exv4w1



 






Exihibit 4.1



 




Allis-Chalmers Energy Inc.



9.0% SENIOR NOTES DUE 2014



 



Indenture



Dated as of January 18, 2006



 



Wells Fargo Bank, N.A.



Trustee



 



 




 









 








CROSS-REFERENCE TABLE*




	 	 	 
	Trust Indenture	 	 
	  Act Section	 	Indenture Section
	310(a)(1)
	 	7.10
	(a)(2)
	 	7.10
	(a)(3)
	 	N.A.
	(a)(4)
	 	N.A.
	(a)(5)
	 	7.10
	(b)
	 	7.08, 7.10
	(c)
	 	N.A.
	311(a)
	 	7.11
	(b)
	 	7.11
	(c)
	 	N.A.
	312(a)
	 	2.06
	(b)
	 	12.03
	(c)
	 	12.03
	313(a)
	 	7.06
	(b)(1)
	 	N.A.
	(b)(2)
	 	7.06, 7.07
	(c)
	 	7.06, 12.02
	(d)
	 	7.06
	314(a)
	 	4.03, 4.04, 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)
	 	6.11
	316(a) (last sentence)
	 	2.10
	(a)(1)(A)

	 	6.05
	(a)(1)(B)

	 	6.04
	(a)(2)
	 	N.A.
	(b)
	 	6.07, 9.02








 




			
	*	 	N.A. means not applicable.
	 
	 	 	This Cross-Reference Table is Not part of this Indenture




 









 










	 	 	 
	Trust Indenture	 	 
	  Act Section	 	Indenture Section
	(c)
	 	2.13, 12.14
	317(a)(1)
	 	6.08
	(a)(2)
	 	6.09
	(b)
	 	2.05
	318(a)
	 	12.01
	(b)
	 	N.A.
	(c)
	 	12.01






 









 






TABLE OF CONTENTS




	 	 	 
	 	 	Page
	ARTICLE ONE

	DEFINITIONS AND INCORPORATION

	BY REFERENCE

	 
	 	 
	Section 1.01. Definitions
	 	1
	Section 1.02. Other Definitions
	 	27
	Section 1.03. Incorporation by Reference of Trust Indenture Act
	 	27
	Section 1.04. Rules of Construction
	 	28
	 
	 	 
	ARTICLE TWO

	THE NOTES

	 
	 	 
	Section 2.01. Form and Dating
	 	28
	Section 2.02. Execution and Authentication
	 	29
	Section 2.03. Methods of Receiving Payments on the Notes
	 	30
	Section 2.04. Registrar and Paying Agent
	 	30
	Section 2.05. Paying Agent to Hold Money in Trust
	 	31
	Section 2.06. Holder Lists
	 	31
	Section 2.07. Transfer and Exchange
	 	31
	Section 2.08. Replacement Notes
	 	44
	Section 2.09. Outstanding Notes
	 	45
	Section 2.10. Treasury Notes
	 	45
	Section 2.11. Temporary Notes
	 	45
	Section 2.12. Cancellation
	 	46
	Section 2.13. Defaulted Interest
	 	46
	Section 2.14. CUSIP Numbers
	 	46
	 
	 	 
	ARTICLE THREE

	REDEMPTION AND OFFERS TO

	PURCHASE

	 
	 	 
	Section 3.01. Notices to Trustee
	 	46
	Section 3.02. Selection of Notes to Be Redeemed
	 	46
	Section 3.03. Notice of Redemption
	 	47
	Section 3.04. Effect of Notice of Redemption
	 	48
	Section 3.05. Deposit of Redemption Price
	 	48
	Section 3.06. Notes Redeemed in Part
	 	48
	Section 3.07. Optional Redemption
	 	48
	Section 3.08. Repurchase Offers
	 	50
	 
	 	 
	ARTICLE FOUR

	COVENANTS

	 
	 	 
	Section 4.01. Payment of Notes
	 	52








 i 









 








	 	 	 
	Section 4.02. Maintenance of Office or Agency
	 	52
	Section 4.03. Reports
	 	53
	Section 4.04. Compliance Certificate
	 	53
	Section 4.05. Taxes
	 	54
	Section 4.06. Stay, Extension and Usury Laws
	 	54
	Section 4.07. Restricted Payments
	 	54
	Section 4.08. Dividend and Other Payment Restrictions Affecting Restricted Subsidiaries
	 	58
	Section 4.09. Incurrence of Indebtedness
	 	61
	Section 4.10. Asset Sales
	 	63
	Section 4.11. Transactions with Affiliates
	 	65
	Section 4.12. Liens
	 	67
	Section 4.13. Offer to Repurchase upon a Change of Control
	 	67
	Section 4.14. Designation of Restricted and Unrestricted Subsidiaries
	 	69
	Section 4.15. Payments for Consent
	 	70
	Section 4.16. Subsidiary Guarantees
	 	70
	 
	 	 
	ARTICLE FIVE

	SUCCESSORS

	 
	 	 
	Section 5.01. Merger, Consolidation or Sale of Assets
	 	71
	Section 5.02. Successor Corporation Substituted
	 	72
	 
	 	 
	ARTICLE SIX

	DEFAULTS AND REMEDIES

	 
	 	 
	Section 6.01. Events of Default
	 	72
	Section 6.02. Acceleration
	 	74
	Section 6.03. Other Remedies
	 	74
	Section 6.04. Waiver of Past Defaults
	 	75
	Section 6.05. Control by Majority
	 	75
	Section 6.06. Limitation on Suits
	 	75
	Section 6.07. Rights of Holders of Notes to Receive Payment
	 	76
	Section 6.08. Collection Suit by Trustee
	 	76
	Section 6.09. Trustee May File Proofs of Claim
	 	76
	Section 6.10. Priorities
	 	77
	Section 6.11. Undertaking for Costs
	 	77
	 
	 	 
	ARTICLE SEVEN

	TRUSTEE

	 
	 	 
	Section 7.01. Duties of Trustee
	 	77
	Section 7.02. Certain Rights of Trustee
	 	78
	Section 7.03. Individual Rights of Trustee
	 	79
	Section 7.04. Trustee’s Disclaimer
	 	79
	Section 7.05. Notice of Defaults
	 	79
	Section 7.06. Reports by Trustee to Holders of the Notes
	 	80
	Section 7.07. Compensation and Indemnity
	 	80






ii




 









 








	 	 	 
	Section 7.08. Replacement of Trustee
	 	81
	Section 7.09. Successor Trustee by Merger, Etc.
	 	82
	Section 7.10. Eligibility; Disqualification
	 	82
	Section 7.11. Preferential Collection of Claims Against Company
	 	82
	 
	 	 
	ARTICLE EIGHT

	DEFEASANCE AND COVENANT DEFEASANCE

	 
	 	 
	Section 8.01. Option to Effect Legal Defeasance or Covenant Defeasance
	 	82
	Section 8.02. Legal Defeasance and Discharge
	 	83
	Section 8.03. Covenant Defeasance
	 	83
	Section 8.04. Conditions to Legal or Covenant Defeasance
	 	84
	Section 8.05. Deposited Money and Government Securities to Be Held in Trust;
Other Miscellaneous Provisions
	 	85
	Section 8.06. Repayment to the Company
	 	86
	Section 8.07. Reinstatement
	 	86
	 
	 	 
	ARTICLE NINE

	AMENDMENT, SUPPLEMENT AND WAIVER

	 
	 	 
	Section 9.01. Without Consent of Holders of Notes
	 	86
	Section 9.02. With Consent of Holders of Notes
	 	87
	Section 9.03. Compliance with Trust Indenture Act
	 	89
	Section 9.04. Revocation and Effect of Consents
	 	89
	Section 9.05. Notation on or Exchange of Notes
	 	89
	Section 9.06. Trustee to Sign Amendments, Etc.
	 	90
	 
	 	 
	ARTICLE TEN

	SUBSIDIARY GUARANTEES

	 
	 	 
	Section 10.01. Guarantee
	 	90
	Section 10.02. Limitation on Guarantor Liability
	 	91
	Section 10.03. Guarantors May Consolidate, Etc., on Certain Terms
	 	91
	Section 10.04. Release of Guarantor
	 	92
	Section 10.05. Execution and Delivery of Notation of Subsidiary Guarantee
	 	93
	 
	 	 
	ARTICLE ELEVEN

	SATISFACTION AND DISCHARGE

	 
	 	 
	Section 11.01. Satisfaction and Discharge
	 	93
	Section 11.02. Deposited Money and Government Securities to Be Held in Trust; Other
Miscellaneous Provisions
	 	94
	Section 11.03. Repayment to the Company
	 	95
	Section 11.04. Survival
	 	95
	Section 11.05. Reinstatement
	 	95






iii




 









 








	 	 	 
	ARTICLE TWELVE

	MISCELLANEOUS

	Section 12.01. Trust Indenture Act Controls
	 	96
	Section 12.02. Notices
	 	96
	Section 12.03. Communication by Holders of Notes with Other Holders of Notes
	 	97
	Section 12.04. Certificate and Opinion as to Conditions Precedent
	 	97
	Section 12.05. Statements Required in Certificate or Opinion
	 	98
	Section 12.06. Rules by Trustee and Agents
	 	98
	Section 12.07. No Personal Liability of Directors, Officers, Employees and Stockholders
	 	98
	Section 12.08. Governing Law
	 	99
	Section 12.09. Consent to Jurisdiction
	 	99
	Section 12.10. No Adverse Interpretation of Other Agreements
	 	99
	Section 12.11. Successors
	 	99
	Section 12.12. Severability
	 	99
	Section 12.13. Counterpart Originals
	 	99
	Section 12.14. Acts of Holders
	 	100
	Section 12.15. Benefit of Indenture
	 	101
	Section 12.16. Table of Contents, Headings, Etc.
	 	101






	 	 	 
	EXHIBITS

	Exhibit A
	 	FORM OF GLOBAL NOTE

	Exhibit B
Exhibit C
Exhibit D
	 	FORM OF CERTIFICATE OF TRANSFER

FORM OF CERTIFICATE OF EXCHANGE

FORM OF CERTIFICATE FROM ACQUIRING INSTITUTIONAL ACCREDITED

INVESTOR

	Exhibit E
	 	FORM OF SUPPLEMENTAL INDENTURE TO BE DELIVERED BY SUBSEQUENT GUARANTORS

	Exhibit F
	 	FORM OF NOTATION OF SUBSIDIARY GUARANTEE







iv





 










 






          INDENTURE dated as of January 18, 2006 among Allis-Chalmers Energy Inc., a Delaware
corporation, the Guarantors (as defined below) listed on the signature pages hereto and Wells Fargo
Bank, N.A., a nationally chartered banking association, as trustee.



          The Company (as defined below) has duly authorized the execution and delivery of this
Indenture to provide for the issuance from time to time of its 9.0% Senior Notes due 2014 to be
issued in one or more series as provided in this Indenture. The Initial Guarantors (as defined
below) have duly authorized the execution and delivery of this Indenture to provide for a guarantee
of the Notes and of certain of the Company’s obligations hereunder. All things necessary to make
this Indenture a valid agreement of the Company and the Initial Guarantors, in accordance with its
terms, have been done.



          The Company, the Guarantors and the Trustee (as defined below) agree as follows for the
benefit of each other and for the equal and ratable benefit of the Holders (as defined below) of
the Company’s 9.0% Senior Notes due 2014:



ARTICLE ONE

DEFINITIONS AND INCORPORATION

BY REFERENCE




Section 1.01. Definitions.




          “144A Global Note” means a Global Note substantially in the form of Exhibit A bearing
the Global Note Legend and the Private Placement Legend and deposited with or on behalf of, and
registered in the name of, the Depositary or its nominee, that shall be issued in a denomination
equal to the outstanding principal amount at maturity of the Notes sold in reliance on Rule 144A.



          “Acquired Debt” means, with respect to any specified Person, Indebtedness of any other Person
existing at the time such other Person is merged with or into or became a Subsidiary of such
specified Person, regardless of whether such Indebtedness is incurred in connection with, or in
contemplation of, such other Person merging with or into, or becoming a Restricted Subsidiary of,
such specified Person.



          “Additional Notes” means an unlimited maximum aggregate principal amount of Notes (other than
the Notes issued on the date hereof) issued under this Indenture in accordance with Sections 2.02
and 4.09.



          “Affiliate” of any specified Person means any other Person directly or indirectly controlling
or controlled by or under direct or indirect common control with such specified Person. For
purposes of this definition, “control,” as used with respect to any Person, will mean the
possession, directly or indirectly, of the power to direct or cause the direction of the management
or policies of such Person, whether through the ownership of voting securities, by agreement or
otherwise; provided that beneficial ownership of 10% or more of the Voting Stock of a Person will
be deemed to be control. For purposes of this definition, the terms “controlling,” “controlled by”
and “under common control with” will have correlative meanings.



          “Agent” means any Registrar or Paying Agent.



 









 





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



          “Asset Sale” means:




	 	(i)	 	the sale, lease, conveyance or other disposition of any assets,
other than a transaction governed by Sections 4.13 and/or 5.01; and
	 
	 	(ii)	 	the issuance of Equity Interests by any of the Company’s
Restricted Subsidiaries or the sale by the Company or any Restricted Subsidiary
thereof of Equity Interests in any of its Subsidiaries (other than directors’
qualifying shares and shares issued to foreign nationals to the extent required
by applicable law).




Notwithstanding the preceding, the following items, which may constitute all or a portion of any
transaction, will be deemed not to be Asset Sales:





	 	(i)	 	any single transaction or series of related transactions that
involves assets or other Equity Interests having a Fair Market Value of less
than $3.0 million or for Net Proceeds of less than such amount;
	 
	 	(ii)	 	any issuance or transfer of assets or Equity Interests between
or among two or more of the Persons that are among the Company and its
Restricted Subsidiaries;
	 
	 	(iii)	 	the sale, lease or other disposition of products, services,
equipment, inventory, accounts receivable or other assets in the ordinary
course of business;
	 
	 	(iv)	 	the sale or other disposition of cash or Cash Equivalents;
	 
	 	(v)	 	dispositions (including without limitation surrenders and
waivers) of accounts receivable or other contract rights in connection with the
compromise, settlement or collection thereof;
	 
	 	(vi)	 	the issuance or sale of Equity Interests or the sale, lease or
other disposition of products, services, equipment, inventory, accounts
receivable or other assets pursuant to any Restricted Payment that is permitted
by Section 4.07 or any Permitted Investment;
	 
	 	(vii)	 	the trade or exchange by the Company or any Restricted
Subsidiary of any asset for any other asset or assets, including any cash or
Cash Equivalents necessary in order to achieve an exchange of equivalent value;
provided, however, that the Fair Market Value of the asset or assets received
by the Company or any Restricted Subsidiary in such trade or exchange
(including any such cash or Cash Equivalents) is at least equal to the Fair
Market Value (as determined in good faith by the Board of Directors or an




2









 






	 	 	 	executive officer of the Company or of such Restricted Subsidiary with
responsibility for such transaction, which determination shall be conclusive
evidence of compliance with this provision) of the asset or assets disposed
of by the Company or any Restricted Subsidiary pursuant to such trade or
exchange;






	 	(viii)	 	any sale, lease, conveyance or other disposition of any assets or any sale or
issuance of Equity Interests in each case, made pursuant to a Permitted Joint
Venture Investment or a Joint Marketing Arrangement;
	 
	 	(ix)	 	any sale or disposition of any property or equipment that has
become damaged, worn out or obsolete or pursuant to a program for the
maintenance or upgrading of such property or equipment; and
	 
	 	(x)	 	the creation of a Lien not prohibited by this Indenture and any
disposition of assets resulting from the enforcement or foreclosure of any such
Lien.





          “Bankruptcy Law” means title 11 of the United States Code or any similar federal or state law
for the relief of debtors.



          “Beneficial Owner” has the meaning assigned to such term in Rule 13d-3 and Rule 13d-5 under
the Exchange Act, except that in calculating the beneficial ownership of any particular “person”
(as that term is used in Section 13(d)(3) of the Exchange Act), such “person” will be deemed to
have beneficial ownership of all securities that such “person” has the right to acquire by
conversion or exercise of other securities, whether such right is currently exercisable or is
exercisable only upon the occurrence of a subsequent condition. The terms “Beneficially Owns,”
“Beneficially Owned” and “Beneficially Owning” will have a corresponding meaning.



          “Board of Directors” means:




	 	(i)	 	with respect to a corporation, the board of directors of the
corporation or, except in the context of the definitions of “Change of Control”
and “Continuing Directors,” a duly authorized committee thereof;
	 
	 	(ii)	 	with respect to a partnership, the Board of Directors of the
general partner of the partnership; and
	 
	 	(iii)	 	with respect to any other Person, the board or committee of
such Person serving a similar function.





          “Board Resolution” means a resolution certified by the Secretary or an Assistant Secretary of
the Company to have been duly adopted by the Board of Directors of the Company and to be in full
force and effect on the date of such certification.



          “Broker-Dealer” has the meaning set forth in the Registration Rights Agreement.



          “Business Day” means any day other than a Legal Holiday.



3









 





          “Calculation Date” has the meaning set forth below in the definition of Fixed Charge Coverage
Ratio.



          “Capital Lease Obligation” means, at the time any determination thereof is to be made, the
amount of the liability in respect of a capital lease that would at that time be required to be
capitalized on a balance sheet in accordance with GAAP, and the Stated Maturity thereof shall be
the date of the last payment of rent or any other amount due under such lease prior to the first
date upon which such lease may be prepaid by the lessee without payment of a penalty.



          “Capital Stock” means:




	 	(i)	 	in the case of a corporation, corporate stock;
	 
	 	(ii)	 	in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however
designated) of corporate stock;
	 
	 	(iii)	 	in the case of a partnership or limited liability company,
partnership or membership interests (whether general or limited); and
	 
	 	(iv)	 	any other interest or participation that confers on a Person
the right to receive a share of the profits and losses of, or distributions of
assets of, the issuing Person, but excluding from all of the foregoing any debt
securities convertible into Capital Stock, regardless of whether such debt
securities include any right of participation with Capital Stock.





          “Cash Equivalents” means:




	 	(i)	 	United States dollars;
	 
	 	(ii)	 	securities issued or directly and fully guaranteed or insured
by the United States government or any agency or instrumentality thereof
(provided that the full faith and credit of the United States is pledged in
support of such securities), maturing, unless such securities are deposited to
defease any Indebtedness, not more than one year from the date of acquisition;
	 
	 	(iii)	 	certificates of deposit and eurodollar time deposits with
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 domestic commercial bank having capital and surplus in
excess of $500.0 million and a rating at the time of acquisition thereof and a
Thomson Bank Watch Rating of “B” or higher;
	 
	 	(iv)	 	repurchase obligations with a term of not more than seven days
for underlying securities of the types described in clauses (ii) and (iii)
above entered into with any financial institution meeting the qualifications
specified in clause (iii) above;




4









 












	 	(v)	 	commercial paper having the highest rating obtainable from
either (1) Moody’s Investors Service, Inc. or (2) Standard & Poor’s Rating
Services and in each case maturing within one year after the date of
acquisition; and
	 
	 	(vi)	 	securities issued and fully guaranteed by any state,
commonwealth or territory of the United States of America, or by any political
subdivision or taxing authority thereof, rated at least “A” by Moody’s
Investors Service, Inc. or Standard & Poor’s Rating Services and having
maturities of not more than one year from the date of acquisition; and
	 
	 	(vii)	 	money market funds at least 95% of the assets of which
constitute Cash Equivalents of the kinds described in clauses (i) through (vi)
of this definition.





          “Change of Control” means the occurrence of any of the following:




	 	(i)	 	the direct or indirect sale, transfer, conveyance or other
disposition (other than by way of merger or consolidation), in one or a series
of related transactions, of all or substantially all of the properties or
assets of the Company and its Restricted Subsidiaries, taken as a whole, to any
“person” (as that term is used in Section 13(d)(3) of the Exchange Act) other
than a Permitted Holder;
	 
	 	(ii)	 	the adoption of a plan relating to the liquidation or
dissolution of the Company;
	 
	 	(iii)	 	any “person” or “group” (as such terms are used in Sections
13(d) and 14(d) of the Exchange Act) other than Parent or a Permitted Holder
becomes the Beneficial Owner, directly or indirectly, of more than 50% of the
voting power of the Voting Stock of the Company; or
	 
	 	(iv)	 	the first day on which a majority of the members of the Board
of Directors of the Company are not Continuing Directors.





          “Clearstream” means Clearstream Banking S.A. and any successor thereto.



          “Company” means Allis-Chalmers Energy Inc., a Delaware corporation, not including its
Subsidiaries, until a successor replaces it pursuant to Section 5.01 and thereafter means the
successor.



          “Consolidated Cash Flow” means, with respect to any specified Person for any period, the
Consolidated Net Income of such Person for such period plus:




	 	(i)	 	any net loss realized by such Person or any of its Restricted
Subsidiaries in connection with an Asset Sale, to the extent such losses were
deducted in computing such Consolidated Net Income; plus




5









 












	 	(ii)	 	all extraordinary, unusual or non-recurring items of loss or
expense to the extent deducted in computing such Consolidated Net Income; plus
	 
	 	(iii)	 	provision for taxes based on income or profits of such Person
and its Restricted Subsidiaries for such period, to the extent that such
provision for taxes was deducted in computing such Consolidated Net Income;
plus
	 
	 	(iv)	 	Fixed Charges of such Person and its Restricted Subsidiaries
for such period, to the extent that any such Fixed Charges were deducted in
computing such Consolidated Net Income; plus
	 
	 	(v)	 	depreciation, amortization (including amortization of
intangibles but excluding amortization of prepaid cash expenses that were paid
in a prior period) and other non-cash expenses (excluding any such non-cash
expense to the extent that it represents an accrual of or reserve for cash
expenses in any future period or amortization of a prepaid cash expense that
was paid in a prior period) of such Person and its Restricted Subsidiaries for
such period to the extent that such depreciation, amortization and other
non-cash expenses were deducted in computing such Consolidated Net Income; plus
	 
	 	(vi)	 	all expenses related to restricted stock and redeemable stock
interests granted to officers, directors and employees, to the extent such
expenses were deducted in computing such Consolidated Net Income; minus
	 
	 	(vii)	 	non-cash items increasing such Consolidated Net Income for
such period, other than the accrual of revenue in the ordinary course of
business;




in each case, on a consolidated basis and determined in accordance with GAAP.




          Notwithstanding the preceding, the provision for taxes based on the income or profits of, the
Fixed Charges of and the depreciation and amortization and other non-cash expenses of, a Restricted
Subsidiary of the Company will be added to Consolidated Net Income to compute Consolidated Cash
Flow of the Company (A) in the same proportion that the Net Income of such Restricted Subsidiary
was added to compute such Consolidated Net Income of the Company and (B) only to the extent that a
corresponding amount would be permitted at the date of determination to be dividended or
distributed directly or indirectly to the Company by such Restricted Subsidiary without prior
governmental approval (that has not been obtained), and without restriction pursuant to the terms
of its charter and all agreements, instruments, judgments, decrees, orders, statutes, rules and
governmental regulations applicable to that Subsidiary or its stockholders (without regard to any
restrictions existing by reason of, or any governmental approvals necessary pursuant to, any law,
rule, regulation, order or decree that is generally applicable to all Persons operating in any
jurisdiction in which the Company or any of its Restricted Subsidiaries are conducting business so
long as there is in effect no specific order, decree or other prohibition pursuant to any such law,
rule or regulation in such jurisdiction limiting the payment of a dividend or similar distribution
by such Restricted Subsidiary).



6









 





          “Consolidated Net Income” means, with respect to any specified Person for any period, the
aggregate of the Net Income of such Person and its Subsidiaries for such period, on a consolidated
basis, determined in accordance with GAAP; provided that:




	 	(i)	 	the Net Income or loss of any Person that is not a Restricted
Subsidiary or that is accounted for by the equity method of accounting will be
included only to the extent of the amount of dividends or similar distributions
paid in cash to the specified Person or a Restricted Subsidiary thereof;
	 
	 	(ii)	 	the Net Income of any Restricted Subsidiary will be excluded to
the extent that the declaration or payment of dividends or similar
distributions by that Restricted Subsidiary of that Net Income is not at the
date of determination permitted without any prior governmental approval (that
has not been obtained) or, directly or indirectly, by operation of the terms of
its charter or any judgment, decree, order, statute, rule or governmental
regulation applicable to that Restricted Subsidiary or its equityholders
(without regard to any restrictions existing by reason of, or any governmental
approvals necessary pursuant to, any law, rule, regulation, order or decree
that is generally applicable to all Persons operating in any jurisdiction in
which the Company or any of its Restricted Subsidiaries are conducting business
so long as there is in effect no specific order, decree or other prohibition
pursuant to any such law, rule or regulation in such jurisdiction limiting the
payment of a dividend or similar distribution by such Restricted Subsidiary);
	 
	 	(iii)	 	the cumulative effect of a change in accounting principles
will be excluded; and
	 
	 	(iv)	 	to the extent deducted in the calculation of Net Income, any
non-recurring charges associated with any premium or penalty paid, write-offs
of deferred financing costs or other financial recapitalization charges in
connection with redeeming or retiring any Indebtedness prior to its Stated
Maturity will be added back to arrive at Consolidated Net income.





          “Consolidated Tangible Assets” means, with respect to any Person as of any date, the amount
which, in accordance with GAAP, would be set forth under the caption “Total Assets” (or any like
caption) on a consolidated balance sheet of such Person and its Restricted Subsidiaries, less all
goodwill, patents, tradenames, trademarks, copyrights, franchises, experimental expenses,
organization expenses and any other amounts classified as intangible assets in accordance with
GAAP.



          “Continuing Directors” means, as of any date of determination, any member of the Board of
Directors of the Company who:




	 	(i)	 	was a member of such Board of Directors on the Issue Date; or




7









 












	 	(ii)	 	was nominated for election or elected to such Board of
Directors with the approval of a majority of the Continuing Directors who were
members of such Board of Directors at the time of such nomination or election.





          “Corporate Trust Office of the Trustee” shall be at the address of the Trustee specified in
Section 12.02 or such other address as to which the Trustee may give notice to the Company.



          “Credit Agreement” means the Amended and Restated Credit Agreement, dated as of January 18,
2006 by and among the Company, Royal Bank of Canada, as Administrative Agent, and the other lenders
named therein providing for up to $25.0 million of revolving credit borrowings, including any
standby letters of credit, related notes, Guarantees, collateral documents, instruments and
agreements executed in connection therewith, and in each case as amended, restated, modified,
renewed, refunded, replaced or refinanced from time to time, regardless of whether such amendment,
restatement, modification, renewal, refunding, replacement or refinancing is with the same
financial institutions or otherwise.



          “Credit Facilities” means one or more debt facilities (including, without limitation, the
Credit Agreement), commercial paper facilities, in each case with banks or other institutional
lenders, providing for revolving credit loans, term loans, receivables financing (including through
the sale of receivables to such lenders or to special purpose entities formed to borrow from such
lenders against such receivables), one or more letters of credit, or one or more indentures or
similar agreements, including any related bond, note, debentures, Guarantees, collateral documents,
instruments and agreements executed in connection therewith, in each case, as amended, restated,
modified, renewed, refunded, replaced or refinanced (including by means of sales of debt securities
to institutional investors) in whole or in part from time to time.



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



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



          “Definitive Note” means a certificated Note registered in the name of the Holder thereof and
issued in accordance with Section 2.07, substantially in the form of Exhibit A, except that
such Note shall not bear the Global Note Legend and shall not have the “Schedule of Exchanges of
Interests in the Global Note” attached thereto.



          “Depositary” means, with respect to the Notes issuable or issued in whole or in part in global
form, the Person specified in Section 2.04(b) as the Depositary with respect to the Notes, and any
and all successors thereto appointed as depositary hereunder and having become such pursuant to the
applicable provisions of this Indenture.



          “Disqualified Stock” means any Capital Stock that, by its terms (or by the terms of any
security into which it is convertible, or for which it is exchangeable, in each case at the option
of the holder thereof), or upon the happening of any event, matures or is mandatorily redeemable,
pursuant to a sinking fund obligation or otherwise, or redeemable at the option of the holder
thereof, in whole or in part, on or prior to the date that is 91 days after the date on



8









 




which the Notes mature. Notwithstanding the preceding sentence, any Capital Stock that would
constitute Disqualified Stock solely because the holders thereof have the right to require the
Company to repurchase such Capital Stock upon the occurrence of a change of control or an asset
sale will not constitute Disqualified Stock if the terms of such Capital Stock provide that the
Company may not repurchase or redeem any such Capital Stock pursuant to such provisions unless such
repurchase or redemption complies with Section 4.07. The amount of Disqualified Stock deemed to be
outstanding at any time for purposes of this Indenture will be the maximum amount that the Company
and its Restricted Subsidiaries may become obligated to pay upon the maturity of, or pursuant to
any mandatory redemption provisions of, such Disqualified Stock, exclusive of accrued dividends.




          “Domestic Subsidiary” means each Restricted Subsidiary of the Company organized or existing
under the laws of the United States, any state thereof or the District of Columbia.



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



          “Equity Offering” means any issuance or sale of Equity Interests (other than Disqualified
Stock), or a contribution to the equity capital, of the Company to any Person (other than a
Restricted Subsidiary of the Company).



          “Euroclear” means Euroclear Bank S.A./N.V., as operator of the Euroclear system, and any
successor thereto.



          “Exchange Act” means the Securities Exchange Act of 1934, as amended.



          “Exchange Notes” means the Notes issued in the Exchange Offer in accordance with Section
2.07(f).



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



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



          “Existing Indebtedness” means the aggregate amount of Indebtedness of the Company and its
Restricted Subsidiaries (other than Indebtedness under the Credit Agreement or under the Notes and
the related Subsidiary Guarantees) in existence on the Issue Date after giving effect to the
application of the proceeds of (1) the Notes and (2) any borrowings made under the Credit Agreement
on the Issue Date, until such amounts are repaid.



          “Fair Market Value” means the value that would be paid by a willing buyer to an unaffiliated
willing seller in a transaction not involving distress or necessity of either party, determined in
good faith by the Board of Directors of the Company (unless otherwise provided in this Indenture).



9









 





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




	 	(i)	 	the consolidated interest expense of such Person and its
Restricted Subsidiaries for such period, whether paid or accrued, including,
without limitation, amortization of debt issuance costs and original issue
discount, non-cash interest payments, the interest component of any deferred
payment obligations, the interest component of all payments associated with
Capital Lease Obligations, commissions, discounts and other fees and charges
incurred in respect of letter of credit or bankers’ acceptance financings, and
net of the effect of all payments made or received pursuant to Hedging
Obligations; plus
	 
	 	(ii)	 	the consolidated interest of such Person and its Restricted
Subsidiaries that was capitalized during such period; plus
	 
	 	(iii)	 	any interest expense on Indebtedness of another Person that is
Guaranteed by such Person or one of its Restricted Subsidiaries or secured by a
Lien on assets of such Person or one of its Restricted Subsidiaries, whether or
not such Guarantee or Lien is called upon; plus
	 
	 	(iv)	 	all dividends, whether paid or accrued and whether or not in
cash, on any series of Disqualified Stock of such Person or any of its
Restricted Subsidiaries or Preferred Stock of such Person’s Restricted
Subsidiaries, other than dividends on Equity Interests payable solely in Equity
Interests (other than Disqualified Stock) of the Company or to the Company or a
Restricted Subsidiary of the Company,




in each case, on a consolidated basis and in accordance with GAAP.




          “Fixed Charge Coverage Ratio” means, with respect to any specified Person for any period, the
ratio of the Consolidated Cash Flow of such Person for such period to the Fixed Charges of such
Person for such period. In the event that the specified Person or any of its Restricted
Subsidiaries Incurs, repays, repurchases or redeems any Indebtedness (other than the incurrence or
repayment of revolving credit borrowings, except to the extent that a repayment is accompanied by a
permanent reduction in revolving credit commitments) or issues, repurchases or redeems Disqualified
Stock subsequent to the commencement of the period for which the Fixed Charge Coverage Ratio is
being calculated and on or prior to the date on which the event for which the calculation of the
Fixed Charge Coverage Ratio is made (the “Calculation Date”), then the Fixed Charge Coverage Ratio
will be calculated giving pro forma effect to such Incurrence, repayment, repurchase or redemption
of Indebtedness, or such issuance, repurchase or redemption of Disqualified Stock, and the use of
the proceeds therefrom as if the same had occurred at the beginning of such period.



          In addition, for purposes of calculating the Fixed Charge Coverage Ratio:




	 	(i)	 	acquisitions and dispositions of business entities or property
and assets constituting a division or line of business of any Person that have
been




10









 






	 	 	 	made by the specified Person or any of its Restricted Subsidiaries,
including through mergers or consolidations, during the four-quarter
reference period or subsequent to such reference period and on or prior to
the Calculation Date will be given pro forma effect as if they had occurred
on the first day of the four-quarter reference period and Consolidated Cash
Flow for such reference period will be calculated on a pro forma basis in
good faith on a reasonable basis by a responsible financial or accounting
Officer of the Company; provided, that such Officer may in his discretion
include any pro forma changes to Consolidated Cash Flow, including any pro
forma reductions of expenses and costs, that have occurred or are reasonably
expected by such Officer to occur (regardless of whether such expense or
cost savings or any other operating improvements could then be reflected
properly in pro forma financial statements prepared in accordance with
Regulation S-X under the Securities Act or any other regulation or policy of
the SEC);
	 
	 	(ii)	 	the Consolidated Cash Flow attributable to discontinued
operations, as determined in accordance with GAAP, will be excluded;
	 
	 	(iii)	 	the Fixed Charges attributable to discontinued operations, as
determined in accordance with GAAP, will be excluded, but only to the extent
that the obligations giving rise to such Fixed Charges will not be obligations
of the specified Person or any of its Restricted Subsidiaries following the
Calculation Date; and
	 
	 	(iv)	 	Fixed Charges attributable to interest on any Indebtedness
(whether existing or being Incurred) computed on a pro forma basis and bearing
a floating interest rate will be computed as if the rate in effect on the
Calculation Date (taking into account any interest rate option, swap, cap or
similar agreement applicable to such Indebtedness if such agreement has a
remaining term in excess of 12 months or, if shorter, at least equal to the
remaining term of such Indebtedness) had been the applicable rate for the
entire period.





          “Foreign Subsidiary” means any Restricted Subsidiary of the Company other than a Domestic
Subsidiary.



          “GAAP” means generally accepted accounting principles set forth in the opinions and
pronouncements of the Accounting Principles Board of the American Institute of Certified Public
Accountants, the opinions and pronouncements of the Public Company Accounting Oversight Board and
in the statements and pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as have been approved by a significant segment of the accounting
profession, which are in effect from time to time.



          “Global Note Legend” means the legend set forth in Section 2.07(g)(ii), which is required to
be placed on all Global Notes issued under this Indenture.



11









 





          “Global Notes” means, individually and collectively, each of the Restricted Global Notes and
the Unrestricted Global Notes, substantially in the form of Exhibit A, issued in accordance
with Section 2.01 or Section 2.07.



          “Government Securities” means securities that are direct obligations of, or obligations
guaranteed by, the United States of America for the timely payment of which its full faith and
credit is pledged.



          “Guarantee” means, as to any Person, a guarantee other than by endorsement of negotiable
instruments for collection in the ordinary course of business, direct or indirect, in any manner
including, without limitation, by way of a pledge of assets or through letters of credit or
reimbursement agreements in respect thereof, of all or any part of any Indebtedness of another
Person.



          “Guarantors” means:




	 	(i)	 	the Initial Guarantors; and
	 
	 	(ii)	 	any other subsidiary that executes a Subsidiary Guarantee in
accordance with the provisions of this Indenture;




and their respective successors and assigns until released from their obligations under their
Subsidiary Guarantees and this Indenture in accordance with the terms of this Indenture.




          “Hedging Obligations” means, with respect to any specified Person, the obligations of such
Person under:




	 	(i)	 	interest rate swap agreements, interest rate cap agreements,
interest rate collar agreements and other agreements or arrangements with
respect to interest rates;
	 
	 	(ii)	 	commodity swap agreements, commodity option agreements, forward
contracts and other agreements or arrangements with respect to commodity
prices;
	 
	 	(iii)	 	foreign exchange contracts, currency swap agreements and other
agreements or arrangements with respect to foreign currency exchange rates;
	 
	 	(iv)	 	other agreements or arrangements designed to protect such
Person or any Restricted Subsidiaries against fluctuations in interest rates,
commodity prices or currency exchange rates; and
	 
	 	(v)	 	letters of credit and reimbursement obligations with respect to
letters of credit, in each case supporting obligations of the types described
in the preceding clauses of this definition.





          “Holder” means a Person in whose name a Note is registered.



12









 





          “Incur” means, with respect to any Indebtedness, to incur, create, issue, assume, Guarantee or
otherwise become directly or indirectly liable for or with respect to, or become responsible for,
the payment of, contingently or otherwise, such Indebtedness (and “Incurrence” and “Incurred” will
have meanings correlative to the foregoing); provided that (1) any Indebtedness of a Person
existing at the time such Person becomes a Restricted Subsidiary of the Company will be deemed to
be Incurred by such Restricted Subsidiary at the time it becomes a Restricted Subsidiary of the
Company and (2) neither the accrual of interest nor the accretion of original issue discount nor
the payment of interest in the form of additional Indebtedness with the same terms and the payment
of dividends on Disqualified Stock in the form of additional shares of the same class of
Disqualified Stock (to the extent provided for when the Indebtedness or Disqualified Stock on which
such interest or dividend is paid was originally issued) will be considered an Incurrence of
Indebtedness; provided that in each case the amount thereof is for all other purposes included in
the Fixed Charges and Indebtedness of the Company or its Restricted Subsidiary as accrued.



          “Indebtedness” means, with respect to any specified Person, any indebtedness of such Person,
whether or not contingent:




	 	(i)	 	in respect of borrowed money;
	 
	 	(ii)	 	evidenced by bonds, notes, debentures or similar instruments or
letters of credit (or reimbursement agreements in respect thereof);
	 
	 	(iii)	 	in respect of banker’s acceptances;
	 
	 	(iv)	 	in respect of Capital Lease Obligations;
	 
	 	(v)	 	in respect of the balance deferred and unpaid of the purchase
price of any property or services due more than six months after such property
is acquired or such services are completed, except any such balance that
constitutes an accrued expense or a trade payable;
	 
	 	(vi)	 	representing Hedging Obligations; or
	 
	 	(vii)	 	representing Disqualified Stock valued at the greater of its
voluntary or involuntary maximum fixed repurchase price plus accrued dividends,




if and to the extent any of the preceding items (other than letters of credit and Hedging
Obligations) would appear as a liability upon a balance sheet of the specified Person prepared in
accordance with GAAP.



In addition, the term “Indebtedness” includes (x) all Indebtedness of others secured by a Lien on
any asset of the specified Person (whether or not such Indebtedness is assumed by the specified
Person), provided that the amount of such Indebtedness will be the lesser of (A) the Fair Market
Value of such asset at such date of determination and (B) the amount of such Indebtedness, and (y)
to the extent not otherwise included, the Guarantee by the specified Person of any Indebtedness of
any other Person. For purposes hereof, the “maximum fixed repurchase price” of any Disqualified
Stock which does not have a fixed repurchase price will be calculated in





13










 





accordance with the terms of such Disqualified Stock, as applicable, as if such Disqualified
Stock were repurchased on any date on which Indebtedness will be required to be determined pursuant
to this Indenture.




          Notwithstanding the foregoing, the following shall not constitute Indebtedness:




	 	(i)	 	accrued expenses and trade accounts payable arising in the
ordinary course of business;
	 
	 	(ii)	 	any indebtedness that has been defeased in accordance with GAAP
or defeased pursuant to the deposit of cash or Cash Equivalents (in an amount
sufficient to satisfy all obligations relating thereto at maturity or
redemption, as applicable, including all payments of interest and premium, if
any) in a trust or account created or pledged for the sole benefit of the
holders of such indebtedness, and subject to no other Liens, and in accordance
with the other applicable terms of the instrument governing such indebtedness;
	 
	 	(iii)	 	any obligation arising from the honoring by a bank or other
financial institution of a check, draft or similar instrument drawn against
insufficient funds in the ordinary course of business; provided, however, that
such obligation is extinguished within five business days of its incurrence;
and
	 
	 	(iv)	 	any obligation arising from any agreement providing for
indemnities, Guarantees, purchase price adjustments, holdbacks, contingency
payment obligations based on the performance of the acquired or disposed assets
or similar obligations (other than Guarantees of Indebtedness) incurred by any
Person in connection with the acquisition or disposition of any assets,
including Capital Stock.





          The amount of any Indebtedness outstanding as of any date will be the outstanding balance at
such date of all unconditional obligations as described above and, with respect to contingent
obligations, the maximum liability upon the occurrence of the contingency giving rise to the
obligation, and will be:




	 	(i)	 	the accreted value thereof, in the case of any Indebtedness
issued with original issue discount; and
	 
	 	(ii)	 	the principal amount thereof, together with any interest
thereon that is more than 30 days past due, in the case of any other
Indebtedness.





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



          “Independent Financial Advisor” means a nationally recognized accounting, appraisal or
investment banking firm that is, in the reasonable judgment of the Board of Directors of the
Company, qualified to perform the task for which such firm has been engaged



14









 







hereunder and disinterested and independent with respect to the Company and its Affiliates;
provided that providing accounting, appraisal or investment banking services to the Company or any
of its Affiliates or having an employee, officer or other representative serving as a member of the
Board of Directors of the Company or any of its Affiliates will not disqualify any firm from being
an Independent Financial Advisor.



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



          “Initial Guarantors” means all of the Domestic Subsidiaries of the Company except
Allis-Chalmers Management, LP, Allis-Chalmers GP, LLC and Allis-Chalmers LP, LLC .



          “Institutional Accredited Investor” means an institution that is an “accredited investor” as
defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act, who is not also a QIB.



          “Investments” means, with respect to any Person, all direct or indirect investments by such
Person in other Persons (including Affiliates) in the form of loans or other extensions of credit
(including Guarantees), advances, capital contributions (by means of any transfer of cash or other
property to others or any payment for property or services for the account or use of others,
excluding commission, travel and similar advances to officers and employees made in the ordinary
course of business and excluding accounts receivables created or acquired in the ordinary course of
business), purchases or other acquisitions for consideration of Indebtedness, Equity Interests or
other securities, together with all items that are or would be classified as investments on a
balance sheet prepared in accordance with GAAP.



          If the Company or any Restricted Subsidiary of the Company sells or otherwise disposes of any
Equity Interests of any direct or indirect Restricted Subsidiary of the Company such that, after
giving effect to any such sale or disposition, such Person is no longer a Restricted Subsidiary of
the Company, the Company will be deemed to have made an Investment on the date of any such sale or
disposition equal to the Fair Market Value of the Investment in such Subsidiary not sold or
disposed of. The acquisition by the Company or any Restricted Subsidiary of the Company of a
Person that holds an Investment in a third Person will be deemed to be an Investment by the Company
or such Restricted Subsidiary in such third Person in an amount equal to the Fair Market Value of
the Investment held by the acquired Person in such third Person.



          “Issue Date” means the first date of original issuance of the Notes under this Indenture.



          “Joint Marketing Arrangement” means any joint venture, partnership, lease, joint marketing
agreement, operating agreement, or other arrangement (which may or may not include joint ownership
of any Person) pursuant to which the Company or any of its Restricted Subsidiaries arrange for the
marketing, lease or sale of products and services and share in the profits therefrom.



15









 





          “Legal Holiday” means a Saturday, a Sunday or a day on which banking institutions in The City
of New York or Houston, Texas or at a place of payment are authorized or required by law,
regulation or executive order to remain closed.



          “Letter of Transmittal” means the letter of transmittal to be prepared by the Company and sent
to all Holders of the Notes for use by such Holders in connection with the Exchange Offer.



          “Lien” means, with respect to any asset, any mortgage, lien, pledge, charge, security interest
or encumbrance of any kind in respect of such asset, whether or not filed, recorded or otherwise
perfected under applicable law, including any conditional sale or other title retention agreement,
any lease in the nature thereof, any option or other agreement to sell or give a security interest
in and any filing of or agreement to give any financing statement under the Uniform Commercial Code
(or equivalent statutes) of any jurisdiction.



          “Liquidated Damages” means all Liquidated Damages then owing pursuant to the Registration
Rights Agreement.



          “Net Income” means, with respect to any specified Person, the net income (loss) of such
Person, determined in accordance with GAAP and before any reduction in respect of Preferred Stock
dividends, excluding, however:




	 	(i)	 	any gain or loss, together with any related provision for taxes
on such gain or loss, realized in connection with: (a) any Asset Sale; or (b)
the disposition of any securities by such Person or any of its Restricted
Subsidiaries or the extinguishment of any Indebtedness of such Person or any of
its Restricted Subsidiaries; and
	 
	 	(ii)	 	any extraordinary gain or loss, together with any related
provision for taxes on such extraordinary gain or loss.





          “Net Proceeds” means the aggregate cash proceeds, including payments in respect of deferred
payment obligations (to the extent corresponding to the principal, but not the interest component,
thereof) received by the Company or any of its Restricted Subsidiaries in respect of any Asset Sale
(including, without limitation, any cash received upon the sale or other disposition of any
non-cash consideration received in any Asset Sale), net of (1) the direct costs relating to such
Asset Sale, including, without limitation, legal, accounting, investment banking and brokerage
fees, and sales commissions, and any relocation expenses incurred as a result thereof, (2) taxes
paid or payable as a result thereof, in each case, after taking into account any available tax
credits or deductions and any tax sharing arrangements, (3) amounts required to be applied to the
repayment of Indebtedness or other liabilities secured by a Lien on the asset or assets that were
the subject of such Asset Sale or required to be paid as a result of such sale, (4) any reserve for
adjustment in respect of the sale price of such asset or assets established in accordance with
GAAP, (5) in the case of any Asset Sale by a Restricted Subsidiary of the Company, payments to
holders of Equity Interests in such Restricted Subsidiary in such capacity (other than such Equity
Interests held by the Company or any Restricted Subsidiary thereof) to the extent that such payment
is required to permit the distribution of such proceeds in respect of



16









 







the Equity Interests in such Restricted Subsidiary held by the Company or any Restricted
Subsidiary thereof, and (6) appropriate amounts to be provided by the Company or its Restricted
Subsidiaries as a reserve against liabilities associated with such Asset Sale, including, without
limitation, pension and other post-employment benefit liabilities, liabilities related to
environmental matters and liabilities under any indemnification obligations associated with such
Asset Sale, all as determined in accordance with GAAP; provided that (a) excess amounts set aside
for payment of taxes pursuant to clause (2) above remaining after such taxes have been paid in full
or the statute of limitations therefor has expired and (b) amounts initially held in reserve
pursuant to clause (6) no longer so held, will, in the case of each of subclause (a) and (b), at
that time become Net Proceeds.



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



          “Notes” means the 9.0% Senior Notes due 2014 of the Company issued on the date hereof and any
Additional Notes, including any Exchange Notes. The Notes and the Additional Notes (including any
Exchange Notes), if any, shall be treated as a single class for all purposes under this Indenture.



          “Obligations” means any principal, interest, penalties, fees, indemnifications,
reimbursements, damages and other liabilities payable under the documentation governing any
Indebtedness.



          “Offering Memorandum” means the offering memorandum, dated January 12, 2006, relating to the
Company’s 9.0% Senior Notes due 2014.



          “Officer” means, with respect to any Person, the Chairman of the Board, the Chief Executive
Officer, the President, the Chief Operating Officer, the Chief Financial Officer, the Treasurer,
any Assistant Treasurer, the Controller, the Secretary, any Assistant Secretary or any
Vice-President of such Person.



          “Officers’ Certificate” means a certificate signed on behalf of the Company by at least two
Officers of the Company, one of whom must be the principal executive officer, the principal
financial officer, the treasurer or the principal accounting officer of the Company, that meets the
requirements of this Indenture.



          “Opinion of Counsel” means an opinion from legal counsel who is reasonably acceptable to the
Trustee (who may be counsel to or an employee of the Company) that meets the requirements of this
Indenture.



          “Parent” means any entity that becomes the holder of 100% of the outstanding Equity Interests
of the Company in a transaction in which the Beneficial Owners of the Company immediately prior to
such transaction are Beneficial Owners in the same proportion of the Company immediately after such
transaction.



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



17









 





          “Permitted Business” means any business conducted or proposed to be conducted (as described in
the Offering Memorandum) by the Company and its Restricted Subsidiaries on the Issue Date and other
businesses reasonably related or ancillary thereto.



          “Permitted Holder” means:




	 	(i)	 	any Officer or member of the Board of Directors of the Company
or any Beneficial Owner of at least 5% of the Company’ Equity Interests as of
the Issue Date;
	 
	 	(ii)	 	any controlling stockholder, 80% (or more) owned Subsidiary or
immediate family member (in the case of an individual) of any Person referred
to in clause (i); or
	 
	 	(iii)	 	any trust, corporation, partnership or other entity, the
beneficiaries, stockholders, partners, owners or Persons Beneficially Owning an
80% or more controlling interest of which consist of any one or more Persons
referred to in clause (i) or (ii).





          “Permitted Investments” means:




	 	(i)	 	any Investment in the Company or in a Restricted Subsidiary of
the Company;
	 
	 	(ii)	 	any Investment in cash or Cash Equivalents;
	 
	 	(iii)	 	any Investment by the Company or any Restricted Subsidiary of
the Company in a Person, if as a result of such Investment:
	 
	 	 	(1)	such Person becomes a Restricted Subsidiary of the Company; or
	 
	 	 	(2)	such Person is merged, consolidated or
amalgamated with or into, or transfers or conveys substantially all of
its assets to, or is liquidated into, the Company or a Restricted
Subsidiary of the Company;
	 
	 	(iv)	 	any Investment made as a result of the receipt of non-cash
consideration from an Asset Sale that was made pursuant to and in compliance
with Section 4.10;
	 
	 	(v)	 	Hedging Obligations that are Incurred for the purpose of
fixing, hedging or swapping interest rate, commodity price or foreign currency
exchange rate risk (or to reverse or amend any such agreements previously made
for such purposes), and not for speculative purposes, and that do not increase
the Indebtedness of the obligor outstanding at any time other than as a result
of fluctuations in interest rates, commodity prices or foreign currency
exchange rates or by reason of fees, indemnities and compensation payable
thereunder;




18









 












	 	(vi)	 	stock, obligations or securities received in satisfaction of
judgments;
	 
	 	(vii)	 	advances to customers or suppliers in the ordinary course of
business that are, in conformity with GAAP, recorded as accounts receivable,
prepaid expenses or deposits on the balance sheet of the Company or its
Restricted Subsidiaries and endorsements for collection or deposit arising in
the ordinary course of business;
	 
	 	(viii)	 	any Investment in any Person solely in exchange for the issuance of Equity
Interests (other than Disqualified Stock) of the Company or any of its
Subsidiaries;
	 
	 	(ix)	 	any Investments received in compromise or resolution of (A)
obligations of trade creditors or customers that were incurred in the ordinary
course of business of the Company or any of its Restricted Subsidiaries,
including pursuant to any plan of reorganization or similar arrangement upon
the bankruptcy or insolvency of any trade creditor or customer; or (B)
litigation, arbitration or other disputes with Persons who are not Affiliates;
	 
	 	(x)	 	loans to officers and employees of the Company or any of its
Subsidiaries made in the ordinary course of business;
	 
	 	(xi)	 	commission, payroll, travel, entertainment and similar advances
to officers and employees of the Company or any of its Restricted Subsidiaries
that are expected at the time of such advance ultimately to be recorded as an
expense in conformity with GAAP;
	 
	 	(xii)	 	Permitted Joint Venture Investments made by the Company or any
of its Restricted Subsidiaries and Investments made pursuant to any Joint
Marketing Arrangement, in an aggregate amount (measured on the date each such
Investment was made and without giving effect to subsequent changes in value),
when taken together with all other Investments made pursuant to this clause
(xii), that does not exceed $10.0 million;
	 
	 	(xiii)	 	Investments existing on the Issue Date;
	 
	 	(xiv)	 	repurchases of, or other Investments in, the Notes;
	 
	 	(xv)	 	advances, deposits and prepayments for purchases of any assets,
including any Equity Interests; and
	 
	 	(xvi)	 	other Investments in any Person having an aggregate Fair
Market Value (measured on the date each such Investment was made and without
giving effect to subsequent changes in value), when taken together with all
other Investments made pursuant to this clause (xvi) since the Issue Date, not
to exceed the greater of (a) $15.0 million or (b) 5.0% of Consolidated Tangible
Assets.




19









 











          In determining whether any Investment is a Permitted Investment, the Company may allocate or
reallocate all or any portion of an Investment among the clauses of this definition and any of the
provisions of Section 4.07.



          “Permitted Joint Venture Investment” means, with respect to an Investment by any specified
Person, an Investment by such specified Person in any other Person engaged in a Permitted Business
(a) over which the specified Person is responsible (either directly or through a services
agreement) for day-to-day operations or otherwise has operational and managerial control of such
other Person, or veto power over significant management decisions affecting such other Person and
(b) of which at least 30% of the outstanding Equity Interests of such other Person is at the time
owned directly or indirectly by the specified Person.



          “Permitted Liens” means:




	 	(i)	 	Liens on the assets of the Company and any Restricted
Subsidiary securing Indebtedness Incurred under clause (i) of Section 4.09(b);
	 
	 	(ii)	 	Liens in favor of the Company or any Restricted Subsidiary;
	 
	 	(iii)	 	Liens on property of a Person (a) existing at the time of
acquisition thereof or (b) existing at the time such Person is merged with or
into or consolidated with the Company or any Restricted Subsidiary of the
Company; provided that such Liens were in existence prior to the contemplation
of such merger or consolidation and do not extend to any assets other than
those of the Person acquired or merged into or consolidated with the Company or
the Restricted Subsidiary;
	 
	 	(iv)	 	Liens on property existing at the time of acquisition thereof
by the Company or any Restricted Subsidiary of the Company, provided that such
Liens were in existence prior to, and not in contemplation of, such acquisition
and do not extend to any property other than the property so acquired by the
Company or the Restricted Subsidiary;
	 
	 	(v)	 	Liens securing the Notes and the Subsidiary Guarantees;
	 
	 	(vi)	 	Liens existing on the Issue Date (other than any Liens securing
Indebtedness Incurred under clause (i) of Section 4.09(b));
	 
	 	(vii)	 	Liens securing Permitted Refinancing Indebtedness; provided
that such Liens do not extend to any property or assets other than the property
or assets that secure the Indebtedness being refinanced;
	 
	 	(viii)	 	Liens on property or assets used to defease or to satisfy and discharge
Indebtedness; provided that (a) the Incurrence of such Indebtedness was not
prohibited by this Indenture and (b) such defeasance or satisfaction and
discharge is not prohibited by this Indenture;




20









 






	 	(ix)	 	Liens securing obligations that do not exceed $10.0 million at
any one time outstanding;
	 
	 	(x)	 	Liens to secure Indebtedness (including Capital Lease
Obligations) permitted by clause (iv) of Section 4.09(b); provided that any
such Lien (i) covers only the assets acquired, constructed, refurbished,
installed, improved, deployed, refurbished, modified or leased with such
Indebtedness and (ii) is created within 180 days of such acquisition,
construction, refurbishment, installation, improvement, deployment,
refurbishment, modification or lease;
	 
	 	(xi)	 	Liens to secure Indebtedness incurred for the purpose of
financing all or any part of the purchase price or the cost of construction,
development, expansion or improvement of the equipment or other property
subject to such Liens; provided, however, that (a) the principal amount of any
Indebtedness secured by such a Lien does not exceed 100% of such purchase price
or cost, (b) such Lien does not extend to or cover any property other than such
item of property or any improvements on such item of property and (c) the
incurrence of such Indebtedness is otherwise not prohibited by this Indenture;
	 
	 	(xii)	 	Liens securing Indebtedness of any Foreign Subsidiary which
Indebtedness is permitted by this Indenture;
	 
	 	(xiii)	 	Liens securing Hedging Obligations of the Company or any of its Restricted
Subsidiaries;
	 
	 	(xiv)	 	Liens incurred or deposits made in the ordinary course of
business in connection with worker’s compensation, unemployment insurance or
other social security obligations;
	 
	 	(xv)	 	Liens, deposits or pledges to secure the performance of bids,
tenders, contracts (other than contracts for the payment of Indebtedness),
leases, or other similar obligations arising in the ordinary course of
business;
	 
	 	(xvi)	 	survey exceptions, encumbrances, easements or reservations of,
or rights of others for, rights of way, electric lines, telegraph and telephone
lines and other similar purposes or zoning or other restrictions as to the use
of properties, and defects in title which, in the case of any of the foregoing,
were not incurred or created to secure the payment of Indebtedness, and which
in the aggregate do not materially adversely affect the value of such
properties or materially impair the use for the purposes of which such
properties are held by the Company or any of its Restricted Subsidiaries;
	 
	 	(xvii)	 	judgment and attachment Liens not giving rise to an Event of Default, notices
of lis pendens and associated rights related to litigation being contested in
good faith by appropriate proceedings and for which adequate reserves have been
made and any Liens that are required to protect or




21









 






	 	 	 	enforce any rights in any administrative, arbitration, litigation or other
court proceeding in the ordinary course of business;






	 	(xviii)	 	Liens, deposits or pledges to secure public or statutory obligations,
surety, stay, appeal, indemnity, performance or other similar bonds or
obligations; and Liens, deposits or pledges in lieu of such bonds or
obligations, or to secure such bonds or obligations, or to secure letters of
credit in lieu of or supporting the payment of such bonds or obligations;
	 
	 	(xix)	 	Liens in favor of collecting or payor banks having a right of
setoff, revocation, refund or chargeback with respect to money or instruments
of the Company or any Subsidiary thereof on deposit with or in possession of
such bank;
	 
	 	(xx)	 	any interest or title of a lessor, licensor or sublicensor in
the property subject to any lease, license or sublicense;
	 
	 	(xxi)	 	Liens for taxes, assessments and governmental charges not yet
delinquent or being contested in good faith and for which adequate reserves
have been established to the extent required by GAAP;
	 
	 	(xxii)	 	Liens arising from precautionary UCC financing statements regarding operating
leases or consignments;
	 
	 	(xxiii)	 	Liens of franchisors in the ordinary course of business not securing
Indebtedness;
	 
	 	(xxiv)	 	Liens imposed by law, such as carriers’, warehousemen’s, repairmen’s,
landlord’s and mechanics’ Liens or other similar Liens, in each case, incurred
in the ordinary course of business;
	 
	 	(xxv)	 	Liens contained in purchase and sale agreements limiting the
transfer of assets pending the closing of the transactions contemplated
thereby;
	 
	 	(xxvi)	 	Liens that may be deemed to exist by virtue of contractual provisions that
restrict the ability of the Company or any of its Subsidiaries from granting or
permitting to exist Liens on their respective assets; and
	 
	 	(xxvii)	 	Liens in favor of the Trustee as provided for in this Indenture on money or
property held or collected by the Trustee in its capacity as Trustee.





          “Permitted Payments to Parent” means, for so long as the Company is a member of a group filing
a consolidated or combined tax return with the Parent, payments to the Parent in respect of an
allocable portion of the tax liabilities of such group that is attributable to the Company and its
Subsidiaries (“Tax Payments”). The Tax Payments shall not exceed the lesser of (a) the amount of
the relevant tax (including any penalties and interest) that the Company would owe if the Company
were filing a separate tax return (or a separate consolidated or combined return with its
Subsidiaries that are members of the consolidated or combined



22









 







group), taking into account any carryovers and carrybacks of tax attributes (such as net
operating losses) of the Company and such Subsidiaries from other taxable years and (b) the net
amount of the relevant tax that the Parent actually owes to the appropriate taxing authority. Any
Tax Payments received from the Company shall be paid over to the appropriate taxing authority
within 30 days of the Parent’s receipt of such Tax Payments or refunded to the Company.



          “Permitted Refinancing Indebtedness” means any Indebtedness of the Company or any of its
Restricted Subsidiaries issued (a) in exchange for, or the net proceeds of which are used to
extend, refinance, renew, replace, defease, discharge, refund or otherwise retire for value, in
whole or in part, or (b) constituting an amendment, modification or supplement to or a deferral or
renewal of ((a) and (b) above collectively, a “Refinancing”) any other Indebtedness of the Company
or any of its Restricted Subsidiaries (other than intercompany Indebtedness); provided that:




	 	(i)	 	the amount of such Permitted Refinancing Indebtedness does not
exceed the amount of the Indebtedness so Refinanced (plus all accrued and
unpaid interest thereon and the amount of any reasonably determined premium
necessary to accomplish such refinancing and such reasonable expenses incurred
in connection therewith);
	 
	 	(ii)	 	such Permitted Refinancing Indebtedness has a final maturity
date later than the final maturity date of, and has a Weighted Average Life to
Maturity equal to or greater than the Weighted Average Life to Maturity of, the
Indebtedness being Refinanced;
	 
	 	(iii)	 	if the Indebtedness being Refinanced is subordinated in right
of payment to the Notes or the Subsidiary Guarantees, such Permitted
Refinancing Indebtedness has a final maturity date later than the final
maturity date of the Notes and is subordinated in right of payment to the Notes
or the Subsidiary Guarantees, as applicable, on terms at least as favorable,
taken as a whole, to the Holders of Notes as those contained in the
documentation governing the Indebtedness being Refinanced; and
	 
	 	(iv)	 	such Indebtedness is Incurred by either (a) the Restricted
Subsidiary that is the obligor on the Indebtedness being Refinanced or (b) the
Company.





          “Person” means any individual, corporation, partnership, joint venture, association,
joint-stock company, trust, unincorporated organization, limited liability company or government or
other entity.



          “Preferred Stock” means, with respect to any Person, any Capital Stock of such Person that has
preferential rights to any other Capital Stock of such Person with respect to dividends or
redemptions upon liquidation.



          “Private Placement Legend” means the legend set forth in Section 2.07(g)(i) to be placed on
all Notes issued under this Indenture except where otherwise permitted by the provisions of this
Indenture.




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




          “Registration Rights Agreement” means (1) with respect to the Notes issued on the Issue Date,
the Registration Rights Agreement, to be dated the Issue Date, among the Company, the Initial
Guarantors, RBC Capital Markets Corporation and Morgan Keegan & Company, Inc. and (2) with respect
to any Additional Notes, any registration rights agreement between the Company and the other
parties thereto relating to the registration by the Company of such Additional Notes under the
Securities Act.




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




          “Regulation S Global Note” means a Global Note in the form of Exhibit A bearing the
Global Note Legend and the Private Placement Legend and deposited with or on behalf of and
registered in the name of the Depositary or its nominee, issued in a denomination equal to the
outstanding principal amount at maturity of the Notes initially sold in reliance on Rule 903 of
Regulation S.




          “Replacement Assets” means (1) non-current assets that will be used or useful in a Permitted
Business or (2) substantially all the assets of a Permitted Business or a majority of the Voting
Stock of any Person engaged in a Permitted Business that will become on the date of acquisition
thereof a Restricted Subsidiary.




          “Responsible Officer”, when used with respect to the Trustee, means any officer within the
Corporate Trust Office of the Trustee (or any successor group of the Trustee) or any other officer
of the Trustee customarily performing functions similar to those performed by any of the above
designated officers and also means, with respect to a particular corporate trust matter, any other
officer to whom such matter is referred because of his knowledge of and familiarity with the
particular subject.




          “Restricted Definitive Note” 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” of a Person means any Subsidiary of such Person that is not an
Unrestricted Subsidiary.




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




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




24









 








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




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




          “SEC” means the United States Securities and Exchange Commission.




          “Securities Act” means the Securities Act of 1933, as amended.




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




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




          “Stated Maturity” means, with respect to any installment of interest or principal on any
series of Indebtedness, the date on which such payment of interest or principal was scheduled to be
paid in the original documentation governing such Indebtedness, and will not include any contingent
obligations to repay, redeem or repurchase any such interest or principal prior to the date
originally scheduled for the payment thereof.




          “Subordinated Indebtedness” means Indebtedness of the Company or a Guarantor that is
contractually subordinated in right of payment, in any respect (by its terms or the terms of any
document or instrument relating thereto), to the Notes or the Subsidiary Guarantee of such
Guarantor, as applicable.




          “Subsidiary” means, with respect to any specified Person:





	 	(i)	 	any corporation, association or other business entity of which
more than 50% of the total voting power of shares of Capital Stock entitled
(without regard to the occurrence of any contingency) to vote in the election
of directors, managers or trustees thereof is at the time owned or controlled,
directly or indirectly, by such Person or one or more of the other Subsidiaries
of that Person (or a combination thereof); and
	 
	 	(ii)	 	any partnership (a) the sole general partner or the managing
general partner of which is such Person or a Subsidiary of such Person or (b)
the only general partners of which are such Person or one or more Subsidiaries
of such Person (or any combination thereof).





          “Subsidiary Guarantee” means a Guarantee of the Notes by a Subsidiary of the Company in
accordance with the provisions of this Indenture.




          “TIA” means the Trust Indenture Act of 1939, as in effect on the date on which this Indenture
is qualified under the TIA.




25









 








          “Trustee” means Wells Fargo Bank, N.A., a nationally chartered banking association, until a
successor replaces it in accordance with the applicable provisions of this Indenture and thereafter
means the successor serving hereunder.




          “Unrestricted Definitive Note” means a Definitive Note that does not bear and is not required
to bear the Private Placement Legend.




          “Unrestricted Global Note” means a Global Note substantially in the form of Exhibit A
that bears the Global Note Legend, that has the “Schedule of Exchanges of Interests in the Global
Note” attached thereto, that is deposited with or on behalf of and registered in the name of the
Depositary, representing a series of Notes, and that does not bear and is not required to bear the
Private Placement Legend.




          “Unrestricted Subsidiary” means any Subsidiary of the Company that is designated by the Board
of Directors of the Company as an Unrestricted Subsidiary pursuant to a Board Resolution in
compliance with Section 4.14, and any Subsidiary of such Subsidiary.




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




          “Voting Stock” of any Person as of any date means the Capital Stock of such Person that is
ordinarily entitled to vote in the election of the Board of Directors of such Person.




          “Weighted Average Life to Maturity” means, when applied to any Indebtedness at any date, the
number of years obtained by dividing:





	 	(i)	 	the sum of the products obtained by multiplying (a) the amount
of each then remaining installment, sinking fund, serial maturity or other
required payments of principal, including payment at final maturity, in respect
thereof, by (b) the number of years (calculated to the nearest one-twelfth)
that will elapse between such date and the making of such payment; by
	 
	 	(ii)	 	the then outstanding principal amount of such Indebtedness.




26









 











Section 1.02. Other Definitions.




	 	 	 	 	 
	 	 	Defined in	 
	Term	 	Section	 
	“Act”
	 	 	12.14	 
	“Affiliate Transaction”
	 	 	4.11	 
	“Asset Sale Offer”
	 	 	4.10	 
	“Authentication Order”
	 	 	2.02	 
	“Change of Control Offer”
	 	 	4.13	 
	“Change of Control Payment”
	 	 	4.13	 
	“Change of Control Payment Date”
	 	 	4.13	 
	“Covenant Defeasance”
	 	 	8.03	 
	“DTC”
	 	 	2.01	 
	“Event of Default”
	 	 	6.01	 
	“Excess Proceeds”
	 	 	4.10	 
	“Legal Defeasance”
	 	 	8.02	 
	“Make-Whole Amount”
	 	 	3.07	 
	“Make-Whole Average Life”
	 	 	3.07	 
	“Make-Whole Price”
	 	 	3.07	 
	“Offer Amount”
	 	 	3.08	 
	“Offer Period”
	 	 	3.08	 
	“offshore transaction”
	 	 	2.07	 
	“Paying Agent”
	 	 	2.04	 
	“Payment Default”
	 	 	6.01	 
	“Permitted Debt”
	 	 	4.09	 
	“Purchase Date”
	 	 	3.08	 
	“Registrar”
	 	 	2.04	 
	“Related Proceedings”
	 	 	12.09	 
	“Repurchase Offer”
	 	 	3.08	 
	“Restricted Payments”
	 	 	4.07	 
	“Specified Courts”
	 	 	12.09	 
	“Treasury Rate”
	 	 	3.07	 






Section 1.03. Incorporation by Reference of Trust Indenture Act.




          Whenever this Indenture refers to a provision of the TIA, the provision is incorporated by
reference in and made a part of this Indenture.




          The following TIA terms used in this Indenture have the following meanings:




          “indenture securities” means the Notes and the Guarantees;




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




          “indenture to be qualified” means this Indenture;




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




27









 









     “obligor” on the Notes means the Company, the Guarantors and any successor obligor upon
the Notes or the Guarantees.



          All other terms used in this Indenture that are defined by the TIA, defined by TIA reference
to another statute or defined by SEC rule under the TIA have the meanings so assigned to them.




Section 1.04. Rules of Construction.




          Unless the context otherwise requires:





	 	(a)	 	a term has the meaning assigned to it;
	 
	 	(b)	 	an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
	 
	 	(c)	 	“or” is not exclusive;
	 
	 	(d)	 	words in the singular include the plural, and in the plural
include the singular;
	 
	 	(e)	 	“herein”, “hereof” and other word of similar import refer to
this Indenture as a whole and not to any particular Section, Article or other
subdivision;
	 
	 	(f)	 	all references to Sections or Articles or Exhibits refer to
Sections or Articles or Exhibits of or to this Indenture unless otherwise
indicated;
	 
	 	(g)	 	references to sections of or rules under the Securities Act
shall be deemed to include substitute, replacement of successor sections or
rules adopted by the SEC from time to time; and
	 
	 	(h)	 	whenever in this Indenture or the Notes it is provided that the
principal amount with respect to a Note shall be paid, such provision shall be
deemed to require (whether or not so expressly stated) the simultaneous payment
of any accrued and unpaid interest to the date of payment on such Note.





ARTICLE TWO

THE NOTES




Section 2.01. Form and Dating.




          (a) General. The Notes and the Trustee’s certificate of authentication shall be substantially
in the form of Exhibit A. The Notes may have notations, legends or endorsements required
by law, stock exchange rule or usage. Each Note shall be dated the date of its
authentication. The Notes shall be issued in registered form without interest coupons in
minimum denominations of $2,000 and integral multiples of $1,000 in excess thereof.




28









 








          The terms and provisions contained in the Notes shall constitute, and are hereby expressly
made, a part of this Indenture, and the Company, the Guarantors and the Trustee, by their execution
and delivery of this Indenture, expressly agree to such terms and provisions and to be bound
thereby. However, to the extent any provision of any Note conflicts with the express provisions of
this Indenture, the provisions of this Indenture shall govern and be controlling.




          (b) Global Notes. Notes issued in global form shall be substantially in the form of
Exhibit A (and shall include the Global Note Legend thereon and the “Schedule of Exchanges
of Interests in the Global Note” attached thereto). Notes issued in definitive form shall be
substantially in the form of Exhibit A (but without the Global Note Legend thereon and
without the “Schedule of Exchanges of Interests in the Global Note” attached thereto). Each Global
Note shall represent such amount of the outstanding Notes as shall be specified therein and each
shall provide that it represents the aggregate principal amount of outstanding Notes from time to
time endorsed thereon and that the aggregate principal amount of outstanding Notes represented
thereby may from time to time be reduced or increased, as appropriate, to reflect exchanges and
redemptions. Any endorsement of a Global Note to reflect the amount of any increase or decrease in
the aggregate principal amount of outstanding Notes represented thereby shall be made by the
Trustee or, if the Custodian and the Trustee are not the same Person, by the Custodian at the
direction of the Trustee, in accordance with instructions given by the Holder thereof as required
by Section 2.07 hereof.




          (c) Regulation S Global Notes. Notes offered and sold in reliance on Regulation S shall be
issued initially in the form of the Regulation S Global Note, which shall be deposited on behalf of
the purchasers of the Notes represented thereby with the Trustee, as custodian for The Depository
Trust Company (“DTC”) in New York, New York, and registered in the name of the Depositary or the
nominee of the Depositary for the accounts of designated agents holding on behalf of Euroclear or
Clearstream, duly executed by the Company and authenticated by the Trustee as hereinafter provided.
The aggregate principal amount of the Regulation S Global Notes may from time to time be increased
or decreased by adjustments made on the records of the Trustee and the Depositary or its nominee,
as the case may be, in connection with transfers of interest as hereinafter provided.




          (d) Euroclear and Clearstream Procedures Applicable. The provisions of the “Operating
Procedures of the Euroclear System” and “Terms and Conditions Governing Use of Euroclear” and the
“General Terms and Conditions of Clearstream Banking” and “Customer Handbook” of Clearstream shall
be applicable to transfers of beneficial interests in the Regulation S Global Notes that are held
by Participants through Euroclear or Clearstream.




Section 2.02. Execution and Authentication.




          At least one Officer of the Company shall sign the Notes for the Company by manual or
facsimile signature.




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




29









 








          A Note shall not be valid until authenticated by the manual signature of the Trustee. Such
signature shall be conclusive evidence that the Note has been authenticated under this Indenture.




          The aggregate principal amount of Notes that may be authenticated and delivered under this
Indenture is unlimited.




          The Company may, subject to Article Four of this Indenture and applicable law, issue
Additional Notes under this Indenture, including Exchange Notes. The Notes issued on the Issue
Date and any Additional Notes subsequently issued shall be treated as a single class for all
purposes under this Indenture.




          At any time and from time to time after the execution of this Indenture, the Trustee shall,
upon receipt of a written order of the Company signed by an Officer of the Company (an
“Authentication Order”), authenticate Notes for original issue in an aggregate principal amount
specified in such Authentication Order. The Authentication Order shall specify the amount of Notes
to be authenticated and the date on which the Notes are to be authenticated.




          The Trustee may appoint an authenticating agent acceptable to the Company, which acceptance
shall not be unreasonably withheld, to authenticate Notes. An authenticating agent may
authenticate Notes whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An authenticating agent has
the same rights as an Agent to deal with Holders or an Affiliate of the Company.




Section 2.03. Methods of Receiving Payments on the Notes.




          If a Holder has given wire transfer instructions to the Company, the Company shall pay all
principal, interest and premium and Liquidated Damages, if any, on that Holder’s Notes in
accordance with those instructions. All other payments on Notes shall be made at the office or
agency of the Paying Agent and Registrar within the City and State of New York unless the Company
elects to make interest payments by check mailed to the Holders at their addresses set forth in the
register of Holders.




Section 2.04. Registrar and Paying Agent.




          (a) The Company shall maintain a registrar with an office or agency where Notes may be
presented for registration of transfer or for exchange (“Registrar”) and a paying agent with an
office or agency where Notes may be presented for payment (“Paying Agent”). The Registrar shall
keep a register of the Notes and of their transfer and exchange. The Company may appoint one or
more co-registrars and one or more additional paying agents. The term “Registrar” includes any
co-registrar and the term “Paying Agent” includes any additional paying agent. The Company may change any Paying Agent or Registrar without prior notice to
any Holder. The Company shall promptly notify the Trustee in writing of the name and address of
any Agent who is not a party to this Indenture. If the Company fails to appoint or maintain
another entity as Registrar or Paying Agent, the Trustee shall act as such. The Company or any of
its Subsidiaries may act as Paying Agent or Registrar.




30









 








          (b) The Company initially appoints DTC to act as Depositary with respect to the Global Notes.




          (c) The Company initially appoints the Trustee to act as the Registrar and Paying Agent and to
act as Custodian with respect to the Global Notes.




Section 2.05. Paying Agent to Hold Money in Trust.




          The Company shall require each Paying Agent other than the Trustee to agree in writing that
the Paying Agent shall hold in trust for the benefit of Holders or the Trustee all money held by
the Paying Agent for the payment of principal, premium or Liquidated Damages, if any, or interest
on the Notes, and shall notify the Trustee of any default by the Company in making any such
payment. While any such default continues, the Trustee may require a Paying Agent to pay all money
held by it to the Trustee. The Company at any time may require a Paying Agent to pay all money
held by it to the Trustee. Upon payment over to the Trustee, the Paying Agent (if other than the
Company or one of its Subsidiaries) shall have no further liability for the money. If the Company
or one of its Subsidiaries acts as Paying Agent, it shall segregate and hold in a separate trust
fund for the benefit of the Holders all money held by it as Paying Agent. Upon any bankruptcy or
reorganization proceedings relating to the Company, the Trustee shall serve as Paying Agent for the
Notes.




Section 2.06. Holder Lists.




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




Section 2.07. Transfer and Exchange.




          (a) Transfer and Exchange of Global Notes. A Global Note may not be transferred as a whole
except by the Depositary to a nominee of the Depositary, by a nominee of the Depositary to the
Depositary or to another nominee of the Depositary, or by the Depositary
or any such nominee to a successor Depositary or a nominee of such successor Depositary. All
Global Notes shall be exchanged by the Company for Definitive Notes if (i) the Depositary notifies
the Company that it (A) is unwilling or unable to continue to act as Depositary for the Global
Notes or (B) has ceased to be a clearing agency registered under the Exchange Act and, in either
case, the Company fails to appoint a successor Depositary within 120 days after receiving such
notice; (ii) the Company, at its option, notifies the Trustee in writing that it elects to cause
the issuance of Definitive Notes in exchange for Global Notes (in whole but not in part); provided
that in no event shall the Regulation S Global Note be exchanged by the Company for Definitive
Notes other than in accordance with Section 2.07(c)(ii); or (iii) there shall have occurred and be
continuing a Default or Event of Default with respect to the Notes. Upon the occurrence of any of
the preceding events in (i), (ii) or (iii) above, Definitive Notes shall be

31









 








issued in such names as the Depositary shall instruct the Trustee. Global Notes also may be exchanged or replaced, in
whole or in part, as provided in Sections 2.08 and 2.11 hereof. Every Note authenticated and
delivered in exchange for, or in lieu of, a Global Note or any portion thereof, pursuant to this
Section 2.07 or Section 2.08 or 2.11 hereof, shall be authenticated and delivered in the form of,
and shall be, a Global Note. A Global Note may not be exchanged for another Note other than as
provided in this Section 2.07(a); however, beneficial interests in a Global Note may be transferred
and exchanged as provided in Section 2.07(b), (c) or (f) hereof.




          (b) Transfer and Exchange of Beneficial Interests in the Global Notes. The transfer and
exchange of beneficial interests in the Global Notes shall be effected through the Depositary, in
accordance with the provisions of this Indenture and the Applicable Procedures. Beneficial
interests in the Restricted Global Notes shall be subject to restrictions on transfer comparable to
those set forth herein to the extent required by the Securities Act. Transfers of beneficial
interests in the Global Notes also shall require compliance with either subparagraph (i) or (ii)
below, as applicable, as well as one or more of the other following subparagraphs, as applicable:





     (i) Transfer of Beneficial Interests in the Same Global Note. Beneficial interests in
any Restricted Global Note may be transferred to Persons who take delivery thereof in the
form of a beneficial interest in the same Restricted Global Note in accordance with the
transfer 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 Global Note may not be made to a U.S. Person or for the account or benefit of a
U.S. Person (other than an Initial Purchaser). Beneficial interests in any Unrestricted
Global Note may be transferred to Persons who take delivery thereof in the form of a
beneficial interest in an Unrestricted Global Note. No written orders or instructions shall
be required to be delivered to the Registrar to effect the transfers described in this
Section 2.07(b)(i).




     (ii) All Other Transfers and Exchanges of Beneficial Interests in Global Notes. In
connection with all transfers and exchanges of beneficial interests that are not subject to
Section 2.07(b)(i), the transferor of such beneficial interest must deliver to the Registrar
either (A) both (1) a written order from a Participant or an Indirect Participant given to
the Depositary in accordance with the Applicable Procedures directing the Depositary to
credit or cause to be credited a beneficial interest in another Global Note in an amount
equal to the beneficial interest to be transferred or exchanged and (2)
instructions given in accordance with the Applicable Procedures containing information
regarding the Participant account to be credited with such increase or (B) both (1) a
written order from a Participant or an Indirect Participant given to the Depositary in
accordance with the Applicable Procedures directing the Depositary to cause to be issued a
Definitive Note in an amount equal to the beneficial interest to be transferred or exchanged
and (2) instructions given by the Depositary to the Registrar containing information
regarding the Person in whose name such Definitive Note shall be registered to effect the
transfer or exchange referred to in (1) above; provided that in no event shall Definitive
Notes be issued upon the transfer or exchange of beneficial interests in the Regulation S
Global Note other than in accordance with Section 2.07(c)(ii). Upon consummation of an
Exchange Offer by the Company in accordance with Section 2.07(f),



32









 







the requirements of this
Section 2.07(b)(ii) shall be deemed to have been satisfied upon receipt by the Registrar of
the instructions contained in the Letter of Transmittal delivered by the holder of such
beneficial interests in the Restricted Global Notes. Upon satisfaction of all of the
requirements for transfer or exchange of beneficial interests in Global Notes contained in
this Indenture and the Notes or otherwise applicable under the Securities Act, the Trustee
shall adjust the principal amount at maturity of the relevant Global Notes pursuant to
Section 2.07(h).




     (iii) Transfer of Beneficial Interests to Another Restricted Global Note. A beneficial
interest in any Restricted Global Note may be transferred to a Person who takes delivery
thereof in the form of a beneficial interest in another Restricted Global Note if the
transfer complies with the requirements of Section 2.07(b)(ii) and the Registrar receives
the following:




     (A) if the transferee shall take delivery in the form of a beneficial interest
in the 144A Global Note, then the transferor must deliver a certificate in the form
of Exhibit B, including the certifications in item (1) thereof; and




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




     (iv) Transfer and Exchange of Beneficial Interests in a Restricted Global Note for
Beneficial Interests in an Unrestricted Global Note. A beneficial interest in any
Restricted Global Note may be exchanged by any holder thereof for a beneficial interest in
an Unrestricted Global Note or transferred to a Person who takes delivery thereof in the
form of a beneficial interest in an Unrestricted Global Note if the exchange or transfer
complies with the requirements of Section 2.07(b)(ii) and:




     (A) such exchange or transfer is effected pursuant to the Exchange Offer in
accordance with the Registration Rights Agreement and the holder of the beneficial
interest to be transferred, in the case of an exchange, or the transferee, in the
case of a transfer, certifies in the applicable Letter of Transmittal (1) it is not
an affiliate (as defined in Rule 144) of the Company, (2) it is not a Broker-Dealer
and is not engaged in, and does not intend to engage in, and has no arrangement or
understanding with any Person to participate in, a distribution of the Exchange Notes to be issued in the Exchange Offer and (3) it is acquiring
the Exchange Notes in its ordinary course of business;




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




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




33










 







     (D) the Registrar receives the following:




     (1) if the holder of such beneficial interest in a Restricted Global
Note proposes to exchange such beneficial interest for a beneficial interest
in an Unrestricted Global Note, a certificate from such holder in the form
of Exhibit C, including the certifications in item (1)(a) thereof;
or




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




and, in each such case set forth in this subparagraph (D), if the Registrar or the
Company so requests or if the Applicable Procedures so require, an Opinion of
Counsel in form reasonably acceptable to the Registrar and the Company to the effect
that such exchange or transfer is in compliance with the Securities Act and that the
restrictions on transfer contained herein and in the Private Placement Legend are no
longer required in order to maintain compliance with the Securities Act.



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




          Beneficial interests in an Unrestricted Global Note cannot be exchanged for, or transferred to
Persons who take delivery thereof in the form of, a beneficial interest in a Restricted Global
Note.




          (c) Transfer or Exchange of Beneficial Interests for Definitive Notes.




          (i) Beneficial Interests in Restricted Global Notes to Restricted Definitive Notes. If
any holder of a beneficial interest in a Restricted Global Note proposes to exchange such
beneficial interest for a Restricted Definitive Note or to transfer such beneficial interest
to a Person who takes delivery thereof in the form of a Restricted Definitive Note, then,
upon receipt by the Registrar of the following documentation:





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




     (B) if such beneficial interest is being transferred to a QIB in accordance
with Rule 144A under the Securities Act, a certificate to the effect set forth in
Exhibit B, including the certifications in item (1) thereof;



34









 






     (C) if such beneficial interest is being transferred to a Non-U.S. Person in an
offshore transaction in accordance with Rule 903 or Rule 904, a certificate to the
effect set forth in Exhibit B, including the certifications in item (2)
thereof;




     (D) if such beneficial interest is being transferred pursuant to an exemption
from the registration requirements of the Securities Act in accordance with Rule
144, a certificate to the effect set forth in Exhibit B, including the
certifications in item (3)(a) thereof;




     (E) if such beneficial interest is being transferred to an Institutional
Accredited Investor in reliance on an exemption from the registration requirements
of the Securities Act other than those listed in subparagraphs (B) through (D)
above, a certificate to the effect set forth in Exhibit B, including the
certifications, certificates and Opinion of Counsel required by item (3) thereof, if
applicable; or




     (F) if such beneficial interest is being transferred to the Company or any of
its Subsidiaries, a certificate to the effect set forth in Exhibit B,
including the certifications in item (3)(a) thereof,


the Trustee shall cause the aggregate principal amount of the applicable Global Note to be
reduced accordingly pursuant to Section 2.07(h) hereof, and the Company shall execute and
the Trustee shall authenticate and deliver to the Person designated in the instructions a
Definitive Note in the appropriate principal amount. Any Definitive Note issued in exchange
for a beneficial interest in a Restricted Global Note pursuant to this Section 2.07(c) shall
be registered in such name or names and in such authorized denomination or denominations as
the holder of such beneficial interest shall instruct the Registrar through instructions
from the Depositary and the Participant or Indirect Participant. The Trustee shall deliver
such Definitive Notes to the Persons in whose names such Notes are so registered. Any
Definitive Note issued in exchange for a beneficial interest in a Restricted Global Note
pursuant to this Section 2.07(c)(i) shall bear the Private Placement Legend and shall be
subject to all restrictions on transfer contained therein.




     (ii) Beneficial Interests in Regulation S Global Note to Definitive Notes.
Notwithstanding Sections 2.07(c)(i)(A) and (C), a beneficial interest in the Regulation S
Global Note may not be exchanged for a Definitive Note or transferred to a Person who takes
delivery thereof in the form of a Definitive Note unless (x) if such exchange or transfer is
made prior to the expiration of the Restricted Period, such Definitive Note will not be
issued to, or for the account or benefit of, any U.S. Person, (y) such exchange or transfer
is made after the expiration of the Restricted Period or (z) in the case of a transfer, such
transfer is made pursuant to an exemption from the registration requirements of the
Securities Act other than Rule 903 or Rule 904.



     (iii) Beneficial Interests in Restricted Global Notes to Unrestricted Definitive Notes.
A holder of a beneficial interest in a Restricted Global Note may exchange such beneficial



35









 







interest for an Unrestricted Definitive Note or may transfer such beneficial interest to a
Person who takes delivery thereof in the form of an Unrestricted Definitive Note only if:




     (A) such exchange or transfer is effected pursuant to the Exchange Offer in
accordance with the Registration Rights Agreement and the holder of such beneficial
interest, in the case of an exchange, or the transferee, in the case of a transfer,
certifies in the applicable Letter of Transmittal that (1) it is not an affiliate
(as defined in Rule 144) of the Company, (2) it is not a Broker-Dealer and is not
engaged in, and does not intend to engage in, and has no arrangement or
understanding with any Person to participate in, a distribution of the Exchange
Notes to be issued in the Exchange Offer and (3) it is acquiring the Exchange Notes
in its ordinary course of business;




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




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




     (D) the Registrar receives the following:




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




     (2) if the holder of such beneficial interest in a Restricted Global
Note proposes to transfer such beneficial interest to a Person who shall
take delivery thereof in the form of an Unrestricted Definitive Note, a
certificate from such holder in the form of Exhibit B, including the
certifications in item (4) thereof;




and, in each such case set forth in this subparagraph (D), if the Registrar or the
Company so requests or if the Applicable Procedures so require, an opinion of
counsel in form reasonably acceptable to the Registrar and the Company to the effect
that such exchange or transfer is in compliance with the Securities Act and that the
restrictions on transfer contained herein and in the Private Placement Legend are no
longer required in order to maintain compliance with the Securities Act.



     (iv) Beneficial Interests in Unrestricted Global Notes to Unrestricted Definitive
Notes. If any holder of a beneficial interest in an Unrestricted Global Note proposes to
exchange such beneficial interest for a Definitive Note or to transfer such beneficial
interest to a Person who takes delivery thereof in the form of a Definitive Note,
then, upon satisfaction of the conditions set forth in Section 2.07(b)(ii), the Trustee
shall cause the aggregate principal amount of the applicable Global Note to be reduced
accordingly pursuant to Section 2.07(h), and the Company shall execute and the Trustee



36









 







shall authenticate and deliver to the Person designated in the instructions a Definitive Note in
the appropriate principal amount. Any Definitive Note issued in exchange for a beneficial
interest pursuant to this Section 2.07(c)(iv) shall be registered in such name or names and
in such authorized denomination or denominations as the holder of such beneficial interest
shall instruct the Registrar through instructions from or through the Depositary and the
Participant or Indirect Participant. The Trustee shall deliver such Definitive Notes to the
Persons in whose names such Notes are so registered. Any Definitive Note issued in exchange
for a beneficial interest pursuant to this Section 2.07(c)(iv) shall not bear the Private
Placement Legend.




     (d) Transfer and Exchange of Definitive Notes for Beneficial Interests.




     (i) Restricted Definitive Notes to Beneficial Interests in Restricted Global Notes. If
any Holder of a Restricted Definitive Note proposes to exchange such Note for a beneficial
interest in a Restricted Global Note or to transfer such Restricted Definitive Notes to a
Person who takes delivery thereof in the form of a beneficial interest in a Restricted
Global Note, then, upon receipt by the Registrar of the following documentation:




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




     (B) if such Restricted Definitive Note is being transferred to a QIB in
accordance with Rule 144A, a certificate to the effect set forth in Exhibit
B, 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, a
certificate to the effect set forth in Exhibit B, including the
certifications in item (2) thereof; or




     (D) if such Restricted Definitive Note is being transferred to the Company or
any of its Subsidiaries, a certificate to the effect set forth in Exhibit B,
including the certifications in item (3)(a) thereof,


the Trustee shall cancel the Restricted Definitive Note, and increase or cause to be
increased the aggregate principal amount of, in the case of clause (A) above, the
appropriate Restricted Global Note, in the case of clause (B) above, the 144A Global Note,
and in the case of clause (C) above, the Regulation S Global Note.




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



37









 






     (A) such exchange or transfer is effected pursuant to the Exchange Offer in
accordance with the Registration Rights Agreement and the Holder, in the case of an
exchange, or the transferee, in the case of a transfer, certifies in the applicable
Letter of Transmittal (1) it is not an affiliate (as defined in Rule 144) of the
Company, (2) it is not a Broker-Dealer and is not engaged in, and does not intend to
engage in, and has no arrangement or understanding with any Person to participate
in, a distribution of the Exchange Notes to be issued in the Exchange Offer and (3)
it is acquiring the Exchange Notes in its ordinary course of business;




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




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




     (D) the Registrar receives the following:




     (1) if the Holder of such Restricted Definitive Note proposes to
exchange such Note for a beneficial interest in the Unrestricted Global
Note, a certificate from such Holder in the form of Exhibit C,
including the certifications in item (1)(c) thereof; or




     (2) if the Holder of such Restricted Definitive Note proposes to
transfer such Note to a Person who shall take delivery thereof in the form
of a beneficial interest in the Unrestricted Global Note, a certificate from
such Holder in the form of Exhibit B, including the certifications
in item (4) thereof;




and, in each such case set forth in this subparagraph (D), if the Registrar or the
Company so requests or if the Applicable Procedures so require, an Opinion of
Counsel in form reasonably acceptable to the Registrar and the Company to the effect
that such exchange or transfer is in compliance with the Securities Act and that the
restrictions on transfer contained herein and in the Private Placement Legend are no
longer required in order to maintain compliance with the Securities Act.



     Upon satisfaction of the conditions of any of the subparagraphs in this Section
2.07(d)(ii), the Trustee shall cancel the Definitive Notes and increase or cause to be
increased the aggregate principal amount of the Unrestricted Global Note.



     (iii) Unrestricted Definitive Notes to Beneficial Interests in Unrestricted Global
Notes. A Holder of an Unrestricted Definitive Note may exchange such Note for a beneficial
interest in an Unrestricted Global Note or transfer such Unrestricted Definitive Note to a
Person who takes delivery thereof in the form of a beneficial interest in an Unrestricted Global Note at any time. Upon receipt of a request for such an
exchange or transfer, the Trustee shall cancel the applicable Unrestricted Definitive Note



38









 







and increase or cause to be increased the aggregate principal amount of one of the
Unrestricted Global Notes.



          If any such exchange or transfer from a Definitive Note to a beneficial interest is effected
pursuant to subparagraphs (ii)(B), (ii)(D) or (iii) above at a time when an Unrestricted Global
Note has not yet been issued, the Company shall issue and, upon receipt of an Authentication Order
in accordance with Section 2.02 hereof, the Trustee shall authenticate one or more Unrestricted
Global Notes in an aggregate principal amount equal to the principal amount of Definitive Notes so
transferred.




          (e) Transfer and Exchange of Definitive Notes for Definitive Notes. Upon request by a Holder
of Definitive Notes and such Holder’s compliance with the provisions of this Section 2.07(e), the
Registrar shall register the transfer or exchange of Definitive Notes. Prior to such registration
of transfer or exchange, the requesting Holder shall present or surrender to the Registrar the
Definitive Notes duly endorsed or accompanied by a written instruction of transfer in form
satisfactory to the Registrar duly executed by such Holder or by its attorney, duly authorized in
writing. In addition, the requesting Holder shall provide any additional certifications, documents
and information, as applicable, required pursuant to the following provisions of this Section
2.07(e).





     (i) Restricted Definitive Notes to Restricted Definitive Notes. Any Restricted
Definitive Note may be transferred to and registered in the name of Persons who take
delivery thereof in the form of a Restricted Definitive Note if the Registrar receives the
following:




     (A) if the transfer shall be made pursuant to Rule 144A under the Securities
Act, then the transferor must deliver a certificate in the form of Exhibit
B, including the certifications in item (1) thereof;




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




     (C) if the transfer shall be made pursuant to any other exemption from the
registration requirements of the Securities Act, then the transferor must deliver a
certificate in the form of Exhibit B, including the certifications,
certificates and Opinion of Counsel required by item (3) thereof, if applicable.




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




     (A) such exchange or transfer is effected pursuant to the Exchange Offer in
accordance with the Registration Rights Agreement and the Holder, in the case of an
exchange, or the transferee, in the case of a transfer, certifies in the
applicable Letter of Transmittal that (1) it is not an affiliate (as defined in
Rule 144) of the Company, (2) it is not a Broker-Dealer and is not engaged in, and
does



39









 







not intend to engage in, and has no arrangement or understanding with any
Person to participate in, a distribution of the Exchange Notes to be issued in the
Exchange Offer and (3) it is acquiring the Exchange Notes in its ordinary course of
business;




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




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




     (D) the Registrar receives the following:




     (1) if the Holder of such Restricted Definitive Note proposes to
exchange such Note for an Unrestricted Definitive Note, a certificate from
such Holder in the form of Exhibit C, including the certifications
in item (1)(d) thereof; or




     (2) if the Holder of such Restricted Definitive Note proposes to
transfer such Note to a Person who shall take delivery thereof in the form
of an Unrestricted Definitive Note, a certificate from such Holder in the
form of Exhibit B, including the certifications in item (4) thereof;




and, in each such case set forth in this subparagraph (D), if the Registrar so
requests, an Opinion of Counsel in form reasonably acceptable to the Registrar to
the effect that such exchange or transfer is in compliance with the Securities Act
and that the restrictions on transfer contained herein and in the Private Placement
Legend are no longer required in order to maintain compliance with the Securities
Act.




     (iii) Unrestricted Definitive Notes to Unrestricted Definitive Notes. A Holder of
Unrestricted Definitive Notes may transfer such Notes to a Person who takes delivery thereof
in the form of an Unrestricted Definitive Note. Upon receipt of a request to register such
a transfer, the Registrar shall register the Unrestricted Definitive Notes pursuant to the
instructions from the Holder thereof.



          (f) Exchange Offer. Upon the occurrence of the Exchange Offer in accordance with the
Registration Rights Agreement, the Company shall issue and, upon receipt of an Authentication Order
in accordance with Section 2.02, the Trustee shall authenticate (i) one or more Unrestricted Global
Notes in an aggregate principal amount equal to the principal amount of the beneficial interests in
the Restricted Global Notes tendered for acceptance by Persons that certify in the applicable
Letters of Transmittal that (x) they are not affiliates (as defined in Rule 144) of the Company,
(y) they are not Broker-Dealers and are not engaged in, and do not intend to engage in, and have no
arrangement or understanding with any Person to participate in, a distribution of the Exchange
Notes to be issued in the Exchange Offer and (z) they are acquiring the Exchange Notes in their ordinary course of business and (ii) Unrestricted Definitive Notes
in an aggregate principal amount equal to the principal amount of the Restricted Definitive Notes

40









 






accepted for exchange in the Exchange Offer by Persons who made the foregoing certifications.
Concurrently with the issuance of such Notes, the Trustee shall cause the aggregate principal
amount of the applicable Restricted Global Notes to be reduced accordingly, and the Company shall
execute and the Trustee shall authenticate and deliver to the Persons designated by the Holders of
Restricted Definitive Notes so accepted Unrestricted Definitive Notes in the appropriate principal
amount.




          (g) Legends. The following legends shall appear on the face of all Global Notes and
Definitive Notes issued under this Indenture unless specifically stated otherwise in the applicable
provisions of this Indenture.





     (i) Private Placement Legend. (1) Except as permitted in clause (2) below, each Global
Note and each Definitive Note (and all Notes issued in exchange therefor or substitution
thereof) shall bear the legend in substantially the following form:




THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS
AMENDED (THE “SECURITIES ACT”), OR ANY STATE OR OTHER SECURITIES LAWS. NEITHER THIS
SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED,
TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH
REGISTRATION OR UNLESS THE TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THE HOLDER OF THIS SECURITY BY ITS
ACCEPTANCE HEREOF (1) REPRESENTS THAT (A) IT IS A “QUALIFIED INSTITUTIONAL BUYER”
(AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR (B) IT IS NOT A U.S. PERSON
AND IS ACQUIRING THIS SECURITY IN AN “OFFSHORE TRANSACTION” PURSUANT TO RULE 903 OR
RULE 904 OF REGULATION S, (2) AGREES THAT IT WILL NOT, PRIOR TO THE DATE THAT IS TWO
YEARS AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF (OR OF ANY PREDECESSOR OF
THIS SECURITY) AND THE LAST DATE ON WHICH ALLIS-CHALMERS ENERGY INC. (THE “COMPANY”)
OR ANY AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS SECURITY OR ANY PREDECESSOR OF
THIS SECURITY, OFFER, SELL OR OTHERWISE TRANSFER THIS SECURITY EXCEPT (A) TO THE
COMPANY OR ANY OF ITS SUBSIDIARIES, (B) PURSUANT TO A REGISTRATION STATEMENT THAT
HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE
SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A PERSON IT REASONABLY
BELIEVES IS A “QUALIFIED INSTITUTIONAL BUYER” AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED
INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN
RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS THAT OCCUR OUTSIDE THE UNITED
STATES WITHIN THE MEANING OF



41









 







REGULATION S OR (E) PURSUANT TO ANOTHER AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND (3) AGREES
THAT IT WILL GIVE TO EACH PERSON TO WHOM THIS SECURITY IS TRANSFERRED A NOTICE
SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND; PROVIDED THAT THE COMPANY AND THE
TRUSTEE SHALL HAVE THE RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER (I) PURSUANT
TO CLAUSE (E) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR
OTHER INFORMATION SATISFACTORY TO EACH OF THEM AND (II) IN EACH OF THE FOREGOING
CASES, TO REQUIRE THAT A CERTIFICATION OF TRANSFER IN THE FORM APPEARING IN THE
INDENTURE IS COMPLETED AND DELIVERED BY THE TRANSFER TO THE TRUSTEE.




     (2) Notwithstanding the foregoing, any Global Note or Definitive Note issued pursuant
to subparagraph (b)(iv), (c)(iii), (c)(iv), (d)(ii), (d)(iii), (e)(ii), (e)(iii) or (f) to
this Section 2.07 (and all Notes issued in exchange therefor or substitution thereof) shall
not bear the Private Placement Legend.




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




THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE GOVERNING
THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL OWNERS
HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT
(I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO
SECTION 2.07 OF THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE EXCHANGED IN WHOLE BUT
NOT IN PART PURSUANT TO SECTION 2.07(a) OF THE INDENTURE, (III) THIS GLOBAL NOTE MAY
BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO SECTION 2.12 OF THE
INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY
WITH THE PRIOR WRITTEN CONSENT OF THE COMPANY.




UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN DEFINITIVE FORM,
THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF
THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER
NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR
DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. UNLESS THIS CERTIFICATE IS
PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER
STREET, NEW YORK, NEW YORK) (“DTC”), TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT,



42









 







AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME
OF CEDE & CO. OR SUCH OTHER NAME AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE
OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR SUCH OTHER ENTITY AS MAY BE
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.



          (h) Cancellation and/or Adjustment of Global Notes. At such time as all beneficial interests
in a particular Global Note have been exchanged for Definitive Notes or a particular Global Note
has been redeemed, repurchased or canceled in whole and not in part, each such Global Note shall be
returned to or retained and canceled by the Trustee in accordance with Section 2.12 hereof. At any
time prior to such cancellation, if any beneficial interest in a Global Note is exchanged for or
transferred to a Person who shall take delivery thereof in the form of a beneficial interest in
another Global Note or for Definitive Notes, the principal amount of Notes represented by such
Global Note shall be reduced accordingly and an endorsement shall be made on such Global Note by
the Trustee or by the Depositary at the direction of the Trustee to reflect such reduction; and if
the beneficial interest is being exchanged for or transferred to a Person who shall take delivery
thereof in the form of a beneficial interest in another Global Note, such other Global Note shall
be increased accordingly and an endorsement shall be made on such Global Note by the Trustee or by
the Depositary at the direction of the Trustee to reflect such increase.





     (i) General Provisions Relating to Transfers and Exchanges.




     (i) To permit registrations of transfers and exchanges, the Company shall execute and
the Trustee shall authenticate Global Notes and Definitive Notes upon the receipt of an
Authentication Order in accordance 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 in a Global
Note or to a Holder of a Definitive Note for any registration of transfer or exchange, but
the Company may require payment of a sum sufficient to cover any transfer tax or similar
governmental charge payable in connection therewith (other than any such transfer taxes or
similar governmental charge payable upon exchange or transfer pursuant to Sections 2.11,
3.06, 3.08, 4.10, 4.13 and 9.05).




     (iii) The Registrar shall not be required to register the transfer of or to exchange
any Note selected for redemption in whole or in part, except the unredeemed portion of any
Note being redeemed in part.




     (iv)
All Global Notes and Definitive Notes issued upon any registration of transfer or exchange of
Global Notes or Definitive Notes shall be the valid and legally
binding obligations of the Company, evidencing the same debt, and entitled to the same




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benefits under this Indenture, as the Global Notes or Definitive Notes surrendered upon such
registration of transfer or exchange.




          (v) Neither the Registrar nor the Company shall be required (A) to issue, to register
the transfer of or to exchange any Notes during a period beginning at the opening of
business 15 days before the day of any selection of Notes for redemption under Section 3.02
and ending at the close of business on the day of selection, (B) to register the transfer of
or to exchange any Note so selected for redemption in whole or in part, except the
unredeemed portion of any Note being redeemed in part, (C) to register the transfer of or to
exchange a Note between a record date and the next succeeding interest payment date or (D)
to register the transfer of or to exchange a Note tendered and not withdrawn in connection
with a Change of Control Offer or an Asset Sale Offer.




          (vi) Prior to due presentment for the registration of a transfer of any Note, the
Trustee, any Agent and the Company may deem and treat the Person in whose name any Note is
registered as the absolute owner of such Note for the purpose of receiving payment of
principal of and interest on such Notes and for all other purposes, and none of the Trustee,
any Agent or the Company shall be affected by notice to the contrary.




          (vii) The Trustee shall authenticate Global Notes and Definitive Notes in accordance
with the provisions of Section 2.02.




          (viii) All certifications, certificates and Opinions of Counsel required to be
submitted to the Registrar pursuant to this Section 2.07 to effect a registration of
transfer or exchange may be submitted by facsimile and may be transmitted electronically.




Section 2.08. Replacement Notes.




          (a) If any mutilated Note is surrendered to the Trustee or the Company and the Trustee
receives evidence to its satisfaction of the destruction, loss or theft of any Note, the Company
shall issue and the Trustee, upon receipt of an Authentication Order, shall authenticate a
replacement Note if the Trustee’s requirements are met. If required by the Trustee or the Company,
an indemnity bond must be supplied by the Holder that is sufficient in the judgment of the Trustee
and the Company to protect the Company, the Trustee, any Agent and any authenticating agent from
any loss that any of them may suffer if a Note is replaced. The Company may charge for its
expenses in replacing a Note.




          (b) Every replacement Note is an additional obligation of the Company and shall be entitled to
all of the benefits of this Indenture equally and proportionately with all other Notes duly issued
hereunder.




Section 2.09. Outstanding Notes.




          (a) The Notes outstanding at any time are all the Notes authenticated by the Trustee except
for those canceled by it, those delivered to it for cancellation, those reductions in the interest
in a Global Note effected by the Trustee in accordance with the provisions hereof, and those
described in this Section as not outstanding. Except as set forth in Section 2.10, a Note does not
cease to be outstanding because the Company or an Affiliate of the Company holds the


44









 







Note; however,
Notes held by the Company or a Subsidiary of the Company shall not be deemed to be outstanding for
purposes of Section 3.07(b).




          (b) If a Note is replaced pursuant to Section 2.08, it ceases to be outstanding unless the
Trustee receives proof satisfactory to it that the replaced Note is held by a bona fide purchaser
or protected purchaser.




          (c) If the principal amount of any Note is considered paid under Section 4.01, it ceases to be
outstanding and interest on it ceases to accrue.




          (d) If the Paying Agent (other than the Company, a Subsidiary of the Company or an Affiliate
of any of the foregoing) holds, on a redemption date or maturity date, money sufficient to pay
Notes payable on that date, then on and after that date such Notes shall be deemed to be no longer
outstanding and shall cease to accrue interest.




Section 2.10. Treasury Notes.




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




Section 2.11. Temporary Notes.




          (a) Until certificates representing Notes are ready for delivery, the Company may prepare and
the Trustee, upon receipt of an Authentication Order, shall authenticate temporary Notes.
Temporary Notes shall be substantially in the form of Definitive Notes but may have variations that
the Company considers appropriate for temporary Notes and as shall be reasonably acceptable to the Trustee. Without unreasonable delay, the Company shall prepare
and the Trustee shall authenticate definitive Notes in exchange for temporary Notes.






          (b) Holders of temporary Notes shall be entitled to all of the benefits of this Indenture.




Section 2.12. Cancellation.




          The Company at any time may deliver Notes to the Trustee for cancellation. The Registrar and
Paying Agent shall forward to the Trustee any Notes surrendered to them for registration of
transfer, exchange or payment. The Trustee, and no one else, shall cancel all Notes surrendered
for registration of transfer, exchange, payment, replacement or cancellation and shall dispose of
canceled Notes in accordance with its procedures for the disposition of canceled securities in
effect as of the date of such disposition (subject to the record retention requirement of the
Exchange Act). Certification of the disposition of all canceled Notes shall be delivered to the
Company. The Company may not issue new Notes to replace Notes that it has paid or that have been
delivered to the Trustee for cancellation.




45









 








Section 2.13. Defaulted Interest.




          If the Company defaults in a payment of interest on the Notes, it shall pay the defaulted
interest in any lawful manner plus, to the extent lawful, interest payable on the defaulted
interest, to the Persons who are Holders on a subsequent special record date, in each case at the
rate provided in the Notes and in Section 4.01. The Company shall notify the Trustee in writing of
the amount of defaulted interest proposed to be paid on each Note and the date of the proposed
payment. The Company shall fix or cause to be fixed each such special record date and payment
date, provided that no such special record date shall be less than 10 days prior to the related
payment date for such defaulted interest. At least 15 days before the special record date, the
Company (or, upon the written request of the Company, the Trustee in the name and at the expense of
the Company) shall mail or cause to be mailed to Holders a notice that states the special record
date, the related payment date and the amount of such interest to be paid.




Section 2.14. CUSIP Numbers.




          The Company in issuing the Notes may use “CUSIP” numbers (if then generally in use), and, if
so, the Trustee shall use “CUSIP” numbers in notices of redemption as a convenience to Holders;
provided that any such notice may state that no representation is made as to the correctness of
such numbers either as printed on the Notes or as contained in any notice of a redemption and that
reliance may be placed only on the other identification numbers printed on the Notes, and any such
redemption shall not be affected by any defect in or omission of such numbers. The Company shall
promptly notify the Trustee of any change in the “CUSIP” numbers applicable to any Notes.




ARTICLE THREE

REDEMPTION AND OFFERS TO

PURCHASE




Section 3.01. Notices to Trustee.




          If the Company elects to redeem Notes pursuant to the optional redemption provisions of
Section 3.07, it shall furnish to the Trustee, at least 30 days but not more than 60 days before a
redemption date, an Officers’ Certificate setting forth (i) the clause of this Indenture pursuant
to which the redemption shall occur, (ii) the redemption date, (iii) the principal amount of Notes
to be redeemed and (iv) the redemption price.




Section 3.02. Selection of Notes to Be Redeemed.




          (a) If less than all of the Notes are to be redeemed at any time, the Trustee shall select the
Notes to be redeemed among the Holders of the Notes in compliance with the requirements of the
principal national securities exchange, if any, on which the Notes are listed or, if the Notes are
not so listed, on a pro rata basis, by lot or in accordance with any other method the Trustee shall
deem fair and appropriate. In the event of partial redemption by lot, the particular Notes to be
redeemed shall be selected, unless otherwise provided herein, not less than 30 nor more than 60
days prior to the redemption date by the Trustee from the outstanding Notes not previously called
for redemption.




46









 








          (b) The Trustee shall promptly notify the Company in writing of the Notes selected for
redemption and, in the case of any Note selected for partial redemption, the principal amount at
maturity thereof to be redeemed. No Notes in amounts of $2,000 or less shall be redeemed in part.
Notes and portions of Notes selected shall be in amounts of $2,000 and integral multiples of $1,000
in excess thereof; except that if all of the Notes of a Holder are to be redeemed, the entire
outstanding amount of Notes held by such Holder, even if not a multiple of $1,000, shall be
redeemed. Except as provided in the preceding sentence, provisions of this Indenture that apply to
Notes called for redemption also apply to portions of Notes called for redemption.




Section 3.03. Notice of Redemption.




          (a) At least 30 days but not more than 60 days before a redemption date, the Company shall
mail or cause to be mailed, by first class mail, a notice of redemption to each Holder whose Notes
are to be redeemed at its registered address, except that redemption notices may be mailed more
than 60 days prior to a redemption date if the notice is issued in connection with a defeasance of
the Notes or a satisfaction and discharge of this Indenture.




          The notice shall identify the Notes to be redeemed and shall state:




          (i) the redemption date;




          (ii) the redemption price;




          (iii) if any Note is being redeemed in part, the portion of the principal amount of
such Note to be redeemed and that, after the redemption date upon surrender of such Note, a
new Note or Notes in principal amount equal to the unredeemed portion of the original Note
shall be issued in the name of the Holder thereof upon cancellation of the original Note;




          (iv) the name and address of the Paying Agent;




          (v) that Notes called for redemption must be surrendered to the Paying Agent to collect
the redemption price and become due on the date fixed for redemption;




          (vi) that, unless the Company defaults in making such redemption payment, interest, if
any, on Notes called for redemption ceases to accrue on and after the redemption date;




          (vii) the paragraph of the Notes and/or Section of this Indenture pursuant to which the
Notes called for redemption are being redeemed;




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




          (ix) any conditions that must be satisfied prior to the Company becoming obligated to
consummate such redemption.




47









 








          (b) At the Company’s request, the Trustee shall give the notice of redemption in the Company’s
name and at the Company’s expense; provided, however, that the Company shall have delivered to the
Trustee, at least 45 days prior to the redemption date (or such shorter period of time as may be
acceptable to the Trustee), an Officers’ Certificate requesting that the Trustee give such notice
and setting forth the information to be stated in such notice as provided in the preceding
paragraph.




Section 3.04. Effect of Notice of Redemption.




          Except as provided below, once notice of redemption is mailed in accordance with Section 3.03
hereof, Notes called for redemption become irrevocably due and payable on the redemption date at
the redemption price. Interest, if any, on Notes called for redemption ceases to accrue on and
after the redemption date, unless the Company defaults in making the applicable redemption payment.
Notwithstanding the foregoing, a notice of redemption may be conditional and the Company’s
obligation to redeem Notes may be subject to one or more conditions that the Company, in its sole
discretion, includes in such notice.




Section 3.05. Deposit of Redemption Price.




          (a) Prior to 12:00 p.m. (noon) Eastern Time on the redemption date, the Company shall deposit
with the Trustee or with the Paying Agent money sufficient to pay the redemption price of and
accrued and unpaid interest and Liquidated Damages, if any, on all Notes to be redeemed on that
date. The Trustee or the Paying Agent shall promptly return to the Company any money deposited
with the Trustee or the Paying Agent by the Company in excess of the amounts necessary to pay the
redemption price of, and accrued and unpaid interest and Liquidated Damages, if any, on all Notes
to be redeemed.




          (b) If the Company complies with the provisions of the preceding paragraph, on and after the
redemption date, interest and Liquidated Damages, if any, shall cease to accrue on the Notes or the
portions of Notes called for redemption. If a Note is redeemed on or after an interest record date
but on or prior to the related interest payment date, then any accrued and unpaid interest and
Liquidated Damages, if any, shall be paid to the Person in whose name such Note was registered at
the close of business on such record date. If any Note called for redemption shall not be so paid
upon surrender for redemption because of the failure of the Company to comply with the preceding
paragraph, interest shall be paid on the unpaid principal from the redemption date until such
principal is paid and to the extent lawful on any interest not paid on such unpaid principal, in
each case at the rate provided in the Notes and in Section 4.01.




Section 3.06. Notes Redeemed in Part.




          Upon cancellation of a Note that is redeemed in part, the Company shall issue and the Trustee
shall authenticate for the Holder at the expense of the Company a new Note equal in principal
amount to the unredeemed portion of the Note surrendered.




Section 3.07. Optional Redemption.




          (a) Except as set forth in clauses (b) and (c) of this Section 3.07, the Company shall not
have the option to redeem the Notes pursuant to this Section 3.07 prior to January 15,


48









 







2010. On or after January 15, 2010, the Company may redeem all or a portion of the Notes upon not less than 30
days’ nor more than 60 days’ notice, at the redemption prices (expressed as percentages of
principal amount) set forth below plus accrued and unpaid interest and Liquidated Damages, if any,
to the applicable redemption date, if redeemed during the twelve-month period beginning on January
15 of the years indicated below, subject to the rights of Holders on the relevant record date to
receive interest on the relevant interest payment date:




	 	 	 
	Year	 	Percentage
	 
	 	 
	2010
	 	104.500%
	 
	 	 
	2011
	 	102.250%
	 
	 	 
	2012 and thereafter
	 	100.000%






          (b) At any time prior to January 15, 2009, the Company may, on one or more occasions, redeem
up to 35% of the aggregate principal amount of Notes issued under this Indenture (including any
Additional Notes) at a redemption price of 109.000% of the principal amount thereof, plus accrued
and unpaid interest and Liquidated Damages, if any, to the redemption date, with the net cash
proceeds of one or more Equity Offerings; provided that (1) at least 65% of the aggregate principal
amount of Notes issued under this Indenture on the Issue Date remains outstanding immediately after
the occurrence of such redemption (excluding Notes held by the Company or its Affiliates); and (2)
the redemption must occur within 180 days of the date of the closing of such Equity Offering.




          (c) At any time prior to January 15, 2010, the Company may redeem the Notes in whole or in
part, at the Make-Whole Price, plus accrued and unpaid interest and Liquidated Damages, if any, to
the redemption date. “Make-Whole Price” with respect to a Note means the greater of:




          (1) the sum of the outstanding principal amount and Make-Whole Amount of such Note; and




          (2) the redemption price of such Note on January 15, 2010, determined pursuant to this
Indenture (104.500% of the principal amount).




          “Make-Whole Amount” with respect to a Note means an amount equal to the excess, if any, of:




          (1) the present value of the remaining interest, premium, if any, and principal
payments due on such Note as if such Note were redeemed on January 15, 2010 computed using a
discount rate equal to the Treasury Rate plus 50 basis points, over




          (2) the outstanding principal amount of such Note.




          “Treasury Rate” means the yield to maturity at the time of the computation of United States
Treasury securities with a constant maturity (as compiled by and published in the most recent
Federal Reserve Statistical Release H.15(519), which has become publicly available




49









 







at least two business days prior to the date of the redemption notice or, if such Statistical Release is no
longer published, any publicly available source of similar market date) most nearly equal to the
then remaining maturity of the Notes assuming redemption of the Notes on January 15, 2010;
provided, however, that if the Make-Whole Average Life of such Notes is not equal to the constant
maturity of the United States Treasury security for which a weekly average yield is given, the
Treasury Rate shall be obtained by linear interpolation (calculated to the nearest one-twelfth of a year) from the weekly average yields of United States Treasury securities for
which such yields are given, except that if the Make-Whole Average Life of such Notes is less than
one year, the weekly average yield on actually traded United States Treasury securities adjusted to
a constant maturity of one year shall be used. “Make-Whole Average Life” means the number of years
(calculated to the nearest one-twelfth) between the date of redemption and January 15, 2010.




          (d) Any redemption pursuant to this Section 3.07 shall be made in accordance with the
provisions of Sections 3.01 through 3.06.




Section 3.08. Repurchase Offers.




          In the event that, pursuant to Section 4.10 or Section 4.13, the Company shall be required to
commence an offer to all Holders to purchase all or a portion of their respective Notes (a
“Repurchase Offer”), it shall follow the procedures specified in such Sections and, to the extent
not inconsistent therewith, the procedures specified below.




          The Repurchase Offer shall remain open for a period of no less than 30 days and no more than
60 days following its commencement, except to the extent that a longer period is required by
applicable law (the “Offer Period”). No later than three Business Days after the termination of
the Offer Period (the “Purchase Date”), the Company shall purchase the principal amount of Notes
required to be purchased pursuant to Section 4.10 or 4.13 hereof (the “Offer Amount”) or, if less
than the Offer Amount has been tendered, all Notes tendered in response to the Repurchase Offer.
Payment for any Notes so purchased shall be made in the same manner as interest payments are made.




          If the Purchase Date is on or after an interest record date and on or before the related
interest payment date, any accrued and unpaid interest shall be paid to the Person in whose name a
Note is registered at the close of business on such record date, and no additional interest shall
be payable to Holders who tender Notes pursuant to the Repurchase Offer.




          Upon the commencement of a Repurchase Offer, the Company shall send, by first class mail, a
notice to the Trustee and each of the Holders. The notice shall contain all instructions and
materials necessary to enable such Holders to tender Notes pursuant to the Repurchase Offer. The
Repurchase Offer shall be made to all Holders. The notice, which shall govern the terms of the
Repurchase Offer, shall state:




          (i) that the Repurchase Offer is being made pursuant to this Section 3.08 and Section
4.10 or Section 4.13 hereof, and the length of time the Repurchase Offer shall remain open;




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


50









 







           (iii) that any Note not tendered or accepted for payment shall continue to accrue
interest and Liquidated Damages, if any;




          (iv) that, unless the Company defaults in making such payment, any Note (or portion
thereof) accepted for payment pursuant to the Repurchase Offer shall cease to accrue
interest and Liquidated Damages, if any, after the Purchase Date;




          (v) that Holders electing to have a Note purchased pursuant to a Repurchase Offer may
elect to have Notes purchased equal to $2,000 and integral multiples of $1,000 in excess
thereof only;




          (vi) that Holders electing to have a Note purchased pursuant to any Repurchase Offer
shall be required to surrender the Note, with the form entitled “Option of Holder to Elect
Purchase” on the reverse of the Note completed, or transfer by book-entry transfer, to the
Company, the Depositary, if appointed by the Company, or a Paying Agent at the address
specified in the notice at least three days before the Purchase Date;




          (vii) that Holders shall be entitled to withdraw their election if the Company, the
Depositary or the Paying Agent, as the case may be, receives, not later than the expiration
of the Offer Period, a telegram, telex, facsimile transmission or letter setting forth the
name of the Holder, the principal amount of the Note the Holder delivered for purchase and a
statement that such Holder is withdrawing his election to have such Note purchased;




          (viii) that, if the aggregate amount of Notes surrendered by Holders exceeds the Offer
Amount, the Trustee shall select the Notes to be purchased on a pro rata basis (with such
adjustments as may be deemed appropriate by the Trustee so that only Notes in denominations
of $2,000, or and integral multiples of $1,000 in excess thereof, shall be purchased); and




          (ix) that Holders whose Notes were purchased only in part shall be issued new Notes
equal in principal amount to the unpurchased portion of the Notes surrendered (or
transferred by book-entry transfer).




          On the Purchase Date, the Company shall, to the extent lawful, accept for payment on a pro
rata basis to the extent necessary, the Offer Amount of Notes (or portions thereof) tendered
pursuant to the Repurchase Offer, or if less than the Offer Amount has been tendered, all Notes
tendered, and shall deliver to the Trustee an Officers’ Certificate stating that such Notes (or
portions thereof) were accepted for payment by the Company in accordance with the terms of this
Section 3.08. The Company, the Depositary or the Paying Agent, as the case may be, shall promptly
(but in any case not later than three days after the Purchase Date) mail or deliver to each
tendering Holder an amount equal to the purchase price of Notes tendered by such Holder, as the
case may be, and accepted by the Company for purchase, and the Company shall promptly issue a new
Note. The Trustee, upon written request from the Company shall authenticate and mail or deliver
such new Note to such Holder, in a principal amount equal to any unpurchased portion of the Note
surrendered. Any Note not so accepted shall be promptly

51









 








mailed or delivered by the Company to the
respective Holder thereof. The Company shall publicly announce the results of the Repurchase Offer
on the Purchase Date.




ARTICLE FOUR

COVENANTS




Section 4.01. Payment of Notes.




          (a) The Company shall pay or cause to be paid the principal of, premium, if any, and interest
on the Notes on the dates and in the manner provided in the Notes. Principal, premium, if any, and
interest shall be considered paid on the date due if the Paying Agent, where not the Company or one
of the Company’s Subsidiaries, holds, as of 12:00 p.m. (noon) Eastern Time on the due date, money
deposited by the Company in immediately available funds and designated for and sufficient to pay
all principal, premium, if any, and interest then due. The Company shall pay all Liquidated
Damages, if any, in the same manner on the dates and in the amounts as required pursuant to the
Registration Rights Agreement.




          (b) The Company shall pay interest on overdue principal at the rate specified therefor in the
Notes, and it shall pay interest on overdue installments of interest at the same rate borne by the
Notes to the extent lawful.




Section 4.02. Maintenance of Office or Agency.




          (a) The Company shall maintain in the Borough of Manhattan, The City of New York, an office or
agency (which may be an office of the Trustee or Registrar or agent of the Trustee or Registrar)
where Notes may be surrendered for registration of transfer or for exchange and where notices and
demands to or upon the Company in respect of the Notes and this Indenture may be served. The
Company shall give prompt written notice to the Trustee of the location, and any change in the
location, of such office or agency. If at any time the Company shall fail to maintain any such
required office or agency or shall fail to furnish the Trustee with the address thereof, such
presentations, surrenders, notices and demands may be made or served at the Corporate Trust Office
of the Trustee.




          (b) The Company may also from time to time designate one or more other offices or agencies
where the Notes may be presented or surrendered for any or all such purposes and may from time to
time rescind such designations; provided, however, that no such designation or rescission shall in
any manner relieve the Company of its obligation to maintain an office or agency in the Borough of
Manhattan, The City of New York for such purposes. The Company shall give prompt written notice to
the Trustee of any such designation or rescission and of any change in the location of any such
other office or agency.




          (c) The Company hereby designates the Corporate Trust Office of the Trustee as one such office
or agency of the Company in accordance with Section 2.04. The address of the Trustee’s Corporate
Trust Office in the Borough of Manhattan is Wells Fargo Bank, 12th Floor MAC T5415-030,
45 Broadway, New York, NY 10006, 3007.




52









 








Section 4.03. Reports.




          (a) The Company shall furnish to the Trustee and, upon request, to beneficial owners and
prospective investors, a copy of all of the information and reports referred to in clauses (i) and
(ii) below within the time periods specified in the SEC’s rules and regulations:




          (i) all quarterly and annual financial information that would be required to be
contained in a filing with the SEC on Forms 10-Q and 10-K under the Exchange Act if the
Company were required to file such Forms, including a “Management’s Discussion and Analysis
of Financial Condition and Results of Operations” and, with respect to the annual
information only, a report on the annual financial statements by the Company’s certified
independent accountants; and




          (ii) all current reports that would be required to be filed with the SEC on Form 8-K
under the Exchange Act if the Company were required to file such reports.




          Regardless of whether required by the SEC, the Company shall comply with the periodic
reporting requirements of the Exchange Act and shall file the reports specified in this Section
4.03(a) with the SEC within the time periods specified above unless the SEC will not accept such a
filing. The Company agrees that it shall not take any action for the purpose of causing the SEC
not to accept any such filings. If, notwithstanding the foregoing, the SEC will not accept the
Company’s filings for any reason, the Company will post the reports referred to in this Section
4.03(a) on its Web site within the time periods that would apply if it were required to file those
reports with the SEC.




          (b) If the Company has designated any of its Subsidiaries as Unrestricted Subsidiaries, then
the quarterly and annual financial information required by this covenant shall include a reasonably
detailed presentation, either on the face of the financial statements or in the footnotes thereto,
and in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of
the financial condition and results of operations of the Company and its Restricted Subsidiaries
separate from the financial condition and results of operations of the Unrestricted Subsidiaries of
the Company.




          (c) For so long as any Notes (other than the Exchange Notes) remain outstanding, the Company
and the Guarantors shall furnish to the Holders and to prospective investors, upon their request,
the information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act.




Section 4.04. Compliance Certificate.




          (a) The Company and each Guarantor (to the extent that such Guarantor is so required under the
TIA) shall deliver to the Trustee, within 90 days after the end of each fiscal year, an Officers’
Certificate stating that a review of the activities of the Company and its Subsidiaries during the
preceding fiscal year has been made under the supervision of the signing Officers with a view to determining whether the Company has kept, observed, performed and
fulfilled its obligations under this Indenture, and further stating, as to each such Officer
signing such certificate, that to the best of his or her knowledge, the Company has kept, observed,
performed and fulfilled all of its obligations under this Indenture and is not in default in the






53










 





performance or observance of any of the terms, provisions and conditions of this Indenture (or, if
a Default or Event of Default shall have occurred, describing all such Defaults or Events of
Default of which he or she may have knowledge and what action the Company is taking or proposes to
take with respect thereto) and that to his or her knowledge no event has occurred and remains in
existence by reason of which payments on account of the principal of or interest, if any, on the
Notes is prohibited or if such event has occurred, a description of the event and what action the
Company is taking or proposes to take with respect thereto.




          (b) So long as not contrary to the then current recommendations of the American Institute of
Certified Public Accountants, the year-end financial statements delivered pursuant to Section
4.03(a)(i) above shall be accompanied by a written statement of the Company’s independent
registered public accounting firm (which shall be a firm of established national reputation) that
in making the examination necessary for certification of such financial statements, nothing has
come to their attention that would lead them to believe that the Company has failed to comply with
the provisions of Article Four or Article Five hereof in so far as they relate to financial or
accounting matters or, if an event of noncompliance has come to their attention, specifying the
nature and period of existence thereof, it being understood that such accountants shall not be
liable directly or indirectly to any Person for any failure to obtain knowledge of any such
violation.




Section 4.05. Taxes.




          The Company shall pay, and shall cause each of its Subsidiaries to pay, prior to delinquency,
any taxes, assessments, and governmental levies except such as are contested in good faith and by
appropriate proceedings or where the failure to effect such payment is not adverse in any material
respect to the Holders of the Notes.




Section 4.06. Stay, Extension and Usury Laws.




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




Section 4.07. Restricted Payments.




          (a) The Company shall not, and shall not permit any of its Restricted Subsidiaries to,
directly or indirectly:





     (i) declare or pay (without duplication) any dividend or make any other payment or
distribution on account of the Company’s or any of its Restricted Subsidiaries’ Equity
Interests or to the direct or indirect holders of the Company’s or any of its Restricted
Subsidiaries’ Equity Interests in their capacity as such (other than



54









 







dividends, payments or distributions (x) payable in Equity Interests (other than Disqualified Stock)
of the Company or (y) to the Company or a Restricted Subsidiary of the Company);




     (ii) purchase, redeem or otherwise acquire or retire for value any Equity Interests of
the Company or any Restricted Subsidiary thereof held by Persons other than the Company or
any of its Restricted Subsidiaries;




     (iii) make any payment on or with respect to, or purchase, redeem, defease or otherwise
acquire or retire for value any Subordinated Indebtedness (other than intercompany
Indebtedness between the Company and any of its Restricted Subsidiaries), except (a) a
payment of interest or principal at the Stated Maturity thereof or (b) the purchase,
repurchase or other acquisition of any such Indebtedness in anticipation of satisfying a
sinking fund obligation, principal installment or final maturity, in each case due within
one year of the date of such purchase, repurchase or other acquisition; or




     (iv) make any Restricted Investment


(all such payments and other actions set forth in clauses (i) through (iv) of this Section 4.07(a)
being collectively referred to as “Restricted Payments”), unless, at the time of and after giving
effect to such Restricted Payment:





     (A) no Default or Event of Default shall have occurred and be continuing or
would occur as a consequence thereof; and




     (B) the Company would, at the time of such Restricted Payment and after giving
pro forma effect thereto as if such Restricted Payment had been made at the
beginning of the applicable four-quarter period, have been permitted to Incur at
least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio
test set forth in Section 4.09(a); and




     (C) such Restricted Payment, together with the aggregate amount of all other
Restricted Payments made by the Company and its Restricted Subsidiaries after the
Issue Date (excluding Restricted Payments permitted by clauses (ii), (iii), (iv),
(v), (vi), (viii), (x) and (xii) of Section 4.07(b)), is less than the sum, without
duplication, of:




     (1) 50% of the Consolidated Net Income of the Company for the period
(taken as one accounting period) from the beginning of the first fiscal
quarter commencing after the Issue Date to the end of the Company’s most
recently ended fiscal quarter for which internal financial statements are
available at the time of such Restricted Payment (or, if such Consolidated
Net Income for such period is a deficit, less 100% of such deficit), plus




     (2) 100% of (A)(i) the aggregate net cash proceeds and (ii) the Fair
Market Value of (x) marketable securities (other than marketable securities
of the Company), (y) Capital Stock of a Person (other than the



55









 







Company or an
Affiliate of the Company) engaged in a Permitted Business and (z) other
assets used in any Permitted Business, in the case of clauses (i) and (ii),
received by the Company since the Issue Date as a contribution to its common
equity capital or from the issue or sale of Equity Interests of the Company
(other than Disqualified Stock) or from the issue or sale of convertible or
exchangeable Disqualified Stock or convertible or exchangeable debt
securities of the Company that have been converted into or exchanged for
such Equity Interests (other than Equity Interests (or Disqualified Stock or
debt securities) sold to a Subsidiary of the Company), (B) the amount by
which Indebtedness of the Company or any Restricted Subsidiary is reduced on
the Company’s consolidated balance sheet upon the conversion or exchange
after the Issue Date of any such Indebtedness into or for Equity Interests
(other than Disqualified Stock) of the Company, and (C) the aggregate net
cash proceeds, if any, received by the Company or any of its Restricted
Subsidiaries upon any conversion or exchange described in clause (A) or (B)
above, plus




     (3) with respect to Restricted Investments made by the Company and its
Restricted Subsidiaries after the Issue Date, an amount equal to the sum of
(A) the net reduction in such Restricted Investments in any Person resulting
from (i) repayments of loans or advances, or other transfers of assets, in
each case to the Company or any Restricted Subsidiary, (ii) other
repurchases, repayments or redemptions of such Restricted Investments, (iii)
the sale of any such Restricted Investment or (iv) the release of any
Guarantee (except to the extent any amounts are paid under such Guarantee)
plus (B) all amounts representing the return of capital (excluding dividends
and distributions ) to the Company or any Restricted Subsidiary in respect
of such Restricted Investment plus (C) with respect to any Unrestricted
Subsidiary that the Board of Directors of the Company redesignates as a
Restricted Subsidiary, the Fair Market Value of the Investment in such
Subsidiary held by the Company or any of its Restricted Subsidiaries at the
time of such redesignation.



          (b) Section 4.07(a) shall not prohibit, so long as, in the case of clauses (vii) and (viii) of
this Section 4.07 (b), no Default has occurred and is continuing or would be caused thereby:





     (i) the payment of any dividend within 60 days after the date of declaration thereof,
if at said date of declaration such payment would have complied with the provisions of this
Indenture;




     (ii) the payment of any dividend or similar distribution by a Restricted Subsidiary of
the Company to the holders of its Equity Interests on a pro rata basis;




     (iii) the making of any Restricted Payment in exchange for, or out of the net cash
proceeds of the substantially concurrent sale (other than to a Subsidiary of the Company)
of, Equity Interests of the Company (other than Disqualified Stock) or from



56









 







the
substantially concurrent contribution (other than by a Subsidiary of the Company) of capital
to the Company in respect of its Equity Interests (other than Disqualified Stock); provided
that the amount of any such net cash proceeds that are utilized for any such Restricted
Payment shall be excluded from Section 4.07(a)(C)(2);




     (iv) the defeasance, redemption, repurchase, retirement or other acquisition of
Subordinated Indebtedness with the net cash proceeds from a substantially concurrent
incurrence of Permitted Refinancing Indebtedness; provided that the amount of any such net
cash proceeds that are utilized for any such defeasance, redemption, repurchase, retirement
or other acquisition of Indebtedness shall be excluded from Section 4.07(a)(C)(2);




     (v) Investments acquired as a capital contribution to, or in exchange for, or out of
the net cash proceeds of a substantially concurrent sale (other than to a Subsidiary of the
Company) of, Equity Interests (other than Disqualified Stock) of the Company; provided that
the amount of any such net cash proceeds that are utilized for any such acquisition or
exchange shall be excluded from Section 4.07(a)(C)(2);




     (vi) the repurchase, redemption or other acquisition or retirement of Equity Interests
deemed to occur upon the exercise or exchange of stock options, warrants or other similar
rights to the extent such Equity Interests represent a portion of the exercise or exchange
price of those stock options, and the repurchase, redemption or other acquisition or
retirement of Equity Interests made in lieu of withholding taxes resulting from the exercise
or exchange of stock options, warrants or other similar rights;




     (vii) the repurchase, redemption or other acquisition or retirement for value of any
Equity Interests of Parent, the Company or any Restricted Subsidiary of the Company held by
any current or former officer, director or employee (or any of their respective heirs or
estates or permitted transferees) of Parent, the Company or any Restricted Subsidiary of the
Company pursuant to any equity subscription agreement, stock option agreement, stockholders’
agreement or similar agreement; provided that the aggregate price paid for all such
repurchased, redeemed, acquired or retired Equity Interests in any calendar year shall not
exceed $2.0 million (with unused amounts in any calendar year being carried over to
succeeding calendar years subject to a maximum (without giving effect to the following
proviso) of $6.0 million in any calendar year); provided further that such amount in any
calendar year may be increased by an amount not to exceed (A) the cash proceeds received by
the Company from the sale of Equity
Interests of the Company to members of management or directors of the Company and its
Restricted Subsidiaries that occurs after the Issue Date (to the extent the cash proceeds
from the sale of such Equity Interests have not otherwise been applied to the payment of
Restricted Payments by virtue of Section 4.07(a)(C)(2)), plus (B) the cash proceeds of key
man life insurance policies received by the Company and its Restricted Subsidiaries after
the Issue Date, less (C) the amount of any Restricted Payments made pursuant to clauses (A)
and (B) of this clause (vii);



57









 






     (viii) dividends on Preferred Stock or Disqualified Stock issued in compliance with
Section 4.09 to the extent such dividends are included in the definition of Fixed Charges;




     (ix) the payment of cash in lieu of fractional Equity Interests;




     (x) Permitted Payments to Parent;




     (xi) payments or distributions to dissenting stockholders pursuant to applicable law in
connection with a merger, consolidation or transfer of assets that complies with Article
Five hereof; and




     (xii) other Restricted Payments in an aggregate amount at any one time outstanding not
to exceed $15.0 million.



          (c) In determining whether any Restricted Payment is permitted by this Section 4.07, the
Company may allocate or reallocate all or any portion of such Restricted Payment among the clauses
of the preceding paragraph (b) or among such clauses and the provisions of paragraph (a) of this
Section 4.07, provided that at the time of such allocation or reallocation, all such Restricted
Payments, or allocated portions thereof, would be permitted under the various provisions of this
Section 4.07.




          (d) The amount of all Restricted Payments shall be the Fair Market Value on the date of the
Restricted Payment of the asset(s) or securities proposed to be transferred or issued by the
Company or such Restricted Subsidiary, as the case may be, pursuant to the Restricted Payment. The
Fair Market Value of any assets or securities (other than cash or Cash Equivalents) that are
required to be valued by this Section 4.07 will be determined by the Board of Directors of the
Company whose resolution with respect thereto will be delivered to the Trustee. The Board of
Directors’ determination must be based upon an opinion or appraisal issued by an Independent
Financial Advisor if such Fair Market Value exceeds $15.0 million.




Section 4.08. Dividend and Other Payment Restrictions Affecting Restricted
Subsidiaries.




          (a) The Company shall not, and shall not permit any of its Restricted Subsidiaries to create
or permit to exist or become effective any consensual encumbrance or restriction on the ability of
any Restricted Subsidiary to:





     (i) pay dividends or make any other distributions on its Capital Stock (or with respect
to any other interest or participation in, or measured by, its profits) to the Company or
any of its Restricted Subsidiaries or pay any liabilities owed to the Company or any of its
Restricted Subsidiaries;




     (ii) make loans or advances to the Company or any of its Restricted Subsidiaries; or




     (iii) transfer any of its properties or assets to the Company or any of its Restricted
Subsidiaries.



58









 





          (b) However, the preceding restrictions in Section 4.08(a) shall not apply to encumbrances or
restrictions:





     (i) existing under, by reason of or with respect to any Credit Facility, Existing
Indebtedness, Capital Stock or any other agreements or instruments in effect on the Issue
Date and any amendments, modifications, restatements, renewals, extensions, supplements,
refundings, replacements or refinancings thereof, provided that the encumbrances and
restrictions in any such amendments, modifications, restatements, renewals, increases,
extensions, supplements, refundings, replacement or refinancings are, in the reasonable good
faith judgment of the Chief Executive Officer and the Chief Financial Officer of the
Company, no more restrictive, taken as a whole, than those contained in the Credit
Agreement, Existing Indebtedness, Capital Stock or such other agreements or instruments, as
the case may be, as in effect on the Issue Date;




     (ii) set forth in this Indenture, the Notes and the Subsidiary Guarantees or contained
in any other instrument relating to any other Indebtedness so long as the Board of Directors
of the Company determines that such encumbrances or restrictions are no more restrictive in
the aggregate than those contained in this Indenture;




     (iii) existing under, by reason of or with respect to applicable law, rule, regulation
or order;




     (iv) with respect to any Person or the property or assets of a Person acquired by the
Company or any of its Restricted Subsidiaries existing at the time of such acquisition,
which encumbrance or restriction is not applicable to any Person or the properties or assets
of any Person, other than the Person, or the property or assets of the Person, so acquired
and any amendments, modifications, restatements, renewals, increases, extensions,
supplements, refundings, replacements or refinancings thereof, provided that the
encumbrances and restrictions in any such amendments, modifications, restatements, renewals,
increases, extensions, supplements, refundings, replacement or refinancings are, in the
reasonable good faith judgment of the Chief Executive Officer and the Chief Financial
Officer of the Company, no more restrictive, taken as a whole, than those in effect on the
date of the acquisition;




     (v) Indebtedness Incurred or Capital Stock issued by any Restricted Subsidiary,
provided that the restrictions contained in the agreements or instruments governing such
Indebtedness or Capital Stock (a) either (i) apply only in the event of a
payment default or a default with respect to a financial covenant in such agreement or
instrument or (ii) shall not materially affect the Company’s ability to pay all principal,
interest and premium and Liquidated Damages, if any, on the Notes, as determined in good
faith by the Chief Executive Officer and the Chief Financial Officer of the Company, whose
determination shall be conclusive; and (b) are not materially more disadvantageous to the
Holders of the Notes than is customary in comparable financings (as determined by the Chief
Financial Officer of the Company, whose determination shall be conclusive);



59









 






     (vi) in the case of clause (iii) of Section 4.08(a):




     (1) that restrict in a customary manner the subletting, assignment or transfer
of any property or asset that is a lease, license, conveyance or contract or similar
property or asset;




     (2) existing by virtue of any transfer of, agreement to transfer, option or
right with respect to, or Lien on, any property or assets of the Company or any
Restricted Subsidiary thereof not otherwise prohibited by this Indenture;




     (3) purchase money obligations for property acquired in the ordinary course of
business and Capital Lease Obligations;




     (4) provisions limiting the disposition or distribution of assets or property
in joint venture agreements, asset sale agreements, sale-leaseback agreements, stock
sale agreements and other similar agreements entered into with the approval of the
Company’s Board of Directors or in the ordinary course of business, which limitation
is applicable only to the assets that are the subject of such agreements;




     (5) any instrument governing secured Indebtedness; and




     (6) arising or agreed to in the ordinary course of business, not relating to
any Indebtedness, and that do not, individually or in the aggregate, detract from
the value of property or assets of the Company or any Restricted Subsidiary thereof
in any manner material to the Company or any Restricted Subsidiary thereof;


1


     (vii) existing under, by reason of or with respect to any agreement for the sale or
other disposition of all or substantially all of the Capital Stock of, or property and
assets of, a Restricted Subsidiary that restrict distributions by that Restricted Subsidiary
pending such sale or other disposition;




     (viii) Permitted Refinancing Indebtedness; provided that the restrictions contained in
the agreements governing such Permitted Refinancing Indebtedness are not materially more
restrictive, taken as a whole, than those contained in the agreements governing the
Indebtedness being refinanced;




     (ix) Liens permitted to be incurred under the provisions of Section 4.12 that limit the
right of the debtor to dispose of the assets subject to such Liens;




     (x) encumbrances or restrictions contained in agreements entered into in connection
with Hedging Obligations permitted from time to time under this Indenture; and




     (xi) existing under restrictions on cash or other deposits or net worth imposed by
customers or required by insurance, surety or bonding companies, in each case, under
contracts entered into in the ordinary course of business.



60









 





Section 4.09. Incurrence of Indebtedness.




          (a) The Company shall not, and shall not permit any of its Restricted Subsidiaries to,
directly or indirectly, Incur any Indebtedness (including Acquired Debt); provided, however, that
the Company or any Guarantor may Incur Indebtedness (including Acquired Debt), if the Fixed Charge
Coverage Ratio for the Company’s most recently ended four full fiscal quarters for which internal
financial statements are available immediately preceding the date on which such additional
Indebtedness is Incurred would have been at least 2.0 to 1, determined on a pro forma basis
(including a pro forma application of the net proceeds therefrom), as if the additional
Indebtedness had been Incurred at the beginning of such four-quarter period.




          (b) Section 4.09(a) will not prohibit the Incurrence of any of the following items of
Indebtedness (collectively, “Permitted Debt”):





     (i) the Incurrence by the Company or any Guarantor of additional Indebtedness under
Credit Facilities (including, without limitation, the Incurrence by the Company and the
Guarantors of Guarantees thereof) in an aggregate amount at any one time outstanding
pursuant to this clause (i) not to exceed a maximum amount equal to the greater of (A) $25.0
million or (B) 10.0% of the Consolidated Tangible Assets of the Company; provided, however,
that the maximum amount permitted to be outstanding under this clause (i) shall not be
deemed to limit additional Indebtedness under the Credit Facilities to the extent the
Incurrence of such additional Indebtedness is permitted pursuant to any of the other
provisions of this Section 4.09;




     (ii) the Incurrence of Existing Indebtedness;




     (iii) the Incurrence by the Company and the Guarantors of Indebtedness represented by
the Notes and the related Subsidiary Guarantees to be issued on the Issue Date and the
Exchange Notes and the related Subsidiary Guarantees to be issued pursuant to the
Registration Rights Agreement;




     (iv) the Incurrence by the Company or any Restricted Subsidiary of the Company of
Indebtedness represented by Capital Lease Obligations, mortgage financings or purchase money
obligations, in each case, Incurred for the purpose of financing all or any part of the
purchase price or cost of construction, installation, improvement,
deployment, refurbishment, modification or lease of property, plant or equipment or
furniture, fixtures and equipment, in each case used in the business of the Company or such
Restricted Subsidiary, in an aggregate amount, including all Permitted Refinancing
Indebtedness Incurred to refund, refinance or replace any Indebtedness Incurred pursuant to
this clause (iv), not to exceed the greater of (a) $10.0 million at any time outstanding or
(b) 5.0% of Consolidated Tangible Assets of the Company;




     (v) the Incurrence by the Company or any Restricted Subsidiary of the Company of
Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to
refund, refinance, replace, defease or discharge Indebtedness (other than intercompany
Indebtedness) that was permitted by this Indenture to be Incurred under Section 4.09(a) or
clauses (ii), (iii), (iv), (v), (ix) or (xiii) of this Section 4.09(b);



61









 






     (vi) the Incurrence by the Company or any of its Restricted Subsidiaries of
intercompany Indebtedness owing to and held by the Company or any of its Restricted
Subsidiaries; provided, however, that (1) any subsequent issuance or transfer of Equity
Interests that results in any such Indebtedness being held by a Person other than the
Company or a Restricted Subsidiary thereof and (2) any sale or other transfer of any such
Indebtedness to a Person that is not either the Company or a Restricted Subsidiary thereof,
shall be deemed, in each case, to constitute an Incurrence of such Indebtedness by the
Company or such Restricted Subsidiary, as the case may be, that was not permitted by this
clause (vi);




     (vii) the Guarantee by the Company or any of the Guarantors of Indebtedness of the
Company or a Restricted Subsidiary of the Company that was permitted to be Incurred by
another provision of this Section 4.09;




     (viii) the Incurrence by the Company or any of its Restricted Subsidiaries of Hedging
Obligations that are Incurred for the purpose of fixing, hedging or swapping interest rate,
commodity price or foreign currency exchange rate risk (or to reverse or amend any such
agreements previously made for such purposes), and not for speculative purposes, and that do
not increase the Indebtedness of the obligor outstanding at any time other than as a result
of fluctuations in interest rates, commodity prices or foreign currency exchange rates or by
reason of fees, indemnities and compensation payable thereunder;




     (ix) the Incurrence by the Company or any of its Restricted Subsidiaries of
Indebtedness in respect of workers’ compensation claims, self-insurance obligations,
bankers’ acceptances, performance bonds, completion bonds, bid bonds, appeal bonds and
surety bonds or other similar bonds or obligations, and any Guarantees or letters of credit
functioning as or supporting any of the foregoing;




     (x) the Incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness
constituting reimbursement obligations with respect to letters of credit issued in the
ordinary course of business; provided that, upon the drawing of such letters of credit or
the Incurrence of such Indebtedness, such obligations are reimbursed within one year
following such drawing or Incurrence;




     (xi) the Incurrence by the Company of Indebtedness to the extent that the net proceeds
thereof are promptly deposited to defease or to satisfy and discharge the Notes;




     (xii) the Incurrence by Foreign Subsidiaries of Indebtedness in an aggregate amount
outstanding at any one time not to exceed 15% of such Foreign Subsidiaries’ Consolidated
Tangible Assets; or




     (xiii) the Incurrence by the Company or any of its Restricted Subsidiaries of
additional Indebtedness in an aggregate amount at any time outstanding, including all
Permitted Refinancing Indebtedness Incurred to refund, refinance, defease, discharge or
replace any Indebtedness Incurred pursuant to this clause (xiii), not to exceed $10.0
million.



62









 





          (c) For purposes of determining compliance with this Section 4.09, in the event that any
proposed Indebtedness meets the criteria of more than one of the categories of Permitted Debt
described in clauses (i) through (xiii) of Section 4.09(b) above, or is entitled to be Incurred
pursuant to Section 4.09(a), the Company shall be permitted to divide and classify such item of
Indebtedness at the time of its Incurrence in any manner that complies with this Section 4.09. In
addition, any Indebtedness originally divided or classified as Incurred pursuant to clauses (i)
through (xiii) of Section 4.09(b) above may later be re-divided or reclassified by the Company such
that it will be deemed as having been Incurred pursuant to another of such clauses provided that
such re-divided or reclassified Indebtedness could be Incurred pursuant to such new clause at the
time of such re-division or reclassification. Notwithstanding the foregoing, Indebtedness under
the Credit Agreement outstanding on the Issue Date shall be deemed to have been Incurred on such
date in reliance on the exception provided by clause (i) of Section 4.09(b).




          (d) Notwithstanding any other provision of this Section 4.09, the maximum amount of
Indebtedness that may be Incurred pursuant to this Section 4.09 shall not be deemed to be exceeded
with respect to any outstanding Indebtedness due solely to the result of fluctuations in the
exchange rates of currencies.




          (e) The Company shall not Incur any Indebtedness that is subordinate in right of payment to
any other Indebtedness of the Company unless it is subordinate in right of payment to the Notes to
the same extent. The Company shall not permit any Guarantor to Incur any Indebtedness that is
subordinate in right of payment to any other Indebtedness of such Guarantor unless it is
subordinate in right of payment to such Guarantor’s Subsidiary Guarantee to the same extent. For
purposes of the foregoing, solely for the avoidance of doubt and without any other implication, no
Indebtedness will be deemed to be subordinated in right of payment to any other Indebtedness of the
Company or any Guarantor, as applicable, solely by reason of any Liens or Guarantees arising or
created in respect thereof or by virtue of the fact that the holders of any secured Indebtedness
have entered into intercreditor agreements giving one or more of such holders priority over the
other holders in the collateral held by them.




Section 4.10. Asset Sales.




          (a) The Company shall not, and shall not permit any of its Restricted Subsidiaries to,
consummate an Asset Sale unless:





     (i) the Company (or the Restricted Subsidiary, as the case may be) receives
consideration in respect of such Asset Sale at least equal to the Fair Market Value of the
assets or Equity Interests issued or sold or otherwise disposed of; and




     (ii) either (x) at least 75% of the consideration therefor received by the Company or
such Restricted Subsidiary is in the form of cash, Cash Equivalents or Replacement Assets or
a combination of the foregoing or (y) the Fair Market Value of the aggregate of all
consideration other than cash, Cash Equivalents or Replacement Assets for all Asset Sales
since the Issue Date would not exceed 10% of Consolidated Tangible Assets of the Company
after giving effect to such Asset Sales. For purposes of this Section 4.10(a)(ii), each of
the following shall be deemed to be cash:




63










 







     (A) any liabilities, as shown on the Company’s or such Restricted Subsidiary’s
most recent consolidated balance sheet (or as would be shown on the Company’s
consolidated balance sheet as of the date of such Asset Sale) of the Company or any
Restricted Subsidiary (other than contingent liabilities, Indebtedness that is by
its terms subordinated to the Notes or any Subsidiary Guarantee) that are assumed by
the transferee of any such assets or Equity Interests pursuant to (1) a written
novation agreement that releases the Company or such Restricted Subsidiary from
further liability therefor or (2) an assignment agreement that includes, in lieu of
such a release, the agreement of the transferee or its parent company to indemnify
and hold harmless the Company or such Restricted Subsidiary from and against any
loss, liability or cost in respect of such assumed liability;




     (B) any securities, notes or other obligations received by the Company or any
such Restricted Subsidiary from such transferee that are converted by the Company or
such Restricted Subsidiary into cash within 270 days after such Asset Sale, to the
extent of the cash received in that conversion; and




     (C) accounts receivables of a business retained by the Company or any of its
Restricted Subsidiaries following the sale of such business; provided that (i) such
accounts receivables are not more than 60 days past due and (ii) do not have a
payment date greater than 90 days from the date of the invoice creating such
accounts receivable.




     (iii) Any Asset Sale pursuant to a condemnation, appropriation or other similar taking,
including by deed in lieu of condemnation, or pursuant to the foreclosure or other
enforcement of a Permitted Lien or exercise by the related lienholder of rights with respect
thereto, including by deed or assignment in lieu of foreclosure shall not be required to
satisfy the conditions set forth in clauses (i) and (ii) of this Section 4.10(a).




     (iv) Notwithstanding the foregoing, the 75% limitation referred to in Section
4.10(a)(ii) shall be deemed satisfied with respect to any Asset Sale in which the cash or
Cash Equivalents portion of the consideration received therefrom, determined in
accordance with the foregoing provision on an after-tax basis, is equal to or greater than
what the after-tax proceeds would have been had such Asset Sale complied with the
aforementioned 75% limitation.



          (b) Within 360 days after the receipt of any Net Proceeds from an Asset Sale, the Company or
its Restricted Subsidiaries may apply an amount equal to such Net Proceeds at its option:





     (i) to repay Indebtedness for borrowed money (other than Subordinated Indebtedness); or




     (ii) to make any capital expenditure or to purchase Replacement Assets (or enter into a
binding agreement to make such capital expenditure or to purchase such Replacement Assets;
provided that (A) such capital expenditure or purchase is



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consummated within the later of
(x) 360 days after the receipt of the Net Proceeds from the related Asset Sale and (y) 180
days after the date of such binding agreement and (B) if such capital expenditure or
purchase is not consummated within the period set forth in subclause (A), the amount not so
applied will be deemed to be Excess Proceeds (as defined in Section 4.10(c))).


Pending the final application of any such Net Proceeds, the Company may temporarily reduce
revolving credit borrowings or otherwise invest such Net Proceeds in any manner that is not
prohibited by this Indenture.




          (c) An amount equal to any Net Proceeds from Asset Sales that are not applied or invested as
provided in Section 4.10(b) shall constitute “Excess Proceeds.” If on any date, the aggregate
amount of Excess Proceeds exceeds $10.0 million, then within 10 Business Days after such date, the
Company shall make an offer (an “Asset Sale Offer”) to all Holders of Notes and all holders of
other Indebtedness that is pari passu with the Notes containing provisions similar to those set
forth in this Indenture with respect to offers to purchase or redeem with the proceeds of sales of
assets, to purchase the maximum principal amount of Notes and such other pari passu Indebtedness
that may be purchased out of the Excess Proceeds. The offer price in any Asset Sale Offer will be
equal to 100% of principal amount plus accrued and unpaid interest and Liquidated Damages, if any,
to the date of purchase, and will be payable in cash. If any Excess Proceeds remain unapplied after
consummation of an Asset Sale Offer, the Company and its Restricted Subsidiaries may use those
Excess Proceeds for any purpose not otherwise prohibited by this Indenture. If the aggregate
principal amount of Notes and other pari passu Indebtedness tendered into such Asset Sale Offer
exceeds the amount of Excess Proceeds, the Trustee will select the Notes and such other pari passu
Indebtedness to be purchased on a pro rata basis. Upon completion of each Asset Sale Offer, the
amount of Excess Proceeds shall be reset at zero.




          (d) Notwithstanding the foregoing, the sale, conveyance or other disposition of all or
substantially all of the assets of the Company and its Restricted Subsidiaries, taken as a whole,
will be governed by Sections 4.13 and 5.01 and not by this Section 4.10.




          (e) The Company shall comply with the requirements of Rule 14e-1 under the Exchange Act and
any other securities laws and regulations thereunder to the extent such laws and regulations are
applicable in connection with each repurchase of Notes pursuant to an Asset Sale Offer. To the
extent that the provisions of any securities laws or regulations conflict with the Asset Sales
provisions of this Indenture, or compliance with the Asset Sale provisions of this Indenture would
constitute a violation of any such laws or regulations, the Company shall comply with the
applicable securities laws and regulations and will not be deemed to have breached its obligations
under the Asset Sale provisions of this Indenture by virtue of such compliance.



Section 4.11. Transactions with Affiliates.




          (a) The Company shall not, and shall not permit any of its Restricted Subsidiaries to, make
any payment to, or sell, lease, transfer or otherwise dispose of any of its properties or assets
to, or purchase any property or assets from, or enter into, make, amend, renew or extend




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any transaction, contract, agreement, understanding, loan, advance or Guarantee with, or for the
benefit of, any Affiliate of the Company (each, an “Affiliate Transaction”), unless:





     (i) such Affiliate Transaction is on terms that are no less favorable to the Company or
the relevant Restricted Subsidiary than those that would have been obtained in a comparable
arm’s-length transaction by the Company or such Restricted Subsidiary with a Person that is
not an Affiliate of the Company; and




     (ii) the Company delivers to the Trustee:




     (1) with respect to any Affiliate Transaction or series of related Affiliate
Transactions involving aggregate consideration in excess of $5.0 million, a Board
Resolution set forth in an Officers’ Certificate certifying that such Affiliate
Transaction or series of related Affiliate Transactions complies with this Section
4.11 and that such Affiliate Transaction or series of related Affiliate Transactions
has been approved by a majority of the disinterested members of the Board of
Directors of the Company; and




     (2) with respect to any Affiliate Transaction or series of related Affiliate
Transactions involving aggregate consideration in excess of $15.0 million, an
opinion as to the fairness to the Company or such Restricted Subsidiary of such
Affiliate Transaction or series of related Affiliate Transactions from a financial
point of view issued by an Independent Financial Advisor.



          (b) The following items shall not be deemed to be Affiliate Transactions and, therefore, will
not be subject to the provisions of Section 4.11(a):





     (i) transactions between or among the Company and/or its Restricted Subsidiaries;




     (ii) payment of reasonable and customary fees to, and reasonable and customary
indemnification and similar payments on behalf of, directors of the Company and its
Subsidiaries;




     (iii) any Permitted Investments or Restricted Payments that are permitted by the
provisions of Section 4.07;




     (iv) any issuance of Equity Interests (other than Disqualified Stock) of the Company,
or receipt of any capital contribution from any Affiliate of the Company;




     (v) transactions with a Person that is an Affiliate of the Company solely because the
Company owns, directly or through a Restricted Subsidiary, an Equity Interest in, or
controls, such Person;




     (vi) transactions pursuant to agreements or arrangements in effect on the Issue Date
and described in the Offering Memorandum, or any amendment, modification, or supplement
thereto or replacement thereof, as long as such agreement or arrangement, as so amended,
modified, supplemented or replaced, taken as a whole, is not more



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disadvantageous to the
Company and its Restricted Subsidiaries than the original agreement or arrangement in
existence on the Issue Date;




     (vii) loans or advances to employees in the ordinary course of business not to exceed
$2.0 million in the aggregate at any one time outstanding; and




     (viii) any employment, consulting, service or termination agreement, employee benefit
plan or arrangement, reasonable and customary indemnification arrangements or any similar
agreement, plan or arrangement, entered into by the Company or any of its Restricted
Subsidiaries with officers, directors, consultants or employees of the Company or any of its
Subsidiaries and the payment of compensation to officers, directors, consultants and
employees of the Company or any of its Subsidiaries (including amounts paid pursuant to
employee benefit plans, employee stock option or similar plans), and any payments,
indemnities or other transactions permitted or required by bylaw, statutory provisions or
any of the foregoing agreements, plans or arrangements; so long as such agreement or payment
has been approved by a majority of the disinterested members of the Board of Directors of
the Company.


Section 4.12. Liens.




          The Company shall not, and shall not permit any of its Restricted Subsidiaries to, create,
incur, assume or suffer to exist any Lien securing Indebtedness, upon any asset, now owned or
hereafter acquired, except Permitted Liens, unless the Notes are equally and ratably secured
(except that Liens securing Subordinated Indebtedness shall be expressly subordinate to any Lien
securing the Notes to at least the same extent such Subordinated Indebtedness is subordinate to the
Notes).



Section 4.13. Offer to Repurchase upon a Change of Control.




          (a) If a Change of Control occurs, each Holder of Notes shall have the right to require the
Company to repurchase all or any part (equal to $2,000 and integral multiples of $1,000 in excess
thereof) of that Holder’s Notes pursuant to an offer (a “Change of Control Offer”) on the terms set
forth in this Indenture. In the Change of Control Offer, the Company will offer payment (a “Change
of Control Payment”) in cash equal to not less than 101% of the aggregate principal amount of Notes
repurchased plus accrued and unpaid interest and Liquidated Damages, if any, to the date of
repurchase (the “Change of Control Payment Date,” which date shall be no earlier than the date of
such Change of Control). No later than 30 days following any Change of Control, the Company shall
mail a notice to each Holder describing the transaction or transactions that constitute the Change
of Control and offering to repurchase Notes on the Change of Control Payment Date specified in such
notice, which date shall be no earlier than 30 days and no later than 60 days from the date such
notice is mailed, pursuant to the procedures described in Section 3.08 (including the notice
required thereby). The Company shall comply with the requirements of Rule 14e-1 under the Exchange
Act and any other securities laws and regulations thereunder to the extent such laws and
regulations are applicable in connection with the repurchase of the Notes as a result of a Change
of Control. To the extent that the provisions of any securities laws or regulations conflict with
the Change of Control provisions of this




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Indenture, or compliance with the Change of Control
provisions of this Indenture would constitute a violation of any such laws or regulations, the
Company shall comply with the applicable securities laws and regulations and will not be deemed to
have breached its obligations under the Change of Control provisions of this Indenture by virtue of
such compliance.




          (b) On or before the Change of Control Payment Date, the Company shall, to the extent lawful:





     (i) accept for payment all Notes or portions thereof properly tendered pursuant to the
Change of Control Offer;




     (ii) deposit with the Paying Agent an amount equal to the Change of Control Payment in
respect of all Notes or portions thereof properly tendered; and




     (iii) deliver or cause to be delivered to the Trustee the Notes so accepted together
with an Officers’ Certificate stating the aggregate principal amount of Notes or portions
thereof being purchased by the Company.



          (c) The Paying Agent shall promptly mail or wire transfer to each Holder of Notes properly
tendered the Change of Control Payment for such Notes, and the Trustee shall promptly authenticate
and mail (or cause to be transferred by book entry) to each Holder a new Note equal in principal
amount to any unpurchased portion of the Notes surrendered, if any; provided that each such new
Note shall be in a principal amount of $2,000 or an integral multiple of $1,000 in excess thereof.




          (d) The Company shall publicly announce the results of the Change of Control Offer on or as
soon as practicable after the Change of Control Payment Date.




          (e) If Holders of not less than 95% in aggregate principal amount of the outstanding Notes
validly tender and do not withdraw such Notes in a Change of Control Offer and the Company, or any
third party making a Change of Control Offer in lieu of the Company as described in this Section
4.13, purchases all of the Notes validly tendered and not withdrawn by such Holders, the Company
shall have the right, upon not less than 30 nor more than 60 days’ prior notice, given not more
than 30 days following such purchase pursuant to the Change of Control Offer described in this
Section 4.13, to redeem all Notes that remain outstanding following such purchase at a redemption
price in cash equal to the applicable Change of Control Payment plus, to the extent not included in
the Change of Control Payment, accrued and unpaid interest, if any, and Liquidated Damages, if any
thereon, to the date of redemption.




          (f) Notwithstanding anything to the contrary in this Section 4.13, the Company shall not be
required to make a Change of Control Offer upon a Change of Control if (i) a third party makes the
Change of Control Offer in the manner, at the times and otherwise in compliance with the
requirements set forth in this Section 4.13 and all other provisions of this Indenture applicable
to a Change of Control Offer made by the Company and purchases all Notes properly tendered and not
withdrawn under such Change of Control Offer or (ii) notice of redemption has been given pursuant
to Section 3.03 and all other provisions of this Indenture applicable to an Optional Redemption,
unless and until there is a default in payment of the applicable redemption price.




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Section 4.14. Designation of Restricted and Unrestricted Subsidiaries.




          (a) The Board of Directors of the Company may designate any Restricted Subsidiary of the
Company to be an Unrestricted Subsidiary; provided that:





     (i) any Guarantee by the Company or any Restricted Subsidiary thereof of any
Indebtedness of the Subsidiary being so designated shall be deemed to be an Incurrence of
Indebtedness by the Company or such Restricted Subsidiary (or both, if applicable) at the
time of such designation, and such Incurrence of Indebtedness would be permitted under
Section 4.09;




     (ii) the aggregate Fair Market Value of all outstanding Investments owned by the
Company and its Restricted Subsidiaries in the Subsidiary being so designated (including any
Guarantee by the Company or any Restricted Subsidiary of any Indebtedness of such
Subsidiary) shall be deemed to be a Restricted Investment made as of the time of such
designation and such Investment would be permitted under Section 4.07;




     (iii) such Subsidiary does not hold any Liens on any property of, the Company or any
Restricted Subsidiary thereof;




     (iv) the Subsidiary being so designated:




     (1) is a Person with respect to which neither the Company nor any of its
Restricted Subsidiaries has any direct or indirect obligation (A) to subscribe for
additional Equity Interests or (B) to maintain or preserve such Person’s financial
condition or to cause such Person to achieve any specified levels of operating
results; and




     (2) has not guaranteed or otherwise directly or indirectly provided credit
support for any Indebtedness of the Company or any of its Restricted Subsidiaries,
except to the extent such Guarantee or credit support would be released upon such
designation; and




     (3) has at least one director on its Board of Directors that is not a director
or officer of the Company or any of its Restricted Subsidiaries and has at least one
executive officer that is not a director or officer of the Company or any of its
Restricted Subsidiaries; and




     (v) no Default or Event of Default would be in existence following such designation.



          (b) Any designation of a Restricted Subsidiary of the Company as an Unrestricted Subsidiary
shall be evidenced to the Trustee by filing with the Trustee the Board Resolution giving effect to
such designation and an Officers’ Certificate certifying that such designation complied with the
preceding conditions and was permitted by this Indenture. If, at any time, any Unrestricted
Subsidiary would fail to meet any of the preceding requirements described in subclauses (1) or (2)
of clause (iv) above it shall thereafter cease to be an Unrestricted Subsidiary




69









 




for purposes of
this Indenture and any Indebtedness of such Subsidiary shall be deemed to be Incurred or made by a
Restricted Subsidiary of the Company as of such date and, if such Indebtedness, Investments or
Liens are not permitted to be Incurred or made as of such date under this Indenture, the Company
shall be in default under this Indenture.




          (c) The Board of Directors of the Company may at any time designate any Unrestricted
Subsidiary to be a Restricted Subsidiary; provided that:





     (i) such designation shall be deemed to be an Incurrence of Indebtedness by a
Restricted Subsidiary of the Company of any outstanding Indebtedness of such Unrestricted
Subsidiary and such designation shall only be permitted if such Indebtedness is permitted
under Section 4.09; and




     (ii) no Default or Event of Default would be in existence following such designation.


Section 4.15. Payments for Consent.




          The Company shall not, and shall not permit any of its Restricted Subsidiaries to, directly or
indirectly, pay or cause to be paid any consideration to or for the benefit of any Holder of Notes
for or as an inducement to any consent, waiver or amendment of any of the
terms or provisions of this Indenture or the Notes unless such consideration is offered to be
paid and is paid to all Holders of the Notes that consent, waive or agree to amend in the time
frame set forth in the solicitation documents relating to such consent, waiver or agreement.



Section 4.16. Subsidiary Guarantees.




          (a) If the Company or any of its Restricted Subsidiaries acquires or creates another Domestic
Subsidiary on or after the Issue Date, then that newly acquired or created Domestic Subsidiary must
become a Guarantor and execute a supplemental indenture and deliver an Opinion of Counsel to the
Trustee within 15 Business Days of the date on which it was acquired or created; provided, however,
that a Domestic Subsidiary that owns net assets that have an aggregate fair market value (as
determined in good faith by the Board of Directors of the Company) of less than 5% of the
Consolidated Tangible Assets as of the end of the previous quarter, need not become a Guarantor.




          (b) However, if, as of the end of any fiscal quarter, the Domestic Subsidiaries that are not
Guarantors collectively own net assets that have an aggregate fair market value (as determined in
good faith by the Board of Directors of the Company) equal to or greater than 5% of the
Consolidated Tangible Assets, then the Company shall designate one or more of such non-Guarantor
Domestic Subsidiaries to become Guarantors such that after giving effect to such designation or
designations, as the case may be, the total net assets owned by all such remaining non-Guarantor
Domestic Subsidiaries will have an aggregate fair market value (as determined in good faith by the
Board of Directors of the Company) of less than 5% of the Consolidated Tangible Assets. Any such
Restricted Subsidiary so designated shall become a Guarantor and execute a supplemental indenture
(in substantially the form attached hereto as Exhibit E or in such other form as shall be
acceptable to the Trustee) and deliver an Opinion of Counsel to the Trustee within 15 Business Days
of the date on which it was designated.




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ARTICLE FIVE

SUCCESSORS



Section 5.01. Merger, Consolidation or Sale of Assets.




          (a) The Company shall not: (1) consolidate or merge with or into another Person (regardless of
whether the Company is the surviving corporation) or (2) directly or indirectly sell, assign,
transfer, convey or otherwise dispose of all or substantially all of the properties and assets of
the Company and its Restricted Subsidiaries taken as a whole, in one or more related transactions,
to another Person, unless:





     (i) either: (1) the Company is the surviving corporation; or (2) the Person formed by
or surviving any such consolidation or merger (if other than the Company) or to which such
sale, assignment, transfer, conveyance or other disposition shall have been made (A) is a
corporation organized or existing under the laws of the United States, any state thereof or
the District of Columbia and (B) assumes all the obligations of the
Company under the Notes, this Indenture and the Registration Rights Agreement pursuant
to agreements reasonably satisfactory to the Trustee;




     (ii) immediately after giving effect to such transaction, no Default or Event of
Default exists;




     (iii) either (1) immediately after giving effect to such transaction on a pro forma
basis, the Company or the Person formed by or surviving any such consolidation or merger (if
other than the Company), or to which such sale, assignment, transfer, conveyance or other
disposition shall have been made, will be permitted to Incur at least $1.00 of additional
Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in Section 4.09(a);
or (2) immediately after giving effect to such transaction on a pro forma basis and any
related financing transactions as if the same had occurred at the beginning of the
applicable four-quarter period, the Fixed Charge Coverage Ratio of the Company is equal to
or greater than its Fixed Charge Coverage Ratio immediately before such transaction; and




     (iv) the Company delivers to the Trustee an Officers’ Certificate (attaching the
arithmetic computation to demonstrate compliance with clause (iii) of this Section 5.01(a))
and an Opinion of Counsel, in each case stating that such transaction and such agreement
complies with this covenant and that all conditions precedent provided for herein relating
to such transaction have been complied with.



          (b) In addition, the Company and its Restricted Subsidiaries shall not, directly or
indirectly, lease all or substantially all of the properties or assets of the Company and its
Restricted Subsidiaries considered as one enterprise, in one or more related transactions, to any
other Person.




          (c) Section 5.01 shall not apply to (i) a merger of the Company with an Affiliate solely for
the purpose of reincorporating the Company in another jurisdiction; or (ii) any merger or
consolidation, or any sale, transfer, assignment, conveyance, lease or other disposition of assets
between or among the Company and its Restricted Subsidiaries that are Guarantors.




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Section 5.02. Successor Corporation Substituted.




          Upon any merger or consolidation, or any sale, transfer, assignment, conveyance or other
disposition of all or substantially all of the properties or assets of the Company and its
Restricted Subsidiaries in accordance with Section 5.01, the successor Person formed by such
consolidation or into which the Company is merged or to which such sale, transfer, assignment,
conveyance or other disposition is made, shall succeed to, and be substituted for the Company (so
that from and after the date of such consolidation, merger, sale, conveyance or other disposition,
the provisions of this Indenture referring to the “Company” shall refer instead to the successor
corporation and not to the Company), and may exercise every right and power of the Company under
this Indenture with the same effect as if such successor Person had been named as the Company
herein. When the successor assumes all of the Company’s obligations under this Indenture, the
Company shall be discharged from those obligations; provided, however, that
the Company shall not be relieved from the obligation to pay the principal of and interest on
the Notes except in the case of a sale of all of the Company’s assets in a transaction that is
subject to, and that complies with, the provisions of this Section 5.01.




ARTICLE SIX

DEFAULTS AND REMEDIES



Section 6.01. Events of Default.





     (a) Each of the following is an “Event of Default”:




     (i) default for 30 days in the payment when due of interest on, or Liquidated Damages,
if any, with respect to, the Notes;




     (ii) default in payment when due of the principal of, or premium, if any, on the Notes;




     (iii) failure by the Company to comply with its obligations under Article Five or to
consummate a purchase of Notes when required pursuant to Section 4.10 or 4.13;




     (iv) failure by the Company or any of its Restricted Subsidiaries for 30 days to comply
with the provisions of Sections 4.07 or 4.09 or to comply with the provisions of Section
4.10 or 4.13 to the extent not described above in clause (iii) of this Section 6.01(a).




     (v) failure by the Company or any of its Restricted Subsidiaries for 60 days after
written notice by the Trustee or Holders representing 25% or more of the aggregate principal
amount of Notes outstanding to comply with any of the other agreements in this Indenture;




     (vi) default under any mortgage, indenture or instrument under which there may be
issued or by which there may be secured or evidenced any Indebtedness for money borrowed by
the Company or any of its Restricted Subsidiaries (or the payment of which is Guaranteed by
the Company or any of its Restricted Subsidiaries) whether such Indebtedness or Guarantee
now exists, or is created after the Issue Date, if that default:



72









 






     (A) is caused by a failure to make any payment when due at the final maturity
of such Indebtedness (a “Payment Default”); or




     (B) results in the acceleration of such Indebtedness prior to its express
maturity,





and, in each case, the principal amount of any such Indebtedness, together with the
principal amount of any other such Indebtedness under which there has been a Payment
Default or the maturity of which has been so accelerated, aggregates $15.0 million
or more;




     (vii) failure by the Company or any of its Restricted Subsidiaries to pay final
judgments (to the extent such judgments are not paid or covered by insurance provided by a
reputable carrier that has the ability to perform and has acknowledged coverage in writing)
aggregating in excess of $15.0 million, which judgments are not paid, discharged or stayed
for a period of 60 days;




     (viii) except as permitted by this Indenture, any Subsidiary Guarantee shall be held in
any judicial proceeding to be unenforceable or invalid or shall cease for any reason to be
in full force and effect or any Guarantor, or any Person acting on behalf of any Guarantor,
shall deny or disaffirm its obligations under its Subsidiary Guarantee;




     (ix) the Company, any Guarantor or any Significant Subsidiary of the Company (or any
Restricted Subsidiaries of the Company that together would constitute a Significant
Subsidiary of the Company) pursuant to or within the meaning of Bankruptcy Law:




     (A) commences a voluntary case,




     (B) consents to the entry of an order for relief against it in an involuntary
case,




     (C) makes a general assignment for the benefit of its creditors, or




     (D) generally is not paying its debts as they become due; and



     (x) a court of competent jurisdiction enters an order or decree under any Bankruptcy
Law that:




     (A) is for relief against the Company, any Guarantor or any Significant
Subsidiary of the Company (or Restricted Subsidiaries of the Company that together
would constitute a Significant Subsidiary of the Company), in an involuntary case;
or




     (B) appoints a custodian of the Company, any Guarantor or any Significant
Subsidiary of the Company (or Restricted Subsidiaries of the Company that together
would constitute a Significant Subsidiary of the Company) or for all or
substantially all of the property of the Company, any Guarantor or




73










 







any Significant
Subsidiary of the Company (or Restricted Subsidiaries of the Company that together
would constitute a Significant Subsidiary of the Company); or




     (C) orders the liquidation of the Company, any Guarantor or any Significant
Subsidiary of the Company (or Restricted Subsidiaries of the Company that together
would constitute a Significant Subsidiary of the Company);
and the order or decree remains unstayed and in effect for 60 consecutive days.



Section 6.02. Acceleration.




          To the extent permitted by applicable law, in the case of an Event of Default specified in
clause (ix) or (x) of Section 6.01(a), with respect to the Company, any Restricted Subsidiary that
is a Significant Subsidiary or any group of Restricted Subsidiaries that, taken together, would
constitute a Significant Subsidiary, all outstanding Notes will become due and payable immediately
without further action or notice. If any other Event of Default occurs and is continuing, the
Trustee or the Holders of at least 25% in principal amount of the then outstanding Notes may
declare all the Notes to be due and payable immediately by notice in writing to the Company
specifying the Event of Default.



          Upon any such declaration, the Notes shall become due and payable immediately.



          The Holders of a majority in aggregate principal amount of the Notes then outstanding by
written notice to the Trustee may, on behalf of the Holders of all of the Notes, rescind an
acceleration and its consequences under the Indenture.



          The Company shall, so long as any of the Notes are outstanding, deliver to the Trustee, within
three Business Days after any Officer becomes aware of any Default or Event of Default, an
Officers’ Certificate specifying such Default or Event of Default and what action the Company is
taking or proposes to take with respect thereto.



Section 6.03. Other Remedies.




          (a) If an Event of Default occurs and is continuing, the Trustee may pursue any available
remedy to collect the payment of principal, premium, if any, interest, and Liquidated Damages, if
any, with respect to, the Notes or to enforce the performance of any provision of the Notes or this
Indenture.



          (b) The Trustee may maintain a proceeding even if it does not possess any of the Notes or does
not produce any of them in the proceeding. A delay or omission by the Trustee or any Holder of a
Note in exercising any right or remedy accruing upon an Event of Default shall not impair the right
or remedy or constitute a waiver of or acquiescence in the Event of Default. All remedies are
cumulative to the extent permitted by law.



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Section 6.04. Waiver of Past Defaults.




          Holders of a majority in aggregate principal amount of the Notes then outstanding by notice to
the Trustee may on behalf of the Holders of all of the Notes waive any existing Default or Event of
Default and its consequences under this Indenture except a continuing Default or Event of Default
in the payment of interest or Liquidated Damages on, or the principal of, the Notes provided,
however, that the Holders of a majority in aggregate principal amount of the then outstanding Notes
may rescind an acceleration and its consequences, including any related payment default that
resulted from such acceleration.



          Upon any such waiver, such Default shall cease to exist, and any Event of Default arising
therefrom shall be deemed to have been cured for every purpose of this Indenture; but no such
waiver shall extend to any subsequent or other Default or impair any right consequent thereon



Section 6.05. Control by Majority.




          The Holders of a majority in principal amount of the then outstanding Notes will have the
right to direct the time, method and place of conducting any proceeding for exercising any remedy
available to the Trustee. However, the Trustee may refuse to follow any direction that conflicts
with law or this Indenture, that may involve the Trustee in personal liability, or that the Trustee
determines in good faith may be unduly prejudicial to the rights of Holders of Notes not joining in
the giving of such direction and may take any other action it deems proper that is not inconsistent
with any such direction received from Holders of Notes.



Section 6.06. Limitation on Suits.




          (a) A Holder may not pursue any remedy with respect to this Indenture or the Notes unless:




     (i) the Holder gives the Trustee written notice of a continuing Event of Default;




     (ii) the Holder or Holders of at least 25% in aggregate principal amount of
outstanding Notes make a written request to the Trustee to pursue the remedy;




     (iii) such Holder or Holders offer the Trustee indemnity satisfactory to the Trustee
against any costs, liability or expense;




     (iv) the Trustee does not comply with the request within 60 days after receipt of the
request and the offer of indemnity; and




     (v) during such 60-day period, the Holders of a majority in aggregate principal amount
of the outstanding Notes do not give the Trustee a direction that is inconsistent with the
request.



          (b) A Holder of a Note may not use this Indenture to prejudice the rights of another Holder of
a Note or to obtain a preference or priority over another Holder of a Note.



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Section 6.07. Rights of Holders of Notes to Receive Payment.




          The limitations in Section 6.06 shall not apply to the right of any Holder of a Note to
receive payment of the principal of, premium or Liquidated Damages, if any, or interest on, such
Note or to bring suit for the enforcement of any such payment, on or after the due date expressed
in the Notes, which right shall not be impaired or affected without the consent of the Holder.



Section 6.08. Collection Suit by Trustee.




          If an Event of Default specified in Section 6.01(a)(i) or (a)(ii) occurs and is continuing,
the Trustee is authorized to recover judgment in its own name and as trustee of an express trust
against the Company for the whole amount of principal of, premium, if any, interest, and Liquidated
Damages, if any, remaining unpaid on the Notes and interest on overdue principal and premium, if
any, and, to the extent lawful, interest and Liquidated Damages, if any, and such further amount as
shall be sufficient to cover the costs and expenses of collection, including the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents and counsel.



Section 6.09. Trustee May File Proofs of Claim.




          The Trustee is authorized to file such proofs of claim and other papers or documents as may be
necessary or advisable in order to have the claims of the Trustee (including any claim for the
reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and
counsel) and the Holders of the Notes allowed in any judicial proceedings relative to the Company
or any Guarantor (or any other obligor upon the Notes), its creditors or its property and shall be
entitled and empowered to collect, receive and distribute any money or other securities or property
payable or deliverable on any such claims and any custodian in any such judicial proceeding is
hereby authorized by each Holder to make such payments to the Trustee, and in the event that the
Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee
any amount due to it for the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee under Section 7.07. To the
extent that the payment of any such
compensation, expenses, disbursements and advances of the Trustee, its agents and counsel and
any other amounts due the Trustee under Section 7.07 out of the estate in any such proceeding shall
be denied for any reason, payment of the same shall be secured by a Lien on, and shall be paid out
of, any and all distributions, dividends, money, securities and other properties that the Holders
may be entitled to receive in such proceeding whether in liquidation or under any plan of
reorganization or arrangement or otherwise. Nothing herein contained shall be deemed to authorize
the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Notes or the rights of any
Holder, or to authorize the Trustee to vote in respect of the claim of any Holder in any such
proceeding.



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Section 6.10. Priorities.




          (a) If the Trustee collects any money pursuant to this Article Six, it shall pay out the money
in the following order:




     First: to the Trustee, its agents and attorneys for amounts due under Section 7.07,
including payment of all compensation, expense and liabilities incurred, and all advances
made, by the Trustee and the costs and expenses of collection;




     Second: to Holders of Notes for amounts due and unpaid on the Notes for principal,
premium, if any, interest and Liquidated Damages, if any, ratably, without preference or
priority of any kind, according to the amounts due and payable on the Notes for principal,
premium, if any, interest, and Liquidated Damages, if any, respectively; and




     Third: to the Company or to such party as a court of competent jurisdiction shall
direct.



          (b) The Trustee may fix a record date and payment date for any payment to Holders of Notes
pursuant to this Section 6.10.



Section 6.11. Undertaking for Costs.




          In any suit for the enforcement of any right or remedy under this Indenture or in any suit
against the Trustee for any action taken or omitted by it as a Trustee, a court in its discretion
may require the filing by any party litigant in the suit of an undertaking to pay the costs of the
suit, and the court in its discretion may assess reasonable costs, including reasonable attorneys’
fees, against any party litigant in the suit, having due regard to the merits and good faith of the
claims or defenses made by the party litigant. This Section 6.11 does not apply to a suit by the
Trustee, a suit by a Holder of a Note pursuant to Section 6.07 hereof, or a suit by Holders of more
than ten percent in principal amount of the then outstanding Notes.



ARTICLE
SEVEN




TRUSTEE




Section 7.01. Duties of Trustee.




          (a) If an Event of Default has occurred and is continuing, the Trustee shall be required, in
the exercise of its power vested in it by this Indenture, and use the degree of care of a prudent
man in the conduct of his own affairs.



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




     (i) the duties of the Trustee shall be determined solely by the express provisions of
this Indenture and the Trustee need perform only those duties that are specifically set
forth (or incorporated by reference) in this Indenture and no others, and no implied
covenants or obligations shall be read into this Indenture against the Trustee; and



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     (ii) in the absence of bad faith on its part, the Trustee may conclusively rely, as to
the truth of the statements and the correctness of the opinions expressed therein, upon
certificates or opinions furnished to the Trustee and conforming to the requirements of
this Indenture. However, the Trustee shall examine the certificates and opinions to
determine whether or not they conform to the requirements of this Indenture.



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




     (i) this paragraph does not limit the effect of paragraph (b) of this Section 7.01;




     (ii) the Trustee shall not be liable for any error of judgment made in good faith by a
Responsible Officer, unless it is proved that the Trustee was negligent in ascertaining the
pertinent facts; and




     (iii) the Trustee shall not be liable with respect to any action it takes or omits to
take in good faith in accordance with a direction received by it pursuant to Section 6.05.



          (d) Whether or not therein expressly so provided, every provision of this Indenture that in
any way relates to the Trustee is subject to paragraphs (a), (b) and (c) of this Section 7.01.



          (e) No provision of this Indenture shall require the Trustee to expend or risk its own funds
or incur any liability. The Trustee shall be under no obligation to exercise any of its rights and
powers under this Indenture at the request of any Holders, unless such Holder shall have offered to
the Trustee security and indemnity satisfactory
to it against any loss, liability or expense that might be incurred by it in connection with
the request or direction.



          (f) Money held in trust by the Trustee need not be segregated from other funds except to the
extent required by law.



          (g) In all cases, the duties and responsibilities of the Trustee shall be as provided in the
Trust Indenture Act of 1939 (as from time to time in effect).



Section 7.02. Certain Rights of Trustee.




          (a) The Trustee may conclusively rely upon any document reasonably believed by it to be
genuine and to have been signed or presented by the proper Person. The Trustee need not
investigate any fact or matter stated in the document.



          (b) Before the Trustee acts or refrains from acting, it may require an Officers’ Certificate
or an Opinion of Counsel or both. The Trustee shall not be liable for any action it takes or omits
to take in good faith in reliance on such Officers’ Certificate or Opinion of Counsel. The Trustee
may consult with counsel and the advice of such counsel or any Opinion of Counsel shall be full and
complete authorization and protection from liability in respect of any action taken, suffered or
omitted by it hereunder in good faith and in reliance thereon.



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



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



          (e) Unless otherwise specifically provided in this Indenture, any demand, request, direction
or notice from the Company shall be sufficient if signed by an Officer of the Company.



          (f) The Trustee shall be under no obligation to exercise any of the rights or powers vested in
it by this Indenture at the request or direction of any of the Holders unless such Holders shall
have offered to the Trustee security or indemnity reasonably satisfactory to it against any loss,
liability or expense.



          (g) The Trustee shall not be deemed to have notice of any Default or Event of Default (except
any Event of Default under clause (i) or (ii) of Section 6.01(a)) unless a Responsible Officer of
the Trustee has actual knowledge thereof.



Section 7.03. Individual Rights of Trustee.




          The Trustee in its individual or any other capacity may become the owner or pledgee of Notes
and may become a creditor of, or otherwise deal with, the Company or any of its Affiliates with the
same rights it would have if it were not Trustee. However, in the event that the Trustee acquires
any conflicting interest as described in the Trust Indenture Act of 1939 (as in effect at such
time), it must eliminate such conflict within 90 days, apply to the SEC for permission to continue
as trustee (if this Indenture has been qualified under the Trust Indenture Act of 1939) or resign.
Any Agent may do the same with like rights and duties. The Trustee is also subject to Sections
7.10 and 7.11.



Section 7.04. Trustee’s Disclaimer.




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



Section 7.05. Notice of Defaults.




          If a Default or Event of Default occurs and is continuing and if it is known to the Trustee,
the Trustee shall mail to Holders of Notes a notice of the Default or Event of Default within 90
days after it occurs. Except in the case of a Default or Event of Default relating to the payment
of principal, premium or interest or Liquidated Damages on any Note, the Trustee may



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withhold the
notice if and so long as a committee of its Responsible Officers in good faith determines that
withholding the notice is in the interests of the Holders of the Notes.



Section 7.06. Reports by Trustee to Holders of the Notes.




          (a) Within 60 days after each May 15 beginning with the May 15 following the Issue Date, and
for so long as Notes remain outstanding, the Trustee shall mail to the Holders of the Notes a brief
report dated as of such reporting date that complies with TIA Section 313(a) (but if no event
described in TIA Section 313(a) has occurred within the twelve months preceding the reporting date,
no report need be
transmitted). The Trustee also shall comply with TIA Section 313(b)(2). The Trustee shall
also transmit by mail all reports as required by TIA Section 313(c).



          (b) A copy of each report at the time of its mailing to the Holders of Notes shall be mailed
to the Company and filed with the SEC and each stock exchange on which the Notes are listed in
accordance with TIA Section 313(d). The Company shall promptly notify the Trustee when the Notes
are listed on any stock exchange or any delisting thereof.



Section 7.07. Compensation and Indemnity.




          (a) The Company shall pay to the Trustee from time to time reasonable compensation for its
acceptance of this Indenture and services provided hereunder. The Trustee’s compensation shall not
be limited by any law on compensation of a trustee of an express trust. The Company shall
reimburse the Trustee promptly upon request for all reasonable disbursements, advances and expenses
incurred or made by it in addition to the compensation for its services. Such expenses shall
include the reasonable compensation, disbursements and expenses of the Trustee’s agents and counsel
and any taxes and other expenses incurred by a trust created pursuant to Section 8.04.



          (b) The Company and the Guarantors shall indemnify the Trustee and its agents against any and
all losses, liabilities or expenses incurred by it arising out of or in connection with the
acceptance or administration of its duties under this Indenture, including the costs and expenses
of enforcing this Indenture against the Company and the Guarantors (including this Section 7.07)
and defending itself against any claim (whether asserted by either of the Company or any Holder or
any other Person) or liability in connection with the exercise or performance of any of its powers
or duties hereunder, except to the extent any such loss, liability or expense may be attributable
to its negligence, bad faith or willful misconduct. The Trustee shall notify the Company and the
Guarantors promptly of any claim for which it may seek indemnity. Failure by the Trustee to so
notify the Company shall not relieve the Company of its obligations hereunder unless the failure to
notify the Company impairs the Company’s ability to defend such claim. The Company shall defend
the claim and the Trustee shall cooperate in the defense. The Company need not pay for any
settlement made without its consent, which consent shall not be unreasonably withheld, conditioned
or delayed.



          (c) The obligations of the Company and the Guarantors under this Section 7.07 shall survive
the satisfaction and discharge of this Indenture and resignation or removal of the Trustee.



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          (d) To secure the Company’s and the Guarantors’ payment obligations in this Section 7.07, the
Trustee shall have a Lien prior to the Notes on all money or property held or collected by the
Trustee, except that such Lien shall not apply to money and property held in trust to pay principal
and interest on particular Notes. Such Lien
shall survive the satisfaction and discharge of this Indenture and resignation or removal of
the Trustee.



          (e) When the Trustee incurs expenses or renders services after an Event of Default specified
in clause (ix) or (x) of Section 6.01(a) hereof occurs, the expenses and the compensation for the
services (including the fees and expenses of its agents and counsel) are intended to constitute
expenses of administration under any Bankruptcy Law.



          (f) The Trustee shall comply with the provisions of TIA Section 313(b)(2) to the extent
applicable.



Section 7.08. Replacement of Trustee.




          (a) A resignation or removal of the Trustee and appointment of a successor Trustee shall
become effective only upon the successor Trustee’s acceptance of appointment as provided in this
Section 7.08.



          (b) The Trustee may resign in writing at any time and be discharged from the trust hereby
created by so notifying the Company. The Holders of a majority in principal amount of the then
outstanding Notes may remove the Trustee by so notifying the Trustee and the Company in writing.
The Company may remove the Trustee if:




     (i) the Trustee fails to comply with Section 7.10;




     (ii) the Trustee is adjudged a bankrupt or an insolvent or an order for relief is
entered with respect to the Trustee under any Bankruptcy Law;




     (iii) a custodian or public officer takes charge of the Trustee or its property; or




     (iv) the Trustee becomes incapable of acting.



          (c) If the Trustee resigns or is removed or if a vacancy exists in the office of Trustee for
any reason, the Company shall promptly appoint a successor Trustee. Within one year after the
successor Trustee takes office, the Holders of a majority in principal amount of the then
outstanding Notes may appoint a successor Trustee to replace the successor Trustee appointed by the
Company.



          (d) If a successor Trustee does not take office within 30 days after the retiring Trustee
resigns or is removed, the retiring Trustee, the Company, or the Holders of at least 10% in
principal amount of the then outstanding Notes may petition at the expense of the Company any court
of competent jurisdiction for the appointment of a successor Trustee.



          (e) If the Trustee, after written request by any Holder who has been a Holder for at least six
months, fails to comply with Section 7.10, such Holder may petition any court of competent
jurisdiction for the removal of the Trustee and the appointment of a successor Trustee.



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          (f) A successor Trustee shall deliver a written acceptance of its appointment to the retiring
Trustee and to the Company. Thereupon, the resignation or removal of the retiring Trustee shall
become effective, and the successor Trustee shall have all the rights, powers and duties of the
Trustee under this Indenture. The successor Trustee shall mail a notice of its succession to
Holders. The retiring Trustee shall promptly transfer all property held by it as Trustee to the
successor Trustee, provided all sums owing to the Trustee hereunder have been paid and subject to
the Lien provided for in Section 7.07. Notwithstanding replacement of the Trustee pursuant to this
Section 7.08, the Company’s obligations under Section 7.07 shall continue for the benefit of the
retiring Trustee.



Section 7.09. Successor Trustee by Merger, Etc.




          If the Trustee consolidates, merges or converts into, or transfers all or substantially all of
its corporate trust business to, another Person, the successor Person without any further act shall
be the successor Trustee.



Section 7.10. Eligibility; Disqualification.




          There shall at all times be a Trustee hereunder that is a corporation or banking association
organized and doing business under the laws of the United States of America or of any state thereof
that is authorized under such laws to exercise corporate trust powers, that is subject to
supervision or examination by federal or state authorities and that has a combined capital and
surplus of at least $50.0 million as set forth in its most recent published annual report of
condition.



          This Indenture shall always have a Trustee who satisfies the requirements of TIA Section
310(a)(1), (2) and (5). The Trustee is subject to TIA Section 310(b).



Section 7.11. Preferential Collection of Claims Against Company.




          The Trustee is subject to TIA Section 311(a), excluding any creditor relationship listed in
TIA Section 311(b). A Trustee who has resigned or been removed shall be subject to TIA Section
311(a) to the extent indicated therein. The Trustee hereby waives any right to set off any claim
that it may have against the Company in any capacity (other than as Trustee and Paying Agent)
against any of the assets of the Company held by the Trustee; provided, however, that if the
Trustee is or becomes a
lender of any other Indebtedness permitted hereunder to be pari passu with the Notes, then
such waiver shall not apply to the extent of such Indebtedness.



ARTICLE
EIGHT




DEFEASANCE AND COVENANT DEFEASANCE




Section 8.01. Option to Effect Legal Defeasance or Covenant Defeasance.




          The Company may, at the option of its Board of Directors evidenced by a resolution set forth
in an Officers’ Certificate, at any time, elect to have either Section 8.02 or 8.03 be applied to
all outstanding Notes upon compliance with the conditions set forth below in this Article Eight.



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Section 8.02. Legal Defeasance and Discharge.




          Upon the Company’s exercise under Section 8.01 hereof of the option applicable to this Section
8.02, the Company shall, subject to the satisfaction of the conditions set forth in Section 8.04
hereof, be deemed to have been discharged from its obligations with respect to all outstanding
Notes and all obligations of the Guarantors shall be deemed to have been discharged with respect to
their obligations under the Subsidiary Guarantees on the date the conditions set forth below are
satisfied (hereinafter, “Legal Defeasance”). For this purpose, Legal Defeasance means that the
Company and the Guarantors shall be deemed to have paid and discharged the entire Indebtedness
represented by the outstanding Notes and Subsidiary Guarantees, respectively, which shall
thereafter be deemed to be “outstanding” only for the purposes of Section 8.05 and the other
Sections of this Indenture referred to in (a) and (b) below, and to have satisfied all its other
obligations under such Notes and this Indenture (and the Trustee, on demand of and at the expense
of the Company, shall execute proper instruments acknowledging the same), except for the following
provisions which shall survive until otherwise terminated or discharged hereunder: (a) the rights
of Holders of outstanding Notes to receive payments in respect of the principal of, or interest or
premium and Liquidated Damages, if any, on such Notes when such payments are due from the trust
referred to in Section 8.04, (b) the Company’s obligations pursuant to Sections 2.05, 2.07, 2.08,
2.11 and 4.02, (c) the rights, powers, trusts, duties and immunities of the Trustee hereunder and
the Company’s and the Guarantors’ obligations in connection therewith and (d) the provisions of
this Article Eight related to Legal Defeasance. Subject to compliance with this Article Eight, the
Company may exercise its option under this Section 8.02 notwithstanding the prior exercise of its
option under Section 8.03 hereof.



Section 8.03. Covenant Defeasance.




          Upon the Company’s exercise under Section 8.01 hereof of the option applicable to this Section
8.03, the Company and the Guarantors shall, subject to the satisfaction of the conditions set forth
in Section 8.04 hereof, be released from their obligations under the covenants contained in
Sections 4.03, 4.07, 4.08, 4.09, 4.10, 4.11, 4.12, 4.13, 4.14, 4.15, 4.16 and 5.01(a)(iii) with
respect to the outstanding Notes on and after the date the conditions set forth in Section 8.04 are
satisfied (hereinafter, “Covenant Defeasance”), and the Notes shall thereafter be deemed not
“outstanding” for the purposes of any direction, waiver, consent or declaration or act of Holders
(and the consequences of any thereof) in connection with such covenants, but shall continue to be
deemed “outstanding” for all other purposes hereunder (it being understood that such Notes shall
not be deemed outstanding for accounting purposes). For this purpose, Covenant Defeasance means
that, with respect to the outstanding Notes and the Subsidiary Guarantees, the Company and the
Guarantors may omit to comply with and shall have no liability in respect of any term, condition or
limitation set forth in any such covenant, whether directly or indirectly, by reason of any
reference elsewhere herein to any such covenant or by reason of any reference in any such covenant
to any other provision herein or in any other document and such omission to comply shall not
constitute a Default or an Event of Default under Section 6.01, but, except as specified above, the
remainder of this Indenture and such Notes and Subsidiary Guarantees shall be unaffected thereby.
In addition, upon the Company’s exercise under Section 8.01 of the option applicable to this
Section 8.03, subject to the satisfaction of the conditions set forth in Section 8.04, clauses
(iii) through (vii) of Section




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6.01(a) shall not constitute Events of Default, and clause (ix) of Section 6.01(a) shall not
constitute an Event of Default with respect to the Subsidiaries of the Company only.



Section 8.04. Conditions to Legal or Covenant Defeasance.




          (a) The following shall be the conditions to the application of either Section 8.02 or 8.03 to
the outstanding Notes:




          (i) the Company must irrevocably deposit with the Trustee, in trust, for the benefit of
the Holders of the Notes, cash in U.S. dollars, non-callable Government Securities, or a
combination thereof, in such amounts as will be sufficient, in the opinion of a nationally
recognized investment bank, appraisal firm or firm of independent public accountants, to pay
the principal of, or interest and premium and Liquidated Damages, if any, on the outstanding
Notes on the Stated Maturity or on the applicable redemption date, as the case may be, and
the Company must specify whether the Notes are being defeased to maturity or to a particular
redemption date;




          (ii) in the case of Legal Defeasance, the Company shall have delivered to the Trustee
an Opinion of Counsel reasonably acceptable to the Trustee confirming that (1) the Company
has received from, or there has been published by, the Internal Revenue Service a ruling or
(2) since the Issue Date, there has been a change in the applicable federal income tax law,
in either case to the effect that, and based thereon such Opinion of Counsel shall confirm
that, the Holders of the outstanding Notes will not recognize income, gain or loss for
federal income tax purposes as a result of such Legal Defeasance and will be subject to
federal income tax on the same amounts, in the same manner and at the same times as would
have been the case if such Legal Defeasance had not occurred;




          (iii) in the case of Covenant Defeasance, the Company shall have delivered to the
Trustee an Opinion of Counsel reasonably acceptable to the Trustee confirming that the
Holders of the outstanding Notes will not recognize income, gain or loss for federal income
tax purposes as a result of such Covenant Defeasance and will be subject to federal income
tax on the same amounts, in the same manner and at the same times as would have been the
case if such Covenant Defeasance had not occurred;




          (iv) no Default or Event of Default shall have occurred and be continuing (other than a
Default or Event of Default resulting from the borrowing of funds to be applied to such
deposit) either: (1) on the date of such deposit; or (2) insofar as Events of Default from
bankruptcy or insolvency events are concerned, at any time in the period ending on the 123rd
day after the date of deposit;




          (v) such Legal Defeasance or Covenant Defeasance will not result in a breach or
violation of, or constitute a default under, any material agreement or instrument (other
than this Indenture) to which the Company or any of its Subsidiaries is a party or by which
the Company or any of its Subsidiaries is bound;




          (vi) in the case of Legal Defeasance, the Company must have delivered to the Trustee an
Opinion of Counsel to the effect that (1) assuming no intervening bankruptcy of the Company
or any Guarantor between the date of deposit and the 123rd day



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following the deposit and assuming that no Holder is an “insider” of the Company under
applicable bankruptcy law, after the 123rd day following the deposit, the trust
funds will not be subject to the effect of any applicable bankruptcy, insolvency,
reorganization or similar laws affecting creditors’ rights generally, including Section 547
of the United States Bankruptcy Code and Section 15 of the New York Debtor and Creditor Law,
and (2) the creation of the defeasance trust does not violate the Investment Company Act of
1940;




          (vii) the Company must deliver to the Trustee an Officers’ Certificate stating that the
deposit was not made by the Company with the intent of preferring the Holders of Notes over
the other creditors of the Company with the intent of defeating, hindering, delaying or
defrauding creditors of the Company or others;




          (viii) the Company must deliver to the Trustee an Officers’ Certificate, stating that
all conditions precedent set forth in clauses (i) through (vii) of this Section 8.04(a) have
been complied with; and




          (ix) the Company must deliver to the Trustee an Opinion of Counsel (which Opinion of
Counsel may be subject to customary assumptions, qualifications and exclusions), stating
that all conditions precedent set forth in clauses (ii) and (iii) of this Section 8.04(a)
have been complied with.


Section 8.05. Deposited Money and Government Securities to Be Held in Trust; Other
Miscellaneous Provisions.




          (a) Subject to Section 8.06, all money and non-callable Government Securities (including the
proceeds thereof) deposited with the Trustee pursuant to Section 8.04 in respect of the outstanding
Notes shall be held in trust and applied by the Trustee, in accordance with the provisions of such
Notes and this Indenture, to the payment, either directly or through any Paying Agent (including
the Company acting as Paying Agent) as the Trustee may determine, to the Holders of such Notes of
all sums due and to become due thereon in respect of principal, premium and Liquidated Damages, if
any, and interest, but such money need not be segregated from other funds except to the extent
required by law.



          (b) The Company shall pay and indemnify the Trustee against any tax, fee or other charge
imposed on or assessed against the cash or non-callable Government Securities deposited pursuant to
Section 8.04 or the principal and interest received in respect thereof other than any such tax, fee
or other charge which by law is for the account of the Holders of the outstanding Notes.



          (c) Anything in this Article Eight to the contrary notwithstanding, the Trustee shall deliver
or pay to the Company from time to time upon the request of the Company any money or non-callable
Government Securities held by it as provided in Section 8.04 which, in the opinion of a nationally
recognized firm of independent public accountants expressed in a written certification thereof
delivered to the Trustee (which may be the opinion delivered under Section 8.04(a)), are in excess
of the amount thereof that would then be required to be deposited to effect an equivalent Legal
Defeasance or Covenant Defeasance.



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Section 8.06. Repayment to the Company.




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


Section 8.07. Reinstatement.




          If the Trustee or Paying Agent is unable to apply any United States dollars or non-callable
Government Securities in accordance with Section 8.02 or 8.03, as the case may be, by reason of any
order or judgment of any court or governmental authority enjoining, restraining or otherwise
prohibiting such application, then the Company’s obligations under this Indenture and the Notes
shall be revived and reinstated as though no deposit had occurred pursuant to Section 8.02 or 8.03
and, in the case of a Legal Defeasance, the Guarantors’ obligations under their respective
Subsidiary Guarantees shall be revised and reinstated as though no deposit had occurred pursuant to
Section 8.02, in each case until such time as the Trustee or Paying Agent is permitted to apply all
such money in accordance with Section 8.02 or 8.03, as the case may be; provided, however, that, if
the Company makes any payment of principal of, premium or Liquidated Damages, if any, or interest
on any Note following the reinstatement of its obligations, the Company shall be subrogated to the
rights of the Holders of such Notes to receive such payment from the money held by the Trustee or
Paying Agent.



ARTICLE NINE

AMENDMENT, SUPPLEMENT AND WAIVER



Section 9.01. Without Consent of Holders of Notes.




          (a) Notwithstanding Section 9.02, without the consent of any Holder of a Note, the Company,
the Guarantors and the Trustee may amend or supplement this Indenture or the Notes:



          (i) to cure any ambiguity, defect or inconsistency;



          (ii) to provide for uncertificated Notes in addition to or in place of certificated
Notes;



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          (iii) to provide for the assumption of the Company’s or any Guarantor’s obligations to
Holders of Notes in the case of a merger or consolidation or sale of all or substantially
all of the Company’s or such Guarantor’s assets;



          (iv) to make any change that would provide any additional rights or benefits to the
Holders of Notes or that does not materially adversely affect the legal rights under this
Indenture of any such Holder;



          (v) to comply with requirements of the SEC in order to effect or maintain the
qualification of this Indenture under the Trust Indenture Act of 1939;



          (vi) to add any Subsidiary Guarantee or to effect the release of a Guarantor from its
Subsidiary Guarantee and the termination of such Subsidiary Guarantee, all in accordance
with the provisions of this Indenture governing such release and termination or to otherwise
comply with Section 4.16;



          (vii) to secure the Notes or any Subsidiary Guarantees or any other obligation under
this Indenture;



          (viii) to evidence and provide for the acceptance of appointment by a successor
Trustee;



          (ix) to conform the text of this Indenture or the Notes to any provision of the
“Description of the Notes” in the Offering Memorandum, to the extent that such provision in
the “Description of the Notes” in the Offering Memorandum was intended to be a verbatim
recitation of a provision of this Indenture, the Subsidiary Guarantees or the Notes; or



          (x) to provide for the issuance of Additional Notes in accordance with this Indenture.



          (b) Upon the request of the Company accompanied by a resolution of its Board of Directors
authorizing the execution of any such amended or supplemental indenture, and upon receipt by the
Trustee of any documents requested under Section 7.02(b) hereof, the Trustee shall join with the
Company in the execution of any amended or supplemental indenture authorized or permitted by the
terms of this Indenture and to make any further appropriate agreements and stipulations that may be
therein contained, but the Trustee shall not be obligated to enter into such amended or
supplemental indenture that affects its own rights, duties or immunities under this Indenture or
otherwise.


Section 9.02. With Consent of Holders of Notes.




          (a) Except as otherwise provided in this Section 9.02, the Company, the Guarantors and the
Trustee may amend or supplement this Indenture, the Notes or the Subsidiary Guarantees with the
consent of the Holders of at least a majority in principal amount of the Notes then outstanding
(including, without limitation, consents obtained in connection with a purchase of, or tender offer
or exchange offer for, Notes), and, subject to Sections 6.04 and 6.07, any existing Default or
Event of Default or compliance with any provision of this Indenture or the



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Notes or the Subsidiary Guarantees may be waived with the consent of the Holders of a majority
in principal amount of the then outstanding Notes (including Additional Notes, if any) (including,
without limitation, consents obtained in connection with a purchase of, or tender offer or exchange
offer for, Notes).



          (b) The Company may, but shall not be obligated to, fix a record date for the purpose of
determining the Persons entitled to consent to any indenture supplemental hereto. If a record date
is fixed, the Holders on such record date, or its duly designated proxies, and only such Persons,
shall be entitled to consent to such supplemental indenture, whether or not such Holders remain
Holders after such record date; provided that unless such consent shall have become effective by
virtue of the requisite percentage having been obtained prior to the date which is 90 days after
such record date, any such consent previously given shall automatically and without further action
by any Holder be cancelled and of no further effect.



          (c) Upon the request of the Company accompanied by a resolution of its Board of Directors
authorizing the execution of any such amendment or supplement to this Indenture, and upon the
filing with the Trustee of evidence satisfactory to the Trustee of the consent of the Holders of
Notes as aforesaid, and upon receipt by the Trustee of the documents described in Section 7.02(b),
the Trustee shall join with the Company in the execution of such amendment or supplement unless
such amendment or supplement directly affects the Trustee’s own rights, duties or immunities under
this Indenture or otherwise, in which case the Trustee may in its discretion, but shall not be
obligated to, enter into such amendment or supplement.



          (d) It shall not be necessary for the consent of the Holders of Notes under this Section 9.02
to approve the particular form of any proposed amendment, supplement or waiver, but it shall be
sufficient if such consent approves the substance thereof.



          (e) After an amendment, supplement or waiver under this Section becomes effective, the Company
shall mail to the Holders of Notes affected thereby a notice briefly describing the amendment,
supplement or waiver. Any failure of the Company to mail such notice, or any defect therein, shall
not, however, in any way impair or affect the validity of any such amendment, supplement or waiver.
Subject to Sections 6.04 and 6.07, the Holders of a majority in aggregate principal amount of the
then outstanding Notes (including Additional Notes, if any) may waive compliance in a particular
instance by the Company with any provision of this Indenture, or the Notes. However, without the
consent of each Holder affected, an amendment or waiver under this Section 9.02 may not (with
respect to any Notes held by a non-consenting Holder):



          (i) reduce the principal amount of Notes whose Holders must consent to an amendment,
supplement or waiver;



          (ii) reduce the principal of or change the fixed maturity of any Note or alter the
provisions, or waive any payment with respect to the redemption of the Notes; provided,
however, that solely for the avoidance of doubt, and without any other implication, any
purchase or repurchase of Notes, including pursuant to 4.10 and 4.13, shall not be deemed a
redemption of the Notes;



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          (iii) reduce the rate of or change the time for payment of interest on any Note;



          (iv) waive a Default or Event of Default in the payment of principal of, or interest or
premium or Liquidated Damages, if any, on the Notes (except a rescission of acceleration of
the Notes by the Holders of at least a majority in aggregate principal amount of the then
outstanding Notes and a waiver of the payment default that resulted from such acceleration);



          (v) make any Note payable in money other than U.S. dollars;



          (vi) make any change in the provisions of this Indenture relating to waivers of past
Defaults or the rights of Holders of Notes to receive payments of principal of, or interest
or premium or Liquidated Damages, if any, on the Notes;



          (vii) release any Guarantor from any of its obligations under its Subsidiary Guarantee
or this Indenture, except in accordance with the terms of this Indenture;



          (viii) impair the right to institute suit for the enforcement of any payment on or with
respect to the Notes or the Subsidiary Guarantees;



          (ix) amend or modify any of the provisions of this Indenture or the related definitions
affecting the ranking of the Notes or any Subsidiary Guarantee in any manner adverse to the
Holders of the Notes or any Subsidiary Guarantee; or



          (x) make any change in the preceding amendment and waiver provisions.



Section 9.03. Compliance with Trust Indenture Act.



          Every amendment or supplement to this Indenture or the Notes shall be set forth in a document
that complies with the TIA as then in effect.


Section 9.04. Revocation and Effect of Consents.




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


Section 9.05. Notation on or Exchange of Notes.




          (a) The Trustee may place an appropriate notation about an amendment, supplement or waiver on
any Note thereafter authenticated. The Company in exchange for all Notes may issue and the Trustee
shall, upon receipt of an Authentication Order, authenticate new Notes that reflect the amendment,
supplement or waiver.



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          (b) Failure to make the appropriate notation or issue a new Note shall not affect the validity
and effect of such amendment, supplement or waiver.


Section 9.06. Trustee to Sign Amendments, Etc.




          The Trustee shall sign any amendment or supplement to this Indenture or any Note authorized
pursuant to this Article Nine if the amendment or supplement does not adversely affect the rights,
duties, liabilities or immunities of the Trustee. The Company may not sign an amendment or
supplemental indenture or Note until its Board of Directors approves it. In executing any
amendment or supplement or Note, the Trustee shall be entitled to receive and (subject to Section
7.01) shall be fully protected in relying upon an Officers’ Certificate and an Opinion of Counsel
stating that the execution of such amendment or supplement is authorized or permitted by this
Indenture.



ARTICLE TEN

SUBSIDIARY GUARANTEES



Section 10.01. Guarantee.




          (a) Subject to this Article Ten, each of the Guarantors hereby, jointly and severally, and
fully and unconditionally guarantees to each Holder of a Note authenticated and delivered by the
Trustee and to the Trustee and its successors and assigns, irrespective of the validity and
enforceability of, this Indenture, the Notes or the obligations of the Company hereunder or
thereunder, that: (i) the principal of, premium, if any, and interest and Liquidated Damages, if
any, on the Notes will be promptly paid in full when due, whether at maturity, by acceleration,
redemption or otherwise, and interest on the overdue principal of, premium, if any, and interest
and Liquidated Damages, if any, on the Notes, if lawful (subject in all cases to any applicable
grace period provided herein), and all other obligations of the Company to the Holders or the
Trustee hereunder or thereunder will be promptly paid in full, all in accordance with the terms
hereof and thereof; and (ii) in case of any extension of time of payment or renewal of any Notes or
any of such other obligations, the same will be promptly paid in full when due in accordance with
the terms of the extension or renewal, whether at stated maturity, by acceleration or otherwise.
Failing payment when due of any amount so guaranteed for whatever reason, the Guarantors shall be
jointly and severally obligated to pay the same immediately. Each Guarantor agrees that this is a
guarantee of payment and not a guarantee of collection.



          (b) The Guarantors hereby agree that, to the maximum extent permitted under applicable law,
their obligations hereunder shall be unconditional, irrespective of the validity, regularity or
enforceability of the Notes or this Indenture, the absence of any action to enforce the same, any
waiver or consent by any Holder of the Notes with respect to any provisions hereof or thereof, the
recovery of any judgment against the Company, any action to enforce the same or any other
circumstance which might otherwise constitute a legal or equitable discharge or defense of a
Guarantor. Subject to Section 6.06, to the maximum extent permitted under applicable law, each
Guarantor hereby waives diligence, presentment, demand of payment, filing of claims with a court in
the event of insolvency or bankruptcy of the Company, any right to require a proceeding first
against the Company, protest, notice and all demands whatsoever and



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covenants that this Subsidiary Guarantee shall not be discharged except by complete
performance of the obligations contained in the Notes and this Indenture.



          (c) If any Holder or the Trustee is required by any court or otherwise to return to the
Company, the Guarantors or any custodian, trustee, liquidator or other similar official acting in
relation to any of the Company or the Guarantors, any amount paid by any of them to the Trustee or
such Holder, this Subsidiary Guarantee, to the extent theretofore discharged, shall be reinstated
in full force and effect.



          (d) Each Guarantor agrees that it shall not be entitled to any right of subrogation in
relation to the Holders in respect of any obligations guaranteed hereby until payment in full of
all obligations guaranteed hereby. Each Guarantor further agrees that, to the maximum extent
permitted by applicable law, as between the Guarantors, on the one hand, and the Holders and the
Trustee, on the other hand, (x) the maturity of the obligations guaranteed hereby may be
accelerated as provided in Article Six for the purposes of this Subsidiary Guarantee,
notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect
of the obligations guaranteed hereby, and (y) in the event of any declaration of acceleration of
such obligations as provided in Article Six hereof, such obligations (whether or not due and
payable) shall forthwith become due and payable by the Guarantors for the purpose of this
Subsidiary Guarantee. The Guarantors shall have the right to seek contribution from any non-paying
Guarantor so long as the exercise of such right does not impair the rights of the Holders under the
Subsidiary Guarantee.


Section 10.02. Limitation on Guarantor Liability.




          Each Guarantor, and by its acceptance of Notes, each Holder, hereby confirms that it is the
intention of all such parties that the Subsidiary Guarantee of such Guarantor not constitute (i) a
fraudulent transfer or conveyance for purposes of Bankruptcy Law, the Uniform Fraudulent Conveyance
Act, the Uniform Fraudulent Transfer Act or any similar federal or state law to the extent
applicable to its Subsidiary Guarantee or (ii) an unlawful distribution under any applicable state
law prohibiting shareholder distributions by an insolvent subsidiary to the extent applicable to
its Subsidiary Guarantee. To effectuate the foregoing intention, the Trustee, the Holders and the
Guarantors hereby irrevocably agree that the obligations of such Guarantor will be limited to the
maximum amount as will, after giving effect to all other contingent and fixed liabilities of such
Guarantor that are relevant under such laws, and after giving effect to any collections from,
rights to receive contribution from or payments made by or on behalf of any other Guarantor in
respect of the obligations of such other Guarantor under this Article Ten, result in the
obligations of such Guarantor under its Subsidiary Guarantee not constituting a fraudulent transfer
or conveyance or such an unlawful shareholder distribution.


Section 10.03. Guarantors May Consolidate, Etc., on Certain Terms.




          (a) Except as provided in Section 10.04 hereof, each Guarantor may not sell or otherwise
dispose of all or substantially all of its assets to, or consolidate with or merge with or into
(regardless of whether such Guarantor is the surviving Person), another Person, other than the
Company or another Guarantor, unless:



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          (i) immediately after giving effect to that transaction, no Default or Event of Default
exists; and




          (ii) either:




     (A) the Person acquiring the property in any such sale or disposition or the
Person formed by or surviving any such consolidation or merger (if other than the
Guarantor) is organized or existing under the laws of the United States, any state
thereof or the District of Columbia and assumes all the obligations of that
Guarantor under this Indenture, its Subsidiary Guarantee and the Registration Rights
Agreement pursuant to a supplemental indenture satisfactory to the Trustee; or




     (B) such sale or other disposition or consolidation or merger complies with
Section 4.10.



          (b) In case of any such consolidation, merger, sale or conveyance and upon the assumption by
the successor Person, by supplemental indenture, executed and delivered to the Trustee and
satisfactory in form to the Trustee, of the Subsidiary Guarantee and the due and punctual
performance of all of the covenants and conditions of this Indenture to be performed by a
Guarantor, such successor Person shall succeed to and be substituted for a Guarantor with the same
effect as if it had been named herein as a Guarantor.



          (c) Except as set forth in Article Five, and notwithstanding clauses (i) and (ii) of Section
10.03(a), nothing contained in this Indenture or in any of the Notes shall prevent any
consolidation or merger of a Guarantor with or into the Company or another Guarantor, or shall
prevent any sale or conveyance of the property of a Guarantor as an entirety or substantially as an
entirety to the Company or another Guarantor.


Section 10.04. Release of Guarantor.




          (a) The Subsidiary Guarantee of a Guarantor will be released: (i) in connection with any sale
or other disposition of all or substantially all of the assets of that Guarantor (including by way
of merger or consolidation) to a Person that is not (either before or after giving effect to such
transaction) the Company or a Restricted Subsidiary of the Company, if the sale or other
disposition does not violate Section 4.10; (ii) in connection with any sale or other disposition of
all of the Capital Stock of a Guarantor to a Person that is not (either before or after giving
effect to such transaction) a Restricted Subsidiary of the Company, if the sale of all such Capital
Stock of that Guarantor complies with Section 4.10; (iii) if the Company properly designates any
Restricted Subsidiary that is a Guarantor as an Unrestricted Subsidiary under this Indenture; or
(iv) upon Legal Defeasance or satisfaction and discharge of this Indenture as provided under
Article Eight and Section 11.01, respectively. Upon delivery by the Company to the Trustee of an
Officers’ Certificate and an Opinion of Counsel to the effect that one of the foregoing
requirements has been satisfied and the conditions to the release of a Guarantor under this Section
10.04 have been met, the Trustee shall execute any documents reasonably required in order to
evidence the release of such Guarantor from its obligations under its Subsidiary Guarantee.



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          (b) Any Guarantor not released from its obligations under its Subsidiary Guarantee shall
remain liable for the full amount of principal of and interest and Liquidated Damages, if any, on
the Notes and for the other obligations of any Guarantor under this Indenture as provided in this
Article Ten.


Section 10.05. Execution and Delivery of Notation of Subsidiary Guarantee.




          (a) To evidence its Subsidiary Guarantee set forth in Section 10.01 hereof, each Guarantor
hereby agrees that a notation of such Subsidiary Guarantee substantially in the form attached as
Exhibit F hereto will be endorsed by an Officer of such Guarantor on each Note
authenticated and delivered by the Trustee and that this Indenture will be executed on behalf of
such Guarantor by one of its Officers.



          (b) Each Guarantor hereby agrees that its Subsidiary Guarantee set forth in Section 10.01
hereof will remain in full force and effect notwithstanding any failure to endorse on each Note a
notation of such Subsidiary Guarantee.



          (c) If an Officer whose signature is on this Indenture or on the Subsidiary Guarantee no
longer holds that office at the time the Trustee authenticates the Note on which a Subsidiary
Guarantee is endorsed, the Subsidiary Guarantee will be valid nevertheless.



          (d) The delivery of any Note by the Trustee, after the authentication thereof hereunder, will
constitute due delivery of the Subsidiary Guarantee set forth in this Indenture on behalf of the
Guarantors.



ARTICLE ELEVEN

SATISFACTION AND DISCHARGE



Section 11.01. Satisfaction and Discharge.




          (a) This Indenture shall be discharged and shall cease to be of further effect as to all Notes
issued hereunder, when:




          (i) either:




     (A) all Notes that have been authenticated (except lost, stolen or destroyed
Notes that have been replaced or paid and Notes for whose payment money has
theretofore been deposited in trust and thereafter repaid to the Company) have been
delivered to the Trustee for cancellation; or




     (B) all Notes that have not been delivered to the Trustee for cancellation have
become due and payable by reason of the mailing of a notice of redemption or
otherwise or will become due and payable within one year and the Company or any
Guarantor has irrevocably deposited or caused to be deposited with the Trustee as
trust funds in trust solely for the benefit of the Holders, cash in U.S. dollars,
non-callable Government Securities, or a combination thereof, in such amounts as
will be sufficient without consideration of any reinvestment of interest, to pay and
discharge the entire Indebtedness on the Notes not delivered to




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          the Trustee for cancellation for principal, premium and Liquidated Damages, if any, and accrued
interest to the date of maturity or redemption;




          (ii) no Default or Event of Default has occurred and is continuing on the date of the
deposit (other than a Default or Event of Default resulting from the borrowing of funds to
be applied to such deposit);




          (iii) such deposit will not result in a breach or violation of, or constitute a default
under, any material agreement or instrument (other than this Indenture) to which the Company
or any Guarantor is a party or by which the Company or any Guarantor is bound;




          (iv) the Company or any Guarantor has paid or caused to be paid all sums payable by it
under this Indenture; and




          (v) the Company has delivered irrevocable instructions to the Trustee under this
Indenture to apply the deposited money toward the payment of the Notes at maturity or the
redemption date, as the case may be.



               (b) In addition, the Company must deliver to the Trustee (a) an Officers’ Certificate, stating
that all conditions precedent set forth in clauses (i) through (v) of Section 11.01(a) above have
been satisfied, and (b) an Opinion of Counsel (which Opinion of Counsel may be subject to customary
assumptions and qualifications), stating that all conditions precedent set forth in clauses (iii)
and (v) of Section 11.01(a) above have been satisfied; provided that the Opinion of Counsel with
respect to clause (iii) of Section 11.01(a) above may be to the knowledge of such counsel.



               (c) Notwithstanding the above, the Trustee shall pay to the Company from time to time upon its
request any cash or Government Securities held by it as provided in this section which, in the
opinion of a nationally recognized firm of independent public accountants expressed in a written
certification delivered to the Trustee, are in excess of the amount thereof that would then be
required to be deposited to effect a satisfaction and discharge under this Article Eleven.



               (d) After the conditions to discharge contained in this Article Eleven have been satisfied,
and the Company has paid or caused to be paid all other sums payable hereunder by the Company, the
Trustee upon written request shall acknowledge in writing the discharge of the obligations of the
Company and the Guarantors under this Indenture (except for those surviving obligations specified
in Section 11.04).



Section 11.02. Deposited Money and Government Securities to Be Held in Trust; Other
Miscellaneous Provisions.




               Subject to Section 11.03 hereof, all money and non-callable Government Securities (including
the proceeds thereof) deposited with the Trustee pursuant to Section 11.01 hereof in respect of the
outstanding Notes shall be held in trust and applied by the Trustee, in accordance with the
provisions of such Notes and this Indenture, to the payment, either directly or through any Paying
Agent (including the Company acting as Paying Agent) as the Trustee



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may determine, to the Holders of such Notes of all sums due and to become due thereon in
respect of principal, premium and Liquidated Damages, if any, and interest, but such money need not
be segregated from other funds except to the extent required by law.



Section 11.03. Repayment to the Company.




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



Section 11.04. Survival.




               In the event that the Company makes (or causes to be made) an irrevocable deposit with the
Trustee for the benefit of the Holders pursuant to Section 11.01(a) hereof, prior to the date of
maturity or redemption, as the case may be, the following provisions of this Indenture shall
survive until otherwise terminated or discharged hereunder:




     (i) the rights of Holders of outstanding Notes to receive payments in respect of the
principal of, premium, if any, interest and Liquidated Damages, if any, on such Notes when
such payments are due from the trust;




     (ii) the Company’s obligations with respect to such Notes under Article Two and Section
4.02 hereof;




     (iii) the rights, powers, trusts, duties and immunities of the Trustee hereunder and
the Company’s obligations in connection therewith; and




     (iv)this Article Eleven.



Section 11.05. Reinstatement.





               If the Trustee or Paying Agent is unable to apply any Government Securities in accordance with
Section 11.02 hereof, as the case may be, by reason of any order or judgment of any court or
governmental authority enjoining, restraining or otherwise prohibiting such application, then the
Company’s obligations under this Indenture and the Notes shall be revived and reinstated as though
no deposit had occurred pursuant to Section 11.01(a)(2) hereof until such time as the Trustee or
Paying Agent is permitted to apply all such money in accordance with Section 11.02 hereof;
provided, however, that, if the Company makes any payment of



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principal of, premium, if any, interest and Liquidated Damages, if any, on any Note following
the reinstatement of its obligations, the Company shall be subrogated to the rights of the Holders
of such Notes to receive such payment from the money held by the Trustee or Paying Agent.



ARTICLE TWELVE

MISCELLANEOUS




Section 12.01. Trust Indenture Act Controls.




               This Indenture is subject to the provisions of the TIA that are required to be a part of this
Indenture, and shall, to the extent applicable, be governed by such provisions. If any provision
of this Indenture modifies any TIA provision that may be so modified, such TIA provision shall be
deemed to apply to this Indenture as so modified. If any provision of this Indenture excludes any
TIA provision that may be so excluded, such TIA provision shall be excluded from this Indenture.



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



Section 12.02. Notices.




               (a) Any notice or communication by the Company, any of the Guarantors or the Trustee to the
others is duly given if in writing and delivered in Person or mailed by first class mail
(registered or certified, return receipt requested), telecopier or overnight air courier
guaranteeing next day delivery, to the others’ address:



               If to the Company and/or any Guarantor:


c/o Allis-Chalmers Energy Inc.



5075 Westheimer, Suite 890



Houston, TX 77056



Facsimile: (713) 369-0555



Attention: Theodore F. Pound III, Esq.




               with a copy, which shall not constitute notice, to:


Andrews Kurth LLP



600 Travis, Suite 400



Houston, TX 77002



Facsimile: (713) 238-7135



Attention: Robert V. Jewell, Esq.




               If to the Trustee:


Wells Fargo Bank, N.A.



Corporate Trust Services



505 Main Street, Suite 301



Fort Worth, TX 76102





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Facsimile: (817) 885-8650



Attention: Melissa Scott




               (b) The Company, the Guarantors or the Trustee, by notice to the others, may designate
additional or different addresses for subsequent notices or communications.



               (c) All notices and communications (other than those sent to Holders) shall be deemed to have
been duly given: at the time delivered by hand, if personally delivered; three Business Days after
being deposited in the mail, postage prepaid, if mailed; when receipt acknowledged, if telecopied;
and the next Business Day after timely delivery to the courier, if sent by overnight air courier
guaranteeing next day delivery.



               (d) Any notice or communication to a Holder shall be mailed by first class mail, certified or
registered, return receipt requested, or by overnight air courier guaranteeing next day delivery to
its address shown on the register kept by the Registrar. Any notice or communication shall also be
so mailed to any Person described in TIA Section 313(c), to the extent required by the TIA.
Failure to mail a notice or communication to a Holder or any defect in it shall not affect its
sufficiency with respect to other Holders.



               (e) Where this Indenture provides for notice in any manner, such notice may be waived in
writing by the Person entitled to receive such notice, either before or after the event, and such
waiver shall be the equivalent of such notice. Waivers of notice by Holders shall be filed with
the Trustee, but such filing shall not be a condition precedent to the validity of any action taken
in reliance on such waiver.



               (f) In case by reason of the suspension of regular mail service or by reason of any other
cause it shall be impracticable to give such notice by mail, then such notification as shall be
made with the approval of the Trustee shall constitute a sufficient notification for every purpose
hereunder.



               (g) If a notice or communication is mailed in the manner provided above within the time
prescribed, it is duly given, whether or not the addressee receives it.



               (h) If the Company mails a notice or communication to Holders, it shall mail a copy to the
Trustee and each Agent at the same time.



Section 12.03. Communication by Holders of Notes with Other Holders of Notes.




               Holders may communicate pursuant to TIA Section 312(b) with other Holders with respect to
their rights under this Indenture or the Notes. The Company, the Trustee, the Registrar and any
other Person shall have the protection of TIA Section 312(c).



Section 12.04. Certificate and Opinion as to Conditions Precedent.




               Upon any request or application by the Company to the Trustee to take any action under this
Indenture, the Company shall furnish to the Trustee:



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          (i) an Officers’ Certificate in form and substance reasonably satisfactory to the
Trustee (which shall include the statements set forth in Section 12.05 hereof) stating that,
in the opinion of the signers, all conditions precedent and covenants, if any, provided for
in this Indenture relating to the proposed action have been satisfied; and




          (ii) an Opinion of Counsel in form and substance reasonably satisfactory to the Trustee
(which shall include the statements set forth in Section 12.05 hereof) stating that, in the
opinion of such counsel (who may rely upon an Officers’ Certificate as to matters of fact),
all such conditions precedent and covenants have been satisfied.



Section 12.05. Statements Required in Certificate or Opinion.




               Each certificate or opinion with respect to compliance with a condition or covenant provided
for in this Indenture (other than a certificate provided pursuant to TIA Section 314(a)(4)) shall
comply with the provisions of TIA Section 314(e) and shall include:




          (i) a statement that the Person making such certificate or opinion has read such
covenant or condition;




          (ii) a brief statement as to the nature and scope of the examination or investigation
upon which the statements or opinions contained in such certificate or opinion are based;




          (iii) a statement that, in the opinion of such Person, he or she has made such
examination or investigation as is necessary to enable him to express an informed opinion as
to whether or not such covenant or condition has been complied with; and




          (iv) a statement as to whether or not, in the opinion of such Person, such condition or
covenant has been complied with.



Section 12.06. Rules by Trustee and Agents.




                  The Trustee may make reasonable rules for actions taken by, or meetings or consents of,
Holders. The Registrar or Paying Agent may make reasonable rules and set reasonable requirements
for its functions.



Section 12.07. No Personal Liability of Directors, Officers, Employees and
Stockholders.




                  No director, officer, employee, incorporator, stockholder, member, manager or partner of the
Company or any Guarantor, as such, shall have any liability for any obligations of the Company or
the Guarantors under the Notes, this Indenture, the Subsidiary Guarantees, or for any claim based
on, in respect of, or by reason of, such obligations or their creation. Each Holder of Notes by
accepting a Note waives and releases all such liability. This waiver and release are part of the
consideration for issuance of the Notes and the Subsidiary Guarantees.



98









 





Section 12.08. Governing Law.




               THE LAWS OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO CONSTRUE THIS INDENTURE, THE
NOTES AND THE SUBSIDIARY GUARANTEES.



Section 12.09. Consent to Jurisdiction.




               Any legal suit, action or proceeding arising out of or based upon this Indenture or the
transactions contemplated hereby (“Related Proceedings”) may be instituted in the federal courts of
the United States of America located in the City of New York or the courts of the State of New York
in each case located in the City of New York (collectively, the “Specified Courts”), and each party
irrevocably submits to the non-exclusive jurisdiction of such courts in any such suit, action or
proceeding. Service of any process, summons, notice or document by mail (to the extent allowed
under any applicable statute or rule of court) to such party’s address set forth above shall be
effective service of process for any suit, action or other proceeding brought in any such court.
To the maximum extent permitted under applicable law, the parties irrevocably and unconditionally
waive any objection to the laying of venue of any suit, action or other proceeding in the Specified
Courts and irrevocably and unconditionally waive and agree not to plead or claim in any such court
has been brought in an inconvenient forum.



Section 12.10. No Adverse Interpretation of Other Agreements.




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



Section 12.11. Successors.




               All agreements of the Company in this Indenture and the Notes shall bind its successors. All
agreements of the Trustee in this Indenture shall bind its successors. All agreements of each
Guarantor in this Indenture shall bind such Guarantor’s successors, except as otherwise provided in
Section 10.04.



Section 12.12. Severability.




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



Section 12.13. Counterpart Originals.




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



99









 





Section 12.14. Acts of Holders.




               (a) Any request, demand, authorization, direction, notice, consent, waiver or other action
provided by this Indenture to be given or taken by the Holders may be embodied in and evidenced by
one or more instruments of substantially similar tenor signed by such Holders in person or by
agents duly appointed in writing; and, except as herein otherwise expressly provided, such action
shall become effective when such instrument or instruments are delivered to the Trustee and, where
it is hereby expressly required, to the Company. Such instrument or instruments (and the action
embodied therein and evidenced thereby) are herein sometimes referred to as the “Act” of the
Holders signing such instrument or instruments. Proof of execution of any such instrument or of a
writing appointing any such agent shall be sufficient for any purpose of this Indenture and
conclusive in favor of the Trustee and the Company if made in the manner provided in this Section
12.14.



               (b) The fact and date of the execution by any Person of any such instrument or writing may be
proved by the affidavit of a witness of such execution or by a certificate of a notary public or
other officer authorized by law to take acknowledgments of deeds, certifying that the individual
signing such instrument or writing acknowledged to such witness, notary or officer the execution
thereof. Where such execution is by a signer acting in a capacity other than his individual
capacity, such certificate or affidavit shall also constitute sufficient proof of authority. The
fact and date of the execution of any such instrument or writing, or the authority of the Person
executing the same, may also be proved in any other manner which the Trustee deems sufficient.



               (c) Notwithstanding anything to the contrary contained in this Section 12.14, the principal
amount and serial numbers of Notes held by any Holder, and the date of holding the same, shall be
proved by the register of the Notes maintained by the Registrar as provided in Section 2.04.



               (d) If the Company shall solicit from the Holders of the Notes any request, demand,
authorization, direction, notice, consent, waiver or other Act, the Company may, at its option, by
or pursuant to a resolution of its Board of Directors, fix in advance a record date for the
determination of Holders entitled to give such request, demand, authorization, direction, notice,
consent, waiver or other Act, but the Company shall have no obligation to do so. Notwithstanding
TIA Section 316(c), such record date shall be the record date specified in or pursuant to such
resolution, which shall be a date not earlier than the date 30 days prior to the first solicitation
of Holders generally in connection therewith or the date of the most recent list of Holders
forwarded to the Trustee prior to such solicitation pursuant to Section 2.06 and not later than the
date such solicitation is completed. If such a record date is fixed, such request, demand,
authorization, direction, notice, consent, waiver or other Act may be given before or after such
record date, but only the Holders of record at the close of business on such record date shall be
deemed to be Holders for the purposes of determining whether Holders of the requisite proportion of
the then outstanding Notes have authorized or agreed or consented to such request, demand,
authorization, direction, notice, consent, waiver or other Act, and for that purpose the then
outstanding Notes shall be computed as of such record date; provided that no such authorization,
agreement or consent by the Holders on such record date shall be deemed effective



100









 





unless it shall become effective pursuant to the provisions of this Indenture not later than
eleven months after the record date.



               (e) Any request, demand, authorization, direction, notice, consent, waiver or other Act of the
Holder of any Note shall bind every future Holder of the same Note and the Holder of every Note
issued upon the registration or transfer thereof or in exchange therefor or in lieu thereof in
respect of anything done, omitted or suffered to be done by the Trustee or the Company in reliance
thereon, whether or not notation of such action is made upon such Note.



               (f) Without limiting the foregoing, a Holder entitled hereunder to take any action hereunder
with regard to any particular Note may do so itself with regard to all or any part of the principal
amount of such Note or by one or more duly appointed agents each of which may do so pursuant to
such appointment with regard to all or any part of such principal amount.



Section 12.15. Benefit of Indenture.




               Nothing in this Indenture, the Notes or the Subsidiary Guarantees, express or implied, shall
give to any Person, other than the parties hereto, any Paying Agent, any Registrar and its
successors hereunder, and the Holders, any benefit or any legal or equitable right, remedy or claim
under this Indenture.



Section 12.16. Table of Contents, Headings, Etc.




               The Table of Contents, Cross-Reference Table and Headings of the Articles and Sections of this
Indenture have been inserted for convenience of reference only, are not to be considered a part of
this Indenture and shall in no way modify or restrict any of the terms or provisions hereof.



[SIGNATURE PAGES FOLLOW]




101









 







               IN WITNESS WHEREOF, the parties have executed this Indenture as of January 18, 2006.



	 	 	 	 	 
	 	 	COMPANY:
	 
	 	 	 	 
	 	 	ALLIS-CHALMERS ENERGY INC.
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Victor M. Perez

 




	 

	 	 	 	Name: Victor M. Perez

	 

	 	 	 	Title: Chief Financial Officer
	 
	 	 	 	 
	 	 	GUARANTORS:
	 
	 	 	 	 
	 	 	ALLIS-CHALMERS TUBULAR SERVICES,
INC.
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Victor M. Perez

 




	 

	 	 	 	Name: Victor M. Perez

	 

	 	 	 	Title: Chief Financial Officer
	 
	 	 	 	 
	 	 	AIRCOMP L.L.C.
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Victor M. Perez


 




	 

	 	 	 	Name: Victor M. Perez

	 

	 	 	 	Title: Chief Financial Officer
	 
	 	 	 	 
	 	 	CAPCOIL TUBING SERVICES, INC.
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Victor M. Perez

 




	 

	 	 	 	Name: Victor M. Perez

	 

	 	 	 	Title: Vice President & Chief Financial
Officer






 









 







	 	 	 	 	 
	 	 	DELTA RENTAL SERVICE INC.
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Victor M. Perez

 




	 

	 	 	 	Name: Victor M. Perez

	 

	 	 	 	Title: Chief Financial Officer
	 
	 	 	 	 
	 	 	DOWNHOLE INJECTION SYSTEMS, LLC
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Victor M. Perez

 




	 

	 	 	 	Name: Victor M. Perez

	 

	 	 	 	Title: Vice President & Chief Financial
Officer
	 
	 	 	 	 
	 	 	MOUNTAIN COMPRESSED AIR, INC.
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Munawar H. Hidayatallah

 




	 

	 	 	 	Name: Munawar H. Hidayatallah

	 

	 	 	 	Title: Chairman & Chief Executive Officer
	 
	 	 	 	 
	 	 	OILQUIP RENTALS, INC.
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Munawar H. Hidayatallah

 




	 

	 	 	 	Name: Munawar H. Hidayatallah

	 

	 	 	 	Title: Chairman & Chief Executive Officer
	 
	 	 	 	 
	 	 	SAFCO-OIL FIELD PRODUCTS, INC.
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Victor M. Perez

 




	 

	 	 	 	Name: Victor M. Perez
	 

	 	 	 	Title: Chief Financial Officer







 










 






	 	 	 	 	 
	 	 	STRATA DIRECTIONAL
TECHNOLOGY, INC.
	 
	 	 	 	 
	 

	 	By:
	 	   /s/ Victor M. Perez
	 

	 	 	 	 
	 

	 	 	 	Name: Victor M. Perez
	 

	 	 	 	Title: Chief Financial Officer

	 
	 	 	 	 
	 	 	TARGET ENERGY INC.
	 
	 	 	 	 
	 

	 	By:
	 	   /s/ Victor M. Perez
	 

	 	 	 	 
	 

	 	 	 	Name: Victor M. Perez
	 

	 	 	 	Title: Chief Financial Officer
	 
	 	 	 	 
	 	 	SPECIALTY RENTAL TOOLS INC.
	 
	 	 	 	 
	 

	 	By:
	 	  /s/ Theodore F. Pound III
	 

	 	 	 	 
	 

	 	 	 	Name: Theodore F. Pound III
	 

	 	 	 	Title: Vice President & Secretary






S-3









 






	 	 	 	 	 
	 	 	TRUSTEE:

	 
	 	 	 	 
	 	 	WELLS FARGO BANK, N.A.
	 
	 	 	 	 
	 

	 	By:
	 	      /s/ Melissa Scott
	 

	 	 	 	 
	 

	 	 	 	Name: Melissa Scott

Title: Vice President






S-4









 






EXHIBIT A




[Face of Note]



[If a Global Note, insert—THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE
GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND
IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH
NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO SECTION 2.07 OF THE INDENTURE, (II) THIS GLOBAL
NOTE MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.07(a) OF THE INDENTURE, (III)
THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO SECTION 2.12 OF THE
INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR
WRITTEN CONSENT OF THE COMPANY.



UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN DEFINITIVE FORM, THIS NOTE MAY
NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A
NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE
DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY (55 WATER STREET, NEW YORK, NEW YORK) (“DTC”), TO THE COMPANY OR ITS AGENT FOR REGISTRATION
OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE &
CO. OR SUCH OTHER NAME AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT
IS MADE TO CEDE & CO. OR SUCH OTHER ENTITY AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]



[If a Restricted Global Note or a Restricted Definitive Note, insert—THIS SECURITY HAS NOT BEEN
REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE
OR OTHER SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE
REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE
OF SUCH REGISTRATION OR UNLESS THE TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT. THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF (1)
REPRESENTS THAT (A) IT IS A “QUALIFIED INSTITUTIONAL BUYER” (AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT) OR (B) IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS SECURITY IN AN “OFFSHORE
TRANSACTION” PURSUANT TO RULE 903 OR RULE 904 OF REGULATION S, (2) AGREES THAT IT WILL NOT, PRIOR
TO THE DATE THAT IS TWO


A-1









 






YEARS AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF (OR OF ANY PREDECESSOR OF THIS SECURITY)
AND THE LAST DATE ON WHICH ALLIS-CHALMERS ENERGY INC. (THE “COMPANY”) OR ANY AFFILIATE OF THE
COMPANY WAS THE OWNER OF THIS SECURITY OR ANY PREDECESSOR OF THIS SECURITY, OFFER, SELL OR
OTHERWISE TRANSFER THIS SECURITY EXCEPT (A) TO THE COMPANY OR ANY OF ITS SUBSIDIARIES, (B) PURSUANT
TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO
LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A PERSON IT REASONABLY
BELIEVES IS A “QUALIFIED INSTITUTIONAL BUYER” AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT THAT
PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE
IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES
TO NON-U.S. PERSONS THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S OR (E)
PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT
AND (3) AGREES THAT IT WILL GIVE TO EACH PERSON TO WHOM THIS SECURITY IS TRANSFERRED A NOTICE
SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND; PROVIDED THAT THE COMPANY AND THE TRUSTEE SHALL HAVE
THE RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER (I) PURSUANT TO CLAUSE (E) TO REQUIRE THE
DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF
THEM AND (II) IN EACH OF THE FOREGOING CASES, TO REQUIRE THAT A CERTIFICATION OF TRANSFER IN THE
FORM APPEARING IN THE INDENTURE IS COMPLETED AND DELIVERED BY THE TRANSFER TO THE TRUSTEE.]




A-2









 










CUSIP ___________




No.
_____  **$__________**




ALLIS-CHALMERS ENERGY INC.




9.0% SENIOR NOTES DUE 2014




Issue Date: ____________




     Allis-Chalmers Energy Inc., a Delaware corporation (the “Company,” which term includes any
successor under the Indenture hereinafter referred to), for value received, promises to pay to
                                                                                                     [if a Global Note, insert—CEDE & CO., as nominee for The Depository
Trust Company] or its registered assigns, the principal sum of                                                                                                     
United States
Dollars [if a Global Note, -insert—, or such other principal amount as shall be set forth on the
“Schedule of Exchanges of Interests in the Global Note” attached hereto,] on January 15, 2014.


Interest Payment Dates: January 15 and July 15, commencing July 15, 2006.



Record Dates: January 1 and July 1.




     Reference is hereby made to the further provisions of this Note set forth on the reverse
hereof, which further provisions shall for all purposes have the same effect as if set forth at
this place.



[SIGNATURE PAGE FOLLOWS]




A-3









 








     IN WITNESS WHEREOF, the Company has caused this Note to be signed manually or by facsimile by
its duly authorized officer.



	 	 	 	 	 
	 	 	ALLIS-CHALMERS ENERGY INC.
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	 	 	Name:
	 

	 	 	 	Title:






A-4









 







(Trustee’s Certificate of Authentication)



This is one of the 9.0% Senior Notes due 2014 described in the within-mentioned Indenture.




Dated: _________, ____



WELLS FARGO BANK, N.A.,

as Trustee



By:                                                              


      Authorized Signatory




A-5









 








[Reverse Side of Note]




ALLIS-CHALMERS ENERGY INC.




9.0% Senior Notes due 2014




          Capitalized terms used herein shall have the meanings assigned to them in the Indenture
referred to below unless otherwise indicated.




          1. Interest. The Company promises to pay interest on the principal amount of this Note at
9.0% per annum until maturity and shall pay the Liquidated Damages, if any, payable pursuant to
Section 5 of the Registration Rights Agreement referred to below. The Company shall pay interest
and Liquidated Damages, if any, semi-annually in arrears on January 15 and July 15 of each year, or
if any such day is not a Business Day, on the next succeeding Business Day (each, an “Interest
Payment Date”). Interest on overdue principal and interest and Liquidated Damages, if any, will
accrue at the applicable interest rate on the Notes. Interest on the Notes will accrue from the
most recent date to which interest has been paid or, if no interest has been paid, from the date of
issuance; provided that if there is no existing Default in the payment of interest, and if this
Note is authenticated between a record date referred to on the face hereof and the next succeeding
Interest Payment Date, interest shall accrue from such next succeeding Interest Payment Date;
provided further that the first Interest Payment Date shall be July 15, 2006. The Company shall
pay interest on overdue principal at the rate borne by the Notes, and it shall pay interest on
overdue installments of interest at the same rate to the extent lawful. Interest shall be computed
on the basis of a 360-day year comprised of twelve 30-day months. If an Interest Payment Date
falls on a day that is not a Business Day, the interest payment to be made on such Interest Payment
Date will be made on the next succeeding Business Day with the same force and effect as if made on
such Interest Payment Date, and no additional interest will accrue as a result of such delayed
payment.




          2. Method of Payment. The Company shall pay interest on the Notes (except defaulted interest)
and Liquidated Damages, if any, to the Persons who are registered Holders of Notes at the close of
business on the January 1 or July 1 next preceding the Interest Payment Date, even if such Notes
are canceled after such record date and on or before such Interest Payment Date, except as provided
in Section 2.13 of the Indenture with respect to defaulted interest. The Notes will be payable as
to principal, premium, Liquidated Damages, if any, and interest at the office or agency of the
Paying Agent and Registrar within the City and State of New York, or, at the option of the Company,
payment of interest and Liquidated Damages, if any, may be made by check mailed to the Holders at
their addresses set forth in the register of Holders; provided that payment by wire transfer of
immediately available funds will be required with respect to principal of and interest, premium and
Liquidated Damages, if any, on, all Global Notes and all other Notes the Holders of which will have
provided wire transfer instructions to the Company or the Paying Agent. Such payment will be in
such coin or currency of the United States of America as at the time of payment is legal tender for
payment of public and private debts.




A-6









 








          3. Paying Agent and Registrar. Initially, the Trustee under the Indenture shall act as Paying
Agent and Registrar. The Company may change any Paying Agent or Registrar without prior notice to
any Holder. The Company or any of its Subsidiaries may act in any such capacity.




          4. Indenture. The Company issued the Notes under an Indenture dated as of January 18, 2006
among the Company, the Guarantors and the Trustee. The terms of the Notes include those stated in
the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939,
as amended. The Notes are subject to all such terms, and Holders are referred to the Indenture and
such Act for a statement of such terms. To the extent any provision of this Note conflicts with
the express provisions of the Indenture, the provisions of the Indenture shall govern and be
controlling. The Indenture pursuant to which this Note is issued provides that an unlimited
aggregate principal amount of Additional Notes may be issued thereunder.




          5. Optional Redemption. (a) Except as set forth in paragraphs 5(b) and (c) below, the
Company shall not have the option to redeem the Notes prior to January 15, 2010. On or after
January 15, 2010 the Company may redeem all or a portion of the Notes upon not less than 30 days’
nor more than 60 days’ notice, at the redemption prices (expressed as percentages of principal
amount) set forth below plus accrued and unpaid interest and Liquidated Damages, if any, to the
applicable redemption date, if redeemed during the twelve-month period beginning on January 15 of
the years indicated below, subject to the rights of Holders on the relevant record date to receive
interest on the relevant Interest Payment Date:




	 	 	 	 	 
	Year

	 	Percentage

	2010

	 	 	104.500	%
	2011

	 	 	102.250	%
	2012 and thereafter

	 	 	100.000	%






          (b) At any time prior to January 15, 2009, the Company may, on one or more occasions, redeem
up to 35% of the aggregate principal amount of Notes issued under the Indenture (including any
Additional Notes) at a redemption price of 109.000% of the principal amount thereof, plus accrued
and unpaid interest and Liquidated Damages, if any, to the redemption date, with the net cash
proceeds of one or more Equity Offerings; provided that (1) at least 65% of the aggregate principal
amount of Notes issued under the Indenture on the Issue Date remains outstanding immediately after
the occurrence of such redemption (excluding Notes held by the Company or its Affiliates); and (2)
the redemption must occur within 180 days of the date of the closing of such Equity Offering.




          (c) At any time prior to January 15, 2010, the Company may redeem the Notes, in whole or in
part, at the Make-Whole Price, plus accrued and unpaid interest and Liquidated Damages, if any, to
the redemption date. “Make-Whole Price” with respect to a Note means the greater of:




          (1) the sum of the outstanding principal amount and Make-Whole Amount of such Note; and




A-7









 









          (2) the redemption price of such Note on January 15, 2010, determined pursuant to the
Indenture (104.500% of the principal amount).




          “Make-Whole Amount” with respect to a Note means an amount equal to the excess, if any, of:




          (1) the present value of the remaining interest, premium, if any, and principal payments due
on such Note as if such Note were redeemed on January 15, 2010 computed using a discount rate equal
to the Treasury Rate plus 50 basis points, over




          (2) the outstanding principal amount of such Note.




          “Treasury Rate” means the yield to maturity at the time of the computation of United States
Treasury securities with a constant maturity (as compiled by and published in the most recent
Federal Reserve Statistical Release H.15(519), which has become publicly available at least two
business days prior to the date of the redemption notice or, if such Statistical Release is no
longer published, any publicly available source of similar market date) most nearly equal to the
then remaining maturity of the Notes assuming redemption of the Notes on January 15, 2010;
provided, however, that if the Make-Whole Average Life of such Notes is not equal to the constant
maturity of the United States Treasury security for which a weekly average yield is given, the
Treasury Rate shall be obtained by linear interpolation (calculated to the nearest one-twelfth of a
year) from the weekly average yields of United States Treasury securities for which such yields are
given, except that if the Make-Whole Average Life of such Notes is less than one year, the weekly
average yield on actually traded United States Treasury securities adjusted to a constant maturity
of one year shall be used. “Make-Whole Average Life” means the number of years (calculated to the
nearest one-twelfth) between the date of redemption and January 15, 2010.




          6. Repurchase at Option of Holder. (a) If a Change of Control occurs, each Holder of Notes
shall have the right to require the Company to repurchase all or any part (equal to $2,000 and
integral multiples of $1,000 in excess thereof) of that Holder’s Notes pursuant to an offer (a
“Change of Control Offer”) on the terms set forth in the Indenture. In the Change of Control
Offer, the Company will offer a payment (a “Change of Control Payment”) in cash equal to not less
than 101% of the aggregate principal amount of Notes repurchased plus accrued and unpaid interest
and Liquidated Damages, if any, to the date of repurchase (the “Change of Control Payment Date,”
which date shall be no earlier than the date of such Change of Control). No later than 30 days
following any Change of Control, the Company shall mail a notice to each Holder describing the
transaction or transactions that constitute the Change of Control and offering to repurchase Notes
on the Change of Control Payment Date specified in such notice, which date shall be no earlier than
30 days and no later than 60 days from the date such notice is mailed, pursuant to the procedures
required by the Indenture and described in such notice.




          (b) If the Company or a Restricted Subsidiary of the Company consummates any Asset Sales,
within 10 Business Days of each date on which the aggregate amount of Excess Proceeds exceeds $10.0
million, the Company shall make an offer (an “Asset Sale Offer”) to all Holders of Notes and all
holders of other Indebtedness that is pari passu with the Notes





A-8










 





containing provisions similar to those set forth in the Indenture with respect to offers to
purchase or redeem with the proceeds of sales of assets, in accordance with Section 4.10 of the
Indenture, to purchase the maximum principal amount of Notes and such other pari passu Indebtedness
that may be purchased out of the Excess Proceeds. The offer price in any Asset Sale Offer will be
equal to 100% of principal amount plus accrued and unpaid interest and Liquidated Damages, if any,
to the date of purchase, and will be payable in cash, all in accordance with the procedures set
forth in the Indenture. If any Excess Proceeds remain unapplied after consummation of an Asset
Sale Offer, the Company and its Restricted Subsidiaries may use those Excess Proceeds for any
purpose not otherwise prohibited by the Indenture. If the aggregate principal amount of Notes and
other pari passu Indebtedness tendered into such Asset Sale Offer exceeds the amount of Excess
Proceeds, the Trustee will select the Notes and such other pari passu Indebtedness to be purchased
on a pro rata basis. Holders of Notes that are the subject of an offer to purchase will receive
notice of an Asset Sale Offer from the Company prior to any related purchase date and may elect to
have such Notes purchased by completing the form entitled “Option of Holder to Elect Purchase”
attached to this Note. Upon completion of each Asset Sale Offer, the amount of Excess Proceeds
shall be reset at zero.




          7. Denominations, Transfer, Exchange. The Notes are in registered form without interest
coupons in minimum denominations of $2,000 and integral multiples of $1,000 in excess thereof. The
transfer of Notes may be registered and Notes may be exchanged as provided in the Indenture. The
Registrar and the Trustee may require a Holder, among other things, to furnish appropriate
endorsements and transfer documents and the Company may require a Holder to pay any taxes and fees
required by law or permitted by the Indenture. The Company is not required to transfer or exchange
any Note selected for redemption. Also, the Company is not required to (1) to issue, to register
the transfer of or to exchange any Notes during a period beginning at the opening of business 15
days before the day of any selection of Notes for redemption under Section 3.02 under the Indenture
and ending at the close of business on the day of selection, (2) to register the transfer of or to
exchange any Note so selected for redemption in whole or in part, except the unredeemed portion of
any Note being redeemed in part, (3) to register the transfer of or to exchange a Note between a
record date and the next succeeding interest payment date or (4) to register the transfer of or to
exchange a Note tendered and not withdrawn in connection with a Change of Control Offer or an Asset
Sale Offer. Transfer may be restricted as provided in the Indenture.




          8. Persons Deemed Owners. The registered Holder of a Note will be treated as its owner for all
purposes.




          9. Amendment, Supplement and Waiver. Subject to certain exceptions, the Indenture or the Notes
may be amended or supplemented with the consent of the Holders of at least a majority in principal
amount of the Notes then outstanding (including, without limitation, consents obtained in
connection with a purchase of, or tender offer or exchange offer for, Notes), and any existing
default or compliance with any provision of the Indenture or the Notes may be waived with the
consent of the Holders of a majority in principal amount of the then outstanding Notes (including,
without limitation, consents obtained in connection with a purchase of, or tender offer or exchange
offer for, Notes). Without the consent of any Holder of a Note, the Indenture or the Notes may be
amended or supplemented to, among other things, cure any




A-9









 







ambiguity, defect or inconsistency, or make any change that does not adversely affect the
legal rights under the Indenture of any such Holder.




          10. Defaults and Remedies. To the extent permitted by applicable law, in the case of an Event
of Default arising from events of bankruptcy or insolvency specified in clause (ix) or (x) of
Section 6.01(a) of the Indenture, with respect to the Company, any Restricted Subsidiary that is a
Significant Subsidiary or any group of Restricted Subsidiaries that, taken together, would
constitute a Significant Subsidiary, all outstanding Notes will become due and payable immediately
without further action or notice. If any other Event of Default occurs and is continuing, the
Trustee or the Holders of at least 25% in principal amount of the then outstanding Notes may
declare all the Notes to be due and payable immediately by notice in writing to the Company
specifying the Event of Default. Holders of the Notes may not enforce the Indenture or the Notes
except as provided in the Indenture. Subject to certain limitations, Holders of a majority in
principal amount of the then outstanding Notes may direct the Trustee in its exercise of any trust
or power. The Trustee may withhold from Holders of the Notes notice of any Default or Event of
Default (except a Default or Event of Default relating to the payment of principal, premium or
interest or Liquidated Damages) if and so long as a committee of its Responsible Officers in good
faith determines that withholding the notice is in the interests of the Holders of the Notes. The
Holders of a majority in aggregate principal amount of the Notes then outstanding by notice to the
Trustee may on behalf of the Holders of all of the Notes waive any existing Default or Event of
Default and its consequences under the Indenture, except a continuing Default or Event of Default
in the payment of interest or Liquidated Damages on, or the principal of, the Notes. The Holders
of a majority in principal amount of the then outstanding Notes will have the right to direct the
time, method and place of conducting any proceeding for exercising any remedy available to the
Trustee. However, the Trustee may refuse to follow any direction that conflicts with law or the
Indenture, that may involve the Trustee in personal liability, or that the Trustee determines in
good faith may be unduly prejudicial to the rights of Holders of Notes not joining in the giving of
such direction and may take any other action it deems proper that is not inconsistent with any such
direction received from Holders of Notes.




          11. Trustee Dealings with Company. The Trustee in its individual or any other capacity may
become the owner or pledgee of Notes and may become a creditor of, or otherwise deal with the
Company or any of its Affiliates, with the same rights it would have if it were not Trustee.




          12. No Recourse Against Others. No director, officer, employee, incorporator, stockholder,
member, manager or partners of the Company or any Guarantor, as such, shall have any liability for
any obligations of the Company or the Guarantors under the Notes, the Indenture, the Subsidiary
Guarantees or for any claim based on, in respect of, or by reason of, such obligations or their
creation. Each Holder of Notes by accepting a Note waives and releases all such liability. This
waiver and release are part of the consideration for issuance of the Notes and the Subsidiary
Guarantees.




          13. Authentication. This Note shall not be valid until authenticated by the manual signature
of the Trustee.




A-10









 








          14. Additional Rights of Holders of Restricted Global Notes and Restricted Definitive Notes.
In addition to the rights provided to Holders under the Indenture, Holders of Restricted Global
Notes and Restricted Definitive Notes shall have all the rights and obligations set forth in the
Registration Rights Agreement. By any such Holder’s acceptance of Restricted Global Notes or
Restricted Definitive Notes, such Holder acknowledges and agrees to the provisions of the
applicable Registration Rights Agreement, including without limitation the obligations of the
Holders with respect to indemnification of the Company and the Guarantors to the extent provided
therein.




          15. CUSIP Numbers. Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Company has caused CUSIP numbers to be printed on the Notes
and the Trustee may use CUSIP numbers in notices of redemption as a convenience to Holders. No
representation is made as to the accuracy of such numbers either as printed on the Notes or as
contained in any notice of redemption and reliance may be placed only on the other identification
numbers placed thereon.




          16. Guarantee. The Company’s obligations under the Notes are fully and unconditionally
guaranteed, jointly and severally, by the Guarantors.




          17. Copies of Documents. The Company shall furnish to any Holder upon written request and
without charge a copy of the Indenture and/or the Registration Rights Agreement. Requests may be
made to:



Allis-Chalmers Energy Inc.

5075 Westheimer, Suite 890

Houston, TX 77056

Attention: Theodore F. Pound III, Esq.




A-11









 









Assignment Form



To assign this Note, fill in the form below:



(I) or (we) assign and transfer this Note to:
                                                                                                                        




(Insert assignee’s legal name) 



 


(Insert assignee’s soc. sec. or tax I.D. no.)



 



 



 



 




(Print or type assignee’s name, address and zip code)



and irrevocably appoint
                                                                                                                                                                



to transfer this Note on the books of the Company. The agent may substitute another to act for
him.




Date:
                                        




	 	 	 	 	 
	 

	 	Your Signature:	 	 
	 

	 	 	 	 
	 

	 	 	 	(Sign exactly as your name appears on the face of this Note)






Signature Guarantee*:
                                                                                



* Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor
acceptable to the Trustee).




A-12









 







OPTION OF HOLDER TO ELECT PURCHASE




          If you want to elect to have this Note purchased by the Company pursuant to Section 4.10 or
4.13 of the Indenture, check the appropriate box below:




	 	 	 	 	 	 	 	 	 
	 

	 	o   Section 4.10
	 	 	 	o   Section 4.13
	 	 






          If you want to elect to have only part of the Note purchased by the Company pursuant to
Section 4.10 or Section 4.13 of the Indenture, state the amount you elect to have purchased:




$_________________




Date:
                                                            




	 	 	 	 	 
	 

	 	Your Signature:	 	 
	 

	 	 	 	 
	 

	 	 	 	(Sign exactly as your name appears on the face of this Note)






Tax Identification No.:
                                                                                              




Signature Guarantee*:
                                                            





	*	 	Participant in a recognized Signature Guarantee Medallion Program (or other signature
guarantor acceptable to the Trustee).




A-13









 













[If a Global Note, insert as a separate page—




SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE




      The following exchanges of a part of this Global Note for an interest in another Global Note
or for a Definitive Note, or exchanges of a part of another Global Note or Definitive Note for an
interest in this Global Note, have been made:



	 	 	 	 	 	 	 	 	 
	   Date 

of Exchange
	 	Amount of Decrease in

Principal Amount at

Maturity

of this Global Note
	 	Amount of Increase in

Principal Amount at

Maturity

of this Global Note
	 	Principal Amount at

Maturity

of this Global Note

Following such

decrease (or increase)
	 	Signature of

Authorized Officer

of Trustee or

Custodian]
	 
	 	 
	 	 
	 	 
	 	 





A-14









 






EXHIBIT B




FORM OF CERTIFICATE OF TRANSFER




Allis-Chalmers Energy Inc.

5075 Westheimer, Suite 890

Houston, TX 77056

Attention: Theodore F. Pound III, Esq.




Wells Fargo Bank, N.A.

505 Main Street, Suite 301

Fort Worth, TX 76102

Attention: Corporate Trust Administration



Re: 9.0% Senior Notes due 2014




          Reference is hereby made to the Indenture, dated as of January 18, 2006 (the “Indenture”),
among Allis-Chalmers Energy Inc., a Delaware corporation (the “Company”), the Guarantors named
therein and Wells Fargo Bank, N.A., a nationally chartered banking association, as trustee.
Capitalized terms used but not defined herein shall have the meanings given to them in the
Indenture.




                                                                       (the “Transferor”) owns and proposes to transfer the Note(s) or interest
in such Note(s) specified in Annex A hereto, in the principal amount at maturity of $                                         in
such Note(s) or interests (the “Transfer”), to                                                                                  (the “Transferee”), as
further specified in Annex A hereto. In connection with the Transfer, the Transferor hereby
certifies that:




[CHECK ALL THAT APPLY]




          o     1. Check if Transferee will take delivery of a beneficial interest in the 144A Global Note
or a Definitive Note Pursuant to Rule 144A. The Transfer is being effected pursuant to and in
accordance with Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”), and,
accordingly, the Transferor hereby further certifies that the beneficial interest or Definitive
Note is being transferred to a Person that the Transferor reasonably believed and believes is
purchasing the beneficial interest or Definitive Note for its own account, or for one or more
accounts with respect to which such Person exercises sole investment discretion, and such Person
and each such account is a “qualified institutional buyer” within the meaning of Rule 144A in a
transaction meeting the requirements of Rule 144A and such Transfer is in compliance with any
applicable blue sky securities laws of any state of the United States. Upon consummation of the
proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial
interest or Definitive Note will be subject to the restrictions on transfer enumerated in the
Private Placement Legend printed on the 144A Global Note and/or the Definitive Note and in the
Indenture and the Securities Act.




          o 2. Check if Transferee will take delivery of a beneficial interest in a Regulation S
Global Note, or a Definitive Note pursuant to Regulation S. The Transfer is being




B-1









 







effected pursuant to and in accordance with Rule 903 or Rule 904 under the Securities Act and,
accordingly, the Transferor hereby further certifies that (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 the United States or such Transferor and any Person acting on its behalf reasonably
believed and believes that the Transferee was outside the United States or (y) the transaction was
executed in, on or through the facilities of a designated offshore securities market and neither
such Transferor nor any Person acting on its behalf knows that the transaction was prearranged with
a buyer in the United States, (ii) no directed selling efforts have been made in contravention of
the requirements of Rule 903(b) or Rule 904(b) of Regulation S under the Securities Act, (iii) the
transaction is not part of a plan or scheme to evade the registration requirements of the
Securities Act and (iv) the transfer is not being made to a U.S. Person or for the account or
benefit of a U.S. Person (other than an Initial Purchaser). Upon consummation of the proposed
transfer in accordance with the terms of the Indenture, the transferred beneficial interest or
Definitive Note will be subject to the restrictions on transfer enumerated in the Private Placement
Legend printed on the Regulation S Global Note and/or the Definitive Note and in the Indenture and
the Securities Act.




          o      3. Check and complete if Transferee will take delivery of a Restricted Definitive Note
pursuant to any provision of the Securities Act other than Rule 144, Rule 144A or Regulation S.
The Transfer is being effected in compliance with the transfer restrictions applicable to
beneficial interests in Restricted Global Notes and Restricted Definitive Notes and pursuant to and
in accordance with the Securities Act and any applicable blue sky securities laws of any state of
the United States, and accordingly the Transferor hereby further certifies that (check one):




          o      (a) such Transfer is being effected to the Parent, the Company or a subsidiary thereof; or




          o     (b) such Transfer is being effected to an Institutional Accredited Investor and pursuant to an
exemption from the registration requirements of the Securities Act other than Rule 144A, Rule 144
or Rule 904, and the Transferor hereby further certifies that it has not engaged in any general
solicitation within the meaning of Regulation D under the Securities Act and the Transfer complies
with the transfer restrictions applicable to Restricted Definitive Notes and the requirements of
the exemption claimed, which certification is supported by (1) a certificate executed by the
Transferee in the form of Exhibit D to the Indenture and (2) an Opinion of Counsel provided
by the Transferor or the Transferee (a copy of which the Transferor has attached to this
certification), to the effect that such Transfer is in compliance with the Securities Act. Upon
consummation of the proposed transfer in accordance with the terms of the Indenture, the
transferred Definitive Note will be subject to the restrictions on transfer enumerated in the
Private Placement Legend printed on the Definitive Notes and in the Indenture and the Securities
Act.




          4. Check if Transferee will take delivery of a beneficial interest in an Unrestricted
Global Note or of an Unrestricted Definitive Note.




          o      (a) Check if Transfer is Pursuant to Rule 144. (i) The Transfer is being effected pursuant to
and in accordance with Rule 144 under the Securities Act and in compliance


B-2









 








with the transfer restrictions contained in the Indenture and any applicable blue sky
securities laws of any state of the United States and (ii) the restrictions on transfer contained
in the Indenture and the Private Placement Legend are not required in order to maintain compliance
with the Securities Act. Upon consummation of the proposed Transfer in accordance with the terms
of the Indenture, the transferred beneficial interest or Definitive Note will no longer be subject
to the restrictions on transfer enumerated in the Private Placement Legend printed on the
Restricted Global Notes, on Restricted Definitive Notes and in the Indenture.




          o      (b) Check if Transfer is Pursuant to Regulation S. (i) The Transfer is being effected
pursuant to and in accordance with Rule 903 or Rule 904 under the Securities Act and in compliance
with the transfer restrictions contained in the Indenture and any applicable blue sky securities
laws of any state of the United States and, in the case of a transfer from a Restricted Global Note
or a Restricted Definitive Note, the Transferor hereby further certifies that (a) 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 the United States or such Transferor and any Person acting on its behalf
reasonably believed and believes that the Transferee was outside the United States or (y) the
transaction was executed in, on or through the facilities of a designated offshore securities
market and neither such Transferor nor any Person acting on its behalf knows that the transaction
was prearranged with a buyer in the United States, (b) no directed selling efforts have been made
in contravention of the requirements of Rule 903(b) or Rule 904(b) of Regulation S under the
Securities Act, (c) the transaction is not part of a plan or scheme to evade the registration
requirements of the Securities Act and (d) the transfer is not being made to a U.S. Person or for
the account or benefit of a U.S. Person, and (ii) the restrictions on transfer contained in the
Indenture and the Private Placement Legend are not required in order to maintain compliance with
the Securities Act. Upon consummation of the proposed Transfer in accordance with the terms of the
Indenture, the transferred beneficial interest or Definitive Note will no longer be subject to the
restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted
Global Notes, on Restricted Definitive Notes and in the Indenture.




          o     (c) Check if Transfer is Pursuant to Other Exemption. (i) The Transfer is being effected
pursuant to and in compliance with an exemption from the registration requirements of the
Securities Act other than Rule 144, Rule 903 or Rule 904 and in compliance with the transfer
restrictions contained in the Indenture and any applicable blue sky securities laws of any State of
the United States and (ii) the restrictions on transfer contained in the Indenture and the Private
Placement Legend are not required in order to maintain compliance with the Securities Act. Upon
consummation of the proposed Transfer in accordance with the terms of the Indenture, the
transferred beneficial interest or Definitive Note will not be subject to the restrictions on
transfer enumerated in the Private Placement Legend printed on the Restricted Global Notes or
Restricted Definitive Notes and in the Indenture.




B-3









 









                This certificate and the statements contained herein are made for your benefit and the benefit
of the Company.




	 	 	 	 	 
	 

	 	Dated:
                                                	 	 
	 
	 	 	 	 
	 

	 	 

[Insert Name of Transferor]
	 	 






	 	 	 	 	 
	 

	By:	 	 	 
	 

	 	 	 	 
	 

	 	Name:

Title:	 	 







B-4










 






ANNEX A TO CERTIFICATE OF TRANSFER




     1. The Transferor owns and proposes to transfer the following:



[CHECK ONE OF (a) OR (b)]




          o       (a) a beneficial interest in the:




          (i) 144A Global Note (CUSIP ___); or




          (ii) Regulation S Global Note (CUSIP ___); or




          o       (b) a Restricted Definitive Note.




     2. After the Transfer the Transferee will hold:



[CHECK ONE]




          o       (a) a beneficial interest in the:




          (i) 144A Global Note (CUSIP ___); or




          (ii) Regulation S Global Note (CUSIP ___); or




          (iii) Unrestricted Global Note (CUSIP ___); or




          o       (b) a Restricted Definitive Note; or




          o
      (c) an Unrestricted Definitive Note,




     in accordance with the terms of the Indenture.



B-5









 





EXHIBIT C




FORM OF CERTIFICATE OF EXCHANGE




Allis-Chalmers Energy Inc.

5075 Westheimer, Suite 890

Houston, TX 77056

Attention: Theodore F. Pound III, Esq.




Wells Fargo Bank, N.A.

505 Main Street, Suite 301

Forth Worth, TX 76102




Attention: Corporate Trust Administration




          Re: 9.0% Senior Notes due 2014




          Reference is hereby made to the Indenture, dated as of January 18, 2006 (the “Indenture”),
among Allis-Chalmers Energy Inc., a Delaware corporation (the “Company”), the Guarantors named
therein and Wells Fargo Bank, N.A., a nationally chartered banking association, as trustee.
Capitalized terms used but not defined herein shall have the meanings given to them in the
Indenture.




          ___
(the “Owner”) owns and proposes to exchange the Note(s) or interest
in such Note(s) specified herein, in the principal amount at maturity
of $___ in such
Note(s) or interests (the “Exchange”). In connection with the Exchange, the Owner hereby certifies
that:




          1. Exchange of Restricted Definitive Notes or Beneficial Interests in a Restricted Global Note
for Unrestricted Definitive Notes or Beneficial Interests in an Unrestricted Global Note




     o       (a) Check if Exchange is from beneficial interest in a Restricted Global Note to beneficial
interest in an Unrestricted Global Note. In connection with the Exchange of the Owner’s beneficial
interest in a Restricted Global Note for a beneficial interest in an Unrestricted Global Note in an
equal principal amount at maturity, the Owner hereby certifies (i) the beneficial interest is being
acquired for the Owner’s own account without transfer, (ii) such Exchange has been effected in
compliance with the transfer restrictions applicable to the Global Notes and pursuant to and in
accordance with the United States Securities Act of 1933, as amended (the “Securities Act”), (iii)
the restrictions on transfer contained in the Indenture and the Private Placement Legend are not
required in order to maintain compliance with the Securities Act and (iv) the beneficial interest
in an Unrestricted Global Note is being acquired in compliance with any applicable blue sky
securities laws of any state of the United States.



     o       (b) Check if Exchange is from beneficial interest in a Restricted Global Note to Unrestricted
Definitive Note. In connection with the Exchange of the Owner’s beneficial interest in a
Restricted Global Note for an Unrestricted Definitive Note, the Owner hereby certifies (i) the
Definitive Note is being acquired for the Owner’s own account without transfer,



C-1









 




(ii) such Exchange has been effected in compliance with the transfer restrictions applicable
to the Restricted Global Notes and pursuant to and in accordance with the Securities Act, (iii) the
restrictions on transfer contained in the Indenture and the Private Placement Legend are not
required in order to maintain compliance with the Securities Act and (iv) the Definitive Note is
being acquired in compliance with any applicable blue sky securities laws of any state of the
United States.




     o       (c) Check if Exchange is from Restricted Definitive Note to beneficial interest in an
Unrestricted Global Note. In connection with the Owner’s Exchange of a Restricted Definitive Note
for a beneficial interest in an Unrestricted Global Note, the Owner hereby certifies (i) the
beneficial interest is being acquired for the Owner’s own account without transfer, (ii) such
Exchange has been effected in compliance with the transfer restrictions applicable to Restricted
Definitive Notes and pursuant to and in accordance with the Securities Act, (iii) the restrictions
on transfer contained in the Indenture and the Private Placement Legend are not required in order
to maintain compliance with the Securities Act and (iv) the beneficial interest is being acquired
in compliance with any applicable blue sky securities laws of any state of the United States.



     o       (d) Check if Exchange is from Restricted Definitive Note to Unrestricted Definitive Note. In
connection with the Owner’s Exchange of a Restricted Definitive Note for an Unrestricted Definitive
Note, the Owner hereby certifies (i) the Unrestricted Definitive Note is being acquired for the
Owner’s own account without transfer, (ii) such Exchange has been effected in compliance with the
transfer restrictions applicable to Restricted Definitive Notes and pursuant to and in accordance
with the Securities Act, (iii) the restrictions on transfer contained in the Indenture and the
Private Placement Legend are not required in order to maintain compliance with the Securities Act
and (iv) the Unrestricted Definitive Note is being acquired in compliance with any applicable blue
sky securities laws of any state of the United States.



          2. Exchange of Restricted Definitive Notes or Beneficial Interests in Restricted Global Notes
for Restricted Definitive Notes or Beneficial Interests in Restricted Global Notes




     o       (a) Check if Exchange is from beneficial interest in a Restricted Global Note to Restricted
Definitive Note. In connection with the Exchange of the Owner’s beneficial interest in a
Restricted Global Note for a Restricted Definitive Note with an equal principal amount at maturity,
the Owner hereby certifies that the Restricted Definitive Note is being acquired for the Owner’s
own account without transfer. Upon consummation of the proposed Exchange in accordance with the
terms of the Indenture, the Restricted Definitive Note issued will continue to be subject to the
restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted
Definitive Note and in the Indenture and the Securities Act.



     o      (b) Check if Exchange is from Restricted Definitive Note to beneficial interest in a
Restricted Global Note. In connection with the Exchange of the Owner’s Restricted Definitive Note
for a beneficial interest in the [CHECK ONE] :



          o       144A Global Note,




C-2









 









          o       Regulation S Global Note,



with an equal principal amount at maturity, the Owner hereby certifies (i) the beneficial interest
is being acquired for the Owner’s own account without transfer and (ii) such Exchange has been
effected in compliance with the transfer restrictions applicable to the Restricted Global Notes and
pursuant to and in accordance with the Securities Act, and in compliance with any applicable blue
sky securities laws of any state of the United States. Upon consummation of the proposed Exchange
in accordance with the terms of the Indenture, the beneficial interest issued will be subject to
the restrictions on transfer enumerated in the Private Placement Legend printed on the relevant
Restricted Global Note and in the Indenture and the Securities Act.




          This certificate and the statements contained herein are made for your benefit and the benefit
of the Company.




	 	 	 	 	 	 	 
	 	 	Dated:                                         
	 
	 	 	 	 	 	 
	 	 	 
	 	 	[Insert Name of Transferor]

	 
	 	 	 	 	 	 





	 	 	 	 	 
	 	 	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 



C-3









 







	 	 	 	 	 



EXHIBIT D




FORM OF CERTIFICATE FROM

ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR




Allis-Chalmers Energy Inc.

5075 Westheimer, Suite 890

Houston, TX 77056

Attention: Theodore F. Pound III, Esq.




Wells Fargo Bank, N.A.

505 Main Street, Suite 301

Fort Worth, TX 76102




Attention: Corporate Trust Administration




          Re: 9.0% Senior Notes due 2014




          Reference is hereby made to the Indenture, dated as of January 18, 2006 (the “Indenture”),
among Allis-Chalmers Energy Inc., a Delaware corporation (the “Company”), the Guarantors named
therein and Wells Fargo Bank, N.A., a nationally chartered banking association, as trustee (the
“Trustee”). Capitalized terms used but not defined herein shall have the meanings given to them in
the Indenture.




          In
connection with our proposed purchase of $___ aggregate principal amount of:




          (a)       o beneficial interest in a Global Note, or




          (b)       o a Definitive Note,




          we confirm that:




          1. We understand that any subsequent transfer of the Notes or any interest therein is subject
to certain restrictions and conditions set forth in the Indenture and the undersigned agrees to be
bound by, and not to resell, pledge or otherwise transfer the Notes or any interest therein except
in compliance with, such restrictions and conditions and the Securities Act of 1933, as amended
(the “Securities Act”).




          2. We understand that the offer and sale of the Notes have not been registered under the
Securities Act, and that the Notes and any interest therein may not be offered or sold except as
permitted in the following sentence. We agree, on our own behalf and on behalf of any accounts for
which we are acting as hereinafter stated, that if we should sell the Notes or any interest
therein, we shall do so only (A) to the Company or any subsidiary thereof, (B) in accordance with
Rule 144A under the Securities Act to a “qualified institutional buyer” (as defined therein), (C)
to an institutional “accredited investor” (as defined below) that, prior to such transfer,
furnishes (or has furnished on its behalf by a U.S. broker-dealer) to you and to the




D-1









 







Company a signed letter substantially in the form of this letter and an Opinion of Counsel in
form reasonably acceptable to the Company to the effect that such transfer is in compliance with
the Securities Act, (D) outside the United States in accordance with Rule 904 of Regulation S under
the Securities Act, (E) pursuant to the provisions of Rule 144(k) under the Securities Act or (F)
pursuant to an effective registration statement under the Securities Act, and we further agree to
provide to any person purchasing the Definitive Note or beneficial interest in a Global Note from
us in a transaction meeting the requirements of clauses (A) through (E) of this paragraph a notice
advising such purchaser that resales thereof are restricted as stated herein.




          3.      We understand that, on any proposed resale of the Notes or beneficial interest therein, we
will be required to furnish to you and the Company such certifications, legal opinions and other
information as you and the Company may reasonably require to confirm that the proposed sale
complies with the foregoing restrictions. We further understand that the Notes purchased by us
will bear a legend to the foregoing effect.




          4.       We are an institutional “accredited investor” (as defined in Rule 501(a)(1), (2), (3) or
(7) of Regulation D under the Securities Act) and have such knowledge and experience in financial
and business matters as to be capable of evaluating the merits and risks of our investment in the
Notes, and we and any accounts for which we are acting are each able to bear the economic risk of
our or its investment.




          5.       We are acquiring the Notes or beneficial interest therein purchased by us for our own
account or for one or more accounts (each of which is an institutional “accredited investor”) as to
each of which we exercise sole investment discretion.




          The Trustee and the Company are entitled to rely upon this letter and are irrevocably
authorized to produce this letter or a copy hereof to any interested party in any administrative or
legal proceedings or official inquiry with respect to the matters covered hereby.




	 	 	 	 	 	 	 	 	 	 	 
	Dated:
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	[Insert Name of Accredited Investor]	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	By:	 	 	 	 
	 

	 	 	 	 	 	 	 	 

Name:
	 	 
	 

	 	 	 	 	 	 	 	Title:	 	 






D-2









 







EXHIBIT E




FORM OF SUPPLEMENTAL INDENTURE

TO BE DELIVERED BY SUBSEQUENT GUARANTORS




          Supplemental Indenture (this “Supplemental Indenture”), dated as of                     ,
200                    , among                                         (the “Guaranteeing Subsidiary”), a subsidiary of Allis-Chalmers
Energy Inc. (or its permitted successor), a Delaware corporation (the “Company”), the Company, the
other Guarantors (as defined in the Indenture referred to herein) and Wells Fargo Bank, N.A., a
nationally chartered banking association (or its permitted successor), as trustee under the
Indenture referred to below (the “Trustee”).



W I T N E S S E T H




          WHEREAS, the Company has heretofore executed and delivered to the Trustee an indenture
dated as of January 18, 2006 (the “Indenture”) providing for the issuance of 9.0% Senior Notes due
2014 (the “Notes”);




          WHEREAS, Section 4.16 of the Indenture provides that the Guaranteeing Subsidiary shall execute
and deliver to the Trustee a supplemental indenture pursuant to which the Guaranteeing Subsidiary
shall become a Guarantor (as defined in the Indenture); and




          WHEREAS, pursuant to Section 9.06 of the Indenture, the Trustee is authorized to execute and
deliver this Supplemental Indenture.




          NOW THEREFORE, in consideration of the foregoing and for other good and valuable
consideration, the receipt of which is hereby acknowledged, the Guaranteeing Subsidiary, the
Company, the other Guarantors and the Trustee agree as follows for the equal and ratable benefit of
the Holders of the Notes:




          1. Capitalized Terms. Capitalized terms used herein without definition shall have
the meanings assigned to them in the Indenture.




          2. Agreement to Guarantee. The Guaranteeing Subsidiary hereby provides an
unconditional Subsidiary Guarantee on the terms and subject to the conditions set forth in the
Indenture, including but not limited to Article Ten thereof.




          3. Execution and Delivery. The Subsidiary Guarantees shall remain in full
force and effect notwithstanding any failure to endorse on each Note a notation of such Subsidiary
Guarantee.




          4. No Recourse Against Others. Pursuant to Section 12.07 of the Indenture, no
director, officer, employee, incorporator, stockholder, member, manager or partner of the
Guaranteeing Subsidiary shall have any liability for any obligations of the Guaranteeing Subsidiary
under the Notes, the Indenture, this Supplemental Indenture, the Subsidiary Guarantees or for any
claim based on, in respect of, or by reason of, such obligations or their creation. This waiver
and release are part of the consideration for the Subsidiary Guarantee.




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          5. NEW YORK LAW TO GOVERN. THE LAWS OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO
CONSTRUE THIS SUPPLEMENTAL INDENTURE AND THE SUBSIDIARY GUARANTEE.




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




          7. Effect of Headings. The Section headings herein are for convenience only and
shall not affect the construction hereof.




          8. The Trustee. The Trustee shall not be responsible in any manner whatsoever for or
in respect of the validity or sufficiency of this Supplemental Indenture or for or in respect of
the recitals contained herein, all of which recitals are made solely by the Guaranteeing Subsidiary
and the Company.



[SIGNATURE PAGE FOLLOWS]




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




	 	 	 	 	 	 	 
	 	 	[NAME OF GUARANTEEING SUBSIDIARY]
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name:	 	 
	 

	 	 	 	Title:	 	 
	 
	 	 	 	 	 	 
	 	 	ALLIS-CHALMERS ENERGY INC.
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name:	 	 
	 

	 	 	 	Title:	 	 
	 
	 	 	 	 	 	 
	 	 	WELLS FARGO BANK,
N.A.,

 AS TRUSTEE
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name:	 	 
	 

	 	 	 	Title:	 	 
	 
	 	 	 	 	 	 
	 	 	[EACH THEN EXISTING GUARANTOR]
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name:

Title:	 	 






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EXHIBIT F




FORM OF SUBSIDIARY GUARANTEE NOTATION




          For value received, each Guarantor (which term includes any successor Person under the
Indenture) has, jointly and severally, unconditionally guaranteed, to the extent set forth in, and
subject to the provisions of, the Indenture dated as of January 18, 2006 (the “Indenture”) among
Allis-Chalmers Energy Inc. (the “Company”), the Guarantors party thereto and Wells Fargo Bank,
N.A., a nationally chartered banking association, as trustee (the “Trustee”), that (i) the
principal of, premium, if any, and interest and Liquidated Damages, if any, on the Notes will be
promptly paid in full when due, whether at maturity, by acceleration, redemption or otherwise, and
interest on the overdue principal of, premium, if any, and interest and Liquidated Damages, if any,
on the Notes, if lawful (subject in all cases to any applicable grace period provided herein), and
all other obligations of the Company to the Holders or the Trustee hereunder or thereunder will be
promptly paid in full, all in accordance with the terms hereof and thereof; and (ii) in case of any
extension of time of payment or renewal of any Notes or any of such other obligations, the same
will be promptly paid in full when due in accordance with the terms of the extension or renewal,
whether at stated maturity, by acceleration or otherwise. Failing payment when due of any amount
so guaranteed for whatever reason, the Guarantors shall be jointly and severally obligated to pay
the same immediately. The obligations of the Guarantors to the Holders of Notes and to the Trustee
pursuant to the Indenture (including the Subsidiary Guarantee) are set forth in Article Ten of the
Indenture, and reference is hereby made to the Indenture for the precise terms of the Subsidiary
Guarantee. Each Holder of a Note, by accepting the same agrees to and shall be bound by such
provisions.




          Capitalized terms used but not defined herein have the meanings given to them in the
Indenture.




	 	 	 	 	 
	 	[NAME OF EACH GUARANTOR]

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 




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