the consent as to its Note if theTrustee 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.

 

The Issuer may, but shallnot be obligated to, fix a record date for the purpose of determining theHolders entitled to consent to any amendment, supplement, or waiver.  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 designated proxies), and onlysuch Persons, shall be entitled to consent to such amendment, supplement, orwaiver or to revoke any consent previously given, whether or not such Personscontinue to be Holders after such record date. No such consent shall be valid or effective for more than 120 days aftersuch record date unless the consent of the requisite number of Holders has beenobtained.

 

## Section9.05           Notation on or Exchange of Notes.

##  

The Trustee may place anappropriate notation about an amendment, supplement or waiver on any Notethereafter authenticated.  The Issuer inexchange for all Notes may issue and the Trustee shall, upon receipt of anAuthentication Order, authenticate new Notes that reflect the amendment,supplement or waiver.

 

Failure to make the appropriatenotation or issue a new Note shall not affect the validity and effect of suchamendment, supplement or waiver.

 

## Section9.06           Trustee To Sign Amendments, etc.

##  

The Trustee shall sign anyamendment, supplement or waiver authorized pursuant to this Article 9 if theamendment or supplement does not adversely affect the rights, duties,liabilities or immunities of the Trustee. The Issuer may not sign an amendment, supplement or waiver until theboard of directors approves it.  Inexecuting any amendment, supplement or waiver, the Trustee shall be providedwith and (subject to Section 7.01 hereof) shall be fully protected in relyingupon, in addition to the documents required by Section 12.04 hereof, an Officer’sCertificate and an Opinion of Counsel stating that the execution of suchamended or supplemental indenture is authorized or permitted by this Indentureand that such amendment, supplement or waiver is the legal, valid and bindingobligation of the Issuer and any Guarantors party thereto, enforceable againstthem in accordance with its terms, subject to customary exceptions, andcomplies with the provisions hereof (including Section 9.03).  Notwithstanding the foregoing, no Opinion ofCounsel will be required for the Trustee to execute any amendment or supplementadding a new Guarantor under this Indenture.

 

## Section9.07           Payment for Consent.

##  

The Issuer shall not, andshall not permit any of its Subsidiaries to, directly or indirectly, pay orcause to be paid any consideration, whether by way of interest, fee orotherwise, to or for the benefit of any Holder for or as an inducement to anyconsent, waiver or amendment of any of the terms or provisions of thisIndenture or the Notes unless such consideration is offered to all Holders andis paid to all Holders that so consent, waive or agree to amend in the timeframe set forth in the solicitation documents relating to such consent, waiveror agreement.

 

# ARTICLE10

#  

# GUARANTEES

#  

## Section10.01         Guarantee.

##  

Subject to this Article 10,each of the Guarantors hereby, jointly and severally, unconditionallyguarantees to each Holder of a Note authenticated and delivered by the Trusteeand to the Trustee and its successors and assigns, irrespective of the validityand enforceability of this Indenture, the Notes or the obligations of theIssuer hereunder or thereunder, that: (a) the principal of, and interest,premium and Additional Interest, if any, on the Notes shall be promptly paid infull when due, whether at maturity, by acceleration, redemption or otherwise, andinterest on the overdue principal of and interest on the 

 

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Notes, if any, if lawful, and all otherObligations of the Issuer to the Holders or the Trustee hereunder or thereundershall be promptly paid in full or performed, all in accordance with the termshereof and thereof; and (b) in case of any extension of time of payment orrenewal of any Notes or any of such other obligations, that same shall 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 or any performance so guaranteed for whatever reason,the Guarantors shall be jointly and severally obligated to pay the sameimmediately.  Each Guarantor agrees thatthis is a guarantee of payment and not a guarantee of collection.

 

The Guarantors hereby agreethat their obligations hereunder shall be unconditional, irrespective of thevalidity, regularity or enforceability of the Notes or this Indenture, theabsence of any action to enforce the same, any waiver or consent by any Holderof the Notes with respect to any provisions hereof or thereof, the recovery ofany judgment against the Issuer, any action to enforce the same or any othercircumstance which might otherwise constitute a legal or equitable discharge ordefense of a guarantor.  Each Guarantorhereby waives diligence, presentment, demand of payment, filing of claims witha court in the event of insolvency or bankruptcy of the Issuer, any right torequire a proceeding first against the Issuer, protest, notice and all demandswhatsoever and covenants that this Guarantee shall not be discharged except bycomplete performance of the obligations contained in the Notes and thisIndenture.

 

Each Guarantor also agreesto pay any and all costs and expenses (including reasonable attorneys’ fees)incurred by the Trustee or any Holder in enforcing any rights under thisSection 10.01.

 

If any Holder or the Trusteeis required by any court or otherwise to return to the Issuer, the Guarantorsor any custodian, trustee, liquidator or other similar official acting inrelation to either the Issuer or the Guarantors, any amount paid either to theTrustee or such Holder, this Guarantee, to the extent theretofore discharged,shall be reinstated in full force and effect.

 

Each Guarantor agrees thatit shall not be entitled to any right of subrogation in relation to the Holdersin respect of any obligations guaranteed hereby until payment in full of allobligations guaranteed hereby.  EachGuarantor further agrees that, as between the Guarantors, on the one hand, andthe Holders and the Trustee, on the other hand, (x) the maturity of theobligations guaranteed hereby may be accelerated as provided in Article 6hereof for the purposes of this Guarantee, notwithstanding any stay, injunctionor other prohibition preventing such acceleration in respect of the obligationsguaranteed hereby, and (y) in the event of any declaration of acceleration ofsuch obligations as provided in Article 6 hereof, such obligations (whether ornot due and payable) shall forthwith become due and payable by the Guarantorsfor the purpose of this Guarantee.  TheGuarantors shall have the right to seek contribution from any non-payingGuarantor so long as the exercise of such right does not impair the rights ofthe Holders under the Guarantees.

 

Each Guarantee shall remainin full force and effect and continue to be effective should any petition befiled by or against the Issuer for liquidation, reorganization, should theIssuer become insolvent or make an assignment for the benefit of creditors orshould a receiver or trustee be appointed for all or any significant part ofthe Issuer’s assets, and shall, to the fullest extent permitted by law,continue to be effective or be reinstated, as the case may be, if at any timepayment and performance of the Notes are, pursuant to applicable law, rescindedor reduced in amount, or must otherwise be restored or returned by any obligeeon the Notes or Guarantees, whether as a “voidable preference,” “fraudulenttransfer” or otherwise, all as though such payment or performance had not beenmade.  In the event that any payment orany part thereof, is rescinded, reduced, restored or returned, the Notes shall,to the fullest extent permitted by law, be reinstated and deemed reduced onlyby such amount paid and not so rescinded, reduced, restored or returned.

 

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

 

The Guarantee issued by anyGuarantor shall be a general unsecured senior obligation of such Guarantor andshall be *pari passu* in right ofpayment with all existing and future senior Indebtedness of such Guarantor, ifany.

 

Each payment to be made by aGuarantor in respect of its Guarantee shall be made without set-off,counterclaim, reduction or diminution of any kind or nature.

 

## Section10.02         Limitation on Guarantor Liability.

##  

Each Guarantor, and by itsacceptance of Notes, each Holder, hereby confirms that it is the intention ofall such parties that the Guarantee of such Guarantor not constitute afraudulent transfer or conveyance for purposes of Bankruptcy Law, the UniformFraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any similarfederal 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, aftergiving effect to such maximum amount and all other contingent and fixedliabilities of such Guarantor that are relevant under such laws and aftergiving effect to any collections from, rights to receive contribution from orpayments made by or on behalf of any other Guarantor in respect of theobligations of such other Guarantor under this Article 10, result in theobligations of such Guarantor under its Guarantee not constituting a fraudulentconveyance or fraudulent transfer under applicable law.  Each Guarantor that makes a payment under itsGuarantee shall be entitled upon payment in full of all guaranteed obligationsunder this Indenture to a contribution from each other Guarantor in an amountequal to such other Guarantor’s *pro rata*portion of such payment based on the respective net assets of all theGuarantors at the time of such payment determined in accordance with GAAP.

 

## Section10.03         Execution and Delivery.

##  

To evidence its Guaranteeset forth in Section 10.01 hereof, each Guarantor hereby agrees that thisIndenture shall be executed on behalf of such Guarantor by its President, oneof its Vice Presidents or one of its Assistant Vice Presidents.

 

Each Guarantor hereby agreesthat its Guarantee set forth in Section 10.01 hereof shall remain in full forceand effect notwithstanding the absence of the endorsement of any notation ofsuch Guarantee on the Notes.

 

If an Officer whosesignature is on this Indenture no longer holds that office at the time theTrustee authenticates the Note, the Guarantee shall be valid nevertheless.

 

The delivery of any Note bythe Trustee, after the authentication thereof hereunder, shall constitute duedelivery of the Guarantee set forth in this Indenture on behalf of theGuarantors.

 

If required by Section 4.15hereof, the Issuer shall cause any newly created or acquired RestrictedSubsidiary to comply with the provisions of Section 4.15 hereof and thisArticle 10, to the extent applicable.

 

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## Section10.04         Subrogation.

##  

Each Guarantor shall besubrogated to all rights of Holders of Notes against the Issuer in respect ofany amounts paid by any Guarantor pursuant to the provisions of Section 10.01hereof; provided that, if an Event of Default has occurred and iscontinuing, no Guarantor shall be entitled to enforce or receive any paymentsarising out of, or based upon, such right of subrogation until all amounts thendue and payable by the Issuer under this Indenture or the Notes shall have beenpaid in full.

 

## Section10.05         Benefits Acknowledged.

##  

Each Guarantor acknowledgesthat it will receive direct and indirect benefits from the financingarrangements contemplated by this Indenture and that the guarantee and waiversmade by it pursuant to its Guarantee are knowingly made in contemplation ofsuch benefits.

 

## Section10.06         Release of Guarantees.

##  

A Guarantee by a Guarantorshall be automatically and unconditionally released and discharged, and nofurther action by such Guarantor, the Issuer or the Trustee is required for therelease of such Guarantor’s Guarantee, upon:

 

(1)           (A)  any sale, exchange,disposition or transfer (by merger or otherwise) of (x) the Capital Stockof such Guarantor, after which the applicable Guarantor is no longer aRestricted Subsidiary, or (y) all or substantially all the assets of suchGuarantor which sale, exchange, disposition or transfer in each case is made incompliance 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 an Officer’s Certificate and anOpinion of Counsel, each stating that all conditions precedent provided for inthis Indenture relating to such transaction have been complied with.

 

# ARTICLE11

#  

# SATISFACTIONAND DISCHARGE

#  

## Section11.01         Satisfaction and Discharge.

##  

This Indenture shall bedischarged and shall cease to be of further effect as to all Notes, wheneither:

 

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(1)           all Notes theretofore authenticated and delivered, except lost, stolenor destroyed Notes which have been replaced or paid and Notes for whose paymentmoney has theretofore been deposited in trust, have been delivered to theTrustee for cancellation; or

 

(2)           (A)  all Notes not theretoforedelivered to the Trustee for cancellation have become due and payable by reasonof the making of a notice of redemption or otherwise, shall become due andpayable within one year or are to be called for redemption within one yearunder arrangements satisfactory to the Trustee for the giving of notice ofredemption by the Trustee in the name, and at the expense, of the Issuer andthe Issuer or any Guarantor have irrevocably deposited or caused to bedeposited with the Trustee as trust funds in trust solely for the benefit ofthe Holders of the Notes, cash in U.S. dollars, Government Securities, or acombination thereof, in such amounts as will be sufficient withoutconsideration of any reinvestment of interest to pay and discharge the entireindebtedness on the Notes not theretofore delivered to the Trustee forcancellation for principal, premium, if any, and accrued interest to the dateof 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 Subordinated Notes and theSubordinated Discount Notes, and the granting of Liens in connection therewith)with respect to this Indenture or the Notes shall have occurred and becontinuing on the date of such deposit or shall occur as a result of suchdeposit and such deposit will not result in a breach or violation of, orconstitute a default under the Senior Credit Facilities, Senior SubordinatedNotes (or the indenture under which the Senior Subordinated Notes are issued),Subordinated Discount Notes (or the indenture under which the SubordinatedDiscount Notes are issued) or any other material agreement or instrument (otherthan this Indenture) to which the Issuer or any Guarantor is a party or bywhich the Issuer or any Guarantor is bound (other than that resulting from anyborrowing of funds to be applied to make such deposit and any similar andsimultaneous deposit relating to other Indebtedness, including the SeniorSubordinated Notes and the Subordinated Discount Notes, and the granting ofLiens in connection therewith);

 

(C)           the Issuer has paid or caused to be paid all sums payable by it underthis Indenture; and

 

(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.

 

In addition, the Issuer mustdeliver an Officer’s Certificate and an Opinion of Counsel to the Trusteestating that all conditions precedent to satisfaction and discharge have been satisfied.

 

Notwithstanding thesatisfaction and discharge of this Indenture, if money shall have beendeposited with the Trustee pursuant to subclause (A) of clause (2) of thisSection 11.01, the provisions of Section 11.02 and Section 8.06 hereof shall survivesuch satisfaction and discharge.

 

## Section11.02         Application of Trust Money.

##  

Subject to the provisions ofSection 8.06 hereof, all money deposited with the Trustee pursuant to Section11.01 hereof shall be held in trust and applied by it, in accordance with theprovisions of the Notes and this Indenture, to the payment, either directly orthrough any Paying Agent (including the Issuer acting as its own Paying Agent)as the Trustee may determine, to the Persons entitled thereto, 

 

106

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of the principal (and premium and AdditionalInterest, if any) and interest for whose payment such money has been depositedwith the Trustee; but such money need not be segregated from other funds exceptto the extent required by law.

 

If the Trustee or PayingAgent is unable to apply any money or Government Securities in accordance withSection 11.01 hereof by reason of any legal proceeding or by reason of anyorder or judgment of any court or governmental authority enjoining, restrainingor otherwise prohibiting such application, the Issuer’s and any Guarantor’sobligations under this Indenture and the Notes shall be revived and reinstatedas though no deposit had occurred pursuant to Section 11.01 hereof; providedthat if the Issuer has made any payment of principal of, premium and AdditionalInterest, if any, or interest on any Notes because of the reinstatement of itsobligations, the Issuer shall be subrogated to the rights of the Holders ofsuch Notes to receive such payment from the money or Government Securities heldby the Trustee or Paying Agent.

 

# ARTICLE12

#  

# MISCELLANEOUS

#  

## Section12.01         Trust Indenture Act Controls.

##  

If any provision of thisIndenture limits, qualifies or conflicts with the duties imposed by Trust IndentureAct Section 318(c), the imposed duties shall control.

 

## Section12.02         Notices.

##  

Any notice or communicationby the Issuer, any Guarantor or the Trustee to the others is duly given if inwriting and delivered in person or mailed by first-class mail (registered orcertified, return receipt requested), fax or overnight air courier guaranteeingnext day delivery, to the others’ address:

 

If to the Issuer and/or anyGuarantor:

 

c/o Michaels Stores, Inc. 8000 Bent Branch DriveIrving, TX 75063Attention: General Counsel

 

with a copy to:

 

Ropes & Gray LLPOne International Place

Boston, MA 02110

Attention: Byung W. Choi, Esq.

 
| Telephone: | (617) 951-7000 |
|------------|----------------|
| Facsimile: | (617) 951-7050 |

 

If to the Trustee:

 

Wells Fargo Bank, NationalAssociation

1445 Ross Avenue - 2nd Floor

 

107

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Dallas, Texas 75202-2812

Fax No.: 214-777-4086

Attention:   PatrickGiordano

CorporateTrust Services

 

The Issuer, any Guarantor orthe Trustee, by notice to the others, may designate additional or differentaddresses for subsequent notices or communications.

 

All notices andcommunications (other than those sent to Holders) shall be deemed to have beenduly given: at the time delivered by hand, if personally delivered; fivecalendar days after being deposited in the mail, postage prepaid, if mailed byfirst-class mail; when receipt acknowledged, if faxed; and the next BusinessDay after timely delivery to the courier, if sent by overnight air courierguaranteeing next day delivery; and, subject to compliance with the TrustIndenture Act, on the first date on which publication is made, if given bypublication; provided that any notice or communication delivered to theTrustee shall be deemed effective upon actual receipt thereof.

 

Any notice or communicationto a Holder shall be mailed by first-class mail, certified or registered,return receipt requested, or by overnight air courier guaranteeing next daydelivery to its address shown on the register kept by the Registrar.  Any notice or communication shall also be somailed to any Person described in Trust Indenture Act Section 313(c), to theextent required by the Trust Indenture Act. Failure to mail a notice or communication to a Holder or any defect in itshall not affect its sufficiency with respect to other Holders.

 

If a notice or communicationis mailed or otherwise delivered in the manner provided above within  the time prescribed, it is duly given,whether or not the addressee receives it.

 

If the Issuer mails a noticeor communication to Holders, it shall mail a copy to the Trustee and each Agentat the same time.

 

## Section12.03         Communication by Holders of Notes with OtherHolders of Notes.

##  

Holders may communicatepursuant to Trust Indenture Act Section 312(b) with other Holders with respectto 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).

 

## Section12.04         Certificate and Opinion as to ConditionsPrecedent.

##  

Upon any request orapplication by the Issuer or any of the Guarantors to the Trustee to take anyaction 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 and substance reasonably satisfactoryto the Trustee (which shall include the statements set forth in Section 12.05hereof) stating that, in the opinion of the signers, all conditions precedentand covenants, if any, provided for in this Indenture relating to the proposedaction have been satisfied; and

###  

### (b)           An Opinion of Counsel in form and substance reasonably satisfactory tothe Trustee (which shall include the statements set forth in Section 12.05hereof) stating that, in the opinion of such counsel, all such conditions precedentand covenants have been satisfied.

 

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## Section12.05         Statements Required in Certificate or Opinion.

##  

Each certificate or opinionwith respect to compliance with a condition or covenant provided for in thisIndenture (other than a certificate provided pursuant to Section 4.04 hereof orTrust Indenture Act Section 314(a)(4)) shall comply with the provisions ofTrust Indenture Act Section 314(e) and shall include:

 

### (a)           a statement that the Person making such certificate or opinion has readsuch covenant or condition;

###  

### (b)           a brief statement as to the nature and scope of the examination orinvestigation upon which the statements or opinions contained in suchcertificate or opinion are based;

###  

### (c)           a statement that, in the opinion of such Person, he or she has madesuch examination or investigation as is necessary to enable him to express aninformed opinion as to whether or not such covenant or condition has beencomplied with (and, in the case of an Opinion of Counsel, may be limited toreliance on an Officer’s Certificate as to matters of fact); and

###  

### (d)           a statement as to whether or not, in the opinion of such Person, suchcondition or covenant has been complied with; *provided,however*, that with respect to matters of fact an Opinion of Counselmay rely on an Officer’s Certificate or certificates of public officials.

###  

## Section12.06         Rules by Trustee and Agents.

##  

The Trustee may makereasonable rules for action by or at a meeting of Holders.  The Registrar or Paying Agent may makereasonable rules and set reasonable requirements for its functions.

 

## Section12.07         No Personal Liability of Directors, Officers,Employees and Stockholders.

##  

No past, present or futuredirector, officer, employee, incorporator, member, partner or stockholder ofthe Issuer or any Guarantor or any of their direct or indirect parent companiesshall have any liability for any obligations of the Issuer or the Guarantorsunder the Notes, the Guarantees or this Indenture or for any claim based on, inrespect of, or by reason of such obligations or their creation.  Each Holder by accepting Notes waives andreleases all such liability.  The waiverand release are part of the consideration for issuance of the Notes.

 

## Section12.08         Governing Law.

##  

THIS INDENTURE, THE NOTESAND ANY GUARANTEE WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWSOF THE STATE OF NEW YORK.

 

## Section12.09         Waiver of Jury Trial.

##  

EACH OF THE ISSUER, THEGUARANTORS AND THE TRUSTEE HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENTPERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGALPROCEEDING ARISING OUT OF OR RELATING TO THIS INDENTURE, THE NOTES OR THETRANSACTIONS CONTEMPLATED HEREBY.

 

109

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## Section12.10         Force Majeure.

##  

In no event shall theTrustee be responsible or liable for any failure or delay in the performance ofits obligations under this Indenture arising out of or caused by, directly orindirectly, forces beyond its reasonable control, including without limitationstrikes, work stoppages, accidents, acts of war or terrorism, civil or militarydisturbances, nuclear or natural catastrophes or acts of God, andinterruptions, loss or malfunctions of utilities, communications or computer (softwareor hardware) services.

 

## Section12.11         No Adverse Interpretation of Other Agreements.

##  

This Indenture may not beused to interpret any other indenture, loan or debt agreement of the Issuer orits Restricted Subsidiaries or of any other Person.  Any such indenture, loan or debt agreementmay not be used to interpret this Indenture.

 

## Section12.12         Successors.

##  

All agreements of the Issuerin 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 10.06 hereof.

 

## Section12.13         Severability.

##  

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

 

## Section12.14         Counterpart Originals.

##  

The parties may sign anynumber of copies of this Indenture.  Eachsigned copy shall be an original, but all of them together represent the sameagreement.  This Indenture may beexecuted in multiple counterparts which, when taken together, shall constituteone instrument.

 

## Section12.15         Table of Contents, Headings, etc.

##  

The Table of Contents,Cross-Reference Table and headings of the Articles and Sections of thisIndenture have been inserted for convenience of reference only, are not to beconsidered a part of this Indenture and shall in no way modify or restrict anyof the terms or provisions hereof.

 

## Section12.16         Qualification of Indenture.

##  

The Issuer and theGuarantors shall qualify this Indenture under the Trust Indenture Act inaccordance with the terms and conditions of the Registration Rights Agreementand shall pay all reasonable costs and expenses (including attorneys’ fees andexpenses for the Issuer, the Guarantors and the Trustee) incurred in connectiontherewith, including, but not limited to, costs and expenses of qualificationof this Indenture and the Notes and printing this Indenture and the Notes.  The Trustee shall be entitled to receive fromthe Issuer and the Guarantors any such Officer’s Certificates, Opinions ofCounsel or other documentation as it may reasonably request in connection withany such qualification of this Indenture under the Trust Indenture Act.

 

[Signatureson following page]

 

110

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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 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 Indenture

 

----

 
|   | WELLS FARGO BANK, NATIONAL  ASSOCIATION, |
|--------|------------------------------------------|
|   | as Trustee                               |
|   |                                     |
|   |                                     |
|   | By:                                      |  /s/ Frank  McDonald |
|   |                                     | Name: | Frank  McDonald |
|   |                                     | Title: | Vice  President |

 

 

Signature Page to Senior Indenture

 

----

EXHIBITA

 

[Face of Note]

 

[Insert the Global NoteLegend, if applicable pursuant to the provisions of the Indenture]

 

[Insert the PrivatePlacement Legend, if applicable pursuant to the provisions of the Indenture]

 

[Insert the Regulation STemporary Global Note Legend, if applicable pursuant to the provisions of theIndenture]

 

A-1

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CUSIP [                    ]

ISIN [                    ](1)

 

[[RULE 144A][REGULATION S] GLOBAL NOTErepresenting up to$                   ]

10% Senior Notes due 2014

 
| No.            | [$                 ] |
|-----------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------|

 

MICHAELS STORES, INC.

 

promises to pay to CEDE & CO. orregistered assigns, the principal sum [set forth on the Schedule of Exchangesof Interests in the Global Note attached hereto] [of                                     UnitedStates Dollars] on November 1, 2014.

 

Interest Payment Dates:  May 1 and November 1

 

Record Dates: April 15 and October 15

 

----

| (1)    | Rule 144A  Note CUSIP: 594087 AG 3    |
|--------|---------------------------------------|
|   | Rule 144A  Note ISIN: US594087AG34    |
|   | Regulation S  Note CUSIP: U59329 AA 7 |
|   | Regulation S  Note ISIN: USU59329AA76 |
|   | Exchange  Note CUSIP: 594087 AJ 7     |
|   | Exchange  Note ISIN: US594087AJ72     |

 

A-2

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IN WITNESS HEREOF, theIssuer has caused this instrument to be duly executed.

 
| Dated: [      ],  2006 |                  |
|------------------------------------------------------|-----------------------|
|                                                 |                  |
|                                                 | MICHAELS STORES, INC. |
|                                                 |                  |
|                                                 |                  |
|                                                 | By:                   |   |
|                                                 |                  | Name: |
|                                                 |                  | Title: |

 

A-3

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This is one of the Notes referred to in thewithin-mentioned Indenture:

 
|   | WELLS FARGO BANK, NATIONAL  ASSOCIATION, |
|--------|------------------------------------------|
|   | as Trustee                               |
|   |                                     |
|   |                                     |
|   | By:                                      |   |   |
|   |                                     | Authorized Signatory |

 

A-4

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[Back of Senior Note]

 

10% Senior Notes due 2014

 

Capitalized terms usedherein shall have the meanings assigned to them in the Indenture referred tobelow unless otherwise indicated.

 

1.             INTEREST. Michaels Stores, Inc., a Delaware corporation, promises to pay intereston the principal amount of this Note at 10% per annum from October 31, 2006(2)until maturity and shall pay the Additional Interest, if any, payable pursuantto the Registration Rights Agreement referred to below.  The Issuer will pay interest and AdditionalInterest, if any, semi-annually in arrears on May 1 and November 1 of eachyear, or if any such day is not a Business Day, on the next succeeding BusinessDay (each, an “Interest Payment Date”). Interest on the Notes will accrue from the most recent date to whichinterest has been paid or, if no interest has been paid, from the date ofissuance; provided that the first Interest Payment Date shall be May 1,2007.  The Issuer will pay interest(including post-petition interest in any proceeding under any Bankruptcy Law)on overdue principal and premium, if any, from time to time on demand at theinterest rate on the Notes; it shall pay interest (including post-petitioninterest in any proceeding under any Bankruptcy Law) on overdue installments ofinterest and Additional Interest, if any, (without regard to any applicablegrace periods) from time to time on demand at the interest rate on theNotes.  Interest will be computed on thebasis of a 360-day year comprised of twelve 30-day months.

 

2.             METHOD OF PAYMENT.  The Issuer will pay interest on the Notes andAdditional Interest, if any, to the Persons who are registered Holders of Notesat the close of business on the April 15 or October 15 (whether or not aBusiness 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 principal of and interest, premium and Additional Interest, ifany, on, all Global Notes and all other Notes the Holders of which shall haveprovided wire transfer instructions to the Issuer or the Paying Agent.  Such payment shall be in such coin orcurrency of the United States of America as at the time of payment is legaltender 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 10%Senior Notes due 2014.  The Issuer shallbe entitled to issue Additional Notes pursuant to Section 2.01 and 4.09 ofthe Indenture.  The terms of the Notesinclude those stated in the Indenture and those made part of the 

 

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(2)           With respect to theInitial Notes.

 

A-5

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Indenture by reference to the Trust IndentureAct 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 Noteswill not be redeemable at the Issuer’s option before November 1, 2010.

 

(b)           At any time prior to November 1, 2010, the Issuer may redeem all or apart of the Notes, upon not less than 30 nor more than 60 days’ prior noticemailed by first-class mail to the registered address of each Holder of Notes orotherwise delivered in accordance with the procedures of DTC, at a redemptionprice equal to 100% of the principal amount of the Notes redeemed plus theApplicable Premium as of, and accrued and unpaid interest and AdditionalInterest, if any, to the date of redemption (the “Redemption Date”),subject to the rights of Holders of record on the relevant Record Date toreceive interest due on the relevant Interest Payment Date.

 

(c)           Until November 1, 2009, the Issuer may, at its option, on one or moreoccasions redeem up to 35% of the aggregate principal amount of Notes(including the aggregate principal amount of Notes issued after the Issue Date)at a redemption price equal to 110.000% of the aggregate principal amountthereof, plus accrued and unpaid interest thereon and Additional Interest, ifany, to the applicable Redemption Date, subject to the right of Holders ofrecord on the relevant Record Date to receive interest due on the relevantInterest Payment Date, with the net cash proceeds of one or more EquityOfferings; provided that at least 50% of the sum of the aggregateprincipal amount of Notes originally issued under the Indenture and anyAdditional Notes that are issued under the Indenture after the Issue Dateremains outstanding immediately after the occurrence of each such redemption; providedfurther that each such redemption occurs within 90 days of the date ofclosing of each such Equity Offering. Notice of any redemption upon any Equity Offering may be given prior tosuch redemption, and any such redemption or notice may, at the Issuer’sdiscretion, be subject to one or more conditions precedent, including, but notlimited to, completion of the related Equity Offering.

 

(d)           On and after November 1, 2010, the Issuer may redeem the Notes, inwhole or in part, at the redemption prices (expressed as percentages ofprincipal amount of the Notes to be redeemed) set forth below, plus accrued andunpaid interest thereon and Additional Interest, 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 each of theyears indicated below:

 
| **Year**            | ** ** | **Percentage** | ** ** |
|---------------------|------------|----------------|------------|
| ** **          | ** ** | ** **     | ** ** |
| 2010                |       | 105.000        | %          |
| 2011                |       | 102.500        | %          |
| 2012 and thereafter |       | 100.000        | %          |

 

(e)           Any redemption pursuant to this paragraph 5 shall be made pursuantto the provisions of Sections 3.01 through 3.06 of the Indenture.

 

6.             MANDATORY REDEMPTION.  The Issuer shall not be required to makemandatory redemption or sinking fund payments with respect to the Notes.

 

A-6

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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 redemption noticesmay be mailed more than 60 days prior to a redemption date if the notice isissued in connection with Article 8 or Article 11 of the Indenture) to eachHolder 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 anoffer (a “Change of Control Offer”) to each Holder to repurchase all orany part (equal to $1,000 or an integral multiple thereof) of each Holder’sNotes at a purchase price equal to 101% of the aggregate principal amountthereof plus accrued and unpaid interest and Additional Interest thereon, ifany, to the date 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 Restricted Subsidiaries consummates anAsset Sale, within 10 Business Days of each date that Excess Proceeds exceed$50.0 million, the Issuer shall commence, an offer to all Holders of the Notesand, 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 principal amount of Notes (includingany Additional Notes) and such other Pari Passu Indebtedness that may bepurchased out of the Excess Proceeds at an offer price in cash in an amountequal to 100% of the principal amount thereof plus accrued and unpaid interestand Additional Interest thereon, if any, to the date fixed for the closing ofsuch offer, 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 aggregate principal amount of Notesand the Pari Passu Indebtedness surrendered by such holders thereof exceeds theamount of Excess Proceeds, the Trustee shall select the Notes and such PariPassu Indebtedness to be purchased on a *prorata* basis based on the accreted value or principal amount of theNotes or such Pari Passu Indebtedness tendered. Upon completion of any such Asset Sale Offer, the amount of ExcessProceeds shall be reset at zero.  Holdersof Notes that are the subject of an offer to purchase will receive an AssetSale Offer from the Issuer prior to any related purchase date and may elect tohave such Notes purchased by completing the form entitled “Option of Holder toElect Purchase” attached to the Notes.

 

9.             DENOMINATIONS, TRANSFER, EXCHANGE.  The Notes are in registered form withoutcoupons in denominations of $1,000 and integral multiples of $1,000.  The transfer of Notes may be registered andNotes may be exchanged as provided in the Indenture.  The Registrar and the Trustee may require aHolder, among other things, to furnish appropriate endorsements and transferdocuments and the Issuer may require a Holder to pay any taxes and feesrequired by law or permitted by the Indenture. The Issuer need not exchange or register the transfer of any Note orportion of a Note selected for redemption, except for the unredeemed portion ofany Note being redeemed in part.  Also,the Issuer need not exchange or register the transfer of any Notes for a periodof 15 days before a selection of Notes to be redeemed.

 

10.           PERSONS DEEMED OWNERS.  Theregistered Holder of a Note may be treated as its owner for all purposes.

 

A-7

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11.           AMENDMENT, SUPPLEMENT AND WAIVER. The Indenture, the Guarantees or the Notes may be amended orsupplemented as provided in the Indenture.

 

12.           DEFAULTS AND REMEDIES.  TheEvents of Default relating to the Notes are defined in Section 6.01 of theIndenture.  If any Event of Defaultoccurs and is continuing, the Trustee or the Holders of at least 25% inprincipal amount of the then outstanding Notes may declare the principal,premium, if any, interest and any other monetary obligations on all the thenoutstanding Notes to be due and payable immediately.  Notwithstanding the foregoing, in the case ofan Event of Default arising from certain events of bankruptcy or insolvency,all outstanding 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 of the thenoutstanding Notes may direct the Trustee in its exercise of any trust orpower.  The Trustee may withhold fromHolders of the Notes notice of any continuing Default (except a Defaultrelating to the payment of principal, premium, if any, Additional Interest, ifany, or interest) if it determines that withholding notice is in theirinterest.  The Holders of a majority inaggregate principal amount of the Notes then outstanding by notice to theTrustee may on behalf of the Holders of all of the Notes waive any existingDefault or and its consequences under the Indenture except a continuing Defaultin payment of the principal of, premium, if any, Additional Interest, if any,or interest on, any of the Notes held by a non-consenting Holder.  The Issuer and each Guarantor (to the extentthat such Guarantor is so required under the Trust Indenture Act) is requiredto deliver to the Trustee annually a statement regarding compliance with theIndenture, and the Issuer is required within five (5) Business Days afterbecoming aware of any Default, to deliver to the Trustee a statement specifyingsuch Default and what action the Issuer proposes to take with respect thereto.

 

13.           AUTHENTICATION.  This Note shallnot be entitled to any benefit under the Indenture or be valid or obligatoryfor any purpose until authenticated by the manual signature of the Trustee.

 

14.           ADDITIONAL RIGHTS OF HOLDERS OF RESTRICTED GLOBAL NOTES AND RESTRICTEDDEFINITIVE NOTES.  In addition to therights provided to Holders of Notes under the Indenture, Holders of RestrictedGlobal Notes and Restricted Definitive Notes shall have all the rights setforth in the Registration Rights Agreement, dated as of October 31, 2006, amongMichaels Stores, Inc., the Guarantors named therein and the other parties namedon the signature pages thereof (the “Registration Rights Agreement”),including the right to receive Additional Interest (as defined in theRegistration Rights Agreement).

 

15.           GOVERNING LAW.  THE LAWS OF THESTATE OF NEW YORK SHALL GOVERN AND BE USED TO CONSTRUE THE INDENTURE, THE NOTESAND THE GUARANTEES.

 

16.           CUSIP NUMBERS.  Pursuant to arecommendation promulgated by the Committee on Uniform Security IdentificationProcedures, the Issuer has caused CUSIP numbers to be printed on the Notes andthe Trustee may use CUSIP numbers in notices of redemption as a convenience toHolders.  No representation is made as tothe accuracy of such numbers either as printed on the Notes or as contained inany notice of redemption and reliance may be placed only on the otheridentification numbers placed thereon.

 

A-8

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The Issuer will furnish toany Holder upon written request and without charge a copy of the Indenture and/orthe Registration Rights Agreement. Requests may be made to the Issuer at the following address:

 

8000 Bent Branch DriveIrving, TX 75063Attention: General Counsel

 

A-9

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ASSIGNMENT FORM

 
| To  assign this Note, fill in the form below:                                                       |
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| (I) or (we) assign and  transfer this Note to:                                                      |   |
|                                                                                                |   | (Insert assignee’ legal  name) |
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| (Insert  assignee’s soc. sec. or tax I.D. no.)                                                 |
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| (Print  or type assignee’s name, address and zip code)                                         |
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| and irrevocably appoint                                                                             |   |
| to transfer this Note on  the books of the Issuer. The agent may substitute another to act for him. |
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| Date:                                                                                               |   |   |
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|                                                                                                | Your Signature: |   |
|                                                                                                | (Sign exactly as your name  appears on |
|                                                                                                | the face of this Note) |
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| Signature Guarantee*:                                                                               |   |   |
|                                                                                                     |  |  |  |  |  |  |  |  |  |

 

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* Participant in a recognized SignatureGuarantee Medallion Program (or other signature guarantor acceptable to theTrustee).

 

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OPTION OF HOLDER TO ELECT PURCHASE

 

If you want to elect to havethis Note purchased by the Issuer pursuant to Section 4.10 or 4.14 of theIndenture, check the appropriate box below:

 

o Section 4.10      o Section 4.14

 

If you want to elect to haveonly part of this Note purchased by the Issuer pursuant to Section 4.10 orSection 4.14 of the Indenture, state the amount you elect to have purchased:

 

$                    

 
| Date:                 |                                   |   |
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|                  | 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 GuaranteeMedallion Program (or other signature guarantor acceptable to the Trustee).

 

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SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE*

 

The initial outstandingprincipal amount 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** | ** ** | **Amount of increase  in Principal  Amount of this  Global Note** | ** ** | **Principal Amount  of  this Global Note  following such  decrease or  increase** | ** ** | **Signature of  authorized officer  of Trustee or  Note Custodian** | ** ** |
|----------------------------|------------|---------------------------------------------------------|------------|-------------------------------------------------------------------------------------------------|------------|------------------------------------------------------------------------------------------------------------|------------|----------------------------------------------------------------------------------------------|------------|
|                       |       |                                                    |       |                                                                                            |       |                                                                                                       |       |                                                                                         |       |
|                       |       |                                                    |       |                                                                                            |       |                                                                                                       |       |                                                                                         |       |
|                       |       |                                                    |       |                                                                                            |       |                                                                                                       |       |                                                                                         |       |

 

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*This schedule should be included only if theNote is issued in global form.

 

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EXHIBITB

 

FORM OF CERTIFICATE OF TRANSFER

 

Michaels Stores, Inc. 8000 Bent Branch DriveIrving, TX 75063Attention: General Counsel

 

Wells Fargo Bank, NationalAssociation1445 Ross Avenue - 2nd FloorDallas, Texas 75202-2812Fax No.: 214-777-4086 Attention:   Patrick Giordano

Corporate Trust Services

 

Re:  10% Senior Notes due 2014

 

Reference is hereby made tothe Indenture, dated as of October 31, 2006 (the “Indenture”), amongMichaels 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 interest insuch Note[s] specified in Annex A hereto, in the principal amount of $                  insuch 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  CHECK IF TRANSFEREE WILL TAKE DELIVERY OF ABENEFICIAL INTEREST IN THE 144A GLOBAL NOTE OR A DEFINITIVE NOTE PURSUANT TORULE 144A.  The Transfer is beingeffected pursuant to and in accordance with Rule 144A under the United StatesSecurities Act of 1933, as amended (the “Securities Act”), and,accordingly, the Transferor hereby further certifies that the beneficialinterest or Definitive Note is being transferred to a Person that theTransferor reasonably believes is purchasing the beneficial interest orDefinitive Note for its own account, or for one or more accounts with respect towhich such Person exercises sole investment discretion, and such Person andeach such account is a “qualified institutional buyer” within the meaning ofRule 144A in a transaction meeting the requirements of Rule 144A and suchTransfer is in compliance with any applicable blue sky securities laws of anystate of the United States.

 

2.             o  CHECK IF TRANSFEREE WILL TAKE DELIVERY OF ABENEFICIAL INTEREST IN THE REGULATION S GLOBAL NOTE OR A DEFINITIVE NOTEPURSUANT TO REGULATION S.  The Transferis being effected pursuant to and in accordance with Rule 903 or Rule 904 underthe Securities Act and, accordingly, the Transferor hereby further certifiesthat (i) the Transfer is not being made to a person in the United States and(x) at the time the buy order was originated, the Transferee was outside theUnited States or such Transferor and any Person acting on its behalf reasonablybelieved and believes that the Transferee was outside the United States or (y)the transaction was executed in, on or through the facilities of a designatedoffshore securities market and neither such Transferor nor any Person acting onits behalf knows that the transaction was prearranged with a buyer in theUnited States, (ii) no directed selling efforts have been made in contraventionof the requirements of Rule 903(b) 

 

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or Rule 904(b) of Regulation S under theSecurities Act (iii) the transaction is not part of a plan or scheme to evadethe registration requirements of the Securities Act and (iv) if the proposedtransfer is being made prior to the expiration of the Restricted Period, thetransfer is not being made to a U.S. Person or for the account or benefit of aU.S. Person (other than an Initial Purchaser). Upon consummation of the proposed transfer in accordance with the termsof the Indenture, the transferred beneficial interest or Definitive Note willbe subject to the restrictions on Transfer enumerated in the Indenture and theSecurities Act.

 

3.             o  CHECK AND COMPLETE IF TRANSFEREE WILL TAKEDELIVERY OF A BENEFICIAL INTEREST IN THE DEFINITIVE NOTE PURSUANT TO ANYPROVISION OF THE SECURITIES ACT OTHER THAN RULE 144A OR REGULATION S.  The Transfer is being effected in compliancewith the transfer restrictions applicable to beneficial interests in RestrictedGlobal Notes and Restricted Definitive Notes and pursuant to and in accordancewith the Securities Act and any applicable blue sky securities laws of anystate of the United States, and accordingly the Transferor hereby furthercertifies 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  CHECK IF TRANSFEREE WILL TAKE DELIVERY OF ABENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL NOTE OR OF AN UNRESTRICTEDDEFINITIVE NOTE.

 

(a)           o  CHECK IF TRANSFER IS PURSUANT TO RULE 144.(i) The Transfer is being effected pursuant to and in accordance with Rule 144under the Securities Act and in compliance with the transfer restrictionscontained in the Indenture and any applicable blue sky securities laws of anystate of the United States and (ii) the restrictions on transfer contained inthe Indenture and the Private Placement Legend are not required in order tomaintain compliance with the Securities Act. Upon consummation of the proposed Transfer in accordance with the termsof the Indenture, the transferred beneficial interest or Definitive Note willno longer be subject to the restrictions on transfer enumerated in the PrivatePlacement Legend printed on the Restricted Global Notes, on RestrictedDefinitive Notes and in the Indenture.

 

(b)           o  CHECK IF TRANSFER IS PURSUANT TO REGULATIONS. (i) The Transfer is being effected pursuant to and in accordance with Rule903 or Rule 904 under the Securities Act 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 no longer be subject to the restrictions on transferenumerated in the Private Placement Legend printed on the Restricted GlobalNotes, on Restricted Definitive Notes and in the Indenture.

 

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(c)           o  CHECK IF TRANSFER IS PURSUANT TO OTHEREXEMPTION.  (i) The Transfer isbeing effected pursuant to and in compliance with an exemption from theregistration requirements of the Securities Act other than Rule 144, Rule 903or Rule 904 and in compliance with the transfer restrictions contained in theIndenture and any applicable blue sky securities laws of any State of theUnited States and (ii) the restrictions on transfer contained in the Indentureand the Private Placement Legend are not required in order to maintain compliancewith the Securities Act.  Uponconsummation of the proposed Transfer in accordance with the terms of theIndenture, the transferred beneficial interest or Definitive Note will not besubject to the restrictions on transfer enumerated in the Private PlacementLegend printed on the Restricted Global Notes or Restricted Definitive Notesand in the Indenture.

 

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This certificate and thestatements contained herein are made for your benefit and the benefit of theIssuer.

 
|   | [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 abeneficial interest in the:

 

(i)    o 144AGlobal Note (CUSIP 594087 AG 3, or

 

(ii)   oRegulation S Global Note (CUSIP U59329 AA 7, or

 

(b)           o aRestricted Definitive Note.

 

2.             After the Transfer the Transferee will hold:

 

[CHECK ONE]

 

(a)           o abeneficial interest in the:

 

(i)    o 144AGlobal Note (CUSIP 594087 AG 3, or

 

(ii)   oRegulation S Global Note (CUSIP U59329 AA 7, or

 

(iii)  oUnrestricted Global Note (CUSIP 594087 AJ 7; or

 

(b)           o aRestricted Definitive Note; or

 

(c)           o anUnrestricted Definitive Note, in accordance with the terms of the Indenture.

 

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EXHIBITC

 

FORM OF CERTIFICATE OF EXCHANGE

 

Michaels Stores, Inc. 8000 Bent Branch DriveIrving, TX 75063Attention: General Counsel

 

Wells Fargo Bank, National Association1445 Ross Avenue - 2nd FloorDallas, Texas 75202-2812Fax No.: 214-777-4086 Attention:   Patrick Giordano

Corporate Trust Services

 

Re:  10% Senior Notes due 2014

 

Reference is hereby made tothe Indenture, dated as of October 31, 2006 (the “Indenture”), amongMichaels 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 in suchNote[s] specified herein, in the principal amount of $                 insuch 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  CHECK IF EXCHANGE IS FROM BENEFICIAL INTERESTIN A RESTRICTED GLOBAL NOTE TO BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBALNOTE.  In connection with the Exchange ofthe Owner’s beneficial interest in a Restricted Global Note for a beneficialinterest in an Unrestricted Global Note in an equal principal amount, 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  CHECK IF EXCHANGE IS FROM BENEFICIAL INTERESTIN A RESTRICTED GLOBAL NOTE TO UNRESTRICTED DEFINITIVE NOTE.  In connection with the Exchange of the Owner’sbeneficial interest in a Restricted Global Note for an Unrestricted DefinitiveNote, the Owner hereby certifies (i) the Definitive Note is being acquired forthe Owner’s own account without transfer, (ii) such Exchange has beeneffected in compliance with the transfer restrictions applicable to theRestricted Global Notes and pursuant to and in accordance with the SecuritiesAct, (iii) the restrictions on transfer contained in the Indenture and the 

 

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Private Placement Legend arenot required in order to maintain compliance with the Securities Act and (iv)the Definitive Note is being acquired in compliance with any applicable bluesky securities laws of any state of the United States.

 

c)             o  CHECK IF EXCHANGE IS FROM RESTRICTEDDEFINITIVE NOTE TO BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL NOTE.  In connection with the Owner’s Exchange of aRestricted Definitive Note for a beneficial interest in an Unrestricted GlobalNote, the Owner hereby certifies (i) the beneficial interest is being acquiredfor the Owner’s own account without transfer, (ii) such Exchange has beeneffected in compliance with the transfer restrictions applicable to RestrictedDefinitive Notes and pursuant to and in accordance with the Securities Act,(iii) the restrictions on transfer contained in the Indenture and the PrivatePlacement Legend are not required in order to maintain compliance with theSecurities Act and (iv) the beneficial interest is being acquired in compliancewith any applicable blue sky securities laws of any state of the United States.

 

d)            o  CHECK IF EXCHANGE IS FROM RESTRICTEDDEFINITIVE NOTE TO UNRESTRICTED DEFINITIVE NOTE.  In connection with the Owner’s Exchange of aRestricted Definitive Note for an Unrestricted Definitive Note, the Ownerhereby certifies (i) the Unrestricted Definitive Note is being acquired for theOwner’s own account without transfer, (ii) such Exchange has been effected incompliance with the transfer restrictions applicable to Restricted DefinitiveNotes and pursuant to and in accordance with the Securities Act, (iii) therestrictions on transfer contained in the Indenture and the Private PlacementLegend are not required in order to maintain compliance with the Securities Actand (iv) the Unrestricted Definitive Note is being acquired in compliance withany applicable blue sky securities laws of any state of the United 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  CHECK IF EXCHANGE IS FROM BENEFICIAL INTERESTIN A RESTRICTED GLOBAL NOTE TO RESTRICTED DEFINITIVE NOTE.  In connection with the Exchange of the Owner’sbeneficial interest in a Restricted Global Note for a Restricted DefinitiveNote with an equal principal amount, the Owner hereby certifies that theRestricted Definitive Note is being acquired for the Owner’s own accountwithout transfer.  Upon consummation ofthe proposed Exchange in accordance with the terms of the Indenture, theRestricted Definitive Note issued will continue to be subject to therestrictions on transfer enumerated in the Private Placement Legend printed onthe Restricted Definitive Note and in the Indenture and the Securities Act.

 

b)            o  CHECK IF EXCHANGE IS FROM RESTRICTEDDEFINITIVE NOTE TO BENEFICIAL INTEREST IN A RESTRICTED GLOBAL NOTE.  In connection with the Exchange of the Owner’sRestricted Definitive Note for a beneficial interest in the [CHECK ONE]  o 144AGlobal Note  oRegulation S Global Note, with an equal principal amount, the Owner herebycertifies (i) the beneficial interest is being acquired for the Owner’s ownaccount without transfer and (ii) such Exchange has been effected in compliancewith the transfer restrictions applicable to the Restricted Global Notes andpursuant to and in accordance with the Securities Act, and in compliance withany applicable blue sky securities laws of any state of the United States.  Upon consummation of the proposed Exchange inaccordance with the terms of the Indenture, the beneficial interest issued willbe subject to the restrictions on transfer enumerated in 

 

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the Private Placement Legendprinted on the relevant Restricted Global Note and in the Indenture and theSecurities Act.

 

This certificate and thestatements contained herein are made for your benefit and the benefit of theIssuer and are dated                                  .

 
|   | [Insert Name of  Transferor] |
|--------|------------------------------|
|   |                         |
|   |                         |
|   | By:                          |   |
|   |                         | Name: |
|   |                         | Title: |
|   |                         |
|   |                         |
| Dated: |                         |   |   |
|        |                              |  |  |  |

 

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EXHIBITD

 

[FORM OF SUPPLEMENTAL INDENTURETO BE DELIVERED BY SUBSEQUENT GUARANTORS]

 

Supplemental Indenture (this“Supplemental Indenture”), dated as of                 ,among                              (the“Guaranteeing Subsidiary”), a subsidiary of Michaels Stores, Inc., aDelaware 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 MichaelsStores, Inc. and the Guarantors (as defined in the Indenture referred to below)has heretofore executed and delivered to the Trustee an indenture (the “Indenture”),dated as of October 31, 2006, providing for the issuance of an unlimitedaggregate principal amount of 10% Senior Notes due 2014 (the “Notes”);

 

WHEREAS, the Indentureprovides that under certain circumstances the Guaranteeing Subsidiary shall executeand deliver to the Trustee a supplemental indenture pursuant to which theGuaranteeing Subsidiary shall unconditionally guarantee all of the Issuer’sObligations under the Notes and the Indenture on the terms and conditions setforth herein and under the Indenture (the “Guarantee”); and

 

WHEREAS, pursuant to Section9.01 of the Indenture, the Trustee is authorized to execute and deliver thisSupplemental Indenture.

 

NOW THEREFORE, inconsideration of the foregoing and for other good and valuable consideration,the receipt of which is hereby acknowledged, the parties mutually covenant andagree for the equal and ratable benefit of the Holders of the 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 the Indenture, to jointly andseverally unconditionally guarantee to each Holder of a Note authenticated anddelivered by the Trustee and to the Trustee and its successors and assigns,irrespective of the validity and enforceability of the Indenture, the Notes orthe obligations of the Issuer hereunder or thereunder, that:

 

(i)            the principal of and interest, premium andAdditional Interest, if any, on the Notes will be promptly paid in full whendue, whether at maturity, by acceleration, redemption or otherwise, andinterest on the overdue principal of and interest on the Notes, if any, if lawful,and all other obligations of the Issuer to the Holders or the Trustee hereunderor thereunder will be promptly paid in full or performed, all in accordancewith the terms hereof and thereof; and

 

(ii)           in case of any extension of time of payment or renewal of any Notes orany of such other obligations, that same will be promptly paid in full when dueor performed in accordance with the terms of the extension or renewal, whetherat stated maturity, by acceleration or otherwise.  Failing payment when due of any amount soguaranteed or any performance so guaranteed for whatever reason, the Guarantorsand the 

 

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Guaranteeing Subsidiaryshall be jointly and severally obligated to pay the same immediately.  This is a guarantee of payment and not aguarantee of collection.

 

(b)           The obligations hereunder shall be unconditional, irrespective of thevalidity, regularity or enforceability of the Notes or the Indenture, theabsence of any action to enforce the same, any waiver or consent by any Holderof the Notes with respect to any provisions hereof or thereof, the recovery ofany judgment against the Issuer, any action to enforce the same or any othercircumstance which might otherwise constitute a legal or equitable discharge ordefense of a guarantor.

 

(c)           The following is hereby waived: diligence, presentment, demand of payment, filing of claims with a courtin the event of insolvency or bankruptcy of the Issuer, any right to require aproceeding first against the Issuer, protest, notice and all demandswhatsoever.

 

(d)           This Guarantee shall not be discharged except by complete performanceof the obligations contained in the Notes, the Indenture and this SupplementalIndenture, and the Guaranteeing Subsidiary accepts all obligations of aGuarantor under the Indenture.

 

(e)           If any Holder or the Trustee is required by any court or otherwise toreturn to the Issuer, the Guarantors (including the Guaranteeing Subsidiary),or any custodian, trustee, liquidator or other similar official acting inrelation to either the Issuer or the Guarantors, any amount paid either to theTrustee or such Holder, this Guarantee, to the extent theretofore 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, on the one hand, and theHolders and the Trustee, on the other hand, (x) the maturity of the obligationsguaranteed hereby may be accelerated as provided in Article 6 of the Indenturefor the purposes of this Guarantee, notwithstanding any stay, injunction orother prohibition preventing such acceleration in respect of the obligationsguaranteed hereby, and (y) in the event of any declaration of acceleration ofsuch obligations as provided in Article 6 of the Indenture, such obligations(whether or not due and payable) shall forthwith become due and payable by theGuaranteeing Subsidiary for the purpose of this Guarantee.

 

(h)           The Guaranteeing Subsidiary shall have the right to seek contributionfrom any non-paying Guarantor so long as the exercise of such right does notimpair the rights of the Holders under this Guarantee.

 

(i)            Pursuant to Section 10.02 of the Indenture,after giving effect to all other contingent and fixed liabilities that arerelevant under any applicable Bankruptcy or fraudulent conveyance laws, and aftergiving effect to any collections from, rights to receive contribution from orpayments made by or on behalf of any other Guarantor in respect of theobligations of such other Guarantor under Article 10 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.

 

(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 

 

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Issuer become insolvent ormake an assignment for the benefit of creditors or should a receiver or trusteebe 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 or bereinstated, as the case may be, if at any time payment and performance of theNotes are, pursuant to applicable law, rescinded or reduced in amount, or mustotherwise be restored or returned by any obligee on the Notes and Guarantee,whether as a “voidable preference”, “fraudulent transfer” or otherwise, all asthough 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 such amountpaid and not so rescinded, reduced, restored or returned.

 

(k)           In case any provision of this Guarantee shall be invalid, illegal orunenforceable, the validity, legality, and enforceability of the remainingprovisions shall not in any way be affected or impaired thereby.

 

(l)            This Guarantee shall be a general unsecuredsenior obligation of such Guaranteeing Subsidiary, ranking *pari passu* with any other future seniorIndebtedness of such Guaranteeing Subsidiary, if any.

 

(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 orSubstantially All Assets.

 

(a)           The Guaranteeing Subsidiary may not consolidate or merge with or intoor wind up into (whether or not the Issuer or Guaranteeing Subsidiary is thesurviving corporation), or sell, assign, transfer, lease, convey or otherwisedispose of all or substantially all of its properties or assets, in one or morerelated transactions, to any Person unless:

 

(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 will havebeen 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 with Sections 4.10(a)(1) and (2)of the Indenture;

 

(b)           Subject to certain limitations described in the Indenture, theSuccessor Person will succeed to, and be substituted for, the GuaranteeingSubsidiary 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.

 

The Guarantee of theGuaranteeing Subsidiary shall be automatically and unconditionally released anddischarged, and no further action by the Guaranteeing Subsidiary, the Issuer orthe Trustee is required for the release of the Guaranteeing Subsidiary’sGuarantee, upon:

 

(1)           (A)  any sale, exchange,disposition or transfer (by merger or otherwise) of (x) the Capital Stock ofthe Guaranteeing Subsidiary, after which the Guaranteeing Subsidiary is nolonger a Restricted Subsidiary, or (y) all or substantially all the assets ofthe Guaranteeing Subsidiary which sale, exchange, disposition or transfer ineach case is made in compliance with Sections 4.10(a)(1) and (2) of theIndenture;

 

(B)           the release or discharge of the guarantee by the Guaranteeing Subsidiaryof the Senior Credit Facilities or the guarantee which resulted in the creationof the Guarantee, except a discharge or release by or as a result of paymentunder such guarantee;

 

(C)           the proper designation of the Guaranteeing Subsidiary as an UnrestrictedSubsidiary; 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 an Officer’s Certificate and anOpinion of Counsel, each stating that all conditions precedent provided for inthe Indenture relating to such transaction have 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 GuaranteeingSubsidiary.

 

(11)         Subrogation.  The Guaranteeing Subsidiaryshall be subrogated to all rights of Holders of Notes against the Issuer in respectof any amounts paid by the Guaranteeing Subsidiary pursuant to the provisionsof Section 2 hereof and Section 10.01 of the Indenture; provided that,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.  Allagreements of the Trustee in this Supplemental Indenture shall bind itssuccessors.

 

D-5

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

 
|   | [GUARANTEEING SUBSIDIARY]                |
|--------|------------------------------------------|
|   |                                     |
|   |                                     |
|   | By:                                      |   |
|   |                                     | Name: |
|   |                                     | Title: |
|   |                                     |
|   |                                     |
|   | WELLS FARGO BANK, NATIONAL  ASSOCIATION, |
|   | as Trustee                               |
|   |                                     |
|   |                                     |
|   | By:                                      |   |
|   |                                     | Name: |
|   |                                     | Title: |

 

D-6

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