Exhibit
4.2


 


Execution Version


 




 





INDENTURE


 


Dated as of October 21, 2010


 


Among


 


MICHAELS STORES, INC.,


 


THE GUARANTORS NAMED ON THE SIGNATURE PAGES HERETO


 


and


 


LAW DEBENTURE TRUST COMPANY OF NEW YORK,


 


as Trustee


 


73/4% SENIOR NOTES DUE 2018




 





 

















 


CROSS-REFERENCE TABLE*


 


	
  Trust Indenture Act Section

  	
   

  	
  Indenture Section

  
	
   

  	
   

  	
   

  	
   

  
	
  310

  	
  (a)(1)

  	
   

  	
  7.10

  
	
   

  	
  (a)(2)

  	
   

  	
  7.10

  
	
   

  	
  (a)(3)

  	
   

  	
  N.A.

  
	
   

  	
  (a)(4)

  	
   

  	
  N.A.

  
	
   

  	
  (a)(5)

  	
   

  	
  7.10

  
	
   

  	
  (b)

  	
   

  	
  7.03, 7.10

  
	
   

  	
  (c)

  	
   

  	
  N.A.

  
	
  311

  	
  (a)

  	
   

  	
  7.11

  
	
   

  	
  (b)

  	
   

  	
  7.11

  
	
   

  	
  (c)

  	
   

  	
  N.A.

  
	
  312

  	
  (a)

  	
   

  	
  2.05

  
	
   

  	
  (b)

  	
   

  	
  12.03

  
	
   

  	
  (c)

  	
   

  	
  12.03

  
	
  313

  	
  (a)

  	
   

  	
  2.05, 7.06

  
	
   

  	
  (b)(1)

  	
   

  	
  N.A.

  
	
   

  	
  (b)(2)

  	
   

  	
  7.06;7.07

  
	
   

  	
  (c)

  	
   

  	
  7.06;12.02

  
	
   

  	
  (d)

  	
   

  	
  7.06

  
	
  314

  	
  (a)

  	
   

  	
  4.03;12.02;12.05

  
	
   

  	
  (b)

  	
   

  	
  N.A.

  
	
   

  	
  (c)(1)

  	
   

  	
  12.04

  
	
   

  	
  (c)(2)

  	
   

  	
  12.04

  
	
   

  	
  (c)(3)

  	
   

  	
  N.A.

  
	
   

  	
  (d)

  	
   

  	
  N.A.

  
	
   

  	
  (e)

  	
   

  	
  12.05

  
	
   

  	
  (f)

  	
   

  	
  N.A.

  
	
  315

  	
  (a)

  	
   

  	
  7.01

  
	
   

  	
  (b)

  	
   

  	
  7.05;12.02

  
	
   

  	
  (c)

  	
   

  	
  7.01

  
	
   

  	
  (d)

  	
   

  	
  7.01

  
	
   

  	
  (e)

  	
   

  	
  6.14

  
	
  316

  	
  (a)(last
  sentence)

  	
   

  	
  2.09

  
	
   

  	
  (a)(1)(A)

  	
   

  	
  6.05

  
	
   

  	
  (a)(1)(B)

  	
   

  	
  6.04

  
	
   

  	
  (a)(2)

  	
   

  	
  N.A.

  
	
   

  	
  (b)

  	
   

  	
  6.07

  
	
   

  	
  (c)

  	
   

  	
  2.12;9.04

  
	
  317

  	
  (a)(1)

  	
   

  	
  6.08

  
	
   

  	
  (a)(2)

  	
   

  	
  6.12

  
	
   

  	
  (b)

  	
   

  	
  2.04

  
	
  318

  	
  (a)

  	
   

  	
  12.01

  
	
   

  	
  (b)

  	
   

  	
  N.A.

  
	
   

  	
  (c)

  	
   

  	
  12.01

  



 






N.A.
means not applicable.


*  This Cross-Reference Table is not part of
this Indenture.


 

















 


TABLE OF CONTENTS


 


	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  ARTICLE 1

  
	
   

  
	
  DEFINITIONS AND INCORPORATION BY REFERENCE

  
	
   

  
	
  Section 1.01

  	
  Definitions

  	
  1

  
	
  Section 1.02

  	
  Other Definitions

  	
  31

  
	
  Section 1.03

  	
  Incorporation by Reference of Trust Indenture Act

  	
  32

  
	
  Section 1.04

  	
  Rules of Construction

  	
  33

  
	
  Section 1.05

  	
  Acts of Holders

  	
  33

  
	
   

  
	
  ARTICLE 2

  
	
   

  
	
  THE NOTES

  
	
   

  
	
  Section 2.01

  	
  Form and Dating; Terms

  	
  35

  
	
  Section 2.02

  	
  Execution and Authentication

  	
  36

  
	
  Section 2.03

  	
  Registrar and Paying Agent

  	
  37

  
	
  Section 2.04

  	
  Paying Agent To Hold Money in Trust

  	
  37

  
	
  Section 2.05

  	
  Holder Lists

  	
  37

  
	
  Section 2.06

  	
  Transfer and Exchange

  	
  37

  
	
  Section 2.07

  	
  Replacement Notes

  	
  50

  
	
  Section 2.08

  	
  Outstanding Notes

  	
  50

  
	
  Section 2.09

  	
  Treasury Notes

  	
  50

  
	
  Section 2.10

  	
  Temporary Notes

  	
  50

  
	
  Section 2.11

  	
  Cancellation

  	
  51

  
	
  Section 2.12

  	
  Defaulted Interest

  	
  51

  
	
  Section 2.13

  	
  CUSIP Numbers

  	
  51

  
	
   

  	
   

  	
   

  
	
  ARTICLE 3

  
	
   

  
	
  REDEMPTION

  
	
   

  
	
  Section 3.01

  	
  Notices to Trustee

  	
  52

  
	
  Section 3.02

  	
  Selection of Notes To Be Redeemed or Purchased

  	
  52

  
	
  Section 3.03

  	
  Notice of Redemption

  	
  52

  
	
  Section 3.04

  	
  Effect of Notice of Redemption

  	
  53

  
	
  Section 3.05

  	
  Deposit of Redemption or Purchase Price

  	
  53

  
	
  Section 3.06

  	
  Notes Redeemed or Purchased in Part

  	
  54

  
	
  Section 3.07

  	
  Optional Redemption

  	
  54

  
	
  Section 3.08

  	
  Mandatory Redemption

  	
  55

  
	
  Section 3.09

  	
  Offers To Repurchase by Application of Excess Proceeds

  	
  55

  



 


i

















 


	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  ARTICLE 4

  
	
   

  
	
  COVENANTS

  
	
   

  	
   

  	
   

  
	
  Section 4.01

  	
  Payment of Notes

  	
  57

  
	
  Section 4.02

  	
  Maintenance of Office or Agency

  	
  57

  
	
  Section 4.03

  	
  Reports and Other Information

  	
  58

  
	
  Section 4.04

  	
  Compliance Certificate

  	
  59

  
	
  Section 4.05

  	
  Taxes

  	
  59

  
	
  Section 4.06

  	
  Stay, Extension and Usury Laws

  	
  59

  
	
  Section 4.07

  	
  Limitation on Restricted Payments

  	
  59

  
	
  Section 4.08

  	
  Dividend and Other Payment Restrictions Affecting Restricted
  Subsidiaries

  	
  67

  
	
  Section 4.09

  	
  Limitation on Incurrence of Indebtedness and Issuance of
  Disqualified Stock and Preferred Stock

  	
  68

  
	
  Section 4.10

  	
  Asset Sales

  	
  74

  
	
  Section 4.11

  	
  Transactions with Affiliates

  	
  76

  
	
  Section 4.12

  	
  Liens

  	
  78

  
	
  Section 4.13

  	
  Corporate Existence

  	
  79

  
	
  Section 4.14

  	
  Offer to Repurchase Upon Change of Control

  	
  79

  
	
  Section 4.15

  	
  Limitation on Guarantees of Indebtedness by Restricted
  Subsidiaries

  	
  80

  
	
  Section 4.16

  	
  Discharge and Suspension of Covenants

  	
  81

  
	
   

  
	
  ARTICLE 5

  
	
   

  
	
  SUCCESSORS

  
	
   

  
	
  Section 5.01

  	
  Merger, Consolidation or Sale of All or Substantially All
  Assets

  	
  82

  
	
  Section 5.02

  	
  Successor Corporation Substituted

  	
  84

  
	
   

  
	
  ARTICLE 6

  
	
   

  
	
  DEFAULTS AND REMEDIES

  
	
   

  
	
  Section 6.01

  	
  Events of Default

  	
  84

  
	
  Section 6.02

  	
  Acceleration

  	
  86

  
	
  Section 6.03

  	
  Other Remedies

  	
  87

  
	
  Section 6.04

  	
  Waiver of Past Defaults

  	
  87

  
	
  Section 6.05

  	
  Control by Majority

  	
  87

  
	
  Section 6.06

  	
  Limitation on Suits

  	
  88

  
	
  Section 6.07

  	
  Rights of Holders of Notes To Receive Payment

  	
  88

  
	
  Section 6.08

  	
  Collection Suit by Trustee

  	
  88

  
	
  Section 6.09

  	
  Restoration of Rights and Remedies

  	
  88

  
	
  Section 6.10

  	
  Rights and Remedies Cumulative

  	
  89

  
	
  Section 6.11

  	
  Delay or Omission Not Waiver

  	
  89

  
	
  Section 6.12

  	
  Trustee May File Proofs of Claim

  	
  89

  
	
  Section 6.13

  	
  Priorities

  	
  89

  
	
  Section 6.14

  	
  Undertaking for Costs

  	
  90

  



 


ii

















 


	
   

  	
   

  	
  Page

  
	
   

  
	
  ARTICLE 7

  
	
   

  
	
  TRUSTEE

  
	
   

  
	
  Section 7.01

  	
  Duties of Trustee

  	
  90

  
	
  Section 7.02

  	
  Rights of Trustee

  	
  91

  
	
  Section 7.03

  	
  Individual Rights of Trustee

  	
  92

  
	
  Section 7.04

  	
  Trustee’s Disclaimer

  	
  92

  
	
  Section 7.05

  	
  Notice of Defaults

  	
  93

  
	
  Section 7.06

  	
  Reports by Trustee to Holders of the Notes

  	
  93

  
	
  Section 7.07

  	
  Compensation and Indemnity

  	
  93

  
	
  Section 7.08

  	
  Replacement of Trustee

  	
  94

  
	
  Section 7.09

  	
  Successor Trustee by Merger, etc.

  	
  95

  
	
  Section 7.10

  	
  Eligibility; Disqualification

  	
  95

  
	
  Section 7.11

  	
  Preferential Collection of Claims Against Issuer

  	
  95

  
	
   

  
	
  ARTICLE 8

  
	
   

  
	
  LEGAL DEFEASANCE AND COVENANT DEFEASANCE

  
	
   

  
	
  Section 8.01

  	
  Option To Effect Legal Defeasance or Covenant Defeasance

  	
  95

  
	
  Section 8.02

  	
  Legal Defeasance and Discharge

  	
  96

  
	
  Section 8.03

  	
  Covenant Defeasance

  	
  96

  
	
  Section 8.04

  	
  Conditions to Legal or Covenant Defeasance

  	
  97

  
	
  Section 8.05

  	
  Deposited Money and Government Securities To Be Held in
  Trust; Other Miscellaneous Provisions

  	
  98

  
	
  Section 8.06

  	
  Repayment to Issuer

  	
  98

  
	
  Section 8.07

  	
  Reinstatement

  	
  99

  
	
   

  
	
  ARTICLE 9

  
	
   

  
	
  AMENDMENT, SUPPLEMENT AND WAIVER

  
	
   

  
	
  Section 9.01

  	
  Without Consent of Holders of Notes

  	
  99

  
	
  Section 9.02

  	
  With Consent of Holders of Notes

  	
  100

  
	
  Section 9.03

  	
  Compliance with Trust Indenture Act

  	
  101

  
	
  Section 9.04

  	
  Revocation and Effect of Consents

  	
  102

  
	
  Section 9.05

  	
  Notation on or Exchange of Notes

  	
  102

  
	
  Section 9.06

  	
  Trustee To Sign Amendments, etc.

  	
  102

  
	
  Section 9.07

  	
  Payment for Consent

  	
  102

  
	
   

  
	
  ARTICLE 10

  
	
   

  
	
  GUARANTEES

  
	
   

  
	
  Section 10.01

  	
  Guarantee

  	
  103

  
	
  Section 10.02

  	
  Limitation on Guarantor Liability

  	
  104

  
	
  Section 10.03

  	
  Execution and Delivery

  	
  104

  
	
  Section 10.04

  	
  Subrogation

  	
  105

  
	
  Section 10.05

  	
  Benefits Acknowledged

  	
  105

  



 


iii

















 


	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  Section 10.06

  	
  Release of Guarantees

  	
  105

  
	
   

  
	
  ARTICLE 11

  
	
   

  
	
  SATISFACTION AND DISCHARGE

  
	
   

  
	
  Section 11.01

  	
  Satisfaction and Discharge

  	
  106

  
	
  Section 11.02

  	
  Application of Trust Money

  	
  107

  
	
   

  
	
  ARTICLE 12

  
	
   

  
	
  MISCELLANEOUS

  
	
   

  
	
  Section 12.01

  	
  Trust Indenture Act Controls

  	
  107

  
	
  Section 12.02

  	
  Notices

  	
  107

  
	
  Section 12.03

  	
  Communication by Holders of Notes with Other Holders of
  Notes

  	
  109

  
	
  Section 12.04

  	
  Certificate and Opinion as to Conditions Precedent

  	
  109

  
	
  Section 12.05

  	
  Statements Required in Certificate or Opinion

  	
  109

  
	
  Section 12.06

  	
  Rules by Trustee and Agents

  	
  109

  
	
  Section 12.07

  	
  No Personal Liability of Directors, Officers, Employees and
  Stockholders

  	
  110

  
	
  Section 12.08

  	
  Governing Law

  	
  110

  
	
  Section 12.09

  	
  Waiver of Jury Trial

  	
  110

  
	
  Section 12.10

  	
  Force Majeure

  	
  110

  
	
  Section 12.11

  	
  No Adverse Interpretation of Other Agreements

  	
  110

  
	
  Section 12.12

  	
  Successors

  	
  110

  
	
  Section 12.13

  	
  Severability

  	
  110

  
	
  Section 12.14

  	
  Counterpart Originals

  	
  111

  
	
  Section 12.15

  	
  Table of Contents, Headings, etc.

  	
  111

  
	
  Section 12.16

  	
  Qualification of Indenture

  	
  111

  
	
   

  	
   

  	
   

  
	
  EXHIBITS

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Exhibit A

  	
  Form of
  Note

  	
   

  
	
  Exhibit B

  	
  Form of
  Certificate of Transfer

  	
   

  
	
  Exhibit C

  	
  Form of
  Certificate of Exchange

  	
   

  
	
  Exhibit D

  	
  Form of
  Supplemental Indenture to Be Delivered by Subsequent Guarantors

  	
   

  



 


iv

















 


INDENTURE,
dated as of October 21, 2010, among Michaels Stores, Inc., a Delaware
corporation (“Michaels”), the Guarantors (as defined herein) listed on
the signature pages hereto and Law Debenture Trust Company of New York, as
Trustee.


 


W  I  T  N  E  S  S
E  T  H


 


WHEREAS,
Michaels has duly authorized the creation of an issue of $800,000,000 aggregate
principal amount of 7 3/4% Senior Notes due 2018 (the “Initial Notes”);


 


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


 


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


 


ARTICLE 1


 


DEFINITIONS AND
INCORPORATION BY REFERENCE


 


Section 1.01                                          Definitions.


 


“10%
Senior Notes” means the $750,000,000 aggregate principal amount of the
Issuer’s 10% senior notes due 2014 issued on October 31, 2006.


 


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


 


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


 


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


 


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


 


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


 


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


 


“Affiliate”
of any specified Person means any other Person directly or indirectly
controlling or controlled by or under direct or indirect common control with
such specified Person.  For purposes of this
definition, “control” (including, with correlative meanings, the terms “controlling,”
“controlled by” 


 

















 


and
“under common control with”), as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise.


 


“Agent”
means any Registrar or Paying Agent.


 


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


 


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


 


(2)           the excess, if any,
of (a) the present value at such Redemption Date of (i) the
redemption price of such Note at November 1, 2014 (such redemption price
being set forth in Section 3.07 hereof), plus (ii) all required
interest payments due on such Note through November 1, 2014 (excluding
accrued but unpaid interest to the Redemption Date), computed using a discount
rate equal to the Treasury Rate as of such Redemption Date plus 50 basis
points; over (b) the then outstanding principal amount of such Note.


 


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


 


“Asset
Sale” means:


 


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


 


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


 


in
each case, other than:


 


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


 


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


 


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


 


2

















 


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


 


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


 


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


 


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


 


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


 


(i)            foreclosures on or
expropriations of assets;


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


“Capital
Stock” means:


 


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


 


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


 


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


 


3

















 


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


 


“Capitalized Lease Obligation”
means, at the time any determination thereof is to be made, the amount of the
liability in respect of a capital lease that would at such time be required to
be capitalized and reflected as a liability on a balance sheet (excluding the
footnotes thereto) prepared in accordance with GAAP.


 


“Cash
Equivalents” means:


 


(1)           United States
dollars and Canadian dollars;


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


4
















 


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


 


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


 


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


 


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


 


Notwithstanding
the foregoing, Cash Equivalents shall include amounts denominated in currencies
other than those set forth in clauses (1) and (2) above, provided that such amounts are
converted into any currency listed in clauses (1) and (2) as promptly as
practicable and in any event within ten Business Days following the receipt of
such amounts.


 


“Cash
Management Services” means any of the following to the extent not
constituting a line of credit: ACH transactions, treasury and/or cash
management services, including, without limitation, controlled disbursement
services, foreign exchange facilities, deposit and other accounts and merchant
services.


 


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


 


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


 


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


 


“Clearstream”
means Clearstream Banking, Société Anonyme.


 


“Consolidated Depreciation and Amortization
Expense” means with respect to any Person for any period, the total
amount of depreciation and amortization expense, including the amortization of
deferred financing fees of such Person and its Restricted Subsidiaries for such
period on a consolidated basis and otherwise determined in accordance with
GAAP.


 


5

















 


“Consolidated Interest Expense”
means, with respect to any Person for any period, without duplication, the sum
of:


 


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


 


(3)           interest income for
such period.


 


For
purposes of this definition, interest on a Capitalized Lease Obligation shall
be deemed to accrue at an interest rate reasonably determined by such Person to
be the rate of interest implicit in such Capitalized Lease Obligation in
accordance with GAAP.


 


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


 


(1)           any after-tax effect of extraordinary, non-recurring or unusual gains
or losses (less all fees and expenses relating thereto) or expenses,
Transaction Expenses to the extent incurred on or prior to December 31, 2007,
severance, relocation costs, costs related to the Perfect Store Initiative,
Hybrid Distribution Network Costs, Public Company Costs, integration costs,
pre-opening, opening, consolidation and closing costs for facilities (including
stores), signing, retention or completion bonuses, transition costs, costs
incurred in connection with acquisitions after October 31, 2006,
restructuring costs, Specified Legal Expenses, and curtailments or
modifications to pension and post-retirement employee benefit plans shall be
excluded,


 


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


 


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


 


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


 


(5)           the Net Income for
such period of any Person that is not a Subsidiary, or is an Unrestricted Subsidiary,
or that is accounted for by the equity method of accounting, shall be excluded;
provided that
Consolidated Net Income of the Issuer shall be increased by the amount of 


 


6

















 


dividends
or distributions or other payments that are actually paid in cash (or to the
extent converted into cash) to the referent Person or a Restricted Subsidiary
thereof in respect of such period, by such Person,


 


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


 


(7)           effects of
adjustments (including the effects of such adjustments pushed down to the
Issuer and its Restricted Subsidiaries) in the merchandise inventory, property
and equipment, goodwill, intangible assets, deferred revenue and debt line
items in such Person’s consolidated financial statements pursuant to GAAP
resulting from the application of purchase accounting in relation to the
Transactions or any consummated acquisition or the amortization or write-off of
any amounts thereof, net of taxes, shall be excluded,


 


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


 


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


 


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


 


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


 


(12)         accruals and reserves
that are established within twelve months after October 31, 2006 that are
so required to be established as a result of the Transactions in accordance
with GAAP shall be excluded,


 


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


 


7

















 


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


 


In addition, to the extent not already included
in the Net Income of such Person and its Restricted Subsidiaries,
notwithstanding anything to the contrary in the foregoing, Consolidated Net
Income shall include the amount of proceeds received from business interruption
insurance and reimbursements of any expenses and charges that are covered by
indemnification or other reimbursement provisions in connection with any
Permitted Investment or any sale, conveyance, transfer or other disposition of
assets permitted under this Indenture.


 


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


 


“Consolidated
Secured Debt Ratio” means, as of any date of determination, the ratio of
(1) Consolidated Total Indebtedness of the Issuer and its Restricted
Subsidiaries that is secured by Liens as of the end of the most recent fiscal
quarter for which internal financial statements are available immediately
preceding the date on which such event for which such calculation is being made
shall occur to (2) the Issuer’s EBITDA for the most recently ended four
full fiscal quarters for which internal financial statements are available
immediately preceding the date on which such event for which such calculation
is being made shall occur, in each case with such pro forma
adjustments to Consolidated Total Indebtedness and EBITDA as are appropriate
and consistent with the pro forma
adjustment provisions set forth in the definition of Fixed Charge Coverage
Ratio.


 


“Consolidated
Total Indebtedness” means, as at any date of determination, an amount equal
to (x) the sum of (1) the aggregate amount of all outstanding Indebtedness of
the Issuer and its Restricted Subsidiaries on a consolidated basis consisting
of Indebtedness for borrowed money, Obligations in respect of Capitalized Lease
Obligations and debt obligations evidenced by promissory notes and similar
instruments (and excluding, for the avoidance of doubt, all obligations
relating to Receivables Facilities) and (2) the aggregate amount of all
outstanding Disqualified Stock of the Issuer and all Preferred Stock of its
Restricted Subsidiaries on a consolidated basis, with the amount of such
Disqualified Stock and Preferred Stock equal to the greater of their respective
voluntary or involuntary liquidation preferences and maximum fixed repurchase
prices, in each case determined on a consolidated basis in accordance with
GAAP, less (y) the aggregate amount of unrestricted cash and Cash Equivalents
included on the consolidated balance sheet of the Issuer and any Restricted
Subsidiaries as of such date; provided that Indebtedness of the Issuer and its
Restricted Subsidiaries under any revolving credit facility as at any date of
determination shall be determined using the Average Monthly Balance of such
Indebtedness for the most recently ended four fiscal quarters for which
internal financial statements are available as of such date of determination
(the “Reference Period”). For purposes hereof, (a) the “maximum fixed
repurchase price” of any Disqualified Stock or Preferred Stock that does not
have a fixed repurchase price shall be calculated in accordance with the terms
of such Disqualified Stock or Preferred Stock as if such Disqualified Stock or
Preferred Stock were purchased on any date on which Consolidated Total
Indebtedness shall be required to be determined pursuant to this Indenture, and
if such price is based upon, or measured by, the fair market value of such
Disqualified Stock or Preferred Stock, such fair market value shall be
determined reasonably and in good faith by the Issuer, (b) “Average Monthly
Balance” means, with respect to 


 


8

















 


any
Indebtedness incurred by the Issuer or its Restricted Subsidiaries under a
revolving credit facility, the quotient of (x) the sum of each Individual
Monthly Balance for each fiscal month ended on or prior to such date of
determination and included in the Reference Period divided by (y) 12, and (c) “Individual
Monthly Balance” means, with respect to any Indebtedness incurred by the Issuer
or its Restricted Subsidiaries under a revolving credit facility during any
fiscal month of the Issuer, the quotient of (x) the sum of the aggregate
outstanding principal amount of all such Indebtedness at the end of each day of
such fiscal month divided by (y) the number of days in such fiscal month.


 


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


 


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


 


(2)           to advance or supply
funds


 


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


 


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


 


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


 


“Corporate
Trust Office of the Trustee” means the office of the Trustee at which at
any time its Corporate Trust business shall be principally administered, which
address on the date hereof shall be at the address of the Trustee specified in
Section 12.02 hereof or such other address as to which the Trustee may give
notice to the Holders and the Issuer.


 


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


 


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


 


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


 


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


 


“Designated Non-cash Consideration”
means the fair market value of non-cash consideration received by the Issuer or
a Restricted Subsidiary in connection with an Asset Sale that is so designated
as Designated Non-cash Consideration pursuant to an Officer’s Certificate,
setting forth the basis of 


 


9

















 


such
valuation, executed by the principal financial officer of the Issuer, less the
amount of Cash Equivalents received in connection with a subsequent sale,
redemption, repurchase of or collection or payment on, such Designated Non-cash
Consideration.


 


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


 


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


 


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


 


(1)           increased (without
duplication) by:


 


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


 


(b)           Fixed Charges of such Person for such period plus bank fees and costs
of surety bonds in connection with financing activities plus amounts excluded
from Consolidated Interest Expense as set forth in clauses (v), (w), (x), (y)
and (z) in the definition thereof, to the extent the same were deducted (and
not added back) in calculating such Consolidated Net Income; plus


 


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


 


(d)           any expenses or charges
(other than depreciation or amortization expense) related to any Equity
Offering, Permitted Investment, acquisition, disposition, recapitalization or
the incurrence of Indebtedness permitted to be incurred by this Indenture
(including a refinancing thereof) (whether or not successful), including (i)
such fees, expenses or charges related to the offering of the Initial Notes, and (ii) any amendment or other modification of the Initial
Notes, the Existing Notes and the Senior Credit Facilities,


 


10

















 


in each case, deducted (and not added back) in
computing Consolidated Net Income; plus


 


(e)           the amount of any
restructuring charge or reserve deducted (and not added back) in such period in
computing Consolidated Net Income; plus


 


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


 


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


 


(h)           the amount of management,
monitoring, consulting and advisory fees (including termination fees) and
related indemnities and expenses paid or accrued in such period to the
Investors or Highfields Capital to the extent otherwise permitted under Section
4.11 hereof and deducted (and not added back) in such period in computing
Consolidated Net Income; plus


 


(i)            [Reserved];


 


(j)            the
amount of loss on sale of receivables and related assets to the Receivables
Subsidiary in connection with a Receivables Facility; plus


 


(k)           any costs or expense incurred by the
Issuer or a Restricted Subsidiary pursuant to any management equity plan or
stock option plan or any other management or employee benefit plan or agreement
or any stock subscription or shareholder agreement, to the extent that such
cost or expenses are funded with cash proceeds contributed to the capital of
the Issuer or net cash proceeds of an issuance of Equity Interest of the Issuer
(other than Disqualified Stock) solely to the extent that such net cash
proceeds are excluded from the calculation set forth in clause (3) of Section
4.07(a) hereof; plus


 


(l)            any
net loss from disposed or discontinued operations; plus


 


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


 


(2)           decreased (without
duplication) by:


 


11

















 


(a)           non-cash
gains increasing Consolidated Net Income of such Person for such period,
excluding any non-cash gains to the extent they represent the reversal of an
accrual or reserve for a potential cash item that reduced EBITDA in any prior
period and any non-cash gains with respect to cash actually received in a prior
period so long as such cash did not increase EBITDA in such prior period, plus


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


(1)           contributions to its
common equity capital, and


 


12

















 


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


 


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


 


“Existing
Notes” means, collectively, the 10% Senior Notes, the Senior Subordinated
Notes and the Subordinated Discount Notes.


 


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


 


For
purposes of making the computation referred to above, Investments,
acquisitions, dispositions, amalgamations, mergers and consolidations that have
been made by the Issuer or any of its Restricted Subsidiaries during the
four-quarter reference period or subsequent to such reference period and on or
prior to or simultaneously with the Fixed Charge Coverage Ratio Calculation
Date shall be calculated on a pro forma
basis assuming that all such Investments, acquisitions, dispositions,
amalgamations, mergers and consolidations (and the change in any associated
fixed charge obligations and the change in EBITDA resulting therefrom) had
occurred on the first day of the four-quarter reference period.  If since the beginning of such period any
Person that subsequently became a Restricted Subsidiary or was merged,
amalgamated or consolidated with or into the Issuer or any of its Restricted
Subsidiaries since the beginning of such period shall have made any Investment,
acquisition, disposition, amalgamation, merger or consolidation that would have
required adjustment pursuant to this definition, then the Fixed Charge Coverage
Ratio shall be calculated giving pro forma
effect thereto for such period as if such Investment, acquisition, disposition,
merger or consolidation had occurred at the beginning of the applicable
four-quarter period.


 


For purposes of this definition, whenever pro forma effect is to be given to an
Investment, acquisition, disposition, amalgamation, merger or consolidation and
the amount of income or earnings relating thereto, the pro forma calculations shall be made in
good faith by a responsible financial or accounting officer of the Issuer (and
may include, for the avoidance of doubt, cost savings and operating expense
reductions resulting from such Investment, acquisition, amalgamation, merger or
consolidation which is being given pro forma effect that have been or are
expected to be realized).  If any
Indebtedness bears a floating rate of interest and is being given pro forma effect, the interest on such
Indebtedness shall be calculated as if the rate in effect on the Fixed Charge
Coverage Ratio Calculation Date had been the applicable rate for the entire
period (taking into account any Hedging Obligations applicable to such Indebtedness).


 


13

















 


Interest on a Capitalized Lease Obligation
shall be deemed to accrue at an interest rate reasonably determined by a
responsible financial or accounting officer of the Issuer to be the rate of
interest implicit in such Capitalized Lease Obligation in accordance with
GAAP.  Interest on Indebtedness that may
optionally be determined at an interest rate based upon a factor of a prime or
similar rate, a eurocurrency interbank offered rate, or other rate, shall be
deemed to have been based upon the rate actually chosen, or, if none, then
based upon such optional rate chosen as the Issuer may designate.


 


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


 


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


 


(2)           all cash dividends
or other distributions paid (excluding items eliminated in consolidation) on
any series of Preferred Stock during such period; and


 


(3)           all cash dividends
or other distributions paid (excluding items eliminated in consolidation) on
any series of Disqualified Stock during such period.


 


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


 


“GAAP”
means generally accepted accounting principles in the United States which are
in effect on October 31, 2006.  For purposes of this Indenture, the term “consolidated” with respect to
any Person means such Person consolidated with its Restricted Subsidiaries and
does not include any Unrestricted Subsidiary.


 


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


 


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


 


“Government
Securities” means securities that are:


 


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


 


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


 


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


 


14
















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


(a)           in
respect of borrowed money;


 


(b)           evidenced
by bonds, notes, debentures or similar instruments or letters of credit or
bankers’ acceptances (or, without duplication, reimbursement agreements in
respect thereof);


 


(c)           representing
the balance deferred and unpaid of the purchase price of any property
(including Capitalized Lease Obligations), except (i) any such balance that
constitutes an obligation in respect of a commercial letter of credit, a trade
payable or similar obligation to a trade creditor, in each case accrued in the
ordinary course of business and (ii) any earn-out obligations until such
obligation becomes a liability on the balance sheet of such Person in
accordance with GAAP and is not paid
after becoming due and payable; or


 


(d)           representing
any Hedging Obligations;


 


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


 


15

















 


(2)           to the extent not
otherwise included, any obligation by such Person to be liable for, or to pay,
as obligor, guarantor or otherwise, on the obligations of the type referred to
in clause (1) of a third Person (whether or not such items would appear upon
the balance sheet of such obligor or guarantor), other than by endorsement of
negotiable instruments for collection in the ordinary course of business; and


 


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


 


provided,
however, that notwithstanding the foregoing, Indebtedness
shall be deemed not to include (a) Contingent Obligations incurred in the
ordinary course of business or (b) obligations under or in respect of
Receivables Facilities.


 


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


 


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


 


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


 


“Initial
Notes” is defined in the recitals hereto.


 


“Initial
Purchasers” means Deutsche Bank Securities Inc., Banc of America Securities
LLC, Barclays Capital Inc., Credit Suisse Securities (USA) LLC, J.P. Morgan
Securities LLC and Wells Fargo Securities, LLC.


 


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


 


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


 


“Investment
Grade Securities” means:


 


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


 


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


 


(3)           investments in any
fund that invests exclusively in investments of the type described in clauses
(1) and (2) which fund may also hold immaterial amounts of cash pending
investment or distribution; and


 


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


 


16

















 


“Investments”
means, with respect to any Person, all investments by such Person in other
Persons (including Affiliates) in the form of loans (including guarantees),
advances or capital contributions (excluding accounts receivable, credit card
and debit card receivables, trade credit, advances to customers, commission,
travel and similar advances to officers and employees, in each case made in the
ordinary course of business), purchases or other acquisitions for consideration
of Indebtedness, Equity Interests or other securities issued by any other
Person and investments that are required by GAAP to be classified on the
balance sheet (excluding the footnotes) of the Issuer in the same manner as the
other investments included in this definition to the extent such transactions
involve the transfer of cash or other property. 
For purposes of the definition of “Unrestricted Subsidiary” and Section
4.07 hereof:


 


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


 


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


 


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


 


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


 


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


 


“Issue
Date” means October 21, 2010.


 


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


 


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


 


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


 


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


 


“Lien”
means, with respect to any asset, any mortgage, lien (statutory or otherwise),
pledge, hypothecation, charge, security interest, preference, priority or
encumbrance of any kind in respect


 


17

















 


of
such asset, whether or not filed, recorded or otherwise perfected under
applicable law, including any conditional sale or other title retention
agreement, any lease in the nature thereof, any option or other agreement to
sell or give a security interest in and any filing of or agreement to give any
financing statement under the Uniform Commercial Code (or equivalent statutes)
of any jurisdiction; provided
that in no event shall an operating lease be deemed to constitute a Lien.


 


“Michaels”
is defined in the preamble hereto.


 


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


 


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


 


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


 


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


 


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


 


“Obligations”
means any principal, interest (including any interest accruing subsequent to
the filing of a petition in bankruptcy, reorganization or similar proceeding at
the rate provided for in the documentation with respect thereto, whether or not
such interest is an allowed claim under applicable state, federal or foreign
law), penalties, fees, indemnifications, reimbursements (including
reimbursement obligations with respect to letters of credit and banker’s
acceptances), damages and other liabilities, and guarantees of payment of such
principal, interest, penalties, fees, indemnifications, reimbursements, damages
and other liabilities, payable under the documentation governing any
Indebtedness.


 


“Offering
Memorandum” means the offering memorandum, dated October 7, 2010, relating
to the sale of the Initial Notes.


 


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


 


18

















 


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


 


“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 Issuer or the Trustee.


 


“outstanding”
shall have the meaning set forth in Section 2.08 hereof.


 


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


 


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


 


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


 


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


 


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


 


“Permitted
Investments” means:


 


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


 


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


 


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


 


(a)           such
Person becomes a Restricted Subsidiary; or


 


19

















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


(8)           any Investment in a
Similar Business having an aggregate fair market value, taken together with all
other Investments made pursuant to this clause (8) that are at that time
outstanding, not to exceed $75.0 million (with the fair market value of each
Investment being measured at the time made and without giving effect to
subsequent changes in value);


 


(9)           Investments the
payment for which consists of Equity Interests (exclusive of Disqualified
Stock) of the Issuer, or any of its direct or indirect parent companies; provided, however, that such Equity Interests will not increase
the amount available for Restricted Payments under clause (3) of Section
4.07(a) hereof;


 


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


 


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


 


20

















 


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


 


(13)         additional
Investments having an aggregate fair market value, taken together with all
other Investments made pursuant to this clause (13) that are at that time
outstanding (without giving effect to the sale of an Unrestricted Subsidiary to
the extent the proceeds of such sale do not consist of, or have not been
subsequently sold or transferred for, cash or marketable securities), not to
exceed $100.0 million (with the fair market value of each Investment being
measured at the time made and without giving effect to subsequent changes in
value);


 


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


 


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


 


(16)         loans and advances to
officers, directors and employees for business-related travel expenses, moving
expenses and other similar expenses, in each case incurred in the ordinary
course of business or consistent with past practices or to fund such Person’s
purchase of Equity Interests of the Issuer or any direct or indirect parent
company thereof; and


 


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


 


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


 


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


 


(2)           Liens imposed by
law, such as carriers’, warehousemen’s, materialmen’s, repairmen’s and
mechanics’ Liens, in each case for sums not yet overdue for a period of more
than 30 days or being contested in good faith by appropriate actions or other
Liens arising out of judgments or awards against such Person with respect to
which such Person shall then be proceeding with an appeal or other proceedings
for review if adequate reserves with respect thereto are maintained on the books
of such Person in accordance with GAAP;


 


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


 


(4)           Liens in favor of issuers of performance, surety, bid, indemnity,
warranty, release, appeal or similar bonds or with respect to other regulatory
requirements or letters of credit 


 


21

















 


or bankers’ acceptances issued, and completion
guarantees provided for, in each case pursuant to the request of and for the
account of such Person in the ordinary course of its business or consistent
with past practice prior to the Issue Date;


 


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


 


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


 


(7)           Liens existing on
the Issue Date;


 


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


 


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


 


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


 


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


 


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


 


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


 


22

















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


(22)         Liens (i) of a
collection bank arising under Section 4-210 of the Uniform Commercial Code on
items in the course of collection, (ii) attaching to commodity trading
accounts or other commodity brokerage accounts incurred in the ordinary course
of business, and (iii) in favor of banking institutions arising as a
matter of law encumbering deposits (including the right of set-off) and which
are within the general parameters customary in the banking industry;


 


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


 


(24)         Liens encumbering
reasonable customary initial deposits and margin deposits and similar Liens
attaching to commodity trading accounts or other brokerage accounts incurred in
the ordinary course of business and not for speculative purposes;


 


23

















 


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


 


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


 


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


 


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


 


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


 


(30)         zoning
by-laws and other land use restrictions, including, without limitation, site
plan agreements, development agreements and contract zoning agreements;


 


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


 


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


 


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


 


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


 


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


 


For
purposes of this definition, the term “Indebtedness” shall be deemed to include
interest on such Indebtedness.


 


24
















 


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


 


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


 


“Public Company Costs” shall mean costs
relating to compliance with the Sarbanes-Oxley Act of 2002, as amended, and other
expenses arising out of or incidental to the Issuer’s status as a public
company, including costs, fees and expenses (including legal, accounting and
other professional fees) relating to compliance with provisions of the
Securities Act and the Exchange Act, as applicable to companies with equity
securities held by the public, the rules of national securities exchange
companies with listed equity securities, directors’ compensation, fees and
expense reimbursement, shareholder meetings and reports to shareholders,
directors and officers’ insurance and other executive costs, legal and other
professional fees, and listing fees, in each case incurred or accrued prior to
October 31, 2006 and that will not continue to be incurred immediately
after October 31, 2006.


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


25

















 


“Registration
Rights Agreement” means the Registration Rights Agreement related to the
Notes dated as of the Issue Date, among the Issuer, the Guarantors and the
Initial Purchasers, as such agreement may be amended, modified or supplemented
from time to time and, with respect to any Additional Notes, one or more
registration rights agreements between the Issuer and the other parties
thereto, as such agreement(s) may be amended, modified or supplemented
from time to time, relating to rights given by the Issuer to the purchasers of
Additional Notes to register such Additional Notes under the Securities Act.


 


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


 


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


 


“Regulation
S Permanent Global Note” means a permanent Global Note in the form of Exhibit A
bearing the Global Note Legend and the Private Placement Legend and deposited
with or on behalf of and registered in the name of the Depositary or its
nominee, issued in a denomination equal to the outstanding principal amount of
the Regulation S Temporary Global Note upon expiration of the Restricted
Period.


 


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


 


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


 


“Related Business Assets” means
assets (other than cash or Cash Equivalents) used or useful in a Similar
Business, provided that
any assets received by the Issuer or a Restricted Subsidiary in exchange for
assets transferred by the Issuer or a Restricted Subsidiary shall not be deemed
to be Related Business Assets if they consist of securities of a Person, unless
upon receipt of the securities of such Person, such Person would become a
Restricted Subsidiary.


 


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


 


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


 


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


 


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


 


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


 


26

















 


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


 


“Revolving
Credit Facility” means the credit facility provided under the Amended and
Restated Credit Agreement, dated as of February 18, 2010 among the Issuer,
the other borrowers party thereto, the facility guarantors party thereto from
time to time, the lenders party thereto from time to time in their capacities
as lenders thereunder and Bank of America, N.A., as Administrative Agent,
including any notes, mortgages, guarantees, collateral documents, instruments
and agreements executed in connection therewith, and any amendments,
supplements, modifications, extensions, replacements, renewals, restatements,
refundings or refinancings thereof and any one or more indentures or credit
facilities or commercial paper facilities with banks or other institutional
lenders or investors that extend, replace, refund, refinance, renew or defease
any part of the loans, notes, other credit facilities or commitments
thereunder, including any such replacement, refunding or refinancing facility
or indenture that increases the amount borrowable thereunder or alters the
maturity thereof or adds Restricted Subsidiaries as additional borrowers or
guarantors thereunder and whether by the same or any other agent, lender or
group of lenders.


 


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


 


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


 


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


 


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


 


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


 


“Sale and Lease-Back Transaction”
means any arrangement providing for the leasing by the Issuer or any of its
Restricted Subsidiaries of any real or tangible personal property, which
property has been or is to be sold or transferred by the Issuer or such
Restricted Subsidiary to a third Person in contemplation of such leasing.


 


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


 


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


 


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


 


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


 


“Senior
Subordinated Notes” means the $400,000,000 aggregate principal amount of
the Issuer’s 11 3/8% senior subordinated notes due 2016 issued on
October 31, 2006.


 


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


 


27

















 


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


 


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


 


“Specified
Legal Expenses” means all attorneys’ and experts’ fees and expenses and all
other costs and expenses paid or payable in connection with investigating or
defending or preparing to investigate or defend any threatened, pending,
completed or future claim, demand, action, suit, proceeding, inquiry or
investigation (whether civil, criminal, administrative or investigative)
arising out of or related to (i) the Issuer’s compensation practices
(including option grants) prior to October 31, 2006, (ii) any
disclosure or alleged lack of disclosure on the part of the Issuer or any of
its directors or officers regarding the beneficial ownership of any securities
of the Issuer prior to October 31, 2006 by any such director or officer
(or any trust established for the benefit of any such director or officer or
any family member thereof), (iii) any transaction prior to
October 31, 2006 involving any securities of the Issuer alleged to have
been engaged in by any such Person, (iv) any alleged deficiencies in the
Issuer’s financial reporting, internal control over financial reporting or
disclosure controls prior to October 31, 2006 and procedures relating to
any of the foregoing, and (v) any alleged bad faith, breach of fiduciary
duty or other act or omission on the part of any director or officer of the
Issuer relating to any of the foregoing, together in each case with all
damages, losses, liabilities, judgments, fines, penalties and amounts paid in
settlement arising out of or incurred in connection with any of the foregoing
(including all amounts paid to or on behalf of other Persons in connection with
any of the foregoing pursuant to any indemnification agreements, arrangements
or obligations).


 


“Sponsor
Management Agreement” means the management agreements between certain of
the management companies associated with the Investors and Highfields Capital,
and the Issuer, as in effect on the Issue Date and as amended, supplemented,
amended and restated, replaced or otherwise modified from time to time;
provided, however, that the terms of any such amendment, supplement, amendment
and restatement or replacement agreement are not, taken as a whole, less
favorable to the holders of the Notes in any material respect than the original
agreement in effect on the Issue Date.


 


“Subordinated
Discount Notes” means the $469,449,000 aggregate principal amount at
maturity of the Issuer’s 13% subordinated discount notes due 2016 issued on
October 31, 2006.


 


“Subordinated Indebtedness” means,
with respect to the Notes,


 


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


 


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


 


“Subsidiary”
means, with respect to any Person:


 


(1)           any corporation,
association, or other business entity (other than a partnership, joint venture,
limited liability company or similar entity) of which more than 50% of the
total voting power of shares of Capital Stock entitled (without regard to the
occurrence of any contingency)


 


28

















 


to
vote in the election of directors, managers or trustees thereof is at the time
of determination owned or controlled, directly or indirectly, by such Person or
one or more of the other Subsidiaries of that Person or a combination thereof
or is consolidated under GAAP with such Person at such time; and


 


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


 


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


 


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


 


“Term Loan Facility” means the credit
facility provided under the Senior Secured Term Loan Agreement, dated as of October 31,
2006 among the Issuer, the lenders party thereto
from time to time in their capacities as lenders thereunder and Deutsche Bank
AG New York Branch, as Administrative Agent, including any notes, mortgages,
guarantees, collateral documents, instruments and agreements executed in
connection therewith, and any amendments, supplements, modifications,
extensions, replacements, renewals, restatements, refundings or refinancings
thereof and any one or more indentures or credit facilities or commercial paper
facilities with banks or other institutional lenders or investors that extend,
replace, refund, refinance, renew or defease any part of the loans, notes,
other credit facilities or commitments thereunder, including any such
replacement, refunding or refinancing facility or indenture that increases the
amount borrowable thereunder or alters the maturity thereof or adds Restricted
Subsidiaries as additional borrowers or guarantors thereunder and whether by
the same or any other agent, lender or group of lenders.


 


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


 


“Transaction Agreement” means the
Agreement and Plan of Merger, dated as of June 30, 2006 among Bain Paste
Mergerco, Inc., Blackstone Paste Mergerco, Inc., Bain Paste Finco,
LLC, Blackstone Paste Finco, LLC and the Issuer, as the same may be amended
prior to October 31, 2006.


 


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


 


“Transactions” means the transactions
contemplated by the Transaction Agreement, the issuance of the 10% Senior
Notes, the Senior Subordinated Notes and the Subordinated Discount Notes and
borrowings under the Senior Credit Facilities as in effect on October 31,
2006.


 


“Treasury Rate” means, as of any
Redemption Date, the yield to maturity as of such Redemption Date of United
States Treasury securities with a constant maturity (as compiled and published
in the most recent Federal Reserve Statistical Release H.15 (519) that has
become publicly available at least two Business Days prior to the Redemption
Date (or, if such Statistical Release is no longer published,


 


29

















 


any
publicly available source of similar market data)) most nearly equal to the
period from the Redemption Date to November 1, 2014; provided, however, that if the period from the Redemption Date to
November 1, 2014 is less than one year, the weekly average yield on
actually traded United States Treasury securities adjusted to a constant
maturity of one year will be used.


 


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


 


“Trustee”
means Law Debenture Trust Company of New York as trustee, until a successor
replaces it in accordance with the applicable provisions of this Indenture and
thereafter means the successor serving hereunder.


 


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


 


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


 


“Unrestricted
Subsidiary” means:


 


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


 


(2)           any Subsidiary of an
Unrestricted Subsidiary.


 


The
Issuer may designate any Subsidiary of the Issuer (including any existing
Subsidiary and any newly acquired or newly formed Subsidiary) to be an
Unrestricted Subsidiary unless such Subsidiary or any of its Subsidiaries owns
any Equity Interests or Indebtedness of, or owns or holds any Lien on, any
property of, the Issuer or any Subsidiary of the Issuer (other than solely any
Subsidiary of the Subsidiary to be so designated); provided that


 


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


 


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


 


(3)           each of:


 


(a)           the
Subsidiary to be so designated; and


 


(b)           its
Subsidiaries


 


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


 


30

















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


(2)           the sum of all such
payments.


 


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


 


Section 1.02                                          Other
Definitions.


 


	
  Term

  	
   

  	
  Defined in

  Section

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  “Acceptable
  Commitment”

  	
   

  	
  4.10(b)

  	
   

  
	
  “Affiliate
  Transaction”

  	
   

  	
  4.11(a)

  	
   

  
	
  “Asset
  Sale Offer”

  	
   

  	
  4.10(c)

  	
   

  
	
  “Authentication
  Order”

  	
   

  	
  2.02

  	
   

  
	
  “Change
  of Control Offer”

  	
   

  	
  4.14(a)

  	
   

  
	
  “Change
  of Control Payment”

  	
   

  	
  4.14(a)

  	
   

  
	
  “Change
  of Control Payment Date”

  	
   

  	
  4.14(a)

  	
   

  



 


31

















 


	
  Term

  	
   

  	
  Defined in

  Section

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  “Covenant
  Defeasance”

  	
   

  	
  8.03

  	
   

  
	
  “Covenant
  Suspension Event”

  	
   

  	
  4.16(a)

  	
   

  
	
  “DTC”

  	
   

  	
  2.03

  	
   

  
	
  “Event
  of Default”

  	
   

  	
  6.01(a)

  	
   

  
	
  “Excess
  Proceeds”

  	
   

  	
  4.10(c)

  	
   

  
	
  “incur”
  or “incurrence”

  	
   

  	
  4.09(a)

  	
   

  
	
  “Legal
  Defeasance”

  	
   

  	
  8.02

  	
   

  
	
  “Note
  Register”

  	
   

  	
  2.03

  	
   

  
	
  “Offer
  Amount”

  	
   

  	
  3.09(b)

  	
   

  
	
  “Offer
  Period”

  	
   

  	
  3.09(b)

  	
   

  
	
  “Pari
  Passu Indebtedness”

  	
   

  	
  4.10(c)

  	
   

  
	
  “Paying
  Agent”

  	
   

  	
  2.03

  	
   

  
	
  “Purchase
  Date”

  	
   

  	
  3.09(b)

  	
   

  
	
  “Redemption
  Date”

  	
   

  	
  3.07(a)

  	
   

  
	
  “Refinancing Indebtedness”

  	
   

  	
  4.09(b)

  	
   

  
	
  “Refunding
  Capital Stock”

  	
   

  	
  4.07(b)

  	
   

  
	
  “Registrar”

  	
   

  	
  2.03

  	
   

  
	
  “Restricted
  Payments”

  	
   

  	
  4.07(a)

  	
   

  
	
  “Reversion
  Date”

  	
   

  	
  4.16(b)

  	
   

  
	
  “Second
  Commitment”

  	
   

  	
  4.10(b)

  	
   

  
	
  “Successor
  Company”

  	
   

  	
  5.01(a)

  	
   

  
	
  “Successor Person”

  	
   

  	
  5.01(c)

  	
   

  
	
  “Suspended
  Covenants”

  	
   

  	
  4.16(a)

  	
   

  
	
  “Suspension
  Period”

  	
   

  	
  4.16(b)

  	
   

  
	
  “Treasury
  Capital Stock”

  	
   

  	
  4.07(b)

  	
   

  



 


Section 1.03                                Incorporation
by Reference of Trust Indenture Act.


 


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


 


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


 


“indenture
securities” means the Notes;


 


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


 


“indenture
to be qualified” means this Indenture;


 


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


 


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


 


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


 


32
















 


Section 1.04                                          Rules of
Construction.


 


Unless
the context otherwise requires:


 


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


 


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


 


(c)           “or” is not exclusive;


 


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


 


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


 


(f)            provisions apply to successive events and transactions;


 


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


 


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


 


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


 


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


 


(k)           the principal amount of any
non-interest 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;


 


(l)            the principal amount of any
Preferred Stock shall be (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, whichever is greater;
and


 


(m)          the words “herein,” “hereof” and “hereunder” and other
words of similar import refer to this Indenture as a whole and not any
particular Article, Section, clause or other subdivision.


 


Section 1.05                                          Acts of Holders.


 


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


 


33

















 


(subject to Section 7.01) conclusive in favor
of the Trustee and the Issuer, if made in the manner provided in this Section 1.05.


 


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


 


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


 


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


 


(e)           The Issuer may, in the circumstances permitted by the
Trust Indenture Act, set a record date for purposes of determining the identity
of Holders entitled to give any request, demand, authorization, direction,
notice, consent, waiver or take any other act, or to vote or consent to any
action by vote or consent authorized or permitted to be given or taken by
Holders.  Unless otherwise specified, if
not set by the Issuer prior to the first solicitation of a Holder made by any
Person in respect of any such action, or in the case of any such vote, prior to
such vote, any such record date shall be the later of 30 days prior to the
first solicitation of such consent or the date of the most recent list of
Holders furnished to the Trustee prior to such solicitation.


 


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


 


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


 


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


 


34

















 


waiver or other action shall be valid or effective
if made, given or taken more than 90 days after such record date.


 


ARTICLE 2


 


THE NOTES


 


Section 2.01                                          Form and
Dating; Terms.


 


(a)           General.  The
Notes and the Trustee’s certificate of authentication shall be substantially in
the form of Exhibit A hereto. 
The Notes may have notations, legends or endorsements required by law,
stock exchange rules or usage.  Each
Note shall be dated the date of its authentication.  The Notes shall be in denominations of $2,000
and integral multiples of $1,000 in excess of $2,000.


 


(b)           Global Notes. 
Notes issued in global form shall be substantially in the form of Exhibit A
attached hereto (including the Global Note Legend thereon and the “Schedule of
Exchanges of Interests in the Global Note” attached thereto).  Notes issued in definitive form shall be
substantially in the form of Exhibit A attached hereto (but without
the Global Note Legend thereon and without the “Schedule of Exchanges of
Interests in the Global Note” attached thereto).  Each Global Note shall represent such of the
outstanding Notes as shall be specified in the “Schedule of Exchanges of
Interests in the Global Note” attached thereto and each shall provide that it
shall represent up to the aggregate principal amount of Notes from time to time
endorsed thereon and that the aggregate principal amount of outstanding Notes
represented thereby may from time to time be reduced or increased, as
applicable, to reflect exchanges and redemptions.  Any endorsement of a Global Note to reflect
the amount of any increase or decrease in the aggregate principal amount of
outstanding Notes represented thereby shall be made by the Trustee or the Custodian,
at the direction of the Trustee, in accordance with instructions given by the
Holder thereof as required by Section 2.06 hereof.


 


(c)           Temporary Global Notes.  Notes offered and sold in reliance on
Regulation S shall be issued initially in the form of the Regulation S
Temporary Global Note, which shall be deposited on behalf of the purchasers of
the Notes represented thereby with the Trustee, as custodian for the
Depositary, and registered in the name of the Depositary or the nominee of the
Depositary for the accounts of designated agents holding on behalf of Euroclear
or Clearstream, duly executed by the Issuer and authenticated by the Trustee as
hereinafter provided.  The Restricted
Period shall be terminated upon the receipt by the Trustee of:


 


(i)            a written certificate from the Depositary, together with
copies of certificates from Euroclear and Clearstream certifying that they have
received certification of non-United States beneficial ownership of 100% of the
aggregate principal amount of the Regulation S Temporary Global Note (except to
the extent of any beneficial owners thereof who acquired an interest therein
during the Restricted Period pursuant to another exemption from registration
under the Securities Act and who shall take delivery of a beneficial ownership
interest in a 144A Global Note bearing a Private Placement Legend, all as
contemplated by Section 2.06(b) hereof); and


 


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


 


Following
the termination of the Restricted Period, beneficial interests in the
Regulation S Temporary Global Note shall be exchanged for beneficial
interests in the Regulation S Permanent Global Note pursuant to the Applicable
Procedures.  Simultaneously with the
authentication of the Regulation S Permanent Global Note, the Trustee shall
cancel the Regulation S Temporary Global Note. 
The aggregate principal amount of the Regulation S Temporary Global Note
and the Regulation S Permanent


 


35

















 


Global
Note may from time to time be increased or decreased by adjustments made on the
records of the Trustee and the Depositary or its nominee, as the case may be,
in connection with transfers of interest as hereinafter provided.


 


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


 


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


 


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


 


Additional
Notes ranking pari  passu
with the Initial Notes may be created and issued from time to time by the
Issuer without notice to or consent of the Holders and shall be consolidated
with and form a single class with the Initial Notes and shall have the same
terms as to status, redemption or otherwise as the Initial Notes; provided
that the Issuer’s ability to issue Additional Notes shall be subject to the
Issuer’s compliance with Section 4.09 hereof.  Any Additional Notes shall be issued with the
benefit of an indenture supplemental to this Indenture.


 


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


 


Section 2.02                                          Execution and
Authentication.


 


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


 


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


 


A
Note shall not be entitled to any benefit under this Indenture or be valid or
obligatory for any purpose until authenticated substantially in the form of Exhibit A
attached hereto by the manual signature of the Trustee.  The signature shall be conclusive evidence
that the Note has been duly authenticated and delivered under this Indenture.


 


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


 


The
Trustee may appoint an authenticating agent acceptable to the Issuer to
authenticate Notes.  An authenticating
agent may authenticate Notes whenever the Trustee may do so.  Each reference


 


36

















 


in
this Indenture to authentication by the Trustee includes authentication by such
agent.  An authenticating agent has the
same rights as an Agent to deal with Holders or an Affiliate of the Issuer.


 


Section 2.03                                          Registrar and
Paying Agent.


 


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


 


The
Issuer initially appoints The Depository Trust Company (“DTC”) to act as
Depositary with respect to the Global Notes.


 


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


 


Section 2.04                                          Paying Agent To
Hold Money in Trust.


 


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


 


Section 2.05                                          Holder Lists.


 


The
Trustee shall preserve in as current a form as is reasonably practicable the
most recent list available to it of the names and addresses of all Holders and
shall otherwise comply with Trust Indenture Act Section 312(a).  If the Trustee is not the Registrar, the
Issuer shall furnish to the Trustee no later than five (5) Business Days
after each Record Date and at such other times as the Trustee may request in
writing, a list in such form and as of such date as the Trustee may reasonably
require of the names and addresses of the Holders of Notes and the Issuer shall
otherwise comply with Trust Indenture Act Section 312(a).


 


Section 2.06                                          Transfer and
Exchange.


 


(a)           Transfer and Exchange of Global Notes.  Except as otherwise set forth in this Section 2.06,
a Global Note may be transferred, in whole and not in part, only to another
nominee of the Depositary or to a successor Depositary or a nominee of such
successor Depositary.  A beneficial
interest


 


37

















 


in a Global Note may not be exchanged for a
Definitive Note unless (i) the Depositary (x) notifies the Issuer
that it is unwilling or unable to continue as Depositary for such Global Note
or (y) has ceased to be a clearing agency registered under the Exchange
Act and, in either case, a successor Depositary is not appointed by the Issuer
within 120 days or (ii) there shall have occurred and be continuing a
Default with respect to the Notes.  Upon
the occurrence of any of the preceding events in (i) or (ii) above,
Definitive Notes delivered in exchange for any Global Note or beneficial interests
therein will be registered in the names, and issued in any approved
denominations, requested by or on behalf of the Depositary (in accordance with
its customary procedures).  Global Notes
also may be exchanged or replaced, in whole or in part, as provided in Sections
2.07 and 2.10 hereof.  Every Note
authenticated and delivered in exchange for, or in lieu of, a Global Note or
any portion thereof, pursuant to this Section 2.06 or Section 2.07 or
2.10 hereof, shall be authenticated and delivered in the form of, and shall be,
a Global Note, except for Definitive Notes issued subsequent to any of the
preceding events in (i) or (ii) above and pursuant to Section 2.06(c) hereof.  A Global Note may not be exchanged for
another Note other than as provided in this Section 2.06(a); provided,
however, beneficial interests in a Global Note may be transferred and
exchanged as provided in Section 2.06(b), (c) or (f) hereof.


 


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


 


(i)            Transfer of Beneficial Interests in the Same Global
Note.  Beneficial interests in any
Restricted Global Note may be transferred to Persons who take delivery thereof
in the form of a beneficial interest in the same Restricted Global Note in
accordance with the transfer restrictions set forth in the Private Placement
Legend; provided, however, that prior to the expiration of the
Restricted Period, transfers of beneficial interests in the Regulation S
Temporary Global Note may not be made to a U.S. Person or for the account or
benefit of a U.S. Person (other than an Initial Purchaser).  Beneficial interests in any Unrestricted
Global Note may be transferred to Persons who take delivery thereof in the form
of a beneficial interest in an Unrestricted Global Note.  No written orders or instructions shall be
required to be delivered to the Registrar to effect the transfers described in
this Section 2.06(b)(i).


 


(ii)           All Other Transfers and Exchanges of Beneficial
Interests in Global Notes.  In
connection with all transfers and exchanges of beneficial interests that are
not subject to Section 2.06(b)(i) hereof, the transferor of such beneficial interest must deliver
to the Registrar either (A) (1) a written order from a Participant or
an Indirect Participant given to the Depositary in accordance with the
Applicable Procedures directing the Depositary to credit or cause to be
credited a beneficial interest in another Global Note in an amount equal to the
beneficial interest to be transferred or exchanged and (2) instructions
given in accordance with the Applicable Procedures containing information
regarding the Participant account to be credited with such increase or
(B) (1) a written order from a Participant or an Indirect Participant
given to the Depositary in accordance with the Applicable Procedures directing
the Depositary to cause to be issued a Definitive Note in an amount equal to
the beneficial interest to be transferred or exchanged and (2) instructions
given by the Depositary to the Registrar containing information regarding the
Person in whose name such Definitive Note shall be registered to effect the
transfer or exchange referred to in (1) above; provided that in no
event shall Definitive Notes be issued upon the transfer or exchange of
beneficial interests in the Regulation S Temporary Global Note prior to (A) the
expiration


 


38

















 


of the Restricted Period and
(B) the receipt by the Registrar of any certificates required pursuant to Rule 903.  Upon consummation of an Exchange Offer by the
Issuer in accordance with Section 2.06(f) hereof, the requirements of
this Section 2.06(b)(ii) shall be deemed to have been satisfied upon
receipt by the Registrar of the instructions contained in the Letter of
Transmittal delivered by the Holder of such beneficial interests in the
Restricted Global Notes.  Upon
satisfaction of all of the requirements for transfer or exchange of beneficial
interests in Global Notes contained in this Indenture and the Notes or
otherwise applicable under the Securities Act, the Trustee shall adjust the
principal amount of the relevant Global Note(s) pursuant to Section 2.06(h) hereof.


 


(iii)          Transfer of Beneficial Interests to Another Restricted
Global Note.  A beneficial interest
in any Restricted Global Note may be transferred to a Person who takes delivery
thereof in the form of a beneficial interest in another Restricted Global Note
if the transfer complies with the requirements of Section 2.06(b)(ii) hereof and the Registrar receives the
following:


 


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


 


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


 


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


 


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


 


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


 


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


 


(D)          the Registrar receives the following:


 


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


 


39

















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


(E)           if such beneficial interest is being transferred to the
Issuer or any of its Restricted Subsidiaries, a certificate substantially in
the form of Exhibit B hereto, including the certifications in item
(3)(b) thereof; or


 


40

















 


(F)           if such beneficial interest is being transferred pursuant
to an effective registration statement under the Securities Act, a certificate
substantially in the form of Exhibit B hereto, including the
certifications in item (3)(c) thereof,


 


the
Trustee shall cause the aggregate principal amount of the applicable Global
Note to be reduced accordingly pursuant to Section 2.06(h) hereof,
and the Issuer shall execute and the Trustee shall authenticate and mail to the
Person designated in the instructions a Definitive Note in the applicable
principal amount.  Any Definitive Note
issued in exchange for a beneficial interest in a Restricted Global Note
pursuant to this Section 2.06(c) shall be registered in such name or
names and in such authorized denomination or denominations as the holder of
such beneficial interest shall instruct the Registrar through instructions from
the Depositary and the Participant or Indirect Participant.  The Trustee shall mail such Definitive Notes
to the Persons in whose names such Notes are so registered.  Any Definitive Note issued in exchange for a
beneficial interest in a Restricted Global Note pursuant to this Section 2.06(c)(i) shall
bear the Private Placement Legend and shall be subject to all restrictions on
transfer contained therein.


 


(ii)           Beneficial Interests in Regulation S Temporary Global
Note to Definitive Notes.  
Notwithstanding Sections 2.06(c)(i)(A) and (C) hereof, a
beneficial interest in the Regulation S Temporary Global Note may not be
exchanged for a Definitive Note or transferred to a Person who takes delivery
thereof in the form of a Definitive Note prior to (A) the expiration of
the Restricted Period and (B) the receipt by the Registrar of any
certificates required pursuant to Rule 903(b)(3)(ii)(B) of the
Securities Act, except in the case of a transfer pursuant to an exemption from
the registration requirements of the Securities Act other than Rule 903 or
Rule 904.


 


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


 


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


 


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


 


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


 


(D)          the Registrar receives the following:


 


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


 


(2)           if the holder of such beneficial interest in a Restricted
Global Note proposes to transfer such beneficial interest to a Person who shall
take delivery thereof in the


 


41

















 


form of an Unrestricted Definitive Note, a
certificate from such holder substantially in the form of Exhibit B
hereto, including the certifications in item (4) thereof;


 


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


 


(iv)          Beneficial Interests in Unrestricted Global Notes to
Unrestricted Definitive Notes.  If
any holder of a beneficial interest in an Unrestricted Global Note proposes to
exchange such beneficial interest for a Definitive Note or to transfer such
beneficial interest to a Person who takes delivery thereof in the form of a
Definitive Note, then, upon the occurrence of any of the events in subsection (i) or
(ii) of Section 2.06(a) hereof
and satisfaction of the conditions set forth in Section 2.06(b)(ii) hereof,
the Trustee shall cause the aggregate principal amount of the applicable Global
Note to be reduced accordingly pursuant to Section 2.06(h) hereof,
and the Issuer shall execute and the Trustee shall authenticate and mail to the
Person designated in the instructions a Definitive Note in the applicable
principal amount.  Any Definitive Note
issued in exchange for a beneficial interest pursuant to this Section 2.06(c)(iv) shall
be registered in such name or names and in such authorized denomination or
denominations as the holder of such beneficial interest shall instruct the
Registrar through instructions from or through the Depositary and the
Participant or Indirect Participant.  The
Trustee shall mail such Definitive Notes to the Persons in whose names such
Notes are so registered.  Any Definitive
Note issued in exchange for a beneficial interest pursuant to this Section 2.06(c)(iv) shall
not bear the Private Placement Legend.


 


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


 


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


 


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


 


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


 


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


 


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


 


(E)           if such Restricted Definitive Note is being transferred to
the Issuer or any of its Restricted Subsidiaries, a certificate substantially
in the form of Exhibit B hereto, including the certifications in
item (3)(b) thereof; or


 


42
















 


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


 


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


 


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


 


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


 


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


 


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


 


(D)          the Registrar receives the following:


 


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


 


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


 


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


 


Upon
satisfaction of the conditions of any of the subparagraphs in this Section 2.06(d)(ii),
the Trustee shall cancel the Definitive Notes and increase or cause to be
increased the aggregate principal amount of the Unrestricted Global Note.


 


(iii)          Unrestricted Definitive Notes to Beneficial Interests in
Unrestricted Global Notes.  A Holder
of an Unrestricted Definitive Note may exchange such Note for a beneficial
interest in an Unrestricted Global Note or transfer such Definitive Notes to a
Person who takes delivery thereof in


 


43

















 


the form of a beneficial interest in an Unrestricted
Global Note at any time.  Upon receipt of
a request for such an exchange or transfer, the Trustee shall cancel the
applicable Unrestricted Definitive Note and increase or cause to be increased
the aggregate principal amount of one of the Unrestricted Global Notes.


 


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


 


(e)           Transfer and Exchange of Definitive Notes for
Definitive Notes.  Upon request by a
Holder of Definitive Notes and such Holder’s compliance with the provisions of
this Section 2.06(e), the Registrar shall register the transfer or
exchange of Definitive Notes.  Prior to
such registration of transfer or exchange, the requesting Holder shall present
or surrender to the Registrar the Definitive Notes duly endorsed or accompanied
by a written instruction of transfer in form satisfactory to the Registrar duly
executed by such Holder or by its attorney, duly authorized in writing.  In addition, the requesting Holder shall
provide any additional certifications, documents and information, as
applicable, required pursuant to the following provisions of this Section 2.06(e):


 


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


 


(A)          if the transfer will be made pursuant to a QIB in
accordance with Rule 144A, then the transferor must deliver a certificate
substantially in the form of Exhibit B hereto, including the
certifications in item (1) thereof;


 


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


 


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


 


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


 


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


 


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


 


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


 


44

















 


(D)          the Registrar receives the following:


 


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


 


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


 


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


 


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


 


(f)            Exchange Offer. 
Upon the occurrence of the Exchange Offer in accordance with the
Registration Rights Agreement, the Issuer shall issue and, upon receipt of an
Authentication Order in accordance with Section 2.02 hereof, the Trustee
shall authenticate (i) one or more Unrestricted Global Notes in an
aggregate principal amount equal to the principal amount of the beneficial
interests in the Restricted Global Notes tendered for acceptance by Persons
that certify in the applicable Letters of Transmittal that (x) they are
not Participating Broker-Dealers, (y) they are not participating in a
distribution of the Exchange Notes and (z) they are not affiliates (as
defined in Rule 144) of the Issuer, and accepted for exchange in the
Exchange Offer and (ii) Unrestricted Definitive Notes in an aggregate
principal amount equal to the principal amount of the Restricted Definitive
Notes tendered for acceptance by Persons that certify in the applicable Letters
of Transmittal that (x) they are not Participating Broker-Dealers, (y) they
are not participating in a distribution of the Exchange Notes and (z) they
are not affiliates (as defined in Rule 144) of the Issuer, and accepted
for exchange in the Exchange Offer. 
Concurrently with the issuance of such Notes, the Trustee shall cause
the aggregate principal amount of the applicable Restricted Global Notes to be
reduced accordingly, and the Issuer shall execute and the Trustee shall
authenticate and mail to the Persons designated by the Holders of Definitive
Notes so accepted Unrestricted Definitive Notes in the applicable principal
amount.  Any Notes that remain
outstanding after the consummation of the Exchange Offer, and Exchange Notes
issued in connection with the Exchange Offer, shall be treated as a single
class of securities under this Indenture.


 


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


 


(i)            Private Placement Legend.


 


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


 


45

















 


“THIS
SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS
AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR
SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S.
PERSONS EXCEPT AS SET FORTH BELOW. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS
THAT (A) IT IS A “QUALIFIED INSTITUTIONAL BUYER” (AS DEFINED IN RULE 144A
UNDER THE SECURITIES ACT), (B) IT IS NOT A U.S. PERSON AND IS ACQUIRING
THIS SECURITY IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE
SECURITIES ACT OR (C) IT IS AN ACCREDITED INVESTOR (AS DEFINED IN RULE
501(a)(1), (2), (3), OR (7) UNDER THE SECURITIES ACT (AN ‘‘ACCREDITED
INVESTOR’’), (2) AGREES THAT IT WILL NOT WITHIN ONE YEAR AFTER THE
ORIGINAL ISSUANCE OF THIS SECURITY RESELL OR OTHERWISE TRANSFER THIS SECURITY
EXCEPT (A) TO THE ISSUER OR ANY SUBSIDIARY THEREOF, (B) INSIDE THE
UNITED STATES TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A
UNDER THE SECURITIES ACT, (C) INSIDE THE UNITED STATES TO AN ACCREDITED
INVESTOR THAT, PRIOR TO SUCH TRANSFER, FURNISHES (OR HAS FURNISHED ON ITS
BEHALF BY A U.S. BROKER-DEALER) TO THE TRUSTEE A SIGNED LETTER CONTAINING
CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER
OF THIS SECURITY (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM THE
TRUSTEE FOR THIS SECURITY), (D)OUTSIDE THE UNITED STATES IN AN OFFSHORE
TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT (IF
AVAILABLE), (E) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY
RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE), (F) IN ACCORDANCE WITH
ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND
BASED UPON AN OPINION OF COUNSEL IF THE ISSUER SO REQUESTS), OR (G) PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND (3) AGREES
THAT IT WILL GIVE TO EACH PERSON TO WHOM THIS SECURITY IS TRANSFERRED A NOTICE
SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. 
IN CONNECTION WITH ANY TRANSFER OF THIS SECURITY WITHIN ONE YEAR AFTER
THE ORIGINAL ISSUANCE OF THIS SECURITY, IF THE PROPOSED TRANSFEREE IS AN
ACCREDITED INVESTOR, THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE
TRUSTEE AND THE ISSUER SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION
AS EITHER OF THEM MAY REASONABLY REQUIRE 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.  AS USED HEREIN, THE TERMS “OFFSHORE
TRANSACTION,” “UNITED STATES” AND “U.S. PERSON” HAVE THE MEANING GIVEN TO THEM
BY REGULATION S UNDER THE SECURITIES ACT.


 


BY ITS PURCHASE OR
ACQUISITION OF THIS NOTE, THE HOLDER REPRESENTS AND AGREES THAT (1) IT IS
NOT AND WILL


 


46

















 


NOT BE (AND IS NOT AND WILL NOT BE DEEMED FOR PURPOSES OF THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED (“ERISA”) OR SECTION 4975
OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”) TO BE) (A) AN
“EMPLOYEE BENEFIT PLAN” (AS DEFINED UNDER SECTION 3(3) OF ERISA), (B) A
PLAN SUBJECT TO SECTION 4975 OF THE CODE OR PROVISIONS UNDER THE
APPLICABLE FEDERAL, STATE, LOCAL, NON-U.S. OR OTHER LAWS OR REGULATIONS THAT
ARE SIMILAR TO SUCH PROVISIONSOF ERISA OR THE CODE (“SIMILAR LAWS”), OR (C) AN
ENTITY, THE UNDERLYING ASSETS OF WHICH ARE CONSIDERED TO INCLUDE “PLAN ASSETS”
OF ANY OF THE FOREGOING BY REASON OF AN EMPLOYEE BENEFIT PLAN OR PLAN’S INVESTMENT
IN SUCH ENTITY; OR (2) THE PURCHASE AND HOLDING OF THIS NOTE DOES NOT AND
WILL NOT CONSTITUTE OR INVOLVE A NON-EXEMPT PROHIBITED TRANSACTION UNDER SECTION 406
OF ERISA OR SECTION 4975 OF THE CODE OR, IF APPLICABLE, A VIOLATION
OF SIMILAR LAWS.”


 


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


 


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


 


“THIS
GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE GOVERNING
THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL OWNERS
HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT
THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE
REQUIRED PURSUANT TO SECTION 2.06(h) OF THE INDENTURE, (II) THIS
GLOBAL NOTE MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF
THE INDENTURE, (III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE
FOR CANCELLATION PURSUANT TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS
GLOBAL NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR
WRITTEN CONSENT OF THE ISSUER.  UNLESS
AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN DEFINITIVE
FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY
TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE
DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY
SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR
DEPOSITARY.  UNLESS THIS CERTIFICATE IS
PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55
WATER STREET, NEW YORK, NEW YORK) (“DTC”) TO THE ISSUER OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED


 


47

















 


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


 


(iii)          Regulation S Temporary Global Note Legend.  The Regulation S Temporary Global Note shall bear
a legend in substantially the following form:


 


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


 


(h)           Cancellation and/or Adjustment of Global Notes.  At such time as all beneficial interests in a
particular Global Note have been exchanged for Definitive Notes or a particular
Global Note has been redeemed, repurchased or canceled in whole and not in part,
each such Global Note shall be returned to or retained and canceled by the
Trustee in accordance with Section 2.11 hereof.  At any time prior to such cancellation, if
any beneficial interest in a Global Note is exchanged for or transferred to a
Person who will take delivery thereof in the form of a beneficial interest in
another Global Note or for Definitive Notes, the principal amount of Notes
represented by such Global Note shall be reduced accordingly and an endorsement
shall be made on such Global Note by the Trustee or by the Depositary at the
direction of the Trustee to reflect such reduction; and if the beneficial
interest is being exchanged for or transferred to a Person who will take
delivery thereof in the form of a beneficial interest in another Global Note,
such other Global Note shall be increased accordingly and an endorsement shall
be made on such Global Note by the Trustee or by the Depositary at the
direction of the Trustee to reflect such increase.


 


(i)            General Provisions Relating to Transfers and Exchanges.


 


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


 


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


 


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


 


(iv)          All Global Notes and Definitive Notes issued upon any
registration of transfer or exchange of Global Notes or Definitive Notes shall
be the valid obligations of the Issuer, evidencing the same debt, and entitled
to the same benefits under this Indenture, as the Global Notes or Definitive
Notes surrendered upon such registration of transfer or exchange.


 


48

















 


(v)           The Issuer shall not be required (A) to issue, to
register the transfer of or to exchange any Notes during a period beginning at
the opening of business 15 days before the day of any selection of Notes for
redemption under Section 3.02 hereof and ending at the close of business
on the day of selection, (B) to register the transfer of or to exchange
any Note so selected for redemption in whole or in part, except the unredeemed
portion of any Note being redeemed in part or (C) to register the transfer
of or to exchange a Note between a Record Date and the next succeeding Interest
Payment Date.


 


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


 


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


 


(viii)        At the option of the Holder, Notes may
be exchanged for other Notes of any authorized denomination or denominations of
a like aggregate principal amount upon surrender of the Notes to be exchanged
at such office or agency.  Whenever any
Global Notes or Definitive Notes are so surrendered for exchange, the Issuer
shall execute, and the Trustee shall authenticate and mail, the replacement Global
Notes and Definitive Notes which the Holder making the exchange is entitled to
in accordance with the provisions of Section 2.02 hereof.


 


(ix)           Each Holder of a Note agrees to indemnify the Issuer and
the Trustee against any liability that may result from the transfer, exchange
or assignment of such Holder’s Note in violation of any provision of this
Indenture and/or applicable United States federal or state securities law.


 


(x)            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 Note (including any transfers between or among Depositary
Participants or beneficial owners of interest in any Global Note) 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.


 


(xi)           Neither the Trustee nor any Agent shall have any
responsibility for any actions taken or not taken by the Depositary.


 


(xii)          All certifications, certificates and Opinions of Counsel
required to be submitted to the Registrar pursuant to this Section 2.06 to
effect a registration of transfer or exchange may be submitted by facsimile.


 


Section 2.07                                          Replacement
Notes.


 


If
any mutilated Note is surrendered to the Trustee, the Registrar or the Issuer,
and the Trustee receives evidence to its satisfaction of the ownership and
destruction, loss or theft of any Note, the Issuer shall issue and the Trustee,
upon receipt of an Authentication Order, shall authenticate a replacement Note
if the Trustee’s requirements are met. 
If required by the Trustee or the Issuer, an indemnity bond must be
supplied by the Holder that is sufficient in the judgment of the Trustee and
the Issuer to


 


49

















 


protect
the Issuer, the Trustee, any Agent and any authenticating agent from any loss
that any of them may suffer if a Note is replaced.  The Issuer may charge for its expenses in
replacing a Note.


 


Every
replacement Note is a contractual obligation of the Issuer and shall be
entitled to all of the benefits of this Indenture equally and proportionately
with all other Notes duly issued hereunder.


 


Section 2.08                                          Outstanding
Notes.


 


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


 


If
a Note is replaced pursuant to Section 2.07 hereof, it ceases to be
outstanding unless the Trustee receives proof satisfactory to it that the
replaced Note is held by a bona fide purchaser.


 


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


 


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


 


Section 2.09                                          Treasury Notes.


 


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


 


Section 2.10                                          Temporary Notes.


 


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


 


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


 


50

















 


Section 2.11                                          Cancellation.


 


The
Issuer at any time may deliver Notes to the Trustee for cancellation. The
Registrar and Paying Agent shall forward to the Trustee any Notes surrendered
to them for registration of transfer, exchange or payment.  The Trustee and no one else shall cancel all
Notes surrendered for registration of transfer, exchange, payment, replacement
or cancellation and shall dispose of cancelled Notes (subject to the record
retention requirement of the Exchange Act) in its customary manner.  Certification of the disposal of all
cancelled Notes shall be delivered to the Issuer upon its written request
therefor.  The Issuer may not issue new
Notes to replace Notes that it has paid or that have been delivered to the
Trustee for cancellation.


 


Section 2.12                                          Defaulted
Interest.


 


If
the Issuer defaults in a payment of interest on the Notes, it shall pay the
defaulted interest in any lawful manner plus, to the extent lawful, interest
payable on the defaulted interest to the Persons who are Holders on a
subsequent special record date, in each case at the rate provided in the Notes
and in Section 4.01 hereof.  The
Issuer shall notify the Trustee in writing of the amount of defaulted interest
proposed to be paid on each Note and the date of the proposed payment, and at
the same time the Issuer shall deposit with the Trustee an amount of money
equal to the aggregate amount proposed to be paid in respect of such defaulted
interest or shall make arrangements satisfactory to the Trustee for such
deposit prior to the date of the proposed payment, such money when deposited to
be held in trust for the benefit of the Persons entitled to such defaulted
interest as provided in this Section 2.12. 
The Trustee shall fix or cause to be fixed each such special record date
and payment date; provided that no such special record date shall be
less than 10 days prior to the related payment date for such defaulted
interest.  The Trustee shall promptly
notify the Issuer of such special record date. 
At least 15 days before the special record date, the Issuer (or, upon
the written request of the Issuer, the Trustee in the name and at the expense
of the Issuer) shall mail or cause to be mailed, first-class postage prepaid,
to each Holder a notice at his or her address as it appears in the Note
Register that states the special record date, the related payment date and the
amount of such interest to be paid.


 


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


 


Section 2.13                                          CUSIP Numbers


 


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


 


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ARTICLE 3


 


REDEMPTION


 


Section 3.01                                          Notices to
Trustee.


 


If
the Issuer elects to redeem Notes pursuant to Section 3.07 hereof, it
shall furnish to the Trustee, at least 5 Business Days (unless a shorter period
shall be agreed to by the Trustee) before notice of redemption is required to
be mailed or caused to be mailed to Holders pursuant to Section 3.03
hereof but not more than 60 days before a redemption date, an Officer’s
Certificate setting forth (i) the paragraph or subparagraph of such Notes
and/or Section of this Indenture pursuant to which the redemption shall
occur, (ii) the redemption date, (iii) the principal amount of the
Notes to be redeemed and (iv) the redemption price.


 


Section 3.02                                          Selection of
Notes To Be Redeemed or Purchased.


 


If
less than all of the Notes are to be redeemed or purchased in an offer to
purchase at any time, the Trustee shall select the Notes to be redeemed or
purchased (a) if the Notes are listed on any national securities exchange,
in compliance with the requirements of the principal national securities
exchange on which the Notes are listed or (b) on a pro rata
basis or, to the extent that selection on a pro rata basis
is not practicable, by lot or by such other method the Trustee considers fair
and appropriate.  In the event of partial
redemption or purchase by lot, the particular Notes to be redeemed or purchased
shall be selected, unless otherwise provided herein, not less than 35 nor more
than 60 days prior to the redemption date by the Trustee from the outstanding
Notes not previously called for redemption or purchase.


 


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


 


Section 3.03                                          Notice of
Redemption.


 


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


 


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


 


(a)           the redemption date;


 


(b)           the redemption price;


 


52
















 


(c)           if any Note is to be redeemed in part only, the portion of
the principal amount of that Note that is to be redeemed and that, after the
redemption date upon surrender of such Note, a new Note or Notes in principal
amount equal to the unredeemed portion of the original Note representing the
same indebtedness to the extent not redeemed will be issued in the name of the
Holder of the Notes upon cancellation of the original Note;


 


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


 


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


 


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


 


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


 


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


 


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


 


At
the Issuer’s request, the Trustee shall give the notice of redemption in the
Issuer’s name and at its expense; provided that the Issuer shall have
delivered to the Trustee, at least 5 Business Days before notice of redemption
is required to be mailed or caused to be mailed to Holders pursuant to this
Section 3.03 (unless a shorter notice shall be agreed to by the Trustee), an
Officer’s Certificate requesting that the Trustee give such notice and setting
forth the information to be stated in such notice as provided in the preceding
paragraph.


 


Section 3.04                                          Effect of
Notice of Redemption.


 


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


 


Section 3.05                                          Deposit of
Redemption or Purchase Price.


 


Prior
to noon Eastern Time on the redemption or purchase date, the Issuer shall
deposit with the Trustee or with the Paying Agent money sufficient to pay the
redemption or purchase price of and accrued and unpaid interest (including
Additional Interest, if any) on all Notes to be redeemed or purchased on that
date.  The Trustee or the Paying Agent
shall promptly return to the Issuer any money deposited with the Trustee or the
Paying Agent by the Issuer in excess of the amounts necessary to pay the
redemption price of, and accrued and unpaid interest on, all Notes to be
redeemed or purchased.


 


53

















 


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


 


Section 3.06                                          Notes Redeemed
or Purchased in Part.


 


Upon
surrender of a Note that is redeemed or purchased in part, the Issuer shall
issue and the Trustee shall authenticate for the Holder at the expense of the
Issuer a new Note equal in principal amount to the unredeemed or unpurchased
portion of the Note surrendered representing the same indebtedness to the
extent not redeemed or purchased; provided that each new Note will be in
a principal amount of $2,000 or an integral multiple of $1,000 in excess of
$2,000.  It is understood that,
notwithstanding anything in this Indenture to the contrary, only an
Authentication Order is required for the Trustee to authenticate such new Note.


 


Section 3.07                                          Optional
Redemption.


 


(a)           At any time prior to November 1,
2014, the Issuer may redeem all or a part of the Notes, upon not less than 30
nor more than 60 days’ prior notice mailed by first—class mail to the
registered address of each Holder of Notes or otherwise delivered in accordance
with the procedures of DTC, at a redemption price equal to 100% of the
principal amount of the Notes redeemed plus the Applicable Premium as of, and
accrued and unpaid interest and Additional Interest, if any, to the date of
redemption (the “Redemption Date”),
subject to the rights of Holders of record on the relevant Record Date to
receive interest due on the relevant Interest Payment Date.


 


(b)           Until November 1, 2013, the Issuer
may, at its option, on one or more occasions redeem up to 35% of the aggregate
principal amount of Notes (including the aggregate principal amount of Notes
issued after the Issue Date), upon notice provided as described in Section 3.03
hereof, at a redemption price equal to 107.750% of the aggregate principal
amount thereof, plus accrued and unpaid interest thereon and Additional
Interest, if any, to the applicable 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, with the net cash proceeds of one or more
Equity Offerings; provided
that at least 50% of the sum of the aggregate principal amount of Notes
originally issued under this Indenture and any Additional Notes that are issued
under this Indenture after the Issue Date remains outstanding immediately after
the occurrence of each such redemption; provided  further
that each such redemption occurs within 90 days of the date of closing of each
such Equity Offering.  Notice of any
redemption upon any Equity Offering may be given prior to such redemption, and
any such redemption or notice may, at the Issuer’s discretion, be subject to
one or more conditions precedent, including, but not limited to, completion of
the related Equity Offering.


 


(c)           Except pursuant to Sections 3.07(a)
and (b), the Notes will not be redeemable at the Issuer’s option before
November 1, 2014.


 


(d)           On and after November 1, 2014, the
Issuer may redeem the Notes, in whole or in part, at the redemption prices
(expressed as percentages of principal amount of the Notes to be redeemed)


 


54

















 


set
forth below, plus accrued and unpaid interest thereon and Additional Interest,
if any, to the applicable 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, if redeemed during the twelve—month period beginning on
November 1 of each of the years indicated below:


 


	
  Year

  	
   

  	
  Percentage

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  2014

  	
   

  	
  103.875

  	
  %

  
	
  2015

  	
   

  	
  101.938

  	
  %

  
	
  2016 and thereafter

  	
   

  	
  100.000

  	
  %

  



 


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


 


Section 3.08                                          Mandatory
Redemption.


 


The
Issuer shall not be required to make mandatory redemption or sinking fund
payments with respect to the Notes.


 


Section 3.09                                          Offers To
Repurchase by Application of Excess Proceeds.


 


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


 


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


 


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


 


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


 


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


 


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


 


55

















 


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


 


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


 


(v)           that Holders electing to have a Note purchased pursuant to
an Asset Sale Offer may elect to have Notes purchased in amounts of $2,000 or
integral multiples of $1,000 in excess of $2,000; no Notes of $2,000 or less
can be purchased in part pursuant to an Asset Sale Offer;


 


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


 


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


 


(viii)        that, if the aggregate principal amount
of Notes and Pari Passu Indebtedness surrendered by the holders thereof exceeds
the Offer Amount, the Trustee shall select the Notes and such Pari Passu
Indebtedness to be purchased on a pro rata basis
based on the accreted value or principal amount of the Notes or such Pari Passu
Indebtedness tendered (with such adjustments as may be deemed appropriate by
the Trustee so that only Notes in denominations of $2,000, or integral
multiples of $1,000 in excess of $2,000, shall be purchased and unpurchased
portions of Notes are equal to $2,000 or integral multiples of $1,000 in excess
of $2,000); and


 


(ix)           that Holders whose Notes were purchased only in part shall
be issued new Notes equal in principal amount to the unpurchased portion of the
Notes surrendered (or transferred by book-entry transfer) representing the same
indebtedness to the extent not repurchased in denominations of $2,000 or an
integral multiple of $1,000 in excess of $2,000.


 


(e)           On or before the Purchase Date, the Issuer shall, to the
extent lawful, (1) accept for payment, on a pro rata basis
to the extent necessary, the Offer Amount of Notes or portions thereof validly
tendered pursuant to the Asset Sale Offer, or if less than the Offer Amount has
been tendered, all Notes tendered and (2) deliver or cause to be delivered to
the Trustee the Notes properly accepted together with an Officer’s Certificate
stating the aggregate principal amount of Notes or portions thereof so
tendered.


 


(f)            The Issuer, the Depositary or the Paying Agent, as the
case may be, shall promptly mail or deliver to each tendering Holder an amount
equal to the purchase price of the Notes properly tendered by such Holder and
accepted by the Issuer for purchase, and the Issuer shall promptly issue a new
Note, and the Trustee, upon receipt of an Authentication Order, shall
authenticate and mail or deliver (or cause to be transferred by book-entry)
such new Note to such Holder (it being understood that, notwithstanding
anything in this Indenture to the contrary, no Opinion of Counsel or Officer’s
Certificate is required for the Trustee to authenticate and mail or deliver
such new Note) in a principal amount equal to any unpurchased portion of the
Note surrendered representing the same indebtedness to the extent not
repurchased; provided that each such new Note shall be in a principal
amount of $2,000 or an integral


 


56

















 


multiple of $1,000 in excess of $2,000.  Any Note not so accepted shall be promptly
mailed or delivered by the Issuer to the Holder thereof.  The Issuer shall publicly announce the
results of the Asset Sale Offer on or as soon as practicable after the Purchase
Date.


 


Other
than as specifically provided in this Section 3.09 or Section 4.10 hereof, any
purchase pursuant to this Section 3.09 shall be made pursuant to the applicable
provisions of Sections 3.01 through 3.06 hereof.


 


ARTICLE 4


 


COVENANTS


 


Section 4.01                                          Payment of
Notes.


 


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


 


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


 


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


 


Section 4.02                                          Maintenance of
Office or Agency.


 


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


 


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


 


The
Issuer hereby initially designates the Corporate Trust Office of the Trustee as
one such office or agency of the Issuer in accordance with Section 2.03 hereof.


 


57

















 


Section 4.03                                          Reports and
Other Information.


 


(a)           Notwithstanding that the Issuer may not be subject to the
reporting requirements of Section 13 or 15(d) of the Exchange Act or otherwise
report on an annual and quarterly basis on forms provided for such annual and
quarterly reporting pursuant to rules and regulations promulgated by the SEC,
the Issuer shall file with the SEC (and make available to the Trustee and
Holders of the Notes (without exhibits), without cost to any Holder, within
15 days after the Issuer files them with the SEC) from and after the Issue
Date,


 


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


 


(2)           within 45 days after the end of each of the first three
fiscal quarters of each fiscal year, reports on Form 10-Q containing all
quarterly information that would be required to be contained in Form 10-Q, or
any successor or comparable form;


 


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


 


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


 


in
each case, in a manner that complies in all material respects with the
requirements specified in such form; provided
that the Issuer shall not be so obligated to file such reports with the SEC (i)
if the SEC does not permit such filing or (ii) prior to the consummation of an
exchange offer or the effectiveness of a shelf registration statement as
required by the Registration Rights Agreement, so long as if clause (i) or
(ii) is applicable the Issuer makes available such information to
prospective purchasers of Notes, in addition to providing such information to
the Trustee and the Holders of the Notes, in each case within 15 days after the
time the Issuer would be required to file such information with the SEC, if it
were subject to Sections 13 or 15(d) of the Exchange Act.  To
the extent any such information is not so filed or furnished, as applicable,
within the time periods specified above and such information is subsequently
filed or furnished, as applicable, the Issuer shall be deemed to have satisfied
its obligations with respect thereto at such time and any Default with respect
thereto shall be deemed to have been cured; provided that such cure
shall not otherwise affect the rights of the Holders under Article 6 hereto if
Holders of at least 25% in principal amount of the then total outstanding Notes
have declared the principal, premium, if any, interest and any other monetary
obligations on all the then outstanding Notes to be due and payable immediately
and such declaration shall not have been rescinded or cancelled prior to such
cure.  In addition, to the extent not
satisfied by the foregoing, for so long as any Notes are outstanding, the
Issuer shall furnish to Holders and to securities analysts and prospective
investors, upon their request, the information required to be delivered
pursuant to Rule 144A(d)(4) under the Securities Act.


 


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


 


58

















 


(c)           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 Issuer’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                                          Compliance
Certificate.


 


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


 


(b)           When any Default has occurred and is continuing under this
Indenture, or if the Trustee or the holder of any other evidence of
Indebtedness of the Issuer or any Subsidiary gives any notice or takes any
other action with respect to a claimed Default, the Issuer shall promptly
(which shall be no more than five (5) Business Days after becoming aware of
such Default) deliver to the Trustee by registered or certified mail or by
facsimile transmission an Officer’s Certificate specifying such event and what
action the Issuer proposes to take with respect thereto.


 


Section 4.05                                          Taxes.


 


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


 


Section 4.06                                          Stay, Extension
and Usury Laws.


 


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


 


Section 4.07                                          Limitation on
Restricted Payments.


 


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


 


59

















 


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


 


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


 


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


 


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


 


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


 


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


 


(B)           the
purchase, repurchase or other acquisition of Subordinated Indebtedness
purchased in anticipation of satisfying a sinking fund obligation, principal
installment or final maturity, in each case due within one year of the date of
purchase, repurchase or acquisition; or


 


(IV)         make any Restricted
Investment


 


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


 


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


 


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


 


(3)           such Restricted
Payment, together with the aggregate amount of all other Restricted Payments
made by the Issuer and its Restricted Subsidiaries after October 31, 2006
(including Restricted Payments permitted by clauses (1), (6)(c), (9) and (14)
of Section 4.07(b) hereof, but excluding all other Restricted Payments
permitted by Section 4.07(b) hereof), is less than the sum of (without duplication):


 


(a)           50%
of the Consolidated Net Income of the Issuer for the period (taken as one
accounting period) beginning July 30, 2006 to the end of the Issuer’s most
recently ended fiscal quarter for which internal financial statements are
available at the time of


 


60

















 


such
Restricted Payment, or, in the case such Consolidated Net Income for such
period is a deficit, minus 100% of such deficit; plus


 


(b)           100% of the aggregate net
cash proceeds and the fair market value, as determined in good faith by the
Issuer, of marketable securities or other property received by the Issuer since
immediately after October 31, 2006 (other than net cash proceeds to the
extent such net cash proceeds have been used to incur Indebtedness,
Disqualified Stock or Preferred Stock pursuant to clause (12)(a) of Section
4.09(b) hereof) from the issue or sale of:


 


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


 


(x)            Equity
Interests to members of management, directors or consultants of the Issuer, any
direct or indirect parent company of the Issuer and the Issuer’s Subsidiaries
after October 31, 2006 to the extent such amounts have been applied to
Restricted Payments made in accordance with clause (4) of Section 4.07(b)
hereof; and


 


(y)           Designated
Preferred Stock; and


 


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


 


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


 


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


 


(c)           100%
of the aggregate amount of cash and the fair market value, as determined in
good faith by the Issuer, of marketable securities or other property
contributed to the capital of the Issuer following October 31, 2006 other
than (X) net cash proceeds to the extent such net cash proceeds have been used
to incur Indebtedness or issue Disqualified Stock or Preferred Stock pursuant
to clause (12)(a) of Section 4.09(b) hereof), (Y) by a Restricted Subsidiary
and (Z) from any Excluded Contributions; plus


 


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


 


(i)            the
sale or other disposition (other than to the Issuer or a Restricted Subsidiary)
of Restricted Investments made by the Issuer or its Restricted


 


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Subsidiaries
and repurchases and redemptions of such Restricted Investments from the Issuer
or its Restricted Subsidiaries and repayments of loans or advances, and
releases of guarantees, which constitute Restricted Investments by the Issuer
or its Restricted Subsidiaries, in each case after October 31, 2006; or


 


(ii)           the
sale (other than to the Issuer or a Restricted Subsidiary) of the stock of an
Unrestricted Subsidiary or a distribution from an Unrestricted Subsidiary
(other than in each case to the extent the Investment in such Unrestricted
Subsidiary was made by the Issuer or a Restricted Subsidiary pursuant to
clause (7) of Section 4.07(b) hereof or to the extent such Investment
constituted a Permitted Investment) or a dividend from an Unrestricted
Subsidiary after October 31, 2006; plus


 


(e)           in
the case of the redesignation of an Unrestricted Subsidiary as a Restricted
Subsidiary or the merger, amalgamation or consolidation of an Unrestricted
Subsidiary into the Issuer or a Restricted Subsidiary or the transfer of all or
substantially all of the assets of an Unrestricted Subsidiary to the Issuer or
a Restricted Subsidiary after October 31, 2006, the fair market value of
the Investment in such Unrestricted Subsidiary (or the assets transferred), as
determined by the Issuer in good faith or, if such fair market value may exceed
$125.0 million, in writing by an Independent Financial Advisor, at the time of
the redesignation of such Unrestricted Subsidiary as a Restricted Subsidiary or
at the time of such merger, amalgamation, consolidation or transfer of assets
other than to the extent the Investment in such Unrestricted Subsidiary was
made by the Issuer or a Restricted Subsidiary pursuant to clause (7) of Section
4.07(b) hereof or to the extent such Investment constituted a Permitted
Investment.


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


(4)           a Restricted Payment
to pay for the repurchase, retirement or other acquisition or retirement for value
of Equity Interests (other than Disqualified Stock) of the Issuer or any of its
direct or indirect parent companies held by any future, present or former
employee, director or consultant of the Issuer, any of its Subsidiaries or any
of its direct or indirect parent companies, or any of their respective estates,
spouses or former spouses pursuant to any management equity plan or stock
option plan or any other management or employee benefit plan or agreement
(including, for the avoidance of doubt, any principal and interest payable on
any notes issued by the Issuer or any direct or indirect parent company in
connection with any such repurchase, retirement or other acquisition or
retirement); provided, however, that the aggregate Restricted Payments made under
this clause (4) do not exceed in calendar year 2010 $30.0 million and in
any other calendar year $15.0 million (which shall increase to $30.0 million
subsequent to the consummation of an underwritten public Equity Offering by the
Issuer or any direct or indirect parent company of the Issuer) with unused
amounts in any calendar year being carried over to succeeding calendar years
subject to a maximum (without giving effect to the following proviso) of $30.0
million in any calendar year (which shall increase to $60.0 million subsequent
to the consummation of an underwritten public Equity Offering by the Issuer or
any direct or indirect parent company of the Issuer); provided further that
such amount in any calendar year may be increased by an amount not to exceed:


 


(a)           the
cash proceeds from the sale of Equity Interests (other than Disqualified Stock)
of the Issuer and, to the extent contributed to the Issuer, Equity Interests of
any of the Issuer’s direct or indirect parent companies, in each case to members
of management, directors or consultants of the Issuer, any of its Subsidiaries
or any of its direct or indirect parent companies that occurs after
October 31, 2006, to the extent the cash proceeds from the sale of such
Equity Interests have not otherwise been applied to the


 


63

















 


payment
of Restricted Payments by virtue of clause (3) of Section 4.07(a) hereof,
plus, in respect of any sale of Equity Interests in connection with an exercise
of stock options, an amount equal to the amount required to be withheld by the
Issuer or any of its direct or indirect parent companies in connection with
such exercise under applicable law to the extent such amount is repaid to the
Issuer or its direct or indirect parent company, as applicable, constituted a
Restricted Payment and has not otherwise been applied to the payment of
Restricted Payments by virtue of clause (3) of Section 4.07(a) hereof;
plus


 


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


 


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


 


and provided  further
that cancellation of Indebtedness owing to the Issuer from employees, directors
or consultants of the Issuer, any of the Issuer’s direct or indirect parent
companies or any of the Issuer’s Restricted Subsidiaries in connection with a
repurchase of Equity Interests of the Issuer or any of its direct or indirect
parent companies will not be deemed to constitute a Restricted Payment for
purposes of this Section 4.07 or any other provision of this Indenture;


 


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


 


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


 


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


 


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


 


provided, however,
in the case of each of (a), (b) and (c) of this clause (6), that for
the most recently ended four full fiscal quarters for which internal financial
statements are available immediately preceding the date of issuance of such
Designated Preferred Stock or the declaration of such dividends on Refunding
Capital Stock that is Preferred Stock, after giving effect to such issuance or
declaration on a pro forma basis, the Issuer and
its Restricted Subsidiaries on a consolidated basis would have had a Fixed
Charge Coverage Ratio of at least 2.00 to 1.00;


 


(7)           Investments in
Unrestricted Subsidiaries having an aggregate fair market value, taken together
with all other Investments made pursuant to this clause (7) that are at
the time outstanding, without giving effect to the sale of an Unrestricted
Subsidiary to the extent the proceeds of such sale do not consist of, or have
not been subsequently sold or transferred for, cash or marketable


 


64

















 


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


 


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


 


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


 


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


 


(11)         other Restricted
Payments in an aggregate amount taken together with all other Restricted
Payments made pursuant to this clause (11) that are at the time outstanding
(without giving effect to the sale of an Investment to the extent the proceeds
of such sale do not consist of, or have not been subsequently sold or
transferred for, cash or marketable securities) not to exceed $75.0 million;


 


(12)         distributions or
payments of Receivables Fees;


 


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


 


(14)         the repurchase,
redemption or other acquisition or retirement for value of any Subordinated
Indebtedness pursuant to the provisions similar to those described under
Sections 4.10 and Section 4.14 hereof; provided that all Notes tendered by Holders in connection
with a Change of Control Offer or Asset Sale Offer, as applicable, have been
repurchased, redeemed or acquired for value;


 


(15)         the declaration and
payment of dividends or distributions by the Issuer to, or the making of loans
to, any direct or indirect parent company in amounts required for any direct or
indirect parent companies to pay, in each case without duplication,


 


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


 


(b)           federal,
state and local income taxes, to the extent such income taxes are attributable
to the income of the Issuer and its Restricted Subsidiaries and, to the extent
of the amount actually received from its Unrestricted Subsidiaries, in amounts
required to pay such taxes to the extent attributable to the income of such
Unrestricted Subsidiaries; provided
that in each case the amount of such payments in any fiscal year does not
exceed the excess (if any) of (A) the amount that the Issuer and its
Restricted Subsidiaries would be required to pay in respect of federal, state
and local income taxes for such fiscal year were the Issuer, its Restricted
Subsidiaries and its Unrestricted Subsidiaries (to the extent described above)
to pay such taxes separately from any such parent company over


 


65

















 


(B) the
aggregate federal, state and local income taxes paid by the Issuer and its
Restricted Subsidiaries;


 


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


 


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


 


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


 


(16)         the distribution, by
dividend or otherwise, or other transfer or disposition of shares of Capital
Stock of, or Indebtedness owed to the Issuer or a Restricted Subsidiary by,
Unrestricted Subsidiaries (other than Unrestricted Subsidiaries, the primary
assets of which are Cash Equivalents) or the proceeds thereof;


 


(17)         cash payments in lieu
of the issuance of fractional shares in connection with the exercise of
warrants, options or other securities convertible into exchangeable for Capital
Stock of the Issuer or any direct or indirect parent company of the Issuer;
provided, that any such cash payment shall not be for the purpose of evading
the limitation of this Section 4.07;


 


(18)         the payment of
dividends and other distributions in an amount equal to any reduction in taxes
actually realized by the Issuer and its Restricted Subsidiaries in the form of
refunds or credits or from deductions when applied to offset income or gain as
a direct result of (i) transaction fees and expenses, (ii) commitment
and other financing fees or (iii) severance, change in control and other
compensation expense incurred in connection with the exercise, repurchase,
rollover or payout of stock options or bonuses, in each case in connection with
the Transactions; and


 


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


 


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


 


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


 


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Section 4.08                                          Dividend and
Other Payment Restrictions  

Affecting Restricted Subsidiaries.


 


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


 


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


 


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


 


(2)           make loans or advances to the Issuer or any of its
Restricted Subsidiaries; or


 


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


 


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


 


(1)           contractual encumbrances or restrictions in effect on the
Issue Date, including pursuant to the Senior Credit Facilities and the related
documentation and the indentures governing the Existing Notes and the related
documentation;


 


(2)           this Indenture and the Notes;


 


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


 


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


 


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


 


(6)           contracts for the sale of assets, including customary
restrictions with respect to a Subsidiary of the Issuer pursuant to an
agreement that has been entered into for the sale or disposition of all or
substantially all of the Capital Stock or assets of such Subsidiary;


 


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


 


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


 


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


 


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


 


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


 


(12)         any encumbrances or restrictions of the type referred to in
clauses (1), (2) and (3) of Section 4.08(a) hereof imposed
by any amendments, modifications, restatements, renewals, increases,
supplements, refundings, replacements or refinancings of the contracts,
instruments or obligations referred to in clauses (1) through (11) of this
Section 4.08(b); provided that such amendments, modifications,
restatements, renewals, increases, supplements, refundings, replacements or
refinancings are, in the good faith judgment of the Issuer, no more restrictive
in any material respect with respect to such encumbrances and other
restrictions taken as a whole than those prior to such amendment, modification,
restatement, renewal, increase, supplement, refunding, replacement or
refinancing;


 


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


 


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


 


Section 4.09                                          Limitation on
Incurrence of Indebtedness and 

Issuance of Disqualified Stock and Preferred Stock.


 


(a)           The Issuer shall not, and shall not permit any of its
Restricted Subsidiaries to, directly or indirectly, create, incur, issue,
assume, guarantee or otherwise become directly or indirectly liable,
contingently or otherwise (collectively, “incur” and collectively, an “incurrence”) with respect to any Indebtedness (including
Acquired Indebtedness) and the Issuer shall not issue any shares of
Disqualified Stock and shall not permit any Restricted Subsidiary to issue any
shares of Disqualified Stock or Preferred Stock; provided, however,
that the Issuer may incur Indebtedness (including Acquired Indebtedness) or
issue shares of Disqualified Stock, and any of its Restricted Subsidiaries may
incur Indebtedness (including Acquired Indebtedness), issue shares of
Disqualified Stock and issue shares of Preferred Stock, if the Fixed Charge
Coverage Ratio on a consolidated basis for the Issuer and its Restricted
Subsidiaries’ most recently ended four fiscal quarters for which internal
financial statements are available immediately preceding the date on which such
additional Indebtedness is incurred or such Disqualified Stock or Preferred
Stock is issued would have been at least 2.00 to 1.00, determined on a pro forma basis (including a pro forma application of the net proceeds
therefrom), as if the additional Indebtedness had been incurred, or the
Disqualified Stock or Preferred Stock had been issued, as the case may be, and
the application of the proceeds therefrom had occurred at the beginning of such
four-quarter period; provided that the amount of Indebtedness (including
Acquired Indebtedness), Disqualified Stock and Preferred Stock that may be
incurred or issued, as applicable, pursuant to the foregoing by Restricted
Subsidiaries that are not Guarantors shall not exceed $150.0 million at any one
time outstanding.


 


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


 


(1)           (x) Indebtedness incurred pursuant to the Revolving
Credit Facility by the Issuer or any Restricted Subsidiary; provided
that immediately after giving effect to any such incurrence, the aggregate
principal amount of all Indebtedness incurred under this clause (x) and
then outstanding does not exceed the greater of (A) $1,200.0 million less up to $150.0 million in the aggregate of all principal
payments with respect to such Indebtedness made following the Issue Date
pursuant to clause (1) of Section 4.10(b) less
the aggregate principal amount of outstanding obligations under or in respect
of Receivables Facilities and (B) (i) 90.0% of the eligible credit
card and debit card receivables of the Issuer and its Restricted Subsidiaries
plus (ii) 90.0% of the net appraised orderly liquidation value of the
eligible inventory of the Issuer and its Restricted Subsidiaries and (y) Indebtedness
incurred pursuant to the Term Loan Facility by the Issuer or any Restricted
Subsidiary; provided that after giving effect to any such incurrence,
the aggregate principal amount of all Indebtedness incurred under this clause (y) and
then outstanding does not exceed $2,400.0 million less
up to $250.0 million in the aggregate of all principal payments with respect to
such Indebtedness made following the Issue Date pursuant to clause (1) of Section 4.10(b);


 


(2)           the incurrence by the Issuer and any Guarantor of
Indebtedness represented by the Notes (including any Guarantee and including
the Exchange Notes) (other than any Additional Notes);


 


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


 


(4)           (i) Indebtedness (including Capitalized Lease
Obligations) incurred or Disqualified Stock and Preferred Stock issued by the
Issuer or any of its Restricted Subsidiaries, to finance the purchase, lease or
improvement of property (real or personal) or equipment that is used or useful
in a Similar Business, whether through the direct purchase of assets or the
Capital Stock of any Person owning such assets and (ii) any Indebtedness
incurred or Disqualified Stock or Preferred Stock issued to refund, refinance
or replace any other Indebtedness incurred or Disqualified Stock or Preferred
Stock issued pursuant to this clause (4); provided
that the aggregate amount of Indebtedness incurred and Disqualified
Stock and Preferred Stock issued pursuant to clauses (i) and (ii) of
this clause (4) does not exceed $125.0 million at any one time
outstanding;


 


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


 


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


 


69

















 


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


 


(B)           the
maximum assumable liability in respect of all such Indebtedness shall at no
time exceed the gross proceeds including non-cash proceeds (the fair market
value of such non-cash proceeds being measured at the time received and without
giving effect to any subsequent changes in value) actually received by the
Issuer and its Restricted Subsidiaries in connection with such disposition;


 


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


 


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


 


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


 


(10)         (x) Hedging Obligations (excluding Hedging Obligations
entered into for speculative purposes) for the purpose of limiting interest
rate risk, exchange rate risk or commodity pricing risk, and (y) Indebtedness
in respect of Cash Management Services provided by any lender party to a Senior
Credit Facility or any affiliate of such lender (or any Person that was a
lender or an affiliate of a lender at the time the applicable agreement
pursuant to which such Cash Management Services are provided was entered into);


 


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


 


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(12)         (a) Indebtedness or Disqualified Stock of the Issuer
and Indebtedness, Disqualified Stock or Preferred Stock of the Issuer or any
Restricted Subsidiary equal to 100.0% of the net cash proceeds received by the
Issuer since immediately after the Issue Date from the issue or sale of Equity
Interests of the Issuer or cash contributed to the capital of the Issuer (in
each case, other than proceeds of Disqualified Stock or sales of Equity
Interests to the Issuer or any of its Subsidiaries) as determined in accordance
with clauses (3)(b) and (3)(c) of Section 4.07(a) hereof to
the extent such net cash proceeds or cash have not been applied pursuant to
such clauses to make Restricted Payments or to make other Investments, payments
or exchanges pursuant to Section 4.07(b) hereof or to make Permitted
Investments (other than Permitted Investments specified in clauses (1) and
(3) of the definition thereof) and (b) Indebtedness or Disqualified
Stock of the Issuer and Indebtedness, Disqualified Stock or Preferred Stock of
the Issuer or any Restricted Subsidiary not otherwise permitted hereunder in an
aggregate principal amount or liquidation preference, which when aggregated
with the principal amount and liquidation preference of all other Indebtedness,
Disqualified Stock and Preferred Stock then outstanding and incurred pursuant
to this clause (12)(b), does not at any one time outstanding exceed $125.0
million (it being understood that any Indebtedness incurred or Disqualified
Stock or Preferred Stock issued pursuant to this clause (12)(b) shall
cease to be deemed incurred or outstanding for purposes of this clause (12)(b) but
shall be deemed incurred for the purposes of 
Section 4.09(a) hereof from and after the first date on which
the Issuer or such Restricted Subsidiary could have incurred such Indebtedness,
Disqualified Stock or Preferred Stock under Section 4.09(a) hereof
without reliance on this clause (12)(b));


 


(13)         the incurrence by the Issuer or any Restricted Subsidiary of
Indebtedness or issuance by the Issuer or any Restricted Subsidiary of
Disqualified Stock or Preferred Stock which serves to refund or refinance any
Indebtedness incurred or Disqualified Stock or Preferred Stock issued as
permitted under Section 4.09(a) hereof and clauses (2), (3) and
(12)(a) of this Section 4.09(b), this clause (13) and clause (14) of
this Section 4.09(b) or any Indebtedness incurred or Disqualified
Stock or Preferred Stock issued to so refund or refinance such Indebtedness,
Disqualified Stock or Preferred Stock including additional Indebtedness
incurred or Disqualified Stock or Preferred Stock issued to pay premiums
(including tender premiums), defeasance costs and fees and expenses in
connection therewith (the “Refinancing
Indebtedness”) prior to its respective maturity; provided, however, that such Refinancing
Indebtedness:


 


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


 


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


 


(C)           shall
not include:


 


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


 


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


 


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


 


and provided  further that subclause (A) of
this clause (13) will not apply to any refunding or refinancing of any
Indebtedness outstanding under a Senior Credit Facility;


 


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


 


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


 


(b)            the
Fixed Charge Coverage Ratio of the Issuer and the Restricted Subsidiaries is
greater than immediately prior to such acquisition, merger, amalgamation or
consolidation;


 


(15)         Indebtedness arising from the honoring by a bank or other
financial institution of a check, draft or similar instrument drawn against
insufficient funds in the ordinary course of business, provided that such Indebtedness
is extinguished within five Business Days of its incurrence;


 


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


 


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


 


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


 


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


 


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


 


(20)                            Indebtedness of
the Issuer or any of its Restricted Subsidiaries consisting of (i) the
financing of insurance premiums or (ii) take-or-pay obligations contained
in supply arrangements, in each case incurred in the ordinary course of
business; and


 


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


 


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


 


(1)                                  in the event
that an item of Indebtedness, Disqualified Stock or Preferred Stock (or any
portion thereof) meets the criteria of more than one of the categories of
permitted Indebtedness, Disqualified Stock or Preferred Stock described in
clauses (1) through (21) of Section 4.09(b) hereof or is
entitled to be incurred pursuant to Section 4.09(a) hereof, the
Issuer, in its sole discretion, shall classify or reclassify such item of
Indebtedness, Disqualified Stock or Preferred Stock (or any portion thereof)
and shall only be required to include the amount and type of such Indebtedness,
Disqualified Stock or Preferred Stock in one of the above clauses; provided
that all Indebtedness outstanding under the Senior Credit Facilities on the
Issue Date shall at all times be deemed to be outstanding in reliance on clause
(1) of Section 4.09(b) hereof; and


 


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


 


Accrual
of interest, the accretion of accreted value and the payment of interest in the
form of additional Indebtedness, Disqualified Stock or Preferred Stock shall
not be deemed to be an incurrence of Indebtedness, Disqualified Stock or
Preferred Stock for purposes of this Section 4.09.


 


For
purposes of determining compliance with any U.S. dollar—denominated restriction
on the incurrence of Indebtedness, the U.S. dollar—equivalent principal amount
of Indebtedness denominated in a foreign currency shall be calculated based on
the relevant currency exchange rate in effect on the date such Indebtedness was
incurred, in the case of term debt, or first committed, in the case of
revolving credit debt; provided
that if such Indebtedness is incurred to refinance other Indebtedness
denominated in a foreign currency, and such refinancing would cause the
applicable U.S. dollar denominated restriction to be exceeded if calculated at
the relevant currency exchange rate in effect on the date of such refinancing,
such U.S. dollar-denominated restriction shall be deemed not to have been
exceeded so long 


 


73

















 


as
the principal amount of such refinancing Indebtedness does not exceed the
principal amount of such Indebtedness being refinanced.


 


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


 


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


 


Section 4.10                                          Asset Sales.


 


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


 


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


 


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


 


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


 


(B)                                any securities received by
the Issuer or such Restricted Subsidiary from such transferee that are
converted by the Issuer or such Restricted Subsidiary into Cash Equivalents (to
the extent of the Cash Equivalents received) within 180 days following the
closing of such Asset Sale, and


 


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


 


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


 


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


 


(1)                                  to permanently
reduce:


 


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


 


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


 


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


 


(D)                               Indebtedness of a Restricted
Subsidiary that is not a Guarantor, other than Indebtedness owed to the Issuer
or another Restricted Subsidiary;


 


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


 


(3)                                  to make an
Investment in (A) any one or more businesses, provided that such Investment in any business is in the form
of the acquisition of Capital Stock and results in the Issuer or another of its
Restricted Subsidiaries, as the case may be, owning an amount of the Capital
Stock of such business such that it constitutes a Restricted Subsidiary,
(B) properties or (C) other assets that, in the case of each of (A), (B) and
(C), replace the businesses, properties and/or assets that are the subject of
such Asset Sale;


 


provided  that, in the
case of clauses (2) and (3) above, a binding commitment shall be
treated as a permitted application of the Net Proceeds from the date of such
commitment so long as the Issuer or such other Restricted Subsidiary enters
into such commitment with the good faith expectation that such Net Proceeds
shall be applied to satisfy such commitment within 180 days of such commitment
(an “Acceptable Commitment”)
and, in the event any Acceptable Commitment is later cancelled or terminated
for any reason before the Net Proceeds are applied in connection therewith, the
Issuer or such Restricted Subsidiary enters into another Acceptable Commitment
(a “Second Commitment”) within 180 days of such cancellation or
termination; provided  further that if any Second Commitment is
later cancelled or terminated for any reason before such Net Proceeds are
applied, then such Net Proceeds shall constitute Excess Proceeds.


 


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(c)                                  Any Net
Proceeds from the Asset Sale that are not invested or applied as provided and
within the time period set forth in Section 4.10(b) shall be deemed
to constitute “Excess Proceeds.”  When the aggregate amount of Excess Proceeds
exceeds $50.0 million, the Issuer shall make an offer to all Holders of
the Notes and, if required by the terms of any Indebtedness that is pari passu with the Notes (“Pari Passu Indebtedness”), to the
holders of such Pari Passu Indebtedness (an “Asset Sale Offer”), to purchase the maximum aggregate
principal amount of the Notes and such Pari Passu Indebtedness that is an
integral multiple of $1,000 that may be purchased out of the Excess Proceeds at
an offer price in cash in an amount equal to 100% of the principal amount
thereof, plus accrued and unpaid interest and Additional Interest, if any, to
the date fixed for the closing of such offer, in accordance with the procedures
set forth in this Indenture.  The Issuer
shall commence an Asset Sale Offer with respect to Excess Proceeds within ten
Business Days after the date that Excess Proceeds exceed $50.0 million by
mailing the notice required pursuant to the terms of this Indenture, with a
copy to the Trustee or otherwise in accordance with the procedures of DTC.


 


To
the extent that the aggregate amount of Notes and such Pari Passu Indebtedness
tendered pursuant to an Asset Sale Offer is less than the Excess Proceeds, the
Issuer may use any remaining Excess Proceeds for general corporate purposes,
subject to compliance with this Indenture. 
If the aggregate principal amount of Notes and the Pari Passu
Indebtedness surrendered in an Asset Sale Offer exceeds the amount of Excess Proceeds,
the Trustee shall select the Notes and such Pari Passu Indebtedness to be
purchased on a pro rata basis based on the
accreted value or principal amount of the Notes or such Pari Passu Indebtedness
tendered in accordance with Section 3.09. 
Upon completion of any such Asset Sale Offer, the amount of Excess
Proceeds shall be reset to zero (regardless of whether there are any remaining
Excess Proceeds upon such completion).


 


(d)                                 Pending the
final application of any Net Proceeds pursuant to this Section 4.10, the
holder of such Net Proceeds may apply such Net Proceeds temporarily to reduce
Indebtedness outstanding under a revolving credit facility or otherwise invest
such Net Proceeds in any manner not prohibited by this Indenture.


 


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


 


Section 4.11                                          Transactions
with Affiliates.


 


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


 


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


 


76

















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


(6)                                  any agreement
as in effect as of the Issue Date, or any amendment thereto (so long as any
such amendment is not disadvantageous in any material respect to the Holders
when taken as a whole as compared to the applicable agreement as in effect on
the Issue Date);


 


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


 


(8)                                  [Reserved];


 


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


 


77

















 


(10)                            the issuance of
Equity Interests (other than Disqualified Stock) of the Issuer to any direct or
indirect parent of the Issuer or to any Permitted Holder or to any director,
officer, employee or consultant of the Issuer, any Subsidiary or any direct or
indirect parent of the Issuer;


 


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


 


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


 


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


 


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


 


Section 4.12                                          Liens.


 


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


 


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


 


(2)                                   in all other cases, the
Notes or the Guarantees are equally and ratably secured, except that the
foregoing shall not apply to or restrict (a) Liens securing the Notes and
the related Guarantees, (b) Liens securing (x) Indebtedness permitted
to be incurred under Senior Credit Facilities, including any letter of credit
facility relating thereto, that was permitted by the terms of this Indenture to
be incurred pursuant to clause (1) of Section 4.09(b) hereof and
(y) both (i) Indebtedness described in clause (x) or in respect
of a Senior Credit Facility secured by Liens pursuant to subclause (c) below
or pursuant to clause (6) of the definition of Permitted Liens and (ii) obligations
of the Issuer or any Guarantor in respect of any Bank Products or Cash
Management Services provided by any lender party to any Senior Credit Facility
or any affiliate of such lender (or any Person that was a lender or an
affiliate of a lender at the time the applicable agreements pursuant to which
such Bank Products or Cash Management Services are provided were entered into)
and (C) Liens incurred to secure Obligations in respect of any
Indebtedness permitted to be incurred pursuant to Section 4.09 hereof; provided
that, with respect to Liens securing Obligations permitted under this subclause
(C), at the time of incurrence and after giving pro forma
effect thereto, the Consolidated Secured Debt Ratio would be no greater than
4.0 to 1.0.


 


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Any
Lien created for the benefit of the Holders of the Notes pursuant to this Section 4.12
shall be deemed automatically and unconditionally released and discharged upon
the release and discharge of each of the Liens described in clauses (1) and
(2) of this Section 4.12.


 


Section 4.13                                          Corporate
Existence.


 


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


 


Section 4.14                                          Offer to
Repurchase Upon Change of Control.


 


(a)                                  If a Change of
Control occurs, unless the Issuer has previously or concurrently mailed a
redemption notice with respect to all the outstanding Notes as described under Section 3.07
hereof, the Issuer shall make an offer to purchase all of the Notes pursuant to
the offer described below (the “Change
of Control Offer”) at a price in cash (the “Change of Control Payment”) equal
to 101% of the aggregate principal amount thereof plus accrued and unpaid
interest and Additional Interest, if any, to the date of purchase, subject to
the right of Holders of record of the Notes on the relevant Record Date to
receive interest due on the relevant Interest Payment Date.  Within 30 days following any Change of
Control, the Issuer shall send notice of such Change of Control Offer by
first-class mail, with a copy to the Trustee, to each Holder of Notes to the
address of such Holder appearing in the security register or otherwise in
accordance with the procedures of DTC, with the following information:


 


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


 


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


 


(3)                                  that any Note
not properly tendered will remain outstanding and continue to accrue interest
and Additional Interest, if any;


 


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


 


(5)                                  that Holders
electing to have any Notes purchased pursuant to a Change of Control Offer will
be required to surrender such Notes, with the form entitled “Option of Holder
to Elect Purchase” on the reverse of such Notes completed, to the paying agent
specified in the notice at the address specified in the notice prior to the
close of business on the third Business Day preceding the Change of Control Payment
Date;


 


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


 


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(7)                                  that if the
Issuer is redeeming less than all of the Notes, the Holders of the remaining
Notes will be issued new Notes and such new Notes will be equal in principal
amount to the unpurchased portion of the Notes surrendered.  The unpurchased portion of the Notes must be
equal to $2,000 or an integral multiple of $1,000 in excess of $2,000; and


 


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


 


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


 


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


 


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


 


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


 


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


 


(c)                                  The Issuer
shall 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 Section 4.14
applicable to a Change of Control Offer made by the Issuer and purchases all
Notes validly tendered and not withdrawn under such Change of Control
Offer.  Notwithstanding anything to the
contrary herein, a Change of Control Offer may be made in advance of a Change
of Control, conditional upon such Change of Control, if a definitive agreement
is in place for the Change of Control at the time of making of the Change of
Control Offer.


 


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


 


Section 4.15                                          Limitation on
Guarantees of Indebtedness by Restricted Subsidiaries.


 


The
Issuer shall not permit any of its Wholly—Owned Subsidiaries that are
Restricted Subsidiaries (and non-Wholly—Owned Subsidiaries if such non-Wholly—Owned
Subsidiaries guarantee other capital markets debt securities), other than a
Guarantor or a Foreign Subsidiary, to guarantee the payment of any Indebtedness
of the Issuer or any other Guarantor unless:


 


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(1)                                  such Restricted
Subsidiary within 30 days executes and delivers a supplemental indenture to
this Indenture, the form of which is attached as Exhibit D hereto,
providing for a Guarantee by such Restricted Subsidiary, except that with
respect to a guarantee of Indebtedness of the Issuer or any Guarantor, if such
Indebtedness is by its express terms subordinated in right of payment to the
Notes or such Guarantor’s Guarantee, any such guarantee by such Restricted
Subsidiary with respect to such Indebtedness shall be subordinated in right of
payment to such Guarantee substantially to the same extent as such Indebtedness
is subordinated to the Notes;


 


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


 


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


 


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


 


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


 


provided that this Section 4.15
shall not be applicable to any guarantee of any Restricted Subsidiary that
existed at the time such Person became a Restricted Subsidiary and was not
incurred in connection with, or in contemplation of, such Person becoming a
Restricted Subsidiary.


 


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


 


Section 4.16                                          Discharge and
Suspension of Covenants.


 


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


 


(b)                                 In the event
that the Issuer and the Restricted Subsidiaries are not subject to the
Suspended Covenants under this Indenture for any period of time as a result of
the foregoing, and on any subsequent date (the “Reversion Date”) (i) one
or both of the Rating Agencies withdraw their Investment Grade Rating or
downgrade the rating assigned to the Notes below an Investment Grade Rating or (ii) the
Issuer or any of its Affiliates enters into an agreement to effect a
transaction that would result in a Change of Control and one or more of the
Rating Agencies indicate that if consummated, such transaction (alone or
together with any related recapitalization or refinancing transactions) would
cause such Rating Agency to withdraw its Investment Grade Rating or downgrade
the ratings assigned to the Notes below an Investment Grade Rating, then the
Issuer and the Restricted Subsidiaries shall thereafter again be subject to 


 


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the Suspended Covenants under this Indenture with
respect to future events. The period beginning on the day of a Covenant
Suspension Event and ending on a Reversion Date is called a “Suspension
Period”.


 


(c)                                  On each
Reversion Date, all Indebtedness incurred, or Disqualified Stock or Preferred
Stock issued, during the Suspension Period will be deemed to have been
outstanding on the Issue Date, so that it is classified as permitted under Section 4.09(b)(3) hereof.
Calculations made after the Reversion Date of the amount available to be made
as Restricted Payments under Section 4.07 hereof will be made as though Section 4.07
hereof had been in effect since the Issue Date and throughout the Suspension
Period. Accordingly, Restricted Payments made during the Suspension Period will
reduce the amount available to be made as Restricted Payments under Section 4.07(a) hereof
(but will not reduce any amounts available to be made as Restricted Payments
under Section 4.07(b) hereof). However, no Default or Event of
Default will be deemed to have occurred on the Reversion Date (or thereafter)
under any Suspended Covenant solely as a result of any actions taken by the
Issuer or its Restricted Subsidiaries, or events occurring, during the
Suspension Period. For purposes of Section 4.10 hereof, on the Reversion
Date, the unutilized Excess Proceeds amount will be reset to zero.


 


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


 


ARTICLE 5


 


SUCCESSORS


 


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


 


(a)                                  The Issuer
shall not consolidate or merge with or into or wind up into (whether or not the
Issuer is the surviving corporation), or sell, assign, transfer, lease, convey
or otherwise dispose of all or substantially all of its properties or assets,
in one or more related transactions, to any Person unless:


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


(b)                                 The Successor
Company shall succeed to, and be substituted for the Issuer, as the case may
be, under this Indenture, the Guarantees and the Notes, as applicable.  Notwithstanding clauses (3) and (4) of
Section 5.01(a) hereof,


 


(x)                                   any Restricted
Subsidiary may consolidate with or merge into or transfer all or part of its
properties and assets to the Issuer, and


 


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


 


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


 


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


 


(B)                                the Successor
Person, if other than such Guarantor, expressly assumes all the obligations of
such Guarantor under this Indenture and such Guarantor’s related Guarantee
pursuant to supplemental indentures or other documents or instruments in form
reasonably satisfactory to the Trustee;


 


(C)                                immediately
after such transaction, no Default exists; and


 


(D)                               the Issuer
shall have delivered to the Trustee an Officer’s Certificate and an Opinion of
Counsel, each stating that such consolidation, merger or transfer and such
supplemental indentures, if any, comply with this Indenture; or


 


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(2)                                  the transaction
is made in compliance with clauses (1) and (2) of Section 4.10(a) hereof.


 


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


 


Section 5.02                                          Successor
Corporation Substituted.


 


Upon
any consolidation or merger, or any sale, assignment, transfer, lease,
conveyance or other disposition of all or substantially all of the assets of
the Issuer in accordance with Section 5.01 hereof, the successor
corporation formed by such consolidation or into or with which the Issuer is
merged or to which such sale, assignment, transfer, lease, conveyance or other
disposition is made shall succeed to, and be substituted for (so that from and
after the date of such consolidation, merger, sale, lease, conveyance or other
disposition, the provisions of this Indenture referring to the Issuer shall refer
instead to the successor corporation and not to the Issuer), and may exercise
every right and power of the Issuer under this Indenture with the same effect
as if such successor Person had been named as the Issuer herein; provided
that the predecessor Issuer shall not be relieved from the obligation to pay
the principal of and interest and Additional Interest, if any, on the Notes
except in the case of a sale, assignment, transfer, lease, conveyance or other
disposition of all of the Issuer’s assets that meets the requirements of Section 5.01
hereof.


 


ARTICLE 6


 


DEFAULTS AND REMEDIES


 


Section 6.01                                          Events of
Default.


 


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


 


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


 


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


 


(3)                                  failure by the
Issuer or any Guarantor for 60 days after receipt of written notice given by
the Trustee or the Holders of not less than 25% in principal amount of the
Notes to comply with any of its obligations, covenants or agreements (other
than a default referred to in clauses (1) and (2) above)
contained in this Indenture or the Notes;


 


(4)                                  default under
any mortgage, indenture or instrument under which there is issued or by which
there is secured or evidenced any Indebtedness for money borrowed by the Issuer
or any of its Restricted Subsidiaries or the payment of which is guaranteed by
the Issuer or any of its Restricted Subsidiaries, other than Indebtedness owed
to the Issuer or a Restricted Subsidiary, whether such Indebtedness or
guarantee now exists or is created after the issuance of the Notes, if both:


 


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


 


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


 


(5)                                  failure by the Issuer or any Significant Subsidiary, or any group of
Restricted Subsidiaries that, taken together (as of the latest audited
consolidated financial statements for the Issuer), would constitute a
Significant Subsidiary, to pay final judgments aggregating in excess of $50.0
million, which final judgments remain unpaid, undischarged and unstayed for a
period of more than 60 days after such judgment becomes final, and in the event
such judgment is covered by insurance, an enforcement proceeding has been
commenced by any creditor upon such judgment or decree which is not promptly
stayed;


 


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


 


(i)                                   commences
proceedings to be adjudicated bankrupt or insolvent;


 


(ii)                                consents to the
institution of bankruptcy or insolvency proceedings against it, or the filing
by it of a petition or answer or consent seeking reorganization or relief under
applicable Bankruptcy Law;


 


(iii)                             consents to the
appointment of a receiver, liquidator, assignee, trustee, sequestrator or other
similar official of it or for all or substantially all of its property;


 


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


 


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


 


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


 


(i)                                   is for relief
against the Issuer or any of its Restricted Subsidiaries that is a Significant
Subsidiary or any group of Restricted Subsidiaries that, taken together, would
constitute a Significant Subsidiary, in a proceeding in which the Issuer or any
such Restricted Subsidiaries, that is a Significant Subsidiary or any group of
Restricted Subsidiaries that, taken together (as of the latest audited
consolidated financial statements for the Issuer), would constitute a
Significant Subsidiary, is to be adjudicated bankrupt or insolvent;


 


(ii)                                appoints a
receiver, liquidator, assignee, trustee, sequestrator or other similar official
of the Issuer or any of its Restricted Subsidiaries that is a Significant 


 


85

















 


Subsidiary or any group of
Restricted Subsidiaries that, taken together (as of the latest audited
consolidated financial statements for the Issuer), would constitute a
Significant Subsidiary, or for all or substantially all of the property of the
Issuer or any of its Restricted Subsidiaries that is a Significant Subsidiary
or any group of Restricted Subsidiaries that, taken together (as of the latest
audited consolidated financial statements for the Issuer), would constitute a
Significant Subsidiary; or


 


(iii)                             orders the
liquidation of the Issuer or any of its Restricted Subsidiaries that is a
Significant Subsidiary or any group of Restricted Subsidiaries that, taken
together (as of the latest audited consolidated financial statements for the
Issuer), would constitute a Significant Subsidiary;


 


and
the order or decree remains unstayed and in effect for 60 consecutive days; or


 


(8)                                  the Guarantee of any Significant Subsidiary, or any group of Restricted
Subsidiaries that, taken together (as of the latest audited consolidated
financial statements for the Issuer), would constitute a Significant Subsidiary,
shall for any reason cease to be in full force and effect or any responsible
officer of any Guarantor that is a Significant Subsidiary, or any group of
Restricted Subsidiaries that, taken together (as of the latest audited
consolidated financial statements for the Issuer), would constitute a
Significant Subsidiary, as the case may be, denies that it has any further
liability under its or their Guarantee(s) or gives notice to such effect,
other than by reason of the termination of this Indenture or the release of any
such Guarantee in accordance with this Indenture.


 


(b)                                 In the event of
any Event of Default specified in clause (4) of Section 6.01(a) hereof,
such Event of Default and all consequences thereof (excluding any resulting
payment default, other than as a result of acceleration of the Notes) shall be
annulled, waived and rescinded, automatically and without any action by the
Trustee or the Holders, if within 20 days after such Event of Default arose:


 


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


 


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


 


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


 


Section 6.02                                          Acceleration.


 


If
any Event of Default (other than an Event of Default specified in clause (6) or
(7) of Section 6.01(a) hereof with respect to the Issuer) occurs
and is continuing under this Indenture, the Trustee or the Holders of at least
25% in principal amount of the then total outstanding Notes may declare the
principal, premium, if any, interest and any other monetary obligations on all
the then outstanding Notes to be due and payable immediately.  Upon the effectiveness of such declaration,
such principal and interest shall be due and payable immediately.  The Trustee shall have no obligation to
accelerate the Notes unless instructed in accordance with Section 6.05
hereof.


 


Notwithstanding
the foregoing, in the case of an Event of Default arising under clause (6) or
(7) of Section 6.01(a) hereof with respect to the Issuer, all
outstanding Notes shall be due and payable immediately without further action
or notice.


 


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


 


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


 


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


 


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


 


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


 


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, premium, if any, and
interest on the Notes or to enforce the performance of any provision of the
Notes or this Indenture.


 


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


 


Section 6.04                                          Waiver of Past
Defaults.


 


Holders
of not less than a majority in aggregate principal amount of the then
outstanding Notes by notice to the Trustee may on behalf of the Holders of all
of the Notes waive any existing Default and its consequences hereunder, except
a continuing Default in the payment of the principal of, premium, if any,
Additional Interest, if any, or interest on, any Note held by a non-consenting
Holder (including in connection with an Asset Sale Offer or a Change of Control
Offer); provided, subject to Section 6.02 hereof, that the Holders
of a majority in aggregate principal amount of the then outstanding Notes may
rescind an acceleration and its consequences, including any related payment default
that resulted from such acceleration. 
Upon any such waiver, such Default shall
cease to exist, and any Event of Default arising therefrom shall be deemed to
have been cured for every purpose of this Indenture; but no such waiver shall
extend to any subsequent or other Default or impair any right consequent
thereto.


 


Section 6.05                                          Control by
Majority.


 


Holders
of a majority in principal amount of the then total outstanding Notes 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.  The Trustee, however, may
refuse to follow any direction that conflicts with law or this Indenture or
that the Trustee determines is unduly prejudicial to the rights of any other
Holder of a Note or that would involve the Trustee in personal liability.


 


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Section 6.06                                          Limitation on
Suits.


 


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


 


(1)                                  such Holder has
previously given the Trustee written notice that an Event of Default is
continuing;


 


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


 


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


 


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


 


(5)                                  Holders of a
majority in principal amount of the total outstanding Notes have not given the
Trustee a direction inconsistent with such request within such 60-day period.


 


A
Holder of a Note may not use this Indenture to prejudice the rights of another
Holder of a Note or to obtain a preference or priority over another Holder of a
Note (it being understood that the Trustee does not have an affirmative duty to
ascertain whether or not such actions or forbearances are unduly prejudicial to
such Holders).


 


Section 6.07                                          Rights of
Holders of Notes To Receive Payment.


 


Notwithstanding
any other provision of this Indenture, the right of any Holder of a Note to
receive payment of principal, premium, if any, and Additional Interest, if any,
and interest on the Note, on or after the respective due dates expressed in the
Note (including in connection with an Asset Sale Offer or a Change of Control
Offer), 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(a)(1) or (2) hereof occurs and is continuing, the
Trustee is authorized to recover judgment in its own name and as trustee of an
express trust against the Issuer for the whole amount of principal of, premium,
if any, and Additional Interest, if any, and interest remaining unpaid on the
Notes and interest on overdue principal and, to the extent lawful, interest and
such further amount as shall be sufficient to cover the costs and expenses of
collection, including the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel.


 


Section 6.09                                          Restoration of
Rights and Remedies.


 


If
the Trustee or any Holder has instituted any proceeding to enforce any right or
remedy under this Indenture and such proceeding has been discontinued or
abandoned for any reason, or has been determined adversely to the Trustee or to
such Holder, then and in every such case, subject to any determination in such
proceedings, the Issuer, the Trustee and the Holders shall be restored
severally and 


 


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respectively
to their former positions hereunder and thereafter all rights and remedies of
the Trustee and the Holders shall continue as though no such proceeding has
been instituted.


 


Section 6.10                                          Rights and
Remedies Cumulative.


 


Except
as otherwise provided with respect to the replacement or payment of mutilated,
destroyed, lost or stolen Notes in Section 2.07 hereof, no right or remedy
herein conferred upon or reserved to the Trustee or to the Holders is intended
to be exclusive of any other right or remedy, and every right and remedy shall,
to the extent permitted by law, be cumulative and in addition to every other
right and remedy given hereunder or now or hereafter existing at law or in
equity or otherwise.  The assertion or
employment of any right or remedy hereunder, or otherwise, shall not prevent
the concurrent assertion or employment of any other appropriate right or
remedy.


 


Section 6.11                                          Delay or
Omission Not Waiver.


 


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


 


Section 6.12                                          Trustee May File
Proofs of Claim.


 


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


 


Section 6.13                                          Priorities.


 


If
the Trustee collects any money pursuant to this Article 6, it shall pay
out the money in the following order:


 


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


 


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


 


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


 


The
Trustee may fix a record date and payment date for any payment to Holders of
Notes pursuant to this Section 6.13.


 


Section 6.14                                          Undertaking for
Costs.


 


In
any suit for the enforcement of any right or remedy under this Indenture or in
any suit against the Trustee for any action taken or omitted by it as a
Trustee, a court in its discretion may require the filing by any party litigant
in the suit of an undertaking to pay the costs of the suit, and the court in
its discretion may assess reasonable costs, including reasonable attorneys’
fees 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 6.14 does
not apply to a suit by the Trustee, a suit by a Holder of a Note pursuant to Section 6.07
hereof, or a suit by Holders of more than 10% in principal amount of the then
outstanding Notes.


 


ARTICLE 7


 


TRUSTEE


 


Section 7.01                                          Duties of
Trustee.


 


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


 


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


 


(ii)                                in the absence
of bad faith on its part, the Trustee may conclusively rely, as to the truth of
the statements and the correctness of the opinions expressed therein, upon
certificates or opinions furnished to the Trustee and conforming to the
requirements of this Indenture.  However,
in the case of any such certificates or opinions which by any provision hereof
are specifically required to be furnished to the Trustee, 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 mathematical calculations or other facts stated therein).


 


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


 


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


 


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


 


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


 


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


 


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


 


(f)                                    The Trustee
shall not be liable for interest on any money received by it except as the
Trustee may agree in writing with the Issuer. 
Money held in trust by the Trustee need not be segregated from other
funds except to the extent required by law.


 


Section 7.02                                          Rights of
Trustee.


 


(a)                                  The Trustee may
conclusively rely upon any document 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, but the Trustee, in its discretion, may 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 Issuer, personally
or by agent or attorney at the sole cost of the Issuer 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 Officer’s Certificate
or an Opinion of Counsel or both.  The
Trustee shall not be liable for any action it takes or omits to take in good
faith in reliance on such Officer’s Certificate or Opinion of Counsel.  The Trustee may consult with counsel of its
selection and the advice of such counsel or any Opinion of Counsel shall be
full and complete authorization and protection from liability in respect of any
action taken, suffered or omitted by it hereunder in good faith and in reliance
thereon.


 


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


 


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


 


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


 


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(f)                                    None of the
provisions of this Indenture shall require the Trustee to expend or risk its
own funds or otherwise to incur any liability, financial or otherwise, in the
performance of any of its duties hereunder, or in the exercise of any of its
rights or powers if it shall have reasonable grounds for believing that
repayment of such funds or indemnity satisfactory to it against such risk or
liability is not assured to it.


 


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


 


(h)                                 The rights,
privileges, protections, immunities and benefits given to the Trustee,
including, without limitation, its right to be indemnified, are extended to,
and shall be enforceable by, the Trustee in each of its capacities hereunder,
and each agent, custodian and other Person employed to act hereunder.


 


(i)                                     In the event
the Issuer is required to pay Additional Interest, the Issuer will provide an
Officer’s Certificate to the Trustee no later than 15 days prior to the next
Interest Payment Date, which shall set forth the amount of the Additional
Interest to be paid by the Issuer and the rate per thousand.  The Trustee shall not at any time be under
any duty or responsibility to any Holders to determine whether the Additional
Interest is payable and the amount thereof.


 


(j)                                     The Trustee
shall not be required to give any bond or surety in respect of the performance
of its powers and duties hereunder.


 


(k)                                  Any request or
direction of the Issuer mentioned herein shall be sufficiently evidenced by a
request or order of the Issuer and any resolution of the board of directors may
be sufficiently evidenced by a board resolution.


 


(l)                                     The Trustee may
request that the Issuer deliver a certificate setting forth the names of
individuals and/or titles of officers authorized at such time to take specified
actions pursuant to this Indenture.


 


Section 7.03                                          Individual
Rights of Trustee.


 


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


 


Section 7.04                                          Trustee’s
Disclaimer.


 


The
Trustee shall not be responsible for and makes no representation as to the
validity or adequacy of this Indenture or the Notes, it shall not be
accountable for the Issuer’s use of the proceeds from the Notes or any money paid
to the Issuer or upon the Issuer’s direction under any provision of this
Indenture, it shall not be responsible for the use or application of any money
received by any Paying Agent other than the Trustee, and it shall not be
responsible for any statement or recital herein or any


 


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statement
in the Notes or any other document in connection with the sale of the Notes or
pursuant to this Indenture other than its certificate of authentication.


 


Section 7.05                                          Notice of
Defaults.


 


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


 


The Trustee shall not be deemed to have knowledge or
notice of any Default or Event of Default unless a Responsible Officer of the
Trustee has actual knowledge thereof or unless written notice of any event
which is in fact such a Default or Event of Default is received by the Trustee
at the Corporate Trust Office of the Trustee, and such notice references the
Notes and this Indenture.


 


Section 7.06                                          Reports by
Trustee to Holders of the Notes.


 


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


 


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


 


Section 7.07                                          Compensation
and Indemnity.


 


The
Issuer shall pay to the Trustee from time to time such compensation for its
acceptance of this Indenture and services hereunder as the parties shall agree
in writing from time to time.  The
Trustee’s compensation shall not be limited by any law on compensation of a
trustee of an express trust.  The Issuer
shall reimburse the Trustee promptly upon request for all reasonable
disbursements, advances and expenses incurred or made by it in addition to the
compensation for its services.  Such
expenses shall include the reasonable compensation, disbursements and expenses of
the Trustee’s agents and counsel.


 


The
Issuer and the Guarantors, jointly and severally, shall indemnify the Trustee
for, and hold the Trustee harmless against, any and all loss, damage, claims,
liability or expense (including attorneys’ fees) incurred by it in connection
with the acceptance or administration of this trust and the performance of its
duties hereunder (including the costs and expenses of enforcing this Indenture
against the Issuer or any of the Guarantors (including this Section 7.07)
or defending itself against any claim whether asserted by any Holder, the
Issuer or any Guarantor, or liability in connection with the acceptance,
exercise or performance of any of its powers or duties hereunder).  The Trustee shall notify the Issuer promptly of
any claim for which it may seek indemnity. 
Failure by the Trustee to so notify the Issuer shall not relieve the
Issuer of its obligations hereunder.  The
Issuer shall defend the claim and the Trustee may have separate counsel and the
Issuer shall pay the fees and expenses of such counsel.  The Issuer 


 


93

















 


need
not reimburse any expense or indemnify against any loss, liability or expense
incurred by the Trustee through the Trustee’s own willful misconduct,
negligence or bad faith.


 


The
obligations of the Issuer under this Section 7.07 shall survive the
satisfaction and discharge of this Indenture or the earlier resignation or
removal of the Trustee.


 


To
secure the payment obligations of the Issuer and the Guarantors in this Section 7.07,
the Trustee shall have a Lien prior to the Notes on all money or property held
or collected by the Trustee, except that held in trust to pay principal and
interest on particular Notes.  Such Lien
shall survive the satisfaction and discharge of this Indenture.


 


When
the Trustee incurs expenses or renders services after an Event of Default
specified in Section 6.01(a)(6) or (7) hereof occurs, the
expenses and the compensation for the services (including the fees and expenses
of its agents and counsel) are intended to constitute expenses of
administration under any Bankruptcy Law.


 


The
Trustee shall comply with the provisions of Trust Indenture Act Section 313(b)(2) to
the extent applicable.


 


Section 7.08                                          Replacement of
Trustee.


 


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


 


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


 


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


 


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


 


(d)                                 the Trustee
becomes incapable of acting.


 


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


 


If
a successor Trustee does not take office within 60 days after the retiring
Trustee resigns or is removed, the retiring Trustee (at the Issuer’s expense),
the Issuer or the Holders of at least 10% in principal amount of the then
outstanding Notes may petition any court of competent jurisdiction for the
appointment of a successor Trustee.


 


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


 


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


 


Section 7.09                                          Successor
Trustee by Merger, etc.


 


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


 


Section 7.10                                          Eligibility;
Disqualification.


 


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


 


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


 


Section 7.11                                          Preferential
Collection of Claims Against Issuer.


 


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


 


Section 7.12                                          Money Held in
Trust.


 


Money
held by the Trustee in trust hereunder need not be segregated from other funds
except to the extent required by law. 
The Trustee shall be under no liability for interest on any money
received by it hereunder except as otherwise agreed in writing with the Issuer.


 


ARTICLE 8


 


LEGAL DEFEASANCE AND
COVENANT DEFEASANCE


 


Section 8.01                                          Option To
Effect Legal Defeasance or Covenant Defeasance.


 


The
Issuer may, at its option and at any time, elect to have either Section 8.02
or 8.03 hereof applied to all outstanding Notes upon compliance with the
conditions set forth below in this Article 8.


 


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Section 8.02                                          Legal
Defeasance and Discharge.


 


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


 


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


 


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


 


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


 


(d)                                 this Section 8.02.


 


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


 


Section 8.03                                          Covenant
Defeasance.


 


Upon
the Issuer’s exercise under Section 8.01 hereof of the option applicable
to this Section 8.03, the Issuer and the Guarantors shall, subject to the
satisfaction of the conditions set forth in Section 8.04 hereof, be released
from their obligations under the covenants contained in Sections 4.03, 4.04,
4.05, 4.07, 4.08, 4.09, 4.10, 4.11, 4.12, 4.13, 4.14 and 4.15 hereof and
clauses (4) and (5) of Section 5.01(a), Sections 5.01(c) and
5.01(d) hereof with respect to the outstanding Notes on and after the date
the conditions set forth in Section 8.04 hereof are satisfied (“Covenant
Defeasance”), and the Notes shall thereafter be deemed not “outstanding”
for the purposes of any direction, waiver, consent or declaration or act of
Holders (and the consequences of any thereof) in connection with such
covenants, but shall continue to be deemed “outstanding” for all other purposes
hereunder (it being understood that such Notes shall not be deemed outstanding
for accounting purposes).  For this
purpose, Covenant Defeasance means that, with respect to the outstanding Notes,
the Issuer may omit to comply with and shall have no liability in respect of
any term, condition or limitation set forth in any such covenant, whether
directly or indirectly, by reason of any reference elsewhere herein to any such
covenant or by reason of any reference in any such covenant to any other
provision herein or in any other document and such omission to comply shall not
constitute a Default or an Event of Default under Section 6.01 hereof,
but, except as specified above, the remainder of this Indenture and such Notes
shall be unaffected thereby.  In
addition, upon the Issuer’s exercise under Section 8.01 hereof of the
option applicable to this Section 8.03 hereof, subject to the satisfaction
of the conditions set forth in Section 8.04 hereof, Sections 6.01(a)(3),
6.01(a)(4), 6.01(a)(5), 


 


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6.01(a)(6) (solely
with respect to Restricted Subsidiaries subject thereto), 6.01(a)(7) (solely
with respect to Restricted Subsidiaries subject thereto) and 6.01(a)(8) hereof
shall not constitute Events of Default.


 


Section 8.04                                          Conditions to
Legal or Covenant Defeasance.


 


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


 


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


 


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


 


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


 


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


 


in either case to the effect that, and based thereon
such Opinion of Counsel shall confirm that, subject to customary assumptions
and exclusions, the Holders of the Notes will not recognize income, gain or
loss for U.S. federal income tax purposes, as applicable, as a result of such
Legal Defeasance and will be subject to U.S. federal income tax on the same
amounts, in the same manner and at the same times as would have been the case
if such Legal Defeasance had not occurred;


 


(3)                                  in the case of
Covenant Defeasance, the Issuer shall have delivered to the Trustee an Opinion
of Counsel reasonably acceptable to the Trustee confirming that, subject to
customary assumptions and exclusions, the Holders of the Notes will not
recognize income, gain or loss for U.S. federal income tax purposes as a result
of such Covenant Defeasance and will be subject to such 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;


 


(4)                                  no Default
(other than that resulting from borrowing funds to be applied to make such
deposit and any similar and simultaneous deposit relating to other Indebtedness
including the Existing Notes, and in each case the granting of Liens in
connection therewith) shall have occurred and be continuing on the date of such
deposit;


 


(5)                                  such Legal
Defeasance or Covenant Defeasance shall not result in a breach or violation of,
or constitute a default under the Senior Credit Facilities, the Existing Notes
or the indentures pursuant to which the Existing Notes have been issued or any
other material agreement or instrument (other than this Indenture) to which the
Issuer or any Guarantor is a party or by which the Issuer or any Guarantor is
bound (other than that resulting from any borrowing of funds to be applied to
make the deposit required to effect such Legal Defeasance or Covenant 


 


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Defeasance and any similar and simultaneous deposit
relating to other Indebtedness, including the Existing Notes, and the granting
of Liens in connection therewith);


 


(6)                                  the Issuer
shall have delivered to the Trustee an Opinion of Counsel to the effect that,
as of the date of such opinion and subject to customary assumptions and
exclusions following the deposit, the trust funds will not be subject to the
effect of Section 547 of Title 11 of the United States Code;


 


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


 


(8)                                  the Issuer
shall have delivered to the Trustee an Officer’s Certificate and an Opinion of
Counsel (which Opinion of Counsel may be subject to customary assumptions and
exclusions) each stating that all conditions precedent provided for or relating
to the Legal Defeasance or the Covenant Defeasance, as the case may be, have
been complied with.


 


Section 8.05              Deposited Money
and Government Securities


To Be Held in Trust; Other
Miscellaneous Provisions.


 


Subject
to Sections 7.12 and 8.06 hereof, all money and Government Securities
(including the proceeds thereof) deposited with the Trustee (or other
qualifying trustee, collectively for purposes of this Section 8.05, the “Trustee”)
pursuant to Section 8.04 hereof in respect of the outstanding Notes shall
be held in trust and applied by the Trustee, in accordance with the provisions
of such Notes and this Indenture, to the payment, either directly or through
any Paying Agent (including the Issuer or a Guarantor acting as Paying Agent)
as the Trustee may determine, to the Holders of such Notes of all sums due and
to become due thereon in respect of principal, premium and Additional Interest,
if any, and interest, but such money need not be segregated from other funds
except to the extent required by law.


 


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


 


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


 


Section 8.06                                          Repayment to
Issuer.


 


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


 


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Section 8.07                                          Reinstatement.


 


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


 


ARTICLE 9


 


AMENDMENT, SUPPLEMENT AND
WAIVER


 


Section 9.01                                          Without Consent
of Holders of Notes.


 


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


 


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


 


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


 


(3)                                  to comply with Section 5.01
hereof;


 


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


 


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


 


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


 


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


 


(8)                                  to evidence and
provide for the acceptance and appointment under this Indenture of a successor
Trustee thereunder pursuant to the requirements thereof;


 


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


 


(10)                            to add a
Guarantor under this Indenture;


 


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


 


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


 


Upon
the request of the Issuer accompanied by a resolution of its board of directors
authorizing the execution of any such amended or supplemental indenture, and
upon receipt by the Trustee of the documents described in Section 7.02
hereof, the Trustee shall join with the Issuer and the Guarantors in the
execution of any amended or supplemental indenture authorized or permitted by
the terms of this Indenture and to make any further appropriate agreements and
stipulations that may be therein contained, but the Trustee shall not be
obligated to enter into such amended or supplemental indenture that affects its
own rights, duties or immunities under this Indenture or otherwise.  Notwithstanding the foregoing, no Opinion of
Counsel shall be required in connection with the addition of a Guarantor under
this Indenture upon execution and delivery by such Guarantor and the Trustee of
a supplemental indenture to this Indenture, the form of which is attached as Exhibit D
hereto, and delivery of an Officer’s Certificate.


 


Section 9.02                                          With Consent of
Holders of Notes.


 


Except
as provided below in this Section 9.02, the Issuer and the Trustee may
amend or supplement this Indenture, the Notes and the Guarantees with the
consent of the Holders of at least a majority in principal amount of the Notes
(including Additional Notes, if any) then outstanding voting as a single class
(including, without limitation, consents obtained in connection with a tender
offer or exchange offer for, or purchase of, the Notes), and, subject to
Sections 6.04 and 6.07 hereof, any existing Default or Event of Default (other
than a Default or Event of Default in the payment of the principal of, premium
and Additional Interest, if any, or interest on the Notes, except a payment default
resulting from an acceleration that has been rescinded) or compliance with any
provision of this Indenture, the Guarantees or the Notes may be waived with the
consent of the Holders of a majority in principal amount of the then
outstanding Notes (including Additional Notes, if any) voting as a single class
(including consents obtained in connection with a tender offer or exchange
offer for, or purchase of, the Notes).  Section 2.08
hereof and Section 2.09 hereof shall determine which Notes are considered
to be “outstanding” for the purposes of this Section 9.02.


 


Upon
the request of the Issuer accompanied by a resolution of its board of directors
authorizing the execution of any such amended or supplemental indenture, and
upon the filing with the Trustee of evidence satisfactory to the Trustee of the
consent of the Holders of Notes as aforesaid, and upon receipt by the Trustee
of the documents described in Section 7.02 hereof, the Trustee shall join
with the Issuer in the execution of such amended or supplemental indenture
unless such amended or supplemental indenture directly affects the Trustee’s
own rights, duties or immunities under this Indenture or otherwise, in which
case the Trustee may in its discretion, but shall not be obligated to, enter
into such amended or supplemental indenture.


 


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


 


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


 


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


 


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


 


(2)                                  reduce the
principal of or change the fixed final maturity of any such Note or alter or
waive the provisions with respect to the redemption of such Notes (other than
provisions relating to Section 3.09, Section 4.10 and Section 4.14
hereof to the extent that any such amendment or waiver does not have the effect
of reducing the principal of or changing the fixed final maturity of any such
Note or altering or waiving the provisions with respect to the redemption of
such Notes);


 


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


 


(4)                                  waive a Default
in the payment of principal of or premium, if any, or interest on the Notes,
except a rescission of acceleration of the Notes by the Holders of at least a
majority in aggregate principal amount of the Notes and a waiver of the payment
default that resulted from such acceleration, or in respect of a covenant or
provision contained in this Indenture or any Guarantee which cannot be amended
or modified without the consent of all affected Holders;


 


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


 


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


 


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


 


(8)                                  impair the
right of any Holder to receive payment of principal of, or interest on, such
Holder’s Notes 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 Notes;


 


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


 


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


 


Section 9.03                                          Compliance with
Trust Indenture Act.


 


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


 


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Section 9.04                                          Revocation and
Effect of Consents.


 


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


 


The
Issuer may, but shall not be obligated to, fix a record date for the purpose of
determining the Holders entitled to consent to any amendment, supplement, or
waiver.  If a record date is fixed, then,
notwithstanding the preceding paragraph, those Persons who were Holders at such
record date (or their duly designated proxies), and only such Persons, shall be
entitled to consent to such amendment, supplement, or waiver or to revoke any
consent previously given, whether or not such Persons continue to be Holders
after such record date.  No such consent
shall be valid or effective for more than 120 days after such record date
unless the consent of the requisite number of Holders has been obtained.


 


Section 9.05                                          Notation on or
Exchange of Notes.


 


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


 


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


 


Section 9.06                                          Trustee To Sign
Amendments, etc.


 


The
Trustee shall sign any amendment, supplement or waiver authorized pursuant to
this Article 9 if the amendment or supplement does not adversely affect
the rights, duties, liabilities or immunities of the Trustee.  The Issuer may not sign an amendment,
supplement or waiver until the board of directors approves it.  In executing any amendment, supplement or
waiver, the Trustee shall be provided with and (subject to Section 7.01
hereof) shall be fully protected in relying upon, in addition to the documents
required by Section 12.04 hereof, an Officer’s Certificate and an Opinion
of Counsel stating that the execution of such amended or supplemental indenture
is authorized or permitted by this Indenture and that such amendment,
supplement or waiver is the legal, valid and binding obligation of the Issuer and
any Guarantors party thereto, enforceable against them in accordance with its
terms, subject to customary exceptions, and complies with the provisions hereof
(including Section 9.03). 
Notwithstanding the foregoing, no Opinion of Counsel will be required
for the Trustee to execute any amendment or supplement adding a new Guarantor
under this Indenture.


 


Section 9.07                                          Payment for
Consent.


 


The
Issuer shall not, and shall not permit any of its Subsidiaries to, directly or
indirectly, pay or cause to be paid any consideration, whether by way of
interest, fee or otherwise, to or for the benefit of 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 Notes unless such consideration is offered
to all Holders and is paid to all Holders that so consent, waive or agree to
amend in the time frame set forth in the solicitation documents relating to
such consent, waiver or agreement.


 


102
















 


ARTICLE 10


 


GUARANTEES


 


Section 10.01                                    Guarantee.


 


Subject
to this Article 10, each of the Guarantors hereby, jointly and severally,
unconditionally guarantees to each Holder of a Note authenticated and delivered
by the Trustee and to the Trustee and its successors and assigns, irrespective
of the validity and enforceability of this Indenture, the Notes or the
obligations of the Issuer hereunder or thereunder, that: (a) the principal
of, and interest, premium and Additional Interest, if any, on the Notes shall
be promptly paid in full when due, whether at maturity, by acceleration,
redemption or otherwise, and interest on the overdue principal of and interest
on the Notes, if any, if lawful, and all other Obligations of the Issuer to the
Holders or the Trustee hereunder or thereunder shall be promptly paid in full
or performed, all in accordance with the terms hereof and thereof; and
(b) in case of any extension of time of payment or renewal of any Notes or
any of such other obligations, that same shall be promptly paid in full when
due or performed in accordance with the terms of the extension or renewal,
whether at stated maturity, by acceleration or otherwise.  Failing payment when due of any amount so
guaranteed or any performance so guaranteed for whatever reason, the Guarantors
shall be jointly and severally obligated to pay the same immediately.  Each Guarantor agrees that this is a
guarantee of payment and not a guarantee of collection.


 


The
Guarantors hereby agree that their obligations hereunder shall be
unconditional, irrespective of the validity, regularity or enforceability of
the Notes or this Indenture, the absence of any action to enforce the same, any
waiver or consent by any Holder of the Notes with respect to any provisions
hereof or thereof, the recovery of any judgment against the Issuer, any action
to enforce the same or any other circumstance which might otherwise constitute
a legal or equitable discharge or defense of a guarantor.  Each Guarantor hereby waives diligence,
presentment, demand of payment, filing of claims with a court in the event of
insolvency or bankruptcy of the Issuer, any right to require a proceeding first
against the Issuer, protest, notice and all demands whatsoever and covenants
that this Guarantee shall not be discharged except by complete performance of
the obligations contained in the Notes and this Indenture.


 


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


 


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


 


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


 


103

















 


Each
Guarantee shall remain in full force and effect and continue to be effective
should any petition be filed by or against the Issuer for liquidation,
reorganization, should the Issuer become insolvent or make an assignment for
the benefit of creditors or should a receiver or trustee be appointed for all
or any significant part of the Issuer’s assets, and shall, to the fullest
extent permitted by law, continue to be effective or be reinstated, as the case
may be, if at any time payment and performance of the Notes are, pursuant to
applicable law, rescinded or reduced in amount, or must otherwise be restored
or returned by any obligee on the Notes or Guarantees, whether as a “voidable
preference,” “fraudulent transfer” or otherwise, all as though such payment or
performance had not been made.  In the
event that any payment or any part thereof, is rescinded, reduced, restored or
returned, the Notes shall, to the fullest extent permitted by law, be
reinstated and deemed reduced only by such amount paid and not so rescinded,
reduced, restored or returned.


 


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


 


The
Guarantee issued by any Guarantor shall be a general unsecured senior
obligation of such Guarantor and shall be pari passu in right of payment with all existing and future
senior Indebtedness of such Guarantor, if any.


 


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


 


Section 10.02                                    Limitation on
Guarantor Liability.


 


Each
Guarantor, and by its acceptance of Notes, each Holder, hereby confirms that it
is the intention of all such parties that the Guarantee of such Guarantor not
constitute a fraudulent transfer or conveyance for purposes of Bankruptcy Law,
the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or
any similar federal or state law to the extent applicable to any
Guarantee.  To effectuate the foregoing
intention, the Trustee, the Holders and the Guarantors hereby irrevocably agree
that the obligations of each Guarantor shall be limited to the maximum amount
as will, after giving effect to such maximum amount and all other contingent
and fixed liabilities of such Guarantor that are relevant under such laws and
after giving effect to any collections from, rights to receive contribution
from or payments made by or on behalf of any other Guarantor in respect of the
obligations of such other Guarantor under this Article 10, result in the
obligations of such Guarantor under its Guarantee not constituting a fraudulent
conveyance or fraudulent transfer under applicable law.  Each Guarantor that makes a payment under its
Guarantee shall be entitled upon payment in full of all guaranteed obligations
under this Indenture to a contribution from each other Guarantor in an amount
equal to such other Guarantor’s pro rata portion
of such payment based on the respective net assets of all the Guarantors at the
time of such payment determined in accordance with GAAP.


 


Section 10.03                                    Execution and
Delivery.


 


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


 


Each
Guarantor hereby agrees that its Guarantee set forth in Section 10.01 hereof shall remain in full force and
effect notwithstanding the absence of the endorsement of any notation of such
Guarantee on the Notes.


 


104

















 


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


 


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


 


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


 


Section 10.04                                    Subrogation.


 


Each
Guarantor shall be subrogated to all rights of Holders of Notes against the
Issuer in respect of any amounts paid by any Guarantor pursuant to the
provisions of Section 10.01
hereof; provided that, if an Event of Default has occurred and is
continuing, no Guarantor shall be entitled to enforce or receive any payments
arising out of, or based upon, such right of subrogation until all amounts then
due and payable by the Issuer under this Indenture or the Notes shall have been
paid in full.


 


Section 10.05                                    Benefits
Acknowledged.


 


Each
Guarantor acknowledges that it will receive direct and indirect benefits from
the financing arrangements contemplated by this Indenture and that the
guarantee and waivers made by it pursuant to its Guarantee are knowingly made
in contemplation of such benefits.


 


Section 10.06                                    Release of
Guarantees.


 


A
Guarantee by a Guarantor shall be automatically and unconditionally released
and discharged, and no further action by such Guarantor, the Issuer or the
Trustee is required for the release of such Guarantor’s Guarantee, upon:


 


(1)                                  (A)  any
sale, exchange, disposition or transfer (by merger or otherwise) of
(x) the Capital Stock of such Guarantor, after which the applicable
Guarantor is no longer a Restricted Subsidiary, or (y) all or
substantially all the assets of such Guarantor which sale, exchange,
disposition or transfer in each case is made in compliance with Sections
4.10(a)(1) and (2);


 


(B)                                the release or
discharge of the guarantee by such Guarantor of the Senior Credit Facilities or
the guarantee which resulted in the creation of such Guarantee, except a
discharge or release by or as a result of payment under such guarantee;


 


(C)                                the proper
designation of any Restricted Subsidiary that is a Guarantor as an Unrestricted
Subsidiary; or


 


(D)                               the Issuer
exercising Legal Defeasance or Covenant Defeasance in accordance with Article 8
hereof or the Issuer’s obligations under this Indenture being discharged in
accordance with the terms of this Indenture; and


 


(2)                                  the Issuer
delivering to the Trustee an Officer’s Certificate and an Opinion of Counsel,
each stating that all conditions precedent provided for in this Indenture
relating to such transaction have been complied with.


 


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ARTICLE 11


 


SATISFACTION AND DISCHARGE


 


Section 11.01                                    Satisfaction
and Discharge.


 


This
Indenture shall be discharged and shall cease to be of further effect as to all
Notes, when either:


 


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


 


(2)                                  (A)  all
Notes not theretofore delivered to the Trustee for cancellation have become due
and payable by reason of the making of a notice of redemption or otherwise,
shall become due and payable within one year or are to be called for redemption
within one year under arrangements satisfactory to the Trustee for the giving
of notice of redemption by the Trustee in the name, and at the expense, of the
Issuer and the Issuer or any Guarantor have irrevocably deposited or caused to
be deposited with the Trustee as trust funds in trust solely for the benefit of
the Holders of the Notes, cash in U.S. dollars, Government Securities, or a
combination thereof, in such amounts as will be sufficient without
consideration of any reinvestment of interest to pay and discharge the entire
indebtedness on the Notes not theretofore delivered to the Trustee for
cancellation for principal, premium, if any, and accrued interest to the date
of maturity or redemption;


 


(B)                                no Default
(other than that resulting from borrowing funds to be applied to make such
deposit and any similar and simultaneous deposit relating to other
Indebtedness, including the Existing Notes, and the granting of Liens in
connection therewith) with respect to this Indenture or the Notes shall have
occurred and be continuing on the date of such deposit or shall occur as a
result of such deposit and such deposit will not result in a breach or
violation of, or constitute a default under the Senior Credit Facilities, the
Existing Notes (or the indentures under which the Existing Notes have been
issued) or any other material agreement or instrument (other than this
Indenture) to which the Issuer or any Guarantor is a party or by which the
Issuer or any Guarantor is bound (other than that resulting from any borrowing
of funds to be applied to make such deposit and any similar and simultaneous
deposit relating to other Indebtedness, including the Existing Notes, and the
granting of Liens in connection therewith);


 


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


 


(D)                               the Issuer has
delivered irrevocable instructions to the Trustee to apply the deposited money
toward the payment of the Notes at maturity or the redemption date, as the case
may be.


 


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


 


Notwithstanding
the satisfaction and discharge of this Indenture, if money shall have been
deposited with the Trustee pursuant to subclause (A) of clause (2) of
this Section 11.01, the provisions of Section 11.02 and Section 8.06
hereof shall survive such satisfaction and discharge.


 


106

















 


Section 11.02                                    Application of
Trust Money.


 


Subject
to the provisions of Sections 7.12 and 8.06 hereof, all money deposited with
the Trustee pursuant to Section 11.01 hereof shall be held in trust and
applied by it, in accordance with the provisions of the Notes and this
Indenture, to the payment, either directly or through any Paying Agent
(including the Issuer acting as its own Paying Agent) as the Trustee may
determine, to the Persons entitled thereto, of the principal (and premium and
Additional Interest, if any) and interest for whose payment such money has been
deposited with the Trustee; but such money need not be segregated from other
funds except to the extent required by law.


 


If
the Trustee or Paying Agent is unable to apply any money or Government
Securities in accordance with Section 11.01 hereof 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
Issuer’s and any Guarantor’s obligations under this Indenture and the Notes
shall be revived and reinstated as though no deposit had occurred pursuant to Section 11.01
hereof; provided that if the Issuer has made any payment of principal
of, premium and Additional Interest, if any, or interest on any Notes because
of the reinstatement of its obligations, the Issuer shall be subrogated to the
rights of the Holders of such Notes to receive such payment from the money or
Government Securities held by the Trustee or Paying Agent.


 


ARTICLE 12


 


MISCELLANEOUS


 


Section 12.01                                    Trust Indenture
Act Controls.


 


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


 


Section 12.02                                    Notices.


 


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


 


If
to the Issuer and/or any Guarantor:


 


c/o
Michaels Stores, Inc.


8000
Bent Branch Drive


Irving,
TX 75063


Attention:
General Counsel


 


with a copy to:


 


Ropes & Gray LLP


Prudential Tower


800 Boylston Street


Boston, MA 02199


Attention: Byung W. Choi, Esq.


 


Telephone:  (617) 951-7000


 


107

















 


Facsimile:  (617) 951-7050


 


If
to the Trustee:


 


Law
Debenture Trust Company of New York


400
Madison Avenue, Suite 4D


New
York, New York 10017


Attention:  Corporate Trust Department


 


Telephone:  (212) 750-6474


Facsimile:  (212) 750-1361


 


with a copy to:


 


Sullivan & Worcester LLP


One Post Office Square


Boston, MA 02109


Attention: Richard Hiersteiner, Esq.


Jeanne P. Darcey, Esq.


 


Telephone:  (617) 338-2800


Facsimile:   (617)
338-2880


 


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


 


All
notices and communications (other than those sent to Holders) shall be deemed
to have been duly given: at the time delivered by hand, if personally
delivered; five calendar days after being deposited in the mail, postage
prepaid, if mailed by first-class mail; when receipt acknowledged, if faxed;
and the next Business Day after timely delivery to the courier, if sent by
overnight air courier guaranteeing next day delivery; and, subject to compliance with the Trust Indenture Act, on the first
date on which publication is made, if given by publication; provided
that any notice or communication delivered to the Trustee shall be deemed
effective upon actual receipt thereof.


 


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


 


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


 


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


 


108

















 


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


 


Holders
may communicate pursuant to Trust Indenture Act Section 312(b) with
other Holders with respect to their rights under this Indenture or the
Notes.  The Issuer, the Trustee, the
Registrar and anyone else shall have the protection of Trust Indenture Act Section 312(c).


 


Section 12.04                                    Certificate and
Opinion as to Conditions Precedent.


 


Upon
any request or application by the Issuer or any of the Guarantors to the
Trustee to take any action under this Indenture, the Issuer or such Guarantor,
as the case may be, shall furnish to the Trustee:


 


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


 


(b)                                 An Opinion of
Counsel in form and substance reasonably satisfactory to the Trustee (which
shall include the statements set forth in Section 12.05 hereof) stating that, in the opinion
of such counsel, all such conditions precedent and covenants have been
satisfied.


 


Section 12.05                                    Statements
Required in Certificate or Opinion.


 


Each
certificate or opinion with respect to compliance with a condition or covenant
provided for in this Indenture (other than a certificate provided pursuant to Section 4.04
hereof or Trust Indenture Act Section 314(a)(4)) shall comply with the
provisions of Trust Indenture Act Section 314(e) and shall include:


 


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


 


(b)                                 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;


 


(c)                                  a statement
that, in the opinion of such Person, he or she has made such examination or
investigation as is necessary to enable him to express an informed opinion as
to whether or not such covenant or condition has been complied with (and, in
the case of an Opinion of Counsel, may be limited to reliance on an Officer’s
Certificate as to matters of fact); and


 


(d)                                 a statement as
to whether or not, in the opinion of such Person, such condition or covenant
has been complied with; provided, however,
that with respect to matters of fact an Opinion of Counsel may rely on an
Officer’s Certificate or certificates of public officials.


 


Section 12.06                                    Rules by
Trustee and Agents.


 


The
Trustee may make reasonable rules for action by or at a meeting of
Holders.  The Registrar or Paying Agent
may make reasonable rules and set reasonable requirements for its
functions.


 


109

















 


Section 12.07            No Personal
Liability of Directors,


Officers, Employees and
Stockholders.


 


No
past, present or future director, officer, employee, incorporator, member,
partner or stockholder of the Issuer or any Guarantor or any of their direct or
indirect parent companies shall have any liability for any obligations of the
Issuer or the Guarantors under the Notes, the Guarantees or this Indenture or
for any claim based on, in respect of, or by reason of such obligations or
their creation.  Each Holder by accepting
Notes waives and releases all such liability. 
The waiver and release are part of the consideration for issuance of the
Notes.


 


Section 12.08                                    Governing Law.


 


THIS
INDENTURE, THE NOTES AND ANY GUARANTEE WILL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.


 


Section 12.09                                    Waiver of Jury
Trial.


 


EACH
OF THE ISSUER, THE GUARANTORS AND THE TRUSTEE HEREBY IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY
IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS INDENTURE, THE NOTES
OR THE TRANSACTIONS CONTEMPLATED HEREBY.


 


Section 12.10                                    Force Majeure.


 


In
no event shall the Trustee be responsible or liable for any failure or delay in
the performance of its obligations under this Indenture arising out of or
caused by, directly or indirectly, forces beyond its reasonable control,
including without limitation strikes, work stoppages, accidents, acts of war or
terrorism, civil or military disturbances, nuclear or natural catastrophes or
acts of God, and interruptions, loss or malfunctions of utilities,
communications or computer (software or hardware) services.


 


Section 12.11                                    No Adverse
Interpretation of Other Agreements.


 


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


 


Section 12.12                                    Successors.


 


All
agreements of the Issuer in this Indenture and the Notes shall bind its
successors.  All agreements of the
Trustee in this Indenture shall bind its successors.  All agreements of each Guarantor in this
Indenture shall bind its successors, except as otherwise provided in Section 10.06 hereof.


 


Section 12.13                                    Severability.


 


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


 


110

















 


Section 12.14                                    Counterpart
Originals.


 


The
parties may sign any number of copies of this Indenture.  Each signed copy shall be an original, but
all of them together represent the same agreement.  This Indenture may be executed in multiple
counterparts which, when taken together, shall constitute one instrument.


 


Section 12.15                                    Table of
Contents, Headings, etc.


 


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


 


Section 12.16                                    Qualification
of Indenture.


 


The
Issuer and the Guarantors shall qualify this Indenture under the Trust
Indenture Act in accordance with the terms and conditions of the Registration
Rights Agreement and shall pay all reasonable costs and expenses (including
attorneys’ fees and expenses for the Issuer, the Guarantors and the Trustee)
incurred in connection therewith, including, but not limited to, costs and
expenses of qualification of this Indenture and the Notes and printing this
Indenture and the Notes.  The Trustee
shall be entitled to receive from the Issuer and the Guarantors any such
Officer’s Certificates, Opinions of Counsel or other documentation as it may
reasonably request in connection with any such qualification of this Indenture
under the Trust Indenture Act.


 


Section 12.17                                    U.S.A. Patriot
Act.


 


The
parties hereto acknowledge that in accordance with Section 326 of the
U.S.A. Patriot Act, the Trustee, like all financial institutions and in order
to help fight the funding of terrorism and money laundering, is required to
obtain, verify, and record information that identifies each person or legal
entity that establishes a relationship or opens an account with the
Trustee.  The parties to this Indenture
agree that they will provide the Trustee with such information as it may
request in order for the Trustee to satisfy the requirements of the U.S.A.
Patriot Act.


 


[Signatures on following page]


 


111

















 


	
   

  	
  MICHAELS
  STORES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Charles M. Sonsteby

  
	
   

  	
   

  	
  Name:

  	
  Charles
  M. Sonsteby

  
	
   

  	
   

  	
  Title:

  	
  Chief Administrative
  Officer and Chief

  Financial Officer

  



 


Signature Page to
Senior Indenture


 






 












 


	
   

  	
  MICHAELS
  STORES PROCUREMENT

  
	
   

  	
  COMPANY, INC.

  
	
   

  	
  MICHAELS
  OF CANADA, ULC

  
	
   

  	
  ARTISTREE, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Charles M. Sonsteby

  
	
   

  	
   

  	
  Name:

  	
  Charles
  M. Sonsteby

  
	
   

  	
   

  	
  Title:

  	
  Chief
  Administrative Officer and Chief

  Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  AARON
  BROTHERS, INC.

  
	
   

  	
  MICHAELS
  FINANCE COMPANY, INC.

  
	
   

  	
  MICHAELS
  STORES CARD SERVICES, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Charles M. Sonsteby

  
	
   

  	
   

  	
  Name:

  	
  Charles
  M. Sonsteby

  
	
   

  	
   

  	
  Title:

  	
  President, Chief
  Administrative Officer

  and Chief Financial Officer

  



 


Signature Page to
Senior Indenture


 

















 


	
   

  	
  LAW
  DEBENTURE TRUST COMPANY OF NEW YORK,

  
	
   

  	
  as
  Trustee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Anthony
  A. Bocchino, Jr.

  
	
   

  	
   

  	
  Name:

  	
  Anthony
  A. Bocchino, Jr.

  
	
   

  	
   

  	
  Title:

  	
  Managing Director

  



 


Signature Page to
Indenture


 

















 


EXHIBIT A


 


[Face of Note]


 


[Insert
the Global Note Legend, if applicable pursuant to the provisions of the
Indenture]


 


[Insert
the Private Placement Legend, if applicable pursuant to the provisions of the
Indenture]


 


[Insert
the Regulation S Temporary Global Note Legend, if applicable pursuant to the
provisions of the Indenture]


 


A-1

















 


CUSIP 
[                    ]


ISIN 
[                ](1)


 


[[RULE 144A][REGULATION S] GLOBAL NOTE


representing up to


$                   ]


73⁄4% Senior Notes due 2018


 


	
  No.

  	
   

  	
  [$                            ]

  



 


MICHAELS STORES, INC.


 


promises
to pay to CEDE & CO. or registered assigns, the principal sum [set
forth on the Schedule of Exchanges of Interests in the Global Note attached
hereto] [of
                                                
United States Dollars] on November 1, 2018.


 


Interest
Payment Dates:  May 1 and November 1


 


Record
Dates:  April 15 and October 15


 






(1)           Rule 144A
Note CUSIP:  594087 AQ1


Rule 144A Note ISIN: 
US594087AQ16


Regulation S Note CUSIP:  U59329
AC3


Regulation S Note ISIN:  USU59329AC33


Exchange Note CUSIP: 
[                          ]


Exchange Note ISIN: 
[                     ]


 


A-2

















 


IN
WITNESS HEREOF, the Issuer has caused this instrument to be duly executed.


 


Dated:  [            ],
2010


 


	
   

  	
  MICHAELS
  STORES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  



 


A-3

















 


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


 




	
  Dated:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  LAW
  DEBENTURE TRUST COMPANY OF NEW YORK,

  
	
   

  	
   

  	
  as
  Trustee

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Authorized Signatory

  






 


 


A-4






 












 


[Back of Note]


 


73⁄4% Senior Notes due 2018


 


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


 


1.                                       INTEREST.  Michaels Stores, Inc., a Delaware
corporation, promises to pay interest on the principal amount of this Note at
73⁄4% per annum from October 21, 2010(2) until maturity and shall pay
the Additional Interest, if any, payable pursuant to the Registration Rights
Agreement referred to below.  The Issuer
will pay interest and Additional Interest, if any, semi-annually in arrears on May 1
and November 1 of each year, or if any such day is not a Business Day, on
the next succeeding Business Day (each, an “Interest Payment Date”).  Interest on the Notes will accrue from the
most recent date to which interest has been paid or, if no interest has been
paid, from the date of issuance; provided that the first Interest
Payment Date shall be May 1, 2011. 
The Issuer will pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue principal and premium, if any,
from time to time on demand at the interest rate on the Notes; it shall pay
interest (including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue installments of interest and Additional Interest, if
any, (without regard to any applicable grace periods) from time to time on
demand at the interest rate on the Notes. 
Interest will be computed on the basis of a 360-day year comprised of
twelve 30-day months.  In the event the
Issuer is required to pay Additional Interest, the Issuer will provide an
Officer’s Certificate to the Trustee no later than 15 days prior to the next
Interest Payment Date, which shall set forth the amount of the Additional
Interest to be paid by the Issuer and the rate per thousand.  The Trustee shall not at any time be under
any duty or responsibility to any Holders to determine whether the Additional
Interest is payable and the amount thereof.


 


2.                                       METHOD OF
PAYMENT.  The Issuer will pay interest on
the Notes and Additional Interest, if any, to the Persons who are registered
Holders of Notes at the close of business on the April 15 or October 15
(whether or not a Business Day), as the case may be, next preceding the
Interest Payment Date, even if such Notes are canceled after such record date
and on or before such Interest Payment Date, except as provided in Section 2.12
of the Indenture with respect to defaulted interest.  Payment of interest and Additional Interest,
if any, may be made by check mailed to the Holders at their addresses set forth
in the register of Holders, provided that payment by wire transfer of
immediately available funds will be required with respect to principal of and
interest, premium and Additional Interest, if any, on, all Global Notes and all
other Notes the Holders of which shall have provided wire transfer instructions
to the Issuer or the Paying Agent.  Such
payment shall be in such coin or currency of the United States of America as at
the time of payment is legal tender for payment of public and private debts.


 


3.                                       PAYING AGENT
AND REGISTRAR.  Initially, Law Debenture
Trust Company of New York, the Trustee under the Indenture, will act as Paying
Agent and Registrar.  The Issuer may
change any Paying Agent or Registrar without notice to the Holders.  The Issuer or any of its Subsidiaries may act
in any such capacity.


 






(2)                                  With respect to
the Initial Notes.


 


A-5

















 


4.                                       INDENTURE.  The Issuer issued the Notes under an Indenture,
dated as of October 21, 2010 (the “Indenture”), among Michaels
Stores, Inc., the Guarantors named therein and the Trustee.  This Note is one of a duly authorized issue
of notes of the Issuer designated as its 73⁄4% Senior Notes due 2018.  The Issuer shall be entitled to issue
Additional Notes pursuant to Section 2.01 and 4.09 of the Indenture.  The terms of the Notes include those stated
in the Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939, as amended (the “Trust Indenture Act”).  The Notes are subject to all such terms, and
Holders are referred to the Indenture and such Act for a statement of such
terms.  To the extent any provision of
this Note conflicts with the express provisions of the Indenture, the
provisions of the Indenture shall govern and be controlling.


 


5.                                       OPTIONAL
REDEMPTION.


 


(a)                                  Except as
described below under clauses 5(b) and 5(c) hereof, the Notes will
not be redeemable at the Issuer’s option before November 1, 2014.


 


(b)                                 At any time
prior to November 1, 2014, the Issuer may redeem all or a part of the
Notes, upon not less than 30 nor more than 60 days’ prior notice mailed by
first-class mail to the registered address of each Holder of Notes or otherwise
delivered in accordance with the procedures of DTC, at a redemption price equal
to 100% of the principal amount of the Notes redeemed plus the Applicable
Premium as of, and accrued and unpaid interest and Additional Interest, if any,
to the date of redemption (the “Redemption
Date”), subject to the rights of Holders of record on the relevant
Record Date to receive interest due on the relevant Interest Payment Date.


 


(c)                                  Until November 1,
2013, the Issuer may, at its option, on one or more occasions redeem up to 35%
of the aggregate principal amount of Notes (including the aggregate principal
amount of Notes issued after the Issue Date) at a redemption price equal to
107.750% of the aggregate principal amount thereof, plus accrued and unpaid
interest thereon and Additional Interest, if any, to the applicable 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, with the net cash
proceeds of one or more Equity Offerings; provided that at least 50% of the sum of the aggregate
principal amount of Notes originally issued under the Indenture and any
Additional Notes that are issued under the Indenture after the Issue Date
remains outstanding immediately after the occurrence of each such redemption; provided  further that each such redemption occurs within 90 days
of the date of closing of each such Equity Offering.  Notice of any redemption upon any Equity
Offering may be given prior to such redemption, and any such redemption or
notice may, at the Issuer’s discretion, be subject to one or more conditions
precedent, including, but not limited to, completion of the related Equity
Offering.


 


(d)                                 On and after November 1,
2014, the Issuer may redeem the Notes, in whole or in part, at the redemption
prices (expressed as percentages of principal amount of the Notes to be
redeemed) set forth below, plus accrued and unpaid interest thereon and
Additional Interest, if any, to the applicable 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, if redeemed during the twelve-month
period beginning on November 1 of each of the years indicated below:


 


	
  Year

  	
   

  	
  Percentage

  	
   

  
	
  2014

  	
   

  	
  103.875

  	
  %

  
	
  2015

  	
   

  	
  101.938

  	
  %

  
	
  2016 and thereafter

  	
   

  	
  100.000

  	
  %

  



 


A-6

















 


(e)                                  Any redemption
pursuant to this paragraph 5 shall be made pursuant to the provisions of
Sections 3.01 through 3.06 of the Indenture.


 


6.                                       MANDATORY
REDEMPTION.  The Issuer shall not be
required to make mandatory redemption or sinking fund payments with respect to
the Notes.


 


7.                                       NOTICE OF
REDEMPTION.  Subject to Section 3.03
of the Indenture, notice of redemption will be mailed by first-class mail at
least 30 days but not more than 60 days before the redemption date (except that
redemption notices may be mailed more than 60 days prior to a redemption date
if the notice is issued in connection with Article 8 or Article 11 of
the Indenture) to each Holder whose Notes are to be redeemed at its registered
address or shall otherwise be delivered on such timeframe in accordance with
the procedures of DTC.  Notes in
denominations larger than $2,000 may be redeemed in part but only in integral
multiples of $1,000 in excess of $2,000, unless all of the Notes held by a
Holder are to be redeemed.  On and after
the redemption date interest ceases to accrue on Notes or portions thereof
called for redemption.


 


8.                                       OFFERS TO
REPURCHASE.


 


(a)                                  Upon the
occurrence of a Change of Control, the Issuer shall make an offer (a “Change
of Control Offer”) to each Holder to repurchase all or any part (equal to
$2,000 or an integral multiple of $1,000 in excess of $2,000) of each Holder’s
Notes at a purchase price equal to 101% of the aggregate principal amount
thereof plus accrued and unpaid interest and Additional Interest thereon, if
any, to the date of purchase (the “Change of Control Payment”).  The Change of Control Offer shall be made in
accordance with Section 4.14 of the Indenture.


 


(b)                                 If the Issuer
or any of its Restricted Subsidiaries consummates an Asset Sale, within 10
Business Days of each date that Excess Proceeds exceed $50.0 million, the
Issuer shall commence, an offer to all Holders of the Notes and, if required by
the terms of any Indebtedness that is pari
passu with the Notes (“Pari
Passu Indebtedness”), to the holders of such Pari Passu Indebtedness
(an “Asset Sale Offer”),
to purchase the maximum principal amount of Notes (including any Additional
Notes) and such other Pari Passu Indebtedness that may be purchased out of the
Excess Proceeds at an offer price in cash in an amount equal to 100% of the
principal amount thereof plus accrued and unpaid interest and Additional
Interest thereon, if any, to the date fixed for the closing of such offer, in
accordance with the procedures set forth in the Indenture.  To the extent that the aggregate amount of
Notes (including any Additional Notes) and such Pari Passu Indebtedness
tendered pursuant to an Asset Sale Offer is less than the Excess Proceeds, the
Issuer may use any remaining Excess Proceeds for general corporate purposes,
subject to other covenants contained in the Indenture.  If the aggregate principal amount of Notes
and the Pari Passu Indebtedness surrendered by such holders thereof exceeds the
amount of Excess Proceeds, the Trustee shall select the Notes and such Pari
Passu Indebtedness to be purchased on a pro rata basis
based on the accreted value or principal amount of the Notes or such Pari Passu
Indebtedness tendered.  Upon completion
of any such Asset Sale Offer, the amount of Excess Proceeds shall be reset at
zero.  Holders of Notes that are the
subject of an offer to purchase will receive an Asset Sale Offer from the
Issuer prior to any related purchase date and may elect to have such Notes
purchased by completing the form entitled “Option of Holder to Elect Purchase”
attached to the Notes.


 


9.                                       DENOMINATIONS,
TRANSFER, EXCHANGE.  The Notes are in
registered form without coupons in denominations of $2,000 and integral
multiples of $1,000 in excess of $2,000. 
The transfer of Notes may be registered and Notes may be exchanged as
provided in the Indenture.  The Registrar
and the Trustee may require a Holder, among other things, to furnish
appropriate endorsements and transfer documents and the Issuer may require a
Holder to pay any taxes and fees required by law or 


 


A-7

















 


permitted
by the Indenture.  The Issuer need not
exchange or register the transfer of any Note or portion of a Note selected for
redemption, except for the unredeemed portion of any Note being redeemed in
part.  Also, the Issuer need not exchange
or register the transfer of any Notes for a period of 15 days before a
selection of Notes to be redeemed.


 


10.                                 PERSONS DEEMED
OWNERS.  The registered Holder of a Note
may be treated as its owner for all purposes.


 


11.                                 AMENDMENT,
SUPPLEMENT AND WAIVER.  The Indenture,
the Guarantees or the Notes may be amended or supplemented as provided in the
Indenture.


 


12.                                 DEFAULTS AND
REMEDIES.  The Events of Default relating
to the Notes are defined in Section 6.01 of the Indenture.  If any Event of Default occurs and is
continuing, the Trustee or the Holders of at least 25% in principal amount of
the then outstanding Notes may declare the principal, premium, if any, interest
and any other monetary obligations on all the then outstanding Notes to be due
and payable immediately.  Notwithstanding
the foregoing, in the case of an Event of Default arising from certain events
of bankruptcy or insolvency, all outstanding Notes will become due and payable
immediately without further action or notice. 
Holders may not enforce the Indenture, the Notes or the Guarantees
except as provided in the Indenture. 
Subject to certain limitations, Holders of a majority in aggregate principal
amount of the then outstanding Notes may direct the Trustee in its exercise of
any trust or power.  The Trustee may
withhold from Holders of the Notes notice of any continuing Default (except a
Default relating to the payment of principal, premium, if any, Additional
Interest, if any, or interest) if it determines that withholding notice is in
their interest.  The Holders of a
majority in aggregate principal amount of the Notes then outstanding by notice
to the Trustee may on behalf of the Holders of all of the Notes waive any
existing Default or and its consequences under the Indenture except a
continuing Default in payment of the principal of, premium, if any, Additional
Interest, if any, or interest on, any of the Notes held by a non-consenting Holder.  The Issuer and each Guarantor (to the extent
that such Guarantor is so required under the Trust Indenture Act) is required
to deliver to the Trustee annually a statement regarding compliance with the
Indenture, and the Issuer is required within five (5) Business Days after
becoming aware of any Default, to deliver to the Trustee a statement specifying
such Default and what action the Issuer proposes to take with respect thereto.


 


13.                                 AUTHENTICATION.  This Note shall not be entitled to any
benefit under the Indenture or be valid or obligatory for any purpose until
authenticated by the manual signature of the Trustee.


 


14.                                 ADDITIONAL
RIGHTS OF HOLDERS OF RESTRICTED GLOBAL NOTES AND RESTRICTED DEFINITIVE
NOTES.  In addition to the rights
provided to Holders of Notes under the Indenture, Holders of Restricted Global
Notes and Restricted Definitive Notes shall have all the rights set forth in
the Registration Rights Agreement, dated as of October 21, 2010, among
Michaels Stores, Inc., the Guarantors named therein and the other parties
named on the signature pages thereof (the “Registration Rights
Agreement”), including the right to receive Additional Interest (as defined
in the Registration Rights Agreement).


 


15.                                 GOVERNING
LAW.  THE LAWS OF THE STATE OF NEW YORK
SHALL GOVERN AND BE USED TO CONSTRUE THE INDENTURE, THE NOTES AND THE
GUARANTEES.


 


16.                                 CUSIP
NUMBERS.  Pursuant to a recommendation
promulgated by the Committee on Uniform Security Identification Procedures, the
Issuer has caused CUSIP numbers to be printed 


 


A-8

















 


on
the Notes and the Trustee may use CUSIP numbers in notices of redemption as a
convenience to Holders.  No
representation is made as to the accuracy of such numbers either as printed on
the Notes or as contained in any notice of redemption and reliance may be
placed only on the other identification numbers placed thereon.


 


The
Issuer will furnish to any Holder upon written request and without charge a
copy of the Indenture and/or the Registration Rights Agreement.  Requests may be made to the Issuer at the
following address:


 


8000
Bent Branch Drive

Irving, TX 75063

Attention: General Counsel


 


A-9

















 


ASSIGNMENT FORM


 


To
assign this Note, fill in the form below:


 


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

  	
   

  
	
   

  	
  (Insert assignee’s legal name)

  
	
   

  
	
   

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

  
	
   

  
	
   

  
	
   

  
	
   

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

  
	
   

  
	
  and
  irrevocably appoint

  	
   

  
			



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


 


	
  Date:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Your
  Signature:

  	
   

  
	
   

  	
   

  	
   

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

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Signature
  Guarantee*:

  	
   

  	
   

  	
   

  
						



 






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


 


A-10

















 


OPTION OF HOLDER TO ELECT PURCHASE


 


If
you want to elect to have this Note purchased by the Issuer pursuant to Section 4.10
or 4.14 of the Indenture, check the appropriate box below:


 


	
  o
  Section 4.10

  	
   

  	
  o
  Section 4.14

  



 


If
you want to elect to have only part of this Note purchased by the Issuer
pursuant to Section 4.10 or Section 4.14 of the Indenture, state the
amount you elect to have purchased:


 


$                 


 


	
  Date:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Your
  Signature:

  	
   

  
	
   

  	
   

  	
   

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

  
	
   

  	
   

  	
  Tax
  Identification No.:

  	
   

  
	
   

  	
   

  	
   

  
	
  Signature
  Guarantee*:

  	
   

  	
   

  	
   

  
							



 






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


 


A-11
















 


SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE*


 


The
initial outstanding principal amount of this Global Note is
$                    .  The following exchanges of a part of this
Global Note for an interest in another Global Note or for a Definitive Note, or
exchanges of a part of another Global or Definitive Note for an interest in
this Global Note, have been made:


 


	
  Date of

  Exchange

  	
   

  	
  Amount of

  decrease

  in Principal

  Amount

  	
   

  	
  Amount of increase

  in Principal

  Amount of this

  Global Note

  	
   

  	
  Principal Amount

  of 

  this Global Note

  following such

  decrease or

  increase

  	
   

  	
  Signature of

  authorized officer

  of Trustee or 

  Note Custodian

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  



 






*This
schedule should be included only if the Note is issued in global form.


 


A-12

















 


EXHIBIT B


 


FORM OF CERTIFICATE OF TRANSFER


 


Michaels
Stores, Inc. 

8000 Bent Branch Drive

Irving, TX 75063

Attention: General Counsel


 


Law
Debenture Trust Company of New York

400 Madison Avenue, Suite 4D

New York, New York 10017

Fax No.:  (212) 750-1361

Attention:  Corporate Trust Department


 


Re:  73⁄4% Senior Notes due 2018


 


Reference
is hereby made to the Indenture, dated as of October 21, 2010 (the “Indenture”),
among Michaels Stores, Inc., the Guarantors named therein and the
Trustee.  Capitalized terms used but not
defined herein shall have the meanings given to them in the Indenture.


 


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


 


[CHECK ALL THAT APPLY]


 


1.                                       o  CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A
BENEFICIAL INTEREST IN THE 144A GLOBAL NOTE OR A DEFINITIVE NOTE PURSUANT TO
RULE 144A.  The Transfer is being
effected pursuant to and in accordance with Rule 144A under the United
States Securities Act of 1933, as amended (the “Securities Act”), and,
accordingly, the Transferor hereby further certifies that the beneficial
interest or Definitive Note is being transferred to a Person that the
Transferor reasonably believes is purchasing the beneficial interest or
Definitive Note for its own account, or for one or more accounts with respect
to which such Person exercises sole investment discretion, and such Person and
each such account is a “qualified institutional buyer” within the meaning of Rule 144A
in a transaction meeting the requirements of Rule 144A and such Transfer
is in compliance with any applicable blue sky securities laws of any state of
the United States.


 


2.                                       o  CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A
BENEFICIAL INTEREST IN THE REGULATION S GLOBAL NOTE OR A DEFINITIVE NOTE
PURSUANT TO REGULATION S.  The Transfer
is being effected pursuant to and in accordance with Rule 903 or Rule 904
under the Securities Act and, accordingly, the Transferor hereby further
certifies that (i) the Transfer is not being made to a person in the
United States and (x) at the time the buy order was originated, the
Transferee was outside the United States or such Transferor and any Person
acting on its behalf reasonably believed and believes that the Transferee was
outside the United States or (y) the transaction was executed in, on or
through the facilities of a designated offshore securities market and neither
such Transferor nor any Person acting on its behalf knows that the transaction
was prearranged with a buyer in the United States, (ii) no directed
selling efforts have been made in contravention of the requirements of Rule 903(b) or
Rule 904(b) of Regulation S under the Securities Act (iii) the
transaction is not part of a plan or 


 


B-1

















 


scheme
to evade the registration requirements of the Securities Act and (iv) if
the proposed transfer is being made prior to the expiration of the Restricted
Period, the transfer is not being made to a U.S. Person or for the account or
benefit of a U.S. Person (other than an Initial Purchaser).  Upon consummation of the proposed transfer in
accordance with the terms of the Indenture, the transferred beneficial interest
or Definitive Note will be subject to the restrictions on Transfer enumerated
in the Indenture and the Securities Act.


 


3.                                       o  CHECK AND COMPLETE IF TRANSFEREE WILL TAKE
DELIVERY OF A BENEFICIAL INTEREST IN THE DEFINITIVE NOTE PURSUANT TO ANY
PROVISION OF THE SECURITIES ACT OTHER THAN RULE 144A OR REGULATION S.  The Transfer is being effected in compliance
with the transfer restrictions applicable to beneficial interests in Restricted
Global Notes and Restricted Definitive Notes and pursuant to and in accordance
with the Securities Act and any applicable blue sky securities laws of any
state of the United States, and accordingly the Transferor hereby further
certifies that (check one):


 


(a)                                  o  such Transfer is being effected pursuant to
and in accordance with Rule 144 under the Securities Act;


 


or


 


(b)                                 o  such Transfer is being effected to the Issuer
or a subsidiary thereof;


 


or


 


(c)                                  o  such Transfer is being effected pursuant to
an effective registration statement under the Securities Act and in compliance
with the prospectus delivery requirements of the Securities Act.


 


4.                                       o  CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A
BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL NOTE OR OF AN UNRESTRICTED
DEFINITIVE NOTE.


 


(a)                                  o  CHECK IF TRANSFER IS PURSUANT TO RULE 144. (i) The
Transfer is being effected pursuant to and in accordance with Rule 144
under the Securities Act and in compliance with the transfer restrictions
contained in the Indenture and any applicable blue sky securities laws of any
state of the United States and (ii) the restrictions on transfer contained
in the Indenture and the Private Placement Legend are not required in order to
maintain compliance with the Securities Act. 
Upon consummation of the proposed Transfer in accordance with the terms
of the Indenture, the transferred beneficial interest or Definitive Note will
no longer be subject to the restrictions on transfer enumerated in the Private
Placement Legend printed on the Restricted Global Notes, on Restricted
Definitive Notes and in the Indenture.


 


(b)                                 o  CHECK IF TRANSFER IS PURSUANT TO REGULATION
S. (i) The Transfer is being effected pursuant to and in accordance with Rule 903
or Rule 904 under the Securities Act and in compliance with the transfer
restrictions contained in the Indenture and any applicable blue sky securities
laws of any state of the United States and (ii) the restrictions on
transfer contained in the Indenture and the Private Placement Legend are not
required in order to maintain compliance with the Securities Act.  Upon consummation of the proposed Transfer in
accordance with the terms of the Indenture, the transferred beneficial interest
or Definitive Note will no longer be subject to the restrictions on transfer
enumerated in the Private Placement Legend printed on the Restricted Global Notes,
on Restricted Definitive Notes and in the Indenture.


 


B-2

















 


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


 


B-3

















 


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


 


	
   

  	
   

  	
  [Insert
  Name of Transferor]

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Dated:

  	
   

  	
   

  	
   

  
					



 


B-4

















 


ANNEX A TO CERTIFICATE OF TRANSFER


 


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


 


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


 


(a)                                  o a beneficial
interest in the:


 


(i)                o 144A Global
Note (CUSIP 594087 AQ1, or


 


(ii)             o Regulation S
Global Note (CUSIP U59329 AC3, or


 


(b)                                 o a Restricted
Definitive Note.


 


2.                                       After the
Transfer the Transferee will hold:


 


[CHECK ONE]


 


(a)                                  o a beneficial
interest in the:


 


(i)                o 144A Global
Note (CUSIP 594087 AQ1, or


 


(ii)             o Regulation S
Global Note (CUSIP U59329 AC3, or


 


(iii)          o Unrestricted
Global Note (CUSIP
[                    ];
or


 


(b)                                 o a Restricted
Definitive Note; or


 


(c)                                  o an
Unrestricted Definitive Note,

in accordance with the terms of the Indenture.


 


B-5
















 


EXHIBIT C


 


FORM OF CERTIFICATE OF EXCHANGE


 


Michaels
Stores, Inc. 

8000 Bent Branch Drive

Irving, TX 75063

Attention: General Counsel


 


Law
Debenture Trust Company of New York

400 Madison Avenue, Suite 4D

New York, New York 10017

Fax No.:  (212) 750-1361

Attention:  Corporate Trust Department


 


Re:  73⁄4% Senior Notes due 2018


 


Reference
is hereby made to the Indenture, dated as of October 21, 2010 (the “Indenture”),
among Michaels Stores, Inc., the Guarantors named therein and the
Trustee.  Capitalized terms used but not
defined herein shall have the meanings given to them in the Indenture.


 


                               (the
“Owner”) owns and proposes to exchange the Note[s] or interest in such
Note[s] specified herein, in the principal amount of
$                    
in such Note[s] or interests (the “Exchange”).  In connection with the Exchange, the Owner
hereby certifies that:


 


1)                                      EXCHANGE OF
RESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS IN A RESTRICTED GLOBAL NOTE
FOR UNRESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS IN AN UNRESTRICTED
GLOBAL NOTE


 


a)                                      o  CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST
IN A RESTRICTED GLOBAL NOTE TO BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL
NOTE.  In connection with the Exchange of
the Owner’s beneficial interest in a Restricted Global Note for a beneficial
interest in an Unrestricted Global Note in an equal principal amount, the Owner
hereby certifies (i) the beneficial interest is being acquired for the
Owner’s own account without transfer, (ii) such Exchange has been effected
in compliance with the transfer restrictions applicable to the Global Notes and
pursuant to and in accordance with the United States Securities Act of 1933, as
amended (the “Securities Act”), (iii) the restrictions on transfer
contained in the Indenture and the Private Placement Legend are not required in
order to maintain compliance with the Securities Act and (iv) the
beneficial interest in an Unrestricted Global Note is being acquired in
compliance with any applicable blue sky securities laws of any state of the
United States.


 


b)                                     o  CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST
IN A RESTRICTED GLOBAL NOTE TO UNRESTRICTED DEFINITIVE NOTE.  In connection with the Exchange of the Owner’s
beneficial interest in a Restricted Global Note for an Unrestricted Definitive
Note, the Owner hereby certifies (i) the Definitive Note is being acquired
for the Owner’s own account without transfer, (ii) such Exchange has been
effected in compliance with the transfer restrictions applicable to the
Restricted Global Notes and pursuant to and in accordance with the Securities
Act, (iii) the restrictions on transfer contained in the Indenture and the
Private Placement Legend are not required in order to maintain compliance with
the Securities Act and 


 


C-1

















 


(iv) the
Definitive Note is being acquired in compliance with any applicable blue sky
securities laws of any state of the United States.


 


c)                                      o  CHECK IF EXCHANGE IS FROM RESTRICTED
DEFINITIVE NOTE TO BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL NOTE.  In connection with the Owner’s Exchange of a
Restricted Definitive Note for a beneficial interest in an Unrestricted Global
Note, the Owner hereby certifies (i) the beneficial interest is being
acquired for the Owner’s own account without transfer, (ii) such Exchange
has been effected in compliance with the transfer restrictions applicable to
Restricted Definitive Notes and pursuant to and in accordance with the
Securities Act, (iii) the restrictions on transfer contained in the
Indenture and the Private Placement Legend are not required in order to
maintain compliance with the Securities Act and (iv) the beneficial
interest is being acquired in compliance with any applicable blue sky
securities laws of any state of the United States.


 


d)                                     o  CHECK IF EXCHANGE IS FROM RESTRICTED
DEFINITIVE NOTE TO UNRESTRICTED DEFINITIVE NOTE.  In connection with the Owner’s Exchange of a
Restricted Definitive Note for an Unrestricted Definitive Note, the Owner
hereby certifies (i) the Unrestricted Definitive Note is being acquired
for the Owner’s own account without transfer, (ii) such Exchange has been
effected in compliance with the transfer restrictions applicable to Restricted
Definitive Notes and pursuant to and in accordance with the Securities Act, (iii) the
restrictions on transfer contained in the Indenture and the Private Placement
Legend are not required in order to maintain compliance with the Securities Act
and (iv) the Unrestricted Definitive Note is being acquired in compliance
with any applicable blue sky securities laws of any state of the United States.


 


2)                                      EXCHANGE OF
RESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS IN RESTRICTED GLOBAL NOTES
FOR RESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS IN RESTRICTED GLOBAL
NOTES


 


a)                                      o  CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST
IN A RESTRICTED GLOBAL NOTE TO RESTRICTED DEFINITIVE NOTE.  In connection with the Exchange of the Owner’s
beneficial interest in a Restricted Global Note for a Restricted Definitive
Note with an equal principal amount, the Owner hereby certifies that the
Restricted Definitive Note is being acquired for the Owner’s own account
without transfer.  Upon consummation of
the proposed Exchange in accordance with the terms of the Indenture, the Restricted
Definitive Note issued will continue to be subject to the restrictions on
transfer enumerated in the Private Placement Legend printed on the Restricted
Definitive Note and in the Indenture and the Securities Act.


 


b)                                     o  CHECK IF EXCHANGE IS FROM RESTRICTED
DEFINITIVE NOTE TO BENEFICIAL INTEREST IN A RESTRICTED GLOBAL NOTE.  In connection with the Exchange of the Owner’s
Restricted Definitive Note for a beneficial interest in the [CHECK ONE]  o 144A Global Note  o Regulation S Global Note,
with an equal principal amount, the Owner hereby certifies (i) the
beneficial interest is being acquired for the Owner’s own account without
transfer and (ii) such Exchange has been effected in compliance with the
transfer restrictions applicable to the Restricted Global Notes and pursuant to
and in accordance with the Securities Act, and in compliance with any
applicable blue sky securities laws of any state of the United States.  Upon consummation of the proposed Exchange in
accordance with the terms of the Indenture, the beneficial interest issued will
be subject to the restrictions on transfer enumerated in 


 


C-2

















 


the
Private Placement Legend printed on the relevant Restricted Global Note and in
the Indenture and the Securities Act.


 


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


 


 


	
   

  	
   

  	
  [Insert
  Name of Transferor]

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Dated:

  	
   

  	
   

  	
   

  
					



 


C-3

















 


EXHIBIT D


 


[FORM OF SUPPLEMENTAL INDENTURE

TO BE DELIVERED BY SUBSEQUENT GUARANTORS]


 


Supplemental
Indenture (this “Supplemental Indenture”), dated as of
                    ,
among
                                    
(the “Guaranteeing Subsidiary”), a subsidiary of Michaels Stores, Inc.,
a Delaware Corporation (the “Issuer”), and Law Debenture Trust Company
of New York, as trustee (the “Trustee”).


 


W I T N E S S E T H


 


WHEREAS,
each of Michaels Stores, Inc. and the Guarantors (as defined in the
Indenture referred to below) has heretofore executed and delivered to the
Trustee an indenture (the “Indenture”), dated as of October 21,
2010, providing for the issuance of an unlimited aggregate principal amount of
73⁄4% Senior Notes due 2018 (the “Notes”);


 


WHEREAS,
the Indenture provides that under certain circumstances the Guaranteeing
Subsidiary shall execute and deliver to the Trustee a supplemental indenture
pursuant to which the Guaranteeing Subsidiary shall unconditionally guarantee
all of the Issuer’s Obligations under the Notes and the Indenture on the terms
and conditions set forth herein and under the Indenture (the “Guarantee”);
and


 


WHEREAS,
pursuant to Section 9.01 of the Indenture, the Trustee is authorized to
execute and deliver this Supplemental Indenture.


 


NOW
THEREFORE, in consideration of the foregoing and for other good and valuable
consideration, the receipt of which is hereby acknowledged, the parties
mutually covenant and agree for the equal and ratable benefit of the Holders of
the Notes as follows:


 


(1)                                  Capitalized
Terms.  Capitalized terms used herein
without definition shall have the meanings assigned to them in the Indenture.


 


(2)                                  Agreement to
Guarantee.  The Guaranteeing
Subsidiary hereby agrees as follows:


 


(a)                                  Along with all
Guarantors named in the Indenture, to jointly and severally unconditionally
guarantee to each Holder of a Note authenticated and delivered by the Trustee
and to the Trustee and its successors and assigns, irrespective of the validity
and enforceability of the Indenture, the Notes or the obligations of the Issuer
hereunder or thereunder, that:


 


(i)                                  the principal of and
interest, premium and Additional Interest, if any, on the Notes will be promptly
paid in full when due, whether at maturity, by acceleration, redemption or
otherwise, and interest on the overdue principal of and interest on the Notes,
if any, if lawful, and all other obligations of the Issuer to the Holders or
the Trustee hereunder or thereunder will be promptly paid in full or performed,
all in accordance with the terms hereof and thereof; and


 


(ii)                                     in case of any extension of
time of payment or renewal of any Notes or any of such other obligations, that
same will be promptly paid in full when due or performed in accordance with the
terms of the extension or renewal, whether at stated maturity, by acceleration
or otherwise.  Failing payment when due
of any amount so guaranteed or any performance so guaranteed for whatever
reason, the Guarantors and the Guaranteeing 


 


D-1

















 


Subsidiary
shall be jointly and severally obligated to pay the same immediately.  This is a guarantee of payment and not a
guarantee of collection.


 


(b)                                 The obligations
hereunder shall be unconditional, irrespective of the validity, regularity or
enforceability of the Notes or the Indenture, the absence of any action to
enforce the same, any waiver or consent by any Holder of the Notes with respect
to any provisions hereof or thereof, the recovery of any judgment against the
Issuer, any action to enforce the same or any other circumstance which might
otherwise constitute a legal or equitable discharge or defense of a guarantor.


 


(c)                                  The following
is hereby waived:  diligence,
presentment, demand of payment, filing of claims with a court in the event of
insolvency or bankruptcy of the Issuer, any right to require a proceeding first
against the Issuer, protest, notice and all demands whatsoever.


 


(d)                                 This Guarantee
shall not be discharged except by complete performance of the obligations
contained in the Notes, the Indenture and this Supplemental Indenture, and the
Guaranteeing Subsidiary accepts all obligations of a Guarantor under the
Indenture.


 


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


 


(f)                                    The
Guaranteeing Subsidiary shall not be entitled to any right of subrogation in
relation to the Holders in respect of any obligations guaranteed hereby until
payment in full of all obligations guaranteed hereby.


 


(g)                                 As between the
Guaranteeing Subsidiary, on the one hand, and the Holders and the Trustee, on
the other hand, (x) the maturity of the obligations guaranteed hereby may
be accelerated as provided in Article 6 of the Indenture for the purposes
of this Guarantee, notwithstanding any stay, injunction or other prohibition
preventing such acceleration in respect of the obligations guaranteed hereby, and
(y) in the event of any declaration of acceleration of such obligations as
provided in Article 6 of the Indenture, such obligations (whether or not
due and payable) shall forthwith become due and payable by the Guaranteeing
Subsidiary for the purpose of this Guarantee.


 


(h)                                 The
Guaranteeing Subsidiary shall have the right to seek contribution from any
non-paying Guarantor so long as the exercise of such right does not impair the
rights of the Holders under this Guarantee.


 


(i)                                     Pursuant to Section 10.02
of the Indenture, after giving effect to all other contingent and fixed
liabilities that are relevant under any applicable Bankruptcy or fraudulent
conveyance laws, and after giving effect to any collections from, rights to
receive contribution from or payments made by or on behalf of any other
Guarantor in respect of the obligations of such other Guarantor under Article 10
of the Indenture, this new Guarantee shall be limited to the maximum amount
permissible such that the obligations of such Guaranteeing Subsidiary under
this Guarantee will not constitute a fraudulent transfer or conveyance.


 


(j)                                     This Guarantee
shall remain in full force and effect and continue to be effective should any
petition be filed by or against the Issuer for liquidation, reorganization,
should the Issuer 


 


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become
insolvent or make an assignment for the benefit of creditors or should a
receiver or trustee be appointed for all or any significant part of the Issuer’s
assets, and shall, to the fullest extent permitted by law, continue to be
effective or be reinstated, as the case may be, if at any time payment and
performance of the Notes are, pursuant to applicable law, rescinded or reduced
in amount, or must otherwise be restored or returned by any obligee on the
Notes and Guarantee, whether as a “voidable preference”, “fraudulent transfer”
or otherwise, all as though such payment or performance had not been made.  In the event that any payment or any part
thereof, is rescinded, reduced, restored or returned, the Note shall, to the
fullest extent permitted by law, be reinstated and deemed reduced only by such
amount paid and not so rescinded, reduced, restored or returned.


 


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


 


(l)                                     This Guarantee
shall be a general unsecured senior obligation of such Guaranteeing Subsidiary,
ranking pari passu with any other future senior
Indebtedness of such Guaranteeing Subsidiary, if any.


 


(m)                               Each payment to
be made by the Guaranteeing Subsidiary in respect of this Guarantee shall be
made without set-off, counterclaim, reduction or diminution of any kind or
nature.


 


(3)                                  Execution and
Delivery.  The
Guaranteeing Subsidiary agrees that the Guarantee shall remain in full force
and effect notwithstanding the absence of the endorsement of any notation of
such Guarantee on the Notes.


 


(4)                                  Merger, Consolidation
or Sale of All or Substantially All Assets.


 


(a)                                  The
Guaranteeing Subsidiary may not consolidate or merge with or into or wind up
into (whether or not the Issuer or Guaranteeing Subsidiary is the surviving
corporation), or sell, assign, transfer, lease, convey or otherwise dispose of
all or substantially all of its properties or assets, in one or more related
transactions, to any Person unless:


 


(i)                                     (A) the
Guaranteeing Subsidiary is the surviving corporation or the Person formed by or
surviving any such consolidation or merger (if other than the Guaranteeing
Subsidiary) or to which such sale, assignment, transfer, lease, conveyance or
other disposition will have been made is a corporation organized or existing
under the laws of the jurisdiction of organization of the Guaranteeing
Subsidiary, as the case may be, or the laws of the United States, any state
thereof, the District of Columbia, or any territory thereof (the Guaranteeing
Subsidiary or such Person, as the case may be, being herein called the “Successor Person”);


 


(B)                                the Successor
Person, if other than the Guaranteeing Subsidiary, expressly assumes all the
obligations of the Guaranteeing Subsidiary under the Indenture and the
Guaranteeing Subsidiary’s related Guarantee pursuant to supplemental indentures
or other documents or instruments in form reasonably satisfactory to the
Trustee;


 


(C)                                immediately
after such transaction, no Default exists; and


 


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(D)                               the Issuer
shall have delivered to the Trustee an Officer’s Certificate and an Opinion of
Counsel, each stating that such consolidation, merger or transfer and such
supplemental indentures, if any, comply with the Indenture; or


 


(ii)                                  the transaction
is made in compliance with Sections 4.10(a)(1) and (2) of the
Indenture;


 


(b)                                 Subject to
certain limitations described in the Indenture, the Successor Person will
succeed to, and be substituted for, the Guaranteeing Subsidiary under the
Indenture and the Guaranteeing Subsidiary’s Guarantee.  Notwithstanding the foregoing, the
Guaranteeing Subsidiary may merge into or transfer all or part of its
properties and assets to another Guarantor or the Issuer.


 


(5)                                  Releases.


 


The
Guarantee of the Guaranteeing Subsidiary shall be automatically and unconditionally
released and discharged, and no further action by the Guaranteeing Subsidiary,
the Issuer or the Trustee is required for the release of the Guaranteeing
Subsidiary’s Guarantee, upon:


 


(1)                                  (A)  any
sale, exchange, disposition or transfer (by merger or otherwise) of (x) the
Capital Stock of the Guaranteeing Subsidiary, after which the Guaranteeing
Subsidiary is no longer a Restricted Subsidiary, or (y) all or
substantially all the assets of the Guaranteeing Subsidiary which sale,
exchange, disposition or transfer in each case is made in compliance with
Sections 4.10(a)(1) and (2) of the Indenture;


 


(B)                                the release or
discharge of the guarantee by the Guaranteeing Subsidiary of the Senior Credit
Facilities or the guarantee which resulted in the creation of the Guarantee,
except a discharge or release by or as a result of payment under such
guarantee;


 


(C)                                the proper
designation of the Guaranteeing Subsidiary as an Unrestricted Subsidiary; or


 


(D)                               the Issuer
exercising Legal Defeasance or Covenant Defeasance in accordance with Article 8
of the Indenture or the Issuer’s obligations under the Indenture being
discharged in accordance with the terms of the Indenture; and


 


(2)                                  the Issuer
delivering to the Trustee an Officer’s Certificate and an Opinion of Counsel,
each stating that all conditions precedent provided for in the Indenture
relating to such transaction have been complied with.


 


(6)                                  No Recourse
Against Others.  No past,
present or future director, officer, employee, incorporator, member, partner or
stockholder of the Guaranteeing Subsidiary or any of its direct or indirect
parent companies shall have any liability for any obligations of the Issuer or
the Guarantors (including the Guaranteeing Subsidiary) under the Notes, any
Guarantees, the Indenture or this Supplemental Indenture or for any claim based
on, in respect of, or by reason of, such obligations or their creation.  Each Holder by accepting Notes waives and
releases all such liability.  The waiver
and release are part of the consideration for issuance of the Notes.


 


(7)                                  Governing Law.  THIS SUPPLEMENTAL INDENTURE WILL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.


 


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


 


(9)                                  Effect of
Headings.  The Section headings
herein are for convenience only and shall not affect the construction hereof.


 


(10)                            The Trustee.  The Trustee shall not be responsible in any
manner whatsoever for or in respect of the validity or sufficiency of this
Supplemental Indenture or for or in respect of the recitals contained herein,
all of which recitals are made solely by the Guaranteeing Subsidiary.


 


(11)                            Subrogation.  The Guaranteeing Subsidiary shall be
subrogated to all rights of Holders of Notes against the Issuer in respect of
any amounts paid by the Guaranteeing Subsidiary pursuant to the provisions of Section 2
hereof and Section 10.01 of the Indenture; provided that, if an
Event of Default has occurred and is continuing, the Guaranteeing Subsidiary
shall not be entitled to enforce or receive any payments arising out of, or
based upon, such right of subrogation until all amounts then due and payable by
the Issuer under the Indenture or the Notes shall have been paid in full.


 


(12)                            Benefits
Acknowledged.  The
Guaranteeing Subsidiary’s Guarantee is subject to the terms and conditions set
forth in the Indenture.  The Guaranteeing
Subsidiary acknowledges that it will receive direct and indirect benefits from
the financing arrangements contemplated by the Indenture and this Supplemental
Indenture and that the guarantee and waivers made by it pursuant to this Guarantee
are knowingly made in contemplation of such benefits.


 


(13)                            Successors.  All agreements of the Guaranteeing Subsidiary
in this Supplemental Indenture shall bind its Successors, except as otherwise
provided in Section 2(k) hereof or elsewhere in this Supplemental
Indenture.  All agreements of the Trustee
in this Supplemental Indenture shall bind its successors.


 


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


 


	
   

  	
  [GUARANTEEING
  SUBSIDIARY]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  LAW
  DEBENTURE TRUST COMPANY OF NEW YORK, as Trustee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  



 


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