exv4w1



 








Exhibit 4.1




EXECUTION COPY




LEVI STRAUSS & CO.



8-7/8% Senior Notes due 2016


 




INDENTURE


Dated as of March 17, 2006


 




WILMINGTON TRUST COMPANY,


Trustee









 



 








	 	 	 	 	 
	TABLE OF CONTENTS
	 	 	 	 
	 	 	Page
	ARTICLE I
	 	 	 	 
	 
	Definitions
and Incorporation by Reference
	 	 	 	 
	 
	 	 	 	 
	SECTION 1.01. Definitions
	 	 	1	 
	SECTION 1.02. Other Definitions
	 	 	30	 
	SECTION 1.03. Incorporation by Reference of Trust Indenture Act
	 	 	31	 
	SECTION 1.04. Rules of Construction
	 	 	32	 
	 
	 	 	 	 
	ARTICLE II
	 	 	 	 
	 
	The
Securities
	 	 	 	 
	 
	 	 	 	 
	SECTION 2.01. Amount of Securities; Issuable in Series
	 	 	32	 
	SECTION 2.02. Form and Dating
	 	 	33	 
	SECTION 2.03. Execution and Authentication
	 	 	34	 
	SECTION 2.04. Registrar and Paying Agent
	 	 	34	 
	SECTION 2.05. Paying Agent To Hold Money in Trust
	 	 	35	 
	SECTION 2.06. Securityholder Lists
	 	 	35	 
	SECTION 2.07. Replacement Securities
	 	 	35	 
	SECTION 2.08. Outstanding Securities
	 	 	36	 
	SECTION 2.09. Temporary Securities
	 	 	36	 
	SECTION 2.10. Cancellation
	 	 	36	 
	SECTION 2.11. Defaulted Interest
	 	 	36	 
	SECTION 2.12. CUSIP Numbers
	 	 	36	 
	 
	 	 	 	 
	ARTICLE III
	 	 	 	 
	 
	Redemption
	 	 	 	 
	 
	 	 	 	 
	SECTION 3.01. Notices to Trustee
	 	 	37	 
	SECTION 3.02. Selection of Securities To Be Redeemed
	 	 	37	 
	SECTION 3.03. Notice of Redemption
	 	 	37	 
	SECTION 3.04. Effect of Notice of Redemption
	 	 	38	 
	SECTION 3.05. Deposit of Redemption Price
	 	 	38	 
	SECTION 3.06. Securities Redeemed in Part
	 	 	38	 












 



 


	 	 	 	 	 
	 	 	Page
	ARTICLE IV
	 	 	 	 
	 
	Covenants
	 	 	 	 
	 
	 	 	 	 
	SECTION 4.01. Covenant Suspension
	 	 	39	 
	SECTION 4.02. Payment of Securities
	 	 	39	 
	SECTION 4.03. SEC Reports
	 	 	39	 
	SECTION 4.04. Limitation on Debt
	 	 	40	 
	SECTION 4.05. Limitation on Restricted Payments
	 	 	42	 
	SECTION 4.06. Limitation on Liens
	 	 	46	 
	SECTION 4.07. Limitation on Asset Sales
	 	 	46	 
	SECTION 4.08. Limitation on Restrictions on Distributions from Restricted Subsidiaries
	 	 	49	 
	SECTION 4.09. Limitation on Transactions with Affiliates
	 	 	51	 
	SECTION 4.10. Designation of Restricted and Unrestricted Subsidiaries
	 	 	52	 
	SECTION 4.11. Limitation on Sale and Leaseback Transactions
	 	 	53	 
	SECTION 4.12. Change of Control
	 	 	54	 
	SECTION 4.13. Further Instruments and Acts
	 	 	55	 
	 
	 	 	 	 
	ARTICLE V
	 	 	 	 
	 
	Successor
Company
	 	 	 	 
	 
	 	 	 	 
	SECTION 5.01. When Company May Merge or Transfer Assets
	 	 	55	 
	 
	 	 	 	 
	ARTICLE VI
	 	 	 	 
	 
	Defaults
and Remedies
	 	 	 	 
	 
	 	 	 	 
	SECTION 6.01. Events of Default
	 	 	57	 
	SECTION 6.02. Acceleration
	 	 	58	 
	SECTION 6.03. Other Remedies
	 	 	59	 
	SECTION 6.04. Waiver of Past Defaults
	 	 	59	 
	SECTION 6.05. Control by Majority
	 	 	59	 
	SECTION 6.06. Limitation on Suits
	 	 	60	 
	SECTION 6.07. Rights of Holders to Receive Payment
	 	 	60	 
	SECTION 6.08. Collection Suit by Trustee
	 	 	60	 
	SECTION 6.09. Trustee May File Proofs of Claim
	 	 	60	 
	SECTION 6.10. Priorities
	 	 	61	 
	SECTION 6.11. Undertaking for Costs
	 	 	61	 
	SECTION 6.12. Waiver of Stay or Extension Laws
	 	 	61	 




(ii)








 



 


	 	 	 	 	 
	 	 	Page
	ARTICLE VII
	 	 	 	 
	 
	Trustee
	 	 	 	 
	 
	 	 	 	 
	SECTION 7.01. Duties of Trustee
	 	 	61	 
	SECTION 7.02. Rights of Trustee
	 	 	63	 
	SECTION 7.03. Individual Rights of Trustee
	 	 	63	 
	SECTION 7.04. Trustee’s Disclaimer
	 	 	64	 
	SECTION 7.05. Notice of Defaults
	 	 	64	 
	SECTION 7.06. Reports by Trustee to Holders
	 	 	64	 
	SECTION 7.07. Compensation and Indemnity
	 	 	64	 
	SECTION 7.08. Replacement of Trustee
	 	 	65	 
	SECTION 7.09. Successor Trustee by Merger
	 	 	66	 
	SECTION 7.10. Eligibility; Disqualification
	 	 	66	 
	SECTION 7.11. Preferential Collection of Claims Against Company
	 	 	66	 
	 
	 	 	 	 
	ARTICLE VIII
	 	 	 	 
	 
	Discharge
of Indenture; Defeasance
	 	 	 	 
	 
	 	 	 	 
	SECTION 8.01. Discharge of Liability on Securities; Defeasance
	 	 	67	 
	SECTION 8.02. Conditions to Defeasance
	 	 	68	 
	SECTION 8.03. Application of Trust Money
	 	 	69	 
	SECTION 8.04. Repayment to Company
	 	 	69	 
	SECTION 8.05. Indemnity for Government Obligations
	 	 	69	 
	SECTION 8.06. Reinstatement
	 	 	69	 
	 
	 	 	 	 
	ARTICLE IX
	 	 	 	 
	 
	Amendments
	 	 	 	 
	 
	 	 	 	 
	SECTION 9.01. Without Consent of Holders
	 	 	70	 
	SECTION 9.02. With Consent of Holders
	 	 	70	 
	SECTION 9.03. Compliance with Trust Indenture Act
	 	 	71	 
	SECTION 9.04. Revocation and Effect of Consents and Waivers
	 	 	71	 
	SECTION 9.05. Notation on or Exchange of Securities
	 	 	72	 
	SECTION 9.06. Trustee To Sign Amendments
	 	 	72	 
	SECTION 9.07. Payment for Consent
	 	 	72	 
	 
	 	 	 	 
	ARTICLE X
	 	 	 	 
	 
	Miscellaneous
	 	 	 	 
	 
	 	 	 	 
	SECTION 10.01. Trust Indenture Act Controls
	 	 	73	 
	SECTION 10.02. Notices
	 	 	73	 




(iii)








 



 


	 	 	 	 	 
	 	 	Page
	SECTION 10.03. Communication by Holders with Other Holders
	 	 	73	 
	SECTION 10.04. Certificate and Opinion as to Conditions Precedent
	 	 	74	 
	SECTION 10.05. Statements Required in Certificate or Opinion
	 	 	74	 
	SECTION 10.06. When Securities Disregarded
	 	 	74	 
	SECTION 10.07. Rules by Trustee, Paying Agent and Registrar
	 	 	74	 
	SECTION 10.08. Legal Holidays
	 	 	75	 
	SECTION 10.09. Governing Law
	 	 	75	 
	SECTION 10.10. No Recourse Against Others
	 	 	75	 
	SECTION 10.11. Successors
	 	 	75	 
	SECTION 10.12. Multiple Originals
	 	 	75	 
	SECTION 10.13. Table of Contents; Headings
	 	 	75	 





(iv)








 



 




CROSS-REFERENCE TABLE




	 	 	 
	TIA	 	Indenture
	Section	 	Section
	310 (a) (1)
	 	7.10 
	(a)(2)
	 	7.10 
	(a)(3)
	 	N.A.
	(a)(4)
	 	N.A.
	(b)
	 	7.08; 7.10 
	(c)
	 	N.A.
	311 (a)
	 	7.11 
	(b)
	 	7.11 
	(c)
	 	N.A.
	312 (a)
	 	2.06 
	(b)
	 	N.A.
	(c)
	 	N.A.
	313 (a)
	 	7.06 
	(b)(1)
	 	N.A.
	(b)(2)
	 	7.06 
	(c)
	 	N.A.
	(d)
	 	7.06 
	314 (a)
	 	4.02;  4.10; N.A.
	(b)
	 	N.A.
	(c)(1)
	 	N.A.
	(c)(2)
	 	N.A.
	(c)(3)
	 	N.A.
	(d)
	 	N.A.
	(e)
	 	N.A.
	(f)
	 	4.10 
	315 (a)
	 	7.01 
	(b)
	 	7.05; N.A.
	(c)
	 	7.01 
	(d)
	 	7.01 
	(e)
	 	6.11 
	316 (a) (last
sentence)
	 	N.A.
	(a)(1)(A)
	 	6.05 
	(a)(1)(B)
	 	6.04 
	(a)(2)
	 	N.A.
	(b)
	 	6.07 
	317 (a)(1)
	 	6.08 
	(a)(2)
	 	6.09 
	(b)
	 	2.05 
	318 (a)
	 	N.A.






N.A. Means Not Applicable.



Note: This Cross-Reference Table shall not, for any purposes, be deemed to be part of this
Indenture.


(v)








 








     INDENTURE dated as of March 17, 2006, between LEVI STRAUSS & CO., a Delaware corporation (the
“Company”) and WILMINGTON TRUST COMPANY, a Delaware banking corporation, as Trustee (the
“Trustee”).



          Each party agrees as follows for the benefit of the other party and for the equal and ratable
benefit of the Holders of the Company’s 8-7/8% Senior Notes due 2016, to be issued, from time to
time, in one or more series as in this Indenture provided (the “Initial Securities”) and, if and
when issued pursuant to a registered or private exchange for the Initial Securities, the Company’s
8-7/8% Senior Notes due 2016 (the “Exchange Securities” and, together with the Initial Securities,
the “Securities”):




ARTICLE I



Definitions and Incorporation by Reference




          SECTION 1.01. Definitions.




          “Additional Assets” means:





     (a) any Property (other than cash, cash equivalents, securities and inventory) to be
owned by the Company or any Restricted Subsidiary and used in a Related Business; or




     (b) Capital Stock of a Person that becomes a Restricted Subsidiary as a result of the
acquisition of that Capital Stock by the Company or another Restricted Subsidiary from any
Person other than the Company or an Affiliate of the Company; provided,
however, that, in the case of this clause (b), the Restricted Subsidiary is
primarily engaged in a Related Business.



          “Affiliate” of any specified Person means:





     (a) any other Person directly or indirectly controlling or controlled by or under
direct or indirect common control with that specified Person, or




     (b) any other Person who is a director or officer of that specified Person.


For the purposes of this definition, “control” when used with respect to any Person means the power
to direct the management and policies of that Person, directly or indirectly, whether through the
ownership of voting securities, by contract or otherwise; and the terms “controlling” and
“controlled” have meanings correlative to the foregoing. For purposes of Section 4.09 and Section
4.07 and the definition of “Additional Assets” only, “Affiliate” shall also mean any Beneficial
Owner of shares representing 10% or more of the total voting power of the Voting Stock (on a fully
diluted basis) of the Company or of rights or warrants to purchase that Voting Stock (whether or
not currently exercisable) and any Person who would be an Affiliate of any Beneficial Owner
pursuant to the first sentence hereof.










 



2




          “Asset Sale” means any sale, lease, transfer, issuance or other disposition (or series of
related sales, leases, transfers, issuances or dispositions) by the Company or any Restricted
Subsidiary, including any disposition by means of a merger, consolidation or similar transaction
(each referred to for the purposes of this definition as a “disposition”), of





     (a) any shares of Capital Stock of a Restricted Subsidiary (other than directors’
qualifying shares),




     (b) all or substantially all the assets of any division or line of business of the
Company or any Restricted Subsidiary, or




     (c) any other assets of the Company or any Restricted Subsidiary outside of the
ordinary course of business of the Company or such Restricted Subsidiary,


other than, in the case of clause (a), (b) or (c) above,





     (1) any disposition by a Restricted Subsidiary to the Company or by the Company or a
Restricted Subsidiary to a Restricted Subsidiary,




     (2) any disposition that constitutes a Permitted Investment or Restricted Payment
permitted by Section 4.05,




     (3) any disposition effected in compliance with the first paragraph in Section 5.01,




     (4) a sale of accounts receivables and related assets of the type specified in the
definition of “Qualified Receivables Transaction” to a Receivables Entity,




     (5) a transfer of accounts receivables and related assets of the type specified in
the definition of “Qualified Receivables Transaction” (or a fractional undivided interest
therein) by a Receivables Entity in connection with a Qualified Receivables Transaction,




     (6) a transfer of accounts receivable of the type specified in the definition of
“Credit Facilities” that is permitted under clause (b) of the second paragraph of Section
4.04, and




     (7) any disposition that does not (together with all related dispositions) involve
assets having a Fair Market Value or consideration in excess of $1.0 million.



          “Attributable Debt” in respect of a Sale and Leaseback Transaction means, at any date of
determination,





     (a) if the Sale and Leaseback Transaction is a Capital Lease Obligation, the amount
of Debt represented thereby according to the definition of “Capital Lease Obligation”, and









 



3



     (b) in all other instances, the greater of:




     (1) the Fair Market Value of the Property subject to the Sale and Leaseback
Transaction, and




     (2) the present value (discounted at the interest rate borne by the
Securities, compounded annually) of the total obligations of the lessee for rental
payments during the remaining term of the lease included in the Sale and Leaseback
Transaction (including any period for which the lease has been extended).



          “Average Life” means, as of any date of determination, with respect to any Debt or Preferred
Stock, the quotient obtained by dividing:





     (a) the sum of the product of the numbers of years (rounded to the nearest
one-twelfth of one year) from the date of determination to the dates of each successive
scheduled principal payment of that Debt or redemption or similar payment with respect to
that Preferred Stock multiplied by the amount of the payment by




     (b) the sum of all payments of this kind.



          “Beneficial Owner” means a beneficial owner as defined in Rule 13d-3 under the Exchange Act,
except that:





     (a) a Person will be deemed to be the Beneficial Owner of all shares that the Person
has the right to acquire, whether that right is exercisable immediately or only after the
passage of time,




     (b) for purposes of clause (a) of the definition of “Change of Control”, Permitted
Holders will be deemed to be the Beneficial Owners of any Voting Stock of a corporation or
other legal entity held by any other corporation or other legal entity so long as the
Permitted Holders Beneficially Own, directly or indirectly, in the aggregate a majority of
the total voting power of the Voting Stock of that corporation or other legal entity, and




     (c) for purposes of clause (b) of the definition of “Change of Control”, any “person”
or “group” (as those terms are defined in Sections 13(d) and 14(d) of the Exchange Act or
any successor provisions to either of the foregoing), including any group acting for the
purpose of acquiring, holding, voting or disposing of securities within the meaning of Rule
13d-5(b)(1) under the Exchange Act, other than any one or more of the Permitted Holders,
shall be deemed to be the Beneficial Owners of any Voting Stock of a corporation or other
legal entity held by any other corporation or legal entity (“the parent corporation”), so
long as that person or group Beneficially Owns, directly or indirectly, in the aggregate a
majority of the total voting power of the Voting Stock of that parent corporation.









 



4

The term “Beneficially Own” shall have a corresponding meaning.




          “Board of Directors” means the Board of Directors of the Company (or, in the case of clause
(b) of the first paragraph of Section 4.09, the applicable Restricted Subsidiary) or any committee
thereof duly authorized to act on behalf of such Board.




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




          “Business Day” means each day that is not a Legal Holiday.




          “Capital Lease Obligation” means any obligation under a lease that is required to be
capitalized for financial reporting purposes in accordance with GAAP; and the amount of Debt
represented by that obligation shall be the capitalized amount of the obligations determined 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 that lease prior to the first date upon which that lease may be
terminated by the lessee without payment of a penalty. For purposes of Section 4.06, a Capital
Lease Obligation shall be deemed secured by a Lien on the Property being leased.




          “Capital Stock” means, with respect to any Person, any shares or other equivalents (however
designated) of any class of corporate stock or partnership interests or any other participations,
rights, warrants, options or other interests in the nature of an equity interest in that Person,
including Preferred Stock, but excluding any debt security convertible or exchangeable into that
equity interest.




          “Capital Stock Sale Proceeds” means the aggregate cash proceeds received by the Company from
the issuance or sale (other than to a Subsidiary of the Company or an employee stock ownership plan
or trust established by the Company or the Subsidiary for the benefit of their employees) by the
Company of its Capital Stock (other than Disqualified Stock) after the Issue Date, net of
attorneys’ fees, accountants’ fees, initial purchasers’ or placement agents’ fees, discounts or
commissions and brokerage, consultant and other fees actually incurred in connection with the
issuance or sale and net of taxes paid or payable as a result thereof.




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





     (a) prior to the first Public Equity Offering that results in a Public Market, the
Permitted Holders cease to be the Beneficial Owners, directly or indirectly, of a majority
of the total voting power of the Voting Stock of the Company, whether as a result of the
issuance of securities of the Company, any merger, consolidation, liquidation or
dissolution of the Company, any direct or indirect transfer of securities by the Permitted
Holders or otherwise; or




     (b) on or after the first Public Equity Offering that results in a Public Market, if
any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Exchange
Act or any successor provisions to either of the foregoing),









 



5



including any group acting for the purpose of acquiring, holding, voting or disposing
of securities within the meaning of Rule 13d-5(b)(1) under the Exchange Act, other than any
one or more of the Permitted Holders, becomes the Beneficial Owner, directly or indirectly,
of 35% or more of the total voting power of the Voting Stock of the Company;
provided, however, that the Permitted Holders are the Beneficial Owners,
directly or indirectly, in the aggregate of a lesser percentage of the total voting power
of the Voting Stock of the Company than that other person or group; and provided
further, that the provisions of this clause (b) will not apply to Voting Trustees
serving in that capacity under the Voting Trust Agreement; or




     (c) the sale, transfer, assignment, lease, conveyance or other disposition, directly
or indirectly, of all or substantially all the assets of the Company and the Restricted
Subsidiaries, considered as a whole (other than a disposition of assets as an entirety or
virtually as an entirety to a Wholly Owned Restricted Subsidiary or one or more Permitted
Holders) shall have occurred, or the Company merges, consolidates or amalgamates with or
into any other Person (other than one or more Permitted Holders) or any other Person (other
than one or more Permitted Holders) merges, consolidates or amalgamates with or into the
Company, in any event pursuant to a transaction in which the outstanding Voting Stock of
the Company is reclassified into or exchanged for cash, securities or other Property, other
than a transaction where:




     (1) the outstanding Voting Stock of the Company is reclassified into or
exchanged for other Voting Stock of the Company or for Voting Stock of the
surviving corporation or transferee, and




     (2) the Holders of the Voting Stock of the Company immediately prior to the
transaction own, directly or indirectly, not less than a majority of the Voting
Stock of the Company or the surviving corporation or transferee immediately after
the transaction and in substantially the same proportion as before the transaction;
or




     (d) during any period of two consecutive years, individuals who at the beginning of
that period constituted the Board of Directors (together with any new directors whose
election or appointment by such Board or whose nomination for election by the shareholders
of the Company was approved by a vote of not less than three-fourths of the directors then
still in office who were either directors at the beginning of that period or whose election
or nomination for election was previously so approved or by a vote of the Voting Trustees
pursuant to the terms of the Voting Trust Agreement) cease for any reason to constitute a
majority of the Board of Directors then in office; or




     (e) the shareholders of the Company shall have approved any plan of liquidation or
dissolution of the Company.



          “Code” means the Internal Revenue Code of 1986, as amended.










 



6




          “Commodity Price Protection Agreement” means, in respect of a Person, any forward contract,
commodity swap agreement, commodity option agreement or other similar agreement or arrangement
designed to protect that Person against fluctuations in commodity prices.




          “Company” means the party named as such in this Indenture until a successor replaces it
pursuant to the applicable provisions hereof and, thereafter, means the successor and, for purposes
of any provision contained herein and required by the TIA, each other obligor on the indenture
securities.




          “Consolidated Current Liabilities” means, as of any date of determination, the aggregate
amount of liabilities of the Company and its consolidated Restricted Subsidiaries which may
properly be classified as current liabilities (including taxes accrued as estimated), after
eliminating:





     (a) all intercompany items between the Company and any Restricted Subsidiary or
between Restricted Subsidiaries, and




     (b) all current maturities of long-term Debt.



          “Consolidated Fixed Charges” means, for any period, the total interest expense (net of
interest income) of the Company and its consolidated Restricted Subsidiaries, plus, to the extent
not included in such total interest expense, and to the extent Incurred by the Company or its
Restricted Subsidiaries,





     (a) interest expense attributable to leases constituting part of a Sale and Leaseback
Transaction and to Capital Lease Obligations,




     (b) amortization of debt discount and debt issuance cost, including commitment fees,




     (c) capitalized interest,




     (d) non-cash interest expense,




     (e) commissions, discounts and other fees and charges owed with respect to letters of
credit and bankers’ acceptance financing,




     (f) net costs associated with Interest Rate Agreements (including amortization of
fees),




     (g) Disqualified Stock Dividends,




     (h) Preferred Stock Dividends,




     (i) interest Incurred in connection with Investments in discontinued operations,









 



7



     (j) interest accruing on any Debt of any other Person to the extent that Debt is
Guaranteed by the Company or any Restricted Subsidiary, and




     (k) the cash contributions to any employee stock ownership plan or similar trust to
the extent those contributions are used by the plan or trust to pay interest or fees to any
Person (other than the Company) in connection with Debt Incurred by the plan or trust.



     Notwithstanding anything to the contrary contained herein, commissions, discounts, yield and
other fees and charges Incurred in connection with any transaction (including, without limitation,
any Qualified Receivables Transaction) pursuant to which the Company or any Subsidiary of the
Company may sell, convey or otherwise transfer or grant a security interest in any accounts
receivable or related assets of the type specified in the definition of “Qualified Receivables
Transaction” shall be included in Consolidated Fixed Charges.



          “Consolidated Fixed Charges Coverage Ratio” means, as of any date of determination, the ratio
of:





     (a) the aggregate amount of EBITDA for the most recent four consecutive fiscal
quarters ending at least 45 days prior to such determination date to



          Consolidated Fixed Charges for those four fiscal quarters;



provided, however, that:





     (1) if




     (A) since the beginning of that period the Company or any Restricted
Subsidiary has Incurred any Debt that remains outstanding or Repaid any
Debt, or




     (B) the transaction giving rise to the need to calculate the
Consolidated Fixed Charges Coverage Ratio involves an Incurrence or
Repayment of Debt,




Consolidated Fixed Charges for that period shall be calculated after giving effect on a pro
forma basis to that Incurrence or Repayment as if the Debt was Incurred or Repaid on the
first day of that period, provided that, in the event of any Repayment of Debt,
EBITDA for that period shall be calculated as if the Company or such Restricted Subsidiary
had not earned any interest income actually earned during such period in respect of the
funds used to Repay such Debt, and




     (2) if




     (A) since the beginning of that period the Company or any Restricted
Subsidiary shall have made any Asset Sale or an









 



8



Investment (by merger or otherwise) in any Restricted Subsidiary (or
any Person which becomes a Restricted Subsidiary) or an acquisition of
Property which constitutes all or substantially all of an operating unit
of a business,




     (B) the transaction giving rise to the need to calculate the
Consolidated Fixed Charges Coverage Ratio involves an Asset Sale,
Investment or acquisition, or




     (C) since the beginning of that period any Person (that subsequently
became a Restricted Subsidiary or was merged with or into the Company or
any Restricted Subsidiary since the beginning of that period) shall have
made such an Asset Sale, Investment or acquisition,




EBITDA for that period shall be calculated after giving pro forma effect to the Asset Sale,
Investment or acquisition as if the Asset Sale, Investment or acquisition occurred on the
first day of that period.



          If any Debt bears a floating rate of interest and is being given pro forma effect, the
interest expense on that Debt shall be calculated as if the base interest rate in effect for the
floating rate of interest on the date of determination had been the applicable base interest rate
for the entire period (taking into account any Interest Rate Agreement applicable to that Debt if
the applicable Interest Rate Agreement has a remaining term in excess of 12 months). In the event
the Capital Stock of any Restricted Subsidiary is sold during the period, the Company shall be
deemed, for purposes of clause (1) above, to have Repaid during that period the Debt of that
Restricted Subsidiary to the extent the Company and its continuing Restricted Subsidiaries are no
longer liable for that Debt after the sale.




          “Consolidated Net Income” means, for any period, the net income (loss) of the Company and its
consolidated Subsidiaries; provided, however, that there shall not be included in
such Consolidated Net Income:





     (a) any net income (loss) of any Person (other than the Company) if that Person is
not a Restricted Subsidiary, except that:




     (1) subject to the exclusion contained in clause (d) below, the Company’s
equity in the net income of any such Person for that period shall be included in
such Consolidated Net Income up to the aggregate amount of cash distributed by that
Person during that period to the Company or a Restricted Subsidiary as a dividend
or other distribution (subject, in the case of a dividend or other distribution to
a Restricted Subsidiary, to the limitations contained in clause (c) below), and




     (2) the Company’s equity in a net loss of that Person other than an
Unrestricted Subsidiary for the specified period shall be included in determining
such Consolidated Net Income,









 



9



     (b) for purposes of Section 4.05 only, any net income (loss) of any Person acquired
by the Company or any of its consolidated Subsidiaries in a pooling of interests
transaction for any period prior to the date of the acquisition,




     (c) any net income (loss) of any Restricted Subsidiary if the Restricted Subsidiary
is subject to restrictions, directly or indirectly, on the payment of dividends or the
making of distributions, directly or indirectly, to the Company, except that:




     (1) subject to the exclusion contained in clause (d) below, the Company’s
equity in the net income of the Restricted Subsidiary for the period shall be
included in Consolidated Net Income up to the aggregate amount that would have been
permitted at the date of determination to be dividended to the Company or another
Restricted Subsidiary by that Restricted Subsidiary without prior approval by a
third party (that has not been obtained), pursuant to the terms of its charter and
all agreements, instruments, judgments, decrees and orders applicable to that
Restricted Subsidiary or its shareholders, during that period as a dividend or
other distribution (subject, in the case of a dividend or other distribution to
another Restricted Subsidiary, to the limitation contained in this clause), and




     (2) the Company’s equity in a net loss of the Restricted Subsidiary for such
period shall be included in determining such Consolidated Net Income,




     (d) any gain (but not loss) realized upon the sale or other disposition of any
Property of the Company or any of its consolidated Subsidiaries (including pursuant to any
Sale and Leaseback Transaction) that is not sold or otherwise disposed of in the ordinary
course of business,




     (e) any extraordinary gain or loss,




     (f) the cumulative effect of a change in accounting principles,




     (g) any unrealized gains or losses of the Company or its consolidated Subsidiaries on
any Hedging Obligations, and




     (h) any non-cash compensation expense realized for grants of performance shares,
stock options or other rights to officers, directors and employees of the Company or any
Restricted Subsidiary, provided, however, that if any such shares, options
or other rights are subsequently redeemed for Property other than Capital Stock of the
Company that is not Disqualified Stock then the Fair Market Value of such Property shall be
treated as a reduction in Consolidated Net Income during the period of such redemption.


Notwithstanding the foregoing, for purposes of Section 4.05 only, there shall be excluded from
Consolidated Net Income any dividends, repayments of loans or advances or other








 



10


transfers of assets from Unrestricted Subsidiaries to the Company or a Restricted Subsidiary to the
extent the dividends, repayments or transfers increase the amount of Restricted Payments permitted
under that Section pursuant to clause (c)(4) of the first paragraph thereof.




          “Consolidated Net Tangible Assets” means, as of any date of determination, the sum of the
amounts that would appear on a consolidated balance sheet of the Company and its consolidated
Restricted Subsidiaries as the total assets (less accumulated depreciation, amortization,
allowances for doubtful receivables, other applicable reserves and other properly deductible items)
of the Company and its Restricted Subsidiaries, after giving effect to purchase accounting and
after deducting therefrom Consolidated Current Liabilities and, to the extent otherwise included,
the amounts of (without duplication):





     (a) the excess of cost over fair market value of assets or businesses acquired;




     (b) any revaluation or other write-up in book value of assets subsequent to the last
day of the fiscal quarter of the Company immediately preceding the Issue Date as a result
of a change in the method of valuation in accordance with GAAP;




     (c) unamortized debt discount and expenses and other unamortized deferred charges,
goodwill, patents, trademarks, service marks, trade names, copyrights, licenses,
organization or developmental expenses and other intangible items;




     (d) minority interests in consolidated Subsidiaries held by Persons other than the
Company or any Restricted Subsidiary;




     (e) treasury stock;




     (f) cash or securities set aside and held in a sinking or other analogous fund
established for the purpose of redemption or other retirement of Capital Stock to the
extent such obligation is not reflected in Consolidated Current Liabilities; and




     (g) Investments in and assets of Unrestricted Subsidiaries.



          “Consolidated Tangible Assets” means, as of any date of determination, the sum of the amounts
of Consolidated Net Tangible Assets and Consolidated Current Liabilities as of such date.




          “Credit Facilities” means, with respect to the Company or any Restricted Subsidiary, one or
more debt or commercial paper facilities (including related Guarantees) with banks, investment
banks, insurance companies, mutual funds or other institutional lenders (including the Existing
Bank Credit Facility), providing for revolving credit loans, term loans, receivables or inventory
financing (including through the sale of receivables or inventory to institutional lenders or to
special purpose, bankruptcy remote










 



11



entities formed to borrow from institutional lenders against those receivables or inventory)
or trade or standby letters of credit, in each case together with any Refinancing thereof on any
basis so long as such Refinancing constitutes Debt; provided that, in the case of a
transaction in which any accounts receivable are sold, conveyed or otherwise transferred by the
Company or any of its subsidiaries to another Person other than a Receivables Entity, then that
transaction must satisfy the following three conditions:





     (a) if the transaction involves a transfer of accounts receivable with Fair Market
Value equal to or greater than $25.0 million, the Board of Directors shall have determined
in good faith that the transaction is economically fair and reasonable to the Company or
the Subsidiary that sold, conveyed or transferred the accounts receivable,




     (b) the sale, conveyance or transfer of accounts receivable by the Company or the
Subsidiary is made at Fair Market Value, and




     (c) the financing terms, covenants, termination events and other provisions of the
transaction shall be market terms (as determined in good faith by the Board of Directors).



          “Currency Exchange Protection Agreement” means, in respect of a Person, any foreign exchange
contract, currency swap agreement, currency option or other similar agreement or arrangement
designed to protect that Person against fluctuations in currency exchange rates.




          “Debt” means, with respect to any Person on any date of determination (without duplication):





     (a) the principal of and premium (if any) in respect of:




     (1) debt of the Person for money borrowed, and




     (2) debt evidenced by notes, debentures, bonds or other similar instruments
for the payment of which the Person is responsible or liable;




     (b) all Capital Lease Obligations of the Person and all Attributable Debt in respect
of Sale and Leaseback Transactions entered into by the Person;




     (c) all obligations of the Person issued or assumed as the deferred purchase price of
Property, all conditional sale obligations of the Person and all obligations of the Person
under any title retention agreement (but excluding trade accounts payable arising in the
ordinary course of business);




     (d) all obligations of the Person for the reimbursement of any obligor on any letter
of credit, banker’s acceptance or similar credit transaction (other than obligations with
respect to letters of credit securing obligations (other than obligations described in
clauses (a) through (c) above) entered into in the ordinary course of business of the
Person to the extent those letters of credit are not drawn









 



12



upon or, if and to the extent drawn upon, the drawing is reimbursed no later than the
third Business Day following receipt by the Person of a demand for reimbursement following
payment on the letter of credit);




     (e) the amount of all obligations of the Person with respect to the Repayment of any
Disqualified Stock or, with respect to any Subsidiary of the Person, any Preferred Stock
(but excluding, in each case, any accrued dividends);




     (f) all obligations of the type referred to in clauses (a) through (e) of other
Persons and all dividends of other Persons for the payment of which, in either case, the
Person is responsible or liable, directly or indirectly, as obligor, guarantor or
otherwise, including by means of any Guarantee;




     (g) all obligations of the type referred to in clauses (a) through (f) of other
Persons secured by any Lien on any Property of the Person (whether or not such obligation
is assumed by the Person), the amount of such obligation being deemed to be the lesser of
the value of that Property or the amount of the obligation so secured; and




     (h) to the extent not otherwise included in this definition, Hedging Obligations of
such Person.


The amount of Debt of any Person at any date shall be the outstanding balance at that date of all
unconditional obligations as described above and the maximum liability, upon the occurrence of the
contingency giving rise to the obligation, of any contingent obligations at that date. The amount
of Debt represented by a Hedging Obligation shall be equal to:





     (1) zero if the Hedging Obligation has been Incurred pursuant to clause (e), (f) or
(g) of the second paragraph of Section 4.04, or




     (2) if the Hedging Obligation is not Incurred pursuant to clause (e), (f) or (g) of
the second paragraph of Section 4.04, then 105% of the aggregate net amount, if any, that
would then be payable by the Company and any Restricted Subsidiary on a per counter-party
basis pursuant to Section 6(e) of the ISDA Master Agreement (Multicurrency-Cross Border) in
the form published by the International Swaps and Derivatives Association in 1992 (the
“ISDA Form”), as if the date of determination were a date that constitutes or is
substantially equivalent to an Early Termination Date, as defined in the ISDA Form, with
respect to all transactions governed by the ISDA Form, plus the equivalent amount under the
terms of any other Hedging Obligations that are not Incurred pursuant to clause (e), (f) or
(g) of the second paragraph of Section 4.04, each such amount to be estimated in good faith
by the Company.



          “Debt Issuances” means, with respect to the Company or any Restricted Subsidiary, one or more
issuances after the Issue Date of Debt evidenced by notes, debentures, bonds or other similar
securities or instruments.










 



13




          “Default” means any event which is, or after notice or passage of time or both would be, an
Event of Default.




          “Disqualified Stock” means, with respect to any Person, 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
either case at the option of the holder thereof) or otherwise:





     (a) matures or is mandatorily redeemable pursuant to a sinking fund obligation or
otherwise,




     (b) is or may become redeemable or repurchaseable at the option of the holder
thereof, in whole or in part, or




     (c) is convertible or exchangeable at the option of the holder thereof for Debt or
Disqualified Stock, on or prior to, in the case of clause (a), (b) or (c), the first
anniversary of the Stated Maturity of the Securities.



          “Disqualified Stock Dividends” means all dividends with respect to Disqualified Stock of the
Company held by Persons other than a Wholly Owned Restricted Subsidiary. The amount of any dividend
of this kind shall be equal to the quotient of the dividend divided by the difference between one
and the maximum statutory federal income tax rate (expressed as a decimal number between 1 and 0)
then applicable to the Company.




          “EBITDA” means, for any period, an amount equal to, for the Company and its consolidated
Restricted Subsidiaries:




          (a) the sum of Consolidated Net Income for that period, plus the following to the
extent reducing Consolidated Net Income for that period:




     (1) the provision for taxes based on income or profits or utilized in
computing net loss,




     (2) Consolidated Fixed Charges,




     (3) depreciation,




     (4) amortization of intangibles,




     (5) any other non-cash items (other than any non-cash item to the extent that
it represents an accrual of or reserve for cash expenditures in any future period),
and




     (6) any one-time, non-recurring expenses relating to, or arising from, any
closures of manufacturing facilities on or after the Issue Date, in each case
incurred within 12 months after such closure, minus









 



14



     (b) all non-cash items increasing Consolidated Net Income for that period (other than
any such non-cash item to the extent that it will result in the receipt of cash payments in
any future period).


Notwithstanding the foregoing clause (a), the provision for taxes and the depreciation,
amortization and non-cash items of a Restricted Subsidiary shall be added to Consolidated Net
Income to compute EBITDA only to the extent (and in the same proportion) that the net income of
that Restricted Subsidiary was included in calculating Consolidated Net Income and only if a
corresponding amount would be permitted at the date of determination to be dividended to the
Company, directly or indirectly, by that Restricted Subsidiary without prior approval (that has not
been obtained), pursuant to the terms of its charter and all agreements, instruments, judgments,
decrees and orders applicable to that Restricted Subsidiary or its shareholders.




          “Equipment Financing Transaction” means any arrangement (together with any Refinancings
thereof) with any Person pursuant to which the Company or any Restricted Subsidiary Incurs Debt
secured by a Lien on equipment or equipment related property of the Company or any Restricted
Subsidiary.




          “Exchange Act” means the Securities Exchange Act of 1934.




          “Existing Bank Credit Facility” means the Credit Agreement dated as of September 29, 2003,
among the Company, Levi Strauss Financial Center Corporation, the financial institutions listed on
the signature pages thereto and Bank of America, N.A., as agent, as amended as of the Issue Date.




          “Existing Policies” means (1) the Company’s estate tax repurchase policy under which the
Company repurchases a portion of a deceased stockholder’s shares to generate funds for payment of
estate taxes and (2) the Company’s valuation policy under which the Company obtains an annual
valuation of the Company’s Voting Trust Certificates, as both policies exist at the Issue Date or
as they may exist from time to time, provided that if either of these policies is
materially amended after the Issue Date in a manner less favorable to the Company than the policy
as existing on the Issue Date, then that amended policy shall be deemed not to be an Existing
Policy.




          “Fair Market Value” means, with respect to any Property, the price that could be negotiated in
an arm’s-length free market transaction, for cash, between a willing seller and a willing buyer,
neither of whom is under undue pressure or compulsion to complete the transaction. For purposes of
Section 4.05 and Section 4.07 and the definitions of “Qualified Receivables Transaction” and
“Credit Facilities”, Fair Market Value shall be determined, except as otherwise provided,





     (a) if the Property has a Fair Market Value equal to or less than $25.0 million, by
any Officer of the Company, or




     (b) if the Property has a Fair Market Value in excess of $25.0 million, by a majority
of the Board of Directors and evidenced by a Board Resolution, dated within 12 months of
the relevant transaction, delivered to the Trustee.









 



15


          “Foreign Restricted Subsidiary” means any Restricted Subsidiary which is not organized under
the laws of the United States of America or any State thereof or the District of Columbia.




          “GAAP” means United States generally accepted accounting principles as in effect on the
Measurement Date, including those set forth:





     (a) in the opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants,




     (b) in the statements and pronouncements of the Financial Accounting Standards Board,




     (c) in other statements by another entity as approved by a significant segment of the
accounting profession, and




     (d) the rules and regulations of the SEC governing the inclusion of financial
statements (including pro forma financial statements) in periodic reports required to be
filed pursuant to Section 13 of the Exchange Act, including opinions and pronouncements in
staff accounting bulletins and similar written statements from the accounting staff of the
SEC.



          “Guarantee” means any obligation, contingent or otherwise, of any Person directly or
indirectly guaranteeing any Debt of any other Person and any obligation, direct or indirect,
contingent or otherwise, of that Person:





     (a) to purchase or pay (or advance or supply funds for the purchase or payment of)
the Debt of such other Person (whether arising by virtue of partnership arrangements, or by
agreements to keep-well, to purchase assets, goods, securities or services, to take-or-pay
or to maintain financial statement conditions or otherwise), or




     (b) entered into for the purpose of assuring in any other manner the obligee against
loss in respect thereof (in whole or in part);


provided, however, that the term “Guarantee” shall not include:





     (1) endorsements for collection or deposit in the ordinary course of
business, or




     (2) a contractual commitment by one Person to invest in another Person for so
long as the Investment is reasonably expected to constitute a Permitted Investment
under clause (a), (b) or (i) of the definition of “Permitted Investment”.


The term “Guarantee” used as a verb has a corresponding meaning. The term “Guarantor” shall mean
any Person Guaranteeing any obligation.










 



16




          “Hedging Obligation” of any Person means any obligation of that Person pursuant to any
Interest Rate Agreement, Currency Exchange Protection Agreement, Commodity Price Protection
Agreement or any other similar agreement or arrangement.




          “Holder” or “Securityholder” means the Person in whose name the Security is registered on the
Security register described in Section 2.04.




          “Incur” means, with respect to any Debt or other obligation of any Person, to create, issue,
incur (by merger, conversion, exchange or otherwise), extend, assume, Guarantee or become liable in
respect of that Debt or other obligation or the recording, as required pursuant to GAAP or
otherwise, of any Debt or obligation on the balance sheet of that Person (and “Incurrence” and
“Incurred” shall have meanings correlative to the foregoing); provided, however,
that a change in GAAP that results in an obligation of that Person that exists at such time, and is
not theretofore classified as Debt, becoming Debt shall not be deemed an Incurrence of that Debt;
provided further, however, that any Debt or other obligations of a Person existing
at the time the Person becomes a Subsidiary (whether by merger, consolidation, acquisition or
otherwise) shall be deemed to be Incurred by that Subsidiary at the time it becomes a Subsidiary;
and provided further, however, that solely for purposes of determining compliance
with Section 4.04, amortization of debt discount or premium shall not be deemed to be the
Incurrence of Debt, provided that in the case of Debt sold at a discount or at a premium, the
amount of the Debt Incurred shall at all times be the aggregate principal amount at Stated
Maturity.




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




          “Independent Financial Advisor” means an investment banking firm of national standing or any
third party appraiser of national standing, provided that the firm or appraiser is not an
Affiliate of the Company.




          “Interest Rate Agreement” means, for any Person, any interest rate swap agreement, interest
rate option agreement or other similar agreement or arrangement designed to protect against
fluctuations in interest rates.




          “Investment” by any Person means any direct or indirect loan (other than advances to customers
and suppliers in the ordinary course of business that are recorded as accounts receivable on the
balance sheet of that Person), advance or other extension of credit or capital contribution (by
means of transfers of cash or other Property to others or payments for Property or services for the
account or use of others, or otherwise) to, or Incurrence of a Guarantee of any obligation of, or
purchase or acquisition of Capital Stock, bonds, notes, debentures or other securities or evidence
of Debt issued by, any other Person. For purposes of Section 4.05, Section 4.10 and the definition
of “Restricted Payment”, Investment shall include the portion (proportionate to the Company’s
equity interest in the Subsidiary) of the Fair Market Value of the net assets of any Subsidiary of
the Company at the time that the Subsidiary is designated an Unrestricted Subsidiary;
provided, however, that upon a redesignation of that Subsidiary as a Restricted










 



17

Subsidiary, the Company shall be deemed to continue to have a permanent Investment in an
Unrestricted Subsidiary of an amount (if positive) equal to:





     (a) the Company’s Investment in that Subsidiary at the time of such redesignation,
less




     (b) the portion (proportionate to the Company’s equity interest in such Subsidiary)
of the Fair Market Value of the net assets of that Subsidiary at the time of such
redesignation.




     (c) In determining the amount of any Investment made by transfer of any Property
other than cash, the Property shall be valued at its Fair Market Value at the time of the
Investment.



          “Investment Grade Rating” means a rating equal to or higher than Baa3 (or the equivalent) by
Moody’s and BBB- (or the equivalent) by S&P.




          “Issue Date” means the first date on which the Securities are initially issued.




          “Lien” means, with respect to any Property of any Person, any mortgage or deed of trust,
pledge, hypothecation, assignment, deposit arrangement, security interest, lien, charge, easement
(other than any easement not materially impairing usefulness or marketability), encumbrance,
preference, priority or other security agreement or preferential arrangement of any kind or nature
whatsoever on or with respect to that Property (including any Capital Lease Obligation, conditional
sale or other title retention agreement having substantially the same economic effect as any of the
foregoing or any Sale and Leaseback Transaction).




          “Measurement Date” means March 11, 2005.




          “Moody’s” means Moody’s Investors Service, Inc. or any successor to the rating agency business
thereof.




          “Net Available Cash” from any Asset Sale means cash payments received therefrom (including any
cash payments received by way of deferred payment of principal pursuant to a note or installment
receivable or otherwise, but only as and when received, but excluding any other consideration
received in the form of assumption by the acquiring Person of Debt or other obligations relating to
the Property that is the subject of that Asset Sale or received in any other non-cash form), in
each case net of:





     (a) all legal, title and recording tax expenses, commissions and other fees
(including, without limitation, brokers’ or investment bankers’ commissions or fees) and
expenses incurred, and all Federal, state, provincial, foreign and local taxes required to
be accrued as a liability under GAAP, as a consequence of the Asset Sale,









 



18



     (b) all payments made on any Debt that is secured by any Property subject to the
Asset Sale, in accordance with the terms of any Lien upon or other security agreement of
any kind with respect to that Property, or which must by its terms, or in order to obtain a
necessary consent to the Asset Sale, or by applicable law, be repaid out of the proceeds
from the Asset Sale,




     (c) all distributions and other payments required to be made to minority interest
holders in Subsidiaries or joint ventures as a result of the Asset Sale, and




     (d) the deduction of appropriate amounts provided by the seller as a reserve, in
accordance with GAAP, against any liabilities associated with the Property disposed in the
Asset Sale and retained by the Company or any Restricted Subsidiary after the Asset Sale.



          “Officer” means the Chief Executive Officer, the President, the Chief Financial Officer, the
Treasurer or the Assistant Treasurer of the Company.




          “Officers’ Certificate” means a certificate signed by two Officers of the Company, at least
one of whom shall be the principal executive officer, principal financial officer or the principal
accounting officer of the Company, and delivered to the Trustee.




          “Opinion of Counsel” means a written opinion from legal counsel who is acceptable to the
Trustee. The counsel may be an employee of or counsel to the Company or the Trustee.




          “Permitted Holders” means the holders of Voting Stock as of the Issue Date, together with any
Voting Trustee and any Person who is a “Permitted Transferee” of the holders, as that term is
defined in the Stockholders Agreement dated as of April 15, 1996 between the Company and the
stockholders of the Company party thereto as that Stockholders Agreement was in effect on the Issue
Date, except that transferees pursuant to Section 2.2(a)(x) of that Stockholders Agreement shall
not be deemed to be Permitted Transferees for purposes of this Indenture.




          “Permitted Investment” means any Investment by the Company or a Restricted Subsidiary in:





     (a) any Restricted Subsidiary or any Person that will, upon the making of such
Investment, become a Restricted Subsidiary, provided that the primary business of
the Restricted Subsidiary is a Related Business;




     (b) any Person if as a result of the Investment that Person is merged or consolidated
with or into, or transfers or conveys all or substantially all its Property to, the Company
or a Restricted Subsidiary, provided that the Person’s primary business is a
Related Business;




     (c) Temporary Cash Investments;









 



19



     (d) receivables owing to the Company or a Restricted Subsidiary, if created or
acquired in the ordinary course of business and payable or dischargeable in accordance with
customary trade terms; provided, however, that those trade terms may
include such concessionary trade terms as the Company or the Restricted Subsidiary deems
reasonable under the circumstances;




     (e) payroll, travel and similar advances to cover matters that are expected at the
time of those advances ultimately to be treated as expenses for accounting purposes and
that are made in the ordinary course of business;




     (f) loans and advances to employees made in the ordinary course of business in
compliance with applicable laws and consistent with past practices of the Company or the
applicable Restricted Subsidiary, as the case may be, provided that those loans and
advances do not exceed $5.0 million at any one time outstanding;




     (g) stock, obligations or other securities received in settlement of debts created in
the ordinary course of business and owing to the Company or a Restricted Subsidiary or in
satisfaction of judgments;




     (h) any Person to the extent the Investment represents the non-cash portion of the
consideration received in connection with an Asset Sale consummated in compliance with
Section 4.07;




     (i) a Receivables Entity or any Investment by a Receivables Entity in any other
Person in connection with a Qualified Receivables Transaction, including Investments of
funds held in accounts permitted or required by the arrangements governing that Qualified
Receivables Transaction or any related Indebtedness; provided that any Investment
in a Receivables Entity is in the form of a purchase money note, contribution of additional
receivables or an equity interest;




     (j) customers or suppliers of the Company or any of its subsidiaries in the form of
extensions of credit or transfers of property, to the extent otherwise constituting an
Investment, and in the ordinary course of business and any Investments received in the
ordinary course of business in satisfaction or partial satisfaction thereof;




     (k) any Person if the Investments are outstanding on the Issue Date and not otherwise
described in clauses (a) through (j) above;




     (l) any securities, derivative instruments or other Investments of any kind that are
acquired and held for the benefit of Company employees in the ordinary course of business
pursuant to deferred compensation plans or arrangements approved by the Board of Directors;
provided, however, that (i) the amount of such Investment represents funds
paid or payable in respect of deferred compensation previously included as an expense in
the calculation of Consolidated Net Income (and not excluded pursuant to clause (h) of the
definition of Consolidated Net Income), and (ii) the terms of such Investment









 



20



shall not require any additional Investment by the Company or any Restricted
Subsidiary; and




     (m) any Person made for Fair Market Value that does not exceed $100.0 million
outstanding at any one time in the aggregate.



          “Permitted Liens” means:





     (a) Liens (including, without limitation and to the extent constituting a Lien,
negative pledges) to secure Debt permitted to be Incurred under clause (b) of the second
paragraph of Section 4.04, regardless of whether the Company and the Restricted
Subsidiaries are actually subject to the covenant contained in Section 4.04 at the time the
Lien is Incurred;




     (b) Liens for taxes, assessments or governmental charges or levies on the Property of
the Company or any Restricted Subsidiary if the same shall not at the time be delinquent or
thereafter can be paid without penalty, or are being contested in good faith and by
appropriate proceedings promptly instituted and diligently concluded, provided that
any reserve or other appropriate provision that shall be required in conformity with GAAP
shall have been made therefor;




     (c) Liens imposed by law, such as carriers’, warehousemen’s and mechanics’ Liens and
other similar Liens, on the Property of the Company or any Restricted Subsidiary arising in
the ordinary course of business and securing payment of obligations that are not more than
60 days past due or are being contested in good faith and by appropriate proceedings;




     (d) Liens on the Property of the Company or any Restricted Subsidiary Incurred in the
ordinary course of business to secure performance of obligations with respect to statutory
or regulatory requirements, performance or return-of-money bonds, surety bonds or other
obligations of a like nature and Incurred in a manner consistent with industry practice,
including banker’s liens and rights of set-off, in each case which are not Incurred in
connection with the borrowing of money, the obtaining of advances or credit or the payment
of the deferred purchase price of Property and which do not in the aggregate impair in any
material respect the use of Property in the operation of the business of the Company and
the Restricted Subsidiaries taken as a whole;




     (e) Liens on Property at the time the Company or any Restricted Subsidiary acquired
the Property, including any acquisition by means of a merger or consolidation with or into
the Company or any Restricted Subsidiary; provided, however, that any Lien
of this kind may not extend to any other Property of the Company or any Restricted
Subsidiary; provided further, however, that the Liens shall not have been
Incurred in anticipation of or in connection with the transaction or series of transactions
pursuant to which the Property was acquired by the Company or any Restricted Subsidiary;









 



21



     (f) Liens on the Property of a Person at the time that Person becomes a Restricted
Subsidiary; provided, however, that any Lien of this kind may not extend to
any other Property of the Company or any other Restricted Subsidiary that is not a direct
Subsidiary of that Person; provided further, however, that the Lien was not
Incurred in anticipation of or in connection with the transaction or series of transactions
pursuant to which the Person became a Restricted Subsidiary;




     (g) pledges or deposits by the Company or any Restricted Subsidiary under worker’s
compensation laws, unemployment insurance laws or similar legislation, or good faith
deposits in connection with bids, tenders, contracts (other than for the payment of Debt)
or leases to which the Company or any Restricted Subsidiary is party, or deposits to secure
public or statutory obligations of the Company or any Restricted Subsidiary, or deposits
for the payment of rent, in each case Incurred in the ordinary course of business;




     (h) Liens (including, without limitation and to the extent constituting Liens,
negative pledges), assignments and pledges of rights to receive premiums, interest or loss
payments or otherwise arising in connection with worker’s compensation loss portfolio
transfer insurance transactions or any insurance or reinsurance agreements pertaining to
losses covered by insurance, and Liens (including, without limitation and to the extent
constituting Liens, negative pledges) in favor of insurers or reinsurers on pledges or
deposits by the Company or any Restricted Subsidiary under workmen’s compensation laws,
unemployment insurance laws or similar legislation;




     (i) utility easements, building restrictions and such other encumbrances or charges
against real Property as are of a nature generally existing with respect to properties of a
similar character;




     (j) Liens arising out of judgments or awards against the Company or a Restricted
Subsidiary with respect to which the Company or the Restricted Subsidiary shall then be
proceeding with an appeal or other proceeding for review;




     (k) Liens in favor of surety bonds or letters of credit issued pursuant to the
request of and for the account of the Company or a Restricted Subsidiary in the ordinary
course of its business, provided that these letters of credit do not constitute Debt;




     (l) leases or subleases of real property granted by the Company or a Restricted
Subsidiary to any other Person in the ordinary course of business and not materially
impairing the use of the real property in the operation of the business of the Company or
the Restricted Subsidiary;









 



22



     (m) Liens (including, without limitation and to the extent constituting Liens,
negative pledges) on intellectual property arising from intellectual property licenses
entered into in the ordinary course of business;




     (n) Liens or negative pledges attaching to or related to joint ventures engaged in a
Related Business, restricting Liens on interests in those joint ventures;




     (o) Liens existing on the Issue Date not otherwise described in clauses (a) through
(n) above;




     (p) Liens not otherwise described in clauses (a) through (o) above on the Property of
any Restricted Subsidiary to secure any Debt permitted to be Incurred by the Restricted
Subsidiary pursuant to Section 4.04;




     (q) Liens on the Property of the Company or any Restricted Subsidiary to secure any
Refinancing, in whole or in part, of any Debt secured by Liens referred to in clause (d),
(e), (f), (j) or (k) above; provided, however, that any Lien of this kind
shall be limited to all or part of the same Property that secured the original Lien
(together with improvements and accessions to such Property) and the aggregate principal
amount of Debt that is secured by the Lien shall not be increased to an amount greater than
the sum of:




     (1) the outstanding principal amount, or, if greater, the committed amount,
of the Debt secured by Liens described under clause (d), (e), (f), (j) or (k)
above, as the case may be, at the time the original Lien became a Permitted Lien
under the indenture, and




     (2) an amount necessary to pay any fees and expenses, including premiums and
defeasance costs, incurred by the Company or the Restricted Subsidiary in
connection with the Refinancing;




     (r) Liens not otherwise permitted by clauses (a) through (q) above that are Liens
permitted by the Existing Bank Credit Facility as it exists on the Issue Date;




     (s) Liens on cash or Temporary Cash Investments held as proceeds of Permitted
Refinancing Debt pending the payment, purchase, defeasance or other retirement of the Debt
being Refinanced; and




     (t) Liens not otherwise permitted by clauses (a) through (s) above encumbering assets
having an aggregate Fair Market Value not in excess of 5.0% of Consolidated Net Tangible
Assets, as determined based on the consolidated balance sheet of the Company as of the end
of the most recent fiscal quarter ending at least 45 days prior to the date the Lien shall
be Incurred.



          “Permitted Refinancing Debt” means any Debt that Refinances any other Debt, including any
successive Refinancings, so long as:










 



23





     (a) the new Debt is in an aggregate principal amount (or if Incurred with original
issue discount, an aggregate issue price) not in excess of the sum of:




     (1) the aggregate principal amount (or if Incurred with original issue
discount, the aggregate accreted value) then outstanding of the Debt being
Refinanced, and




     (2) an amount necessary to pay any fees and expenses, including premiums and
defeasance costs, related to the Refinancing,




     (b) the Average Life of the new Debt is equal to or greater than the Average Life of
the Debt being Refinanced,




     (c) the Stated Maturity of the new Debt is no earlier than the Stated Maturity of the
Debt being Refinanced, and




     (d) the new Debt shall not be senior in right of payment to the Debt that is being
Refinanced;


provided, however, that Permitted Refinancing Debt shall not include:





     (x) Debt of a Subsidiary that Refinances Debt of the Company or




     (y) Debt of the Company or a Restricted Subsidiary that Refinances Debt of an
Unrestricted Subsidiary.



          “Person” means any individual, corporation, company (including any limited liability company),
association, partnership, joint venture, trust, unincorporated organization, government or any
agency or political subdivision thereof or any other entity.




          “Preferred Stock” means any Capital Stock of a Person, however designated, which entitles the
holder thereof to a preference with respect to the payment of dividends, or as to the distribution
of assets upon any voluntary or involuntary liquidation or dissolution of that Person, over shares
of any other class of Capital Stock issued by that Person.




          “Preferred Stock Dividends” means all dividends with respect to Preferred Stock of Restricted
Subsidiaries held by Persons other than the Company or a Wholly Owned Restricted Subsidiary. The
amount of any dividend of this kind shall be equal to the quotient of the dividend divided by the
difference between one and the maximum statutory federal income rate (expressed as a decimal number
between 1 and 0) then applicable to the issuer of the Preferred Stock.




          “pro forma” means, with respect to any calculation made or required to be made pursuant to the
terms hereof, a calculation performed in accordance with Article 11 of Regulation S-X promulgated
under the Securities Act, as interpreted in good faith by the Board of Directors after consultation
with the independent registered public










 



24



accounting firm of the Company, or otherwise a calculation made in good faith by the Board of
Directors after consultation with the independent registered public accounting firm of the Company,
as the case may be.




          “Property” means, with respect to any Person, any interest of that Person in any kind of
property or asset, whether real, personal or mixed, or tangible or intangible, including Capital
Stock in, and other securities of, any other Person. For purposes of any calculation required
pursuant to this Indenture, the value of any Property shall be its Fair Market Value.




          “principal” of any Debt (including the Securities) means the principal amount of such Debt
plus the premium, if any, on such Debt.




          “Public Equity Offering” means an underwritten public offering of common stock of the Company
pursuant to an effective registration statement under the Securities Act.




          “Public Market” means any time after:





     (a) a Public Equity Offering has been consummated, and




     (b) at least 15% of the total issued and outstanding common stock of the Company has
been distributed by means of an effective registration statement under the Securities Act.



          “Purchase Money Debt” means Debt:





     (a) consisting of the deferred purchase price of property, conditional sale
obligations, obligations under any title retention agreement, other purchase money
obligations and obligations in respect of industrial revenue bonds, in each case where the
maturity of the Debt does not exceed the anticipated useful life of the Property being
financed, and




     (b) Incurred to finance the acquisition, construction or lease by the Company or a
Restricted Subsidiary of the Property, including additions and improvements thereto;


provided, however, that the Debt is Incurred within 180 days after the acquisition,
construction or lease of the Property by the Company or Restricted Subsidiary.




          “Qualified Receivables Transaction” means any transaction or series of transactions that may
be entered into by the Company or any of its Subsidiaries pursuant to which the Company or any of
its Subsidiaries may sell, convey or otherwise transfer to:





     (a) a Receivables Entity (in the case of a transfer by the Company or any of its
Subsidiaries) and









 



25



     (b) any other Person (in the case of a transfer by a Receivables Entity),


or may grant a security interest in, any accounts receivable (whether now existing or arising in
the future) of the Company or any of its Subsidiaries, and any assets related thereto including,
without limitation, all collateral securing those accounts receivable, all contracts and all
Guarantees or other obligations in respect of those accounts receivable, proceeds of those accounts
receivable and other assets which are customarily transferred or in respect of which security
interests are customarily granted in connection with asset securitization transactions involving
accounts receivable; provided that:





     (1) if the transaction involves a transfer of accounts receivable with Fair
Market Value equal to or greater than $25.0 million, the Board of Directors shall
have determined in good faith that the Qualified Receivables Transaction is
economically fair and reasonable to the Company and the Receivables Entity,




     (2) all sales of accounts receivable and related assets to or by the
Receivables Entity are made at Fair Market Value, and




     (3) the financing terms, covenants, termination events and other provisions
thereof shall be market terms (as determined in good faith by the Board of
Directors).



     The grant of a security interest in any accounts receivable of the Company or any of its
Restricted Subsidiaries to secure the Credit Facilities shall not be deemed a Qualified Receivables
Transaction.



          “Rating Agencies” mean Moody’s and S&P.




          “Real Estate Financing Transaction” means any arrangement with any Person pursuant to which
the Company or any Restricted Subsidiary Incurs Debt secured by a Lien on real property of the
Company or any Restricted Subsidiary and related personal property together with any Refinancings
thereof.




          “Receivables Entity” means a Wholly Owned Subsidiary of the Company (or another Person formed
for the purposes of engaging in a Qualified Receivables Transaction with the Company in which the
Company or any Subsidiary of the Company makes an Investment and to which the Company or any
Subsidiary of the Company transfers accounts receivable and related assets) which engages in no
activities other than in connection with the financing of accounts receivable of the Company and
its Subsidiaries, all proceeds thereof and all rights (contractual or other), collateral and other
assets relating thereto, and any business or activities incidental or related to that business, and
(with respect to any Receivables Entity formed after the Issue Date) which is designated by the
Board of Directors (as provided below) as a Receivables Entity and





     (a) no portion of the Indebtedness or any other obligations (contingent or otherwise)
of which









 



26



     (1) is Guaranteed by the Company or any Subsidiary of the Company (excluding
Guarantees of obligations (other than the principal of, and interest on,
Indebtedness) pursuant to Standard Securitization Undertakings),




     (2) is recourse to or obligates the Company or any Subsidiary of the Company
in any way other than pursuant to Standard Securitization Undertakings, or




     (3) subjects any property or asset of the Company or any Subsidiary of the
Company, directly or indirectly, contingently or otherwise, to the satisfaction
thereof, other than pursuant to Standard Securitization Undertakings;




     (b) with which neither the Company nor any Subsidiary of the Company has any material
contract, agreement, arrangement or understanding other than on terms which the Company
reasonably believes to be no less favorable to the Company or the Subsidiary than those
that might be obtained at the time from Persons that are not Affiliates of the Company, and




     (c) to which neither the Company nor any Subsidiary of the Company has any obligation
to maintain or preserve the entity’s financial condition or cause the entity to achieve
certain levels of operating results other than pursuant to Standard Securitization
Undertakings.



     Any designation of this kind by the Board of Directors shall be evidenced to the Trustee by
filing with the Trustee a certified copy of the resolution of the Board of Directors giving effect
to the designation and an Officers’ Certificate certifying that the designation complied with the
foregoing conditions.



          “Refinance” means, in respect of any Debt, to refinance, extend, renew, refund, repay, prepay,
repurchase, redeem, defease or retire, or to issue other Debt, in exchange or replacement for, that
Debt. “Refinanced” and “Refinancing” shall have correlative meanings.




          “Related Business” means any business that is related, ancillary or complementary to the
businesses of the Company and the Restricted Subsidiaries on the Issue Date.




          “Repay” means, in respect of any Debt, to repay, prepay, repurchase, redeem, legally defease
or otherwise retire that Debt. “Repayment” and “Repaid” shall have correlative meanings. For
purposes of Section 4.07 and Section 4.04 and the definition of “Consolidated Fixed Charges
Coverage Ratio”, Debt shall be considered to have been Repaid only to the extent the related loan
commitment, if any, shall have been permanently reduced in connection therewith.




          “Restricted Payment” means:










 



27





     (a) any dividend or distribution (whether made in cash, securities or other Property)
declared or paid on or with respect to any shares of Capital Stock of the Company or any
Restricted Subsidiary (including any payment in connection with any merger or consolidation
with or into the Company or any Restricted Subsidiary), except for any dividend or
distribution that is made to the Company or the parent of the Restricted Subsidiary or any
dividend or distribution payable solely in shares of Capital Stock (other than Disqualified
Stock) of the Company;




     (b) the purchase, repurchase, redemption, acquisition or retirement for value of any
Capital Stock of the Company or any Restricted Subsidiary (other than from the Company or a
Restricted Subsidiary) or any securities exchangeable for or convertible into Capital Stock
of the Company or any Restricted Subsidiary, including the exercise of any option to
exchange any Capital Stock (other than for or into Capital Stock of the Company that is not
Disqualified Stock);




     (c) the purchase, repurchase, redemption, acquisition or retirement for value, prior
to the date for any scheduled maturity, sinking fund or amortization or other installment
payment, of any Subordinated Obligation (other than the purchase, repurchase or other
acquisition of any Subordinated Obligation purchased in anticipation of satisfying a
scheduled maturity, sinking fund or amortization or other installment obligation, in each
case due within one year of the date of acquisition);




     (d) any Investment (other than Permitted Investments) in any Person; or




     (e) the issuance, sale or other disposition of Capital Stock of any Restricted
Subsidiary to a Person other than the Company or another Restricted Subsidiary if the
result thereof is that the Restricted Subsidiary shall cease to be a Restricted Subsidiary,
in which event the amount of the “Restricted Payment” shall be the Fair Market Value of the
remaining interest, if any, in the former Restricted Subsidiary held by the Company and the
other Restricted Subsidiaries.



          “Restricted Subsidiary” means any Subsidiary of the Company other than an Unrestricted
Subsidiary.




          “S&P” means Standard & Poor’s Ratings Service or any successor to the rating agency business
thereof.




          “Sale and Leaseback Transaction” means any direct or indirect arrangement relating to Property
now owned or hereafter acquired whereby the Company or a Restricted Subsidiary transfers that
Property to another Person and the Company or a Restricted Subsidiary leases it from that other
Person together with any Refinancings thereof.




          “SEC” means the Securities and Exchange Commission.




          “Securities Act” means the Securities Act of 1933.










 



28




          “Significant Subsidiary” means any Subsidiary that would be a “Significant Subsidiary” of the
Company within the meaning of Rule 1-02 under Regulation S-X promulgated by the SEC.




          “Standard Securitization Undertakings” means representations, warranties, covenants and
indemnities entered into by the Company or any Subsidiary of the Company which are customary in an
accounts receivable securitization transaction involving a comparable company.




          “Stated Maturity” means, with respect to any security, the date specified in the security as
the fixed date on which the payment of principal of the security is due and payable, including
pursuant to any mandatory redemption provision (but excluding any provision providing for the
repurchase of the security at the option of the holder thereof upon the happening of any
contingency beyond the control of the issuer unless that contingency has occurred).




          “Subordinated Obligation” means any Debt of the Company (whether outstanding on the
Measurement Date or thereafter Incurred) that is subordinate or junior in right of payment to the
Securities pursuant to a written agreement to that effect.




          “Subsidiary” means, in respect of any Person, any corporation, company (including any limited
liability company), association, partnership, joint venture or other business entity of which a
majority of the total voting power of the Voting Stock is at the time owned or controlled, directly
or indirectly, by:





     (a) that Person,




     (b) that Person and one or more Subsidiaries of that Person, or




     (c) one or more Subsidiaries of that Person.




     “Temporary Cash Investments” means any of the following:




     (a) Investments in U.S. Government Obligations maturing within 365 days of the date
of acquisition thereof;




     (b) Investments in time deposit accounts, banker’s acceptances, certificates of
deposit and money market deposits maturing within 180 days of the date of acquisition
thereof issued by a bank or trust company organized under the laws of the United States of
America or any state thereof having capital, surplus and undivided profits aggregating in
excess of $500.0 million or issued by a commercial bank organized under the laws of any
other country that is a member of the Organization for Economic Cooperation and Development
having total assets in excess of $500.0 million (or its foreign currency equivalent at the
time), and in any case whose long-term debt is rated “A-3” or “A-” or higher according to
Moody’s or S&P (or a similar equivalent rating by at least one “nationally recognized
statistical rating organization” (as defined in Rule 436 under the Securities Act));









 



29



     (c) repurchase obligations with a term of not more than 30 days for underlying
securities of the types described in clause (a) entered into with:




     (1) a bank meeting the qualifications described in clause (b) above, or




     (2) any primary government securities dealer reporting to the Market Reports
Division of the Federal Reserve Bank of New York;




     (d) Investments in commercial paper, maturing not more than 270 days after the date
of acquisition, issued by a corporation (other than an Affiliate of the Company) organized
and in existence under the laws of the United States of America or any other country that
is a member of the Organization for Economic Cooperation and Development, and in any case
with a rating at the time as of which any Investment therein is made of “P-1” (or higher)
according to Moody’s or”A-1” (or higher) according to S&P (or a similar equivalent rating
by at least one “nationally recognized statistical rating organization” (as defined in Rule
436 under the Securities Act); and




     (e) direct obligations (or certificates representing an ownership interest in such
obligations) of any state of the United States of America (including any agency or
instrumentality thereof) for the payment of which the full faith and credit of such state
is pledged and which are not callable or redeemable at the issuer’s option,
provided that:




     (1) the long-term debt of the state is rated “A-3” or “A-” or higher
according to Moody’s or S&P (or a similar equivalent rating by at least one
“nationally recognized statistical rating organization” (as defined in Rule 436
under the Securities Act)), and




     (2) the obligations mature within 180 days of the date of acquisition
thereof.



          “TIA” means the Trust Indenture Act of 1939 (15 U.S.C. §§ 77aaa-77bbbb) as in effect
on the date of this Indenture; provided, however, that, in the event the TIA is
amended after such date, “TIA” means, to the extent required by any such amendments, the Trust
Indenture Act of 1939 as so amended.




          “Trustee” means the party named as such in this Indenture until a successor replaces it and,
thereafter, means the successor.




          “Trust Officer” means any officer within the Corporate Trust Administration department of the
Trustee (or any successor group of the trustee) with direct responsibility for the administration
of this Indenture and also means, with respect to a particular corporate trust matter, any other
officer to whom such matter is referred because of his knowledge of and familiarity with the
particular subject.










 



30




          “Uniform Commercial Code” means the New York Uniform Commercial Code as in effect from time to
time.




          “Unrestricted Subsidiary” means:





     (a) any Subsidiary of the Company that is designated after the Issue Date as an
Unrestricted Subsidiary as permitted or required pursuant to Section 4.10 and is not
thereafter redesignated as a Restricted Subsidiary as permitted pursuant thereto; and




     (b) any Subsidiary of an Unrestricted Subsidiary.



          “U.S. Government Obligations” means direct obligations (or certificates representing an
ownership interest in such obligations) of the United States of America (including any agency or
instrumentality thereof) for the payment of which the full faith and credit of the United States of
America is pledged and which are not callable or redeemable at the issuer’s option.




          “Voting Stock” of any Person means all classes of Capital Stock or other interests (including
partnership interests, and in the case of the Company, Voting Trust Certificates) of that Person
then outstanding and normally entitled (without regard to the occurrence of any contingency) to
vote in the election of directors, managers or trustees thereof.




          “Voting Trust Agreement” means the Voting Trust Agreement entered into as of April 15, 1996 by
and among Robert D. Haas; Peter E. Haas, Sr.; Peter E. Haas, Jr.; and F. Warren Hellman as the
Voting Trustees and the stockholders of the Company who are parties thereto.




          “Voting Trust Certificates” means those certificates issued pursuant to the Voting Trust
Agreement.




          “Voting Trustees” means the persons entitled to act as voting trustees under the Voting Trust
Agreement.




          “Wholly Owned Restricted Subsidiary” means, at any time, a Restricted Subsidiary all the
Voting Stock of which (except directors’ qualifying shares) is at that time owned, directly or
indirectly, by the Company and its other Wholly Owned Subsidiaries.




          SECTION 1.02. Other Definitions.




	 	 	 	 	 
	 	 	Defined in
	Term	 	Section
	“Affiliate Transaction”
	 	 	4.09	 
	“Bankruptcy Law”
	 	 	6.01	 
	“Change of Control Offer”
	 	 	4.12	 












 



31


	 	 	 	 	 
	 	 	Defined in
	Term	 	Section
	“Change of Control Payment Date”
	 	 	4.12	 
	“Change of Control Purchase Price”
	 	 	4.12	 
	“covenant defeasance option”
	 	 	8.01	 
	“Custodian”
	 	 	6.01	 
	“Event of Default”
	 	 	6.01	 
	“Exchange Security”
	 	Appendix A
	“Global Security”
	 	Appendix A
	“legal defeasance option”
	 	 	8.01	 
	“Legal Holiday”
	 	 	10.08	 
	“Offer Amount”
	 	 	4.07	 
	“Offer Period”
	 	 	4.07	 
	“OID”
	 	 	2.01	 
	“Original Securities”
	 	 	2.01	 
	“Paying Agent”
	 	 	2.04	 
	“Prepayment Offer”
	 	 	4.07	 
	“Registered Exchange Offer”
	 	Appendix A
	“Registrar”
	 	 	2.04	 
	“Shelf Registration Statement”
	 	Appendix A
	“Surviving Person”
	 	 	5.01	 
	“Suspended Covenants”
	 	 	4.01	 






          SECTION 1.03. Incorporation by Reference of Trust Indenture Act. This Indenture is
subject to the mandatory provisions of the TIA, which are incorporated by reference in and made a
part of this Indenture. The following TIA terms have the following meanings:




          “Commission” means the SEC.




          “indenture securities” means the Securities.




          “indenture security holder” means a Securityholder.




          “indenture to be qualified” means this Indenture.




          “indenture trustee” or “institutional trustee” means the Trustee.




          “obligor” on the indenture securities means the Company and any other obligor on the indenture
securities.















 








32




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




          SECTION 1.04. Rules of Construction. Unless the context otherwise requires:





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




     (2) an accounting term not otherwise defined has the meaning assigned to it in
accordance with GAAP;




     (3) “or” is not exclusive;




     (4) “including” means including without limitation;




     (5) words in the singular include the plural and words in the plural include the
singular;




     (6) unsecured Debt shall not be deemed to be subordinate or junior to secured Debt
merely by virtue of its nature as unsecured Debt;




     (7) the principal amount of any noninterest bearing or other discount security at any
date shall be the principal amount thereof that would be shown on a balance sheet of the
issuer dated such date prepared in accordance with GAAP; and




     (8) the principal amount of any Preferred Stock shall be the greater of (i) the
maximum liquidation value of such Preferred Stock or (ii) the maximum mandatory redemption
or mandatory repurchase price with respect to such Preferred Stock.



ARTICLE II




The Securities




          SECTION 2.01. Amount of Securities; Issuable in Series. The aggregate principal
amount of Securities which may be authenticated and delivered under this Indenture is unlimited.
All Securities shall be identical in all respects other than issue prices and issuance dates. The
Securities may be issued in one or more series; provided, however, that any
Securities issued with original issue discount (“OID”) for Federal income tax purposes shall not be
issued as part of the same series as any Securities that are issued with a different amount of OID
or are not issued with OID. All Securities of any one series shall be substantially identical
except as to denomination.




          Subject to Section 2.03, the Trustee shall authenticate Securities for original issue on the
Issue Date in the aggregate principal amount of $350.0 million (the










 



33



“Original Securities”). With respect to any Securities issued after the Issue Date (except
for Securities authenticated and delivered upon registration of transfer of, or in exchange for, or
in lieu of, Original Securities pursuant to Section 2.07, 2.08, 2.09 or 3.06 or Appendix A), there
shall be established in or pursuant to a resolution of the Board of Directors, and subject to
Section 2.03, set forth, or determined in the manner provided in an Officers’ Certificate, or
established in one or more indentures supplemental hereto, prior to the issuance of such
Securities:





     (1) whether such Securities shall be issued as part of a new or existing series of
Securities and the title of such Securities (which shall distinguish the Securities of the
series from Securities of any other series);




     (2) the aggregate principal amount of such Securities that may be authenticated and
delivered under this Indenture (except for Securities authenticated and delivered upon
registration of transfer of, or in exchange for, or in lieu of, other Securities of the
same series pursuant to Section 2.07, 2.08, 2.09 or 3.06 or Appendix A and except for
Securities which, pursuant to Section 2.03, are deemed never to have been authenticated and
delivered hereunder);




     (3) the issue price and issuance date of such Securities, including the date from
which interest on such Securities shall accrue;




     (4) if applicable, that such Securities shall be issuable in whole or in part in the
form of one or more Global Securities and, in such case, the respective depositories for
such Global Securities, the form of any legend or legends that shall be borne by any such
Global Security in addition to or in lieu of that set forth in Exhibit 1 to Appendix A and
any circumstances in addition to or in lieu of those set forth in Section 2.3 of Appendix A
in which any such Global Security may be exchanged in whole or in part for Securities
registered, and any transfer of such Global Security in whole or in part may be registered,
in the name or names of Persons other than the depository for such Global Security or a
nominee thereof; and




     (5) if applicable, that such Securities shall not be issued in the form of Initial
Securities subject to Appendix A, but shall be issued in the form of Exchange Securities as
set forth in Exhibit A.



          If any of the terms of any series are established by action taken pursuant to a resolution of
the Board of Directors, a copy of an appropriate record of such action shall be certified by the
Secretary or any Assistant Secretary of the Company and delivered to the Trustee at or prior to the
delivery of the Officers’ Certificate or the trust indenture supplemental hereto setting forth the
terms of the series.




          SECTION 2.02. Form and Dating. Provisions relating to the Initial Securities of each
series and the Exchange Securities are set forth in Appendix A, which is hereby incorporated in and
expressly made part of this Indenture. The Initial Securities of each series and the Trustee’s
certificate of authentication shall be substantially in the










 



34



form of Exhibit 1 to Appendix A which is hereby incorporated in and expressly made a part of
this Indenture. The Exchange Securities and the Trustee’s certificate of authentication shall be
substantially in the form of Exhibit A, which is hereby incorporated in and expressly made a part
of this Indenture. The Securities of each series may have notations, legends or endorsements
required by law, stock exchange rule, agreements to which the Company is subject, if any, or usage,
provided that any such notation, legend or endorsement is in a form reasonably acceptable to the
Company. Each Security shall be dated the date of its authentication. The terms of the Securities
of each series set forth in Exhibit 1 to Appendix A and Exhibit A are part of the terms of this
Indenture.




          SECTION 2.03. Execution and Authentication. Two Officers shall sign the Securities
for the Company by manual or facsimile signature. The Company’s seal shall be impressed, affixed,
imprinted or reproduced on the Securities and may be in facsimile form.




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




          At any time and from time to time after the execution and delivery of this Indenture, the
Company may deliver Securities of any series executed by the Company to the Trustee for
authentication, together with a written order of the Company in the form of an Officers’
Certificate for the authentication and delivery of such Securities, and the Trustee in accordance
with such written order of the Company shall authenticate and deliver such Securities.




          A Security shall not be valid until an authorized signatory of the Trustee manually signs the
certificate of authentication on the Security. The signature shall be conclusive evidence that the
Security has been authenticated under this Indenture.




          The Trustee may appoint an authenticating agent reasonably acceptable to the Company to
authenticate the Securities. Unless limited by the terms of such appointment, an authenticating
agent may authenticate Securities 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 any Registrar, Paying Agent or agent for service of notices and demands.




          SECTION 2.04. Registrar and Paying Agent. The Company shall maintain an office or
agency where Securities may be presented for registration of transfer or for exchange (the
“Registrar”) and an office or agency where Securities may be presented for payment (the “Paying
Agent”). The Registrar shall keep a register of the Securities and of their transfer and exchange.
The Company may have one or more co-registrars and one or more additional paying agents. The term
“Paying Agent” includes any additional paying agent.




          The Company shall enter into an appropriate agency agreement with any Registrar, Paying Agent
or co-registrar not a party to this Indenture, which shall










 



35



incorporate the terms of the TIA. The agreement shall implement the provisions of this
Indenture that relate to such agent. The Company shall notify the Trustee of the name and address
of any such agent. If the Company fails to maintain a Registrar or Paying Agent, the Trustee shall
act as such and shall be entitled to appropriate compensation therefor pursuant to Section 7.07.
The Company or any of its domestically incorporated Wholly Owned Subsidiaries may act as Paying
Agent, Registrar, co-registrar or transfer agent.




          The Company initially appoints the Trustee as Registrar and Paying Agent in connection with
the Securities.




          SECTION 2.05. Paying Agent To Hold Money in Trust. Prior to each due date of the
principal and interest on any Security, the Company shall deposit with the Paying Agent a sum
sufficient to pay such principal and interest when so becoming due. 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 Securityholders or the Trustee all money held by the Paying Agent for the
payment of principal of or interest on the Securities and shall notify the Trustee of any default
by the Company in making any such payment. If the Company or a Wholly Owned Subsidiary acts as
Paying Agent, it shall segregate the money held by it as Paying Agent and hold it as a separate
trust fund. The Company at any time may require a Paying Agent to pay all money held by it to the
Trustee and to account for any funds disbursed by the Paying Agent. Upon complying with this
Section, the Paying Agent shall have no further liability for the money delivered to the Trustee.




          SECTION 2.06. Securityholder 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
Securityholders. If the Trustee is not the Registrar, the Company shall furnish to the Trustee, in
writing at least five 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 Securityholders.




          SECTION 2.07. Replacement Securities. If a mutilated Security is surrendered to the
Registrar or if the Holder of a Security claims that such Security has been lost, destroyed or
wrongfully taken, the Company shall issue and the Trustee shall authenticate a replacement Security
if the requirements of Section 8-405 of the Uniform Commercial Code are met and the Holder
satisfies any other reasonable requirements of the Trustee. If required by the Trustee or the
Company, such Holder shall furnish an indemnity bond sufficient in the judgment of the Company and
the Trustee to protect the Company, the Trustee, the Paying Agent, the Registrar and any
co-registrar from any loss which any of them may suffer if a Security is replaced. The Company and
the Trustee may charge the Holder for their expenses in replacing a Security.




          Every replacement Security is an additional obligation of the Company.










 



36




          SECTION 2.08. Outstanding Securities. Securities outstanding at any time are all
Securities authenticated by the Trustee except for those canceled by it, those delivered to it for
cancellation and those described in this Section as not outstanding. A Security does not cease to
be outstanding because the Company or an Affiliate of the Company holds the Security.




          If a Security is replaced pursuant to Section 2.07, it ceases to be outstanding unless the
Trustee and the Company receive proof satisfactory to them that the replaced Security is held by a
bona fide purchaser.




          If the Paying Agent segregates and holds in trust, in accordance with this Indenture, on a
redemption date or maturity date money sufficient to pay all principal and interest payable on that
date with respect to the Securities (or portions thereof) to be redeemed or maturing, as the case
may be, then on and after that date such Securities (or portions thereof) cease to be outstanding
and interest on them ceases to accrue.




          SECTION 2.09. Temporary Securities. Until definitive Securities are ready for
delivery, the Company may prepare and the Trustee shall authenticate temporary Securities.
Temporary Securities shall be substantially in the form of definitive Securities but may have
variations that the Company considers appropriate for temporary Securities. Without unreasonable
delay, the Company shall prepare and the Trustee shall authenticate definitive Securities and
deliver them in exchange for temporary Securities.




          SECTION 2.10. Cancellation. The Company at any time may deliver Securities to the
Trustee for cancellation. The Registrar and the Paying Agent shall forward to the Trustee any
Securities surrendered to them for registration of transfer, exchange or payment. The Trustee and
no one else shall cancel and dispose of all Securities surrendered for registration of transfer,
exchange, payment or cancellation in its customary manner. The Company may not issue new
Securities to replace Securities it has redeemed, paid or delivered to the Trustee for
cancellation.




          SECTION 2.11. Defaulted Interest. If the Company defaults in a payment of interest on
the Securities, the Company shall pay the defaulted interest (plus interest on such defaulted
interest to the extent lawful) in any lawful manner. The Company may pay the defaulted interest to
the persons who are Securityholders on a subsequent special record date. The Company shall fix or
cause to be fixed any such special record date and payment date to the reasonable satisfaction of
the Trustee and shall promptly mail to each Securityholder a notice that states the special record
date, the payment date and the amount of defaulted interest to be paid.




          SECTION 2.12. CUSIP Numbers. The Company in issuing the Securities may use “CUSIP”,
“ISIN” or “Common Code” numbers (if then generally in use) and, if so, the Trustee shall use
“CUSIP”, “ISIN” or “Common Code” numbers in notices of redemption as a convenience to Holders;
provided, however, that neither the Company nor the Trustee shall have any
responsibility for any defect in the “CUSIP”, “ISIN” or “Common Code” number that appears on any
Security, check, advice of payment or










 



37



redemption notice, and any such notice may state that no representation is made as to the
correctness of such numbers either as printed on the Securities or as contained in any notice of a
redemption and that reliance may be placed only on the other identification numbers printed on the
Securities, 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 such numbers.




ARTICLE III




Redemption




          SECTION 3.01. Notices to Trustee. If the Company elects to redeem Securities pursuant
to paragraph 5 of the Securities, it shall notify the Trustee in writing of the redemption date,
the principal amount of Securities to be redeemed and that such redemption is being made pursuant
to paragraph 5 of the Securities.




          The Company shall give each notice to the Trustee provided for in this Section at least 45
days before the redemption date unless the Trustee consents to a shorter period. Such notice shall
be accompanied by an Officers’ Certificate and an Opinion of Counsel from the Company to the effect
that such redemption will comply with the conditions herein.




          SECTION 3.02. Selection of Securities To Be Redeemed. If fewer than all the
Securities are to be redeemed, the Trustee shall select the Securities to be redeemed pro rata or
by lot or by a method that complies with applicable legal and securities exchange requirements, if
any, and that the Trustee considers fair and appropriate and in accordance with methods generally
used at the time of selection by fiduciaries in similar circumstances. The Trustee shall make the
selection from outstanding Securities not previously called for redemption. The Trustee may select
for redemption portions of the principal of Securities that have denominations larger than $10,000.
Securities and portions of them the Trustee selects shall be in amounts of $10,000 or a whole
multiple of $1,000. Provisions of this Indenture that apply to Securities called for redemption
also apply to portions of Securities called for redemption. The Trustee shall notify the Company
promptly of the Securities or portions of Securities to be redeemed.




          SECTION 3.03. Notice of Redemption. At least 30 days but not more than 60 days before
a date for redemption of Securities, the Company shall mail a notice of redemption by first-class
mail to each Holder of Securities to be redeemed.




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





     (1) the redemption date;




     (2) the redemption price or the information specified in clause (c) of paragraph 5 of
the Securities;









 



38



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




     (4) that Securities called for redemption must be surrendered to the Paying Agent to
collect the redemption price;




     (5) if fewer than all the outstanding Securities are to be redeemed, the
identification and principal amounts of the particular Securities to be redeemed;




     (6) that, unless the Company defaults in making such redemption payment, interest on
Securities (or portion thereof) called for redemption ceases to accrue on and after the
redemption date; and




     (7) that no representation is made as to the correctness or accuracy of the CUSIP,
ISIN or Common Code number, if any, listed in such notice or printed on the Securities.



          At the Company’s request, the Trustee shall give the notice of redemption in the Company’s
name and at the Company’s expense. In such event, the Company shall provide the Trustee with the
information required by this Section at least 45 days before the redemption date.




          If the Company elects to provide, in lieu of the redemption price, the information specified
in clause (c) of paragraph 5 of the Securities in the notice of redemption, the Trustee shall give
the notice of the redemption price, in the Company’s name and the Company’s expense, one business
day prior to the redemption date.




          SECTION 3.04. Effect of Notice of Redemption. Once notice of redemption is mailed,
Securities called for redemption become due and payable on the redemption date and at the
redemption price stated in the notice. Upon surrender to the Paying Agent, such Securities shall
be paid at the redemption price stated in the notice, plus accrued interest to the redemption date
(subject to the right of Holders of record on the relevant record date to receive interest due on
the related interest payment date that is on or prior to the date of redemption). Failure to give
notice or any defect in the notice to any Holder shall not affect the validity of the notice to any
other Holder.




          SECTION 3.05. Deposit of Redemption Price. Prior to the redemption date, the Company
shall deposit with the Paying Agent (or, if the Company or a Wholly Owned Subsidiary is the Paying
Agent, shall segregate and hold in trust) money sufficient to pay the redemption price of and
accrued interest (subject to the right of Holders of record on the relevant record date to receive
interest due on the related interest payment date that is on or prior to the date of redemption) on
all Securities to be redeemed on that date other than Securities or portions of Securities called
for redemption that have been delivered by the Company to the Trustee for cancellation.




          SECTION 3.06. Securities Redeemed in Part. Upon surrender of a Security that is
redeemed in part, the Company shall execute and the Trustee shall authenticate for the Holder (at
the Company’s expense) a new Security equal in principal amount to the unredeemed portion of the
Security surrendered.










 



39




ARTICLE IV




Covenants




          SECTION 4.01. Covenant Suspension. During any period of time that:





     (a) the Securities have Investment Grade Ratings from both Rating Agencies, and




     (b) no Default or Event of Default has occurred and is continuing under this
Indenture,


the Company and the Restricted Subsidiaries will not be subject to the following Sections of this
Indenture: Section 4.04, Section 4.05, Section 4.07, Section 4.08, clause (x) of the third
paragraph (and as referred to in the first paragraph) of Section 4.10, and clause (e) of Section
5.01 (collectively, the “Suspended Covenants”). In the event that the Company and the Restricted
Subsidiaries are not subject to the Suspended Covenants for any period of time as a result of the
preceding sentence and, subsequently, one or both of the Rating Agencies withdraws its ratings or
downgrades the ratings assigned to the Securities below the required Investment Grade Rating or a
Default or Event of Default occurs and is continuing, then the Company and the Restricted
Subsidiaries will thereafter again be subject to the Suspended Covenants for all periods after that
withdrawal, downgrade, Default or Event of Default and, furthermore, compliance with the provisions
of Section 4.05 with respect to Restricted Payments made after the time of the withdrawal,
downgrade, Default or Event of Default will be calculated in accordance with the terms of that
covenant as though that covenant had been in effect during the entire period of time from the
Measurement Date, provided that there will not be deemed to have occurred a Default or Event of
Default with respect to that covenant during the time that the Company and the Restricted
Subsidiaries were not subject to the Suspended Covenants (or after that time based solely on events
that occurred during that time).




          SECTION 4.02. Payment of Securities. The Company shall promptly pay the principal of
and interest on the Securities on the dates and in the manner provided in the Securities and in
this Indenture. Principal and interest shall be considered paid on the date due if on such date
the Trustee or the Paying Agent holds in accordance with this Indenture money sufficient to pay all
principal and interest then due.




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




          SECTION 4.03. SEC Reports. Notwithstanding that the Company may not be subject to the
reporting requirements of Section 13 or 15(d) of the Exchange Act, the Company shall file with the
SEC and provide the Trustee and Holders of Securities with annual reports and information,
documents and other reports as are specified in Sections 13 and 15(d) of the Exchange Act and
applicable to a U.S. corporation subject to those Sections, and the information, documents and
reports to be so filed and provided at










 



40



the times specified for the filing of the information, documents and reports under those
Sections; provided, however, that (i) the Company shall not be so obligated to file
the information, documents and reports with the SEC if the SEC does not permit those filings and
(ii) the electronic filing with the SEC through the SEC’s Electronic Data Gathering, Analysis, and
Retrieval System (or any successor system providing for free public access to such filings) shall
satisfy the Company’s obligation to provide such reports, information and documents to the Trustee
and the Holders of Securities. The Company shall also comply with the other provisions of TIA §
314(a). Delivery of such reports, information and documents to the Trustee is for informational
purposes only and the Trustee’s receipt of such shall not constitute constructive notice of any
information contained therein or determinable from information contained therein, including the
Company’s compliance with any of its covenants hereunder (as to which the Trustee is entitled to
rely exclusively on Officer’s Certificates).




          SECTION 4.04. Limitation on Debt. The Company shall not, and shall not permit any
Restricted Subsidiary to, Incur, directly or indirectly, any Debt unless, after giving effect to
the application of the proceeds thereof, no Default or Event of Default would occur as a
consequence of the Incurrence or be continuing following the Incurrence and either:




     (1) the Debt is Debt of the Company and after giving effect to the Incurrence of the
Debt and the application of the proceeds thereof, the Consolidated Fixed Charges Coverage
Ratio would be greater than 2.00 to 1.00, or



(2) the Debt is Permitted Debt.



“Permitted Debt” means:



     (a) Debt
of the Company evidenced by the Original Securities and the €100.0 million
aggregate principal amount of 8-5/8% Senior Notes due 2013 issued on the Issue Date;



     (b) Debt of the Company or a Restricted Subsidiary Incurred under any Credit
Facilities, Incurred by the Company or a Restricted Subsidiary pursuant to a Real Estate
Financing Transaction, a Sale and Leaseback Transaction, an Equipment Financing Transaction
or Debt Issuances, Debt Incurred by the Company or a Restricted Subsidiary in respect of
Capital Lease Obligations and Purchase Money Debt, or Incurred by a Receivables Entity in a
Qualified Receivables Transaction that is not recourse to the Company or any other
Restricted Subsidiary of the Company (except for Standard Securitization Undertakings),
provided that the aggregate principal amount of all Debt of this kind at any one
time outstanding shall not exceed the greater of:




     (1) $1.6 billion, which amount shall be permanently reduced by the amount of
Net Available Cash used to Repay Debt under the Credit









 



41



Facilities or otherwise Incurred pursuant to this clause (b) pursuant to
Section 4.07, and




     (2) the sum of the amounts equal to:




     (A) 50% of the book value of the inventory of the Company and the
Restricted Subsidiaries, and




     (B) 85% of the book value of the accounts receivable of the Company
and the Restricted Subsidiaries, in the case of each of clauses (A) and
(B) as of the most recently ended quarter of the Company for which
financial statements of the Company have been provided to the Holders of
Securities;




     (c) Debt of the Company owing to and held by any Restricted Subsidiary and Debt of a
Restricted Subsidiary owing to and held by the Company or any Restricted Subsidiary;
provided, however, that (1) any subsequent issue or transfer of Capital
Stock or other event that results in any Restricted Subsidiary ceasing to be a Restricted
Subsidiary or any subsequent transfer of that Debt (except to the Company or a Restricted
Subsidiary) shall be deemed, in each case, to constitute the Incurrence of that Debt by the
issuer thereof, and (2) if the Company is the obligor on that Indebtedness, the
Indebtedness is expressly subordinated to the prior payment in full in cash of all
obligations with respect to the Securities;




     (d) Debt of a Restricted Subsidiary outstanding on the date on which that Restricted
Subsidiary was acquired by the Company or otherwise became a Restricted Subsidiary (other
than Debt Incurred as consideration in, or to provide all or any portion of the funds or
credit support utilized to consummate, the transaction or series of transactions pursuant
to which that Restricted Subsidiary became a Subsidiary of the Company or was otherwise
acquired by the Company), provided that at the time that Restricted Subsidiary was
acquired by the Company or otherwise became a Restricted Subsidiary and after giving effect
to the Incurrence of that Debt, the Company would have been able to Incur $1.00 of
additional Debt pursuant to clause (1) of the first paragraph of this Section 4.04;




     (e) Debt under Interest Rate Agreements entered into by the Company or a Restricted
Subsidiary for the purpose of limiting interest rate risk in the ordinary course of the
financial management of the Company or that Restricted Subsidiary and not for speculative
purposes, provided that the obligations under those agreements are related to
payment obligations on Debt otherwise permitted by the terms of this Section 4.04;




     (f) Debt under Currency Exchange Protection Agreements entered into by the Company or
a Restricted Subsidiary for the purpose of limiting currency exchange rate risks directly
related to transactions entered into by the Company or









 



42



that Restricted Subsidiary in the ordinary course of business and not for speculative
purposes;




     (g) Debt under Commodity Price Protection Agreements entered into by the Company or a
Restricted Subsidiary in the ordinary course of the financial management of the Company or
that Restricted Subsidiary and not for speculative purposes;




     (h) Debt in connection with one or more standby letters of credit or performance bonds
issued by the Company or a Restricted Subsidiary in the ordinary course of business or
pursuant to self-insurance obligations and not in connection with the borrowing of money or
the obtaining of advances or credit;




     (i) Debt arising from agreements of the Company or a Restricted Subsidiary providing
for indemnification, adjustment of purchase price or similar obligations, in each case,
incurred in connection with the disposition of any business, assets or Capital Stock of a
Subsidiary, other than Guarantees of Debt Incurred by any Person acquiring all or any
portion of such business, assets or Capital Stock; provided, however, that the maximum
aggregate liability in respect of all such Debt shall at no time exceed the gross proceeds
actually received by the Company or such Restricted Subsidiary in connection with such
disposition;




     (j) Debt outstanding on the Issue Date not otherwise described in clauses (a) through
(i) above;




     (k) Debt of the Company or a Restricted Subsidiary in an aggregate principal amount
outstanding at any one time not to exceed $100.0 million; and




     (l) Permitted Refinancing Debt Incurred in respect of Debt Incurred pursuant to clause
(1) of the first paragraph of this Section 4.04 and clauses (a), (d) and (j) above.



For purposes of determining compliance with this Section 4.04:




     (A) in the event that an item of Debt meets the criteria of more than one of the types of
Debt described above, the Company, in its sole discretion, will classify such item of Debt at the
time of Incurrence and only be required to include the amount and type of such Debt in one of the
above clauses; and



     (B) the Company will be entitled to divide and classify an item of Debt in more than one of
the types of Debt described above.



          SECTION 4.05. Limitation on Restricted Payments. The Company shall not make, and
shall not permit any Restricted Subsidiary to make, directly or indirectly, any Restricted Payment
if at the time of, and after giving effect to, the proposed Restricted Payment,





     (a) a Default or Event of Default shall have occurred and be continuing,









 



43



     (b) the Company could not Incur at least $1.00 of additional Debt pursuant to clause
(1) of the first paragraph of Section 4.04, or




     (c) the aggregate amount of that Restricted Payment and all other Restricted Payments
declared or made since the Measurement Date (the amount of any Restricted Payment, if made
other than in cash, to be based upon Fair Market Value) would exceed an amount equal to the
sum of:




     (1) 50% of the aggregate amount of Consolidated Net Income accrued during the
period (treated as one accounting period) from the beginning of the fiscal quarter
ended February 27, 2005 to the end of the most recent fiscal quarter ending at
least 45 days prior to the date of the Restricted Payment (or if the aggregate
amount of Consolidated Net Income for such period shall be a deficit, minus 100% of
such deficit), plus




     (2) Capital Stock Sale Proceeds received after the Measurement Date, plus




     (3) the sum of:




     (A) the aggregate net cash proceeds received by the Company or any
Restricted Subsidiary from the issuance or sale after the Measurement Date
of convertible or exchangeable Debt that has been converted into or
exchanged for Capital Stock (other than Disqualified Stock) of the
Company, and




     (B) the aggregate amount by which Debt of the Company or any
Restricted Subsidiary is reduced on the Company’s consolidated balance
sheet on or after the Measurement Date upon the conversion or exchange of
any Debt issued or sold on or prior to the Measurement Date that is
convertible or exchangeable for Capital Stock (other than Disqualified
Stock) of the Company,




     (C) excluding, in the case of clause (A) or (B):




     (x) any Debt issued or sold to the Company or a
Subsidiary of the Company or an employee stock ownership
plan or trust established by the Company or any Subsidiary
for the benefit of their employees, and




     (y) the aggregate amount of any cash or other
Property distributed by the Company or any Restricted
Subsidiary upon any such conversion or exchange, plus




     (4) an amount equal to the sum of:









 



44


     (A) the net reduction in Investments in any Person other than the
Company or a Restricted Subsidiary resulting from dividends, repayments of
loans or advances or other transfers of Property made after the
Measurement Date, in each case to the Company or any Restricted Subsidiary
from that Person, less the cost of the disposition of those Investments,
and



     (B) the lesser of the net book value or the Fair Market Value of the
Company’s equity interest in an Unrestricted Subsidiary at the time the
Unrestricted Subsidiary is designated a Restricted Subsidiary
(provided that such designation occurs after the Measurement
Date);




provided, however, that the foregoing sum shall not
exceed, in the case of any Person, the amount of Investments previously
made (and treated as a Restricted Payment) by the Company or any
Restricted Subsidiary in that Person.



Notwithstanding the foregoing limitation, the Company may:





     (a) pay dividends on its Capital Stock within 60 days of the declaration thereof if,
on said declaration date, the dividends could have been paid in compliance with this
Indenture; provided, however, that at the time of the payment of the
dividend, no other Default or Event of Default shall have occurred and be continuing (or
result therefrom); provided further, however, that, if declared on or after
the Measurement Date, the dividend shall be included in the calculation of the amount of
Restricted Payments;




     (b) purchase, repurchase, redeem, legally defease, acquire or retire for value Capital
Stock of the Company or Subordinated Obligations on or after the Measurement Date in
exchange for, or out of the proceeds of the substantially concurrent sale of, Capital Stock
of the Company (other than Disqualified Stock and other than Capital Stock issued or sold
to a Subsidiary of the Company or an employee stock ownership plan or trust established by
the Company or any Subsidiary for the benefit of their employees); provided,
however, that




     (1) the purchase, repurchase, redemption, legal defeasance, acquisition or
retirement shall be excluded in the calculation of the amount of Restricted
Payments, and




     (2) the Capital Stock Sale Proceeds from the exchange or sale shall be
excluded from the calculation pursuant to clause (c)(2) above;




     (c) purchase, repurchase, redeem, legally defease, acquire or retire for value any
Subordinated Obligations on or after the Measurement Date in exchange for, or out of the
proceeds of the substantially concurrent sale of, Permitted Refinancing Debt;
provided, however, that the purchase, repurchase,









 



45



redemption, legal defeasance, acquisition or retirement shall be excluded in the
calculation of the amount of Restricted Payments;




     (d) pay scheduled dividends (not constituting a return on capital) on Disqualified
Stock of the Company issued pursuant to and in compliance with Section 4.04 on or after the
Measurement Date;




     (e) permit a Restricted Subsidiary that is not a Wholly Owned Subsidiary to pay
dividends to shareholders of that Restricted Subsidiary on or after the Measurement Date
that are not the parent of that Restricted Subsidiary, so long as the Company or a
Restricted Subsidiary that is the parent of that Restricted Subsidiary receives dividends
on a pro rata basis or on a basis that results in the receipt by the Company or a
Restricted Subsidiary that is the parent of that Restricted Subsidiary of dividends or
distributions of greater value than it would receive on a pro rata basis;




     (f) make cash payments in lieu of fractional shares in connection with the exercise of
warrants, options or other securities convertible into Capital Stock of the Company;
provided, however, that such repurchases shall be excluded in the calculation of the amount
of Restricted Payments;




     (g) make repurchases of shares of common stock of the Company deemed to occur upon the
exercise of options to purchase shares of common stock of the Company if such shares of
common stock of the Company represent a portion of the exercise price of such options;
provided, however, that such repurchases shall be excluded in the calculation of the amount
of Restricted Payments;




     (h) pay dividends on the common stock of the Company following the first Public Equity
Offering of the Company after the Issue Date in an annual amount not to exceed 6.0% of the
net cash proceeds received by the Company in such Public Equity Offering; provided,
however, that such dividends shall be included in the calculation of the amount of
Restricted Payments;




     (i) repurchase shares of, or options to purchase shares of, common stock of the
Company from current or former officers, directors or employees of the Company or any of
its Subsidiaries (or permitted transferees of such current or former officers, directors or
employees), pursuant to the terms of agreements (including employment agreements) or plans
approved by the Board of Directors under which such individuals acquire shares of such
common stock; provided, however, that the aggregate amount of such repurchases shall not
exceed $10.0 million; and provided further, however, that such repurchases shall be
excluded in the calculation of the amount of Restricted Payments; and




     (j) purchase, defease or otherwise acquire or retire for value any Subordinated
Obligations upon a Change of Control of the Company or an Asset Sale by the Company, to the
extent required by any agreement pursuant to which such Subordinated Obligations were
issued, but only if the Company has









 



46



previously made the offer to purchase Securities required under Section 4.12 or
Section 4.07; provided, however, that such payments shall be included in the calculation of
the amount of Restricted Payments.



          SECTION 4.06. Limitation on Liens. The Company shall not, and shall not permit any
Restricted Subsidiary to, directly or indirectly, Incur or suffer to exist, any Lien (other than
Permitted Liens) upon any of its Property (including Capital Stock of a Restricted Subsidiary),
whether owned at the Issue Date or thereafter acquired, or any interest therein or any income or
profits therefrom, unless it has made or will make effective provision whereby the Securities will
be secured by that Lien equally and ratably with (or prior to) all other Debt of the Company or any
Restricted Subsidiary secured by that Lien.




          SECTION 4.07. Limitation on Asset Sales. (a) The Company shall not, and shall not
permit any Restricted Subsidiary to, directly or indirectly, consummate any Asset Sale unless:





     (i) the Company or the Restricted Subsidiary receives consideration at the time of the
Asset Sale at least equal to the Fair Market Value of the Property subject to such Asset
Sale;




     (ii) at least 75% of the consideration paid to the Company or the Restricted
Subsidiary in connection with such Asset Sale is in the form of cash or cash equivalents or
the assumption by the purchaser of liabilities of the Company or any Restricted Subsidiary
(other than liabilities that are by their terms subordinated to the Securities) as a result
of which the Company and the Restricted Subsidiaries are no longer obligated with respect
to such liabilities; and




     (iii) the Company delivers an Officers’ Certificate to the Trustee certifying that
such Asset Sale complies with the foregoing clauses (i) and (ii).



     For the purposes of this Section 4.07:




     (1) in the case of a transaction involving a sale of any distribution center by the
Company or a Restricted Subsidiary and the establishment of an outsourcing arrangement in
which the purchaser assumes distribution responsibilities on behalf of the Company or the
Restricted Subsidiary, any credits or other consideration the purchaser grants to the
Company or the Restricted Subsidiary as part of the purchase price of the distribution
center, which credits or other consideration effectively offset future payments due from
the Company or the Restricted Subsidiary to the purchaser as part of the outsourcing
arrangement, will be considered to be cash equivalents;




     (2) securities or other assets received by the Company or any Restricted Subsidiary
from the transferee that are converted by the Company or such Restricted Subsidiary into
cash within 90 days shall be considered to be cash to









 



47



the extent of the cash received in that conversion;




     (3) any cash consideration paid to the Company or the Restricted Subsidiary in
connection with the Asset Sale that is held in escrow or on deposit to support
indemnification, adjustment of purchase price or similar obligations in respect of such
Asset Sale shall be considered to be cash; and




     (4) the requirement that at least 75% of the consideration paid to the Company or the
Restricted Subsidiary in connection with the Asset Sale be in the form of cash or cash
equivalents shall also be considered satisfied if the cash received constitutes at least
75% of the consideration received by the Company or the Restricted Subsidiary in connection
with such Asset Sale, determined on an after-tax basis.



          (b) The Net Available Cash (or any portion thereof) from Asset Sales may be applied by the
Company or a Restricted Subsidiary, to the extent the Company or such Restricted Subsidiary elects
(or is required by the terms of any Debt):





     (i) to Repay Debt of the Company (excluding, in any such case, any Debt that (A)
constitutes a Subordinated Obligation or (B) is owed to the Company or an Affiliate of the
Company); or




     (ii) to reinvest in Additional Assets (including by means of an Investment in
Additional Assets by a Restricted Subsidiary with Net Available Cash received by the
Company or another Restricted Subsidiary), provided, however, that the Net
Available Cash (or any portion thereof) from Asset Sales from the Company to any Subsidiary
must be reinvested in Additional Assets of the Company.



          (c) Any Net Available Cash from an Asset Sale not applied in accordance with the preceding
paragraph within 360 days from the date of the receipt of such Net Available Cash or that the
Company earlier elects to so designate shall constitute “Excess Proceeds”.




          When the aggregate amount of Excess Proceeds not previously subject to a Prepayment Offer (as
defined below) exceeds $10.0 million (taking into account income earned on those Excess Proceeds,
if any), the Company will be required to make an offer to purchase (the “Prepayment Offer”) the
Securities, which offer shall be in the amount of the Allocable Excess Proceeds, on a pro rata
basis according to principal amount, at a purchase price equal to 100% of the principal amount
thereof, plus accrued and unpaid interest, if any, to the purchase date (subject to the right of
Holders of record on the relevant record date to receive interest due on the relevant interest
payment date), in accordance with the procedures (including prorating in the event of
oversubscription) set forth in this Indenture. To the extent that any portion of the amount of Net
Available Cash remains after compliance with the preceding sentence and provided that all Holders
of Securities have been given the opportunity to tender their Securities for purchase in accordance
with this Indenture, the Company or such








 



48



           Restricted Subsidiary may use the remaining amount for any purpose permitted by this Indenture
and the amount of Excess Proceeds will be reset to zero.




          The term “Allocable Excess Proceeds” will mean the product of:





     (a) the Excess Proceeds, and




     (b) a fraction,




     (1) the numerator of which is the aggregate principal amount of the Securities
outstanding on the date of the Prepayment Offer, and




     (2) the denominator of which is the sum of the aggregate principal amount of
the Securities outstanding on the date of the Prepayment Offer and the aggregate
principal amount of other Debt of the Company outstanding on the date of the
Prepayment Offer that is pari passu in right of payment with the
Securities and subject to terms and conditions in respect of Asset Sales similar in
all material respects to the covenant described hereunder and requiring the Company
to make an offer to purchase such Debt at substantially the same time as the
Prepayment Offer.




     (d) (1) Not later than five Business Days after the Company is obligated to make a
Prepayment Offer as described in the preceding paragraph, the Company shall send a written
notice, by first-class mail, to the Holders of Securities, accompanied by information
regarding the Company and its Subsidiaries as the Company in good faith believes will
enable the Holders to make an informed decision with respect to that Prepayment Offer. The
notice shall state, among other things, the purchase price and the purchase date, which
shall be, subject to any contrary requirements of applicable law, a Business Day no earlier
than 30 days nor later than 60 days from the date the notice is mailed.




     (2) Not later than the date upon which written notice of a Prepayment Offer is
delivered to the Trustee as provided above, the Company shall deliver to the Trustee an
Officers’ Certificate as to (i) the amount of the Prepayment Offer (the “Offer Amount”),
(ii) the allocation of the Net Available Cash from the Asset Sales pursuant to which such
Prepayment Offer is being made and (iii) the compliance of such allocation with the
provisions of Section 4.07(c). On or before the Purchase Date, the Company shall also
irrevocably deposit with the Trustee or with the Paying Agent (or, if the Company or a
Wholly Owned Subsidiary is the Paying Agent, shall segregate and hold in trust) in
Temporary Cash Investments (other than in those enumerated in clause (b) of the definition
of Temporary Cash Investments), maturing on the last day prior to the Purchase Date or on
the Purchase Date if funds are immediately available by open of business, an amount equal
to the Offer Amount to be held for payment in accordance with the provisions of this
Section. Upon the expiration of the period for which the Prepayment Offer remains open
(the “Offer Period”), the Company shall deliver









 



49



to the Trustee for cancellation the Securities or portions thereof that have been
properly tendered to and are to be accepted by the Company. The Trustee or the Paying
Agent shall, on the Purchase Date, mail or deliver payment to each tendering Holder in the
amount of the purchase price. In the event that the aggregate purchase price of the
Securities delivered by the Company to the Trustee is less than the Offer Amount, the
Trustee or the Paying Agent shall deliver the excess to the Company immediately after the
expiration of the Offer Period for application in accordance with this Section.




     (3) Holders electing to have a Security purchased shall be required to surrender the
Security, with an appropriate form duly completed, to the Company or its agent at the
address specified in the notice at least three Business Days prior to the Purchase Date.
Holders shall be entitled to withdraw their election if the Trustee or the Company receives
not later than one Business Day prior to the Purchase Date, a telegram, telex, facsimile
transmission or letter setting forth the name of the Holder, the principal amount of the
Security that was delivered for purchase by the Holder and a statement that such Holder is
withdrawing its election to have such Security purchased. If at the expiration of the
Offer Period the aggregate principal amount of Securities surrendered by Holders exceeds
the Offer Amount, the Company shall select the Securities to be purchased on a pro rata
basis for all Securities, (with such adjustments as may be deemed appropriate by the
Company so that only Securities in denominations of $10,000, or integral multiples of
$1,000 thereafter, shall be purchased). Holders whose Securities are purchased only in
part shall be issued new Securities equal in principal amount to the unpurchased portion of
the Securities surrendered.




     (4) At the time the Company delivers Securities to the Trustee that are to be accepted
for purchase, the Company shall also deliver an Officers’ Certificate stating that such
Securities are to be accepted by the Company pursuant to and in accordance with the terms
of this Section. A Security shall be deemed to have been accepted for purchase at the time
the Trustee or the Paying Agent mails or delivers payment therefor to the surrendering
Holder.



          (e) The Company will comply, to the extent applicable, with the requirements of Section 14(e)
of the Exchange Act and any other securities laws or regulations in connection with the repurchase
of Securities pursuant to this Section. To the extent that the provisions of any securities laws
or regulations conflict with provisions of this Section, the Company will comply with the
applicable securities laws and regulations and will not be deemed to have breached its obligations
under this Section by virtue thereof.




          SECTION 4.08. Limitation on Restrictions on Distributions from Restricted
Subsidiaries. The Company shall not, and shall not permit any Restricted Subsidiary to,
directly or indirectly, create or otherwise cause or suffer to exist any consensual restriction on
the right of any Restricted Subsidiary to:










 



50





     (a) pay dividends, in cash or otherwise, or make any other distributions on or in
respect of its Capital Stock, or pay any Debt or other obligation owed, to the Company or
any other Restricted Subsidiary,




     (b) make any loans or advances to the Company or any other Restricted Subsidiary, or




     (c) transfer any of its Property to the Company or any other Restricted Subsidiary.



          The foregoing limitations will not apply:





     (1) with respect to clauses (a), (b) and (c), to restrictions:




     (A) in effect on the Issue Date,




     (B) relating to Debt of a Restricted Subsidiary and existing at the
time it became a Restricted Subsidiary if such restriction was not created
in connection with or in anticipation of the transaction or series of
transactions pursuant to which that Restricted Subsidiary became a
Restricted Subsidiary or was acquired by the Company,




     (C) that result from the Refinancing of Debt Incurred pursuant to an
agreement referred to in clause (1)(A) or (B) above or in clause (2)(A) or
(B) below, provided that restriction is no less favorable to the
Holders of Securities than those under the agreement evidencing the Debt
so Refinanced,




     (D) resulting from the Incurrence of any Permitted Debt described in
clause (b) of the second paragraph of Section 4.04, provided that
the restriction is no less favorable to the Holders of Securities than the
restrictions of the same type contained in this Indenture, or




     (E) constituting Standard Securitization Undertakings relating solely
to, and restricting only the rights of, a Receivables Entity in connection
with a Qualified Receivables Transaction, and




     (2) with respect to clause (c) only, to restrictions:




     (A) relating to Debt that is permitted to be Incurred and secured
without also securing the Securities pursuant to Section 4.04 and Section
4.06 that limit the right of the debtor to dispose of the Property
securing that Debt,




     (B) encumbering Property at the time the Property was acquired by the
Company or any Restricted Subsidiary, so long as









 



51



the restriction relates solely to the Property so acquired and was
not created in connection with or in anticipation of the acquisition,




     (C) resulting from customary provisions restricting subletting or
assignment of leases or customary provisions in other agreements
(including, without limitation, intellectual property licenses entered
into in the ordinary course of business) that restrict assignment of the
agreements or rights thereunder, or




     (D) which are customary restrictions contained in asset sale
agreements limiting the transfer of Property pending the closing of the
sale.



          SECTION 4.09. Limitation on Transactions with Affiliates. The Company shall not, and
shall not permit any Restricted Subsidiary to, directly or indirectly, conduct any business or
enter into or suffer to exist any transaction or series of transactions (including the purchase,
sale, transfer, assignment, lease, conveyance or exchange of any Property or the rendering of any
service) with, or for the benefit of, any Affiliate of the Company (an “Affiliate Transaction”),
unless:





     (a) the terms of such Affiliate Transaction are:




     (1) set forth in writing, and




     (2) no less favorable to the Company or that Restricted Subsidiary, as the
case may be, than those that could be obtained in a comparable arm’s-length
transaction with a Person that is not an Affiliate of the Company, and




     (b) if the Affiliate Transaction involves aggregate payments or value in excess of
$10.0 million, the Board of Directors (including a majority of the disinterested members of
the Board of Directors) approves the Affiliate Transaction and, in its good faith judgment,
believes that the Affiliate Transaction complies with clauses (a)(1) and (2) of this
paragraph as evidenced by a Board Resolution promptly delivered to the Trustee.



     Notwithstanding the foregoing limitation, the Company or any Restricted Subsidiary may enter
into or suffer to exist the following:




     (a) any transaction or series of transactions between the Company and one or
more Restricted Subsidiaries or between two or more Restricted Subsidiaries in the
ordinary course of business, provided that no more than 5% of the total voting
power of the Voting Stock (on a fully diluted basis) of any such Restricted
Subsidiary is owned by an Affiliate of the Company (other than a Restricted
Subsidiary);




     (b) any Restricted Payment permitted to be made pursuant to Section 4.05 or
any Permitted Investment;









 



52



     (c) the payment of compensation (including amounts paid pursuant to employee
benefit plans) for the personal services of officers, directors and employees of
the Company or any of the Restricted Subsidiaries, so long as, in the case of
executive officers and directors, the Board of Directors in good faith shall have
approved the terms thereof and deemed the services theretofore or thereafter to be
performed for the compensation to be fair consideration therefor;




     (d) loans and advances to employees made in the ordinary course of business in
compliance with applicable laws and consistent with the past practices of the
Company or that Restricted Subsidiary, as the case may be, provided that
those loans and advances do not exceed $10.0 million in the aggregate at any one
time outstanding;




     (e) any transaction effected as part of a Qualified Receivables Transaction or
any transaction involving the transfer of accounts receivable of the type specified
in the definition of “Credit Facility” and permitted under clause (b) of the second
paragraph of Section 4.04;




     (f) the Existing Policies or any transaction contemplated thereby; and




     (g) any sale of shares of Capital Stock (other than Disqualified Stock) of the
Company.



          SECTION 4.10. Designation of Restricted and Unrestricted Subsidiaries. The Board of
Directors may designate any Subsidiary of the Company to be an Unrestricted Subsidiary if:





     (a) the Subsidiary to be so designated does not own any Capital Stock or Debt of, or
own or hold any Lien on any Property of, the Company or any other Restricted Subsidiary,
and




     (b) any of the following:




     (1) the Subsidiary to be so designated has total assets of $1,000 or less,




     (2) if the Subsidiary has consolidated assets greater than $1,000, then the
designation would be permitted under Section 4.05, or




     (3) the designation is effective immediately upon the entity becoming a
Subsidiary of the Company.


Unless so designated as an Unrestricted Subsidiary, any Person that becomes a Subsidiary of the
Company will be classified as a Restricted Subsidiary; provided, however, that the
Subsidiary shall not be designated a Restricted Subsidiary and shall be automatically classified as
an Unrestricted Subsidiary if either of the requirements set








 



53


forth in clauses (x) and (y) of the second immediately following paragraph will not be satisfied
after giving pro forma effect to the classification or if the Person is a Subsidiary of an
Unrestricted Subsidiary.




          Except as provided in the first sentence of the preceding paragraph, no Restricted Subsidiary
may be redesignated as an Unrestricted Subsidiary. In addition, neither the Company nor any
Restricted Subsidiary shall at any time be directly or indirectly liable for any Debt that provides
that the holder thereof may (with the passage of time or notice or both) declare a default thereon
or cause the payment thereof to be accelerated or payable prior to its Stated Maturity upon the
occurrence of a default with respect to any Debt, Lien or other obligation of any Unrestricted
Subsidiary in existence and classified as an Unrestricted Subsidiary at the time the Company or the
Restricted Subsidiary is liable for that Debt (including any right to take enforcement action
against that Unrestricted Subsidiary).




          The Board of Directors may designate any Unrestricted Subsidiary to be a Restricted Subsidiary
if, immediately after giving pro forma effect to the designation,





     (x) the Company could Incur at least $1.00 of additional Debt pursuant to clause (1)
of the first paragraph of Section 4.04, and




     (y) no Default or Event of Default shall have occurred and be continuing or would
result therefrom.



          Any designation or redesignation of this kind by the Board of Directors will be evidenced to
the Trustee by filing with the Trustee a Board Resolution giving effect to the designation or
redesignation and an Officers’ Certificate that:





     (a) certifies that the designation or redesignation complies with the foregoing
provisions, and




     (b) gives the effective date of the designation or redesignation, and the filing with
the Trustee to occur within 45 days after the end of the fiscal quarter of the Company in
which the designation or redesignation is made (or, in the case of a designation or
redesignation made during the last fiscal quarter of the Company’s fiscal year, within 90
days after the end of that fiscal year).



          SECTION 4.11. Limitation on Sale and Leaseback Transactions. The Company shall not,
and shall not permit any Restricted Subsidiary to, enter into any Sale and Leaseback Transaction
with respect to any Property unless:





     (a) the Company or that Restricted Subsidiary would be entitled to:




     (1) Incur Debt in an amount equal to the Attributable Debt with respect to
that Sale and Leaseback Transaction pursuant to Section 4.04, and









 



54



     (2) create a Lien on the Property securing that Attributable Debt without also
securing the Securities pursuant to Section 4.06, and




     (b) the Sale and Leaseback Transaction is effected in compliance with Section 4.07.



          SECTION 4.12. Change of Control. (a) Upon the occurrence of a Change of Control,
each Holder of Securities shall have the right to require the Company to repurchase all or any part
of such Holder’s Securities pursuant to the offer described below (the “Change of Control Offer”)
at a purchase price (the “Change of Control Purchase Price”) equal to 101.0% of the principal
amount thereof, plus accrued and unpaid interest, if any, to the purchase date (subject to the
right of Holders of record on the relevant record date to receive interest due on the relevant
interest payment date).




          (b) Within 30 days following any Change of Control, the Company shall (i) cause a notice of
the Change of Control Offer to be sent at least once to the Dow Jones News Service or similar
business news service in the United States and (ii) send, by first-class mail, with a copy to the
Trustee, to each Holder of Securities, at such Holder’s address appearing in the Security Register,
a notice stating: (A) that a Change of Control Offer is being made pursuant to this Section 4.12
and that all Securities timely tendered will be accepted for payment; (B) the Change of Control
Purchase Price and the purchase date, which shall be, subject to any contrary requirements of
applicable law, a Business Day no earlier than 30 days nor later than 60 days from the date such
notice is mailed (the “Change of Control Payment Date”); (C) the circumstances and relevant facts
regarding the Change of Control (including information with respect to pro forma historical income,
cash flow and capitalization after giving effect to the Change of Control); and (D) the procedures
that Holders of Securities must follow in order to tender their Securities (or portions thereof)
for payment and the procedures that Holders of Securities must follow in order to withdraw an
election to tender Securities (or portions thereof) for payment.




          (c) Holders electing to have a Security purchased shall be required to surrender the Security,
with an appropriate form duly completed, to the Company or its agent at the address specified in
the notice at least three Business Days prior to the Change of Control Payment Date. Holders shall
be entitled to withdraw their election if the Trustee or the Company receives not later than one
Business Day prior to the Change of Control Payment Date, a telegram, telex, facsimile transmission
or letter setting forth the name of the Holder, the principal amount of the Security that was
delivered for purchase by the Holder and a statement that such Holder is withdrawing its election
to have such Security purchased.




          (d) Prior to the Change of Control Payment Date, the Company shall irrevocably deposit with
the Trustee or with the Paying Agent (or, if the Company or any of its Wholly Owned Subsidiaries is
acting as the Paying Agent, segregate and hold in trust) in cash an amount equal to the Change of
Control Purchase Price payable to the Holders entitled thereto, to be held for payment in
accordance with the provisions of this Section. On the Change of Control Payment Date, the Company
shall deliver to the








 



55



Trustee the Securities or portions thereof that have been properly tendered to and are to be
accepted by the Company for payment. The Trustee or the Paying Agent shall, on the Change of
Control Payment Date, mail or deliver payment to each tendering Holder of the Change of Control
Purchase Price. In the event that the aggregate Change of Control Purchase Price is less than the
amount delivered by the Company to the Trustee or the Paying Agent, the Trustee or the Paying
Agent, as the case may be, shall deliver the excess to the Company immediately after the Change of
Control Payment Date.




          (e) The Company will not be required to make a Change of Control Offer following a Change of
Control if a third party makes the Change of Control Offer in the manner, at the times and
otherwise in compliance with the requirements set forth in this Indenture applicable to a Change of
Control Offer made by the Company and purchases all Securities validly tendered and not withdrawn
under such Change of Control Offer.




          (f) The Company will comply, to the extent applicable, with the requirements of Section 14(e)
of the Exchange Act and any other securities laws or regulations in connection with the purchase of
Securities pursuant to this Section. To the extent that the provisions of any securities laws or
regulations conflict with the provisions of this Section, the Company will comply with the
applicable securities laws and regulations and will not be deemed to have breached its obligations
under this Section by virtue thereof.




          SECTION 4.13. Further Instruments and Acts. Upon request of the Trustee, the Company
shall execute and deliver such further instruments and do such further acts as may be reasonably
necessary or proper to carry out more effectively the purpose of this Indenture.




ARTICLE V




Successor Company




          SECTION 5.01. When Company May Merge or Transfer Assets. The Company shall not merge,
consolidate or amalgamate with or into any other Person (other than a merger of a Wholly Owned
Restricted Subsidiary into the Company) or sell, transfer, assign, lease, convey or otherwise
dispose of all or substantially all its Property in any one transaction or series of transactions
unless:





     (a) the Company shall be the surviving Person (the “Surviving Person”) or the
Surviving Person (if other than the Company) formed by that merger, consolidation or
amalgamation or to which that sale, transfer, assignment, lease, conveyance or disposition
is made shall be a corporation organized and existing under the laws of the United States
of America, any State thereof or the District of Columbia;




     (b) the Surviving Person (if other than the Company) expressly assumes, by
supplemental indenture in form satisfactory to the Trustee, executed and delivered to the
Trustee by that Surviving Person, the due and punctual payment









 



56



of the principal of, and premium, if any, and interest on, all the Securities,
according to their tenor, and the due and punctual performance and observance of all the
covenants and conditions of this Indenture to be performed by the Company;




     (c) in the case of a sale, transfer, assignment, lease, conveyance or other
disposition of all or substantially all the Property of the Company, that Property shall
have been transferred as an entirety or virtually as an entirety to one Person;




     (d) immediately before and after giving effect to that transaction or series of
transactions on a pro forma basis (and treating, for purposes of this clause (d) and clause
(e) below, any Debt that becomes, or is anticipated to become, an obligation of the
Surviving Person or any Restricted Subsidiary as a result of that transaction or series of
transactions as having been Incurred by the Surviving Person or the Restricted Subsidiary
at the time of that transaction or series of transactions), no Default or Event of Default
shall have occurred and be continuing;




     (e) immediately after giving effect to that transaction or series of transactions on a
pro forma basis, the Company or the Surviving Person, as the case may be, would be able to
Incur at least $1.00 of additional Debt under clause (1) of the first paragraph of Section
4.04, provided, however, that this clause (e) shall not be applicable to
the Company merging, consolidating or amalgamating with or into an Affiliate incorporated
solely for the purpose of reincorporating the Company in another State of the United States
so long as the amount of Debt of the Company and the Restricted Subsidiaries is not
increased thereby;




     (f) the Company shall deliver, or cause to be delivered, to the Trustee, in form and
substance reasonably satisfactory to the Trustee, an Officers’ Certificate and an Opinion
of Counsel, each stating that the transaction and the supplemental indenture, if any, in
respect thereto comply with this Section and that all conditions precedent herein provided
for relating to the transaction have been satisfied; and




     (g) the Company shall have delivered to the Trustee an Opinion of Counsel to the
effect that the Holders will not recognize income, gain or loss for Federal income tax
purposes as a result of the transaction 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 that
transaction had not occurred.



          The Surviving Person shall succeed to, and be substituted for, and may exercise every right
and power of the Company under this Indenture, but the predecessor Company in the case of:





     (a) a sale, transfer, assignment, conveyance or other disposition (unless that sale,
transfer, assignment, conveyance or other disposition is of all the assets of the Company
as an entirety or virtually as an entirety), or









 



57



     (b) a lease,




     shall not be released from any obligation to pay the principal of, premium, if any, and
interest on, the Securities.



ARTICLE VI




Defaults and Remedies




          SECTION 6.01. Events of Default. The following events shall be “Events of Default”:





     (1) the Company defaults in any payment of interest on any Security when the same
becomes due and payable, and such default continues for a period of 30 days;




     (2) the Company defaults in the payment of the principal of, or premium, if any, on
any Security when the same becomes due and payable at its Stated Maturity, upon
acceleration, redemption, optional redemption, required repurchase or otherwise;




     (3) the Company fails to comply with Article 5;




     (4) the Company fails to comply with any covenant or agreement in the Securities or in
this Indenture (other than a failure that is the subject of the foregoing clause (1), (2)
or (3)) and such failure continues for 30 days after written notice is given to the Company
as specified below;




     (5) a default under any Debt by the Company or any Restricted Subsidiary that results
in acceleration of the maturity of that Debt, or failure to pay any Debt at maturity, in an
aggregate amount greater than $25.0 million or its foreign currency equivalent at the time;




     (6) the Company or any Significant Subsidiary pursuant to or within the meaning of any
Bankruptcy Law:




     (A) commences a voluntary case;




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




     (C) consents to the appointment of a Custodian of it or for any substantial
part of its property; or




     (D) makes a general assignment for the benefit of its creditors;




     or takes any comparable action under any foreign laws relating to insolvency;









 



58



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




     (A) is for relief against the Company or any Significant Subsidiary in an
involuntary case;




     (B) appoints a Custodian of the Company or any Significant Subsidiary or for
any substantial part of its property;




     (C) orders the winding up or liquidation of the Company or any Significant
Subsidiary; or




     (D) grants any similar relief under any foreign laws;




and in each such case the order or decree remains unstayed and in effect for 30 days; or





     (8) any judgment or judgments for the payment of money in an aggregate amount in
excess of $25.0 million (or its foreign currency equivalent at the time) that shall be
rendered against the Company or any Restricted Subsidiary and that shall not be waived,
satisfied or discharged for any period of 30 consecutive days during which a stay of
enforcement shall not be in effect.



          The foregoing will constitute Events of Default whatever the reason for any such Event of
Default and whether it is voluntary or involuntary or is effected by operation of law or pursuant
to any judgment, decree or order of any court or any order, rule or regulation of any
administrative or governmental body.




          The term “Bankruptcy Law” means Title 11, United States Code, or any similar Federal
or state law for the relief of debtors. The term “Custodian” means any receiver, trustee,
assignee, liquidator, custodian or similar official under any Bankruptcy Law.




          A Default under clause (4) is not an Event of Default until the Trustee or the Holders of at
least 25% in aggregate principal amount of the Securities then outstanding notify the Company (and
in the case of such notice by Holders, the Trustee) of the Default and the Company does not cure
that Default within the time specified after receipt of such notice. The notice must specify the
Default, demand that it be remedied and state that such notice is a “Notice of Default”.




          The Company shall deliver to the Trustee, within 30 days after the occurrence thereof, written
notice in the form of an Officers’ Certificate of any Event of Default and any event that with the
giving of notice or the lapse of time would become an Event of Default, its status and what action
the Company is taking or proposes to take with respect thereto.




          SECTION 6.02. Acceleration. If an Event of Default with respect to any of the
Securities (other than an Event of Default specified in Section 6.01(6) or (7) with





 









 








59



respect to the Company) shall have occurred and be continuing, the Trustee or the registered
Holders of not less than 25% in aggregate principal amount of the Securities then outstanding may,
by notice to the Company and the Trustee, declare to be immediately due and payable the principal
amount of all the applicable Securities then outstanding, plus accrued but unpaid interest to the
date of acceleration. Upon such a declaration, such principal and interest shall be due and
payable immediately. If an Event of Default specified in Section 6.01(6) or (7) with respect to
the Company occurs, the principal of and accrued and unpaid interest on all the Securities shall be
due and payable immediately without any declaration or other act by the Trustee or the Holder of
the Securities. After any such acceleration but before a judgment or decree based on acceleration
is obtained by the Trustee, the Holders of a majority in aggregate principal amount of the
outstanding Securities by notice to the Trustee and the Company may rescind any declaration of
acceleration if the rescission would not conflict with any judgment or decree and if all existing
Events of Default have been cured or waived except nonpayment of principal, premium, or interest
that has become due solely because of the acceleration. No such rescission shall affect any
subsequent Default or impair any right consequent thereto.




          SECTION 6.03. Other Remedies. If an Event of Default occurs and is continuing, the
Trustee may pursue any available remedy to collect the payment of principal of, or premium, if any,
or interest on, the Securities or to enforce the performance of any provision of the Securities or
this Indenture.




          The Trustee may maintain a proceeding even if it does not possess any of the Securities or
does not produce any of them in the proceeding. A delay or omission by the Trustee or any
Securityholder 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. No remedy
is exclusive of any other remedy. All available remedies are cumulative.




          SECTION 6.04. Waiver of Past Defaults. The Holders of a majority in aggregate
principal amount of the Securities then outstanding by notice to the Trustee may waive an existing
Default and its consequences except (i) a Default in the payment of the principal of or interest on
a Security or (ii) a Default in respect of a provision that under Section 9.02 cannot be amended
without the consent of each Securityholder affected. When a Default is waived, it is deemed cured,
but no such waiver shall extend to any subsequent or other Default or impair any consequent right.




          SECTION 6.05. Control by Majority. The Holders of a majority in aggregate principal
amount of the Securities then outstanding may direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee or of exercising any trust or power conferred on
the Trustee with respect to the Securities. However, the Trustee may refuse to follow any
direction that conflicts with law or this Indenture or, subject to Section 7.01, that the Trustee
determines is unduly prejudicial to the rights of other Securityholders or would involve the
Trustee in personal liability; provided, however, that the Trustee may take any
other action deemed proper by the Trustee that is not inconsistent with such direction. Prior to
taking any action hereunder,










 



60



the Trustee shall be entitled to reasonable security or indemnification against all losses and
expenses caused by taking or not taking such action.




          SECTION 6.06. Limitation on Suits. A Securityholder may not pursue any remedy with
respect to this Indenture or the Securities unless:





     (1) such Holder shall have previously given to the Trustee written notice of a
continuing Event of Default;




     (2) the Holders of at least 25% in aggregate principal amount of the Securities then
outstanding shall have made a written request, and such Holder or Holders shall have
offered reasonable security or indemnity, to the Trustee to pursue such proceeding as
trustee; and




     (3) the Trustee has failed to institute such proceeding and has not received from the
Holders of at least a majority in aggregate principal amount of the Securities outstanding
a direction inconsistent with such request, within 60 days after such notice, request and
offer.



          The foregoing limitations on the pursuit of remedies by a Securityholder shall not apply to a
suit instituted by a Holder of Securities for the enforcement of payment of the principal of, and
premium, if any, or interest on such Security on or after the applicable due date specified in such
Security. A Securityholder may not use this Indenture to prejudice the rights of another
Securityholder or to obtain a preference or priority over another Securityholder.




          SECTION 6.07. Rights of Holders to Receive Payment. Notwithstanding any other
provision of this Indenture, the right of any Holder to receive payment of principal of and
interest on the Securities held by such Holder, on or after the respective due dates expressed in
the Securities, or to bring suit for the enforcement of any such payment on or after such
respective dates, shall not be impaired or affected without the consent of such Holder.




          SECTION 6.08. Collection Suit by Trustee. If an Event of Default specified in Section
6.01(1) or (2) occurs and is continuing, the Trustee may recover judgment in its own name and as
trustee of an express trust against the Company for the whole amount then due and owing (together
with interest on any unpaid interest to the extent lawful) and the amounts provided for in Section
7.07.




          SECTION 6.09. Trustee May File Proofs of Claim. The Trustee may 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 and the Securityholders allowed in any judicial proceedings relative to the Company,
its creditors or its property and, unless prohibited by law or applicable regulations, may vote on
behalf of the Holders in any election of a trustee in bankruptcy or other Person performing similar
functions, and any Custodian in any such judicial proceeding is hereby authorized by each Holder to
make 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 it for the










 



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reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and
its counsel, and any other amounts due the Trustee under Section 7.07.




          SECTION 6.10. Priorities. If the Trustee collects any money or property pursuant to
this Article 6, it shall pay out the money or property in the following order:





     FIRST: to the Trustee for amounts due under Section 7.07;




     SECOND: to Securityholders for amounts due and unpaid on the Securities for principal
and interest, ratably, without preference or priority of any kind, according to the amounts
due and payable on the Securities for principal and interest, respectively; and




     THIRD: to the Company.



          The Trustee may fix a record date and payment date for any payment to Securityholders pursuant
to this Section. At least 15 days before such record date, the Company shall mail to each
Securityholder and the Trustee a notice that states the record date, the payment date and amount to
be paid.




          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 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 and expenses, 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 does not apply to a suit by the Trustee, a suit by a Holder pursuant
to Section 6.07 or a suit by Holders of more than 10% in aggregate principal amount of the
Securities.




          SECTION 6.12. Waiver of Stay or Extension Laws. The Company (to the extent it may
lawfully do so) shall not at any time insist upon, or plead, or in any manner whatsoever claim or
take the benefit or advantage of, any stay or extension 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 (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage
of any such law, and shall not 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
had been enacted.




ARTICLE VII




Trustee




          SECTION 7.01. Duties of Trustee. (a) If an Event of Default has occurred and is
continuing, the Trustee shall exercise the rights and powers vested in it by this Indenture and use
the same degree of care and skill in its exercise as a prudent Person










 



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would exercise or use under the circumstances in the conduct of such Person’s own affairs.




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





     (1) the Trustee undertakes to perform such duties and only such duties as are
specifically set forth in this Indenture and no implied covenants or obligations shall be
read into this Indenture against the Trustee; and




     (2) 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 but need not
confirm or investigate the accuracy of any mathematical calculations or other facts stated
therein.



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





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




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




     (3) 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) Every provision of this Indenture that in any way relates to the Trustee is subject to
paragraphs (a), (b) and (c) of this Section.




          (e) The Trustee shall not be liable for interest on any money received by it except as the
Trustee may agree in writing with the Company.




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




          (g) No provision of this Indenture shall require the Trustee to expend or risk its own funds
or otherwise incur financial liability in the performance of any of its duties hereunder or in the
exercise of any of its rights or powers.




          (h) Every provision of this Indenture relating to the conduct or affecting the liability of or
affording protection to the Trustee shall be subject to the provisions of this Section and to the
provisions of the TIA and the provisions of this Article VII shall apply to the Trustee in its role
as Registrar, Paying Agent and Security Custodian.










 



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          (i) The Trustee shall not be deemed to have notice of a Default or an Event of Default unless
(a) the Trustee has received written notice thereof from the Company or any Holder or (b) a Trust
Officer shall have actual knowledge thereof.




          SECTION 7.02. Rights of Trustee. (a) The Trustee may conclusively rely on any
document (whether in its original or facsimile form) 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. The Trustee may, however, in its discretion make such further inquiry or
investigation into such facts or matters as it may see fit and, if the Trustee shall determine to
make such further inquiry or investigation, it shall be entitled to examine the books, records and
premises of the Company, personally or by agent or attorney at the expense of the Company and shall
incur no liability or additional liability of any kind by reason of such inquiry or investigation.




          (b) Before the Trustee acts or refrains from acting, it may require an Officers’ Certificate
or an Opinion of Counsel. The Trustee shall not be liable for any action it takes or omits to take
in good faith in reliance on the Officers’ Certificate or Opinion of Counsel.




          (c) The Trustee may act through agents and shall not be responsible for the misconduct or
negligence of any 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 its rights or powers; provided,
however, that the Trustee’s conduct does not constitute wilful misconduct or negligence.




          (e) The Trustee may consult with counsel of its selection, and the advice or opinion of
counsel with respect to legal matters relating to this Indenture and the Securities shall be full
and complete authorization and protection from liability in respect to any action taken, omitted or
suffered by it hereunder in good faith and in accordance with the advice or opinion of such
counsel.




          (f) The permissive rights of the Trustee to do things enumerated in this Indenture shall not
be construed as a duty unless so specified herein.




          (g) The Trustee shall be under no obligation to exercise any of the rights or powers vested in
it by this Indenture at the request or direction of any of the Holders pursuant to this Indenture,
unless such Holders shall have offered to the Trustee security or indemnity reasonably satisfactory
to the Trustee against the costs, expenses and liabilities which might be incurred by it in
compliance with such request or direction.




          SECTION 7.03. Individual Rights of Trustee. The Trustee in its individual or any
other capacity may become the owner or pledgee of Securities and may otherwise deal with the
Company or its Affiliates with the same rights it would have if it were not Trustee. Any Paying
Agent, Registrar or co-registrar may do the same with like rights. However, the Trustee must
comply with Sections 7.10 and 7.11.










 



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          SECTION 7.04. Trustee’s Disclaimer. The Trustee shall not be responsible for and
makes no representation as to the validity, priority or adequacy of this Indenture or the
Securities, it shall not be accountable for the Company’s use of the proceeds from the Securities,
and it shall not be responsible for any statement of the Company in this Indenture or in any
document issued in connection with the sale of the Securities or in the Securities other than the
Trustee’s 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 each Securityholder notice
of the Default or Event of Default within 90 days after it is known to a Trust Officer or written
notice of it is received by the Trustee. Except in the case of a Default or Event of Default in
payment of principal of or interest on any Security, the Trustee may withhold the notice if and so
long as a committee of its Trust Officers in good faith determines that withholding the notice is
in the interests of Securityholders.




          SECTION 7.06. Reports by Trustee to Holders. As promptly as practicable after each
December 31 beginning with December 31, 2004, and in any event prior to March 31 in each year, the
Trustee shall mail to each Securityholder a brief report dated as of December 31 each year that
complies with TIA § 313(a), if and to the extent required by such subsection. The Trustee shall
also comply with TIA § 313(b).




          A copy of each report at the time of its mailing to Securityholders shall be filed with the
SEC and each stock exchange (if any) on which the Securities are listed. The Company agrees to
notify promptly the Trustee whenever the Securities become listed on any stock exchange and of any
delisting thereof.




          SECTION 7.07. Compensation and Indemnity. The Company shall pay to the Trustee from
time to time reasonable compensation for its services. 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 upon request for all reasonable out-of-pocket expenses incurred or made by it,
including costs of collection, in addition to the compensation for its services. Such expenses
shall include the reasonable compensation and expenses, disbursements and advances of the Trustee’s
agents, counsel, accountants and experts. The Company shall indemnify the Trustee against any and
all loss, liability or expense (including reasonable attorneys’ fees) incurred by it in connection
with the acceptance and administration of this trust and the performance of its duties hereunder.
The Trustee shall notify the Company 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
except to the extent that the Company shall have been actually prejudiced as a result of such
failure. The Company shall defend the claim and the Trustee may have separate counsel and the
Company shall pay the fees and expenses of such counsel. The Company need not reimburse any
expense or indemnify against any loss, liability or expense incurred by the Trustee through the
Trustee’s own wilful misconduct, negligence or bad faith. The Company need not pay for any
settlement made by the Trustee without the Company’s consent, such consent not to be unreasonably
withheld. All indemnifications and releases from liability granted










 



65



hereunder to the Trustee shall extend to its officers, directors, employees, agents,
successors and assigns.




          To secure the Company’s payment obligations in this Section, the Trustee shall have a lien
prior to the Securities on all money or property held or collected by the Trustee other than money
or property held in trust to pay principal of and interest on particular Securities.




          The Company’s payment obligations pursuant to this Section shall survive the resignation or
removal of the Trustee and the discharge of this Indenture. When the Trustee incurs expenses after
the occurrence of a Default specified in Section 6.01(6) or (7) with respect to the Company, the
expenses are intended to constitute expenses of administration under the Bankruptcy Law.




          SECTION 7.08. Replacement of Trustee. The Trustee may resign at any time by so
notifying the Company. The Holders of a majority in aggregate principal amount of the Securities
then outstanding may remove the Trustee by so notifying the Trustee and may appoint a successor
Trustee. The Company shall remove the Trustee if:





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




     (2) the Trustee is adjudged bankrupt or insolvent;




     (3) a receiver or other public officer takes charge of the Trustee or its property; or




     (4) the Trustee otherwise becomes incapable of acting.



          If the Trustee resigns, is removed by the Company or by the Holders of a majority in aggregate
principal amount of the Securities then outstanding and such Holders do not reasonably promptly
appoint a successor Trustee, or if a vacancy exists in the office of Trustee for any reason (the
Trustee in such event being referred to herein as the retiring Trustee), the Company shall promptly
appoint a successor Trustee.




          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
Securityholders. The retiring Trustee shall promptly transfer all property held by it as Trustee
to the successor Trustee, subject to the lien provided for in Section 7.07.




          If a successor Trustee does not take office within 60 days after the retiring Trustee resigns
or is removed, the retiring Trustee or the Holders of 10% in aggregate principal amount of the
Securities then outstanding may petition any court of competent jurisdiction for the appointment of
a successor Trustee.










 



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          If the Trustee fails to comply with Section 7.10, any Securityholder who has been a bona fide
Holder of a Security for at least six months may petition any court of competent jurisdiction for
the removal of the Trustee and the appointment of a successor Trustee.




          Notwithstanding the replacement of the Trustee pursuant to this Section, the Company’s
obligations under Section 7.07 shall continue for the benefit of the retiring Trustee.




          SECTION 7.09. Successor Trustee by Merger. If the Trustee consolidates with, merges
or converts into, or transfers all or substantially all its corporate trust business or assets to,
another corporation or banking association, the resulting, surviving or transferee corporation or
banking association without any further act shall be the successor Trustee.




          In case at the time such successor or successors by merger, conversion or consolidation to the
Trustee shall succeed to the trusts created by this Indenture any of the Securities shall have been
authenticated but not delivered, any such successor to the Trustee may adopt the certificate of
authentication of any predecessor trustee, and deliver such Securities so authenticated; and in
case at that time any of the Securities shall not have been authenticated, any such successor to
the Trustee may authenticate such Securities either in the name of any predecessor hereunder or in
the name of the successor to the Trustee; and in all such cases such certificates shall have the
full force which it is anywhere in the Securities or in this Indenture provided that the
certificate of the Trustee shall have.




          SECTION 7.10. Eligibility; Disqualification. The Trustee shall at all times satisfy
the requirements of TIA § 310(a). The Trustee shall have (or, in the case of a corporation
included in a bank holding company system, the related bank holding company shall have) a combined
capital and surplus of at least $50,000,000 as set forth in its (or its related bank holding
company’s) most recent published annual report of condition. The Trustee shall comply with TIA §
310(b), subject to the penultimate paragraph thereof; provided, however, that there
shall be excluded from the operation of TIA § 310(b)(1) any indenture or indentures under which
other securities or certificates of interest or participation in other securities of the Company
are outstanding if the requirements for such exclusion set forth in TIA § 310(b)(1) are met.




          SECTION 7.11. Preferential Collection of Claims Against Company. The Trustee shall
comply with TIA § 311(a), excluding any creditor relationship listed in TIA § 311(b). A Trustee
who has resigned or been removed shall be subject to TIA § 311(a) to the extent indicated.










 



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ARTICLE VIII




Discharge of Indenture; Defeasance




          SECTION 8.01. Discharge of Liability on Securities; Defeasance. (a) When (i) the
Company delivers to the Trustee all outstanding Securities (other than Securities replaced pursuant
to Section 2.07) for cancellation or (ii) all outstanding Securities have become due and payable,
whether at maturity or as a result of the mailing of a notice of redemption pursuant to Article III
and the Company irrevocably deposits with the Trustee funds sufficient to pay at maturity or upon
redemption all outstanding Securities, including interest thereon to maturity or such redemption
date (other than Securities replaced pursuant to Section 2.07), and if in either case the Company
pays all other sums payable hereunder by the Company, then this Indenture shall, subject to Section
8.01(c), cease to be of further effect. The Trustee shall acknowledge satisfaction and discharge
of this Indenture on demand of the Company accompanied by an Officers’ Certificate and an Opinion
of Counsel and at the cost and expense of the Company.




          (b) Subject to Sections 8.01(c) and 8.02, the Company at any time may terminate (i) all of its
obligations under the Securities and this Indenture (“legal defeasance option”) or (ii) its
obligations under Sections 4.04, 4.05, 4.06, 4.07, 4.08, 4.09, 4.10, 4.11, and 4.12 and the
operation of Sections 6.01(5), 6.01(6), 6.01(7) and 6.01(8) (but, in the case of Sections 6.01(6)
and (7), with respect only to Significant Subsidiaries) and the limitations contained in clause (e)
of Section 5.01 (“covenant defeasance option”). The Company may exercise its legal defeasance
option notwithstanding its prior exercise of its covenant defeasance option.




          If the Company exercises its legal defeasance option, payment of the Securities may not be
accelerated because of an Event of Default. If the Company exercises its covenant defeasance
option, payment of the Securities may not be accelerated because of an Event of Default specified
in Sections 6.01(4) (with respect to the covenants of Article IV identified in the immediately
preceding paragraph), 6.01(5), 6.01(6), 6.01(7) or 6.01(8) (with respect only to Significant
Subsidiaries in the case of Sections 6.01(6) and 6.01(7)) or because of the failure of the Company
to comply with the limitations contained in clause (e) of Section 5.01.




          Upon satisfaction of the conditions set forth herein and upon request of the Company,
accompanied by an Officer’s Certificate and an Opinion of Counsel, each stating that all conditions
precedent specified herein relating to the defeasance contemplated have been complied with, the
Trustee shall acknowledge in writing the discharge of those obligations that the Company
terminates.




          (c) Notwithstanding clauses (a) and (b) above, the Company’s obligations in Sections 2.04,
2.05, 2.06, 2.07, 7.07, 7.08, 8.05 and 8.06 shall survive until the Securities have been paid in
full. Thereafter, the Company’s obligations in Sections 7.07 and 8.05 shall survive such
satisfaction or discharge.










 



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          SECTION 8.02. Conditions to Defeasance. The Company may exercise its legal defeasance
option or its covenant defeasance option only if:





     (1) the Company irrevocably deposits in trust with the Trustee money in U.S. Dollars
or U.S. Government Obligations for the payment of principal of and interest on the
Securities to maturity or redemption, as the case may be;




     (2) the Company delivers to the Trustee a certificate from a nationally recognized
firm of independent certified public accountants expressing their opinion that the payments
of principal and interest when due and without reinvestment on the deposited U.S.
Government Obligations plus any deposited money without investment will provide cash at
such times and in such amounts as will be sufficient to pay principal and interest when due
on all the Securities to maturity or redemption, as the case may be;




     (3) 123 days pass after the deposit is made and during the 123-day period no Default
specified in Section 6.01(6) or (7) occurs with respect to the Company or any other Person
making the deposit that is continuing at the end of the period;




     (4) no Default or Event of Default has occurred and is continuing on the date of the
deposit and after giving effect thereto;




     (5) the deposit does not constitute a default under any other agreement or instrument
binding on the Company;




     (6) the Company delivers to the Trustee an Opinion of Counsel to the effect that the
trust resulting from the deposit does not constitute, or is qualified as, a regulated
investment company under the Investment Company Act of 1940;




     (7) in the case of the legal defeasance option, the Company shall have delivered to
the Trustee an Opinion of Counsel stating that (i) the Company has received from, or there
has been published by, the Internal Revenue Service a ruling, or (ii) since the date of
this Indenture there has been a change in the applicable Federal income tax law, in either
case to the effect that, and based thereon such Opinion of Counsel shall confirm that, the
Securityholders will not recognize income, gain or loss for Federal income tax purposes as
a result of such 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 defeasance had
not occurred;




     (8) in the case of the covenant defeasance option, the Company shall have delivered to
the Trustee an Opinion of Counsel to the effect that the Securityholders 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; and




     (9) the Company delivers to the Trustee an Officers’ Certificate and an









 



69



Opinion of Counsel, each stating that all conditions precedent to the defeasance and
discharge of the Securities as contemplated by this Article VIII have been complied with.



          Before or after a deposit, the Company may make arrangements satisfactory to the Trustee for
the redemption of Securities at a future date in accordance with Article III.




          SECTION 8.03. Application of Trust Money. The Trustee shall hold in trust money or
U.S. Government Obligations deposited with it pursuant to this Article VIII. It shall apply the
deposited money and the money from U.S. Government Obligations through the Paying Agent and in
accordance with this Indenture to the payment of principal of and interest on the Securities.




          SECTION 8.04. Repayment to Company. The Trustee and the Paying Agent shall promptly
turn over to the Company upon request any excess money or securities held by them at any time.




          Subject to any applicable abandoned property law, the Trustee and the Paying Agent shall pay
to the Company upon request any money held by them for the payment of principal or interest that
remains unclaimed for two years, and, thereafter, Securityholders entitled to the money must look
to the Company for payment as general creditors.




          SECTION 8.05. Indemnity for Government Obligations. The Company shall pay and shall
indemnify the Trustee against any tax, fee or other charge imposed on or assessed against deposited
U.S. Government Obligations or the principal and interest received on such U.S. Government
Obligations.




          SECTION 8.06. Reinstatement. If the Trustee or Paying Agent is unable to apply any
money or U.S. Government Obligations in accordance with this Article VIII by reason of any legal
proceeding or by reason of any order or judgment of any court or governmental authority enjoining,
restraining or otherwise prohibiting such application, the Company’s obligations under this
Indenture and the Securities shall be revived and reinstated as though no deposit had occurred
pursuant to this Article VIII until such time as the Trustee or Paying Agent is permitted to apply
all such money or U.S. Government Obligations in accordance with this Article VIII;
provided, however, that, if the Company has made any payment of interest on or
principal of any Securities because of the reinstatement of its obligations, the Company shall be
subrogated to the rights of the Holders of such Securities to receive such payment from the money
or U.S. Government Obligations held by the Trustee or Paying Agent.










 



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ARTICLE IX




Amendments




          SECTION 9.01. Without Consent of Holders. The Company and the Trustee may amend this
Indenture or the Securities without notice to or consent of any Securityholder:





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




     (2) to comply with Article V;




     (3) to provide for uncertificated Securities in addition to or in place of
certificated Securities; provided, however, that the uncertificated
Securities are issued in registered form for purposes of Section 163(f) of the Code or in a
manner such that the uncertificated Securities are described in Section 163(f)(2)(B) of the
Code;




     (4) to add Guarantees with respect to the Securities;




     (5) to secure the Securities, to add to the covenants of the Company for the benefit
of the Holders or to surrender any right or power herein conferred upon the Company;




     (6) to comply with any requirements of the SEC in connection with qualifying, or
maintaining the qualification of, this Indenture under the TIA;




     (7) evidence and provide for the acceptance of appointment by a successor trustee;




     (8) to make any change that does not adversely affect the rights of any
Securityholder; or




     (9) to provide for the issuance of additional Securities in accordance with this
Indenture.



          After an amendment under this Section becomes effective, the Company shall mail to
Securityholders a notice briefly describing such amendment. The failure to give such notice to all
Securityholders, or any defect therein, shall not impair or affect the validity of an amendment
under this Section.




          SECTION 9.02. With Consent of Holders. The Company and the Trustee may amend this
Indenture or the Securities without notice to any Securityholder but with the written consent of
the Holders of at least a majority in aggregate principal amount of the Securities then outstanding
(including consents obtained in connection with a tender offer or exchange offer for the
Securities). However, without the consent of each Securityholder affected thereby, an amendment
may not:










 



71





     (1) reduce the amount of Securities whose Holders must consent to an amendment;




     (2) reduce the rate of or extend the time for payment of interest on any Security;




     (3) reduce the principal of or extend the Stated Maturity of any Security;




     (4) impair the right of any Holder to receive payment of principal of and interest on
such Holder’s Securities on or after the due dates therefor or to institute suit for the
enforcement of any payment on or with respect to such Holder’s Securities;




     (5) reduce the amount payable upon the redemption or repurchase of any Security under
Article III or Section 4.07 or 4.12, change the time at which any Security may be redeemed
in accordance with Article III, or, at any time after a Change of Control or Asset Sale has
occurred, change the time at which any Change of Control Offer or Prepayment Offer must be
made or at which the Securities must be repurchased pursuant to such Change of Control
Offer or Prepayment Offer;




     (6) make any Security payable in money other than U.S. dollars;




     (7) release any security interest that may have been granted in favor of the Holders
other than pursuant to the terms of the agreement granting that security interest;




     (8) make any change in Section 6.04 or 6.07 or the second sentence of this Section; or




     (9) subordinate the Securities to any other obligation of the Company.



          It shall not be necessary for the consent of the Holders under this Section to approve the
particular form of any proposed amendment, but it shall be sufficient if such consent approves the
substance thereof.




          After an amendment under this Section becomes effective, the Company shall mail to
Securityholders a notice briefly describing such amendment. The failure to give such notice to all
Securityholders, or any defect therein, shall not impair or affect the validity of an amendment
under this Section.




          SECTION 9.03. Compliance with Trust Indenture Act. Every amendment to this Indenture
or the Securities shall comply with the TIA as then in effect.




          SECTION 9.04. Revocation and Effect of Consents and Waivers. A consent to an
amendment or a waiver by a Holder of a Security shall bind the Holder and every subsequent Holder
of that Security or portion of the Security that evidences the same debt as the consenting Holder’s
Security, even if notation of the consent or waiver










 



72



is not made on the Security. However, any such Holder or subsequent Holder may revoke the
consent or waiver as to such Holder’s Security or portion of the Security if the Trustee receives
the notice of revocation before the date the amendment or waiver becomes effective. After an
amendment or waiver becomes effective, it shall bind every Securityholder. An amendment or waiver
becomes effective upon the execution of such amendment or waiver by the Trustee.




          The Company may, but shall not be obligated to, fix a record date for the purpose of
determining the Securityholders entitled to give their consent or take any other action described
above or required or permitted to be taken pursuant to this Indenture. If a record date is fixed,
then notwithstanding the immediately preceding paragraph, those Persons who were Securityholders at
such record date (or their duly designated proxies), and only those Persons, shall be entitled to
give such consent or to revoke any consent previously given or to take any such action, whether or
not such Persons continue to be Holders after such record date. No such consent shall be valid or
effective for more than 120 days after such record date.




          SECTION 9.05. Notation on or Exchange of Securities. If an amendment changes the
terms of a Security, the Trustee may require the Holder of the Security to deliver such Security to
the Trustee. The Trustee may place an appropriate notation on the Security regarding the changed
terms and return such Security to the Holder. Alternatively, if the Company or the Trustee so
determines, the Company in exchange for the Security shall issue and the Trustee shall authenticate
a new Security that reflects the changed terms. Failure to make the appropriate notation or to
issue a new Security shall not affect the validity of such amendment.




          SECTION 9.06. Trustee To Sign Amendments. The Trustee shall sign any amendment
authorized pursuant to this Article IX if the amendment does not adversely affect the rights,
duties, liabilities or immunities of the Trustee. If it does, the Trustee may but need not sign
it. In signing such amendment the Trustee shall be entitled to receive indemnity reasonably
satisfactory to it and 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 such amendment is
authorized or permitted by this Indenture.




          SECTION 9.07. Payment for Consent. Neither the Company nor any Affiliate of the
Company shall, directly or indirectly, pay or cause to be paid any consideration, whether by way of
interest, fee or otherwise, to any Holder for or as an inducement to any consent, waiver or
amendment of any of the terms or provisions of this Indenture or the Securities unless such
consideration is offered to be paid to all Holders that so consent, waive or agree to amend in the
time frame set forth in solicitation documents relating to such consent, waiver or agreement.










 



73




ARTICLE X




Miscellaneous




          SECTION 10.01. Trust Indenture Act Controls. If any provision of this Indenture
limits, qualifies or conflicts with another provision that is required to be included in this
Indenture by the TIA, the required provision shall control.




          SECTION 10.02. Notices. Any notice or communication shall be in writing and delivered
in person or mailed by first-class mail or sent by facsimile (with a hard copy delivered in person
or by mail promptly thereafter) and addressed as follows:



if to the Company:



Levi Strauss & Co.

Levi’s Plaza

1155 Battery Street

San Francisco, CA 94111

Facsimile: (415) 501-7650



Attention of: Legal Department



if to the Trustee:



Wilmington Trust Company

Rodney Square North

1100 North Market Street

Wilmington, DE 19890-0001

Facsimile: (302) 636-4140



Attention of: Corporate Trust Administration




          The Company or the Trustee by notice to the other may designate additional or different
addresses for subsequent notices or communications.




          Any notice or communication mailed to a Securityholder shall be mailed to the Securityholder
at the Securityholder’s address as it appears on the registration books of the Registrar and shall
be sufficiently given if so mailed within the time prescribed.




          Failure to mail a notice or communication to a Securityholder or any defect in it shall not
affect its sufficiency with respect to other Securityholders. If a notice or communication is
mailed in the manner provided above, it is duly given, whether or not the addressee receives it.




          SECTION 10.03. Communication by Holders with Other Holders. Securityholders may
communicate pursuant to TIA § 312(b) with other Securityholders










 



74



with respect to their rights under this Indenture or the Securities. The Company, the
Trustee, the Registrar and anyone else shall have the protection of TIA § 312(c).




          SECTION 10.04. Certificate and Opinion as to Conditions Precedent. Upon any request
or application by the Company to the Trustee to take or refrain from taking any action under this
Indenture, the Company shall furnish to the Trustee:





     (1) an Officers’ Certificate in form and substance reasonably satisfactory to the
Trustee stating that, in the opinion of the signers, all conditions precedent, if any,
provided for in this Indenture relating to the proposed action have been complied with; and




     (2) an Opinion of Counsel in form and substance reasonably satisfactory to the Trustee
stating that, in the opinion of such counsel, all such conditions precedent have been
complied with.



          SECTION 10.05. Statements Required in Certificate or Opinion. Each certificate or
opinion with respect to compliance with a covenant or condition provided for in this Indenture
shall include:





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




     (2) 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;




     (3) a statement that, in the opinion of such individual, he 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




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



          SECTION 10.06. When Securities Disregarded. In determining whether the Holders of the
required principal amount of Securities have concurred in any direction, waiver or consent,
Securities owned by the Company or by any Person directly or indirectly controlling or controlled
by or under direct or indirect common control with the Company shall be disregarded and deemed not
to be outstanding, except that, for the purpose of determining whether the Trustee shall be
protected in relying on any such direction, waiver or consent, only Securities that the Trustee
knows are so owned shall be so disregarded. Also, subject to the foregoing, only Securities
outstanding at the time shall be considered in any such determination.




          SECTION 10.07. Rules by Trustee, Paying Agent and Registrar. The Trustee may make
reasonable rules for action by or a meeting of Securityholders. The










 



75



Registrar and the Paying Agent or co-registrar may make reasonable rules for their functions.




          SECTION 10.08. Legal Holidays. A “Legal Holiday” is a Saturday, a Sunday or a day on
which banking institutions are not required to be open in the State of New York. If a payment date
is a Legal Holiday, payment shall be made on the next succeeding day that is not a Legal Holiday,
and no interest shall accrue for the intervening period. If a regular record date is a Legal
Holiday, the record date shall not be affected.




          SECTION 10.09. Governing Law. THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO
APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER
JURISDICTION WOULD BE REQUIRED THEREBY.




          SECTION 10.10. No Recourse Against Others. A director, officer, employee or
stockholder, as such, of the Company shall not have any liability for any obligations of the
Company under the Securities or this Indenture or for any claim based on, in respect of or by
reason of such obligations or their creation. By accepting a Security, each Securityholder shall
waive and release all such liability. The waiver and release shall be part of the consideration
for the issue of the Securities.




          SECTION 10.11. Successors. All agreements of the Company in this Indenture and the
Securities shall bind its successors. All agreements of the Trustee in this Indenture shall bind
its successors.




          SECTION 10.12. Multiple 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. One signed copy is enough to prove this Indenture.




          SECTION 10.13. Table of Contents; Headings. The table of contents, cross-reference
sheet and headings of the Articles and Sections of this Indenture have been inserted for
convenience of reference only, are not intended to be considered a part hereof and shall not modify
or restrict any of the terms or provisions hereof.










 



76




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




	 	 	 	 	 	 	 	 	 
	 	 	LEVI STRAUSS & CO.,	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	by	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Name:
	 	Hans Ploos van Amstel	 	 
	 

	 	 	 	Title:
	 	Senior Vice President and
Chief Financial Officer	 	 






[Signature Page to the Dollar Notes Indenture]















 





77





	 	 	 	 	 	 	 
	 	 	WILMINGTON TRUST COMPANY,	 	 
	 
	 	 	 	 	 	 
	 

	 	by	 	 	 	 
	 

	 	 	 	 

Name:    Steven M. Cimalore
	 	 
	 

	 	 	 	Title:
     Senior Financial Services	 	 
	 

	 	 	 	              Officer
	 	 






[Signature Page to the Dollar Notes Indenture]










 






APPENDIX A




PROVISIONS RELATING TO INITIAL SECURITIES

AND EXCHANGE SECURITIES




     1. Definitions



     1.1 Definitions



     For the purposes of this Appendix A the following terms shall have the meanings indicated
below:



          “Clearstream” means Clearstream Banking, S.A. or any successor securities clearing agency.




          “Definitive Security” means a certificated Initial Security or Exchange Security or Private
Exchange Security bearing, if required, the restricted securities legend set forth in Section
2.3(d).




          “Depository” means The Depository Trust Company, its nominees and their respective successors.




          “Distribution Compliance Period”, with respect to any Securities, means the period of 40
consecutive days beginning on and including the later of (i) the day on which such Securities are
first offered to persons other than distributors (as defined in Regulation S under the Securities
Act) in reliance on Regulation S and (ii) the issue date with respect to such Securities.




          “Exchange Securities” means the 8-7/8% Senior Notes due 2016 to be issued pursuant to this
Indenture in connection with a Registered Exchange Offer pursuant to the Registration Rights
Agreement.




          “Euroclear” means Morgan Guaranty Trust Company of New York (Brussels office) as operator of
the Euroclear Clearance System or any successor securities clearing agency.




          “IAI” means an institutional “accredited investor” as described in Rule 501(a)(1), (2), (3) or
(7) under the Securities Act.




          “Initial Purchasers” means Banc of America Securities LLC, Citigroup Global Markets Inc.,
Goldman, Sachs & Co., J.P. Morgan Securities Inc., Scotia Capital (USA) Inc. and Merrill Lynch,
Pierce, Fenner & Smith Incorporated.




          “Initial Securities” means the 8-7/8% Senior Notes due 2016, to be issued from time to time,
in one or more series as provided for in this Indenture.




          “Original Securities” means Initial Securities in the aggregate principal amount of $350.0
million issued on March 17, 2006.










 



 

2



          “Private Exchange” means the offer by the Company, pursuant to Section 2 of the Registration
Rights Agreement dated as of March 17, 2006, or pursuant to any similar provision of any other
Registration Rights Agreement, to issue and deliver to certain purchasers, in exchange for the
Initial Securities held by such purchasers as part of their initial distribution, a like aggregate
principal amount of Private Exchange Securities.




          “Private Exchange Securities” means the 8-7/8% Senior Notes due 2016 to be issued pursuant to
this Indenture in connection with a Private Exchange pursuant to a Registration Rights Agreement.




          “Purchase Agreement” means the Purchase Agreement dated March 10, 2006, among the Company and
the Initial Purchasers relating to the Original Securities, or any similar agreement relating to
any future sale of Initial Securities by the Company.




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




          “Registered Exchange Offer” means the offer by the Company, pursuant to a Registration Rights
Agreement, to certain Holders of Initial Securities, to issue and deliver to such Holders, in
exchange for the Initial Securities, a like aggregate principal amount of Exchange Securities
registered under the Securities Act.




          “Registration Rights Agreement” means the Registration Rights Agreement dated as of March 17,
2006, among the Company and the Initial Purchasers relating to the Original Securities, or any
similar agreement relating to any additional Initial Securities.




          “Rule 144A Securities” means all Initial Securities offered and sold to QIBs in reliance on
Rule 144A.




          “Securities” means the Initial Securities and the Exchange Securities, treated as a single
class.




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




          “Securities Custodian” means the custodian with respect to a Global Security (as appointed by
the Depository) or any successor person thereto, who shall initially be the Trustee.




          “Shelf Registration Statement” means a registration statement issued by the Company in
connection with the offer and sale of Initial Securities or Private Exchange Securities pursuant to
the Registration Rights Agreement.




          “Transfer Restricted Securities” means Definitive Securities and any other Securities that
bear or are required to bear the legend set forth in Section 2.3(d) hereto.










 



3




     1.2 Other Definitions



	 	 	 
	 	 	Defined in
	Term	 	Section:
	“Agent Members”
	 	2.1(b)
	“Global Security”
	 	2.1(a)
	“IAI Global Security”
	 	2.1(a)
	“Regulation S”
	 	2.1     
	“Rule 144A”
	 	2.1     
	“Rule 144A Global Security”
	 	2.1(a)
	“Regulation S Global Security”
	 	2.1(a)






     2. The Securities



     2.1 Form and Dating



          The Initial Securities will be offered and sold by the Company, from time to time,
pursuant to one or more Purchase Agreements. The Initial Securities will be resold initially only
to QIBs in reliance on Rule 144A under the Securities Act (“Rule 144A”) and in reliance on
Regulation S under the Securities Act (“Regulation S”). Initial Securities may thereafter be
transferred to, among others, QIBs, purchasers in reliance on Regulation S and IAIs under Rule
501(a)(1), (2), (3) or (7) under the Securities Act, subject to the restrictions on transfer set
forth herein.




          (a) Global Securities. Initial Securities initially resold pursuant to Rule 144A
shall be issued initially in the form of one or more permanent global Securities in definitive,
fully registered form (collectively, the “Rule 144A Global Security”), Initial Securities initially
resold pursuant to Regulation S shall be issued initially in the form of one or more global
securities (collectively, the “Regulation S Global Security”) and, subject to Section 2.4 hereof,
Initial Securities transferred subsequent to the initial resale thereof to IAIs shall be issued
initially in the form of one or more permanent global securities in definitive, fully registered
form (collectively, the “IAI Global Security”), in each case without interest coupons and with the
global securities legend and restricted securities legend set forth in Exhibit 1 hereto, which
shall be deposited on behalf of the purchasers of the Initial Securities represented thereby with
the Securities Custodian, and registered in the name of the Depository or a nominee of the
Depository, duly executed by the Company and authenticated by the Trustee as provided in this
Indenture. The Rule 144A Global Security, IAI Global Security and Regulation S Global Security are
collectively referred to herein as “Global Securities.” The aggregate principal amount of the
Global Securities may from time to time be increased or decreased by adjustments made on the
records of the Trustee and the Depository or its nominee as hereinafter provided.




          (b) Book-Entry Provisions. This Section 2.1(b) shall apply only to a Global Security
deposited with or on behalf of the Depository.










 




4



          The Company shall execute and the Trustee shall, in accordance with this Section 2.1(b) and
pursuant to an order of the Company, authenticate and deliver initially
one or more Global Securities that (a) shall be registered in the name of the Depository for
such Global Security or Global Securities or the nominee of such Depository and (b) shall be
delivered by the Trustee to such Depository or pursuant to such Depository’s instructions or held
by the Trustee as Securities Custodian.




          Members of, or participants in, the Depository (“Agent Members”) shall have no rights under
this Indenture with respect to any Global Security held on their behalf by the Depository or by the
Trustee as Securities Custodian or under such Global Security, and the Depository may be treated by
the Company, the Trustee and any agent of the Company or the Trustee as the absolute owner of such
Global Security for all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall
prevent the Company, the Trustee or any agent of the Company or the Trustee from giving effect to
any written certification, proxy or other authorization furnished by the Depository or impair, as
between the Depository and its Agent Members, the operation of customary practices of such
Depository governing the exercise of the rights of a holder of a beneficial interest in any Global
Security.




          (c) Definitive Securities. Except as provided in Section 2.3 or 2.4, owners of
beneficial interests in Global Securities will not be entitled to receive physical delivery of
Definitive Securities.




     2.2 Authentication. The Trustee shall authenticate and deliver: (1) Original
Securities for original issue in an aggregate principal amount of $350.0 million, (2) additional
Initial Securities, if and when issued, in an aggregate principal amount as established in or
pursuant to a resolution of the Board of Directors of the Company and (3) the Exchange Securities
or Private Exchange Securities for issue only in a Registered Exchange Offer or a Private Exchange,
respectively, pursuant to the Registration Rights Agreement, for a like principal amount of Initial
Securities or Private Exchange Securities, as applicable, upon a written order of the Company
signed by two Officers or by an Officer and either an Assistant Treasurer or an Assistant Secretary
of the Company. Such order shall specify the amount of the Securities to be authenticated and the
date on which the original issue of Securities is to be authenticated and whether the Securities
are to be Initial Securities or Exchange Securities. The aggregate principal amount of Securities
outstanding at any time may not exceed the aggregate principal amount established in or pursuant to
a resolution of the Board of Directors of the Company, except as provided in Section 2.08 of this
Indenture.



     2.3 Transfer and Exchange. (a) Transfer and Exchange of Definitive
Securities. When Definitive Securities are presented to the Registrar or a co-registrar with a
request:




     (x) to register the transfer of such Definitive Securities; or




     (y) to exchange such Definitive Securities for an equal principal amount of Definitive
Securities of other authorized denominations,









 




5



the Registrar or co-registrar shall register the transfer or make the exchange as requested if
its reasonable requirements for such transaction are met; provided, however, that
the Definitive Securities surrendered for transfer or exchange:





     (i) shall be duly endorsed or accompanied by a written instrument of transfer in
form reasonably satisfactory to the Company and the Registrar or co-registrar, duly
executed by the Holder thereof or his attorney duly authorized in writing; and




     (ii) if such Definitive Securities bear a restricted securities legend, they are being
transferred or exchanged pursuant to an effective registration statement under the
Securities Act or pursuant to clause (A), (B) or (C) below, and are accompanied by the
following additional information and documents, as applicable:




     (A) if such Definitive Securities are being delivered to the Registrar by a
Holder for registration in the name of such Holder, without transfer, a
certification from such Holder to that effect; or




     (B) if such Definitive Securities are being transferred to the Company, a
certification to that effect; or




     (C) if such Definitive Securities are being transferred pursuant to an
exemption from registration in accordance with Rule 144 under the Securities Act,
(i) a certification to that effect and (ii) if the Company so requests, an opinion
of counsel or other evidence reasonably satisfactory to it as to the compliance
with the restrictions set forth in the legend set forth in Section 2.3(d)(i).




     (b) Transfer and Exchange of Global Securities.




     (i) The transfer and exchange of Global Securities or beneficial interests therein
shall be effected through the Depository, in accordance with this Indenture (including
applicable restrictions on transfer set forth herein, if any) and the procedures of the
Depository therefor. A transferor of a beneficial interest in a Global Security shall
deliver a written order given in accordance with the Depository’s procedures containing
information regarding the participant account of the Depository to be credited with a
beneficial interest in the Global Security and such account shall be credited in accordance
with such instructions with a beneficial interest in the Global Security and the account of
the Person making the transfer shall be debited by an amount equal to the beneficial
interest in the Global Security being transferred. In the case of a transfer of a
beneficial interest in a Global Security to an IAI, the transferee must furnish a signed
letter to the Trustee containing certain representations and agreements in the form of
Exhibit B hereto.




     (ii) If the proposed transfer is a transfer of a beneficial interest in one Global
Security to a beneficial interest in another Global Security, the Registrar









 




6


shall reflect
on its books and records the date and an increase in the principal amount of the Global
Security to which such interest is being transferred in an amount equal to the principal
amount of the interest to be so transferred, and the Registrar shall reflect on its books
and records the date and a corresponding decrease in the principal amount of the Global
Security from which such interest is being transferred.




     (iii) Notwithstanding any other provisions of this Appendix A (other than the
provisions set forth in Section 2.4), a Global Security may not be transferred as a whole
except by the Depository to a nominee of the Depository or by a nominee of the Depository
to the Depository or another nominee of the Depository or by the Depository or any such
nominee to a successor Depository or a nominee of such successor Depository.




     (iv) In the event that a Global Security is exchanged for Definitive Securities
pursuant to Section 2.4 prior to the consummation of a Registered Exchange Offer or the
effectiveness of a Shelf Registration Statement with respect to such Securities, such
Securities may be exchanged only in accordance with such procedures as are substantially
consistent with the provisions of this Section 2.3 (including the certification
requirements set forth on the reverse of the Initial Securities intended to ensure that
such transfers comply with Rule 144A, Regulation S or such other applicable exemption from
registration under the Securities Act, as the case may be) and such other procedures as may
from time to time be adopted by the Company.




     (c) Legend.




     (i) Except as permitted by the following paragraphs (ii), (iii) and (iv), each
certificate evidencing the Global Securities and the Definitive Securities (and all
Securities issued in exchange therefor or in substitution thereof) shall bear a legend in
substantially the following form:




“THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”). THE HOLDER HEREOF, BY PURCHASING THIS NOTE, AGREES FOR THE BENEFIT OF
THE COMPANY THAT THIS NOTE MAY NOT BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED (X) PRIOR TO
THE SECOND ANNIVERSARY OF THE ISSUANCE HEREOF (OR A PREDECESSOR SECURITY HERETO) OR (Y) BY
ANY HOLDER THAT WAS AN AFFILIATE OF THE COMPANY AT ANY TIME DURING THE THREE MONTHS
PRECEDING THE DATE OF SUCH TRANSFER, IN EITHER CASE OTHER THAN:




(1) TO THE COMPANY;




(2) SO LONG AS THIS NOTE IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES
ACT (“RULE 144A”), TO A PERSON









 



7



WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A, PURCHASING FOR ITS OWN ACCOUNT OR FOR
THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE RESALE,
PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A (AS INDICATED BY THE BOX
CHECKED BY THE TRANSFEROR ON THE CERTIFICATE OF TRANSFER ON THE REVERSE OF THIS NOTE);




(3) IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH REGULATION S UNDER THE SECURITIES ACT (AS
INDICATED BY THE BOX CHECKED BY THE TRANSFEROR ON THE CERTIFICATE OF TRANSFER ON THE
REVERSE OF THIS NOTE);




(4) TO AN INSTITUTION THAT IS AN “ACCREDITED INVESTOR” AS DEFINED IN RULE 501(a)(1), (2),
(3) OR (7) UNDER THE SECURITIES ACT (AS INDICATED BY THE BOX CHECKED BY THE TRANSFEROR ON
THE CERTIFICATE OF TRANSFER ON THE REVERSE OF THIS NOTE) THAT IS ACQUIRING THIS NOTE FOR
INVESTMENT PURPOSES AND NOT FOR DISTRIBUTION, AND A CERTIFICATE WHICH MAY BE OBTAINED FROM
THE COMPANY OR THE TRUSTEE IS DELIVERED BY THE TRANSFEREE TO THE COMPANY AND TRUSTEE;




(5) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE
144 (IF APPLICABLE) UNDER THE SECURITIES ACT; OR




(6) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT;




IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED
STATES. AN INSTITUTIONAL ACCREDITED INVESTOR HOLDING THIS NOTE AGREES THAT IT WILL FURNISH
TO THE COMPANY AND THE TRUSTEE SUCH CERTIFICATES AND OTHER INFORMATION AS THEY MAY
REASONABLY REQUIRE TO CONFIRM THAT ANY TRANSFER BY IT OF THIS NOTE COMPLIES WITH THE
FOREGOING RESTRICTIONS. THE HOLDER HEREOF, BY PURCHASING THIS NOTE, REPRESENTS AND AGREES
FOR THE BENEFIT OF THE COMPANY THAT IT IS (1) A QUALIFIED INSTITUTIONAL BUYER WITHIN THE
MEANING OF RULE 144A OR (2) PURCHASING FROM A PERSON NOT PARTICIPATING IN THE INITIAL
DISTRIBUTION OF THIS SECURITY (OR ANY PREDECESSOR SECURITY), THAT IT IS AN INSTITUTION THAT
IS AN “ACCREDITED INVESTOR” AS DEFINED IN RULE 501(a)(1), (2), (3) OR (7) UNDER THE
SECURITIES ACT AND THAT IT IS HOLDING THIS NOTE FOR INVESTMENT PURPOSES AND NOT FOR
DISTRIBUTION OR (3) A NON-U.S. PERSON OUTSIDE THE UNITED STATES WITHIN THE MEANING









 



8



OF (OR
AN ACCOUNT SATISFYING THE REQUIREMENTS OF PARAGRAPH (k)(2)(i) OF RULE 902 UNDER) REGULATION
S UNDER THE SECURITIES ACT.




THIS NOTE (OR ANY INTEREST HEREIN) MAY NOT BE SOLD, TRANSFERRED OR DELIVERED TO
INDIVIDUALS, PARTNERSHIPS OR LEGAL ENTITIES WHO ARE ESTABLISHED, DOMICILED OR HAVE THEIR
RESIDENCE IN THE NETHERLANDS (“DUTCH RESIDENTS”) OTHER THAN TO PROFESSIONAL MARKET PARTIES
(“PMPs”) WITHIN THE MEANING OF THE EXEMPTION REGULATION UNDER THE DUTCH ACT ON THE
SUPERVISION OF CREDIT INSTITUTIONS 1992 THAT ACQUIRE SUCH NOTES (OR ANY INTEREST HEREIN)
FOR THEIR OWN ACCOUNT OR FOR THE ACCOUNT OF ANOTHER PMP AND THAT TRADE OR INVEST IN
SECURITIES IN THE CONDUCT OF A BUSINESS OR PROFESSION.




EACH DUTCH RESIDENT, BY PURCHASING THIS NOTE (OR ANY INTEREST HEREIN), WILL BE DEEMED TO
HAVE REPRESENTED AND AGREED FOR THE BENEFIT OF THE ISSUER THAT IT IS SUCH A PMP AND IS
ACQUIRING THIS NOTE FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF ANOTHER PMP.




EACH HOLDER OF THIS NOTE (OR ANY INTEREST HEREIN), BY PURCHASING SUCH NOTE (OR ANY SUCH
INTEREST), WILL BE DEEMED TO HAVE REPRESENTED AND AGREED FOR THE BENEFIT OF THE ISSUER THAT
(1) SUCH NOTE (OR ANY INTEREST HEREIN) MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE
TRANSFERRED TO DUTCH RESIDENTS OTHER THAN TO A PMP ACQUIRING FOR ITS OWN ACCOUNT OR FOR THE
ACCOUNT OF ANOTHER PMP AND THAT (2) THE HOLDER WILL PROVIDE NOTICE OF THE TRANSFER
RESTRICTIONS DESCRIBED HERE TO ANY SUBSEQUENT TRANSFEREE.”


Each Definitive Security will also bear the following additional legend:





“IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE REGISTRAR AND
TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS SUCH TRANSFER AGENT MAY
REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOING
RESTRICTIONS.”




     (ii) Upon any sale or transfer of a Transfer Restricted Security (including any
Transfer Restricted Security represented by a Global Security) pursuant to Rule 144 under
the Securities Act:









 




9


     (A) in the case of any Transfer Restricted Security that is a Definitive
Security, the Registrar shall permit the Holder thereof to exchange such Transfer
Restricted Security for a Security that does not bear the legends set forth above
and rescind any restriction on the transfer of such Transfer Restricted Security;
and




     (B) in the case of any Transfer Restricted Security that is represented by a
Global Security, the Registrar shall permit the Holder thereof to exchange such
Transfer Restricted Security for a Security that does not bear the legends set
forth above and rescind any restriction on the transfer of such Transfer Restricted
Security,


in either case, if the Holder certifies in writing to the Registrar that its request for such
exchange was made in reliance on Rule 144 (such certification to be in the form set forth on the
reverse of the Initial Security).





     (iii) After a transfer of any Initial Securities or Private Exchange Securities,
as the case may be, during the period of the effectiveness of a Shelf Registration
Statement with respect to such Initial Securities or Private Exchange Securities, all
requirements pertaining to restricted legends on such Initial Security or such Private
Exchange Security will cease to apply and an Initial Security or Private Exchange Security,
as the case may be, in global form without restricted legends will be available to the
transferee of the beneficial interests of such Initial Securities or Private Exchange
Securities. Upon the occurrence of any of the circumstances described in this paragraph,
the Company will deliver an Officers’ Certificate to the Trustee instructing the Trustee to
issue Securities without restricted legends.




     (iv) Upon the consummation of a Registered Exchange Offer with respect to the Initial
Securities pursuant to which certain Holders of such Initial Securities are offered
Exchange Securities in exchange for their Initial Securities, Exchange Securities in global
form without the restricted legends will be available to Holders or beneficial owners that
exchange such Initial Securities (or beneficial interests therein) in such Registered
Exchange Offer. Upon the occurrence of any of the circumstances described in this
paragraph, the Company will deliver an Officers’ Certificate to the Trustee instructing the
Trustee to issue Securities without restricted legends.



          (d) Cancelation or Adjustment of Global Security. At such time as all beneficial
interests in a Global Security have either been exchanged for Definitive Securities, redeemed,
repurchased or canceled, such Global Security shall be returned by the Depository to the Trustee
for cancelation or retained and canceled by the Trustee. At any time prior to such cancelation, if
any beneficial interest in a Global Security is exchanged for Definitive Securities, redeemed,
repurchased or canceled, the principal amount of Securities represented by such Global Security
shall be reduced and an adjustment shall be made on the books and records of the Trustee (if it is
then the









 




10



Securities Custodian for such Global Security) with respect to such Global Security, by
the Trustee or the Securities Custodian, to reflect such reduction.





     (e) Obligations with Respect to Transfers and Exchanges of Securities.




     (i) To permit registrations of transfers and exchanges, the Company shall execute
and the Trustee shall authenticate Definitive Securities and Global Securities at the
Registrar’s or co-registrar’s request.




     (ii) No service charge shall be made for any registration of transfer or exchange, but
the Company may require payment of a sum sufficient to cover any transfer tax, assessments,
or similar governmental charge payable in connection therewith (other than any such
transfer taxes,
assessments or similar governmental charge payable upon exchange or transfer pursuant
to Sections 3.06, 4.08 and 9.05 of this Indenture).




     (iii) The Registrar or co-registrar shall not be required to register the transfer of
or exchange of any Security for a period beginning 15 days before the mailing of a notice
of redemption or an offer to repurchase Securities or 15 days before an interest payment
date.




     (iv) Prior to the due presentation for registration of transfer of any Security, the
Company, the Trustee, the Paying Agent, the Registrar or any co-registrar may deem and
treat the person in whose name a Security is registered as the absolute owner of such
Security for the purpose of receiving payment of principal of and interest on such Security
and for all other purposes whatsoever, whether or not such Security is overdue, and none of
the Company, the Trustee, the Paying Agent, the Registrar or any co-registrar shall be
affected by notice to the contrary.




     (v) All Securities issued upon any transfer or exchange pursuant to the terms of this
Indenture shall evidence the same debt and shall be entitled to the same benefits under
this Indenture as the Securities surrendered upon such transfer or exchange.




     (f) No Obligation of the Trustee.




     (i) The Trustee shall have no responsibility or obligation to any beneficial
owner of a Global Security, a member of, or a participant in the Depository or any other
Person with respect to the accuracy of the records of the Depository or its nominee or of
any participant or member thereof, with respect to any ownership interest in the Securities
or with respect to the delivery to any participant, member, beneficial owner or other
Person (other than the Depository) of any notice (including any notice of redemption or
repurchase) or the payment of any amount, under or with respect to such Securities. All
notices and communications to be given to the Holders and all payments to be made to
Holders under the Securities shall be given or made only to the registered Holders (which
shall be the Depository or its nominee in the case of a Global Security).









 



11



The rights of
beneficial owners in any Global Security shall be exercised only through the Depository
subject to the applicable rules and procedures of the Depository. The Trustee may rely and
shall be fully protected in relying upon information furnished by the Depository with
respect to its members, participants and any beneficial owners.




     (ii) The Trustee shall have no obligation or duty to monitor, determine or inquire as
to compliance with any restrictions on transfer imposed under this Indenture or under
applicable law with respect to any transfer of any interest in any Security (including any
transfers between or among Depository participants, members or beneficial owners in any
Global Security) other than to require delivery of such certificates and other
documentation or evidence as are expressly required by, and to do so if and when expressly
required by, the terms of this Indenture, and to examine the same to determine substantial
compliance as to form with the express requirements hereof.




   2.4 Definitive Securities



               (a) A Global Security deposited with the Depository or with the Trustee as Securities
Custodian pursuant to Section 2.1 shall be transferred to the beneficial owners thereof in the form
of Definitive Securities in an aggregate principal amount equal to the principal amount of such
Global Security, in exchange for such Global Security, only if such transfer complies with Section
2.3 and (i) the Depository notifies the Company that it is unwilling or unable to continue as a
Depository for such Global Security or if at any time the Depository ceases to be a “clearing
agency” registered under the Exchange Act, and a successor Depository is not appointed by the
Company within 90 days of such notice, or (ii) a Default or an Event of Default has occurred
and is continuing or (iii) the Company, in its sole discretion, notifies the Trustee in writing
that it elects to cause the issuance of Definitive Securities under this Indenture.



               (b) Any Global Security that is transferable to the beneficial owners thereof pursuant to this
Section 2.4 shall be surrendered by the Depository to the Trustee, to be so transferred, in whole
or from time to time in part, without charge, and the Trustee shall authenticate and deliver, upon
such transfer of each portion of such Global Security, an equal aggregate principal amount of
Definitive Securities of authorized denominations. Definitive Securities issued in exchange for
any portion of a Global Security transferred pursuant to this Section shall be executed,
authenticated and delivered only in denominations of $10,000 and any integral multiples of $1,000
thereafter and registered in such names as the Depository shall direct. Any Definitive Security
delivered in exchange for an interest in the Global Security shall, except as otherwise provided by
Section 2.3(d), bear the restricted securities legend set forth in Exhibit 1 hereto.



               (c) The registered Holder of a Global Security may grant proxies and otherwise authorize any
Person, including Agent Members and Persons that may hold interests through Agent Members, to take
any action that a Holder is entitled to take under this Indenture or the Securities.









 



12


     (d) In the event of the occurrence of any of the events specified in Section 2.4(a)(i), (ii)
or (iii), the Company will promptly make available to the Trustee a reasonable supply of Definitive
Securities in definitive, fully registered form without interest coupons.













 






EXHIBIT 1





TO APPENDIX A




[FORM OF FACE OF INITIAL SECURITY]




[Global Securities Legend]




          UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY, A NEW YORK CORPORATION (“DTC”), NEW YORK, NEW YORK, 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 IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY
PAYMENT IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO
ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.




          TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO
NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR’S NOMINEE AND TRANSFERS OF PORTIONS OF
THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET
FORTH IN THE INDENTURE REFERRED TO ON THE REVERSE HEREOF.




[Restricted Securities Legend]




          THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”). THE HOLDER HEREOF, BY PURCHASING THIS NOTE, AGREES FOR THE BENEFIT OF THE
COMPANY THAT THIS NOTE MAY NOT BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED (X) PRIOR TO THE SECOND
ANNIVERSARY OF THE ISSUANCE HEREOF (OR A PREDECESSOR SECURITY HERETO) OR (Y) BY ANY HOLDER THAT WAS
AN AFFILIATE OF THE COMPANY AT ANY TIME DURING THE THREE MONTHS PRECEDING THE DATE OF SUCH
TRANSFER, IN EITHER CASE, OTHER THAN:




(1) TO THE COMPANY;



(2) SO LONG AS THIS NOTE IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT
(“RULE 144A”) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER
WITHIN THE MEANING OF RULE 144A, PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED
INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE
IN RELIANCE ON RULE 144A (AS INDICATED BY THE BOX CHECKED BY THE TRANSFEROR ON THE CERTIFICATE OF
TRANSFER ON THE REVERSE OF THIS NOTE);




 









 













2



(3) IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH REGULATION S UNDER THE SECURITIES ACT (AS
INDICATED BY THE BOX CHECKED BY THE TRANSFEROR ON THE CERTIFICATE OF TRANSFER ON THE REVERSE OF
THIS NOTE);



(4) TO AN INSTITUTION THAT IS AN “ACCREDITED INVESTOR” AS DEFINED IN RULE 501(a)(1), (2), (3) OR
(7) UNDER THE SECURITIES ACT (AS INDICATED BY THE BOX CHECKED BY THE TRANSFEROR ON THE CERTIFICATE
OF TRANSFER ON THE REVERSE OF THIS SECURITY) THAT IS ACQUIRING THIS SECURITY FOR INVESTMENT
PURPOSES AND NOT FOR DISTRIBUTION, AND A CERTIFICATE WHICH MAY BE OBTAINED FROM THE COMPANY OR THE
TRUSTEE IS DELIVERED BY THE TRANSFEREE TO THE COMPANY AND TRUSTEE;



(5) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 (IF
APPLICABLE) UNDER THE SECURITIES ACT; OR



(6) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT;



IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES.
AN INSTITUTIONAL ACCREDITED INVESTOR HOLDING THIS NOTE AGREES THAT IT WILL FURNISH TO THE COMPANY
AND THE TRUSTEE SUCH CERTIFICATES AND OTHER INFORMATION AS THEY MAY REASONABLY REQUIRE TO CONFIRM
THAT ANY TRANSFER BY IT OF THIS NOTE COMPLIES WITH THE FOREGOING RESTRICTIONS. THE HOLDER HEREOF,
BY PURCHASING THIS NOTE, REPRESENTS AND AGREES FOR THE BENEFIT OF THE COMPANY THAT IT IS (1) A
QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A OR (2) PURCHASING FROM A PERSON NOT
PARTICIPATING IN THE INITIAL DISTRIBUTION OF THIS SECURITY (OR ANY PREDECESSOR SECURITY), THAT IT
IS AN INSTITUTION THAT IS AN “ACCREDITED INVESTOR” AS DEFINED IN RULE 501(a)(1), (2), (3) OR (7)
UNDER THE SECURITIES ACT AND THAT IT IS HOLDING THIS NOTE FOR INVESTMENT PURPOSES AND NOT FOR
DISTRIBUTION OR (3) A NON-U.S. PERSON OUTSIDE THE UNITED STATES WITHIN THE MEANING OF (OR AN
ACCOUNT SATISFYING THE REQUIREMENTS OF PARAGRAPH (k)(2)(i) OF RULE 902 UNDER) REGULATION S UNDER
THE SECURITIES ACT.



THIS NOTE (OR ANY INTEREST HEREIN) MAY NOT BE SOLD, TRANSFERRED OR DELIVERED TO INDIVIDUALS,
PARTNERSHIPS OR LEGAL ENTITIES WHO ARE ESTABLISHED, DOMICILED OR HAVE THEIR RESIDENCE IN THE
NETHERLANDS (“DUTCH RESIDENTS”) OTHER THAN TO PROFESSIONAL MARKET PARTIES (“PMPs”) WITHIN THE
MEANING OF THE EXEMPTION REGULATION UNDER THE DUTCH ACT ON THE SUPERVISION OF CREDIT INSTITUTIONS
1992 THAT ACQUIRE SUCH NOTES (OR ANY INTEREST

 









 








3






HEREIN) FOR THEIR OWN ACCOUNT OR FOR THE ACCOUNT OF ANOTHER PMP AND THAT TRADE OR INVEST IN
SECURITIES IN THE CONDUCT OF A BUSINESS OR PROFESSION.



EACH DUTCH RESIDENT, BY PURCHASING THIS NOTE (OR ANY INTEREST HEREIN), WILL BE DEEMED TO HAVE
REPRESENTED AND AGREED FOR THE BENEFIT OF THE ISSUER THAT IT IS SUCH A PMP AND IS ACQUIRING THIS
NOTE FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF ANOTHER PMP.



EACH HOLDER OF THIS NOTE (OR ANY INTEREST HEREIN), BY PURCHASING SUCH NOTE (OR ANY SUCH INTEREST),
WILL BE DEEMED TO HAVE REPRESENTED AND AGREED FOR THE BENEFIT OF THE ISSUER THAT (1) SUCH NOTE (OR
ANY INTEREST HEREIN) MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED TO DUTCH RESIDENTS
OTHER THAN TO A PMP ACQUIRING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF ANOTHER PMP AND THAT (2)
THE HOLDER WILL PROVIDE NOTICE OF THE TRANSFER RESTRICTIONS DESCRIBED HERE TO ANY SUBSEQUENT
TRANSFEREE.




[Definitive Securities Legend]



IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE REGISTRAR AND TRANSFER AGENT SUCH
CERTIFICATES AND OTHER INFORMATION AS SUCH TRANSFER AGENT MAY REASONABLY REQUIRE TO CONFIRM THAT
THE TRANSFER COMPLIES WITH THE FOREGOING RESTRICTIONS.




 









 








[FORM OF FACE OF INITIAL SECURITY]




			
	No.
	 	$                    






8-7/8% Senior Note due 2016




CUSIP No. 52736R AU 61

U52799 AP 52

ISIN No. US52736RAU681

USU52799AP592




          LEVI STRAUSS & CO., a Delaware corporation, promises to pay to [Cede & Co.], or registered
assigns, the principal sum of           Dollars on April 1, 2016.




          Interest Payment Dates: April 1 and October 1.




          Record Dates: March 15 and September 15.






 




			
	1	 	Insert for Rule 144A Global Note.
	 
	2	 	Insert for Reg. S Global Note.




 









 









2







          Additional provisions of this Security are set forth on the other side of this Security.




          IN WITNESS WHEREOF, the parties have caused this instrument to be duly executed.




	 	 	 	 	 	 	 	 	 
	 	 	LEVI STRAUSS & CO.,	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	by	 	 	 	 
	 

	 	 	 	 	 	 

Name: Hans Ploos van Amstel
	 	 
	 

	 	 	 	 	 	Title: Chief Financial Officer and Senior Vice President	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	by	 	 	 	 
	 

	 	 	 	 	 	 

Name: Miguel Silva Gonzalez
	 	 
	 

	 	 	 	 	 	Title: Vice President and Treasurer	 	 






	 
	TRUSTEE’S CERTIFICATE OF



	
AUTHENTICATION







Dated:




WILMINGTON TRUST COMPANY,



as Trustee, certifies

that this is one of

the Securities referred

to in the Indenture.




	 	 	 	 	 
	by:
	 	 	 	 
	 

	 	 

          Authorized Signatory
	 	 






 









 






3






[FORM OF REVERSE SIDE OF INITIAL SECURITY]

8-7/8% Senior Note due 2016





	1.	 	Interest





          (a) LEVI STRAUSS & CO., a Delaware corporation (such corporation, and its successors and
assigns under the Indenture hereinafter referred to, being herein called the “Company”), promises
to pay interest on the principal amount of this Security at the rate per annum shown above. The
Company will pay interest semiannually on April 1 and October 1 of each year, commencing October 1,
2006. Interest on the Securities will accrue from the most recent date to which interest has been
paid or, if no interest has been paid, from March 17, 2006. Interest shall be computed on the
basis of a 360-day year of twelve 30-day months. The Company shall pay interest on overdue
principal at the rate borne by the Securities plus 1% per annum, and it shall pay interest on
overdue installments of interest at the rate borne by the Securities to the extent lawful.




          (b) Special Interest. The holder of this Security is entitled to the benefits of a
Registration Rights Agreement, dated as of March 17, 2006, among the Company and the Purchasers
named therein (the “Registration Rights Agreement”). Capitalized terms used in this paragraph (b)
but not defined herein have the meanings assigned to them in the Registration Rights Agreement. In
the event that (i) neither the Exchange Offer Registration Statement nor the Shelf Registration
Statement has been filed with the Commission on or prior to the 90th day following the date of the
original issuance of the Securities, (ii) the Exchange Offer Registration Statement has not been
declared effective on or prior to the 180th day following the date of the original issuance of the
Securities, (iii) neither the Registered Exchange Offer has been consummated nor the Shelf
Registration Statement has been declared effective on or prior to the 210th day following the date
of the original issuance of the Securities, or (iv) after either the Exchange Offer Registration
Statement or the Shelf Registration Statement has been declared effective, such Registration
Statement thereafter ceases to be effective or usable in connection with resales of the Securities
at any time that the Company is obligated to maintain the effectiveness thereof pursuant to the
Registration Rights Agreement (each such event referred to in clauses (i) through (iv) above being
referred to herein as a “Registration Default”), interest (the “Special Interest”) shall accrue on
the principal amount of the Securities (in addition to stated interest on the Securities) from and
including the date on which the first such Registration Default shall occur to but excluding the
date on which all Registration Defaults have been cured, at a rate per annum equal to 0.25% of the
principal amount of the Securities; provided, however, that such rate per annum
shall increase by 0.25% per annum from and including the 91st day after the first such Registration
Default (and each successive 91st day thereafter) unless and until all Registration Defaults have
been cured; provided further, however, that in no event shall the Special Interest
accrue at a rate in excess of 1.00% per annum. The Special Interest will be payable in cash
semiannually in arrears each April 1 and October 1.




 









 








4








	2.	 	Method of Payment





          The Company will pay interest on the Securities (except defaulted interest) to the Persons who
are registered Holders of Securities at the close of business on the March 15 or September 15 next
preceding the interest payment date even if Securities are canceled after the record date and on or
before the interest payment date. Holders must surrender Securities to a Paying Agent to collect
principal payments. The Company will pay principal and interest in money of the United States of
America that at the time of payment is legal tender for payment of public and private debts.
Payments in respect of the Securities represented by a Global Security (including principal,
premium and interest) will be made by wire transfer of immediately available funds to the accounts
specified by The Depository Trust Company. The Company will make all payments in respect of a
Definitive Security (including principal, premium and interest), by mailing a check to the
registered address of each Holder thereof; provided, however, that payments on the
Securities may also be made, in the case of a Holder of at least $1,000,000 aggregate principal
amount of Securities, by wire transfer to a U.S. dollar account maintained by the payee with a bank
in the United States if such Holder elects payment by wire transfer by giving written notice to the
Trustee or the Paying Agent to such effect designating such account no later than 30 days
immediately preceding the relevant due date for payment (or such other date as the Trustee may
accept in its discretion).





	3.	 	Paying Agent and Registrar





          Initially, Wilmington Trust Company, a Delaware banking corporation (the “Trustee”), will act
as Paying Agent and Registrar. The Company may appoint and change any Paying Agent, Registrar or
co-registrar without notice. The Company or any of its domestically incorporated Wholly Owned
Subsidiaries may act as Paying Agent, Registrar or co-registrar.





	4.	 	Indenture





          The Company issued the Securities under an Indenture dated as of March 17, 2006 (the
“Indenture”), between the Company and the Trustee. The terms of the Securities include those
stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture
Act of 1939 (15 U.S.C. §§ 77aaa-77bbbb) as in effect on the date of the Indenture (the
“TIA”). Terms defined in the Indenture and not defined herein have the meanings ascribed thereto
in the Indenture. The Securities are subject to all such terms, and Securityholders are referred
to the Indenture and the TIA for a statement of those terms.




          The Securities are unsubordinated unsecured obligations of the Company limited to an aggregate
principal amount at any one time outstanding as established in or pursuant to a resolution of the
Board of Directors of the Company (subject to Sections 2.01 and 2.08 of the Indenture). [This
Security is one of the Original Securities referred to in the Indenture issued in an aggregate
principal amount of $350.0 million. The Securities include the Original Securities, additional
Initial Securities that may be issued under the Indenture up to an aggregate principal amount as
established in or pursuant to a




 









 







5





resolution of the Board of Directors, and any Exchange Securities issued in exchange for
Initial Securities]. [This Security is one of the additional Initial Securities issued in an
aggregate principal amount of up to $[ ]. The Securities include such additional Securities, the
Original Securities in an aggregate principal amount of $350.0 million previously issued under the
Indenture and any Exchange Securities issued in exchange for Initial Securities. The additional
Initial Securities, the Original Securities and the Exchange Securities are treated as a single
class of securities under the Indenture.] The Indenture imposes certain limitations on the ability
of the Company and its Restricted Subsidiaries to, among other things, make certain Investments and
other Restricted Payments, pay dividends and other distributions, incur Debt, enter into consensual
restrictions upon the payment of certain dividends and distributions by such Restricted
Subsidiaries, issue or sell shares of capital stock of such Restricted Subsidiaries, enter into or
permit certain transactions with Affiliates, create or incur Liens and make Asset Sales. The
Indenture also imposes limitations on the ability of the Company to consolidate or merge with or
into any other Person or sell, transfer, assign, lease, convey or otherwise dispose of all or
substantially all of the Property of the Company.





	5.	 	Optional Redemption





          (a) Except as set forth below, the Securities may not be redeemed prior to April 1, 2011. On
and after that date, the Company may redeem the Securities in whole at any time or in part from
time to time at the following redemption prices (expressed in percentages of principal amount),
plus accrued and unpaid interest, if any, to the redemption date (subject to the right of Holders
of record on the relevant record date to receive interest due on the relevant interest payment date
that is on or prior to the date of redemption), if redeemed during the 12-month period beginning on
or after April 1 of the years set forth below:




	 	 	 	 	 
	 	 	Redemption
	Period	 	Price
	2011
	 	 	104.438	%
	2012
	 	 	102.958	%
	2013
	 	 	101.479	%
	2014 and thereafter
	 	 	100.000	%






          (b) Notwithstanding the foregoing, prior to April 1, 2009, the Company may redeem up to 35% of
the original aggregate principal amount of the Securities issued (including additional Initial
Securities, if any) with the proceeds from one or more Public Equity Offerings by the Company, at a
redemption price equal to 108.875% of the principal amount thereof, plus accrued and unpaid
interest thereon, if any, to the redemption date (subject to the right of Holders of record on the
relevant record date to receive interest due on the relevant interest payment date that is on or
prior to the date of redemption); provided, however, that after giving effect to
any such redemption, at least 65% of the original aggregate principal amount of the Securities
(including additional Initial Securities, if any) remains outstanding. Any such redemption shall
be made within 90 days of such Public Equity Offering.




 









 







6






          (c) Notwithstanding the foregoing, the Company may redeem all or any portion of the
Securities, at once or over time, prior to April 1, 2011, at a redemption price equal to the sum
of:




          (a) 100% of the principal amount of the Securities to be redeemed, plus




          (b) the Applicable Premium,



plus accrued and unpaid interest, if any, to the redemption date (subject to the right of holders
of record on the relevant record date to receive interest due on the relevant interest payment
date).




          “Applicable Premium” means, with respect to a Security at any time, the greater of (1)
1.0% of the principal amount of such Security at such time and (2) the excess of (A) the present
value at such time of (i) the redemption price of such Security at April 1, 2011 (such redemption
price being described in the table appearing in clause (a) of this paragraph 5 exclusive of any
accrued interest) plus (ii) any required interest payments due on such Security through April 1,
2011, (including any accrued and unpaid interest) computed using a discount rate equal to the
Treasury Rate plus 50 basis points, over (B) the principal amount of such Security.




          “Comparable Treasury Issue” means the United States Treasury security selected by an
Independent Investment Banker as having a maturity comparable to the remaining term of the
Securities that would be utilized, at the time of selection and in accordance with customary
financial practice, in pricing new issues of corporate debt securities of comparable maturity to
the remaining term of such Securities. “Independent Investment Banker” means one of the Reference
Treasury Dealers appointed by the trustee after consultation with the Company.




          “Comparable Treasury Price” means, with respect to any redemption date:




          (a) the average of the bid and asked prices for the Comparable Treasury Issue (expressed in
each case as a percentage of its principal amount) on the third Business Day preceding such
redemption date, as set forth in the most recently published statistical release designated
“H.15(519)” (or any successor release) published by the Board of Governors of the Federal Reserve
System and which establishes yields on actively traded United States treasury securities adjusted
to constant maturity under the caption “Treasury Constant Maturities” or




          (b) if such release (or any successor release) is not published or does not contain such
prices on such Business Day, the average of the Reference Treasury Dealer Quotations for such
redemption date.




          “Reference Treasury Dealer” means Banc of America Securities LLC, Citigroup Global
Markets Inc., Goldman, Sachs & Co., J.P. Morgan Securities Inc., Scotia Capital (USA) Inc., Merrill
Lynch, Pierce, Fenner & Smith Incorporated and one other financial institution chosen by the
Company and their respective successors; provided, however, that if any of the
foregoing shall cease to be a primary U.S.




 









 







7





Government securities dealer in New York City (a “Primary Treasury Dealer”), the Company shall
substitute therefor another Primary Treasury Dealer.




          “Reference Treasury Dealer Quotations” means, with respect to each Reference Treasury
Dealer and any redemption date, the average, as determined by the Trustee, of the bid and asked
prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal
amount) quoted in writing to the Trustee by such Reference Treasury Dealer at 5:00 p.m. on the
third Business Day preceding such redemption date.




          “Treasury Rate” means, with respect to any redemption date, the rate per annum equal
to the yield to maturity of the Comparable Treasury Issue, compounded semi-annually, assuming a
price for such Comparable Treasury Issue (expressed as a percentage of its principal amount) equal
to the Comparable Treasury Price for such redemption date.





	6.	 	Notice of Optional Redemption





          Notice of redemption will be mailed by first-class mail at least 30 days but not more than 60
days before the redemption date to each Holder of Securities to be redeemed at his or her
registered address. Any notice to Holders of Securities of such a redemption pursuant to clause
(c) in paragraph 5 needs to include the appropriate calculation of the redemption price, but does
not need to include the redemption price itself. The actual redemption price, calculated as
described in such clause (c), must be set forth in an Officers’ Certificate delivered to the
Trustee no later than two Business Days prior to the redemption date. Securities in denominations
larger than $10,000 may be redeemed in part but only in whole multiples of $1,000. If money
sufficient to pay the redemption price of and accrued interest on all Securities (or portions
thereof) to be redeemed on the redemption date is deposited with the Paying Agent on or before the
redemption date and certain other conditions are satisfied, on and after such date interest ceases
to accrue on such Securities (or such portions thereof) called for redemption.





	7.	 	Sinking Fund





          The Securities are not subject to any sinking fund.





	8.	 	Repurchase of Securities at the Option of Holders upon Change of Control





          Upon a Change of Control, any Holder of Securities will have the right, subject to certain
conditions specified in the Indenture, to cause the Company to repurchase all or any part of the
Securities of such Holder at a purchase price equal to 101% of the principal amount of the
Securities to be repurchased plus accrued and unpaid interest, if any, to the date of purchase
(subject to the right of Holders of record on the relevant record date to receive interest due on
the relevant interest payment date that is on or prior to the date of purchase) as provided in, and
subject to the terms of, the Indenture.




 









 







8







	9.	 	Denominations; Transfer; Exchange





          The Securities are in registered form without coupons in denominations of $10,000 and whole
multiples of $1,000 thereafter. A Holder may transfer or exchange Securities in accordance with
the Indenture. Upon any transfer or exchange, the Registrar and the Trustee may require a Holder,
among other things, to furnish appropriate endorsements or transfer documents and to pay any taxes
required by law or permitted by the Indenture. The Registrar need not register the transfer of or
exchange any Securities selected for redemption (except, in the case of a Security to be redeemed
in part, the portion of the Security not to be redeemed) or to transfer or exchange any Securities
for a period of 15 days prior to a selection of Securities to be redeemed or 15 days before an
interest payment date.





	10.	 	Persons Deemed Owners





          The registered Holder of this Security may be treated as the owner of it for all purposes.





	11.	 	Unclaimed Money





          If money for the payment of principal or interest remains unclaimed for two years, the Trustee
or Paying Agent shall pay the money back to the Company at its written request unless an abandoned
property law designates another Person. After any such payment, Holders entitled to the money must
look only to the Company and not to the Trustee for payment.





	12.	 	Discharge and Defeasance





          Subject to certain conditions, the Company at any time may terminate some of or all its
obligations under the Securities and the Indenture if the Company deposits with the Trustee money
in U.S. dollars or U.S. Government Obligations for the payment of principal and interest on the
Securities to redemption or maturity, as the case may be.





	13.	 	Amendment, Waiver





          Subject to certain exceptions set forth in the Indenture, (i) the Indenture or the Securities
may be amended without prior notice to any Securityholder but with the written consent of the
Holders of at least a majority in aggregate principal amount of the outstanding Securities and (ii)
any default or noncompliance with any provision may be waived with the written consent of the
Holders of at least a majority in principal amount of the outstanding Securities. Subject to
certain exceptions set forth in the Indenture, without the consent of any Holder of Securities, the
Company and the Trustee may amend the Indenture or the Securities (i) to cure any ambiguity,
omission, defect or inconsistency; (ii) to comply with Article V of the Indenture; (iii) to provide
for uncertificated Securities in addition to or in place of certificated Securities; (iv) to add
Guarantees with respect to the Securities; (v) to secure the Securities, to add additional
covenants or to surrender rights and powers conferred on the Company; (vi) to comply

 









 








9





with the requirements of the SEC in order to effect or maintain the qualification of the
Indenture under the TIA; (vii) to evidence and provide for the acceptance of appointment by a
successor trustee; (viii) to make any change that does not adversely affect the rights of any
Securityholder; or (ix) to provide for the issuance of additional securities in accordance with the
Indenture.





	14.	 	Defaults and Remedies





          If an Event of Default occurs and is continuing, the Trustee or the Holders of at least 25% in
aggregate principal amount of the Securities then outstanding, subject to certain limitations, may
declare all the Securities to be immediately due and payable. Certain events of bankruptcy or
insolvency are Events of Default and shall result in the Securities being immediately due and
payable upon the occurrence of such Events of Default without any further act of the Trustee or any
Holder.




          Holders of Securities may not enforce the Indenture or the Securities except as provided in
the Indenture. The Trustee may refuse to enforce the Indenture or the Securities unless it
receives reasonable indemnity or security. Subject to certain limitations, Holders of a majority
in aggregate principal amount of the Securities then outstanding may direct the Trustee in its
exercise of any trust or power under the Indenture. The Holders of a majority in aggregate
principal amount of the Securities then outstanding, by written notice to the Company and the
Trustee, may rescind any declaration of acceleration and its consequences if the rescission would
not conflict with any judgment or decree, and if all existing Events of Default have been cured or
waived except nonpayment of principal or interest that has become due solely because of the
acceleration.





	15.	 	Trustee Dealings with the Company





          Subject to certain limitations imposed by the TIA, the Trustee under the Indenture, in its
individual or any other capacity, may become the owner or pledgee of Securities and may otherwise
deal with and collect obligations owed to it by the Company or its Affiliates and may otherwise
deal with the Company or its Affiliates with the same rights it would have if it were not Trustee.





	16.	 	No Recourse Against Others





          A director, officer, employee or stockholder, as such, of the Company shall not have any
liability for any obligations of the Company under the Securities or the Indenture or for any claim
based on, in respect of or by reason of such obligations or their creation. By accepting a
Security, each Securityholder waives and releases all such liability. The waiver and release are
part of the consideration for the issue of the Securities.




 









 








10





	17.	 	Authentication





          This Security shall not be valid until an authorized signatory of the Trustee (or an
authenticating agent) manually signs the certificate of authentication on the other side of this
Security.





	18.	 	Abbreviations





          Customary abbreviations may be used in the name of a Securityholder or an assignee, such as
TEN COM (=tenants in common), TEN ENT (=tenants by the entireties), JT TEN (=joint tenants with
rights of survivorship and not as tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift
to Minors Act).





	19.	 	Governing Law





          THIS SECURITY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT
THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.





	20.	 	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 Securities and has directed
the Trustee to use CUSIP numbers in notices of redemption as a convenience to Securityholders. To
the extent such numbers have been issued, the Company has caused ISIN and Common Code numbers to be
similarly printed on the Securities and has similarly instructed the Trustee. No representation is
made as to the accuracy of such numbers either as printed on the Securities or as contained in any
notice of redemption and reliance may be placed only on the other identification numbers placed
thereon.




          The Company will furnish to any Holder of Securities upon written request and without charge
to the Holder a copy of the Indenture which has in it the text of this Security.





 









 








11




ASSIGNMENT FORM




To assign this Security, fill in the form below:




I or we assign and transfer this Security to




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



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


and
irrevocably
appoint          agent to transfer this Security 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 other side of this Security.



In connection with any transfer of any of the Securities evidenced by this certificate occurring
prior to the expiration of the period referred to in Rule 144(k) under the Securities Act after the
later of the date of original issuance of such Securities and the last date, if any, on which such
Securities were owned by the Company or any Affiliate of the Company, the undersigned confirms that
such Securities are being transferred in accordance with its terms:



CHECK ONE BOX BELOW




	 	 	 	 	 
	(1)

	 	G
	 	to the Company; or
	 
	 	 	 	 
	(2)

	 	G
	 	pursuant to an effective registration statement under the Securities
Act of 1933; or
	 
	 	 	 	 
	(3)

	 	G
	 	inside the United States to a “qualified institutional buyer” (as
defined in Rule 144A under the Securities Act of 1933) that purchases for its own
account or for the account of a qualified institutional buyer to whom notice is given
that such transfer is being made in reliance on Rule 144A, in each case pursuant to
and in compliance with Rule 144A under the Securities Act of 1933; or
	 
	 	 	 	 
	(4)

	 	G
	 	outside the United States in an offshore transaction within the
meaning of Regulation S under the Securities Act in compliance with Rule 904 under the
Securities Act of 1933; or






 









 






12




	 	 	 	 	 
	(5)

	 	G
	 	to an institutional “accredited investor” (as defined in Rule
501(a)(1), (2), (3) or (7) under the Securities Act of 1933) that has furnished to the
Trustee a signed letter containing certain representations and agreements (the form of
which letter can be obtained from the Trustee or the Company); or
	 
	 	 	 	 
	(6)

	 	G
	 	pursuant to another available exemption from registration provided by
Rule 144 under the Securities Act of 1933.







Unless one of the boxes is checked, the Trustee will refuse to register any of the
Securities evidenced by this certificate in the name of any person other than the
registered holder thereof; provided, however, that if box (4), (5) or (6)
is checked, the Trustee may require, prior to registering any such transfer of the
Securities, such legal opinions, certifications and other information as the Company has
reasonably requested to confirm that such transfer is being made pursuant to an exemption
from, or in a transaction not subject to, the registration requirements of the Securities
Act of 1933.



	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 

Your Signature
	 	 
	 
	 	 	 	 	 	 	 	 
	Signature Guarantee:	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Date:
	 	 
	 	 	 	 
	 	 
	Signature must be guaranteed	 	 	 	Signature of Signature	 	 
	by a participant in a	 	 	 	Guarantee	 	 
	recognized signature guaranty	 	 	 	 	 	 
	medallion program or other	 	 	 	 	 	 
	signature guarantor acceptable	 	 	 	 	 	 
	to the Trustee	 	 	 	 	 	 






 









 






13




TO BE COMPLETED BY PURCHASER IF (3) ABOVE IS CHECKED.




     The undersigned represents and warrants that it is purchasing this Security for its own
account or an account with respect to which it exercises sole investment discretion and that it and
any such account is a “qualified institutional buyer” within the meaning of Rule 144A under the
Securities Act of 1933, and is aware that the sale to it is being made in reliance on Rule 144A and
acknowledges that it has received such information regarding the Company as the undersigned has
requested pursuant to Rule 144A or has determined not to request such information and that it is
aware that the transferor is relying upon the undersigned’s foregoing representations in order to
claim the exemption from registration provided by Rule 144A.



	 	 	 	 	 	 	 	 	 
	Dated:
	 	 	 	 	 	 	 	 
	 

	 	 

	 	 
	 	 

NOTICE: To be executed by an executive officer
	 	 






 









 






14




[TO BE ATTACHED TO GLOBAL SECURITIES]



SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY




     The
initial principal amount of this Global Security is
$[    ]. The following increases
or decreases in this Global Security have been made:



	 	 	 	 	 	 	 	 	 
	 	 	Amount of decrease in	 	 	Amount of increase in	 	 	Principal amount of this	 	 	Signature of authorized
	Date of	 	Principal Amount of this	 	 	Principal Amount of this	 	 	Global Security following	 	 	signatory of Trustee or
	Exchange	 	Global Security	 	 	Global Security	 	 	such decrease or increase	 	 	Securities Custodian







 









 





15




OPTION OF HOLDER TO ELECT PURCHASE




          If you want to elect to have this Security purchased by the Company pursuant to Section 4.07
(Asset Sale) or 4.12 (Change of Control) of the Indenture, check the box:




G




          If you want to elect to have only part of this Security purchased by the Company pursuant
to Section 4.07 or 4.12 of the Indenture, state the amount:




$




	 	 	 
	Date:                                                            

	 	Your Signature:                                                                                





(Sign
exactly as your name appears on the other side of the Security)




	 	 	 
	Signature Guarantee:
	 	 
	 

	 	 
	 

	 	Signature must be guaranteed by a participant in a recognized signature
guaranty medallion program or other signature guarantor acceptable to the
Trustee.






 









 





EXHIBIT A




[FORM OF FACE OF SECURITY]




	 	 	 
	No.

	 	[up to]$                    






8-7/8% Senior Note due 2016




CUSIP No. 52736R AV 4




ISIN No. US52736RAV42




          LEVI STRAUSS & CO., a Delaware corporation, promises to pay to [Cede & Co.], or registered
assigns, the principal sum
[of               Dollars] [as set forth on the Schedule of Increases
or Decreases annexed hereto] on April 1, 2016.




          Interest Payment Dates: April 1 and October 1.




          Record Dates: March 15 and September 15.





 









 




2


          Additional provisions of this Security are set forth on the other side of this Security.




          IN WITNESS WHEREOF, the parties have caused this instrument to be duly executed.




	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 	 	LEVI STRAUSS & CO.,	 	 
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	by	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	 
	 

	 	Title:	 	 
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	by	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	 
	 

	 	Title:	 	 






TRUSTEE’S CERTIFICATE OF

          AUTHENTICATION




Dated:




WILMINGTON TRUST COMPANY,



as Trustee, certifies

that this is one of

the Securities referred

to in the Indenture.




	 	 	 	 	 
	 

	 	 	 	 
	by:
	 	 	 	 
	 

	 	 	 	 
	 

	 	Authorized Signatory	 	 





*/ If the Security is to be issued in global form, add the Global Securities Legend from
Exhibit 1 to Appendix A and the attachment from such Exhibit 1 captioned “TO BE ATTACHED TO GLOBAL
SECURITIES — SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY”.




 









 





3



[FORM OF REVERSE SIDE OF SECURITY]




8-7/8% Senior Note due 2016




1. Interest.




          LEVI STRAUSS & CO., a Delaware corporation (such corporation, and its successors and assigns
under the Indenture hereinafter referred to, being herein called the “Company”), promises to pay
interest on the principal amount of this Security at the rate per annum shown above. The Company
will pay interest semiannually on April 1 and October 1 of each year. Interest on the Securities
will accrue from the most recent date to which interest has been paid or, if no interest has been
paid, from March 17, 2006. Interest shall be computed on the basis of a 360-day year of twelve
30-day months. The Company shall pay interest on overdue principal at the rate borne by the
Securities plus 1% per annum, and it shall pay interest on overdue installments of interest at the
rate borne by the Securities to the extent lawful.




2. Method of Payment




          The Company will pay interest on the Securities (except defaulted interest) to the Persons who
are registered Holders of Securities at the close of business on the March 15 or September 15 next
preceding the interest payment date even if Securities are canceled after the record date and on or
before the interest payment date. Holders must surrender Securities to a Paying Agent to collect
principal payments. The Company will pay principal and interest in money of the United States of
America that at the time of payment is legal tender for payment of public and private debts.
Payments in respect of the Securities represented by a Global Security (including principal,
premium and interest) will be made by wire transfer of immediately available funds to the accounts
specified by The Depository Trust Company. The Company will make all payments in respect of a
Definitive Security (including principal, premium and interest), by mailing a check to the
registered address of each Holder thereof; provided, however, that payments on the
Securities may also be made, in the case of a Holder of at least $1,000,000 aggregate principal
amount of Securities, by wire transfer to a U.S. dollar account maintained by the payee with a bank
in the United States if such Holder elects payment by wire transfer by giving written notice to the
Trustee or the Paying Agent to such effect designating such account no later than 30 days
immediately preceding the relevant due date for payment (or such other date as the Trustee may
accept in its discretion).




3. Paying Agent and Registrar




          Initially, WILMINGTON TRUST COMPANY, a Delaware banking corporation (the “Trustee”), will act
as Paying Agent and Registrar. The Company may appoint and change any Paying Agent, Registrar or
co-registrar without notice. The Company or any of its domestically incorporated Wholly Owned
Subsidiaries may act as Paying Agent, Registrar or co-registrar.




 









 





4



4. Indenture




          The Company issued the Securities under an Indenture dated as of March 17, 2006 (the
“Indenture”), between the Company and the Trustee. The terms of the Securities include those
stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture
Act of 1939 (15 U.S.C. §§ 77aaa-77bbbb) as in effect on the date of the Indenture (the
“TIA”). Terms defined in the Indenture and not defined herein have the meanings ascribed thereto
in the Indenture. The Securities are subject to all such terms, and Securityholders are referred
to the Indenture and the TIA for a statement of those terms.




          The Securities are unsubordinated unsecured obligations of the Company limited to an aggregate
principal amount at any one time outstanding as established in or pursuant to a resolution of the
Board of Directors of the Company (subject to Sections 2.01 and 2.08 of the Indenture). This
Security is one of the Exchange Securities referred to in the Indenture issued in exchange for
Initial Securities. The Securities include the Exchange Securities, the Original Securities in the
aggregate principal amount of $350.0 million and additional Initial Securities that may be issued
under the Indenture up to an aggregate principal amount as established in or pursuant to a
resolution of the Board of Directors. The Exchange Securities, the Original Securities and such
additional Initial Securities are treated as a single class of securities under the Indenture. The
Indenture imposes certain limitations on the ability of the Company and its Restricted Subsidiaries
to, among other things, make certain Investments and other Restricted Payments, pay dividends and
other distributions, incur Debt, enter into consensual restrictions upon the payment of certain
dividends and distributions by such Restricted Subsidiaries, issue or sell shares of capital stock
of such Restricted Subsidiaries, enter into or permit certain transactions with Affiliates, create
or incur Liens and make Asset Sales. The Indenture also imposes limitations on the ability of the
Company to consolidate or merge with or into any other Person or sell, transfer, assign, lease,
convey or otherwise dispose of all or substantially all of the Property of the Company.




5. Optional Redemption




          (a) Except as set forth below, the Securities may not be redeemed prior to April 1, 2011. On
and after that date, the Company may redeem the Securities in whole at any time or in part from
time to time at the following redemption prices (expressed in percentages of principal amount),
plus accrued and unpaid interest, if any, to the redemption date (subject to the right of Holders
of record on the relevant record date to receive interest due on the relevant interest payment date
that is on or prior to the date of redemption), if redeemed during the 12-month period beginning on
or after April 1 of the years set forth below:




	 	 	 	 	 
	 	 	Redemption
	Period	 	Price
	2011
	 	 	104.438	%
	2012
	 	 	102.958	%
	2013
	 	 	101.479	%
	2014 and thereafter
	 	 	100.000	%






 









 





5


          (b) Notwithstanding the foregoing, prior to April 1, 2009, the Company may redeem up to 35%
of the original aggregate principal amount of the Securities issued (including additional Initial
Securities, if any) with the proceeds from one or more Public Equity Offerings by the Company, at a
redemption price equal to 108.875% of the principal amount thereof, plus accrued and unpaid
interest thereon, if any, to the redemption date (subject to the right of Holders of record on the
relevant record date to receive interest due on the relevant interest payment date that is on or
prior to the date of redemption); provided, however, that after giving effect to
any such redemption, at least 65% of the original aggregate principal amount of the Securities
(including additional Initial Securities, if any) remains outstanding. Any such redemption shall
be made within 90 days of such Public Equity Offering.




          (c) Notwithstanding the foregoing, the Company may redeem all or any portion of the
Securities, at once or over time, prior to April 1, 2011, at a redemption price equal to the sum
of:




          (a) 100% of the principal amount of the Securities to be redeemed, plus




          (b) the Applicable Premium, plus accrued and unpaid interest, if any, to the redemption date (subject to the right of holders
of record on the relevant record date to receive interest due on the relevant interest payment
date).




          “Applicable Premium” means, with respect to a Security at any time, the greater of (1)
1.0% of the principal amount of such Security at such time and (2) the excess of (A) the present
value at such time of (i) the redemption price of such Security at April 1, 2011 (such redemption
price being described in the table appearing in clause (a) of this paragraph 5 exclusive of any
accrued interest) plus (ii) any required interest payments due on such Security through April 1,
2011, (including any accrued and unpaid interest) computed using a discount rate equal to the
Treasury Rate plus 50 basis points, over (B) the principal amount of such Security.




          “Comparable Treasury Issue” means the United States Treasury security selected by an
Independent Investment Banker as having a maturity comparable to the remaining term of the
Securities that would be utilized, at the time of selection and in accordance with customary
financial practice, in pricing new issues of corporate debt securities of comparable maturity to
the remaining term of such Securities. “Independent Investment Banker” means one of the Reference
Treasury Dealers appointed by the trustee after consultation with the Company.




          “Comparable Treasury Price” means, with respect to any redemption date:




          (a) the average of the bid and asked prices for the Comparable Treasury Issue (expressed in
each case as a percentage of its principal amount) on the third Business Day preceding such
redemption date, as set forth in the most recently published




 









 





6


statistical release designated “H.15(519)” (or any successor release) published by the Board
of Governors of the Federal Reserve System and which establishes yields on actively traded United
States treasury securities adjusted to constant maturity under the caption “Treasury Constant
Maturities” or




          (b) if such release (or any successor release) is not published or does not contain such
prices on such Business Day, the average of the Reference Treasury Dealer Quotations for such
redemption date.




          “Reference Treasury Dealer” means Banc of America Securities LLC, Citigroup Global
Markets Inc., Goldman, Sachs & Co., J.P. Morgan Securities Inc., Scotia Capital (USA) Inc., Merrill
Lynch, Pierce, Fenner & Smith Incorporated and one other financial institution chosen by the
Company and their respective successors; provided, however, that if any of the
foregoing shall cease to be a primary U.S. Government securities dealer in New York City (a
“Primary Treasury Dealer”), the Company shall substitute therefor another Primary Treasury Dealer.




          “Reference Treasury Dealer Quotations” means, with respect to each Reference Treasury
Dealer and any redemption date, the average, as determined by the Trustee, of the bid and asked
prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal
amount) quoted in writing to the Trustee by such Reference Treasury Dealer at 5:00 p.m. on the
third Business Day preceding such redemption date.




          “Treasury Rate” means, with respect to any redemption date, the rate per annum equal
to the yield to maturity of the Comparable Treasury Issue, compounded semi-annually, assuming a
price for such Comparable Treasury Issue (expressed as a percentage of its principal amount) equal
to the Comparable Treasury Price for such redemption date.




6. Notice of Optional Redemption




          Notice of redemption will be mailed by first-class mail at least 30 days but not more than 60
days before the redemption date to each Holder of Securities to be redeemed at his or her
registered address. Any notice to Holders of Securities of such a redemption pursuant to clause
(c) in paragraph 5 needs to include the appropriate calculation of the redemption price, but does
not need to include the redemption price itself. The actual redemption price, calculated as
described in such clause (c), must be set forth in an Officers’ Certificate delivered to the
Trustee no later than two Business Days prior to the redemption date. Securities in denominations
larger than $10,000 may be redeemed in part but only in whole multiples of $1,000. If money
sufficient to pay the redemption price of and accrued interest on all Securities (or portions
thereof) to be redeemed on the redemption date is deposited with the Paying Agent on or before the
redemption date and certain other conditions are satisfied, on and after such date interest ceases
to accrue on such Securities (or such portions thereof) called for redemption.




 









 





7



7. Sinking Fund




          The Securities are not subject to any sinking fund.




8. Repurchase of Securities at the Option of Holders upon Change of Control




          Upon a Change of Control, any Holder of Securities will have the right, subject to certain
conditions specified in the Indenture, to cause the Company to repurchase all or any part of the
Securities of such Holder at a purchase price equal to 101% of the principal amount of the
Securities to be repurchased plus accrued and unpaid interest, if any, to the date of purchase
(subject to the right of Holders of record on the relevant record date to receive interest due on
the relevant interest payment date that is on or prior to the date of purchase) as provided in, and
subject to the terms of, the Indenture.




9. Denominations; Transfer; Exchange




          The Securities are in registered form without coupons in denominations of $10,000 and whole
multiples of $1,000 thereafter. A Holder may transfer or exchange Securities in accordance with
the Indenture. Upon any transfer or exchange, the Registrar and the Trustee may require a Holder,
among other things, to furnish appropriate endorsements or transfer documents and to pay any taxes
required by law or permitted by the Indenture. The Registrar need not register the transfer of or
exchange any Securities selected for redemption (except, in the case of a Security to be redeemed
in part, the portion of the Security not to be redeemed) or to transfer or exchange any Securities
for a period of 15 days prior to a selection of Securities to be redeemed or 15 days before an
interest payment date.




10. Persons Deemed Owners




          The registered Holder of this Security may be treated as the owner of it for all purposes.




11. Unclaimed Money




          If money for the payment of principal or interest remains unclaimed for two years, the Trustee
or Paying Agent shall pay the money back to the Company at its written request unless an abandoned
property law designates another Person. After any such payment, Holders entitled to the money must
look only to the Company and not to the Trustee for payment.




12. Discharge and Defeasance




          Subject to certain conditions, the Company at any time may terminate some of or all its
obligations under the Securities and the Indenture if the Company deposits with the Trustee money
in U.S. dollars or U.S. Government Obligations for the payment of principal and interest on the
Securities to redemption or maturity, as the case may be.




 









 






8


13. Amendment, Waiver




          Subject to certain exceptions set forth in the Indenture, (i) the Indenture or the Securities
may be amended without prior notice to any Securityholder but with the written consent of the
Holders of at least a majority in aggregate principal amount of the outstanding Securities and (ii)
any default or noncompliance with any provision may be waived with the written consent of the
Holders of at least a majority in principal amount of the outstanding Securities. Subject to
certain exceptions set forth in the Indenture, without the consent of any Holder of Securities, the
Company and the Trustee may amend the Indenture or the Securities (i) to cure any ambiguity,
omission, defect or inconsistency; (ii) to comply with Article V of the Indenture; (iii) to provide
for uncertificated Securities in addition to or in place of certificated Securities; (iv) to add
Guarantees with respect to the Securities; (v) to secure the Securities, to add additional
covenants or to surrender rights and powers conferred on the Company; (vi) to comply with the
requirements of the SEC in order to effect or maintain the qualification of the Indenture under the
TIA; (vii) to evidence and provide for the acceptance of appointment by a successor trustee; (viii)
to make any change that does not adversely affect the rights of any Securityholder; or (ix) to
provide for the issuance of additional securities in accordance with the Indenture.




14. Defaults and Remedies




          If an Event of Default occurs and is continuing, the Trustee or the Holders of at least 25% in
aggregate principal amount of the Securities then outstanding, subject to certain limitations, may
declare all the Securities to be immediately due and payable. Certain events of bankruptcy or
insolvency are Events of Default and shall result in the Securities being immediately due and
payable upon the occurrence of such Events of Default without any further act of the Trustee or any
Holder.




          Holders of Securities may not enforce the Indenture or the Securities except as provided in
the Indenture. The Trustee may refuse to enforce the Indenture or the Securities unless it
receives reasonable indemnity or security. Subject to certain limitations, Holders of a majority
in aggregate principal amount of the Securities then outstanding may direct the Trustee in its
exercise of any trust or power under the Indenture. The Holders of a majority in aggregate
principal amount of the Securities then outstanding, by written notice to the Company and the
Trustee, may rescind any declaration of acceleration and its consequences if the rescission would
not conflict with any judgment or decree, and if all existing Events of Default have been cured or
waived except nonpayment of principal or interest that has become due solely because of the
acceleration.




15. Trustee Dealings with the Company




          Subject to certain limitations imposed by the TIA, the Trustee under the Indenture, in its
individual or any other capacity, may become the owner or pledgee of Securities and may otherwise
deal with and collect obligations owed to it by the




 









 





9


Company or its Affiliates and may otherwise deal with the Company or its Affiliates with the
same rights it would have if it were not Trustee.




16. No Recourse Against Others




          A director, officer, employee or stockholder, as such, of the Company shall not have any
liability for any obligations of the Company under the Securities or the Indenture or for any claim
based on, in respect of or by reason of such obligations or their creation. By accepting a
Security, each Securityholder waives and releases all such liability. The waiver and release are
part of the consideration for the issue of the Securities.




17. Authentication




          This Security shall not be valid until an authorized signatory of the Trustee (or an
authenticating agent) manually signs the certificate of authentication on the other side of this
Security.




18. Abbreviations




          Customary abbreviations may be used in the name of a Securityholder or an assignee, such as
TEN COM (=tenants in common), TEN ENT (=tenants by the entireties), JT TEN (=joint tenants with
rights of survivorship and not as tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift
to Minors Act).




19. Governing Law




          THIS SECURITY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT
THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.




20. 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 Securities and has directed
the Trustee to use CUSIP numbers in notices of redemption as a convenience to Securityholders. To
the extent such numbers have been issued, the Company has caused ISIN and Common Code numbers to be
similarly printed on the Securities and has similarly instructed the Trustee. No representation is
made as to the accuracy of such numbers either as printed on the Securities or as contained in any
notice of redemption and reliance may be placed only on the other identification numbers placed
thereon.




          The Company will furnish to any Holder of Securities upon written request and without charge
to the Holder a copy of the Indenture which has in it the text of this Security.




 









 





10



ASSIGNMENT FORM



To assign this Security, fill in the form below:



I or we assign and transfer this Security to




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




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



and irrevocably appoint            agent to transfer this Security 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 other side of this Security. Signature must be
guaranteed by a participant in a recognized signature guaranty medallion program or other signature
guarantor acceptable to the Trustee.





 









 








11




OPTION OF HOLDER TO ELECT PURCHASE




          If you want to elect to have this Security purchased by the Company pursuant to Section 4.07
(Asset Sale) or 4.12 (Change of Control) of the Indenture, check the box:




 G




          If you want to elect to have only part of this Security purchased by the Company pursuant
to Section 4.07 or 4.12 of the Indenture, state the amount:




$



Date:                                         Your Signature:                                                                                                                         




(Sign exactly as your name appears on the other side of the Security)



Signature Guarantee:                                                                                                                         





Signature must be guaranteed by a participant in a recognized signature
guaranty medallion program or other signature guarantor acceptable to the
Trustee.










 



 




EXHIBIT B




Form of

Transferee Letter of Representation




[Company]




In care of

[            ]

[            ]

[            ]



Ladies and Gentlemen:




          This certificate is delivered to request a transfer of $[ ] principal amount of the
8-7/8% Senior Notes due 2016 (the “Securities”) of LEVI STRAUSS & CO. (the “Company”).




          Upon transfer, the Securities would be registered in the name of the new beneficial owner as
follows:




Name:                                                            




Address:                                                            




Taxpayer ID Number:                                        




     The undersigned represents and warrants to you that:



          1. We are an institutional “accredited investor” (as defined in Rule 501(a)(1), (2), (3)
or (7) under the Securities Act of 1933, as amended (the “Securities Act”)), purchasing for our own
account or for the account of such an institutional “accredited investor,” and we are acquiring the
Securities not with a view to, or for offer or sale in connection with, any distribution in
violation of the Securities Act. We 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 Securities,
and we invest in or purchase securities similar to the Securities in the normal course of our
business. We, and any accounts for which we are acting, are each able to bear the economic risk of
our or its investment.




          2. We understand that the Securities have not been registered under the Securities Act and,
unless so registered, may not be sold except as permitted in the following sentence. We agree on
our own behalf and on behalf of any investor account for which we are purchasing Securities to
offer, sell or otherwise transfer such Securities prior to the date that is two years after the
later of the date of original issue and the last date on which the Company or any affiliate of the
Company was the owner of such Securities (or any predecessor thereto) (the “Resale Restriction
Termination Date”) only (a) to the Company, (b) pursuant to a registration statement that has been
declared effective under










 



2

the Securities Act, (c) in a transaction complying with the requirements
of Rule 144A under the Securities Act (“Rule 144A”), to a person we reasonably believe is a
qualified institutional buyer under Rule 144A (a “QIB”) that is purchasing for its own account or
for the account of a QIB and to whom notice is given that the transfer is being made in reliance on
Rule 144A, (d) pursuant to offers and sales that occur outside the United States within the meaning
of Regulation S under the Securities Act, (e) to an institutional “accredited investor” within the
meaning of Rule 501(a)(1), (2), (3) or (7) under the Securities Act that is purchasing for its own
account or for the account of such an institutional “accredited investor,” or (f) pursuant to any
other available exemption from the registration requirements of the Securities Act, subject in each
of the foregoing cases to any requirement of law that the disposition of our property or the
property of such investor account or accounts be at all times within our or their control and in
compliance with any applicable state securities laws. The foregoing restrictions on resale will
not apply subsequent to the Resale Restriction Termination Date. If any resale or other transfer
of the Securities is proposed to be made pursuant to clause (e) above prior to the Resale
Restriction Termination Date, the transferor shall deliver a letter from the transferee
substantially in the form of this letter to the Company and the Trustee, which shall provide, among
other things, that the transferee is an institutional “accredited investor” within the meaning of
Rule 501(a)(1), (2), (3) or (7) under the Securities Act and that it is acquiring such Securities
for investment purposes and not for distribution in violation of the Securities Act. Each
purchaser acknowledges that the Company and the Trustee reserve the right prior to the offer, sale
or other transfer prior to the Resale Restriction Termination Date of the Securities pursuant to
clause (d), (e) or (f) above to require the delivery of an opinion of counsel, certifications or
other information satisfactory to the Company and the Trustee.




TRANSFEREE:                                        ,




by: