Exhibit
4.1


 






 


CELLU TISSUE HOLDINGS, INC.,


 


THE SUBSIDIARY GUARANTORS
PARTIES HERETO


 


AND


 


THE BANK OF NEW YORK MELLON
TRUST COMPANY, N.A.,

AS TRUSTEE


 


111⁄2% Senior Secured Notes due
2014


 






 


INDENTURE


 


Dated as of June 3, 2009


 






 










 





















 


Table of Contents


 


	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  ARTICLE I
  DEFINITIONS AND INCORPORATION BY REFERENCE

  	
   

  	
  1

  
	
   

  	
   

  	
   

  
	
  SECTION 1.1.
  Definitions

  	
   

  	
  1

  
	
  SECTION 1.2.
  Other Definitions

  	
   

  	
  33

  
	
  SECTION 1.3.
  Incorporation by Reference of Trust Indenture Act

  	
   

  	
  35

  
	
  SECTION 1.4.
  Rules of Construction

  	
   

  	
  36

  
	
   

  	
   

  	
   

  
	
  ARTICLE II
  THE SECURITIES

  	
   

  	
  36

  
	
   

  	
   

  	
   

  
	
  SECTION 2.1.
  Form, Dating and Terms

  	
   

  	
  36

  
	
  SECTION 2.2.
  Execution and Authentication

  	
   

  	
  45

  
	
  SECTION 2.3.
  Registrar and Paying Agent

  	
   

  	
  46

  
	
  SECTION 2.4.
  Paying Agent to Hold Money in Trust

  	
   

  	
  47

  
	
  SECTION 2.5.
  Securityholder Lists

  	
   

  	
  47

  
	
  SECTION 2.6.
  Transfer and Exchange

  	
   

  	
  48

  
	
  SECTION 2.7.
  Form of Certificate to be Delivered upon Termination of Restricted
  Period

  	
   

  	
  52

  
	
  SECTION 2.8.
  Form of Certificate to be Delivered in Connection with Transfers to
  Institutional Accredited Investors

  	
   

  	
  53

  
	
  SECTION 2.9.
  Form of Certificate to be Delivered in Connection with Transfers
  Pursuant to Regulation S

  	
   

  	
  55

  
	
  SECTION 2.10.
  Mutilated, Destroyed, Lost or Stolen Securities

  	
   

  	
  56

  
	
  SECTION 2.11.
  Outstanding Securities

  	
   

  	
  57

  
	
  SECTION 2.12.
  Temporary Securities

  	
   

  	
  57

  
	
  SECTION 2.13.
  Cancellation

  	
   

  	
  58

  
	
  SECTION 2.14.
  Payment of Interest; Defaulted Interest

  	
   

  	
  58

  
	
  SECTION 2.15.
  Computation of Interest

  	
   

  	
  59

  
	
  SECTION 2.16.
  CUSIP, Common Code and ISIN Numbers

  	
   

  	
  59

  
	
   

  	
   

  	
   

  
	
  ARTICLE III
  COVENANTS

  	
   

  	
  60

  
	
   

  	
   

  	
   

  
	
  SECTION 3.1.
  Payment of Securities

  	
   

  	
  60

  
	
  SECTION 3.2.
  Limitation on Indebtedness

  	
   

  	
  60

  
	
  SECTION 3.3.
  Limitation on Restricted Payments

  	
   

  	
  64

  
	
  SECTION 3.4.
  Limitation on Restrictions on Distributions from Restricted Subsidiaries

  	
   

  	
  71

  
	
  SECTION 3.5.
  Limitation on Sales of Assets and Subsidiary Stock

  	
   

  	
  74

  
	
  SECTION 3.6. Limitation on Liens

  	
   

  	
  81

  
	
  SECTION 3.7. Limitation on Sale/Leaseback
  Transactions

  	
   

  	
  81

  
	
  SECTION 3.8. Limitation on Affiliate Transactions

  	
   

  	
  81

  
	
  SECTION 3.9.
  Limitation on Sale of Capital Stock of Restricted Subsidiaries

  	
   

  	
  83

  
	
  SECTION 3.10.
  Change of Control

  	
   

  	
  83

  



 


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  Page

  
	
   

  	
   

  	
   

  
	
  SECTION 3.11.
  SEC Reports

  	
   

  	
  85

  
	
  SECTION 3.12.
  Future Guarantors

  	
   

  	
  87

  
	
  SECTION 3.13.
  Maintenance of Office or Agency

  	
   

  	
  88

  
	
  SECTION 3.14.
  Corporate Existence

  	
   

  	
  88

  
	
  SECTION 3.15.
  Payment of Taxes and Other Claims

  	
   

  	
  88

  
	
  SECTION 3.16.
  Payments for Consent

  	
   

  	
  89

  
	
  SECTION 3.17.
  Compliance Certificate

  	
   

  	
  89

  
	
  SECTION 3.18.
  Further Instruments and Acts

  	
   

  	
  89

  
	
  SECTION 3.19.
  Limitation on Lines of Business

  	
   

  	
  89

  
	
  SECTION 3.20.
  Statement by Officers as to Default

  	
   

  	
  89

  
	
   

  	
   

  	
   

  
	
  ARTICLE IV
  SUCCESSOR COMPANY

  	
   

  	
  89

  
	
   

  	
   

  	
   

  
	
  SECTION 4.1.
  Merger and Consolidation

  	
   

  	
  89

  
	
   

  	
   

  	
   

  
	
  ARTICLE V
  REDEMPTION OF SECURITIES

  	
   

  	
  91

  
	
   

  	
   

  	
   

  
	
  SECTION 5.1.
  Redemption

  	
   

  	
  91

  
	
  SECTION 5.2.
  Applicability of Article

  	
   

  	
  91

  
	
  SECTION 5.3.
  Election to Redeem; Notice to Trustee

  	
   

  	
  91

  
	
  SECTION 5.4.
  Selection by Trustee of Securities to Be Redeemed

  	
   

  	
  92

  
	
  SECTION 5.5.
  Notice of Redemption

  	
   

  	
  92

  
	
  SECTION 5.6.
  Deposit of Redemption Price

  	
   

  	
  93

  
	
  SECTION 5.7.
  Securities Payable on Redemption Date

  	
   

  	
  93

  
	
  SECTION 5.8.
  Securities Redeemed in Part

  	
   

  	
  94

  
	
  SECTION 5.9.
  Additional Amounts; Optional Tax Redemption

  	
   

  	
  94

  
	
   

  	
   

  	
   

  
	
  ARTICLE VI
  DEFAULTS AND REMEDIES

  	
   

  	
  96

  
	
   

  	
   

  	
   

  
	
  SECTION 6.1.
  Events of Default

  	
   

  	
  96

  
	
  SECTION 6.2.
  Acceleration

  	
   

  	
  99

  
	
  SECTION 6.3.
  Other Remedies

  	
   

  	
  99

  
	
  SECTION 6.4.
  Waiver of Past Defaults

  	
   

  	
  100

  
	
  SECTION 6.5.
  Control by Majority

  	
   

  	
  100

  
	
  SECTION 6.6.
  Limitation on Suits

  	
   

  	
  100

  
	
  SECTION 6.7.
  Rights of Holders to Receive Payment

  	
   

  	
  101

  
	
  SECTION 6.8.
  Collection Suit by Trustee

  	
   

  	
  101

  
	
  SECTION 6.9.
  Trustee May File Proofs of Claim

  	
   

  	
  101

  
	
  SECTION 6.10.
  Priorities

  	
   

  	
  101

  
	
  SECTION 6.11.
  Undertaking for Costs

  	
   

  	
  103

  
	
   

  	
   

  	
   

  
	
  ARTICLE VII
  TRUSTEE

  	
   

  	
  103

  
	
   

  	
   

  	
   

  
	
  SECTION 7.1.
  Duties of Trustee

  	
   

  	
  103

  
	
  SECTION 7.2.
  Rights of Trustee

  	
   

  	
  104

  
	
  SECTION 7.3.
  Individual Rights of Trustee

  	
   

  	
  106

  
	
  SECTION 7.4.
  Trustee’s Disclaimer

  	
   

  	
  106

  



 


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  Page

  
	
   

  	
   

  	
   

  
	
  SECTION 7.5.
  Notice of Defaults

  	
   

  	
  106

  
	
  SECTION 7.6.
  Reports by Trustee to Holders

  	
   

  	
  106

  
	
  SECTION 7.7.
  Compensation and Indemnity

  	
   

  	
  106

  
	
  SECTION 7.8.
  Replacement of Trustee

  	
   

  	
  107

  
	
  SECTION 7.9.
  Successor Trustee by Merger

  	
   

  	
  108

  
	
  SECTION 7.10.
  Eligibility; Disqualification

  	
   

  	
  109

  
	
  SECTION 7.11.
  Preferential Collection of Claims Against the Company

  	
   

  	
  109

  
	
  SECTION 7.12.
  Trustee’s Application for Instruction from the Company

  	
   

  	
  109

  
	
   

  	
   

  	
   

  
	
  ARTICLE VIII
  DISCHARGE OF INDENTURE; DEFEASANCE

  	
   

  	
  109

  
	
   

  	
   

  	
   

  
	
  SECTION 8.1.
  Discharge of Liability on Securities; Defeasance

  	
   

  	
  109

  
	
  SECTION 8.2.
  Conditions to Defeasance

  	
   

  	
  111

  
	
  SECTION 8.3.
  Application of Trust Money

  	
   

  	
  112

  
	
  SECTION 8.4.
  Repayment to the Company

  	
   

  	
  112

  
	
  SECTION 8.5.
  Indemnity for U.S. Government Obligations

  	
   

  	
  112

  
	
  SECTION 8.6. Reinstatement

  	
   

  	
  113

  
	
   

  	
   

  	
   

  
	
  ARTICLE IX AMENDMENTS

  	
   

  	
  113

  
	
   

  	
   

  	
   

  
	
  SECTION 9.1. Without Consent of Holders

  	
   

  	
  113

  
	
  SECTION 9.2.
  With Consent of Holders

  	
   

  	
  114

  
	
  SECTION 9.3.
  Compliance with Trust Indenture Act

  	
   

  	
  116

  
	
  SECTION 9.4.
  Revocation and Effect of Consents and Waivers

  	
   

  	
  116

  
	
  SECTION 9.5.
  Notation on or Exchange of Securities

  	
   

  	
  116

  
	
  SECTION 9.6.
  Trustee to Sign Amendments

  	
   

  	
  117

  
	
   

  	
   

  	
   

  
	
  ARTICLE X
  SUBSIDIARY GUARANTEE

  	
   

  	
  117

  
	
   

  	
   

  	
   

  
	
  SECTION 10.1.
  Subsidiary Guarantee

  	
   

  	
  117

  
	
  SECTION 10.2.
  Limitation on Liability; Termination, Release and Discharge

  	
   

  	
  119

  
	
  SECTION 10.3.
  Right of Contribution

  	
   

  	
  120

  
	
  SECTION 10.4.
  No Subrogation

  	
   

  	
  121

  
	
   

  	
   

  	
   

  
	
  ARTICLE XI
  COLLATERAL AND SECURITY

  	
   

  	
  121

  
	
   

  	
   

  	
   

  
	
  SECTION 11.1.
  The Collateral

  	
   

  	
  121

  
	
  SECTION 11.2.
  Further Assurances

  	
   

  	
  122

  
	
  SECTION 11.3.
  After-Acquired Property

  	
   

  	
  123

  
	
  SECTION 11.4.
  Impairment of Security Interest

  	
   

  	
  124

  
	
  SECTION 11.5.
  Real Estate Mortgages and Filings

  	
   

  	
  124

  
	
  SECTION 11.6.
  Release of Liens on the Collateral

  	
   

  	
  125

  
	
  SECTION 11.7.
  Authorization of Actions to be Taken by the Trustee or the Collateral Agent
  Under the Collateral Documents

  	
   

  	
  126

  
	
  SECTION 11.8.
  Collateral Accounts

  	
   

  	
  128

  



 


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  Page

  
	
   

  	
   

  	
   

  
	
  ARTICLE XII
  MISCELLANEOUS

  	
   

  	
  129

  
	
   

  	
   

  	
   

  
	
  SECTION 12.1.
  Trust Indenture Act Controls

  	
   

  	
  129

  
	
  SECTION 12.2.
  Notices

  	
   

  	
  129

  
	
  SECTION 12.3.
  Communication by Holders with other Holders

  	
   

  	
  130

  
	
  SECTION 12.4.
  Certificate and Opinion as to Conditions Precedent

  	
   

  	
  130

  
	
  SECTION 12.5.
  Statements Required in Certificate or Opinion

  	
   

  	
  131

  
	
  SECTION 12.6.
  When Securities Disregarded

  	
   

  	
  131

  
	
  SECTION 12.7.
  Rules by Trustee, Paying Agent and Registrar

  	
   

  	
  131

  
	
  SECTION 12.8.
  Legal Holidays

  	
   

  	
  131

  
	
  SECTION 12.9.
  GOVERNING LAW

  	
   

  	
  131

  
	
  SECTION 12.10.
  No Recourse Against Others

  	
   

  	
  132

  
	
  SECTION 12.11.
  Successors

  	
   

  	
  132

  
	
  SECTION 12.12.
  Multiple Originals

  	
   

  	
  132

  
	
  SECTION 12.13.
  Qualification of Indenture

  	
   

  	
  132

  
	
  SECTION 12.14.
  Table of Contents; Headings

  	
   

  	
  132

  
	
  SECTION 12.15. WAIVERS OF JURY TRIAL

  	
   

  	
  132

  
	
  SECTION 12.16.
  Intercreditor Agreement Controls

  	
   

  	
  132

  
	
  SECTION 12.17.
  Force Majeure

  	
   

  	
  133

  
	
   

  	
   

  	
   

  
	
  SCHEDULE 3.4

  	
   

  	
   

  
	
  SCHEDULE 3.8

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  EXHIBIT A

  	
  Form of
  the Series A Note

  	
   

  	
   

  
	
  EXHIBIT B

  	
  Form of
  the Series B Note

  	
   

  	
   

  
	
  EXHIBIT C

  	
  Form of
  Indenture Supplement to Add Subsidiary Guarantors

  	
   

  	
   

  
	
  EXHIBIT D

  	
  Form of
  Note Security Agreement

  	
   

  	
   

  
	
  EXHIBIT E

  	
  Form of
  Mortgage

  	
   

  	
   

  
	
  EXHIBIT F

  	
  Form of
  Intercreditor Agreement

  	
   

  	
   

  



 


iv

















 


CROSS-REFERENCE TABLE


 




	
  TIA

  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)

  	
   

  	
  7.8; 7.10

  
	
  (c)

  	
   

  	
  7.10

  
	
  311(a)

  	
   

  	
  7.11

  
	
  (b)

  	
   

  	
  7.11

  
	
  (c)

  	
   

  	
  N.A.

  
	
  312(a)

  	
   

  	
  2.5

  
	
  (b)

  	
   

  	
  12.3

  
	
  (c)

  	
   

  	
  12.3

  
	
  313(a)

  	
   

  	
  7.6

  
	
  (b)(1)

  	
   

  	
  7.6; 11.2

  
	
  (b)(2)

  	
   

  	
  7.6; 11.2

  
	
  (c)

  	
   

  	
  7.6; 11.2

  
	
  (d)

  	
   

  	
  7.6

  
	
  314(a)

  	
   

  	
  3.11; 3.17; 12.5

  
	
  (b)

  	
   

  	
  11.2(c)

  
	
  (c)(1)

  	
   

  	
  12.4

  
	
  (c)(2)

  	
   

  	
  12.4

  
	
  (c)(3)

  	
   

  	
  N.A.

  
	
  (d)

  	
   

  	
  11.2; 11.6(b)

  
	
  (e)

  	
   

  	
  12.5

  
	
  315(a)

  	
   

  	
  7.1

  
	
  (b)

  	
   

  	
  7.5; 12.2

  
	
  (c)

  	
   

  	
  7.1

  
	
  (d)

  	
   

  	
  7.1

  
	
  (e)

  	
   

  	
  6.11

  
	
  316(a)(last sentence)

  	
   

  	
  12.6

  
	
  (a)(1)(A)

  	
   

  	
  6.5

  
	
  (a)(1)(B)

  	
   

  	
  6.4

  
	
  (a)(2)

  	
   

  	
  N.A.

  
	
  (b)

  	
   

  	
  6.7

  
	
  (c)

  	
   

  	
  6.5

  
	
  317(a)(1)

  	
   

  	
  6.8

  
	
  (a)(2)

  	
   

  	
  6.9

  
	
  (b)

  	
   

  	
  2.4

  
	
  318(a)

  	
   

  	
  12.1

  






 


N.A. means Not Applicable.


 


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


 


v

















 


INDENTURE dated as of June 3, 2009,
among CELLU TISSUE HOLDINGS, INC., a Delaware corporation (the “Company”),
THE SUBSIDIARY GUARANTORS (as defined herein) parties hereto and THE BANK OF
NEW YORK MELLON TRUST COMPANY, N.A. (the “Trustee”), as Trustee.


 


Each party agrees as follows for the benefit
of the other parties and for the equal and ratable benefit of the Holders of (i) the
Company’s 111⁄2% Senior Secured Notes, Series A, due 2014, issued on the
date hereof and the guarantees thereof by all of the Company’s subsidiaries
(the “Initial Securities”), (ii) if and when issued, an unlimited
principal amount of additional 111⁄2% Senior Secured Notes, Series A, due
2014 in a non-registered offering or 111⁄2% Senior Secured Notes, Series B,
due 2014 in a registered offering of the Company, and the guarantees thereof by
certain of the Company’s subsidiaries that may be offered from time to time
subsequent to the Issue Date, in each case subject to Section 2.1
(the “Additional Securities”) as provided in Section 2.1(a) and
(iii) if and when issued, the Company’s 111⁄2% Senior Secured Notes, Series B,
due 2014 and the guarantees thereof by certain of the Company’s subsidiaries
that may be issued from time to time in exchange for Initial Securities or any
Additional Securities in an offer registered under the Securities Act as
provided in the Registration Rights Agreement, as hereinafter defined, (the “Exchange
Securities,” and together with the Initial Securities and Additional
Securities, the “Securities”):


 


ARTICLE I


 


DEFINITIONS AND INCORPORATION BY REFERENCE


 


SECTION
1.1.   Definitions.


 


“Acquired Indebtedness”
means Indebtedness (i) of a Person or any of its Subsidiaries existing at
the time such Person becomes a Restricted Subsidiary or (ii) assumed in
connection with the acquisition of assets from such Person, in each case
whether or not Incurred by such Person in connection with, or in anticipation
or contemplation of, such Person becoming a Restricted Subsidiary or such
acquisition.  Acquired Indebtedness shall
be deemed to have been Incurred, with respect to clause (i) of the
preceding sentence, on the date such Person becomes a Restricted Subsidiary
and, with respect to clause (ii) of the preceding sentence, on the
date of consummation of such acquisition of assets.


 


“Additional Amounts”
has the meaning ascribed to it in Section 5.9(a).


 


“Additional Assets”
means:


 


(1)   any property, plant, equipment or other assets
(excluding any assets that would be Second Priority Collateral) to be used by
the Company or a Restricted Subsidiary in a Related Business;


 


(2)   the Capital Stock of a Person that becomes a Restricted
Subsidiary as a result of the acquisition of such Capital Stock by the Company
or a Restricted Subsidiary; or


 

















 


(3)   Capital Stock constituting a minority interest in any Person that at
such time is a Restricted Subsidiary;


 


provided, however, that, in the case of clauses (2) and
(3), such Restricted Subsidiary is primarily engaged in a Related Business.


 


“Additional Interest”
means any additional interest payable by the Company pursuant to Section 2(d) of
the Registration Rights Agreement.


 


“Additional Securities”
has the meaning ascribed to it in the second introductory paragraph of this
Indenture.


 


“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 the purposes of this
definition, “control” when used with respect to any Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms “controlling” and “controlled” have meanings correlative to the
foregoing; provided that,
exclusively for purposes of Section 3.8 hereof, beneficial
ownership of 10% or more of the Voting Stock of a Person shall be deemed to be
control.


 


“Asset Disposition”
means any direct or indirect sale, lease (other than an operating lease entered
into in the ordinary course of business), transfer, issuance or other
disposition, or a series of related sales, leases, transfers, issuances or
dispositions that are part of a common plan, of shares of Capital Stock of a
Subsidiary (other than directors’ qualifying shares), property or other assets
(each referred to for the purposes of this definition as a “disposition”) by
the Company or any of its Restricted Subsidiaries, including any disposition by
means of a merger, consolidation or similar transaction; provided that (i) the disposition of
all or substantially all of the assets of the Company and its Restricted Subsidiaries,
taken as a whole, will be governed by Section 3.10 and Section 4.1
and (ii) the disposition of all the Voting Stock of or all or
substantially all of the assets of any Subsidiary Guarantor will be governed by
Section 3.9 and Section 10.2(b), respectively.


 


Notwithstanding the preceding, the following items shall not be deemed to
be Asset Dispositions:


 


(1)           a
disposition of assets by a Restricted Subsidiary to the Company or by the
Company or a Restricted Subsidiary to a Restricted Subsidiary; provided that in the case of a sale by a
Restricted Subsidiary to another Restricted Subsidiary, the Company directly or
indirectly owns an equal or greater percentage of the Common Stock of the
transferee than of the transferor, and provided,
further, that in the case of a
sale of Collateral, the transferee shall cause such amendments, supplements or
other instruments to be executed, filed, and recorded in such jurisdictions as
may be required by applicable law to preserve and protect the Lien on the Collateral
owned by or transferred to the transferee, together with such financing
statements or comparable documents as may be required to perfect any security
interests in such Collateral which may be perfected by the 


 


2

















 


filing of a
financing statement or a similar document under the Uniform Commercial Code or
other similar statute or regulation of the relevant states or jurisdictions;


 


(2)           the sale of Cash Equivalents in the ordinary course of
business;


 


(3)           a disposition of inventory in the ordinary course of business;


 


(4)           a disposition of obsolete or worn out equipment or equipment that is no
longer useful in the conduct of the business of the Company and its Restricted
Subsidiaries and that is disposed of in each case in the ordinary course of
business;


 


(5)           transactions permitted under Section 4.1;


 


(6)           an issuance of Capital Stock by a Restricted Subsidiary to the Company
or to a Wholly-Owned Subsidiary;


 


(7)           for purposes of Section 3.5 only,
the making of a Permitted Investment (other than a Permitted Investment to the
extent such transaction results in the receipt of cash or Cash Equivalents by
the Company or its Restricted Subsidiaries) or a disposition subject to Section 3.3;


 


(8)           an
Asset Swap effected in compliance with Section 3.5;


 


(9)           dispositions of assets in a single transaction or series of related
transactions with an aggregate fair market value in any calendar year of less
than $5.0 million;


 


(10)         the creation of a Permitted Lien and dispositions in connection with
Permitted Liens;


 


(11)         dispositions of receivables in connection with the compromise,
settlement or collection thereof in the ordinary course of business or in
bankruptcy or similar proceedings and exclusive of factoring or similar arrangements;


 


(12)         the issuance by a Restricted Subsidiary of Preferred Stock that is
permitted under Section 3.2;


 


(13)         the licensing or sublicensing of intellectual property or other general
intangibles and licenses, leases or subleases of other property; and


 


(14)         foreclosure
on assets.


 


“Asset Disposition Offer”
has the meaning set forth in Section 3.5(b).


 


“Asset Swap” means a
concurrent purchase and sale or exchange of Related Business Assets between the
Company or any of its Restricted Subsidiaries and another Person; provided that any cash received must be
applied in accordance with Section 3.5.


 


3

















 


“Attributable
Indebtedness” in respect of a Sale/Leaseback Transaction means, as at the
time of determination, the present value (discounted at the interest rate
implicit in the transaction) of the total obligations of the lessee for rental
payments during the remaining term of the lease included in such Sale/Leaseback
Transaction (including any period for which such lease has been extended),
determined in accordance with GAAP; provided, however, that
if such Sale/Leaseback Transaction results in a Capitalized Lease Obligation,
the amount of Indebtedness represented thereby will be determined in accordance
with the definition of “Capitalized Lease Obligations.”


 


“Average Life” means,
as of the date of determination, with respect to any Indebtedness or Preferred
Stock, the quotient obtained by dividing (1) the sum of the products of
the numbers of years from the date of determination to the dates of each
successive scheduled principal payment of such Indebtedness or redemption or
similar payment with respect to such Preferred Stock multiplied by the amount
of such payment by (2) the sum of all such payments.


 


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


 


“Board of Directors” means, as to any Person,
the board of directors or managers, as applicable, of such Person (or, if such
Person is a partnership, the board of directors or other governing body of the
general partner of such Person) or any duly authorized committee thereof.


 


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


 


“Borrowing Base” means, as of the date of
determination, an amount equal to the sum, without duplication of (1) 85%
of the net book value of the Company’s and its Restricted Subsidiaries’
accounts receivable at such date and (2) 65% of the net book value of the
Company’s and its Restricted Subsidiaries’ inventories at such date.  Net book value shall be determined in
accordance with GAAP and shall be calculated using amounts reflected on the
most recent available balance sheet (it being understood that the accounts
receivable and inventories of an acquired business may be included if such
acquisition has been completed on or prior to the date of determination).


 


“Business Day” means each day that is not a
Saturday, Sunday or other day on which banking institutions in New York, New
York are authorized or required by law to close.


 


“Capital Stock” of any Person means any and
all shares, interests, rights to purchase, warrants, options, participations or
other equivalents of or interests in (however designated) equity of such
Person, including any Preferred Stock and limited liability or partnership interests
(whether general or limited), but excluding any debt securities convertible
into such equity.


 


“Capitalized Lease Obligations” means an
obligation that is required to be classified and accounted for as a capitalized
lease for financial reporting purposes in accordance with GAAP, and the amount
of Indebtedness represented by such obligation will be the 


 


4

















 


capitalized amount of such obligation at the time
any determination thereof is to be made as determined in accordance with GAAP,
and the Stated Maturity thereof will be the date of the last payment of rent or
any other amount due under such lease prior to the first date such lease may be
terminated without penalty.


 


“Cash Equivalents” means:


 


(1)           securities issued or directly and fully
guaranteed or insured by the United States Government or any agency or
instrumentality of the United States (provided
that the full faith and credit of the United States is pledged in
support thereof), having maturities of not more than one year from the date of
acquisition;


 


(2)           marketable
general obligations issued by any state of the United States of America or any
political subdivision of any such state or any public instrumentality thereof
maturing within one year from the date of acquisition and, at the time of
acquisition, having a credit rating of “A” or better from either Standard &
Poor’s Ratings Group, Inc. or Moody’s Investors Service, Inc.;


 


(3)           demand deposits, trust accounts, certificates of deposit, time deposits,
eurodollar time deposits, overnight bank deposits or bankers’ acceptances
having maturities of not more than one year from the date of acquisition
thereof issued by any commercial bank the long-term debt of which is rated at
the time of acquisition thereof at least “A” or the equivalent thereof by
Standard & Poor’s Ratings Group, Inc., or “A” or the equivalent
thereof by Moody’s Investors Service, Inc., and having combined capital
and surplus in excess of $500 million;


 


(4)           repurchase obligations with a term of not more than seven days for
underlying securities of the types described in clauses (1), (2) and (3) entered
into with any bank meeting the qualifications specified in clause (3) above;


 


(5)           commercial paper rated at the time of acquisition thereof at least “A-2”
or the equivalent thereof by Standard & Poor’s Ratings Group, Inc.
or “P-2” or the equivalent thereof by Moody’s Investors Service, Inc., or
carrying an equivalent rating by a nationally recognized rating agency, if both
of the two named rating agencies cease publishing ratings of investments, and
in any case maturing within one year after the date of acquisition thereof; and


 


(6)           interests in any investment company or money market fund which invests
95% or more of its assets in instruments of the type specified in clauses (1) through
(5) above.


 


“Change of Control” means:


 


(1)           any
“person” or “group” of related persons (as such terms are used in Sections 13(d) and
14(d) of the Exchange Act), other than one or more Permitted Holders, becomes
the beneficial owner (as defined in Rules 13d-3 and 13d-5 under the
Exchange Act, except that such person or group shall be deemed to have “beneficial
ownership” of all shares that any such person or group has the right to
acquire, whether 


 


5

















 


such right is
exercisable immediately or only after the passage of time), directly or
indirectly, of more than 50% of the total voting power of the Voting Stock of
the Company or any of its direct or indirect parent entities (or their
successors by merger, consolidation or purchase of all or substantially all of
their assets) (for the purposes of this clause, such person or group shall be
deemed to beneficially own any Voting Stock of the Company or any of its direct
or indirect parent entities held by a parent entity, if such person or group “beneficially
owns” (as defined above), directly or indirectly, more than 50% of the voting
power of the Voting Stock of such parent entity); or


 


(2)           the
first day on which a majority of the members of the Board of Directors of the
Company or Holdings are not Continuing Directors; or


 


(3)           the
sale, lease, transfer, conveyance or other disposition (other than by way of
merger or consolidation), in one or a series of related transactions, of all or
substantially all of the assets of the Company or Holdings and its Restricted
Subsidiaries taken as a whole to any “person” (as such term is used in
Sections 13(d) and 14(d) of the Exchange Act) other than a
Permitted Holder; or


 


(4)           the
adoption by the stockholders of the Company or Holdings of a plan or proposal
for the liquidation or dissolution of the Company or Holdings.


 


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


 


“Collateral” means all property and
assets, whether now owned or hereafter acquired, in which Liens are, from time
to time, purported to be granted to secure the Securities pursuant to the
Collateral Documents.


 


“Collateral Accounts” means any
segregated account under the sole control of the Trustee that is free from all
other Liens, including the First Priority Collateral Account and the Second
Priority Collateral Account, and includes all cash and Cash Equivalents
received by the Trustee or the Collateral Agent from Asset Dispositions of
Collateral, Recovery Events, Asset Swaps involving the transfer of Collateral,
foreclosures on or sales of Collateral, any issuance of Additional Securities
or any other awards or proceeds pursuant to the Collateral Documents, including
earnings, revenues, rents, issues, profits and income from the Collateral
received pursuant to the Collateral Documents, and interest earned thereon.


 


“Collateral Agent” means The Bank of
New York Mellon Trust Company, N.A., acting as the collateral agent under the
Collateral Documents.


 


“Collateral Disposition Offer” has the
meaning set forth in Section 3.5(a).


 


“Collateral Documents” means the
mortgages, deeds of trust, deeds to secure debt, security agreements, pledge
agreements, agency agreements and other instruments and documents executed and
delivered pursuant to this Indenture or any of the foregoing, as the same may
be amended, supplemented or otherwise modified from time to time and pursuant
to which Collateral is pledged, assigned or granted to or on behalf of the
Collateral Agent for the ratable benefit of the Holders and the Trustee or
notice of such pledge, assignment or grant is given.


 


6














 


“Commodity Agreement” means any
commodities futures contract, commodity swap, commodity option or other similar
agreement or arrangement entered into by the Company or any Restricted
Subsidiary designed to protect the Company or any of its Restricted Subsidiaries
against fluctuations in the price of commodities actually used in the ordinary
course of business of the Company and its Restricted Subsidiaries.


 


“Common Stock” means with respect to
any Person, any and all shares, interests or other participations in, and other
equivalents (however designated and whether voting or nonvoting) of such Person’s
common stock whether or not outstanding on the Issue Date, and includes,
without limitation, all series and classes of such common stock.


 


“Company” means the Person named as
the “Company” in the first introductory paragraph of this instrument until a
successor Person shall have become such pursuant to the applicable provisions
of this Indenture, and thereafter “Company” shall mean such successor Person.


 


“Consolidated Coverage Ratio” means as of any
date of determination, with respect to any Person, the ratio of (x) the
aggregate amount of Consolidated EBITDA of such Person for the period of the
most recent four consecutive fiscal quarters ending prior to the date of such
determination for which financial statements are in existence to (y) Consolidated
Interest Expense for such four fiscal quarters; provided, however, that:


 


(1)                                  if
the Company or any Restricted Subsidiary:


 


(a)                                  has
Incurred any Indebtedness since the beginning of such period that remains
outstanding on such date of determination or if the transaction giving rise to
the need to calculate the Consolidated Coverage Ratio is an Incurrence of
Indebtedness, Consolidated EBITDA and Consolidated Interest Expense for such
period will be calculated after giving effect on a pro forma basis to such
Indebtedness as if such Indebtedness had been Incurred on the first day of such
period (except that in making such computation, the amount of Indebtedness
under any revolving Credit Facility outstanding on the date of such calculation
will be deemed to be (i) the average daily balance of such Indebtedness
during such four fiscal quarters or such shorter period for which such facility
was outstanding or (ii) if such facility was created after the end of such
four fiscal quarters, the average daily balance of such Indebtedness during the
period from the date of creation of such facility to the date of such
calculation) and the discharge of any other Indebtedness repaid, repurchased,
defeased or otherwise discharged with the proceeds of such new Indebtedness as
if such discharge had occurred on the first day of such period; or


 


(b)                                 has
repaid, repurchased, defeased or otherwise discharged any Indebtedness since
the beginning of the period that is no longer outstanding on such date of
determination or if the transaction giving rise to the need to calculate the
Consolidated Coverage Ratio involves a discharge of Indebtedness (in each case
other than Indebtedness Incurred 


 


7

















 


under any revolving Credit Facility unless such Indebtedness has been
permanently repaid and the related commitment terminated), Consolidated EBITDA
and Consolidated Interest Expense for such period will be calculated after
giving effect on a pro forma basis to such discharge of such Indebtedness,
including with the proceeds of such new Indebtedness, as if such discharge had
occurred on the first day of such period;


 


(2)           if
since the beginning of such period the Company or any Restricted Subsidiary
will have made any Asset Disposition or disposed of or discontinued (as defined
under GAAP) any company, division, operating unit, segment, business, group of
related assets or line of business or if the transaction giving rise to the
need to calculate the Consolidated Coverage Ratio includes such a transaction:


 


(a)           the Consolidated EBITDA for such period will
be reduced by an amount equal to the Consolidated EBITDA (if positive) directly
attributable to the assets that are the subject of such disposition or
discontinuation for such period or increased by an amount equal to the
Consolidated EBITDA (if negative) directly attributable thereto for such
period; and


 


(b)           Consolidated Interest Expense for such
period will be reduced by an amount equal to the Consolidated Interest Expense
directly attributable to any Indebtedness of the Company or any Restricted
Subsidiary repaid, repurchased, redeemed, retired, defeased or otherwise
discharged with respect to the Company and its continuing Restricted
Subsidiaries in connection with such transaction for such period (or, if the
Capital Stock of any Restricted Subsidiary is sold, the Consolidated Interest
Expense for such period directly attributable to the Indebtedness of such
Restricted Subsidiary to the extent the Company and its continuing Restricted
Subsidiaries are no longer liable for such Indebtedness after such sale);


 


(3)           if
since the beginning of such period the Company or any Restricted Subsidiary (by
merger or otherwise) will have made an Investment in any Restricted Subsidiary
(or any Person that becomes a Restricted Subsidiary or is merged with or into
the Company or a Restricted Subsidiary) or an acquisition of assets, including
any acquisition of assets occurring in connection with a transaction causing a
calculation to be made hereunder, which constitutes all or substantially all of
a company, division, operating unit, segment, business, group of related assets
or line of business, Consolidated EBITDA and Consolidated Interest Expense for
such period will be calculated after giving pro forma effect thereto (including
the Incurrence of any Indebtedness) as if such Investment or acquisition
occurred on the first day of such period; and


 


(4)           if
since the beginning of such period any Person (that subsequently became a
Restricted Subsidiary or was merged with or into the Company or any Restricted
Subsidiary since the beginning of such period) will have Incurred any
Indebtedness or discharged any Indebtedness, made any disposition or any
Investment or acquisition of assets that would have required an adjustment
pursuant to clause (1), (2) or 


 


8

















 


(3) above
if made by the Company or a Restricted Subsidiary during such period,
Consolidated EBITDA and Consolidated Interest Expense for such period will be
calculated after giving pro forma effect thereto as if such transaction
occurred on the first day of such period.


 


For purposes of this definition, whenever pro
forma effect is to be given to any calculation under this definition, the pro
forma calculations will be determined in good faith by a responsible financial
or accounting Officer of the Company (including pro forma expense and cost
reductions calculated on a basis consistent with Regulation S-X under the
Securities Act).  If any Indebtedness
bears a floating rate of interest and is being given pro forma effect, the
interest expense on such Indebtedness will be calculated as if the rate in
effect on the date of determination had been the applicable rate for the entire
period (taking into account any Interest Rate Agreement applicable to such
Indebtedness if such Interest Rate Agreement has a remaining term in excess of
12 months).  If any Indebtedness
that is being given pro forma effect bears an interest rate at the option of
the Company, the interest rate shall be calculated by applying such optional
rate chosen by the Company.


 


“Consolidated EBITDA” for any period means,
without duplication, the Consolidated Net Income for such period, plus the
following to the extent deducted (except as specified in clause (10) below)
(and not added back) in calculating such Consolidated Net Income:


 


(1)           Consolidated
Interest Expense; plus


 


(2)           Consolidated Income Taxes; plus


 


(3)           consolidated depreciation
expense; plus


 


(4)           consolidated
amortization expense or impairment charges recorded in connection with the
application of Financial Accounting Standard No. 142 “Goodwill and Other
Intangibles” and Financial Accounting Standard No. 144 “Accounting for the
Impairment or Disposal of Long Lived Assets”; plus


 


(5)           other non-cash charges
reducing Consolidated Net Income (excluding any such non-cash charge to the
extent it represents an accrual of or
reserve for cash charges in any future period or amortization of a prepaid cash
expense that was paid in a prior period not included in the calculation) less
non-cash items increasing Consolidated Net Income of such Person for such
period (excluding any items which represent the reversal of any accrual of, or
reserve for, anticipated cash charges made in any prior period); plus


 


(6)           reasonable legal, accounting,
financing, consulting, advisory and other out-of-pocket fees and expenses
incurred in connection with debt financings, equity financings, acquisitions,
Investments and/or divestitures (including, without limitation, the offering of
the Initial Securities) whether or not such transactions are consummated; plus


 


(7)           extraordinary
costs associated with the restatement of the fiscal year 2008 financial
statements in an amount not to exceed $1.0 million; plus


 


9

















 


(8)           the
amount of any non-recurring restructuring charge or reserve (which, for the
avoidance of doubt, shall include retention, severance, systems establishment
cost, excess pension charges, contract termination costs, future lease
commitments and costs to consolidate facilities and relocate employees or
equipment) deducted in accordance with GAAP (and not added back) in calculating
such Consolidated Net Income in such period; plus


 


(9)           any
non-recurring expenses or charges incurred in connection with any Equity
Offering, Permitted Investment, acquisition, recapitalization, any issuance or
repayment of Indebtedness, 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 and not completed) and any non-recurring
merger costs incurred during such period as a result of any such transaction,
in each case deducted in accordance with GAAP (and not added back) in
calculating such Consolidated Net Income and other than any integration costs
of the type described in clause (10)(i) below; plus


 


(10)         (i) any
integration costs, expenses or reserves deducted in accordance with GAAP (and
not added back) in calculating Consolidated Net Income relating to retention,
severance, systems establishment cost, excess pension charges, contract
termination costs, future lease commitments and costs to consolidate facilities
and relocate employees or equipment and similar costs, expenses or reserves and
(ii) and the amount of net cost savings projected by the Company in good
faith to be realized as a result of specified actions taken or to be taken
(calculated on a pro forma basis as though such cost savings had been realized
on the first day of such period), net of the amount of actual benefits realized
during such period from such actions, in each case described in clauses (i) and
(ii) in connection with any acquisition, recapitalization or Permitted
Investment; provided that (w) any such cost savings are reasonably
identifiable and factually supportable, (x) any such actions referred to
in clause (ii) have been taken or are to be taken within 6 months after the
date of determination to take such action, (y) no cost savings shall be
added pursuant to clause (10)(ii) to the extent duplicative of any
expenses or charges relating to such cost savings that are included in clause (8) or
(9) above or in clause (10)(i) with respect to such period and (z) the
aggregate amount of integration costs, expenses and reserves and cost savings
added pursuant to this clause (10) shall not exceed $10.0 million for any
four consecutive quarter period (which adjustments may be incremental to pro
forma adjustments made pursuant to the clauses (2), (3) or (4) of the
definition of “Consolidated Coverage Ratio”).


 


Notwithstanding the preceding sentence,
clauses (2) through (10) relating to amounts of a Restricted
Subsidiary of a Person will be added to Consolidated Net Income to compute
Consolidated EBITDA of such Person only to the extent (and in the same
proportion) that the net income (loss) of such Restricted Subsidiary was
included in calculating the Consolidated Net Income of such Person and, to the
extent the amounts set forth in clauses (2) through (10) are in
excess of those necessary to offset a net loss of such Restricted Subsidiary or
if such Restricted Subsidiary has net income for such period included in
Consolidated Net Income, only if a corresponding amount would be permitted at
the date of determination to be dividended to the Company by such Restricted
Subsidiary without prior approval (that has not 


 


10

















 


been
obtained), pursuant to the terms of its charter and all agreements,
instruments, judgments, decrees, orders, statutes, rules and governmental
regulations applicable to that Restricted Subsidiary or its stockholders.


 


“Consolidated Income Taxes” means, with
respect to any Person for any period, taxes imposed upon such Person or other
payments required to be made by such Person by any governmental authority which
taxes or other payments are calculated by reference to the income or profits of
such Person or such Person and its Restricted Subsidiaries (to the extent such
income or profits were included in computing Consolidated Net Income for such
period), regardless of whether such taxes or payments are required to be
remitted to any governmental authority.


 


“Consolidated Interest Expense” means, for
any period, the total interest expense of the Company and its consolidated
Restricted Subsidiaries, whether paid or accrued, plus, to the extent not
included in such interest expense:


 


(1)           interest
expense attributable to Capitalized Lease Obligations and the interest portion
of rent expense associated with Attributable Indebtedness in respect of the
relevant lease giving rise thereto, determined as if such lease were a
capitalized lease in accordance with GAAP and the interest component of any
deferred payment obligations;


 


(2)           amortization of debt discount and debt issuance cost; provided, however, that any amortization
of bond premium will be credited to reduce Consolidated Interest Expense
unless, pursuant to GAAP, such amortization of bond premium has otherwise
reduced Consolidated Interest Expense;


 


(3)           non-cash
interest expense;


 


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


 


(5)           the interest expense on Indebtedness of another Person that is
Guaranteed by such Person or one of its Restricted Subsidiaries or secured by a
Lien on assets of such Person or one of its Restricted Subsidiaries;


 


(6)           costs
associated with Hedging Obligations (including amortization of fees); provided, however,
that if Hedging Obligations result in net benefits rather than costs, such
benefits shall be credited to reduce Consolidated Interest Expense unless,
pursuant to GAAP, such net benefits are otherwise reflected in Consolidated Net
Income;


 


(7)           the
consolidated interest expense of such Person and its Restricted Subsidiaries
that was capitalized during such period;


 


(8)           the
product of (a) all dividends paid or payable, in cash, Cash Equivalents or
Indebtedness or accrued during such period on any series of Disqualified Stock
of such Person or on Preferred Stock of its Restricted Subsidiaries that are
not Subsidiary Guarantors payable to a party other than the Company or a
Wholly-Owned Subsidiary, 


 


11

















 


times (b) a
fraction, the numerator of which is one and the denominator of which is one
minus the then current combined federal, state, provincial and local statutory
tax rate of such Person, expressed as a decimal, in each case, on a
consolidated basis and in accordance with GAAP;


 


(9)           Receivables
Fees; and


 


(10)         the cash contributions to any employee stock ownership plan or
similar trust to the extent such contributions are used by such plan or trust
to pay interest or fees to any Person (other than the Company and its
Restricted Subsidiaries) in connection with Indebtedness Incurred by such plan
or trust.


 


For the purpose of calculating the
Consolidated Coverage Ratio, the calculation of Consolidated Interest Expense
shall include all interest expense (including any amounts described in
clauses (1) through (10) above) relating to any Indebtedness of
the Company or any Restricted Subsidiary described in the final paragraph of
the definition of “Indebtedness.”


 


For purposes of the foregoing, total interest
expense will be determined (i) after giving effect to any net payments
made or received by the Company and its Subsidiaries with respect to Interest
Rate Agreements and (ii) exclusive of amounts classified as other
comprehensive income in the balance sheet of the Company. 
Notwithstanding anything to the contrary contained herein, commissions,
discounts, yield and other fees and charges Incurred in connection with any transaction pursuant to which the Company or its
Restricted Subsidiaries may sell, convey or otherwise transfer or grant a
security interest in any accounts receivable or related assets shall be
included in Consolidated Interest Expense.


 


“Consolidated Net Income” means, for any
period, the net income (loss) of the Company and its consolidated Restricted
Subsidiaries determined in accordance with GAAP; provided, however, that there will not be included in such
Consolidated Net Income, without duplication:


 


(1)                                  any
net income (loss) of any Person if such Person is not a Restricted Subsidiary,
except that:


 


(a)                                  subject
to the limitations contained in clauses (3) through (10) below,
the Company’s equity in the net income of any such Person for such period will
be included in such Consolidated Net Income up to the aggregate amount of cash
actually distributed by such Person during such period to the Company or a
Restricted Subsidiary as a dividend or other distribution (subject, in the case
of a dividend or other distribution to a Restricted Subsidiary, to the
limitations contained in clause (2) below); and


 


(b)                                 the Company’s equity in a net loss of any such Person (other than an Unrestricted
Subsidiary) for such period will be included in determining such Consolidated
Net Income to the extent such loss has been funded with cash from the Company
or a Restricted Subsidiary;


 


12

















 


(2)           solely for the purpose of determining the amount available for
Restricted Payments under Section 3.3(a)(c)(i), any net income (but
not loss) of any Restricted Subsidiary if such Subsidiary is subject to
restrictions, directly or indirectly, on the payment of dividends or the making
of distributions by such Restricted Subsidiary, directly or indirectly, to the
Company, except that:


 


(a)                                  subject
to the limitations contained in clauses (3) through (10) below,
the Company’s equity in the net income of any such Restricted Subsidiary for
such period will be included in such Consolidated Net Income up to the
aggregate amount of cash that could have been distributed by such Restricted
Subsidiary during such period to the Company or another Restricted Subsidiary
as a dividend (subject, in the case of a dividend to another Restricted
Subsidiary, to the limitation contained in this clause); and


 


(b)                                 the Company’s equity in a net loss of any
such Restricted Subsidiary for such period will be included in determining such Consolidated Net Income;


 


(3)      any net after-tax gain (loss) realized upon the
sale or other disposition of any property, plant or equipment of the Company or
its consolidated Restricted Subsidiaries (including pursuant to any
Sale/Leaseback Transaction) which is not sold or otherwise disposed of in the
ordinary course of business and any gain (loss) realized upon the sale or other
disposition of any Capital Stock of any Person;


 


(4)      any non-cash compensation expense recorded from
grants of stock appreciation or similar rights, stock options, restricted stock
or other rights;


 


(5)      any net after-tax gains or losses attributable to
the early extinguishment or conversion of Indebtedness;


 


(6)      the effect of any non-cash items resulting from
any amortization, write-up, write-down or write-off of assets (including
intangible assets, goodwill and deferred financing costs in connection with any
acquisition, disposition, merger, consolidation or similar transaction or any
other non-cash impairment charges incurred subsequent to the Issue Date
resulting from the application of Statement of Financial Accounting Standards
Nos. 141, 142 or 144 (excluding any such non-cash item to the extent that it
represents an accrual of or reserve for cash expenditures in any future period
except to the extent such item is subsequently reversed));


 


(7)      to the extent covered by insurance and actually
reimbursed, or, so long as the Company has made a determination that there
exists reasonable evidence that such amount will in fact be reimbursed by the
insurer and only to the extent that such amount is (a) not denied by the
applicable carrier in writing within 180 days and (b) in fact reimbursed
within 365 days of the date of such evidence (with a deduction for any amount
so added back to the extent not so reimbursed within 365 days), expenses with
respect to liability or casualty events or business interruption;


 


13

















 


(8)      any extraordinary gain or loss; and


 


(9)      the cumulative
effect of a change in accounting
principles.


 


“Consolidated
Net Tangible Assets” means, with respect to any Person, the consolidated
total assets of such Person and its Restricted Subsidiaries less (a) all
current liabilities as disclosed on the consolidated balance sheet of such
Person and (b) all goodwill, trade names, trademarks, patents, unamortized
debt discount and expense and other similar intangibles properly classified as
intangibles in accordance with GAAP, all as shown on the most recent balance
sheet for such Person and computed in accordance with GAAP.


 


“Contingent Payment Distributions” has
the meaning set forth in Section 3.3(b)(16).


 


“Continuing Directors” means, as of
any date of determination, any member of the Board of Directors of the Company
or Holdings, as the case may be, who: (1) was a member of such Board of
Directors on the Issue Date; or (2) was nominated for election or elected
to such Board of Directors with the approval of a majority of the Continuing
Directors who were members of the relevant Board at the time of such nomination
or election.


 


“Credit Facility” means, with respect to the
Company or any Subsidiary Guarantor, one or more debt facilities (including,
without limitation, the Working Capital Facility) or commercial paper
facilities with banks or other institutional lenders providing for revolving
credit loans, term loans, receivables financing (including through the sale of
receivables to such lenders or to special purpose entities formed to borrow
from such lenders against such receivables) or letters of credit, in each case,
as amended, restated, supplemented, modified, renewed, refunded, replaced or
refinanced in whole or in part from time to time (and whether or not with the
original administrative agent and lenders or another administrative agent or
agents or other lenders and whether provided under the original Working Capital
Facility or any other credit or other agreement).


 


“Currency Agreement” means in respect of a
Person any foreign exchange contract, currency swap agreement, futures
contract, option contract or other similar agreement as to which such Person is
a party or a beneficiary.


 


“Custodian” means any receiver, trustee,
assignee, liquidator, custodian or similar official under any Bankruptcy Law.


 


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


 


“Definitive Securities” means
certificated Securities.


 


“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
exchangeable) or upon the happening of any event:


 


14

















 


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


 


(2)           is
convertible or exchangeable for Indebtedness or Disqualified Stock (excluding
Capital Stock which is convertible or exchangeable solely at the option of the
Company or a Restricted Subsidiary); or


 


(3)           is
redeemable at the option of the holder of the Capital Stock in whole or in
part,


 


in each case
on or prior to the date that is 91 days after the earlier of the date (a) of
the Stated Maturity of the Securities or (b) on which there are no
Securities outstanding, provided
that only the portion of Capital Stock which so matures or is mandatorily
redeemable, is so convertible or exchangeable or is so redeemable at the option
of the holder thereof prior to such date will be deemed to be Disqualified
Stock; provided, further, that
any Capital Stock that would constitute Disqualified Stock solely because the
holders thereof have the right to require the Company to repurchase such Capital
Stock upon the occurrence of a change of control or asset sale (each defined in
a substantially identical manner to the corresponding definitions in this
Indenture) shall not constitute Disqualified Stock if the terms of such Capital
Stock (and all such securities into which it is convertible or for which it is
ratable or exchangeable) provide that the Company may not repurchase or redeem
any such Capital Stock (and all such securities into which it is convertible or
for which it is ratable or exchangeable) pursuant to such provision prior to
compliance by the Company with Sections 3.5 and 3.10 and
such repurchase or redemption complies with Section 3.3.


 


“DTC” means The Depository Trust
Company, its nominees and their respective successors and assigns, or such
other depository institution hereinafter appointed by the Company.


 


“Equity Offering” means a public
offering for cash by the Company or Holdings, as the case may be, of its Common
Stock, or options, warrants or rights with respect to its Common Stock, other
than (x) public offerings with respect to the Company’s or Holdings’, as
the case may be, Common Stock, or options, warrants or rights, registered on Form S-4
or S-8, (y) an issuance to any Subsidiary or (z) any offering of
Common Stock issued in connection with a transaction that constitutes a Change
of Control.


 


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


 


“Exchange
Securities” has the meaning ascribed to it in the second introductory
paragraph of this Indenture.


 


“First
Priority Collateral” means the portion of the Collateral as to which the
Securities have a first priority Lien.


 


“First
Priority Collateral Account” has the meaning ascribed to it in the Note
Security Agreement.


 


15

















 


“Fiscal
Year” means the fiscal year of the Company ending on February 28 or
29, as applicable, of each year.


 


“Foreign
Subsidiary” means any Restricted Subsidiary that is not organized under the
laws of the United States of America or any state thereof or the District of
Columbia and any Subsidiary of such Restricted Subsidiary.


 


“GAAP” means generally accepted
accounting principles in the United States of America as in effect as of the
Issue Date, including those set forth in the opinions and pronouncements of the
Accounting Principles Board of the American Institute of Certified Public
Accountants and statements and pronouncements of the Financial Accounting
Standards Board or in such other statements by such other entity as approved by
a significant segment of the accounting profession.  All ratios and computations based on GAAP
contained in this Indenture will be computed in conformity with GAAP, except
that in the event the Company is acquired in a transaction that is accounted
for using purchase accounting, the effects of the application of purchase
accounting shall be disregarded in the calculation of such ratios and other
computations contained in this Indenture.


 


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


 


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


 


(2)           entered
into for purposes of assuring in any other manner the obligee of such
Indebtedness of the payment thereof or to protect such obligee against loss in
respect thereof (in whole or in part); provided,
however, that the term “Guarantee” will not include endorsements for
collection or deposit in the ordinary course of business.  The term “Guarantee” used as a verb has a
corresponding meaning.


 


“Guarantor Subordinated Obligation”
means, with respect to a Subsidiary Guarantor, any Indebtedness of such
Subsidiary Guarantor (whether outstanding on the Issue Date or thereafter
Incurred) which is expressly subordinated in right of payment to the
obligations of such Subsidiary Guarantor under its Subsidiary Guarantee pursuant
to a written agreement.


 


“Hedging Obligations” of any Person
means the obligations of such Person pursuant to any Interest Rate Agreement,
Currency Agreement or Commodity Agreement.


 


“Holder” or “Securityholder” means
a Person in whose name a Security is registered in the Securities Register.


 


16














 


“Holdings” means Cellu Paper Holdings, Inc.,
a Delaware corporation, or any other direct or indirect parent of the Company
that owns directly or indirectly 100% of the Capital Stock of the Company.


 


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


 


“Incur” means issue,
create, assume, Guarantee, incur or otherwise become liable for; provided, however, that any Indebtedness
or Capital Stock of a Person existing at the time such Person becomes a
Restricted Subsidiary (whether by merger, consolidation, acquisition or
otherwise) will be deemed to be Incurred by such Restricted Subsidiary at the
time it becomes a Restricted Subsidiary; and the terms “Incurred” and “Incurrence”
have meanings correlative to the foregoing.


 


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


 


(1)           the
principal of and premium (if any) in respect of indebtedness of such Person for
borrowed money;


 


(2)           the
principal of and premium (if any) in respect of obligations of such Person
evidenced by bonds, debentures, notes or other similar instruments;


 


(3)           the
principal component of all obligations of such Person in respect of letters of
credit, bankers’ acceptances or other similar instruments (including
reimbursement obligations with respect thereto except to the extent such
reimbursement obligation relates to a trade payable and such obligation is
satisfied within 30 days of Incurrence);


 


(4)           the
principal component of all obligations of such Person to pay the deferred and
unpaid purchase price of property (except trade payables), which purchase price
is due more than six months after the date of placing such property in service
or taking delivery and title thereto;


 


(5)           Capitalized
Lease Obligations and all Attributable Indebtedness of such Person;


 


(6)           the principal component
or liquidation preference of all
obligations of such Person with respect to the redemption, repayment or other
repurchase of any Disqualified Stock or, with respect to any Subsidiary that is
not a Subsidiary Guarantor, any Preferred Stock;


 


(7)           the
principal component of all Indebtedness of other Persons secured by a Lien on
any asset of such Person, whether or not such Indebtedness is assumed by such
Person; provided, however, that
the amount of such Indebtedness will be the lesser of (a) the fair market
value of such asset at such date of determination and (b) the amount of
such Indebtedness of such other Persons;


 


17

















 


(8)           the
principal component of Indebtedness of other Persons to the extent Guaranteed
by such Person;


 


(9)           to the extent not
otherwise included in this definition, net obligations of such Person under
Hedging Obligations (the amount of any
such obligations to be equal at any time to the termination value of such
agreement or arrangement giving rise to such obligation that would be payable
by such Person at such time); and


 


(10)         to the extent not otherwise included in this definition, the amount of
obligations outstanding under the legal documents entered into as part of a
securitization transaction or series of transactions that would be
characterized as principal if such transaction were structured as a secured
lending transaction rather than as a purchase outstanding relating to a
securitization transaction or series of transactions.


 


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


 


In addition, “Indebtedness”
of any Person shall include Indebtedness described in the preceding paragraph
that would not appear as a liability on the balance sheet of such Person if:


 


(1)           such
Indebtedness is the obligation of a partnership or joint venture that is not a
Restricted Subsidiary (a “Joint Venture”);


 


(2)           such
Person or a Restricted Subsidiary of such Person is a general partner of the
Joint Venture (a “General Partner”); and


 


(3)           there is recourse, by
contract or operation of law, with respect to the payment of such Indebtedness
to property or assets of such Person or
a Restricted Subsidiary of such Person; and then such Indebtedness shall be
included in an amount not to exceed:


 


(a)                                  the
lesser of (i) the net assets of the General Partner and (ii) the
amount of such obligations to the extent that there is recourse, by contract or
operation of law, to the property or assets of such Person or a Restricted
Subsidiary of such Person; or


 


(b)                                 if
less than the amount determined pursuant to clause (a) immediately
above, the actual amount of such Indebtedness that is recourse to such Person
or a Restricted Subsidiary of such Person, if the Indebtedness is evidenced by
a writing and is for a determinable amount.


 


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


 


“Initial Purchasers” means,
collectively, J.P. Morgan Securities Inc. and Goldman, Sachs & Co.
with respect to the Initial Securities.


 


18

















 


“Initial Securities” has the meaning
ascribed to it in the second introductory paragraph of this Indenture.


 


“Intercreditor Agreement” means that
certain Second Amended and Restated Intercreditor Agreement dated as of June 3,
2009 by and among the Company, the Subsidiary Guarantors, the Collateral Agent,
on behalf of itself and the Holders, JPMorgan Chase Bank, N.A., as U. S.
Administrative Agent (as therein defined), JPMorgan Chase Bank, N.A., Toronto
Branch, as Canadian Administrative Agent (as therein defined), with respect to
the Working Capital Facility, and The Bank of New York Mellon Trust Company,
N.A., as Prior Agent (as therein defined), substantially in the form attached
hereto as Exhibit F, as the same may be amended, supplemented or
otherwise modified from time to time.


 


“Interest
Rate Agreement” means with respect to any Person any interest rate
protection agreement, interest rate future agreement, interest rate option
agreement, interest rate swap agreement, interest rate cap agreement, interest
rate collar agreement, interest rate hedge agreement or other similar agreement
or arrangement as to which such Person is party or a beneficiary.


 


“Investment” means, with respect to
any Person, all investments by such Person in other Persons (including
Affiliates) in the form of any direct or indirect advance, loan (other than
advances or extensions of credit to customers, suppliers, licensees or
consultants in the ordinary course of business) or other extensions of credit
(including by way of Guarantee or similar arrangement, but excluding any debt
or extension of credit represented by a bank deposit other than a time deposit)
or capital contribution to (by means of any transfer of cash or other property
to others or any payment for property or services for the account or use of
others), or any purchase or acquisition of Capital Stock, Indebtedness or other
similar instruments issued by, such Person and all other items that are or
would be classified as investments on a balance sheet prepared in accordance
with GAAP; provided that none of
the following will be deemed to be an Investment:


 


(1)           Hedging
Obligations entered into in the ordinary course of business and in compliance
with this Indenture; and


 


(2)           endorsements
of negotiable instruments and documents in the ordinary course of business.


 


For purposes
of Section 3.3,


 


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


 


19

















 


assets (as conclusively
determined by the Board of Directors of the Company in good faith) of such
Subsidiary at the time that such Subsidiary is so re-designated a Restricted
Subsidiary;


 


(2)           any
property transferred to or from an Unrestricted Subsidiary will be valued at
its fair market value at the time of such transfer, in each case as determined
in good faith by the Board of Directors of the Company; and


 


(3)           if
the Company or any Restricted Subsidiary sells or otherwise disposes of any
Voting Stock of any Restricted Subsidiary such that, after giving effect to any
such sale or disposition, such entity is no longer a Subsidiary of the Company,
the Company shall be deemed to have made an Investment on the date of any such
sale or disposition equal to the fair market value (as conclusively determined
by the Board of Directors of the Company in good faith) of the Capital Stock of
such Subsidiary not sold or disposed of.


 


“Issue Date” means June 3, 2009.


 


“Lien” means any mortgage, pledge,
security interest, encumbrance, lien or charge of any kind (including any
conditional sale or other title retention agreement or lease in the nature
thereof).


 


“Mortgages” means the mortgages, deeds
of trust, deeds to secure Indebtedness or other similar documents securing
Liens on the Premises, as well as the other Collateral secured by and described
in the mortgages, deeds of trust, deeds to secure Indebtedness or other similar
documents, in each case substantially in the form attached hereto as Exhibit E.


 


“Net Available Cash”
from an Asset Disposition, Recovery Event or Asset Swap means cash payments
received (including any cash payments received by way of deferred payment of
principal pursuant to a note or installment receivable or otherwise and net
proceeds from the sale or other disposition of any securities received as
consideration, but only as and when received, but excluding any other
consideration received in the form of assumption by the acquiring person of
Indebtedness or other obligations relating to the properties or assets that are
the subject of such Asset Disposition or received in any other non-cash form)
therefrom, in each case net of:


 


(1)           all
legal, accounting, investment banking, title and recording tax expenses,
commissions and other fees and expenses Incurred, and all federal, state,
provincial, foreign and local taxes required to be paid or accrued as a
liability under GAAP (after taking into account any available tax credits or
deductions and any tax sharing agreements), as a consequence of such Asset
Disposition;


 


(2)           all payments made on any Indebtedness which
is secured by any assets subject to such Asset Disposition, in
accordance with the terms of any Lien upon such assets, or which must by its
terms, or in order to obtain a necessary consent to such Asset Disposition, or
by applicable law be repaid out of the proceeds from such Asset Disposition;


 


20

















 


(3)           all
distributions and other payments required to be made to minority interest
holders in Subsidiaries or joint ventures as a result of such Asset
Disposition;


 


(4)           the deduction of
appropriate amounts to be provided by the seller as a reserve, in accordance
with GAAP, against any liabilities
associated with the assets disposed of in such Asset Disposition and retained
by the Company or any Restricted Subsidiary after such Asset Disposition; and


 


(5)           all amounts required by the contract to be held in escrow for not more
than 60 days pending determination of whether a purchase price adjustment will
be made; provided that such amounts shall be
included in Net Available Cash upon the earlier of (i) the release of such
amounts from escrow and (ii) the date that is 60 days after the closing of
the Asset Disposition.


 


“Net Award”
means any awards or proceeds in respect of any condemnation or other eminent
domain proceeding relating to any Collateral deposited in the Collateral
Accounts pursuant to the Collateral Documents.


 


“Net Cash Proceeds”
means, with respect to any issuance or sale of Capital Stock or Additional
Securities, the cash proceeds of such issuance or sale net of attorneys’ fees,
accountants’ fees, underwriters’ or placement agents’ fees, listing fees,
discounts or commissions and brokerage, consultant and other fees and charges
actually Incurred in connection with such issuance or sale and net of taxes
paid or payable as a result of such issuance or sale (after taking into account
any available tax credit or deductions and any tax sharing arrangements).


 


“Net
Insurance Proceeds” means any awards or proceeds in respect of any casualty
insurance or title insurance claim relating to any Collateral deposited in the
Collateral Account pursuant to the Collateral Documents.


 


“Non-Guarantor Restricted
Subsidiary” means any Restricted Subsidiary that is not a Subsidiary
Guarantor.


 


“Non-Recourse Debt”
means Indebtedness of a Person:


 


(1)           as
to which neither the Company nor any Restricted Subsidiary (a) provides
any Guarantee or credit support of any kind (including any undertaking,
guarantee, indemnity, agreement or instrument that would constitute
Indebtedness) or (b) is directly or indirectly liable (as a guarantor or
otherwise);


 


(2)           no default with respect to which (including
any rights that the holders thereof may have to take enforcement action
against an Unrestricted Subsidiary) would permit (upon notice, lapse of time or
both) any holder of any other Indebtedness of the Company or any Restricted
Subsidiary (other than the Securities and Guarantees) to declare a default
under such other Indebtedness or cause the payment thereof to be accelerated or
payable prior to its Stated Maturity; and


 


(3)           the
explicit terms of which provide there
is no recourse against any of the assets of the Company or its Restricted
Subsidiaries.


 


21

















 


“Non-U.S. Person” means a Person who
is not a U.S. Person (as defined in Regulation S).


 


“Note Security Agreement” means that
certain Note Security Agreement, dated as of June 3, 2009, by and among
the Company, the Subsidiary Guarantors and the Collateral Agent, substantially
in the form attached hereto as Exhibit D, as the same may be
amended, supplemented or otherwise modified from time to time.


 


“Offering Memorandum”
means the offering memorandum, dated May 19, 2009, relating to the
offering by the Company of $255.0 million of the 111⁄2% Senior Secured Notes, Series A, due
2014 and any future offering memoranda relating to Additional Securities.


 


“Officer” means the Chairman of the Board,
the Chief Executive Officer, the President, the Chief Financial Officer, any
Vice President, the Treasurer or the Secretary of the Company.  Officer of any Subsidiary Guarantor has a
correlative meaning.


 


“Officers’ Certificate” means a certificate
signed by two Officers or by an Officer and either an Assistant Treasurer or an
Assistant Secretary of the Company.


 


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


 


“Pari Passu Indebtedness” means Indebtedness
that ranks equally in right of payment to the Securities.


 


“Permitted Holders” means Weston Presidio V,
L.P. and any Affiliate and Related Person thereof. Any person or group whose
acquisition of beneficial ownership constitutes a Change of Control in respect
of which a Change of Control Offer is made in accordance with the requirements
of this Indenture (or would result in a Change of Control Offer in the absence
of the waiver of such requirement by holders in accordance with this Indenture)
will thereafter, together with any of its Affiliates and Related Persons,
constitute additional Permitted Holders.


 


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


 


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


 


(2)           another Person if as a result of such Investment
such other Person is merged or consolidated with or into, or transfers
or conveys all or substantially all its assets to, the Company or a Restricted
Subsidiary; provided, however,
that such Person’s primary business is a Related Business;


 


(3)           cash
and Cash Equivalents;


 


22

















 


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


 


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


 


(6)           loans or advances to employees, officers or directors of the Company or
any Restricted Subsidiary of the Company in the ordinary course of business
consistent with past practices, in an aggregate amount not in excess of $1.0
million with respect to all loans or advances made since the Issue Date
(without giving effect to the forgiveness of any such loan); provided, however, that the Company and its Subsidiaries
shall comply in all material respects with the provisions of the Sarbanes Oxley
Act of 2002 and the rules and regulations promulgated in connection
therewith relating to such loans and advances as if the Company had filed a
registration statement with the SEC;


 


(7)           Capital Stock, obligations or securities received in settlement of
debts created in the ordinary course of business and owing to the Company or
any Restricted Subsidiary or in satisfaction of judgments or pursuant to any
plan of reorganization or similar arrangement upon the bankruptcy or insolvency
of a debtor;


 


(8)           Investments made as a result of the receipt of non-cash consideration
from an Asset Disposition that was made pursuant to and in compliance with Section 3.5;


 


(9)           Investments in existence on the Issue Date;


 


(10)         Hedging Obligations, which obligations are Incurred in compliance with Section 3.2;


 


(11)         Investments by the Company or any of its Restricted Subsidiaries,
together with all other Investments pursuant to this clause (11), in an
aggregate amount at the time of such Investment not to exceed $5.0 million
outstanding at any one time (with the fair market value of such Investment
being measured at the time made and without giving effect to subsequent changes
in value);


 


(12)         Guarantees issued in accordance with Section 3.2; and


 


(13)         any
Asset Swap made in accordance with Section 3.5.


 


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


 


(1)           Liens
on any assets, real or personal, tangible or intangible, securing Indebtedness
and other obligations under any Credit Facility and related Hedging Obligations
and Liens on any assets, real or personal, tangible or intangible, of
Restricted Subsidiaries or the Company securing Guarantees of Indebtedness and
other obligations 


 


23

















 


of the Company
under any Credit Facility, in each case permitted to be Incurred under this
Indenture pursuant to Section 3.2(b)(1); provided that any such Liens on First Priority Collateral
shall be subordinated to the Liens securing the Securities;


 


(2)           pledges or deposits by such Person under
workers’ compensation laws, unemployment insurance 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 United States government bonds to secure surety or
appeal bonds to which such Person is a party, or deposits as security for
contested taxes or import or customs duties or for the payment of rent, in each
case Incurred in the ordinary course of business;


 


(3)           Liens
imposed by law, including carriers’, warehousemen’s, mechanics’, materialmen’s
and repairmen’s Liens, in each case for sums not yet due or being contested in
good faith by appropriate proceedings if a reserve or other appropriate
provisions, if any, as shall be required by GAAP shall have been made in
respect thereof;


 


(4)           Liens
for taxes, assessments or other governmental charges not yet subject to
penalties for non-payment or which are being contested in good faith by
appropriate proceedings; provided that
appropriate reserves required pursuant to GAAP have been made in respect
thereof;


 


(5)           Liens in favor of
issuers of surety or performance bonds or letters of credit or bankers’
acceptances issued pursuant to the
request of and for the account of such Person in the ordinary course of its business;
provided, however, that such
letters of credit do not constitute Indebtedness;


 


(6)           survey exceptions, encumbrances, ground
leases, easements or reservations of, or rights of others for, licenses, rights
of way, sewers, electric lines, telegraph and telephone lines 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 do
not individually or in the aggregate materially adversely affect the value of
said properties or materially impair their use in the operation of the business
of such Person;


 


(7)           Liens
securing Hedging Obligations so long as the related Indebtedness is, and is
permitted to be under this Indenture, secured by a Lien on the same property
securing such Hedging Obligation;


 


(8)           leases,
licenses, subleases and sublicenses of assets (including, without limitation,
real property and intellectual property rights) which do not materially
interfere with the ordinary conduct of the business of the Company or any of
its Restricted Subsidiaries; provided
that such leases, licenses, subleases and sublicenses are subordinated to the
Liens on the Collateral that secure the Securities;


 


24

















 


(9)           judgment
Liens not giving rise to an Event of Default so long as such Lien is adequately
bonded and any appropriate legal proceedings which 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;


 


(10)         Liens for the purpose of securing Indebtedness represented by
Capitalized Lease Obligations, mortgage financings, purchase money obligations
or other payments Incurred to finance all or any part of the purchase price or
cost of construction or improvement of assets or property (other than Capital Stock
or other Investments) acquired, constructed or improved in the ordinary course
of business of the Company and the Subsidiary Guarantors; provided that:


 


(a)                                  the
aggregate principal amount of Indebtedness secured by such Liens pursuant to
this clause (10) is otherwise permitted to be Incurred under this
Indenture, does not exceed at any time outstanding the greater of $20.0 million
and 5.0% of Consolidated Net Tangible Assets of the Company and does not exceed
the cost of the assets or property so acquired or constructed; and


 


(b)                                 such
Liens are created within 180 days of construction, acquisition or
improvement of such assets or property and do not encumber any other assets or
property of the Company or any Restricted Subsidiary other than such assets or
property and assets affixed or appurtenant thereto;


 


(11)         Liens
arising solely by virtue of any statutory or common law provisions relating to
banker’s Liens, rights of set-off or similar rights and remedies as to deposit
accounts or other funds maintained with a depositary institution; provided that:


 


(a)                                  such
deposit account is not a dedicated cash collateral account and is not subject
to restrictions against access by the Company in excess of those set forth by
regulations promulgated by the Federal Reserve Board; and


 


(b)                                 such
deposit account is not intended by the Company or any Restricted Subsidiary to
provide collateral to the depository institution;


 


(12)         Liens
arising from Uniform Commercial Code financing statement filings regarding
operating leases entered into by the Company and its Restricted Subsidiaries in
the ordinary course of business;


 


(13)         Liens
existing on the Issue Date (other than Liens permitted under clause (1));


 


(14)         Liens
on property or shares of stock of a Person at the time such Person becomes a
Restricted Subsidiary; provided, however,
that such Liens are not created, Incurred or assumed in connection with, or in
contemplation of, such other Person becoming a Restricted Subsidiary; provided further, however, that any such
Lien may not extend to any other property owned by the Company or any
Restricted Subsidiary;


 


25

















 


(15)         Liens
on property at the time the Company or a Restricted Subsidiary acquired the
property, including any acquisition by means of a merger or consolidation with
or into the Company or any Restricted Subsidiary; provided, however, that such Liens are not created, Incurred
or assumed in connection with, or in contemplation of, such acquisition; provided further, however, that such Liens
may not extend to any other property owned by the Company or any Restricted
Subsidiary;


 


(16)         Liens
securing Indebtedness or other obligations of a Restricted Subsidiary owing to
the Company or another Restricted Subsidiary;


 


(17)         Liens
securing the Securities (and any Additional Securities issued pursuant to, and
in accordance with, the terms of this Indenture) and Subsidiary Guarantees or
any obligations owing to the Trustee or the Collateral Agent under this
Indenture, the Collateral Documents or the Intercreditor Agreement;


 


(18)         Liens
securing Refinancing Indebtedness Incurred to refinance, refund, replace,
amend, extend or modify, as a whole or in part, Indebtedness that was
previously so secured pursuant to clauses (13), (14), (15), (17) and (18) of
this definition; provided that (a) any
such Lien is limited to all or part of the same property or assets (plus
improvements, accessions, proceeds or dividends or distributions in respect
thereof) that secured (or, under the written arrangements under which the
original Lien arose, could secure) the Indebtedness being refinanced or is in
respect of property that is the security for a Permitted Lien hereunder and (b) any
such Lien is no less favorable to the Holders of the Securities and is no more
favorable to the lienholder with respect to such Lien than the Lien in respect
of the Indebtedness being refinanced;


 


(19)         any
interest or title of a lessor under any Capitalized Lease Obligation or
operating lease;


 


(20)         Liens
on property of the Company or any Restricted Subsidiary that are the subject of
a Sale/Leaseback Transaction securing Attributable Indebtedness Incurred in
connection with such Sale/Leaseback Transaction; provided that the Net Available Cash from such
Sale/Leaseback Transaction are applied in accordance with Section 3.5;


 


(21)         Liens
on the assets and property of Cellu Tissue—CityForest LLC securing industrial
revenue bonds in an amount not to exceed $17.2 million; and


 


(22)         Liens
securing Indebtedness (other than Subordinated Obligations and Guarantor
Subordinated Obligations) in an aggregate principal amount outstanding at any
one time not to exceed the greater of $30.0 million and 7.5% of Consolidated
Net Tangible Assets of the Company.


 


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


 


“Predecessor Security” of any
particular Security means every previous Security evidencing all or a portion
of the same debt as that evidenced by such particular Security; and, 


 


26

















 


for the
purposes of this definition, any Security authenticated and delivered under Section 2.10
in exchange for or in lieu of a mutilated, destroyed, lost or stolen Security
shall be deemed to evidence the same debt as the mutilated, destroyed, lost or
stolen Security.


 


“Preferred Stock,” as applied to the
Capital Stock of any corporation, means Capital Stock of any class or classes
(however designated) which is preferred as to the payment of dividends, or as
to the distribution of assets upon any voluntary or involuntary liquidation or
dissolution of such corporation, over shares of Capital Stock of any other
class of such corporation.


 


“QIB” means any “qualified
institutional buyer” as such term is defined in Rule 144A.


 


“Receivable”
means a right to receive payment arising from a sale or lease of goods or the
performance of services by a Person pursuant to an arrangement with another
Person pursuant to which such other Person is obligated to pay for goods or
services under terms that permit the purchase of such goods and services on
credit and shall include, in any event, any items of property that would be
classified as an “account,” “chattel paper,” “payment intangible” or “instrument”
under the Uniform Commercial Code as in effect in the State of New York and any
“supporting obligations” as so defined.


 


“Receivables
Fees” means any fees or interest paid to purchasers or lenders providing
the financing in connection with a securitization transaction, factoring
agreement or other similar agreement, including any such amounts paid by
discounting the face amount of Receivables or participations therein
transferred in connection with a securitization transaction, factoring
agreement or other similar arrangement, regardless of whether any such
transaction is structured as on-balance sheet or off-balance sheet or through a
Restricted Subsidiary or an Unrestricted Subsidiary.


 


“Recovery
Event” means any event, occurrence, claim or proceeding that results in any
Net Award or Net Insurance Proceeds being deposited into the Collateral
Accounts pursuant to the Collateral Documents.


 


“Redemption
Date” means, with respect to any redemption of Securities, the date of
redemption with respect thereto.


 


“Refinancing
Indebtedness” means Indebtedness that is Incurred to refund, refinance,
replace, exchange, renew, repay or extend (including pursuant to any defeasance
or discharge mechanism) (collectively, “refinance,” “refinances” and “refinanced”
shall each have a correlative meaning) any Indebtedness existing on the Issue
Date or Incurred in compliance with this Indenture (including Indebtedness of
the Company that refinances Indebtedness of any Restricted Subsidiary and
Indebtedness of any Restricted Subsidiary that refinances Indebtedness of
another Restricted Subsidiary) including Indebtedness that refinances
Refinancing Indebtedness; provided, however,
that:


 


(1)           (a) if
the Stated Maturity of the Indebtedness being refinanced is earlier than the
Stated Maturity of the Securities, the Refinancing Indebtedness has a Stated
Maturity no earlier than the Stated Maturity of the Indebtedness being
refinanced or (b) if 


 


27

















 


the Stated
Maturity of the Indebtedness being refinanced is later than the Stated Maturity
of the Securities, the Refinancing Indebtedness has a Stated Maturity at least
91 days later than the Stated Maturity of the Securities;


 


(2)           the
Refinancing Indebtedness has an Average Life at the time such Refinancing
Indebtedness is Incurred that is equal to or greater than the Average Life of
the Indebtedness being refinanced;


 


(3)           such
Refinancing Indebtedness is Incurred in an aggregate principal amount (or if
issued with original issue discount, an aggregate issue price) that is equal to
or less than the sum of the aggregate principal amount (or if issued with
original issue discount, the aggregate accreted value) then outstanding of the
Indebtedness being refinanced (plus, without duplication, any additional
Indebtedness Incurred to pay interest or premiums required by the instruments
governing such existing Indebtedness and fees and expenses Incurred in
connection therewith);


 


(4)           if
the Indebtedness being refinanced is subordinated in right of payment to the
Securities or the Subsidiary Guarantees, such Refinancing Indebtedness is
subordinated in right of payment to the Securities or the Subsidiary Guarantees
on terms at least as favorable to the Holders as those contained in the
documentation governing the Indebtedness being refinanced; and


 


(5)           if
the Indebtedness being refinanced is secured, the Lien securing Refinancing
Indebtedness Incurred to refinance Indebtedness that was previously so secured
is not materially less favorable to the Holders of the Securities and is not
materially more favorable to the lienholder with respect to such Lien than the
Lien in respect of the Indebtedness being refinanced.


 


“Registration Rights
Agreement” means that certain registration rights agreement dated as
of the Issue Date by and among the Company, the Subsidiary Guarantors and the
initial purchasers set forth therein and, with respect to any Additional
Securities, one or more substantially similar registration rights agreements
among the Company and the other parties thereto, as such agreements may be
amended from time to time.


 


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


 


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


 


“Related
Business Assets” means assets used or useful in a Related Business.


 


“Related Person”
with respect to any Permitted Holder means:


 


(1)           any
controlling stockholder or a majority (or more) owned Subsidiary of such
Permitted Holder or, in the case of an individual, any spouse or immediate
family member of such Permitted Holder, any trust created for the benefit of
such individual or such individual’s estate, executor, administrator, committee
or beneficiaries; or


 


28














 


(2)                                  any
trust, corporation, partnership or other entity, the beneficiaries,
stockholders, partners, owners or Persons beneficially holding a majority (or
more) controlling interest of which consist of such Permitted Holder and/or
such other Persons referred to in the immediately preceding clause (1).


 


“Restoration”
has the meaning ascribed to it in the applicable Collateral Document.


 


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


 


“Restricted
Securities” means Initial Securities and Additional Securities bearing one
of the restrictive legends described in Section 2.1(d).


 


“Restricted
Securities Legend” means the legend set forth in Section 2.1(d)(1) and,
in the case of the Temporary Regulation S Global Note, the legend set forth in Section 2.1(d)(2).


 


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


 


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


 


“Sale/Leaseback Transaction” means an
arrangement relating to property now owned or hereafter acquired whereby the
Company or a Restricted Subsidiary transfers such property to a Person and the
Company or a Restricted Subsidiary leases it from such Person.


 


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


 


“Second
Priority Collateral” means the portion of the Collateral as to which the
Securities have a second-priority Lien.


 


“Second
Priority Collateral Account” has the meaning ascribed to it in the Note
Security Agreement.


 


“Securities”
has the meaning ascribed to it in the second introductory paragraph of this
Indenture.


 


“Securities Act” means the Securities
Act of 1933 (15 U.S.C. §§ 77a-77aa), as amended, and the rules and
regulations of the SEC promulgated thereunder.


 


“Securities Custodian” means the custodian
with respect to the Global Security (as appointed by DTC), or any successor
Person thereto and shall initially be the Trustee.


 


“Shelf Registration Statement” shall have the
meaning set forth in the Registration Rights Agreement.


 


29

















 


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


 


“Stated Maturity” means, with respect
to any security, the date specified in such security as the fixed date on which
the payment of principal of such security is due and payable, including
pursuant to any mandatory redemption provision, but shall not include any date
on which the payment of principal of such security is due and payable as a
result of any contingent obligations to repay, redeem or repurchase any such
principal prior to the date originally scheduled for the payment thereof.


 


“Subordinated Obligation”
means any Indebtedness of the Company (whether outstanding on the Issue Date or
thereafter Incurred) which is subordinated or junior in right of payment to the
Securities pursuant to a written agreement.


 


“Subsidiary” of any
Person means (a) 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 ordinary voting power of shares of
Capital Stock entitled (without regard to the occurrence of any contingency) to
vote in the election of directors, managers or trustees thereof (or persons
performing similar functions) or (b) any partnership, joint venture
limited liability company or similar entity of which more than 50% of the
capital accounts, distribution rights, total equity and voting interests or
general or limited partnership interests, as applicable, is, in the case of
clauses (a) and (b), at the time owned or controlled, directly or
indirectly, by (1) such Person, (2) such Person and one or more
Subsidiaries of such Person or (3) one or more Subsidiaries of such
Person.  Unless otherwise specified
herein, each reference to a Subsidiary will refer to a Subsidiary of the
Company.


 


“Subsidiary
Guarantee” means, individually, any Guarantee of payment of the Securities
and the Exchange Securities issued in a registered exchange offer pursuant to
the Registration Rights Agreement by a Subsidiary Guarantor pursuant to the
terms of this Indenture and any supplemental indenture hereto, and,
collectively, all such Guarantees.  Each
such Subsidiary Guarantee will be in the form prescribed by this Indenture.


 


“Subsidiary Guarantor”
means each Restricted Subsidiary in existence on the Issue Date that provides a
Subsidiary Guarantee on the Issue Date and any other Restricted Subsidiary that
provides a Subsidiary Guarantee in accordance with this Indenture; provided that upon release or discharge of such Restricted
Subsidiary from its Subsidiary Guarantee in accordance with this Indenture,
such Restricted Subsidiary ceases to be a Subsidiary Guarantor.


 


“TIA” or “Trust Indenture Act”
means the Trust Indenture Act of 1939 (15 U.S.C. §§ 77aaa-77bbbb),
as in effect on the date of this Indenture.


 


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


 


“Trust Officer” shall mean, when used
with respect to the Trustee, any officer within the corporate trust department
of the Trustee, including any vice president, assistant vice president,
secretary, assistant treasurer, trust officer or any other officer of the
Trustee who 


 


30

















 


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.


 


“Unrestricted
Subsidiary” means:


 


(1)                                  any
Subsidiary of the Company that at the time of determination shall be designated
an Unrestricted Subsidiary by the Board of Directors of the Company in the
manner provided below; and


 


(2)                                  any
Subsidiary of an Unrestricted Subsidiary.


 


The Board of
Directors of the Company may designate any Subsidiary of the Company (including
any newly acquired or newly formed Subsidiary or a Person becoming a Subsidiary
through merger or consolidation or Investment therein) to be an Unrestricted
Subsidiary only if:


 


(1)                                  such
Subsidiary or any of its Subsidiaries does not own any Capital Stock or
Indebtedness of or have any Investment in, or own or hold any Lien on any
property of, any other Subsidiary of the Company which is not a Subsidiary of
the Subsidiary to be so designated or otherwise an Unrestricted Subsidiary;


 


(2)                                  all
the Indebtedness of such Subsidiary and its Subsidiaries shall, at the date of
designation, and will at all times thereafter, consist of Non-Recourse Debt;


 


(3)                                  such
designation and the Investment of the Company in such Subsidiary complies with Section 3.3;


 


(4)                                  such
Subsidiary, either alone or in the aggregate with all other Unrestricted
Subsidiaries, does not operate, directly or indirectly, all or substantially
all of the business of the Company and its Subsidiaries;


 


(5)                                  such
Subsidiary is a Person with respect to which neither the Company nor any of its
Restricted Subsidiaries has any direct or indirect obligation:


 


(a)                                  to subscribe for
additional Capital Stock of such Person; or


 


(b)                                 to maintain or
preserve such Person’s financial condition or to cause such Person to achieve
any specified levels of operating results; and


 


(6)                                  on
the date such Subsidiary is designated an Unrestricted Subsidiary, such
Subsidiary is not a party to any agreement, contract, arrangement or
understanding with the Company or any Restricted Subsidiary with terms
substantially less favorable to the Company than those that might have been
obtained from Persons who are not Affiliates of the Company.


 


31

















 


Any such
designation by the Board of Directors of the Company shall be evidenced to the
Trustee by filing with the Trustee a Board Resolution of the Company giving
effect to such designation and an Officers’ Certificate certifying that such designation
complies with the foregoing conditions. 
If, at any time, any Unrestricted Subsidiary would fail to meet the
foregoing requirements as an Unrestricted Subsidiary, it shall thereafter cease
to be an Unrestricted Subsidiary for purposes of this Indenture and any
Indebtedness of such Subsidiary shall be deemed to be Incurred as of such date.


 


The Board of
Directors of the Company may designate any Unrestricted Subsidiary to be a
Restricted Subsidiary; provided
that immediately after giving effect to such designation, no Default or Event
of Default shall have occurred and be continuing or would occur as a
consequence thereof and the Company could Incur at least $1.00 of additional
Indebtedness under Section 3.2(a) on a pro forma basis taking
into account such designation.


 


“U.S.
Government Obligations” means securities that are (a) direct
obligations of the United States of America for the timely payment of which its
full faith and credit is pledged or (b) 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 of the United States of America, which, in
either case, are not callable or redeemable at the option of the issuer
thereof, and shall also include a depositary receipt issued by a bank (as
defined in Section 3(a)(2) of the Securities Act), as custodian with
respect to any such U.S. Government Obligations or a specific payment of principal
of or interest on any such U.S. Government Obligations held by such custodian
for the account of the holder of such depositary 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 depositary receipt from any amount received by the
custodian in respect of the U.S. Government Obligations or the specific payment
of principal of or interest on the U.S. Government Obligations evidenced by
such depositary receipt.


 


“Voting
Stock” of a Person means all classes of Capital Stock of such Person then
outstanding and normally entitled to vote in the election of directors,
managers or trustees, as applicable.


 


“Wholly-Owned
Subsidiary” means a Restricted Subsidiary, all of the Capital Stock of
which (other than directors’ qualifying shares) is owned by the Company or
another Wholly-Owned Subsidiary.


 


“Working
Capital Facility” means the Credit Agreement, dated as of June 12,
2006, among the Company, as U.S. borrower, Interlake Acquisition Corporation
Limited, a subsidiary of the Company, as Canadian borrower, the loan guarantors
party thereto, JPMorgan Chase Bank, N.A., as U.S. administrative agent,
JPMorgan Chase Bank, N.A. Toronto Branch, as Canadian administrative agent, and
the lenders party thereto, as the same may be amended, supplemented, modified,
renewed, refunded, replaced or refinanced in whole or in part from time to time
(and whether or not with the original agent and lenders or another agent or
agents or other lenders).


 


32

















 


SECTION 1.2.   Other
Definitions.


 


	
  Term

  	
   

  	
  Defined in

  Section

  
	
   

  	
   

  	
   

  
	
  “Additional
  Amounts”

  	
   

  	
  5.9(a)

  
	
   

  	
   

  	
   

  
	
  “Additional
  Restricted Securities”

  	
   

  	
  2.1(b)

  
	
   

  	
   

  	
   

  
	
  “Affiliate
  Transaction”

  	
   

  	
  3.8

  
	
   

  	
   

  	
   

  
	
  “Agent Members”

  	
   

  	
  2.1(e)(iii)

  
	
   

  	
   

  	
   

  
	
  “Asset
  Disposition Offer Amount”

  	
   

  	
  3.5(c)

  
	
   

  	
   

  	
   

  
	
  “Asset
  Disposition Offer Period”

  	
   

  	
  3.5(c)

  
	
   

  	
   

  	
   

  
	
  “Asset
  Disposition Offer”

  	
   

  	
  3.5(b)

  
	
   

  	
   

  	
   

  
	
  “Asset
  Disposition Purchase Date”

  	
   

  	
  3.5(c)

  
	
   

  	
   

  	
   

  
	
  “Authenticating
  Agent”

  	
   

  	
  2.2

  
	
   

  	
   

  	
   

  
	
  “Change in
  Tax Law”

  	
   

  	
  5.9(b)

  
	
   

  	
   

  	
   

  
	
  “Change of
  Control Offer”

  	
   

  	
  3.10

  
	
   

  	
   

  	
   

  
	
  “Change of
  Control Payment”

  	
   

  	
  3.10(1)

  
	
   

  	
   

  	
   

  
	
  “Change of
  Control Payment Date”

  	
   

  	
  3.10(2)

  
	
   

  	
   

  	
   

  
	
  “Clearstream”

  	
   

  	
  2.1(b)

  
	
   

  	
   

  	
   

  
	
  “Collateral
  Disposition Offer”

  	
   

  	
  3.5(a)

  
	
   

  	
   

  	
   

  
	
  “Company
  Order”

  	
   

  	
  2.2

  
	
   

  	
   

  	
   

  
	
  “Contingent
  Payment Distributions”

  	
   

  	
  3.3(b)(16)

  
	
   

  	
   

  	
   

  
	
  “covenant
  defeasance option”

  	
   

  	
  8.1(b)

  
	
   

  	
   

  	
   

  
	
  “cross
  acceleration provision”

  	
   

  	
  6.1(6)(b)

  
	
   

  	
   

  	
   

  
	
  “Defaulted
  Interest”

  	
   

  	
  2.14

  
	
   

  	
   

  	
   

  
	
  “Euroclear”

  	
   

  	
  2.1(b)

  
	
   

  	
   

  	
   

  
	
  “Event of
  Default”

  	
   

  	
  6.1

  



 


33

















 


	
  Term

  	
   

  	
  Defined in

  Section

  
	
   

  	
   

  	
   

  
	
  “Excess
  Collateral Proceeds”

  	
   

  	
  3.5(a)

  
	
   

  	
   

  	
   

  
	
  “Excess
  Proceeds”

  	
   

  	
  3.5(b)

  
	
   

  	
   

  	
   

  
	
  “Exchange
  Global Note”

  	
   

  	
  2.1(b)

  
	
   

  	
   

  	
   

  
	
  “General
  Partner”

  	
   

  	
  1.1

  
	
   

  	
   

  	
   

  
	
  “Global
  Securities”

  	
   

  	
  2.1(b)

  
	
   

  	
   

  	
   

  
	
  “Institutional
  Accredited Investor Global Notes”

  	
   

  	
  2.1(b)

  
	
   

  	
   

  	
   

  
	
  “Institutional
  Accredited Investor Note”

  	
   

  	
  2.1(b)

  
	
   

  	
   

  	
   

  
	
  “Joint
  Venture”

  	
   

  	
  1.1

  
	
   

  	
   

  	
   

  
	
  “judgment
  default provision”

  	
   

  	
  6.1(9)

  
	
   

  	
   

  	
   

  
	
  “legal
  defeasance option”

  	
   

  	
  8.1(b)

  
	
   

  	
   

  	
   

  
	
  “Legal
  Holiday”

  	
   

  	
  12.8

  
	
   

  	
   

  	
   

  
	
  “Obligations”

  	
   

  	
  10.1

  
	
   

  	
   

  	
   

  
	
  “Paying
  Agent”

  	
   

  	
  2.3

  
	
   

  	
   

  	
   

  
	
  “Payment Default”

  	
   

  	
  6.1(6)(a)

  
	
   

  	
   

  	
   

  
	
  “Payor”

  	
   

  	
  5.9(a)

  
	
   

  	
   

  	
   

  
	
  “Permanent
  Regulation S Global Note”

  	
   

  	
  2.1(b)

  
	
   

  	
   

  	
   

  
	
  “Premises”

  	
   

  	
  11.5

  
	
   

  	
   

  	
   

  
	
  “protected
  purchaser”

  	
   

  	
  2.10

  
	
   

  	
   

  	
   

  
	
  “Registrar”

  	
   

  	
  2.3

  
	
   

  	
   

  	
   

  
	
  “Regulation S
  Global Note”

  	
   

  	
  2.1(b)

  
	
   

  	
   

  	
   

  
	
  “Regulation S
  Notes”

  	
   

  	
  2.1(b)

  
	
   

  	
   

  	
   

  
	
  “Relevant Tax
  Jurisdiction”

  	
   

  	
  5.9(a)

  
	
   

  	
   

  	
   

  
	
  “Resale
  Restriction Termination Date”

  	
   

  	
  2.6(b)

  



 


34

















 


	
  Term

  	
   

  	
  Defined in

  Section

  
	
   

  	
   

  	
   

  
	
  “Restricted
  Global Note”

  	
   

  	
  2.6(e)

  
	
   

  	
   

  	
   

  
	
  “Restricted
  Payment”

  	
   

  	
  3.3(a)(4)

  
	
   

  	
   

  	
   

  
	
  “Restricted
  Period”

  	
   

  	
  2.1(b)

  
	
   

  	
   

  	
   

  
	
  “Rule 144A
  Global Note”

  	
   

  	
  2.1(b)

  
	
   

  	
   

  	
   

  
	
  “Rule 144A
  Notes”

  	
   

  	
  2.1(b)

  
	
   

  	
   

  	
   

  
	
  “Securities
  Register”

  	
   

  	
  2.3

  
	
   

  	
   

  	
   

  
	
  “Special
  Interest Payment Date”

  	
   

  	
  2.14(a)

  
	
   

  	
   

  	
   

  
	
  “Special
  Record Date”

  	
   

  	
  2.14(a)

  
	
   

  	
   

  	
   

  
	
  “substantially
  concurrent sale”

  	
   

  	
  3.3(b)

  
	
   

  	
   

  	
   

  
	
  “Successor
  Company”

  	
   

  	
  4.1(1)

  
	
   

  	
   

  	
   

  
	
  “Temporary
  Regulation S Global Note”

  	
   

  	
  2.1(b)

  
	
   

  	
   

  	
   

  
	
  “Unrestricted
  Global Note”

  	
   

  	
  2.6(e)

  



 


SECTION 1.3.   Incorporation by Reference of Trust
Indenture Act.  This Indenture is subject to the mandatory
provisions of the TIA which are incorporated by reference in and made a part of
this Indenture.  The following TIA terms
have the following meanings:


 


“Commission” means the SEC.


 


“indenture securities” means the Securities.


 


“indenture security holder” means a
Securityholder.


 


“indenture to be qualified” means this
Indenture.


 


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


 


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


 


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


 


35

















 


SECTION 1.4.   Rules of Construction.  Unless the context otherwise requires:


 


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


 


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


 


(3)          “or” is not exclusive;


 


(4)          “including” means including without
limitation;


 


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


 


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


 


(7)          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;


 


(8)          all amounts expressed in this Indenture or in
any of the Securities in terms of money refer to the lawful currency of the
United States of America; and


 


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


 


ARTICLE II


 


THE SECURITIES


 


SECTION
2.1.   Form, Dating and Terms.


 


(a)  The aggregate principal amount of Securities that may be
authenticated and delivered under this Indenture is unlimited.  The Initial Securities issued on the date
hereof will be in an aggregate principal amount of $255,000,000.  In addition, the Company may issue, from time
to time in accordance with the provisions of this Indenture, Additional Securities (as
provided herein) and Exchange Securities. 
Furthermore, Securities may be authenticated and delivered upon
registration of transfer, exchange or in lieu of, other Securities pursuant to Section 2.2,
2.6, 2.10, 2.12, 5.8 or 9.5, in connection
with a Collateral Disposition Offer or Asset Disposition Offer pursuant to Section 3.5
or in connection with a Change of Control Offer pursuant to Section 3.10.


 


Notwithstanding
anything to the contrary contained herein, the Company may not issue any
Additional Securities, unless:


 


36

















 


(1)          Immediately after giving effect to such
issuance, no Default or Event of Default shall have occurred and be continuing;


 


(2)          Immediately after giving effect to such
issuance, the Company would be able to Incur at least an additional $1.00 of
Indebtedness pursuant to Section 3.2(a); and


 


(3)          The Net Cash Proceeds from any such issuance
shall be deposited into the First Priority Collateral Account and invested by
the Company in Additional Assets, which Additional Assets are thereupon with
their acquisition added to the First Priority Collateral securing the
Securities in accordance with Section 11.7(c); provided that, prior to such investment
(and any related withdrawal from the First Priority Collateral Account), the
Company shall have delivered to the Trustee an Officers’ Certificate stating
that the funds to be withdrawn from the First Priority Collateral Account are
to be invested in Additional Assets in compliance with this clause (3).


 


The Initial
Securities shall be known and designated as “111⁄2% Senior Secured Notes, Series A,
due 2014” of the Company.  Additional
Securities issued as Restricted Securities shall be known and designated as “111⁄2%
Senior Secured Notes, Series A, due 2014” of the Company.  Additional Securities issued other than as
Restricted Securities shall be known and designated as “111⁄2% Senior Secured
Notes, Series B, due 2014” of the Company, and Exchange Securities shall
be known and designated as “111⁄2% Senior Secured Notes, Series B, due 2014”
of the Company.


 


With respect to
any Additional Securities, the Company shall set forth in (a) a Board
Resolution and (b) (i) an Officers’ Certificate or (ii) one or
more indentures supplemental hereto, the following information:


 


(1)                                  the
aggregate principal amount of such Additional Securities to be authenticated
and delivered pursuant to this Indenture;


 


(2)                                  the
issue price and the issue date of such Additional Securities, including the
date from which interest shall accrue; and


 


(3)                                  whether
such Additional Securities shall be Restricted Securities issued in the form of
Exhibit A hereto and/or shall be issued in the form of Exhibit B
hereto.


 


In authenticating
and delivering Additional Securities, the Trustee shall be entitled to receive
and shall be fully protected in relying upon, in addition to the Opinion of
Counsel and Officers’ Certificate required by Section 12.4, an
Opinion of Counsel as to the due authorization, execution, delivery, validity
and enforceability of such Additional Securities.


 


The Initial
Securities, the Additional Securities and the Exchange Securities shall be
considered collectively as a single class for all purposes of this
Indenture.  Holders of the Initial
Securities, the Additional Securities and the Exchange Securities will vote and
consent together on all matters to which such Holders are entitled to vote or
consent as one class, and none of the Holders of the Initial Securities, the
Additional Securities or the Exchange Securities


 


37

















 


shall
have the right to vote or consent as a separate class on any matter to which
such Holders are entitled to vote or consent.


 


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


 


(b)  The Initial Securities are being offered and sold by the
Company pursuant to a Purchase Agreement, dated May 19, 2009, among the
Company, the Subsidiary Guarantors, J.P. Morgan Securities Inc. and the other
initial purchasers named therein.  The
Initial Securities and any Additional Securities (if issued as Restricted Securities)
(the “Additional Restricted Securities”) will be resold initially only
to (A) QIBs in reliance on Rule 144A and (B) Non-U.S. Persons in
reliance on Regulation S.  Such
Initial Securities and Additional Restricted Securities may thereafter be
transferred to, among others, QIBs, purchasers in reliance on Regulation S
and IAIs in accordance with Rule 501 of the Securities Act, in each case,
in accordance with the procedure described herein.  Additional Securities offered after the date
hereof may be offered and sold by the Company from time to time pursuant to one
or more purchase agreements in accordance with applicable law.


 


Initial Securities and Additional Restricted
Securities offered and sold to QIBs in the United States of America in reliance
on Rule 144A (the “Rule 144A Notes”) shall be issued in the
form of a permanent global Security substantially in the form of Exhibit A,
which is hereby incorporated by reference and made a part of this Indenture,
including appropriate legends as set forth in Section 2.1(d) (the
“Rule 144A Global Note”), deposited with the Trustee, as custodian
for DTC, duly executed by the Company and authenticated by the Trustee as
hereinafter provided.  The Rule 144A
Global Note may be represented by more than one certificate, if so required by
DTC’s rules regarding the maximum principal amount to be represented by a
single certificate.  The aggregate
principal amount of the Rule 144A Global Note may from time to time be
increased or decreased by adjustments made on the records of the Trustee, as
custodian for DTC or its nominee, as hereinafter provided.


 


Initial Securities and any Additional Restricted Securities offered and
sold outside the United States of America (the “Regulation S Notes”) in
reliance on Regulation S shall initially be issued in the form of a
temporary global Security (the “Temporary Regulation S Global Note”),
without interest coupons.  Beneficial
interests in the Temporary Regulation S Global Note will be exchanged for
beneficial interests in a corresponding permanent global Security, without
interest coupons, substantially in the form of Exhibit A including
appropriate legends as set forth in Section 2.1(d) (the “Permanent
Regulation S Global Note” and, together with the Temporary Regulation S
Global Note, each a “Regulation S Global Note”) within a reasonable
period after the expiration of the Restricted Period (as defined below) upon
delivery of the certification contemplated by Section 2.7.  Each Regulation S Global Note will be
deposited upon issuance with, or on behalf of, the Trustee as custodian for DTC
in the manner described in this Article II for credit to the
respective accounts of the purchasers (or to such other accounts as they may
direct), including, but not limited to, accounts at Euroclear Bank S.A./N.V. (“Euroclear”)
or Clearstream Banking, société anonyme (“Clearstream”).  Prior to the 40th day 


 


38

















 


after the later of the commencement of the offering of the Initial
Securities and the Issue Date (such period through and including such 40th day,
the “Restricted Period”), interests in the Temporary Regulation S Global
Note may only be transferred to non-U.S. persons pursuant to Regulation S,
unless exchanged for interests in a Global Security in accordance with the
transfer and certification requirements described herein.


 


Investors may hold their interests in the
Regulation S Global Note through organizations other than Euroclear or
Clearstream that are participants in DTC’s system or directly through Euroclear
or Clearstream, if they are participants in such systems, or indirectly through
organizations which are participants in such systems.  If such interests are held through Euroclear
or Clearstream, Euroclear and Clearstream will hold such interests in the
applicable Regulation S Global Note on behalf of their participants through
customers’ securities accounts in their respective names on the books of their
respective depositaries.  Such
depositaries, in turn, will hold such interests in the applicable Regulation S
Global Note in customers’ securities accounts in the depositaries’ names on the
books of DTC.


 


The Regulation S Global Note may be
represented by more than one certificate, if so required by DTC’s rules regarding
the maximum principal amount to be represented by a single certificate.  The aggregate principal amount of the
Regulation S Global Note may from time to time be increased or decreased
by adjustments made on the records of the Trustee, as custodian for DTC or its
nominee, as hereinafter provided.


 


Initial Securities and Additional Restricted
Securities resold to IAIs (the “Institutional Accredited Investor Notes”)
in the United States of America shall be issued in the form of a permanent
global Security substantially in the form of Exhibit A including
appropriate legends as set forth in Section 2.1(d) (the “Institutional
Accredited Investor Global Note”) deposited with the Trustee, as custodian
for DTC, duly executed by the Company and authenticated by the Trustee as
hereinafter provided.  The Institutional
Accredited Investor Global Note may be represented by more than one
certificate, if so required by DTC’s rules regarding the maximum principal
amount to be represented by a single certificate.  The aggregate principal amount of the
Institutional Accredited Investor Global Note may from time to time be
increased or decreased by adjustments made on the records of the Trustee, as
custodian for DTC or its nominee, as hereinafter provided.


 


Exchange Securities exchanged for interests
in the Rule 144A Notes, the Regulation S Notes and the Institutional
Accredited Investor Notes will be issued in the form of a permanent global
Security, substantially in the form of Exhibit B, which is hereby
incorporated by reference and made a part of this Indenture, deposited with the
Trustee as hereinafter provided, including the appropriate legend set forth in Section 2.1(d) (the
“Exchange Global Note”).  The
Exchange Global Note will be deposited upon issuance with, or on behalf of, the
Trustee as custodian for DTC, duly executed by the Company and authenticated by
the Trustee as hereinafter provided. The Exchange Global Note may be
represented by more than one certificate, if so required by DTC’s rules regarding
the maximum principal amount to be represented by a single certificate.


 


39














 


The Rule 144A Global Note, the
Regulation S Global Note, the Institutional Accredited Investor Global
Note and the Exchange Global Note are sometimes collectively herein referred to
as the “Global Securities.”


 


The principal of (and premium, if any) and interest
on the Securities shall be payable at the office or agency of the Company
maintained for such purpose in The  City  of  New  York, or at such other office or agency of
the Company as may be maintained for such purpose pursuant to Section 2.3;
provided, however, that, at the
option of the Company, each installment of interest may be paid by (i) check
mailed to addresses of the Persons entitled thereto as such addresses shall
appear on the Securities Register or (ii) wire transfer to an account
located in the United States maintained by the payee, subject to the last
sentence of this paragraph.  Payments in
respect of Securities represented by a Global Security (including principal,
premium, if any, and interest) will be made by wire transfer of immediately
available funds to the accounts specified by DTC.  Payments in respect of Securities represented
by Definitive Securities (including principal, premium, if any, and interest)
held by a Holder of at least $1,000,000 aggregate principal amount of Securities
represented by Definitive Securities will be made by wire transfer to a U.S.
dollar account maintained by the payee with a bank in the United States if such
Holder elects payment by wire transfer by giving written notice to the Trustee
or the Paying Agent to such effect designating such account no later than
15 days immediately preceding the relevant due date for payment (or such
other date as the Trustee may accept in its discretion).


 


The Securities may have notations, legends or
endorsements required by law, stock exchange rule or usage, in addition to
those set forth on Exhibit A and Exhibit B and in Section 2.1(d).  The Company shall approve any notation,
endorsement or legend on the Securities. 
Each Security shall be dated the date of its authentication.  The terms of the Securities set forth in Exhibit A
and Exhibit B are part of the terms of this Indenture and, to the
extent applicable, the Company, the Subsidiary Guarantors and the Trustee, by
their execution and delivery of this Indenture, expressly agree to be bound by
such terms.


 


(c) 
Denominations.  The Securities
shall be issuable only in fully registered form, without coupons, and only in
denominations of $2,000 and any integral multiple of $1,000 in excess thereof.


 


(d) 
Restrictive Legends.  Unless and
until (i) an Initial Security or an Additional Security issued as a
Restricted Security is sold under an effective registration statement or (ii) an
Initial Security or an Additional Security issued as a Restricted Security is
exchanged for an Exchange Security in connection with an effective registration
statement, in each case pursuant to the Registration Rights Agreement or a
similar agreement:


 


(1) the Rule 144A Global
Note, the Regulation S Global Note and the Institutional Accredited Investor
Global Note shall bear the following legend on the face thereof:


 


THIS NOTE HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE
SECURITIES LAWS. NEITHER THIS NOTE NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE
OFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, 


 


40

















 


ENCUMBERED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT
SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THE HOLDER OF
THIS NOTE BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR OTHERWISE TRANSFER
SUCH SECURITY, PRIOR TO THE DATE WHICH IS [IN THE CASE OF RULE 144A
GLOBAL NOTE AND THE INSTITUTIONAL ACCREDITED INVESTOR NOTE: ONE
YEAR] [IN THE CASE OF THE REGULATION S GLOBAL NOTE:
40 DAYS] AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON
WHICH THE COMPANY OR ANY AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS NOTE
(OR ANY PREDECESSOR OF THIS NOTE) (THE “RESALE RESTRICTION TERMINATION DATE”)
ONLY (A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF, (B) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, (C) FOR SO LONG
AS THE NOTES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES
ACT (“RULE 144A”), TO A PERSON IT REASONABLY BELIEVES IS A “QUALIFIED
INSTITUTIONAL BUYER” AS DEFINED IN RULE 144A THAT PURCHASES FOR ITS OWN ACCOUNT
OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN
THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO
OFFERS AND SALES TO NON-U.S. PERSONS THAT OCCUR OUTSIDE THE UNITED STATES
WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT, (E) TO AN
INSTITUTIONAL ACCREDITED INVESTOR (WITHIN THE MEANING OF RULE 501(a)(1), (2), (3) OR
(7) UNDER THE SECURITIES ACT) THAT IS NOT A QUALIFIED INSTITUTIONAL BUYER
AND THAT IS PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF ANOTHER
INSTITUTIONAL ACCREDITED INVESTOR, IN EACH CASE IN A MINIMUM PRINCIPAL AMOUNT
OF NOTES OF $250,000, OR (F) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE COMPANY’S
AND THE TRUSTEE’S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER (i) PURSUANT
TO CLAUSE (D) PRIOR TO THE END OF THE 40-DAY DISTRIBUTION COMPLIANCE
PERIOD WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT OR PURSUANT
TO CLAUSE (E) OR (F) PRIOR TO THE RESALE RESTRICTION TERMINATION DATE
TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER
INFORMATION SATISFACTORY TO EACH OF THEM, AND (ii) IN EACH OF THE
FOREGOING CASES, TO REQUIRE THAT A CERTIFICATE OF TRANSFER IN THE FORM APPEARING
ON THIS NOTE IS COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE TRUSTEE. THIS
LEGEND WILL BE REMOVED UPON THE REQUEST OF A HOLDER AFTER THE RESALE
RESTRICTION TERMINATION DATE.


 


BY ITS ACQUISITION OF THIS SECURITY THE HOLDER
AND ANY SUBSEQUENT TRANSFEREE HEREOF WILL BE DEEMED TO HAVE REPRESENTED AND
WARRANTED THAT EITHER (I) NO PORTION OF THE ASSETS USED BY SUCH HOLDER OR
ANY TRANSFEREE TO ACQUIRE AND 


 


41

















 


HOLD THIS SECURITY CONSTITUTES THE ASSETS OF
AN EMPLOYEE BENEFIT PLAN THAT IS SUBJECT TO TITLE I OF THE U.S. EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED (“ERISA”), OF PLANS,
INDIVIDUAL RETIREMENT ACCOUNTS OR OTHER ARRANGEMENTS THAT ARE SUBJECT TO SECTION 4975
OF THE U.S. INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”), OR
PROVISIONS UNDER ANY FEDERAL, STATE, LOCAL, NON-U.S. OR OTHER LAWS OR
REGULATIONS THAT ARE SIMILAR TO SUCH PROVISIONS OF ERISA OR THE CODE (“SIMILAR
LAWS”), OR OF AN ENTITY WHOSE UNDERLYING ASSETS ARE CONSIDERED TO INCLUDE “PLAN
ASSETS” OF SUCH PLANS, ACCOUNTS OR ARRANGEMENTS, OR (II) THE ACQUISITION AND
HOLDING OF THIS SECURITY BY SUCH HOLDER OR TRANSFEREE WILL NOT CONSTITUTE A
NON-EXEMPT PROHIBITED TRANSACTION UNDER SECTION 406 OF ERISA OR SECTION 4975
OF THE CODE OR A SIMILAR VIOLATION UNDER ANY APPLICABLE SIMILAR LAWS.


 


(2)   the Temporary
Regulation S Global Note shall bear the following additional legend on the
face thereof:


 


THIS NOTE IS A TEMPORARY GLOBAL NOTE.  PRIOR TO THE EXPIRATION OF THE RESTRICTED
PERIOD APPLICABLE HERETO, BENEFICIAL INTERESTS HEREIN MAY NOT BE HELD BY
ANY PERSON OTHER THAN (1) A NON-U.S. PERSON OR (2) A U.S. PERSON THAT
PURCHASED SUCH INTEREST IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER THE
U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”). 
BENEFICIAL INTERESTS HEREIN ARE NOT EXCHANGEABLE FOR PHYSICAL NOTES OTHER
THAN A PERMANENT GLOBAL NOTE IN ACCORDANCE WITH THE TERMS OF THE
INDENTURE.  TERMS IN THIS LEGEND ARE USED
AS USED IN REGULATION S UNDER THE SECURITIES ACT.


 


(3)   Each Global Security,
whether or not an Initial Security, shall bear the following legend on the face
thereof:


 


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


 


42

















 


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


 


(4)   Each Note issued hereunder
that has more than a de minimis amount of original issue discount for U.S.
federal income tax purposes shall bear a legend in substantially the following
form:


 


THE FOLLOWING INFORMATION IS SUPPLIED SOLELY
FOR U.S. FEDERAL INCOME TAX PURPOSES. 
THIS NOTE IS ISSUED WITH ORIGINAL ISSUE DISCOUNT UNDER SECTIONS 1272,
1273 AND 1275 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED.  A HOLDER MAY OBTAIN
THE ISSUE PRICE, AMOUNT OF ORIGINAL ISSUE DISCOUNT, ISSUE DATE AND YIELD TO
MATURITY FOR THIS NOTE BY SUBMITTING A REQUEST FOR SUCH INFORMATION TO THE
ISSUER AT THE FOLLOWING ADDRESS:  1855
LOCKEWAY DRIVE, SUITE 501, ALPHARETTA, GEORGIA 30004, ATTENTION:  GENERAL COUNSEL.


 


(e) 
Book-Entry Provisions.  (i)  This
Section 2.1(e) shall apply only to Global Securities deposited
with the Trustee, as custodian for DTC.


 


(ii)           Each Global Security initially shall (x) be
registered in the name of DTC or the nominee of DTC, (y) be delivered to
the Trustee as custodian for DTC and (z) bear legends as set forth in Section 2.1(d).
Transfers of a Global Security (but not a beneficial interest therein) will be
limited to transfers thereof in whole, but not in part, to the Depositary, its
successors or their respective nominees, except as set forth in Section 2.1(e)(v) and
2.1(f).  If a beneficial interest
in a Global Security is transferred or exchanged for a beneficial interest in
another Global Security, the Trustee will (x) record a decrease in the
principal amount of the Global Security being transferred or exchanged equal to
the principal amount of such transfer or exchange and (y) record a like
increase in the principal amount of the other Global Security.  Any beneficial interest in one Global
Security that is transferred to a Person who takes delivery in the form of an
interest in another Global Security, or exchanged for an interest in another
Global Security, will, upon transfer or exchange, cease to be an interest in such
Global Security and become an interest in the other Global Security and,
accordingly, will thereafter be subject to all transfer and exchange
restrictions, if any, and other procedures applicable to beneficial interests
in such other Global Security for as long as it remains such an interest.


 


(iii)          Members of, or participants in, DTC (“Agent Members”)
shall have no rights under this Indenture with respect to any Global Security
held on their behalf by DTC or by the Trustee as the custodian of DTC or under
such Global Security, and DTC may be treated by the Company, the Trustee and
any agent of the Company or the Trustee as the absolute owner of such Global
Security for all purposes whatsoever. 
Notwithstanding the foregoing, nothing herein shall prevent the Company,
the Trustee or any agent of the Company or the Trustee from giving effect to
any written certification, proxy or other authorization furnished by DTC or
impair, as 


 


43

















 


between DTC and its Agent Members, the operation of
customary practices of DTC governing the exercise of the rights of a Holder of
a beneficial interest in any Global Security.


 


(iv)          In connection with any transfer of a portion of the
beneficial interest in a Global Security pursuant to Section 2.1(f) to
beneficial owners who are required to hold Definitive Securities, the
Securities Custodian shall reflect on its books and records the date and a
decrease in the principal amount of such Global Security in an amount equal to
the principal amount of the beneficial interest in the Global Security to be
transferred, and the Company shall execute, and the Trustee shall authenticate
and make available for delivery, one or more Definitive Securities of like
tenor and amount.


 


(v)           In connection with the transfer of an entire Global
Security to beneficial owners pursuant to Section 2.1(f), such
Global Security shall be deemed to be surrendered to the Trustee for
cancellation, and the Company shall execute, and the Trustee shall authenticate
and make available for delivery, to each beneficial owner identified by DTC in
exchange for its beneficial interest in such Global Security, an equal
aggregate principal amount of Definitive Securities of authorized
denominations.


 


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


 


(vii)         Any Holder of a Global Security shall, by acceptance of such
Global Security, agree that transfers of beneficial interests in such Global
Security may be effected only through a book-entry system maintained by (a) the
Holder of such Global Security (or its agent) or (b) any Holder of a
beneficial interest in such Global Security, and that ownership of a beneficial
interest in such Global Security shall be required to be reflected in a book
entry.


 


(f) 
Definitive Securities.  (i)  Except
as provided below, owners of beneficial interests in Global Securities will not
be entitled to receive Definitive Securities. 
If required to do so pursuant to any applicable law or regulation,
beneficial owners may obtain Definitive Securities in exchange for their beneficial
interests in a Global Security upon written request in accordance with DTC’s
and the Registrar’s procedures.  In
addition, Definitive Securities shall be transferred to all beneficial owners
in exchange for their beneficial interests in a Global Security if (A) DTC
notifies the Company that it is unwilling or unable to continue as depositary
for such Global Security or DTC ceases to be a clearing agency registered under
the Exchange Act, at a time when DTC is required to be so registered in order to
act as depositary, and in each case a successor depositary is not appointed by
the Company within 90 days of such notice or, (B) the Company in its
sole discretion executes and delivers to the Trustee and Registrar an Officers’
Certificate stating that such Global Security shall be so exchangeable or (C) an
Event of Default has occurred and is continuing and the Registrar has received
a request from DTC.  In the event of the
occurrence of any of the events specified in the preceding sentence or in
clause (A), (B) or (C) of the second preceding sentence, the
Company shall promptly make available to the Trustee a reasonable supply of
Definitive Securities.


 


44

















 


(ii)           Any Definitive Security delivered in exchange for an
interest in a Global Security pursuant to Section 2.1(e)(iii) or
(iv) shall, except as otherwise provided by Section 2.6(d),
bear the applicable legend regarding transfer restrictions applicable to the
Definitive Security set forth in Section 2.1(d).


 


(iii)          If a Definitive Security is transferred or exchanged for a
beneficial interest in a Global Security, the Trustee will (x) cancel such
Definitive Security, (y) record an increase in the principal amount of
such Global Security equal to the principal amount of such transfer or exchange
and (z) in the event that such transfer or exchange involves less than the
entire principal amount of the canceled Certificated Security, the Company
shall execute, and the Trustee shall authenticate and make available for
delivery, to the transferring Holder a new Definitive Security representing the
principal amount not so transferred.


 


(iv)          If a Definitive Security is transferred or exchanged for
another Definitive Security, (x) the Trustee will cancel the Definitive
Security being transferred or exchanged, (y) the Company shall execute,
and the Trustee shall authenticate and make available for delivery, one or more
new Definitive Securities in authorized denominations having an aggregate
principal amount equal to the principal amount of such transfer or exchange to
the transferee (in the case of a transfer) or the Holder of the canceled
Definitive Security (in the case of an exchange), registered in the name of
such transferee or Holder, as applicable, and (z) if such transfer or
exchange involves less than the entire principal amount of the canceled
Definitive Security, the Company shall execute, and the Trustee shall
authenticate and make available for delivery to the Holder thereof, one or more
Definitive Securities in authorized denominations having an aggregate principal
amount equal to the untransferred or unexchanged portion of the canceled
Definitive Securities, registered in the name of the Holder thereof.


 


(v)           Notwithstanding anything to the contrary in this
Indenture, in no event shall a Definitive Security be delivered upon exchange
or transfer of a beneficial interest in the Temporary Regulation S Global Note
prior to the end of the Restricted Period.


 


SECTION 2.2.   Execution and Authentication.  One Officer shall sign the Securities for the
Company by manual or facsimile signature. 
If the Officer whose signature is on a Security no longer holds that
office at the time the Trustee authenticates the Security, the Security shall
be valid nevertheless.


 


A Security shall not be valid until an authorized
officer of the Trustee manually authenticates the Security.  The signature of the Trustee on a Security
shall be conclusive evidence that such Security has been duly and validly
authenticated and issued under this Indenture. 
A Security shall be dated the date of its authentication.


 


At any time and from time to time after the
execution and delivery of this Indenture, the Trustee shall authenticate and
make available for delivery:  (1) Initial
Securities for original issue on the Issue Date in an aggregate principal
amount of $255,000,000, (2) subject to the terms of this Indenture,
Additional Securities for original issue in an unlimited principal amount, (3) Exchange
Securities for issue only in an exchange offer pursuant to the Registration
Rights Agreement or upon resale under an effective Shelf Registration
Statement, and only in exchange for Initial Securities or Additional Securities
of an equal principal amount and (4) 


 


45

















 


under the circumstances set forth in Section 2.6(e),
Initial Securities in the form of an Unrestricted Global Note, in each case
upon a written order of the Company signed by one Officer of the Company (the “Company
Order”).  Such Company Order shall
specify whether the Securities will be in the form of Definitive Securities or
Global Securities, the amount of the Securities to be authenticated and the
date on which the original issue of Securities is to be authenticated and
whether the Securities are to be Initial Securities, Additional Securities or
Exchange Securities.


 


The Trustee may appoint an agent (the “Authenticating
Agent”) reasonably acceptable to the Company to authenticate the
Securities.  Any such instrument shall be
evidenced by an instrument signed by a Trust Officer, a copy of which shall be
furnished to the Company.  Unless limited
by the terms of such appointment, any such Authenticating Agent may
authenticate Securities whenever the Trustee may do so.  Each reference in this Indenture to
authentication by the Trustee includes authentication by the Authenticating
Agent.  An Authenticating Agent has the
same rights as any Registrar, Paying Agent or agent for service of notices and
demands.


 


In case the Company or any Subsidiary Guarantor,
pursuant to Article IV or Section 10.2, as applicable,
shall be consolidated or merged with or into any other Person or shall convey,
transfer, lease or otherwise dispose of its properties and assets substantially
as an entirety to any Person, and the successor Person resulting from such
consolidation, or surviving such merger, or into which the Company or any
Subsidiary Guarantor shall have been merged, or the Person which shall have
received a conveyance, transfer, lease or other disposition as aforesaid, shall
have executed an indenture supplemental hereto with the Trustee pursuant to Article IV
or Section 10.2, as applicable, any of the Securities authenticated
or delivered prior to such consolidation, merger, conveyance, transfer, lease
or other disposition may, from time to time, at the request of the successor
Person, be exchanged for other Securities executed in the name of the successor
Person with such changes in phraseology and form as may be appropriate, but
otherwise in substance of like tenor as the Securities surrendered for such
exchange and of like principal amount; and the Trustee, upon Company Order of
the successor Person, shall authenticate and make available for delivery
Securities as specified in such order for the purpose of such exchange.  If Securities shall at any time be
authenticated and delivered in any new name of a successor Person pursuant to
this Section 2.2 in exchange or substitution for or upon
registration of transfer of any Securities, such successor Person, at the
option of the Holders but without expense to them, shall provide for the
exchange of all Securities at the time outstanding for Securities authenticated
and delivered in such new name.


 


SECTION 2.3.   Registrar and Paying Agent.  The Company shall maintain in New York, New
York an office or agency where Securities may be presented for registration of
transfer or for exchange (the “Registrar”) and an office or agency where
Securities may be presented for payment (the “Paying Agent”).  The Registrar shall keep a register of the
Securities and of their transfer and exchange (the “Securities Register”).  The Company may have one or more
co-registrars and one or more additional paying agents.  The term “Paying Agent” includes any
additional paying agent and the term “Registrar” includes any co-registrar.


 


The Company shall enter into an appropriate agency
agreement with any Registrar or Paying Agent not a party to this Indenture,
which shall incorporate the terms of the 


 


46

















 


TIA.  The
agreement shall implement the provisions of this Indenture that relate to such
agent.  The Company shall notify the
Trustee of the name and address of each such agent.  If the Company fails to maintain a Registrar
or Paying Agent, the Trustee shall act as such and shall be entitled to
appropriate compensation therefor pursuant to Section 7.7.  The Company or any of its wholly owned
Subsidiaries organized in the United States may act as Paying Agent, Registrar
or transfer agent.


 


The Company initially appoints the Trustee as
Registrar and Paying Agent for the Securities. 
The Company may remove any Registrar or Paying Agent upon written notice
to such Registrar or Paying Agent and to the Trustee; provided, however, that no such removal
shall become effective until (i) acceptance of any appointment by a
successor as evidenced by an appropriate agreement entered into by the Company
and such successor Registrar or Paying Agent, as the case may be, and delivered
to the Trustee or (ii) notification to the Trustee that the Trustee shall
serve as Registrar or Paying Agent until the appointment of a successor in
accordance with clause (i) above. 
The Registrar or Paying Agent may resign at any time upon written notice
to the Company and the Trustee.


 


SECTION 2.4.   Paying Agent to Hold Money in Trust.  By no later than 10:00 a.m. (New York
City time) on the date on which any principal of, premium, if any, or interest
on any Security is due and payable, the Company shall deposit with the Paying
Agent a sum sufficient in immediately available funds to pay such principal,
premium or interest when due.  The
Company shall require each Paying Agent (other than the Trustee) to agree in
writing that such Paying Agent shall hold in trust for the benefit of
Securityholders or the Trustee all money held by such Paying Agent for the
payment of principal of, premium, if any, or interest on the Securities
(whether such assets have been distributed to it by the Company or other
obligors on the Securities), shall notify the Trustee in writing of any default
by the Company or any Subsidiary Guarantor in making any such payment and shall
during the continuance of any default by the Company (or any other obligor upon
the Securities) in the making of any payment in respect of the Securities, upon
the written request of the Trustee, forthwith deliver to the Trustee all sums
held in trust by such Paying Agent for payment in respect of the Securities
together with a full accounting thereof. 
If the Company or a Subsidiary of the Company acts as Paying Agent, it
shall segregate the money held by it as Paying Agent and hold it as a separate
trust fund.  The Company at any time may
require a Paying Agent (other than the Trustee) to pay all money held by it to
the Trustee and to account for any funds or assets disbursed by such Paying
Agent.  Upon complying with this Section 2.4,
the Paying Agent (if other than the Company or a Subsidiary of the Company)
shall have no further liability for the money delivered to the Trustee.  Upon any bankruptcy, reorganization or similar
proceeding with respect to the Company, the Trustee shall serve as Paying Agent
for the Securities.


 


SECTION 2.5.   Securityholder Lists.  The Trustee shall preserve in as current a
form as is reasonably practicable the most recent list available to it of the
names and addresses of Securityholders and shall otherwise comply with TIA §
312(a).  If the Trustee is not the
Registrar, or to the extent otherwise required under the TIA, the Company, on
its own behalf and on behalf of each of the Subsidiary Guarantors, shall
furnish or cause the Registrar to furnish to the Trustee, in writing at least
five Business Days before each interest payment date and at such other times as
the Trustee may request in writing, a list in such form and as of such date as
the 


 


47

















 


Trustee may reasonably
require of the names and addresses of Securityholders and the Company shall
otherwise comply with TIA § 312(a).


 


SECTION 2.6.   Transfer and Exchange.


 


(a) 
A Holder may transfer a Security (or a beneficial interest therein) to another
Person or exchange a Security (or a beneficial interest therein) for another
Security or Securities of any authorized denomination by presenting to the Trustee
a written request therefor stating the name of the proposed transferee or
requesting such an exchange, accompanied by any certification, opinion or other
document required by this Section 2.6.  The Trustee will promptly register any
transfer or exchange that meets the requirements of this Section 2.6
by noting the same in the register maintained by the Trustee for the purpose,
and no transfer or exchange will be effective until it is registered in such
register.  The transfer or exchange of
any Security (or a beneficial interest therein) may only be made in accordance
with this Section 2.6 and Section 2.1(e) and 2.1(f),
as applicable, and, in the case of a Global Security (or a beneficial interest
therein), the applicable rules and procedures of DTC, Euroclear and
Clearstream.  The Trustee shall refuse to
register any requested transfer or exchange that does not comply with this
paragraph.


 


(b) 
Transfers of Rule 144A Notes and Institutional Accredited Investor
Notes. The following provisions shall apply with respect to any proposed
registration of transfer of a Rule 144A Note or an Institutional
Accredited Investor Note prior to the date which is one year after the later of
the date of its original issue and the last date on which the Company or any
Affiliate of the Company was the owner of such Securities (or any predecessor
thereto) (the “Resale Restriction Termination Date”):


 


(i)            a registration of transfer of a Rule 144A
Note or an Institutional Accredited Investor Note or a beneficial interest
therein to a QIB shall be made upon the representation of the transferee in the
form as set forth on the reverse of the Security that it is purchasing for its
own account or an account with respect to which it exercises sole investment
discretion and that it and any such account is a “qualified institutional buyer”
within the meaning of Rule 144A, and is aware that the sale to it is being
made in reliance on Rule 144A and acknowledges that it has received such
information regarding the Company as the undersigned has requested pursuant to Rule 144A
or has determined not to request such information and that it is aware that the
transferor is relying upon its foregoing representations in order to claim the
exemption from registration provided by Rule 144A; provided
that no such written representation or other written certification shall be
required in connection with the transfer of a beneficial interest in the Rule 144A
Global Note to a transferee in the form of a beneficial interest in that Rule 144A
Global Note in accordance with this Indenture and the applicable procedures of
DTC.


 


(ii)           a registration of transfer of a Rule 144A
Note or an Institutional Accredited Investor Note or a beneficial interest
therein to an IAI shall be made upon receipt by the Trustee or its agent of a
certificate substantially in the form set forth in Section 2.8 from
the proposed transferee and, if requested by the Company, the delivery of an
opinion of counsel, certification and/or other information satisfactory to it;
and


 


48

















 


(iii)          a registration of transfer of a Rule 144A
Note or an Institutional Accredited Investor Note or a beneficial interest
therein to a Non-U.S. Person shall be made upon receipt by the Trustee or its
agent of a certificate
substantially in the form set forth in Section 2.9 from the
proposed transferee and, if requested by the Company, the delivery of an
opinion of counsel, certification and/or other information satisfactory to it.


 


(c) 
Transfers of Regulations S Notes. 
The following provisions shall apply with respect to any proposed
transfer of a Regulation S Note prior to the expiration of the Restricted
Period:


 


(i)            a transfer of a Regulation S Note or
a beneficial interest therein to a QIB shall be made upon the representation of
the transferee, in the form of assignment on the reverse of the certificate,
that it is purchasing the Security for its own account or an account with
respect to which it exercises sole investment discretion and that it and any
such account is a “qualified institutional buyer” within the meaning of Rule 144A,
is aware that the sale to it is being made in reliance on Rule 144A and
acknowledges that it has received such information regarding the Company as the
undersigned has requested pursuant to Rule 144A or has determined not to
request such information and that it is aware that the transferor is relying
upon its foregoing representations in order to claim the exemption from
registration provided by Rule 144A;


 


(ii)           a transfer of a Regulation S Note or
a beneficial interest therein to an IAI shall be made upon receipt by the
Trustee or its agent of a certificate substantially in the form set forth in Section 2.8
from the proposed transferee and, if requested by the Company or the Trustee, the
delivery of an opinion of counsel, certification and/or other information
satisfactory to each of them; and


 


(iii)          a transfer of a Regulation S Note or a
beneficial interest therein to a Non-U.S. Person shall be made upon receipt by
the Trustee or its agent of a certificate substantially in the form set forth
in Section 2.9 hereof from the proposed transferee and, if
requested by the Company, receipt by the Trustee or its agent of an opinion of
counsel, certification and/or other information satisfactory to the Company.


 


After the expiration of the Restricted Period,
interests in the Regulation S Note may be transferred in accordance with
applicable law without requiring the certification set forth in Section 2.8,
Section 2.9 or any additional certification.


 


(d) 
Restricted Securities Legend. 
Upon the transfer, exchange or replacement of Securities not bearing a
Restricted Securities Legend, the Registrar shall deliver Securities that do
not bear a Restricted Securities Legend. 
Upon the transfer, exchange or replacement of Securities bearing a
Restricted Securities Legend, the Registrar shall deliver only Securities that
bear a Restricted Securities Legend unless (i) Initial Securities are
being exchanged for Exchange Securities in an exchange offer pursuant to the
Registration Rights Agreement, in which case the Exchange Securities shall not
bear a Restricted Securities Legend, (ii) an Initial Security is being
transferred pursuant to the Shelf Registration Statement or other effective
registration statement, (iii) Initial Securities are being exchanged for
Securities that do not bear the Restricted Securities Legend in accordance with
Section 2.6(e) or (iv) there is delivered to 


 


49

















 


the Registrar an Opinion of Counsel
reasonably satisfactory to the Company and the Trustee to the effect that
neither such legend nor the related restrictions on transfer are required in
order to maintain compliance with the provisions of the Securities Act.  Any Additional Securities sold in a
registered offering shall not be required to bear the Restricted Securities
Legend.


 


(e) 
Automatic Exchange from Global Note Bearing Restricted Securities Legend to
Global Note Not Bearing Restricted Securities Legend.  At the option of the Company after the first
anniversary of the Issue Date and upon compliance with the following
procedures, beneficial interests in a Global Note bearing the Restricted
Securities Legend (a “Restricted Global Note”) shall be exchanged for
beneficial interests in a Global Note not bearing the Restricted Securities
Legend (an “Unrestricted Global Note”). 
To the extent any Exchange Securities are outstanding at the time of any
exchange, such Unrestricted Global Note shall be the Global Security
representing such Exchange Securities, if permitted by applicable law and the
applicable procedures of DTC.  In order
to effect such exchange, the Company shall provide written notice to the
Trustee instructing the Trustee to (1) direct DTC to transfer the
specified amount of the outstanding beneficial interests in a particular
Restricted Global Note to an Unrestricted Global Note and provide DTC with all
such information as is necessary for DTC to appropriately credit and debit the
relevant Holder accounts and (2) provide prior written notice to all
Holders of such exchange, which notice must include the date such exchange is
proposed to occur, the CUSIP number of the relevant Restricted Global Note and
the CUSIP number of the Unrestricted Global Note into which such Holders’
beneficial interests will be exchanged. 
As a condition to any such exchange pursuant to this Section 2.6(e),
the Trustee shall be entitled to receive from the Company, and rely upon
conclusively without any liability, an Officers’ Certificate and an Opinion of
Counsel to the Company, in form and in substance reasonably satisfactory to the
Trustee, to the effect that such transfer of beneficial interests to the
Unrestricted Global Note shall be effected in compliance with the Securities
Act.  The Company may request from
Holders such information it reasonably determines is required in order to be
able to deliver such Officers’ Certificate and Opinion of Counsel, including
certification from Holders that they are not Affiliates of the Company and have
not knowingly acquired their beneficial interests in the Restricted Global Note
from any Affiliate of the Company.  Upon
such exchange of beneficial interests pursuant to this Section 2.6(e),
the Registrar shall reflect on its books and records the date of such transfer
and a decrease and increase, respectively, in the principal amount of the
applicable Restricted Global Note and the Unrestricted Global Note,
respectively, equal to the principal amount of beneficial interests
transferred.  Following any such transfer
pursuant to this Section 2.6(e) of all of the beneficial
interests in a Restricted Global Note, such Restricted Global Note shall be
cancelled.  The
Company shall use reasonable best efforts, on or prior to June 3, 2011, to
effect an exchange pursuant to this Section 2.6(e) or
otherwise to remove the Restrictive Securities Legend from any Securities
issued on the date hereof that bear such legend on such date and, to the extent
the Unrestricted Global Note does not constitute the Global Security representing
any Exchange Securities, to obtain an unrestricted CUSIP number for such
Securities, in each case to the extent permitted by applicable law.


 


(f) 
Retention of Written Communications. 
The Registrar shall retain copies of all letters, notices and other
written communications received pursuant to Section 2.1 or this Section 2.6.  The Company shall have the right to inspect
and make copies of all such letters, notices or other written communications at
any reasonable time upon the giving of reasonable prior written notice to the
Registrar.


 


50














 


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


 


(i)            To permit registrations of transfers
and exchanges, the Company shall, subject to the other terms and conditions of
this Article II, execute and the Trustee shall authenticate Definitive
Securities and Global Securities at the Registrar’s request.


 


(ii)           No service charge shall be made to a
Holder for any registration of transfer or exchange, but the Company may
require the Holder to pay a sum sufficient to cover any transfer tax assessments
or similar governmental charge payable in connection therewith (other than any
such transfer taxes, assessments or similar governmental charges payable upon
exchange or transfer pursuant to Sections 2.2, 2.6, 2.10,
2.12, 3.5, 3.10, 5.8 or 9.5).


 


(iii)          The Company (and the Registrar) shall
not be required to register the transfer of or exchange of any Security (A) for
a period beginning (1) 15 days before the mailing of a notice of an
offer to repurchase or redeem Securities and ending at the close of business on
the day of such mailing or (2) 15 days before an interest payment
date and ending on such interest payment date or (B) called for
redemption, except the unredeemed portion of any Security being redeemed in
part.


 


(iv)          Prior to the due presentation for
registration of transfer of any Security, the Company, the Trustee, the Paying
Agent or the Registrar may deem and treat the person in whose name a Security
is registered as the owner of such Security for the purpose of receiving
payment of principal of, premium, if any, and (subject to paragraph 2 of the
forms of Securities attached hereto as Exhibits A and B) interest
on such Security and for all other purposes whatsoever, including without
limitation the transfer or exchange of such Security, whether or not such
Security is overdue, and none of the Company, the Trustee, the Paying Agent or
the Registrar shall be affected by notice to the contrary.


 


(v)           Any Definitive Security delivered in
exchange for an interest in a Global Security pursuant to Section 2.1(f) shall,
except as otherwise provided by Section 2.6(d), bear the applicable
legend regarding transfer restrictions applicable to the Definitive Security
set forth in Section 2.1(d).


 


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


 


(h) 
No Obligation of the Trustee.  (i) The
Trustee shall have no responsibility or obligation to any beneficial owner of a
Global Security, a member of, or a participant in, DTC or other Person with
respect to the accuracy of the records of DTC or its nominee or of any
participant or member thereof, with respect to any ownership interest in the
Securities or with respect to the delivery to any participant, member,
beneficial owner or other Person (other than DTC) of any notice (including any
notice of redemption or purchase) or the payment of any amount or delivery of
any Securities (or other security or property) under or with respect to such 


 


51

















 


Securities.  All notices and communications to be given to
the Holders and all payments to be made to Holders in respect of the Securities
shall be given or made only to or upon the order of the registered Holders
(which shall be DTC or its nominee in the case of a Global Security).  The rights of beneficial owners in any Global
Security shall be exercised only through DTC subject to the applicable rules and
procedures of DTC.  The Trustee may rely
and shall be fully protected in relying upon information furnished by DTC with
respect to its members, participants and any beneficial owners.


 


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


 


(i) 
Affiliate Holders.              By accepting a beneficial interest in a Global Security, any
Person that is an Affiliate of the Company agrees to give notice to the
Company, the Trustee and the Registrar of the acquisition and its Affiliate
status.


 


SECTION 2.7.   Form of Certificate to be Delivered
upon Termination of Restricted Period.


 


[Date]


 


Cellu
Tissue Holdings, Inc.

c/o The Bank of New York Mellon Trust Company, N.A.

222 Berkeley Street, 2nd Floor

Boston, MA 02116

Attention: Corporate Trust Administrator


 


Re:                               Cellu Tissue Holdings, Inc.
(the “Company”) 

111⁄2% Senior Secured Notes due 2014 (the “Securities”)


 


Ladies and Gentlemen:


 


This letter relates to Securities represented by a
temporary global note (the “Temporary Regulation S Global Note”).  Pursuant to Section 2.1 of the Indenture
dated as of June 3, 2009 relating to the Securities (the “Indenture”), we
hereby certify that the persons who are the beneficial owners of
$[              ]
principal amount of Securities represented by the Temporary Regulation S Global
Note are persons outside the United States to whom beneficial interests in such
Securities could be transferred in accordance with Rule 904 of Regulation
S promulgated under the Securities Act of 1933, as amended.  Accordingly, you are hereby requested to
issue a Permanent Regulation S Global Note representing the undersigned’s
interest in the principal amount of Securities represented by the Temporary
Regulation S Global Note, all 


 


52

















 


in the manner provided by the Indenture.  We certify that we [are][are not] an
Affiliate of the Company.


 


You and the Company are entitled to rely upon this
letter and are irrevocably authorized to produce this letter or a copy hereof
to any interested party in any administrative or legal proceedings or official
inquiry with respect to the matters covered hereby.  Terms used in this letter have the meanings
set forth in Regulation S.


 


Very truly yours,


 


[Name of Transferor]


 


 


	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Authorized
  Signature

  	
   

  
				



 


SECTION 2.8.   Form of Certificate to be Delivered
in Connection with Transfers to Institutional Accredited Investors.


 


[Date]


 


Cellu
Tissue Holdings, Inc.

c/o The Bank of New York Mellon Trust Company, N.A.

222 Berkeley Street, 2nd Floor

Boston, MA 02116

Attention: Corporate Trust Administrator


 


Ladies and Gentlemen:


 


This certificate is delivered to request a transfer
of
$[                  ]
principal amount of the 111⁄2% Senior Secured Notes due 2014 (the “Securities”)
of Cellu Tissue Holdings, Inc. (the “Company”).


 


Upon transfer, the Securities would be registered in
the name of the new beneficial owner as follows:


 


Name:


 


Address:


 


Taxpayer ID Number:


 


The undersigned represents
and warrants to you that:


 


1.             We
are an institutional “accredited investor” (as defined in Rule 501(a)(1),
(2), (3) or (7) under the Securities Act of 1933, as amended (the “Securities
Act”)) purchasing for our own account or for the account of such an
institutional “accredited investor” at least 


 


53

















 


$250,000 principal amount of the Securities, and we
are acquiring the Securities not with a view to, or for offer or sale in
connection with, any distribution in violation of the Securities Act.  We have such knowledge and experience in
financial and business matters as to be capable of evaluating the merits and
risk of our investment in the Securities and we invest in or purchase
securities similar to the Securities in the normal course of our business.  We and any accounts for which we are acting
are each able to bear the economic risk of our or its investment.


 


2.             We
understand that the Securities have not been registered under the Securities
Act and, unless so registered, may not be sold except as permitted in the
following sentence.  We agree on our own
behalf and on behalf of any investor account for which we are purchasing Securities
to offer, sell or otherwise transfer such Securities prior to the date that is
one year after the later of the date of original issue and the last date on
which the Company or any affiliate of the Company was the owner of such
Securities (or any predecessor thereto) (the “Resale Restriction Termination
Date”) only (a) to the Company or any Subsidiary thereof, (b) pursuant
to an effective registration statement under the Securities Act, (c) in a
transaction complying with the requirements of Rule 144A under the
Securities Act, to a person we reasonably believe is a “qualified institutional
buyer” under Rule 144A of the Securities Act (a “QIB”) that is
purchasing for its own account or for the account of a QIB and to whom notice
is given that the transfer is being made in reliance on Rule 144A, (d) pursuant
to offers and sales to non-U.S. persons that occur outside the United States
within the meaning of Regulation S under the Securities Act, (e) to
an institutional “accredited investor” within the meaning of Rule 501(a)(1),
(2), (3) or (7) under the Securities Act that is purchasing for its
own account or for the account of such an institutional “accredited investor,”
in each case in a minimum principal amount of Securities of $250,000 for
investment purposes and not with a view to or for offer or sale in connection
with any distribution in violation of the Securities Act or (f) pursuant
to any other available exemption from the registration requirements of the
Securities Act, subject in each of the foregoing cases to any requirement of
law that the disposition of our property or the property of such investor
account or accounts be at all times within our or their control and in
compliance with any applicable state securities laws.  The foregoing restrictions on resale will not
apply subsequent to the Resale Restriction Termination Date.  If any resale or other transfer of the
Securities is proposed to be made pursuant to clause (e) above prior
to the Resale Restriction Termination Date, the transferor shall deliver a
letter from the transferee substantially in the form of this letter to the
Company and the Trustee, which shall provide, among other things, that the
transferee is an institutional “accredited investor” (within the meaning of Rule 501(a)(1),
(2), (3) or (7) under the Securities Act) and that it is acquiring
such Securities for investment purposes and not for distribution in violation
of the Securities Act.  Each purchaser
acknowledges that the Company and the Trustee reserve the right prior to any
offer, sale or other transfer prior to the Resale Termination Date of the
Securities pursuant to clauses (d), (e) or (f) above to require
the delivery of an opinion of counsel, certifications and/or other information
satisfactory to the Company and the Trustee.


 


3.             We
[are][are not] an Affiliate of the Company.


 


	
   

  	
  TRANSFEREE:

  	
   

  
	
   

  	
   

  
	
   

  	
  BY:

  	
   

  
				



 


54

















 


SECTION 2.9.   Form of Certificate to be Delivered
in Connection with Transfers Pursuant to Regulation S.


 


[Date]


 


Cellu
Tissue Holdings, Inc.

c/o The Bank of New York Mellon Trust Company, N.A.

222 Berkeley Street, 2nd Floor

Boston, MA 02116

Attention: Corporate Trust Administrator


 


Re:                               Cellu Tissue Holdings, Inc.

111⁄2% Senior Secured Notes due 2014 (the “Securities”)


 


Ladies and Gentlemen:


 


In connection with our proposed sale of
$[                ]
aggregate principal amount of the Securities, we confirm that such sale has
been effected pursuant to and in accordance with Regulation S under the
United States Securities Act of 1933, as amended (the “Securities Act”),
and, accordingly, we represent that:


 


(a)           the
offer of the Securities was not made to a person in the United States;


 


(b)           either
(i) at the time the buy order was originated, the transferee was outside
the United States or we and any person acting on our behalf reasonably believed
that the transferee was outside the United States or (ii) the transaction
was executed in, on or through the facilities of a designated off-shore
securities market and neither we nor any person acting on our behalf knows that
the transaction has been pre-arranged with a buyer in the United States;


 


(c)           no
directed selling efforts have been made in the United States in contravention
of the requirements of Rule 903(a)(2) or Rule 904(a)(2) of
Regulation S, as applicable; and


 


(d)           the
transaction is not part of a plan or scheme to evade the registration
requirements of the Securities Act.


 


In addition, if the sale is made during a restricted
period and the provisions of Rule 903(b)(2), Rule 903(b)(3) or Rule 904(b)(1) of
Regulation S are applicable thereto, we confirm that such sale has been
made in accordance with the applicable provisions of Rule 903(b)(2), Rule 903(b)(3) or
Rule 904(b)(1), as the case may be.


 


We also hereby certify that we [are][are not] an
Affiliate of the Company and, to our knowledge, the transferee of the
Securities [is][is not] an Affiliate of the Company.


 


You and the Company are entitled to rely upon this
letter and are irrevocably authorized to produce this letter or a copy hereof
to any interested party in any administrative or 


 


55

















 


legal proceedings or official inquiry with respect
to the matters covered hereby.  Terms
used in this certificate have the meanings set forth in Regulation S.


 


Very truly yours,


 


[Name of Transferor]


 


 


	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Authorized
  Signature

  	
   

  
				



 


SECTION 2.10.   Mutilated, Destroyed, Lost or Stolen
Securities.  If a mutilated Security is surrendered to the
Registrar or if the Holder of a Security claims that the Security has been
lost, destroyed or wrongfully taken, the Company shall issue and the Trustee
shall authenticate a replacement Security if the requirements of Section 8-405
of the Uniform Commercial Code are met, such that the Securityholder (a) satisfies
the Company or the Trustee that such Security has been lost, destroyed or
wrongfully taken within a reasonable time after such Securityholder has notice
of such loss, destruction or wrongful taking and the Registrar has not
registered a transfer prior to receiving such notification, (b) makes such
request to the Company or Trustee prior to the Security being acquired by a
protected purchaser as defined in Section 8-303 of the Uniform Commercial
Code (a “protected purchaser”) and (c) satisfies any other
reasonable requirements of the Trustee; provided,
however, if after the delivery of such replacement Security, a
protected purchaser of the Security for which such replacement Security was
issued presents for payment or registration such replaced Security, the Trustee
or the Company shall be entitled to recover such replacement Security from the
Person to whom it was issued and delivered or any Person taking therefrom,
except a protected purchaser, and shall be entitled to recover upon the
security or indemnity provided therefor to the extent of any loss, damage, cost
or expense incurred by the Company or the Trustee in connection therewith.  If required by the Trustee or the Company,
such Holder shall furnish an indemnity bond sufficient in the judgment of the
Company and the Trustee to protect the Company, the Trustee, the Paying Agent
and the Registrar from any loss which any of them may suffer if a Security is
replaced, and, in the absence of notice to the Company, any Subsidiary
Guarantor or the Trustee that such Security has been acquired by a protected
purchaser, the Company shall execute, and upon receipt of a Company Order the
Trustee shall authenticate and make available for delivery, in exchange for any
such mutilated Security or in lieu of any such destroyed, lost or stolen
Security, a new Security of like tenor and principal amount, bearing a number
not contemporaneously outstanding.


 


In case any such mutilated, destroyed, lost or
stolen Security has become or is about to become due and payable, the Company
in its discretion may, instead of issuing a new Security, pay such Security.


 


Upon the issuance of any new Security under this Section 2.10,
the Company may require that such Holder pay a sum sufficient to cover any tax
or other governmental charge that 


 


56

















 


may be imposed in relation thereto and any other
expenses (including the fees and expenses of counsel and of the Trustee) in
connection therewith.


 


Subject to the proviso in the initial paragraph of
this Section 2.10, every new Security issued pursuant to this Section in
lieu of any mutilated, destroyed, lost or stolen Security shall constitute an
original additional contractual obligation of the Company, any Subsidiary
Guarantor (if applicable) and any other obligor upon the Securities, whether or
not the mutilated, destroyed, lost or stolen Security shall be at any time
enforceable by anyone, and shall be entitled to all benefits of this Indenture
equally and proportionately with any and all other Securities duly issued
hereunder.


 


The provisions of this Section 2.10 are
exclusive and shall preclude (to the extent lawful) all other rights and
remedies with respect to the replacement or payment of mutilated, destroyed,
lost or stolen Securities.


 


SECTION 2.11.   Outstanding Securities.  Securities outstanding at any time are all
Securities authenticated by the Trustee except for those cancelled by it, those
delivered to it for cancellation and those described in this Section as
not outstanding.  A Security does not cease
to be outstanding in the event the Company or an Affiliate of the Company holds
the Security; provided, however, that (i) for
purposes of determining which are outstanding for consent or voting purposes
hereunder, the provisions of Section 12.6 shall apply and (ii) in
determining whether the Trustee shall be protected in making a determination
whether the Holders of the requisite principal amount of outstanding Securities
are present at a meeting of Holders of Securities for quorum purposes or have
consented to or voted in favor of any request, demand, authorization,
direction, notice, consent, waiver, amendment or modification hereunder, or
relying upon any such quorum, consent or vote, only Securities which a Trust
Officer of the Trustee actually knows to be held by the Company or an Affiliate
of the Company shall not be considered outstanding.


 


If a Security is replaced pursuant to Section 2.10
(other than a mutilated Security surrendered for replacement), it ceases to be
outstanding unless the Trustee and the Company receive proof satisfactory to
them that the replaced Security is held by a protected purchaser.  A mutilated Security ceases to be outstanding
upon surrender of such Security and replacement pursuant to Section 2.10.


 


If the Paying Agent segregates and holds in trust,
in accordance with this Indenture, on a Redemption Date or maturity date money
sufficient to pay all principal, premium, if any, and accrued interest payable
on that date with respect to the Securities (or portions thereof) to be
redeemed or maturing, as the case may be, and the Paying Agent is not
prohibited from paying such money to the Securityholders on that date pursuant
to the terms of this Indenture, then on and after that date such Securities (or
portions thereof) cease to be outstanding and interest on them ceases to
accrue.


 


SECTION 2.12.   Temporary Securities.  In the event that Definitive Securities are
to be issued under the terms of this Indenture, until such Definitive
Securities are ready for delivery, the Company may prepare and the Trustee
shall authenticate temporary Securities. 
Temporary Securities shall be substantially in the form, and shall carry
all rights, of Definitive 


 


57

















 


Securities but may have
variations that the Company considers appropriate for temporary
Securities.  Without unreasonable delay,
the Company shall prepare and the Trustee shall authenticate Definitive
Securities.  After the preparation of
Definitive Securities, the temporary Securities shall be exchangeable for
Definitive Securities upon surrender of the temporary Securities at any office
or agency maintained by the Company for that purpose and such exchange shall be
without charge to the Holder.  Upon
surrender for cancellation of any one or more temporary Securities, the Company
shall execute, and the Trustee shall authenticate and make available for
delivery in exchange therefor, one or more Definitive Securities representing
an equal principal amount of Securities. 
Until so exchanged, the Holder of temporary Securities shall in all
respects be entitled to the same benefits under this Indenture as a Holder of
Definitive Securities.


 


SECTION 2.13.   Cancellation.  The Company at any time may deliver
Securities to the Trustee for cancellation. 
The Registrar and the Paying Agent shall forward to the Trustee any
Securities surrendered to them for registration of transfer, exchange or
payment.  The Trustee and no one else
shall cancel all Securities surrendered for registration of transfer, exchange,
payment or cancellation and dispose of such Securities in accordance with its
internal policies and customary procedures including delivery of a certificate
describing such Securities disposed (subject to the record retention
requirements of the Exchange Act) or deliver canceled Securities to the Company
pursuant to written direction by one Officer of the Company.  If the Company or any Subsidiary Guarantor
acquires any of the Securities, such acquisition shall not operate as a
redemption or satisfaction of the Indebtedness represented by such Securities
unless and until the same are surrendered to the Trustee for cancellation
pursuant to this Section 2.13. 
The Company may not issue new Securities to replace Securities it has
paid or delivered to the Trustee for cancellation for any reason other than in
connection with a transfer or exchange.


 


At such time as all
beneficial interests in a Global Security have either been exchanged for
Definitive Securities, transferred, redeemed, repurchased or canceled, such
Global Security shall be returned by DTC to the Trustee for cancellation or
retained and canceled by the Trustee.  At
any time prior to such cancellation, if any beneficial interest in a Global
Security is exchanged for Definitive Securities, transferred in exchange for an
interest in another Global Security, redeemed, repurchased or canceled, the
principal amount of Securities represented by such Global Security shall be
reduced and an adjustment shall be made on the books and records of the Trustee
(if it is then the Securities Custodian for such Global Security) with respect
to such Global Security, by the Trustee or the Securities Custodian, to reflect
such reduction.


 


SECTION 2.14.   Payment of Interest; Defaulted Interest.  Interest on any Security which is payable,
and is punctually paid or duly provided for, on any interest payment date shall
be paid to the Person in whose name such Security (or one or more Predecessor
Securities) is registered at the close of business on the regular record date
for such payment at the office or agency of the Company maintained for such
purpose pursuant to Section 2.3.


 


Any interest on any Security which is payable, but
is not paid when the same becomes due and payable and such nonpayment continues
for a period of 30 days shall forthwith cease to be payable to the Holder
on the regular record date, and such defaulted interest and (to the extent
lawful) interest on such defaulted interest at the rate borne by the Securities
(such 


 


58

















 


defaulted interest and interest thereon herein
collectively called “Defaulted Interest”) shall be paid by the Company,
at its election in each case, as provided in clause (a) or (b) below:


 


(a)  The Company may elect to make
payment of any Defaulted Interest to the Persons in whose names the Securities
(or their respective predecessor Securities) are registered at the close of
business on a Special Record Date (as defined below) for the payment of such
Defaulted Interest, which shall be fixed in the following manner.  The Company shall notify the Trustee in
writing of the amount of Defaulted Interest proposed to be paid on each
Security and the date (not less than 30 days after such notice) of the
proposed payment (the “Special Interest Payment Date”), and at the same
time the Company 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 in this
clause provided.  Thereupon the Company
shall fix a record date (the “Special Record Date”) for the payment of
such Defaulted Interest, which date shall be not more than 15 days and not
less than 10 days prior to the Special Interest Payment Date and not less
than 10 days after the receipt by the Trustee of the notice of the proposed
payment.  The Company shall promptly
notify the Trustee of such Special Record Date, and in the name and at the
expense of the Company, the Trustee shall cause notice of the proposed payment
of such Defaulted Interest and the Special Record Date and Special Interest
Payment Date therefor to be given in the manner provided for in Section 12.2,
not less than 10 days prior to such Special Record Date.  Notice of the proposed payment of such
Defaulted Interest and the Special Record Date and Special Interest Payment
Date therefor having been so given, such Defaulted Interest shall be paid on
the Special Interest Payment Date to the Persons in whose names the Securities
(or their respective predecessor Securities) are registered at the close of
business on such Special Record Date and shall no longer be payable pursuant to
the following clause (b).


 


(b)  The Company may make payment
of any Defaulted Interest in any other lawful manner not inconsistent with the
requirements of any securities exchange on which the Securities may be listed,
and upon such notice as may be required by such exchange, if, after notice
given by the Company to the Trustee of the proposed payment pursuant to this
clause, such manner of payment shall be deemed practicable by the Trustee.


 


Subject to the foregoing provisions of this Section 2.14,
each Security delivered under this Indenture upon registration of, transfer of
or in exchange for or in lieu of any other Security shall carry the rights to
interest accrued and unpaid, and to accrue, which were carried by such other
Security.


 


SECTION 2.15.   Computation of Interest.  Interest on the Securities shall be computed
on the basis of a 360-day year of twelve 30-day months.


 


SECTION 2.16.   CUSIP, Common Code and ISIN Numbers.  The Company in issuing the Securities may use
“CUSIP”, “Common Code” and “ISIN” numbers and, if so, the 


 


59

















 


Trustee shall use “CUSIP”,
“Common Code” and “ISIN” numbers in notices of redemption or purchase as a
convenience to Holders; provided, however,
that any such notice may state that no representation is made as to the
correctness of such numbers either as printed on the Securities or as contained
in any notice of a redemption or purchase and that reliance may be placed only
on the other identification numbers printed on the Securities, and any such
redemption or purchase shall not be affected by any defect in or omission of
such CUSIP, Common Code and ISIN numbers. 
The Company shall promptly notify the Trustee in writing of any change
in the CUSIP, Common Code and ISIN numbers.


 


ARTICLE III


 


COVENANTS


 


SECTION 3.1.   Payment of Securities.  The Company shall promptly pay the principal
of, premium, if any, Additional Amounts, if any, and interest (including
Additional Interest) on the Securities on the dates and in the manner provided
in the Securities and in this Indenture. 
Principal, premium, if any, Additional Amounts, if any, and interest
(including Additional Interest) shall be considered paid on the date due if on
such date the Trustee or the Paying Agent holds in accordance with this
Indenture money sufficient to pay all principal, premium, if any, Additional
Amounts, if any, and interest (including Additional Interest) then due and the
Trustee or the Paying Agent, as the case may be, is not prohibited from paying
such money to the Securityholders on that date pursuant to the terms of this
Indenture.


 


The Company shall pay interest on overdue principal
at the rate specified therefor in the Securities, and it shall pay interest on
overdue installments of interest (including Additional Interest) at the same
rate to the extent lawful.


 


Notwithstanding anything to the contrary contained
in this Indenture, the Company may, to the extent it is required to do so by
law, deduct or withhold income or other similar taxes imposed by the United
States of America from principal or interest payments hereunder.


 


SECTION 3.2.   Limitation on Indebtedness.


 


(a) 
The Company will not, and will not permit any of its Restricted Subsidiaries
to, Incur any Indebtedness (including Acquired Indebtedness); provided, however, that the Company and the Subsidiary
Guarantors may Incur Indebtedness if on the date thereof and after giving
effect thereto on a pro forma
basis:


 


(1)           the Consolidated Coverage Ratio for
the Company and its Restricted Subsidiaries is at least 2.00 to 1.00; and


 


(2)           no Default or Event of Default will
have occurred or be continuing or would occur as a consequence of Incurring the
Indebtedness or transactions relating to such Incurrence.


 


60














 


(b) 
Paragraph (a) of this Section 3.2 will not prohibit the
Incurrence of the following Indebtedness:


 


(1)                                  Indebtedness of
the Company or any Subsidiary Guarantor Incurred pursuant to a Credit Facility
in an aggregate amount up to the greater of (a) the Borrowing Base and (b) $60.0
million less the aggregate principal amount of repayments with the proceeds
from Asset Dispositions to the extent required by Section 3.5 to
reduce permanently the revolving commitments under a Credit Facility (and
Guarantees by the Company or its Restricted Subsidiaries in respect of the
Indebtedness Incurred pursuant to this clause (1) under a Credit
Facility);


 


(2)                                  (x) the
Subsidiary Guarantees and other Guarantees by the Company and Subsidiary
Guarantors of Indebtedness Incurred by the Company or a Subsidiary Guarantor in
accordance with the provisions of this Indenture; provided
that in the event such Indebtedness that is being Guaranteed is a Subordinated
Obligation or a Guarantor Subordinated Obligation, then the related Guarantee
shall be subordinated in right of payment to the Securities or the Subsidiary
Guarantee, as the case may be, and (y) other Guarantees of Non-Guarantor
Restricted Subsidiaries of Indebtedness Incurred by Non-Guarantor Restricted
Subsidiaries in accordance with the provisions of this Indenture;


 


(3)                                  Indebtedness of
the Company owing to and held by any Restricted Subsidiary or Indebtedness of a
Restricted Subsidiary owing to and held by the Company or any other Restricted
Subsidiary; provided, however,


 


(A)                               if the Company is the
obligor on such Indebtedness, such Indebtedness is expressly subordinated to
the prior payment in full in cash of all obligations with respect to the
Securities;


 


(B)                                 if a Subsidiary Guarantor is
the obligor on such Indebtedness and the Company or a Subsidiary Guarantor is
not the obligee, such Indebtedness is subordinated in right of payment to the
Subsidiary Guarantees of such Subsidiary Guarantor; and


 


(C)                                 (i)                                   any subsequent issuance or transfer of
Capital Stock or any other event which results in any such Indebtedness being
beneficially held by a Person other than the Company or a Restricted Subsidiary
of the Company; and


 


(ii)                                  any sale or other transfer
of any such Indebtedness to a Person other than the Company or a Restricted
Subsidiary of the Company


 


shall be deemed, in each case, to constitute an
Incurrence of such Indebtedness by the Company or such Subsidiary, as the case
may be.


 


(4)                                  Indebtedness represented by (A) the
Securities issued on the Issue Date, the Subsidiary Guarantees and the Exchange
Securities and exchange guarantees issued pursuant to the Registration Rights
Agreement, (B) any Indebtedness (other than the Indebtedness described in
clauses (1), (2), (3), (5), (7), (8) and (9) of this Section 3.2(b))



 


61

















 


outstanding on the Issue
Date and (C) any Refinancing Indebtedness Incurred in respect of any
Indebtedness described in this clause (4) of Section 3.2(b) or
Incurred pursuant to Section 3.2(a);


 


(5)                                  Indebtedness
under Hedging Obligations that are Incurred in the ordinary course of business
(and not for speculative purposes) (A) for the purpose of fixing or
hedging interest rate risk with respect to any Indebtedness Incurred in
accordance with this Indenture; (B) for the purpose of fixing or hedging
currency exchange rate risk with respect to any currency exchanges; or (C) for
the purpose of fixing or hedging commodity price risk with respect to any
commodities;


 


(6)                                  the Incurrence
by the Company or any of the Subsidiary Guarantors of Indebtedness represented
by Capitalized Lease Obligations, mortgage financings, purchase money
obligations or other payments, in each case Incurred to finance all or any part
of the purchase price, lease or cost of construction or improvement of assets
or property (other than Capital Stock or other Investments) acquired,
constructed or improved in the ordinary course of business of the Company or
such Subsidiary Guarantor, and Attributable Indebtedness, in an aggregate
principal amount, including all Refinancing Indebtedness Incurred to refund,
defease, renew, extend, refinance or replace any Indebtedness Incurred pursuant
to this clause (6), not to exceed the greater of $20.0 million and 5.0% of
Consolidated Net Tangible Assets of the Company at any time outstanding;


 


(7)                                  Indebtedness
Incurred in respect of workers’ compensation claims, self-insurance
obligations, performance, surety and similar bonds and completion guarantees
provided by the Company or a Restricted Subsidiary in the ordinary course of
business;


 


(8)                                  Indebtedness
arising from agreements of the Company or a Restricted Subsidiary 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 Capital Stock of a Restricted Subsidiary; provided that
the maximum aggregate liability in respect of all such Indebtedness shall at no
time exceed the gross proceeds actually received by the Company and its Restricted
Subsidiaries in connection with such disposition;


 


(9)                                  Indebtedness
arising from the honoring by a bank or other financial institution of a check,
draft or similar instrument (except in the case of daylight overdrafts) drawn
against insufficient funds in the ordinary course of business; provided, however, that such Indebtedness is extinguished
within five Business Days of Incurrence;


 


(10)                            Indebtedness
evidenced by promissory notes constituting Subordinated Obligations issued in
connection with a Restricted Payment permitted pursuant to Section 3.3(b)(6)(A);
and


 


(11)                            in addition to
the items referred to in clauses (1) through (10) above of this Section 3.2(b),
Indebtedness of the Company and the Subsidiary Guarantors in an aggregate
outstanding principal amount which, when taken together with the principal 


 


62

















 


amount
of all other Indebtedness Incurred pursuant to this clause (11) of Section 3.2(b) and
then outstanding, will not exceed $30.0 million at any time outstanding.


 


The Company will not Incur any Indebtedness under
this Section 3.2(b) if the proceeds thereof are used, directly
or indirectly, to refinance any Subordinated Obligations of the Company unless
such Indebtedness will be subordinated to the Securities to at least the same
extent as such Subordinated Obligations. 
No Subsidiary Guarantor will Incur any Indebtedness under this Section 3.2(b) if
the proceeds thereof are used, directly or indirectly, to refinance any
Guarantor Subordinated Obligations of such Subsidiary Guarantor unless such
Indebtedness will be subordinated to the obligations of such Subsidiary
Guarantor under its Subsidiary Guarantee to at least the same extent as such
Guarantor Subordinated Obligations.  No
Restricted Subsidiary (other than a Subsidiary Guarantor) may Incur any
Indebtedness if the proceeds are used to refinance Indebtedness of the Company
or a Subsidiary Guarantor.


 


(c) 
For purposes of determining compliance with, and the outstanding principal
amount of any particular Indebtedness Incurred pursuant to and in compliance
with, this Section 3.2:


 


(1)                                  subject to
clause (2) below, in the event that Indebtedness meets the criteria of
more than one of the types of Indebtedness described in clauses (a) and (b) of
this Section 3.2, the Company, in its sole discretion, will
classify such item of Indebtedness on the date of Incurrence and may later
reclassify such item of Indebtedness in any manner that complies with this Section 3.2
and only be required to include the amount and type of such Indebtedness in one
of such clauses;


 


(2)                                  all
Indebtedness outstanding on the Issue Date under the Working Capital Facility
shall be deemed Incurred under Section 3.2(b)(1) and not Section 3.2(a) or
Section 3.2(b)(4);


 


(3)                                  Guarantees of,
or obligations in respect of letters of credit relating to, Indebtedness which
is otherwise included in the determination of a particular amount of
Indebtedness shall not be included;


 


(4)                                  if obligations
in respect of letters of credit are Incurred pursuant to a Credit Facility and
are being treated as Incurred pursuant to Section 3.2(b)(1) and
the letters of credit relate to other Indebtedness, then such other
Indebtedness shall not be included;


 


(5)                                  the principal
amount of any Disqualified Stock of the Company or a Restricted Subsidiary, or
Preferred Stock of a Restricted Subsidiary that is not a Subsidiary Guarantor,
will be equal to the greater of the maximum mandatory redemption or repurchase
price (not including, in either case, any redemption or repurchase premium) or
the liquidation preference thereof;


 


(6)                                  Indebtedness
permitted by this Section 3.2 need not be permitted solely by
reference to one provision permitting such Indebtedness but may be permitted in
part by one such provision and in part by one or more other provisions of this Section 3.2
permitting such Indebtedness;


 


63

















 


(7)                                  the principal
amount of any Indebtedness outstanding in connection with a securitization
transaction or series of transactions is the amount of obligations outstanding
under the legal documents entered into as part of such transaction that would
be characterized as principal if such transaction were structured as a secured
lending transaction rather than as a purchase relating to such transaction; and


 


(8)                                  the amount of
Indebtedness issued at a price that is less than the principal amount thereof
will be equal to the amount of the liability in respect thereof determined in
accordance with GAAP.


 


Accrual of interest, accrual of dividends, the
accretion of accreted value, the amortization of debt discount, the payment of
interest in the form of additional Indebtedness and the payment of dividends in
the form of additional shares of Preferred Stock or Disqualified Stock will not
be deemed to be an Incurrence of Indebtedness for purposes of this Section 3.2.  The amount of any Indebtedness outstanding as
of any date shall be (i) the accreted value thereof in the case of any
Indebtedness issued with original issue discount and (ii) the principal
amount or liquidation preference thereof, together with any interest thereon
that is more than 30 days past due, in the case of any other Indebtedness.


 


In addition, the Company will not permit any of its
Unrestricted Subsidiaries to Incur any Indebtedness or issue any shares of
Disqualified Stock, other than Non-Recourse Debt.  If at any time an Unrestricted Subsidiary
becomes a Restricted Subsidiary, any Indebtedness of such Subsidiary shall be deemed
to be Incurred by a Restricted Subsidiary as of such date (and, if such
Indebtedness is not permitted to be Incurred as of such date under this Section 3.2,
the Company shall be in Default under this Section 3.2).


 


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
Indebtedness, or first committed, in the case of revolving credit Indebtedness;
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-dominated restriction
to be exceeded if calculated at the relevant currency exchange rate in effect
on the date of such refinancing, such U.S. dollar-dominated restriction shall
be deemed not to have been exceeded so long as the principal amount of such
Refinancing Indebtedness does not exceed the principal amount of such
Indebtedness being refinanced. 
Notwithstanding any other provision of this Section 3.2, the
maximum amount of Indebtedness that the Company may Incur pursuant to this Section 3.2
shall not be deemed to be exceeded solely as a result of fluctuations in the
exchange rate of currencies.  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 Refinancing Indebtedness is denominated that is in
effect on the date of such refinancing.


 


SECTION 3.3.   Limitation on Restricted Payments.  (a)  The Company will not, and will not
permit any of its Restricted Subsidiaries, directly or indirectly, to:


 


64

















 


(1)                                  declare or pay
any dividend or make any distribution (whether made in cash, securities or
other property) on or in respect of its Capital Stock (including any payment in
connection with any merger or consolidation involving the Company or any of its
Restricted Subsidiaries) except:


 


(A)                               dividends or distributions
payable in Capital Stock of the Company (other than Disqualified Stock) or in
options, warrants or other rights to purchase such Capital Stock of the
Company; and


 


(B)                                 dividends or distributions
payable to the Company or another Restricted Subsidiary (and if such Restricted
Subsidiary is not a Wholly-Owned Subsidiary, to its other holders of common
Capital Stock on a pro rata basis);


 


(2)                                  purchase,
redeem, retire or otherwise acquire for value any Capital Stock of the Company
or any direct or indirect parent of the Company held by Persons other than the
Company or a Restricted Subsidiary (other than in exchange for Capital Stock of
the Company (other than Disqualified Stock));


 


(3)                                  purchase,
repurchase, redeem, defease or otherwise acquire or retire for value, prior to
scheduled maturity, scheduled repayment or scheduled sinking fund payment, any
Subordinated Obligations or Guarantor Subordinated Obligations (other than (x) Indebtedness
of the Company owing to and held by any Subsidiary Guarantor or Indebtedness of
a Subsidiary Guarantor owing to and held by the Company or any other Subsidiary
Guarantor permitted under Section 3.2(b)(3) or (y) the
purchase, repurchase, redemption, defeasance or other acquisition or retirement
of Subordinated Obligations or Guarantor Subordinated Obligations 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, redemption, defeasance or other acquisition or retirement); or


 


(4)                                  make any
Restricted Investment in any Person;


 


(any such dividend, distribution, purchase,
redemption, repurchase, defeasance, other acquisition, retirement or Restricted
Investment referred to in clauses (1) through (4) shall be
referred to herein as a “Restricted Payment”), if at the time the
Company or such Restricted Subsidiary makes such Restricted Payment:


 


(a)                                  a Default shall
have occurred and be continuing (or would result therefrom); or


 


(b)                                 the Company is
not able to Incur an additional $1.00 of Indebtedness pursuant to Section 3.2(a) after
giving effect, on a pro forma basis, to such Restricted Payment; or


 


(c)                                  the aggregate
amount of such Restricted Payment and all other Restricted Payments declared or
made subsequent to the Issue Date (excluding 


 


65

















 


Restricted
Payments made pursuant to clauses (1), (2), (3), (4),
(7), (8), (9), (10) and (12) of Section 3.3(b))
would exceed the sum of:


 


(i)                                     50% of Consolidated Net
Income for the period (treated as one accounting period) from the Issue Date to
the end of the most recent fiscal quarter ending prior to the date of such
Restricted Payment for which financial statements are in existence (or, in case
such Consolidated Net Income is a deficit, minus 100% of such deficit);


 


(ii)                                  100% of the aggregate Net
Cash Proceeds received by the Company from the issue or sale of its Capital
Stock (other than Disqualified Stock) or other capital contributions subsequent
to the Issue Date (other than Net Cash Proceeds received from an issuance or
sale of such Capital Stock to a Subsidiary of the Company or an employee stock
ownership plan, option plan or similar trust to the extent such sale to an
employee stock ownership plan or similar trust is financed by loans from or
Guaranteed by the Company or any Restricted Subsidiary unless such loans have
been repaid with cash on or prior to the date of determination);


 


(iii)                               the amount by which
Indebtedness of the Company or its Restricted Subsidiaries is reduced on the
Company’s balance sheet upon the conversion or exchange (other than by a
Subsidiary of the Company) subsequent to the Issue Date of any Indebtedness of
the Company or its Restricted Subsidiaries convertible or exchangeable for
Capital Stock (other than Disqualified Stock) of the Company or Holdings (less
the amount of any cash, or the fair market value of any other property,
distributed by the Company upon such conversion or exchange);


 


(iv)                              the amount by which the
Disqualified Stock of the Company or its Restricted Subsidiaries is reduced on
the Company’s balance sheet upon the conversion or exchange (other than by a
Subsidiary of the Company) subsequent to the Issue Date of any Disqualified
Stock of the Company or its Restricted Subsidiaries convertible or exchangeable
for Capital Stock (other than Disqualified Stock) of the Company or Holdings
(less the amount of any cash, or the fair market value of any other property,
distributed by the Company upon such conversion or exchange); and


 


(v)                                 the amount equal to the net
reduction in Restricted Investments made by the Company or any of its
Restricted Subsidiaries in any Person resulting from:


 


(A)                           repurchases or redemptions of
such Restricted Investments by such Person, proceeds realized upon the sale of
such Restricted Investment to an unaffiliated purchaser, repayments of loans or
advances or other transfers of assets (including by way of dividend or
distribution) by such Person to the Company or any Restricted Subsidiary; or


 


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(B)                             the redesignation of
Unrestricted Subsidiaries as Restricted Subsidiaries (valued in each case as
provided in the definition of “Investment”) not to exceed, in the case of any
Unrestricted Subsidiary, the amount of Investments previously made by the
Company or any Restricted Subsidiary in such Unrestricted Subsidiary,


 


which amount in each case under this clause (v) was
included in the calculation of the amount of Restricted Payments; provided, however, that no amount will be included under this
clause (v) to the extent it is already included in Consolidated Net
Income.


 


(b) 
The provisions of the preceding paragraph (a) will not prohibit:


 


(1)                                  any purchase,
repurchase, redemption, defeasance or other acquisition or retirement of
Capital Stock, Disqualified Stock or Subordinated Obligations of the Company or
Guarantor Subordinated Obligations of any Subsidiary Guarantor made by exchange
for, or out of the proceeds of the substantially concurrent sale of, Capital
Stock of the Company or Holdings (to the extent that Holdings contributes the
proceeds of such substantially concurrent sale to the Company as common equity
capital) (other than Disqualified Stock and other than Capital Stock issued or
sold to a Subsidiary or an employee stock ownership plan or similar trust to
the extent such sale to an employee stock ownership plan or similar trust is
financed by loans from or Guaranteed by the Company or any Restricted
Subsidiary unless such loans have been repaid with cash on or prior to the date
of determination); provided, however, that
the Net Cash Proceeds from such transaction will be excluded from clause (c)(ii) of
the preceding paragraph;


 


(2)                                  any purchase,
repurchase, redemption, defeasance or other acquisition or retirement of
Subordinated Obligations of the Company or Guarantor Subordinated Obligations
of any Subsidiary Guarantor made by exchange for, or out of the proceeds of the
substantially concurrent sale of, Subordinated Obligations of the Company or
any purchase, repurchase, redemption, defeasance or other acquisition or
retirement of Guarantor Subordinated Obligations made by exchange for, or out
of the proceeds of the substantially concurrent sale of, Guarantor Subordinated
Obligations that, in each case, is permitted to be Incurred pursuant to Section 3.2
and that in each case constitutes Refinancing Indebtedness;


 


(3)                                  any purchase,
repurchase, redemption, defeasance or other acquisition or retirement of
Disqualified Stock of the Company or a Restricted Subsidiary made by exchange
for, or out of the proceeds of the substantially concurrent sale of,
Disqualified Stock of the Company or such Restricted Subsidiary, as the case
may be, that, in each case, is permitted to be Incurred pursuant to Section 3.2
and that in each case constitutes Refinancing Indebtedness;


 


(4)                                  so long as no
Default or Event of Default has occurred and is continuing, any purchase or
redemption of Subordinated Obligations or Guarantor Subordinated 


 


67

















 


Obligations of a Subsidiary
Guarantor from Net Available Cash to the extent permitted under Section 3.5
below;


 


(5)                                  dividends paid
within 60 days after the date of declaration if at such date of
declaration such dividend would have complied with this provision;


 


(6)                                  so long as no
Default or Event of Default has occurred and is continuing,


 


(A)                            the purchase,
redemption or other acquisition, cancellation or retirement for value of
Capital Stock, or options, warrants, equity appreciation rights or other rights
to purchase or acquire Capital Stock of the Company or any Restricted
Subsidiary or any direct or indirect parent of the Company held by any existing
or former employees, management or stockholders of the Company or Holdings or
any Subsidiary of the Company or their assigns, estates or heirs, or cash
dividends distributed to Holdings or any other parent of the Company for the
purpose of consummating such purchase, redemption or other acquisition,
cancellation or retirement for value, in each case in connection with the repurchase
provisions under employee stock option or stock purchase agreements or other
agreements to compensate management employees; provided
that such Capital Stock, or options, warrants, equity appreciation rights or
other rights to purchase or acquire Capital Stock, were received for services
related to, or for the benefit of, the Company and its Restricted Subsidiaries;
and provided further that such
redemptions or repurchases pursuant to this clause will not exceed (x) $2.0
million in the aggregate during any calendar year (with any unused amounts in
any calendar year being carried over to the immediately succeeding calendar
year subject to a maximum of $4.0 million in any calendar year), plus the
amount of any capital contributions to the Company as a result of sales of
Capital Stock, or options, warrants, equity appreciation rights or other rights
to purchase or acquire Capital Stock, of the Company or any direct or indirect
parent of the Company to such persons (provided, however, that the Net Cash Proceeds from
such sale of Capital Stock will be excluded from Section 3.3(a)(4)(c)(ii)),
less any cash used to prepay promissory notes pursuant to clause (y) and (y) $2.0
million in the aggregate during any calendar year (with any unused amounts in
any calendar year being carried over to the immediately succeeding calendar
year subject to a maximum of $4.0 million in any calendar year) represented by
promissory notes constituting Subordinated Obligations with a Stated Maturity
after the date that is 91 days after the date that is the Stated Maturity of
the Securities, which promissory notes may be prepaid in an aggregate amount
during any calendar year up to any cash amount not used pursuant to clause (x) in
such calendar year; and


 


68

















 


(B)                              loans or
advances to employees, officers or directors of the Company or Holdings or any
Subsidiary of the Company, the proceeds of which are used to purchase Capital
Stock of the Company or Holdings, in an aggregate amount not in excess of $1.0
million with respect to all loans or advances made since the Issue Date
(without giving effect to the forgiveness of any such loan); provided, however,
that the Company and its Subsidiaries shall comply in all material respects
with the provisions of the Sarbanes Oxley Act of 2002 and the rules and
regulations promulgated in connection therewith relating to such loans and
advances as if the Company had filed a registration statement with the SEC;


 


(7)                                  so long as no
Default or Event of Default has occurred and is continuing, the declaration and
payment of dividends to holders of any class or series of Disqualified Stock of
the Company issued in accordance with the terms of this Indenture to the extent
such dividends are included in the definition of “Consolidated Interest Expense”;


 


(8)                                  repurchases of
Capital Stock deemed to occur upon the exercise of stock options, warrants or
other convertible securities if such Capital Stock represents a portion of the
exercise price thereof;


 


(9)                                  so long as no
Default or Event of Default shall have occurred and be continuing, cash
dividends to Holdings in an amount sufficient to enable Holdings to make
payments of cash interest required to be made in respect of Indebtedness of
Holdings that has been Guaranteed by the Company in accordance with the terms
of this Indenture; provided that
the net cash proceeds of such Indebtedness were contributed to the Company and
such Indebtedness is considered Indebtedness of the Company for all purposes,
including for purposes of calculating Consolidated Interest Expense and
Consolidated Net Income, and Holdings is otherwise unable to pay such interest
and such dividends are applied directly to the payment of such interest;


 


(10)                            cash dividends,
distributions, loans or other transfers to Holdings in amounts equal to:


 


(a)                                  the amounts
required for Holdings to pay any foreign, federal, state or local income taxes
to the extent that such income taxes are directly attributable to the income of
Holdings, the Company and its Restricted Subsidiaries and, to the extent of
amounts actually received from Unrestricted Subsidiaries, in amounts required
to pay such taxes to the extent attributable to the income of the Unrestricted
Subsidiaries;


 


(b)                                 the amounts
required for Holdings to pay franchise taxes and other fees required to
maintain its legal existence;


 


(c)                                  an amount not
to exceed $1.0 million in any fiscal year to permit Holdings to pay its
corporate overhead expenses Incurred in the ordinary course of 


 


69

















 


business,
and to pay salaries or other compensation of employees who perform services for
both Holdings and the Company;


 


(11)                            the purchase,
repurchase, redemption, defeasance or other acquisition or retirement for value
of any Subordinated Obligation (i) at a purchase price not greater than
101% of the principal amount of such Subordinated Obligation in the event of a
Change of Control in accordance with provisions similar to Section 3.10
or (ii) at a purchase price not greater than 100% of the principal amount
thereof in accordance with provisions similar to Section 3.5; provided that, prior to or simultaneously with such
purchase, repurchase, redemption, defeasance or other acquisition or
retirement, the Company has made the Change of Control Offer, Collateral
Disposition Offer or Asset Disposition Offer, as applicable, as provided in
such Section 3.5 or 3.10 with respect to the Securities and
has completed the repurchase or redemption of all Securities validly tendered
for payment in connection with such Change of Control Offer, Collateral
Disposition Offer or Asset Disposition Offer;


 


(12)                            a Restricted
Investment either (i) solely in exchange for shares of Capital Stock
(other than Disqualified Stock) of the Company or (ii) through the
application of the Net Cash Proceeds of the substantially concurrent sale of
Capital Stock (other than Disqualified Stock) of the Company or Holdings (to
the extent that Holdings contributes the proceeds of such substantially
concurrent sale to the Company as common equity capital); provided, that the Net Cash Proceeds from
such sale of Capital Stock will be excluded from clause (c)(ii) of the
preceding paragraph;


 


(13)                            so long as no
Default or Event of Default shall have occurred and be continuing or would
exist after giving effect thereto, the declaration or payment of dividends on
the Company’s Common Stock (or dividends, distributions or advances to Holdings
to allow Holdings to pay dividends on Holdings’ Common Stock) following the
first public offering of the Company’s Common Stock (or of Holdings’ Common
Stock, as the case may be) after the Issue Date, of, whichever is earlier, (i) in
the case of the first public offering of the Company’s Common Stock, up to 6%
per annum of the Net Cash Proceeds received by the Company in such public
offering or (ii) in the case of the first public offering of Holdings’
Common Stock, up to 6% per annum of the amount contributed by Holdings to the
Company from the Net Cash Proceeds received by Holdings in such public
offering, in each case, other than public offerings of the Company or Holdings’
Common Stock registered on Form S-4 or Form S-8;


 


(14)                            cash payment in
an amount not to exceed $2.5 million in lieu of issuance of fractional shares
in connection with the exercise of warrants, options or other securities
convertible into or exchangeable for the Capital Stock of the Company or a
Restricted Subsidiary;


 


(15)                            so long as no
Default or Event of Default shall have occurred and be continuing or would
exist after giving effect thereto, Restricted Payments in an amount not to
exceed $10.0 million in the aggregate since the Issue Date;


 


70














 


(16)         so long as no Default or Event of Default shall
have occurred and be continuing, cash dividends (the “Contingent Payment
Distributions”) to Holdings in order to permit Holdings to make contingent
payments to former stockholders of Holdings as additional consideration for the
merger of Cellu Acquisition Corporation with and into Holdings pursuant to the
terms of the Merger Agreement, dated as of May 8, 2006, among Cellu Parent
Corporation, Cellu Acquisition Corporation and Holdings and to permit Holdings
to make other payments in respect of adjustments to the merger consideration
specified in such Merger Agreement; provided that
the aggregate amount of Contingent Payment Distributions shall not exceed $20.0
million; and


 


(17)         so long as no Default or Event of Default shall
have occurred and be continuing, cash dividends to Holdings in order to permit
Holdings to repay the promissory note by the Company to Atlantic Paper &
Foil Corp. of N.Y., dated as of July 2, 2008, in an amount not to exceed
$6.3 million.


 


The amount of all Restricted Payments (other
than cash) shall be the fair market value on the date of such Restricted
Payment of the asset(s) or securities proposed to be paid, transferred or
issued by the Company or such Restricted Subsidiary, as the case may be,
pursuant to such Restricted Payment.  The
fair market value of any cash Restricted Payment shall be its face amount, and
any non-cash Restricted Payment shall be determined conclusively by the Board of
Directors of the Company acting in good faith whose resolution with respect
thereto shall be delivered to the Trustee, such determination to be based upon
an opinion or appraisal issued by an accounting, appraisal or investment
banking firm of national standing if such fair market value is estimated in
good faith by the Board of Directors of the Company to exceed $5.0
million.  Not later than the date of
making of any Restricted Payment, the Company shall deliver to the Trustee an
Officers’ Certificate stating that such Restricted Payment is permitted and
setting forth the basis upon which the calculations required by Section 3.2
were computed, together with a copy of any fairness opinion or appraisal
required by this Indenture.


 


As used herein, “substantially concurrent
sale” shall mean any sale within 45 days prior to the specified event.


 


SECTION 3.4.   Limitation on Restrictions on
Distributions from Restricted Subsidiaries. 
The Company will not, and will not permit any Restricted Subsidiary to,
create or otherwise cause or permit to exist or become effective any consensual
encumbrance or consensual restriction on the ability of any Restricted
Subsidiary to:


 


(1)           pay
dividends or make any other distributions on its Capital Stock or pay any
Indebtedness or other obligations owed to the Company or any Restricted
Subsidiary (it being understood that the priority of any Preferred Stock in
receiving dividends or liquidating distributions prior to dividends or
liquidating distributions being paid on Common Stock shall not be deemed a
restriction on the ability to make distributions on Capital Stock);


 


(2)           make
any loans or advances to the Company or any Restricted Subsidiary (it being
understood that the subordination of loans or advances made to the Company or
any


 


71

















 


Restricted
Subsidiary to other Indebtedness Incurred by the Company or any Restricted
Subsidiary shall not be deemed a restriction on the ability to make loans or
advances); or


 


(3)           transfer
any of its property or assets to the Company or any Restricted Subsidiary (it
being understood that such transfers shall not include any type of transfer
described in clause (1) or (2) above).


 


The preceding provisions will not prohibit:


 


(i)            any encumbrance or
restriction pursuant to an agreement in effect at or entered into on the Issue
Date and identified in Schedule 3.4 to this Indenture, including,
without limitation, this Indenture, the Collateral Documents, the Securities,
the Exchange Securities, the Subsidiary Guarantees and the Working Capital
Facility (and related documentation) in effect on such date;


 


(ii)           any encumbrance or
restriction with respect to a Restricted Subsidiary pursuant to an agreement
relating to any Capital Stock or Indebtedness Incurred by a Restricted
Subsidiary on or before the date on which such Restricted Subsidiary was
acquired by the Company or a Restricted Subsidiary (other than Capital Stock or
Indebtedness Incurred as consideration in, or to provide all or any portion of
the funds utilized to consummate, the transaction or series of related
transactions pursuant to which such Restricted Subsidiary became a Restricted
Subsidiary or was acquired by the Company or in contemplation of the
transaction) and outstanding on such date; provided, that
any such encumbrance or restriction shall not extend to any assets or property
of the Company or any other Restricted Subsidiary other than the assets and
property so acquired and that, in the case of Indebtedness, was permitted to be
Incurred pursuant to this Indenture;


 


(iii)          any encumbrance or
restriction with respect to a Restricted Subsidiary pursuant to an agreement
effecting a refunding, replacement or refinancing of Indebtedness Incurred
pursuant to an agreement referred to in clause (i) or (ii) of
this paragraph or this clause (iii) or contained in any amendment,
restatement, modification, renewal, supplement, refunding, replacement or
refinancing of an agreement referred to in clause (i) or (ii) of
this paragraph or this clause (iii); provided, however,
that the encumbrances and restrictions with respect to such Restricted
Subsidiary contained in any such agreement are no less favorable in any
material respect, taken as a whole, to the Holders of the Securities than the
encumbrances and restrictions contained in such agreements referred to in
clauses (i) or (ii) of this paragraph on the Issue Date or the
date such Restricted Subsidiary became a Restricted Subsidiary or was merged
into a Restricted Subsidiary, whichever is applicable;


 


(iv)          in the case of Section 3.4(3),
any encumbrance, lien or restriction:


 


72

















 


(a)    that restricts in a customary
manner the subletting, assignment or transfer of any property or asset that is
subject to a lease, license or similar contract, or the assignment or transfer
of any such lease, license or other contract;


 


(b)    contained in mortgages, pledges
or other security agreements otherwise permitted under this Indenture securing
Indebtedness of the Company or a Restricted Subsidiary to the extent such
encumbrances or restrictions restrict the transfer of the property subject to
such mortgages, pledges or other security agreements; or


 


(c)    pursuant to customary provisions
restricting dispositions of real property interests set forth in any reciprocal
easement agreements of the Company or any Restricted Subsidiary;


 


(v)           (a)  purchase money
obligations for property acquired in the ordinary course of business and (b) Capitalized
Lease Obligations permitted under this Indenture, in each case, that impose
encumbrances or restrictions of the nature described in Section 3.4(3) on
the property so acquired;


 


(vi)          any restriction with
respect to a Restricted Subsidiary (or any of its property or assets) imposed
pursuant to an agreement entered into for the direct or indirect sale or
disposition of the Capital Stock or assets of such Restricted Subsidiary (or
the property or assets that are subject to such restriction) pending the
closing of such sale or disposition;


 


(vii)         any customary provisions
in joint venture agreements relating to joint ventures that are not Restricted
Subsidiaries and other similar agreements entered into in the ordinary course
of business;


 


(viii)        deposits or net worth
provisions in leases and other agreements entered into by the Company or any
Restricted Subsidiary in the ordinary course of business;


 


(ix)           encumbrances or
restrictions arising or existing by reason of applicable law or any applicable
rule, regulation or order;


 


(x)            encumbrances or
restrictions contained in indentures or debt instruments or other debt
arrangements Incurred or Preferred Stock issued by Subsidiary Guarantors in
accordance with Section 3.2 that are not more restrictive, taken as
a whole, than those applicable to the Company in either this Indenture or the
Working Capital Facility on the Issue Date (which result in encumbrances or
restrictions comparable to those applicable to the Company at a Restricted
Subsidiary level); and


 


(xi)           encumbrances or
restrictions contained in indentures or debt instruments or other debt
arrangements Incurred or Preferred Stock issued by


 


73

















 


Restricted Subsidiaries subsequent to the
Issue Date and permitted pursuant to Section 3.2; provided that such encumbrances and restrictions contained
in any agreement or instrument will not materially affect the Company’s ability
to make anticipated principal or interest payments on the Securities (as
determined in good faith by the Board of Directors of the Company).


 


SECTION 3.5.   Limitation on Sales of Assets and
Subsidiary Stock.  (a) The
Company will not, and will not permit any of its Restricted Subsidiaries to,
make any Asset Disposition of Collateral unless:


 


(1)           the
Company or such Restricted Subsidiary, as the case may be, receives
consideration at least equal to the fair market value (such fair market value
to be determined on the date of contractually agreeing to such Asset
Disposition), as determined in good faith by the Board of Directors (including
as to the value of all non-cash consideration), of the Collateral subject to
such Asset Disposition;


 


(2)           at
least 80% of the consideration from such Asset Disposition received by the
Company or such Restricted Subsidiary, as the case may be, is in the form of
cash or Cash Equivalents and 100% of the Net Available Cash therefrom is
deposited directly by the Company into the Collateral Account; and


 


(3)           the
remaining consideration from such Asset Disposition that is not in the form of
cash or Cash Equivalents is thereupon with its acquisition pledged as First
Priority Collateral to secure the Securities, in the case of an Asset
Disposition of First Priority Collateral, or as Second Priority Collateral, in
the case of an Asset Disposition of Second Priority Collateral.


 


Any Net Available Cash deposited into the
Collateral Account from any Asset Dispositions of First Priority Collateral,
Recovery Events (as described below) or Asset Swaps involving the transfer of
Collateral (as described in Section 3.5(d) below) may be withdrawn
by the Company to be invested by the Company in Additional Assets within 360
days of the date of such Asset Disposition, Recovery Event or Asset Swap, which
Additional Assets are thereupon with their acquisition added to the First
Priority Collateral securing the Securities; provided that
if during such 360-day period the Company or such Restricted Subsidiary (x) enters
into a written agreement committing it to apply such Net Available Cash in
accordance with the requirements of this paragraph after such 360-day period or
(y) has begun construction of such Additional Assets using such Net
Available Cash and delivers an Officers’ Certificate to the Trustee certifying
that such Net Available Cash has been budgeted toward such construction, then
such 360-day period will be extended with respect to the amount of Net
Available Cash so committed or so budgeted for a period, in each case not to
exceed 180 days, until such Net Available Cash is required to be applied in
accordance with such agreement (or, if earlier, until termination of such
agreement) or has been applied toward such construction, as the case may
be.  In the case of an Asset
Disposition of Second Priority Collateral, any Net Available Cash will be
deposited in accordance with the Intercreditor Agreement.


 


74

















 


All of the Net Available Cash received by the
Company or such Restricted Subsidiary, as the case may be, from any Recovery
Event shall be deposited directly into the Collateral Account and may be
withdrawn by the Company or such Restricted Subsidiary to be invested in
Additional Assets (which may include performance of a Restoration of the
affected Collateral) in accordance with the preceding paragraph within 360 days
of the date of such Recovery Event, or such later date if the period is
extended as described above in this Section 3.5(a).


 


Any Net Available Cash from Asset
Dispositions of Collateral, Asset Swaps involving the transfer of Collateral or
Recovery Events that are not applied or invested as provided in this Section 3.5(a) or
in accordance with the Collateral Documents will be deemed to constitute “Excess
Collateral Proceeds.”  On the 361st
day after an Asset Disposition, Asset Swap or Recovery Event pursuant to this Section 3.5(a),
or such later date if the period is extended as described above, if the
aggregate amount of Excess Collateral Proceeds exceeds $8.0 million, the
Company will be required to make an offer (“Collateral Disposition Offer”)
to all Holders of Securities to purchase the maximum principal amount of
Securities to which the Collateral Disposition Offer applies that may be
purchased out of the Excess Collateral Proceeds, at an offer price in cash in
an amount equal to 100% of the principal amount of the Securities plus accrued
and unpaid interest to the date of purchase, in accordance with the procedures
set forth in this Indenture in denominations of $2,000 and integral multiples
of $1,000 in excess thereof; provided,
however, that to the extent the
Excess Collateral Proceeds relate to Asset Dispositions of Second Priority
Collateral, the Company may, prior to making a Collateral Disposition Offer,
make a mandatory prepayment with respect to the maximum principal amount of
Indebtedness that is secured by such Collateral on a first-priority basis that
may be prepaid out of such Excess Collateral Proceeds, at a price in cash in an
amount equal to 100% of the principal amount of such Indebtedness, plus accrued
and unpaid interest to the date of prepayment, with any Excess Collateral
Proceeds not used to prepay such Indebtedness offered to Holders of Securities
in accordance with this paragraph. To the extent that the aggregate amount of
Securities (and such other Indebtedness in the case of an Asset Disposition of
Second Priority Collateral) so validly tendered and not properly withdrawn
pursuant to a Collateral Disposition Offer is less than the Excess Collateral
Proceeds, the Company may use any remaining Excess Collateral Proceeds for
general corporate purposes, subject to other covenants contained in this
Indenture.   If the aggregate principal
amount of Securities surrendered by Holders thereof exceeds the amount of
Excess Collateral Proceeds as set forth in an Officers’ Certificate, the
Trustee shall select the Securities to be purchased on a pro rata basis on the
basis of the aggregate principal amount of tendered Securities (with such
adjustments as may be deemed appropriate by the Trustee so that only Securities
in denominations of $2,000 or integral 
multiples of $1,000 in excess thereof shall be purchased).  Upon completion of such Collateral
Disposition Offer, the amount of Excess Collateral Proceeds shall be reset at
zero.


 


(b)  The Company will not, and will not permit any of its
Restricted Subsidiaries to, make any Asset Disposition (other than an Asset
Disposition of Collateral) unless:


 


(1)   the Company or such Restricted Subsidiary, as the
case may be, receives consideration at least equal to the fair market value
(such fair market value to be determined on the date of contractually agreeing
to such Asset Disposition), as 


 


75

















 


determined in good faith by the Board of Directors (including as to the
value of all non-cash consideration), of the shares and assets subject to such
Asset Disposition;


 


(2)   at least 80% of the consideration from such Asset
Disposition received by the Company or such Restricted Subsidiary, as the case
may be, is in the form of cash or Cash Equivalents; and


 


(3)   an amount equal to 100% of the Net Available Cash
from such Asset Disposition is applied by the Company or such Restricted
Subsidiary, as the case may be:


 


(A)        first,
to the extent the Company or any Restricted Subsidiary, as the case may be,
elects (or is required by the terms of any Indebtedness), to prepay, repay,
purchase, repurchase, redeem, retire, defease or otherwise acquire Indebtedness
of the Company (other than any Disqualified Stock or Subordinated Obligations)
or Indebtedness of a Restricted Subsidiary (other than any Disqualified Stock
or Guarantor Subordinated Obligations) (in each case other than Indebtedness
owed to the Company or an Affiliate of the Company) within 360 days from
the later of the date of such Asset Disposition or the receipt of such Net
Available Cash; provided, however, that, in
connection with any prepayment, repayment, purchase, repurchase, redemption,
retirement, defeasance or other acquisition of Indebtedness pursuant to this
clause (A), the Company or such Restricted Subsidiary will retire such Indebtedness
and will cause the related commitment (if any) to be permanently reduced in an
amount equal to the principal amount so prepaid, repaid, purchased,
repurchased, redeemed, retired, defeased or otherwise acquired; and


 


(B)         second,
to the extent of the balance of such Net Available Cash after application in
accordance with clause (A), to the extent the Company or such Restricted
Subsidiary elects, to invest in Additional Assets within 360 days of the
date of such Asset Disposition; provided that
if during such 360-day period the Company or such Restricted Subsidiary (x) enters
into a written agreement committing it to apply such Net Available Cash in
accordance with the requirements of this clause (B) after such 360-day
period or (y) has begun construction of such Additional Assets using such
Net Available Cash and delivers an Officers’ Certificate to the Trustee
certifying that such Net Available Cash has been budgeted toward such
construction, then such 360-day period will be extended with respect to the
amount of Net Available Cash so committed or so budgeted for a period, in each
case not to exceed 180 days, until such Net Available Cash is required to be
applied in accordance with such agreement (or, if earlier, until termination of
such agreement) or has been applied toward such construction, as the case may
be;


 


76

















 


provided that
pending the final application of any such Net Available Cash in accordance with
clause (A) or clause (B) above, the Company and its Restricted
Subsidiaries may temporarily reduce Indebtedness or otherwise invest such Net
Available Cash in any manner not prohibited by this Indenture.


 


Any Net Available Cash from Asset
Dispositions (other than Asset Dispositions of Collateral) that are not applied
or invested as provided in this Section 3.5(b) will be deemed
to constitute “Excess Proceeds.” 
On the 361st day after an Asset Disposition (or such later date if
the 360-day period is extended as described in Section 3.5(b)(3)(B)),
if the aggregate amount of Excess Proceeds exceeds $8.0 million, the
Company will be required to make an offer (“Asset Disposition Offer”) to
all Holders of Securities and, to the extent required by the terms of other
Pari Passu Indebtedness, to all holders of other Pari Passu Indebtedness
outstanding with similar provisions requiring the Company to make an offer to
purchase such Pari Passu Indebtedness with the proceeds from any such Asset
Disposition, to purchase the maximum principal amount of Securities and any
such Pari Passu Indebtedness to which the Asset Disposition Offer applies 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 of the Securities and Pari Passu
Indebtedness plus accrued and unpaid interest to the date of purchase, in
accordance with the procedures set forth in this Indenture or the agreements
governing the Pari Passu Indebtedness, as applicable, and in compliance with
the Intercreditor Agreement, in each case in denominations of $2,000 or
integral multiples of $1,000 in excess thereof. 
To the extent that the aggregate amount of Securities and Pari Passu
Indebtedness, if applicable, so validly tendered and not properly withdrawn
pursuant to an Asset Disposition Offer is less than the Excess Proceeds, the
Company may use any remaining Excess Proceeds for general corporate purposes,
subject to other covenants contained in this Indenture.  If the aggregate principal amount of
Securities surrendered by Holders thereof and other Pari Passu Indebtedness
surrendered by holders or lenders, collectively, exceeds the amount of Excess
Proceeds as set forth in an Officers’ Certificate, the Trustee shall select the
Securities to be purchased on a pro rata basis on the basis of the aggregate
principal amount of tendered Securities (with such adjustments as may be deemed
appropriate by the Trustee so that only Securities in denominations of $2,000
or integral  multiples of $1,000 in
excess thereof shall be purchased), and the agent for the Pari Passu
Indebtedness shall select the Pari Passu Indebtedness to be purchased on a pro
rata basis on the basis of the aggregate principal amount of tendered Pari
Passu Indebtedness.  Upon completion of
such Asset Disposition Offer, the amount of Excess Proceeds shall be reset at
zero.


 


(c)  The Collateral Disposition Offer or Asset Disposition Offer
will remain open for a period of 20 Business Days following its
commencement, except to the extent that a longer period is required by
applicable law (the “Asset Disposition Offer Period”).  No later than five Business Days after the
termination of the Asset Disposition Offer Period (the “Asset Disposition
Purchase Date”), the Company will purchase the principal amount of
Securities (and other Indebtedness required to be purchased pursuant to the
last paragraph of Section 3.5(a)) and Pari Passu Indebtedness
required to be purchased pursuant to this Section 3.5 (the “Asset
Disposition Offer Amount”) or, if less than the Asset Disposition Offer
Amount has been so validly tendered, all Securities (and other Indebtedness
required to be purchased pursuant to the last paragraph of Section 3.5(a))
and Pari Passu Indebtedness, if applicable, validly tendered in response to the
Collateral Disposition Offer or Asset Disposition Offer, as applicable.


 


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Upon the
commencement of a Collateral Disposition Offer or Asset Disposition Offer, as
applicable, the Company will send, by first class mail, a notice to the Trustee
and each of the Holders of the Securities. 
The notice will contain all instructions and materials necessary to
enable such Holders to tender Securities pursuant to the Collateral Disposition
Offer or Asset Disposition Offer, as applicable.  The notice, which will govern the terms of
the Collateral Disposition Offer or Asset Disposition Offer, as applicable,
will state:


 


(1)   that the Collateral Disposition Offer or Asset
Disposition Offer is being made pursuant to this Section 3.5 and
the length of time the Collateral Disposition Offer or Asset Disposition Offer
will remain open;


 


(2)   the Asset Disposition Offer Amount, the purchase
price and the Asset Disposition Purchase Date;


 


(3)   that any Security not tendered or accepted for
payment will continue to accrue interest;


 


(4)   that, unless the Company defaults in making such
payment, any Security accepted for payment pursuant to the Collateral
Disposition Offer or Asset Disposition Offer will cease to accrue interest
after the Asset Disposition Purchase Date;


 


(5)   that Holders electing to have a Security purchased
pursuant to a Collateral Disposition Offer or Asset Disposition Offer, as
applicable, may elect to have Securities purchased in denominations of $2,000
or integral multiples of $1,000 in excess thereof only;


 


(6)   that Holders electing to have a Security purchased
pursuant to any Collateral Disposition Offer or Asset Disposition Offer, as
applicable, will be required to surrender the Security, with the form entitled “Option
of Holder to Elect Purchase” attached to the Security completed, or transfer
its interest in such Security by book-entry transfer, to the Company or a
Paying Agent at the address specified in the notice at least three Business
Days before the Asset Disposition Purchase Date;


 


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


 


(8)   that, if the aggregate principal amount of Securities
and, if applicable, other Pari Passu Indebtedness surrendered by the Holders
thereof exceeds the Asset Disposition Offer Amount, the Company will select the
Securities and, if applicable, other  Pari Passu Indebtedness to be
purchased on a pro rata basis based on the principal amount of Securities and
such other Pari Passu Indebtedness
surrendered (with such adjustments as may be deemed appropriate so that only
Securities in denominations of $2,000, or integral multiples of $1,000 in
excess thereof, will be purchased); and


 


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


 


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


 


On or before the Asset Disposition Purchase
Date, the Company will, to the extent lawful, accept for payment, on a pro rata
basis to the extent necessary, the Asset Disposition Offer Amount of Securities
(and other Indebtedness required to be purchased pursuant to the last paragraph
of Section 3.5(a)) and Pari Passu Indebtedness or portions of
Securities (and other Indebtedness required to be purchased pursuant to the
last paragraph of Section 3.5(a)) and Pari Passu Indebtedness so
validly tendered and not properly withdrawn pursuant to the Collateral
Disposition Offer or Asset Disposition Offer, or if less than the Asset
Disposition Offer Amount has been validly tendered and not properly withdrawn,
all Securities (and other Indebtedness required to be purchased pursuant to the
last paragraph of Section 3.5(a)) and Pari Passu Indebtedness so
validly tendered and not properly withdrawn, in each case in denominations of
$2,000 and integral multiples of $1,000 in excess thereof. The Company will
deliver to the Trustee an Officers’ Certificate stating that such Securities or
portions thereof were accepted for payment by the Company in accordance with
the terms of this Section 3.5 and, in addition, the Company will
deliver all certificates and notes required, if any, by the agreements
governing the other Indebtedness required to be purchased pursuant to the last
paragraph of Section 3.5(a) and the Pari Passu
Indebtedness.  The Company or the Paying
Agent, as the case may be, will promptly (but in any case not later than five
Business Days after termination of the Asset Disposition Offer Period) mail or
deliver to each tendering Holder of Securities or holder or lender of such
other Indebtedness or Pari Passu Indebtedness, as the case may be, an amount
equal to the purchase price of the Securities, such other Indebtedness or Pari
Passu Indebtedness so validly tendered and not properly withdrawn by such
holder or lender, as the case may be, and accepted by the Company for purchase,
and the Company will promptly issue a new Security, and the Trustee, upon
delivery of an Officers’ Certificate from the Company, will authenticate and
mail or deliver such new Security to such Holder, in a principal amount equal
to any unpurchased portion of the Security surrendered; provided that
each such new Security will be in a principal amount of $2,000 or an integral
multiple of $1,000 in excess thereof.  In
addition, the Company will take any and all other actions required by the
agreements governing the other Indebtedness required to be purchased pursuant
to the last paragraph of Section 3.5(a) and the Pari Passu
Indebtedness.  Any Security not so
accepted will be promptly mailed or delivered by the Company to the Holder
thereof.  The Company will publicly
announce the results of the Collateral Disposition Offer or Asset Disposition
Offer, as applicable, on the Asset Disposition Purchase Date.


 


For the purposes of this Section 3.5,
the following shall be deemed to be cash:


 


(1)           the assumption by the
transferee of Indebtedness (other than Subordinated Obligations or Disqualified
Stock) of the Company or Indebtedness of a Subsidiary (other


 


79

















 


than Guarantor Subordinated Obligations or
Preferred Stock of any Subsidiary Guarantor) and the release of the Company or
such Restricted Subsidiary from all liability on such Indebtedness in
connection with such Asset Disposition (in which case the Company will, without
further action, be deemed to have applied such deemed cash to reduce
Indebtedness in accordance with Section 3.5(a) or 3.5(b),
as applicable); and


 


(2)           securities, notes or
other obligations received by the Company or any Restricted Subsidiary from the
transferee that are promptly converted by the Company or such Restricted
Subsidiary into cash.


 


(d)   The Company will not, and will not permit any
Restricted Subsidiary to, engage in any Asset Swaps, unless:


 


(1)   at the time of entering into such Asset Swap and
immediately after giving effect to such Asset Swap, no Default or Event of
Default shall have occurred and be continuing or would occur as a consequence
thereof;


 


(2)   in the event such Asset Swap involves the transfer by
the Company or any Restricted Subsidiary of assets having an aggregate fair
market value, as determined by the Board of Directors of the Company in good
faith, in excess of $2.5 million, the terms of such Asset Swap have been
approved by a majority of the members of the Board of Directors of the Company;


 


(3)   in the event such Asset Swap involves the transfer by
the Company or any Restricted Subsidiary of assets having an aggregate fair
market value, as determined by the Board of Directors of the Company in good
faith, in excess of $5.0 million, the Company has received a written opinion
from an independent investment banking firm of nationally recognized standing
that such Asset Swap is fair to the Company or such Restricted Subsidiary, as
the case may be, from a financial point of view; and


 


(4)   in the event such Asset Swap involves the transfer by
the Company or any Restricted Subsidiary of Collateral, (A) any Related
Business Assets received by the Company or any Restricted Subsidiary shall be
pledged as First Priority Collateral securing the Securities, in the case of an
Asset Swap involving First Priority Collateral, or as Second Priority
Collateral, in the case of an Asset Swap involving Second Priority Collateral,
and (B) any Net Available Cash received by the Company or any Restricted
Subsidiary shall be deposited directly into the Collateral Account and may be
withdrawn by the Company or such Restricted Subsidiary to be invested in
Additional Assets in the manner set forth under Section 3.5(a) above.


 


(e)           The Company will comply, to the extent
applicable, with the requirements of Rule 14e-1 under the Exchange Act and
any other securities laws or regulations in connection with the repurchase of
Securities pursuant to this Indenture. 
To the extent that the provisions of any securities laws or regulations
conflict with provisions of this Section 3.5, the Company will
comply with the applicable securities laws and regulations and will not be
deemed to have breached its obligations under this Indenture by virtue of any
conflict.


 


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(f) The
Company shall provide an Opinion of Counsel and an Officers’
Certificate to the Trustee in connection with an Asset Disposition or Asset
Swap pursuant to this Section 3.5, each stating that such Asset
Disposition or Asset Swap, as the case may be, complies with this Indenture.


 


SECTION 3.6.   Limitation on Liens.  The Company will not, and will not permit any
of its Restricted Subsidiaries to, directly or indirectly, create, Incur or
suffer to exist any Lien (other than Permitted Liens) upon any of its property
or assets (including Capital Stock of Restricted Subsidiaries), whether owned
on the Issue Date or acquired after that date, which Lien is securing any
Indebtedness.


 


SECTION 3.7.   Limitation on Sale/Leaseback Transactions.  The Company will not, and will not permit any
of its Restricted Subsidiaries to, enter into any Sale/Leaseback Transaction unless:


 


(1)   the Company or such Restricted Subsidiary could have
Incurred Indebtedness in an amount equal to the Attributable Indebtedness in
respect of such Sale/Leaseback Transaction pursuant to Section 3.2;


 


(2)   the Company or such Restricted Subsidiary would be
permitted to create a Lien on the property subject to such Sale/Leaseback
Transaction securing such Attributable Indebtedness without securing the
Securities pursuant to Section 3.6; and


 


(3)   the Sale/Leaseback Transaction is treated as an
Asset Disposition and all of the conditions of this Indenture described under Section 3.5
(including the provisions concerning the application of Net Available Cash) are
satisfied with respect to such Sale/Leaseback Transaction, treating all of the
consideration received in such Sale/Leaseback Transaction as Net Available Cash
for purposes of such Section 3.5.


 


SECTION 3.8.   Limitation on
Affiliate Transactions.  The
Company will not, and will not permit any of its Restricted Subsidiaries to,
directly or indirectly, enter into or conduct any transaction (including the
purchase, sale, lease or exchange of any property or the rendering of any
service) with any Affiliate of the Company (an “Affiliate Transaction”) unless:


 


(1)   the terms of such Affiliate Transaction are no less
favorable to the Company or such Restricted Subsidiary, as the case may be,
than those that could be obtained in a comparable transaction at the time of
such transaction in arm’s-length dealings with a Person who is not such an
Affiliate;


 


(2)   in the event such Affiliate Transaction involves an
aggregate consideration in excess of $1.0 million, the terms of such
transaction have been approved by a majority of the members of the Board of
Directors of the Company and by a majority of the members of such Board having
no personal stake in such transaction, if any (and such majority or majorities,
as the case may be, determines that such Affiliate Transaction satisfies the
criteria in clause (1) above); and


 


(3)   in the event such Affiliate Transaction involves an
aggregate consideration in excess of $2.5 million, the Company has
received a written opinion from an independent


 


81

















 


investment banking, accounting or appraisal firm of nationally
recognized standing that such Affiliate Transaction is not materially less
favorable than those that might reasonably have been obtained in a comparable
transaction at such time on an arm’s-length basis from a Person that is not an
Affiliate.


 


The preceding paragraph will not apply to:


 


(1)           any
Restricted Payment (other than a Restricted Investment) permitted to be made
pursuant to Section 3.3;


 


(2)           any
issuance of securities, or other payments, awards or grants in cash, securities
or otherwise pursuant to, or the funding of, employment agreements and other
compensation arrangements, options to purchase Capital Stock of the Company,
restricted stock plans, long-term incentive plans, stock appreciation rights
plans, participation plans or similar employee benefits plans and/or indemnity
provided on behalf of officers and employees approved by the Board of Directors
of the Company;


 


(3)           loans
or advances to employees, officers or directors of the Company or any
Restricted Subsidiary of the Company in the ordinary course of business
consistent with past practices, in an aggregate amount not in excess of $1.0
million with respect to all loans or advances made since the Issue Date
(without giving effect to the forgiveness of any such loan); provided, however, that
the Company and its Subsidiaries shall comply in all material respects with the
provisions of the Sarbanes Oxley Act of 2002 and the rules and regulations
promulgated in connection therewith relating to such loans and advances as if
the Company had filed a registration statement with the SEC;


 


(4)           any
transaction between the Company and a Restricted Subsidiary or between
Restricted Subsidiaries and Guarantees issued by the Company or a Restricted
Subsidiary for the benefit of the Company or a Restricted Subsidiary, as the
case may be, in accordance with Section 3.2;


 


(5)           the
payment of reasonable and customary fees paid to, and indemnity provided on
behalf of, directors of Holdings, the Company or any Restricted Subsidiary;


 


(6)           the
existence of, and the performance of obligations of the Company or any of its
Restricted Subsidiaries under the terms of any agreement to which the Company
or any of its Restricted Subsidiaries is a party as of or on the Issue Date and
identified on Schedule 3.8 to this Indenture on the Issue Date, as these
agreements may be amended, modified, supplemented, extended or renewed from
time to time; provided, however,
that any future amendment, modification, supplement, extension or renewal
entered into after the Issue Date will be permitted to the extent that its
terms are not more disadvantageous to the Holders of the Securities than the
terms of the agreements in effect on the Issue Date;


 


(7)           transactions
with customers, clients, suppliers or purchasers or sellers of goods or
services, in each case in the ordinary course of the business of the Company
and its Restricted Subsidiaries and otherwise in compliance with the terms of
this Indenture; provided that in the reasonable
determination of the members of the Board of Directors or


 


82

















 


senior
management of the Company, such transactions are on terms that are no less
favorable to the Company or the relevant Restricted Subsidiary than those that
would have been obtained in a comparable transaction by the Company or such
Restricted Subsidiary with an unrelated Person;


 


(8)           any
issuance or sale of Capital Stock (other than Disqualified Stock) to Affiliates
of the Company and the granting of registration and other customary rights in
connection therewith; and


 


(9)           so
long as no Default or Event of Default shall have occurred and be continuing,
up to $450,000 of consulting and management fees payable annually to Weston
Presidio V, L.P. or any of its Affiliates.


 


SECTION 3.9.   Limitation on Sale of Capital Stock of
Restricted Subsidiaries.  The Company
will not, and will not permit any Restricted Subsidiary to, transfer, convey,
sell, lease or otherwise dispose of any Voting Stock of any Restricted
Subsidiary or, with respect to a Restricted Subsidiary, to issue any of the
Voting Stock of a Restricted Subsidiary (other than, if necessary, shares of
its Voting Stock constituting directors’ qualifying shares) to any Person
except:


 


(1)   to the Company or a Wholly-Owned Subsidiary; or


 


(2)   in compliance with Section 3.5 and
immediately after giving effect to such issuance or sale, such Restricted
Subsidiary continues to be a Restricted Subsidiary.


 


Notwithstanding the preceding
paragraph, the Company or any Restricted Subsidiary may sell all the Voting
Stock of a Restricted Subsidiary as long as the Company complies with the terms
of Section 3.5.  In that
case, such Restricted Subsidiary, if a Subsidiary Guarantor, will be
automatically released from all its obligations under this Indenture, its
Subsidiary Guarantee, the Registration Rights Agreement, the Collateral
Documents and the Intercreditor Agreement and the Liens, if any, on the
Collateral pledged by such Subsidiary Guarantor pursuant to the Collateral
Documents shall be released with respect to the Securities if all the
obligations of such Subsidiary Guarantor under its Guarantee under the Working
Capital Facility and related documentation and any other agreements relating to
any other Indebtedness of the Company or its Restricted Subsidiaries terminate
upon consummation of such sale.


 


SECTION 3.10.   Change of Control.  If a Change of Control occurs, unless the
Company has exercised its right to redeem all of the Securities pursuant to Section 5.1,
each Holder will have the right to require the Company to repurchase all or any
part (equal to $2,000 or an integral multiple of $1,000 in excess thereof) of
such Holder’s Securities at a purchase price in cash equal to 101% of the
principal amount of the Securities plus accrued and unpaid interest, if any, to
the date of purchase (subject to the right of Holders of record on the relevant
record date to receive interest due on the relevant interest payment date).


 


Within 30 days following any Change of
Control, unless the Company has exercised its right to redeem all of the
Securities pursuant to Section 5.1, the Company will mail a notice
(the “Change of Control Offer”) to each Holder, with a copy to the Trustee,
stating:


 


83

















 


(1)   that a Change of Control has occurred and that such
Holder has the right to require the Company to purchase such Holder’s
Securities at a purchase price in cash equal to 101% of the principal amount of
such Securities plus accrued and unpaid interest, if any, to the date of
purchase (subject to the right of Holders of record on a record date to receive
interest on the relevant interest payment date) (the “Change of Control
Payment”);


 


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


 


(3)   that any Security not tendered or accepted for
payment will continue to accrue interest;


 


(4)   that, unless the Company defaults in making such
payment, any Security accepted for payment pursuant to the Change of Control
Offer will cease to accrue interest after the Change of Control Payment Date;


 


(5)   that Holders electing to have a Security purchased
pursuant to a Change of Control Offer may elect to have Securities purchased in
denominations of $2,000 or integral multiples of $1,000 in excess thereof only;


 


(6)   that Holders electing to have a Security purchased
pursuant to any Change of Control Offer will be required to surrender the
Security, with the form entitled “Option of Holder to Elect Purchase” attached
to the Security completed, or transfer its interest in such Security by
book-entry transfer, to the Company or a Paying Agent at the address specified
in the notice at least three Business Days before the Change of Control Payment
Date;


 


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


 


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


 


On the Change of Control Payment Date, the
Company will, to the extent lawful:


 


(1)   accept for payment all Securities or portions of
Securities (in denominations of $2,000 or integral multiples of $1,000 in
excess thereof) properly tendered pursuant to the Change of Control Offer;


 


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


 


84

















 


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


 


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


 


If the Change of Control Payment Date is on
or after an interest record date and on or before the related interest payment
date, any accrued and unpaid interest, if any, will be paid on such Change of
Control Payment Date to the Person in whose name a Security is registered at
the close of business on such record date, and no additional interest will be
payable to Holders who tender pursuant to the Change of Control Offer.


 


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


 


The Company will comply, to the extent
applicable, with the requirements of Rule 14e-1 under the Exchange Act and
any other securities laws or regulations in connection with the repurchase of
Securities pursuant to this Section 3.10.  To the extent that the provisions of any
securities laws or regulations conflict with provisions of this Indenture, the
Company will comply with the applicable securities laws and regulations and
will not be deemed to have breached its obligations described in this Indenture
by virtue of the conflict.


 


SECTION 3.11.   SEC Reports.  Notwithstanding that Holdings or the Company
may not be subject to the reporting requirements of Section 13 or 15(d) of
the Exchange Act, to the extent permitted by the Exchange Act, Holdings or the Company
will file with the SEC, and make available to the Trustee and the registered
Holders of the Securities, the annual reports and the information, documents
and other reports (or copies of such portions of any of the foregoing as the
SEC may by rules and regulations prescribe) that are specified in
Sections 13 and 15(d) of the Exchange Act with respect to U.S.
issuers within the time periods specified therein or in the relevant forms. In
the event that Holdings or the Company, as the case may be, is not permitted to
file such reports, documents and information with the SEC pursuant to the
Exchange Act, Holdings or the Company, as the case may be, will nevertheless
make available such Exchange Act information to the Trustee and the Holders of
the Securities as if Holdings or the Company, as the case may be, were subject
to the reporting requirements of Section 13 or 15(d) of the Exchange
Act within the time periods specified therein or in the relevant forms, which
requirement may be satisfied by posting such reports, documents and information
on its website within the time periods specified by this Section 3.11.
The financial information filed with the SEC or delivered to Holders pursuant
to this Section 3.11 shall include consolidated financial


 


85

















 


statements for the Company, the Subsidiary
Guarantors and the Subsidiaries that are not Subsidiary Guarantors in the form
prescribed by the SEC.


 


Delivery of such reports, information and
documents to the Trustee is for informational purposes only, and the Trustee’s
receipt of such documents shall not constitute constructive notice of any
information contained therein or determinable from information contained
therein, including the Company’s compliance with any of its covenants hereunder
(as to which the Trustee is entitled to rely exclusively on Officers’
Certificates to the extent set forth in Sections 7.1 and 7.2).


 


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


 


In addition, the Company and the Subsidiary
Guarantors shall make available to the Holders and to prospective investors,
upon the request of such Holders, the information required to be delivered
pursuant to Rule 144A(d)(4) under the Securities Act so long as the
Securities are not freely transferable under the Securities Act. For purposes
of this Section 3.11, the Company and the Subsidiary Guarantors
will be deemed to have furnished the reports to the Trustee and the Holders of
Securities as required by this Section 3.11 if the Company has
filed such reports with the SEC via the EDGAR filing system and such reports
are publicly available.


 


The filing requirements set forth above for
the applicable period may be satisfied by the Company prior to the commencement
of the offering of the Exchange Securities or the effectiveness of the Shelf
Registration Statement by the filing with the SEC of the registration statement
relating to the exchange offer pursuant to the Registration Rights Agreement
and/or the Shelf Registration Statement, and any amendments thereto, with such
financial information that satisfies Regulation S-X of the Securities Act;
provided that this paragraph
shall not supersede or in any manner suspend or delay the Company’s reporting
obligations set forth in the first three paragraphs of this Section 3.11.


 


In the event that any direct or indirect
parent company of the Company becomes a guarantor of the Securities, the
Company may satisfy its obligations under this Section 3.11 by
furnishing financial information relating to such parent; provided that (x) such financial
statements are accompanied by consolidating financial information for such
parent, the Company, the Subsidiary Guarantors and the Subsidiaries of the
Company that are not Subsidiary Guarantors in the manner prescribed by the SEC
and (y) such parent is not engaged in any business in any material respect
other than incidental to its ownership, directly or indirectly, of the Capital
Stock of the Company.


 


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SECTION 3.12.   Future Guarantors.


 


(a)    After the Issue Date,
the Company will cause each Restricted Subsidiary other than a Foreign
Subsidiary that does not Guarantee any Indebtedness of the Company or any
Restricted Subsidiary created, designated or acquired by the Company or one or
more of its Restricted Subsidiaries, to execute and deliver to the Trustee a
Subsidiary Guarantee, in the form of a supplemental indenture substantially in
the form of Exhibit C hereto, pursuant to which such Subsidiary
will unconditionally Guarantee, on a joint and several basis with the other
Subsidiary Guarantors, the full and prompt payment of the principal of,
premium, if any and interest on the Securities on a senior secured basis and
all other obligations of the Company hereunder. In addition, the Company will
cause such Restricted Subsidiary to become a party to the applicable Collateral
Documents and the Intercreditor Agreement and take such actions necessary or
advisable to grant to the Collateral Agent, for the benefit of itself and the
Holders of the Securities, a perfected security interest in any Collateral held
by such Restricted Subsidiary, subject to Permitted Liens.


 


The obligations of each Subsidiary Guarantor
will be limited to the maximum amount as will, after giving effect to all other
contingent and fixed liabilities of such Subsidiary Guarantor (including,
without limitation, any guarantees under the Working Capital Facility) and
after giving effect to any collections from or payments made by or on behalf of
any other Subsidiary Guarantor in respect of the obligations of such other
Subsidiary Guarantor under its Subsidiary Guarantee or pursuant to its
contribution obligations under this Indenture, result in the obligations of
such Subsidiary Guarantor under its Subsidiary Guarantee not constituting a
fraudulent conveyance or fraudulent transfer under federal or state law.


 


Each Subsidiary Guarantee shall be released
in accordance with Article X.


 


(b)  After the Issue Date, in the event that Holdings Guarantees
any Indebtedness of the Company or any Restricted Subsidiary (other than the
Company’s 93⁄4% Senior Secured Notes due 2010) or grants a Lien on any of its
property or assets (other than Liens of the type described in clauses (2) through
(19) of the definition of “Permitted Liens”), the Company will cause
Holdings to execute and deliver to the Trustee a Guarantee pursuant to which
Holdings will unconditionally Guarantee, on a joint and several basis with the
Subsidiary Guarantors, the full and prompt payment of the principal of,
premium, if any and interest on the Securities on a senior secured basis. Any
such Guarantee of Holdings will be secured by a Lien on all the property and
assets of Holdings, including all of the Capital Stock of the Company owned by
Holdings, and all such property and assets shall become First Priority
Collateral, with a Lien ranking senior to any other Lien on such property and
assets, subject to Permitted Liens. In such an event the Company will cause
Holdings to become a party to the applicable Collateral Documents and the
Intercreditor Agreement and take such actions necessary or advisable to grant
to the Collateral Agent, for its benefit and the benefit of the Holders of the
Securities, a perfected security interest in any Collateral held by Holdings.


 


In the event that Holdings is released and
discharged in full from all of its obligations under its Guarantees of any
other Indebtedness and all other Liens on its property and assets (other than
Liens of the type described in clauses (2) through (19) of the
definition of “Permitted Liens”) are released and discharged in full, then
Holdings will be released from its obligations under any Guarantee entered into
pursuant to the preceding paragraph, this Indenture,


 


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the Registration Rights, the Collateral
Documents to which it is a party and the Intercreditor Agreement.


 


SECTION 3.13.   Maintenance of Office or Agency.  The
Company will maintain an office or agency where the Securities may be presented
or surrendered for payment, where, if applicable, the Securities may be
surrendered for registration of transfer or exchange and where notices and
demands to or upon the Company in respect of the Securities and this Indenture
may be served.  The corporate trust
office of the Trustee, which initially shall be located at 222 Berkeley Street,
2nd Floor, Boston, MA 02116, shall be such office or agency of the Company,
unless the Company shall designate and maintain some other office or agency for
one or more of such purposes.  The
Company will give prompt written notice to the Trustee of any change in the
location of any such office or agency. 
If at any time the Company shall fail to maintain any such required
office or agency or shall fail to furnish the Trustee with the address thereof,
such presentations, surrenders, notices and demands may be made or served at
the corporate trust office of the Trustee, and the Company hereby appoints the
Trustee as its agent to receive all such presentations, surrenders, notices and
demands.


 


The Company may also from time to time
designate one or more other offices or agencies where the Securities may be
presented or surrendered for any or all such purposes and may from time to time
rescind any such designation.  The
Company will give prompt written notice to the Trustee of any such designation
or rescission and any change in the location of any such other office or
agency.


 


SECTION 3.14.   Corporate Existence.  Except as otherwise provided in this Article III,
Article IV and Section 10.2(b), the Company will 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, limited
liability company or other existence of each Restricted Subsidiary and the
rights (charter and statutory), licenses and franchises of the Company and each
Restricted Subsidiary; provided, however,
that the Company shall not be required to preserve any such right, license or
franchise or the corporate, partnership, limited liability company or other
existence of any Restricted Subsidiary if the Board of Directors of the Company
shall determine that the preservation thereof is no longer desirable in the
conduct of the business of the Company and each of its Restricted Subsidiaries,
taken as a whole, and that the loss thereof is not, and will not be,
disadvantageous in any material respect to the Holders.


 


SECTION 3.15.   Payment of Taxes and Other Claims.  The Company shall pay or discharge or cause
to be paid or discharged, before the same shall become delinquent, (i) all
material taxes, assessments and governmental charges levied or imposed upon the
Company or any Subsidiary or upon the income, profits or property of the
Company or any Subsidiary and (ii) all lawful claims for labor, materials
and supplies, which, if unpaid, might by law become a material liability or
lien upon the property of the Company or any Subsidiary; provided,
however, that the Company shall not be required to pay or discharge
or cause to be paid or discharged any such tax, assessment, charge or claim the
amount, applicability or validity of which is being contested in good faith by
appropriate proceedings and for which appropriate reserves, if necessary (in
the good faith judgment of management of the Company), are being maintained in
accordance with GAAP or where the failure to effect such payment will not be
disadvantageous to the Holders.


 


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SECTION 3.16.   Payments for Consent.  None of Holdings, the Company or any of its
Restricted Subsidiaries will, directly or indirectly, pay or cause to be paid
any consideration, whether by way of interest, fees or otherwise, to any Holder
of any Securities for or as an inducement to any consent, waiver or amendment
of any of the terms or provisions of this Indenture, the Securities, the
Subsidiary Guarantees, the Collateral Documents or the Intercreditor Agreement
unless such consideration is offered to be paid or is paid to all Holders of
the Securities that consent, waive or agree to amend in the time frame set
forth in the solicitation documents relating to such consent, waiver or
amendment.


 


SECTION 3.17.   Compliance Certificate.  The Company shall deliver to the Trustee within
120 days after the end of each Fiscal Year of the Company an Officers’
Certificate stating that in the course of the performance by the signers of
their duties as Officers of the Company they would normally have knowledge of
any Default or Event of Default and whether or not the signers know of any
Default or Event of Default that occurred during the previous Fiscal Year.  If they do, the certificate shall describe
the Default or Event of Default, its status and the action the Company is
taking or proposes to take with respect thereto.  The Company also shall comply with TIA
§ 314(a)(4).


 


SECTION 3.18.   Further Instruments and Acts.  Upon request of the Trustee, the Company will
execute and deliver such further instruments and do such further acts as may be
reasonably necessary or proper to carry out more effectively the purpose of
this Indenture, including, without limitation, the filing, in a timely manner,
of all necessary terminations and releases with respect to any outstanding
trademark registrations in favor of parties other than the Collateral Agent,
the Bank Agent (as defined in the Intercreditor Agreement) or the Bank Canadian
Agent (as defined in the Intercreditor Agreement).


 


SECTION 3.19.   Limitation on Lines of Business.  The Company will not, and will not permit any
Restricted Subsidiary to, engage in any business other than a Related Business.


 


SECTION 3.20.   Statement by Officers as to Default.  The Company shall deliver to the Trustee, as
soon as possible and in any event within 10 days after the Company becomes
aware of the occurrence of any Event of Default or an event which, with notice
or the lapse of time or both, would constitute an Event of Default, an Officers’
Certificate setting forth the details of such Event of Default or default, its
status and the actions which the Company is taking or proposes to take with
respect thereto.


 


ARTICLE
IV


 


SUCCESSOR COMPANY


 


SECTION 4.1.   Merger and Consolidation.  The Company will not consolidate with or
merge with or into, or convey, transfer or lease all or substantially all its
assets to, any Person, unless:


 


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(1)   the resulting, surviving or transferee Person (the “Successor
Company”) will be a corporation, partnership, trust or limited liability
company organized and existing under the laws of the United States of America,
any State of the United States or the District of Columbia and the Successor
Company (if not the Company) will expressly assume, by supplemental indenture,
executed and delivered to the Trustee, in form satisfactory to the Trustee, all
the obligations of the Company under the Securities and this Indenture and will
expressly assume, by written agreement, all of the obligations of the Company
under the Registration Rights Agreement, the Collateral Documents (as
applicable) and the Intercreditor Agreement and shall cause such amendments,
supplements or other instruments to be executed, filed, and recorded in such
jurisdictions as may be required by applicable law to preserve and protect the
Lien on the Collateral owned by or transferred to the Successor Company,
together with such financing statements or comparable documents as may be
required to perfect any security interests in such Collateral which may be
perfected by the filing of a financing statement or a similar document under
the Uniform Commercial Code or other similar statute or regulation of the
relevant states or jurisdictions;


 


(2)   immediately after giving effect to such transaction
(and treating any Indebtedness that becomes an obligation of the Successor
Company or any Subsidiary of the Successor Company as a result of such
transaction as having been Incurred by the Successor Company or such Subsidiary
at the time of such transaction), no Default or Event of Default shall have
occurred and be continuing;


 


(3)   immediately after giving effect to such transaction
and any related financing transactions,


 


(a)                                  the
Successor Company would be able to Incur at least an additional $1.00 of
Indebtedness pursuant to Section 3.2(a), or


 


(b)                                 the
Consolidated Coverage Ratio for the Successor Company and its Restricted
Subsidiaries would be greater than such ratio for the Company and its
Restricted Subsidiaries immediately prior to such transaction;


 


(4)   each Subsidiary Guarantor (unless it is the other
party to the transactions above, in which case clause (1) shall
apply) shall have by supplemental indenture confirmed that its Subsidiary
Guarantee shall apply to such Person’s obligations in respect of this Indenture
and the Securities and shall have by written agreement confirmed that its
obligations under the Registration Rights Agreement, the Collateral Documents
and the Intercreditor Agreement shall continue to be in effect and shall cause
such amendments, supplements or other instruments to be executed, filed, and
recorded in such jurisdictions as may be required by applicable law to preserve
and protect the Lien on the Collateral owned by such Subsidiary Guarantor,
together with such financing statements or comparable documents as may be
required to perfect any security interests in such Collateral which may be
perfected by the filing of a financing statement or a similar document under
the Uniform Commercial Code or other similar statute or regulation of the
relevant states or jurisdictions; and


 


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(5)   the Company shall have delivered to the Trustee an
Officers’ Certificate and an Opinion of Counsel, each stating that such
consolidation, merger or transfer and such supplemental indenture (if any)
comply with this Indenture.


 


For purposes of this Section 4.1,
the sale, lease, conveyance, assignment, transfer, or other disposition of all
or substantially all of the properties and assets of one or more Subsidiaries
of the Company, in a single or a series of related transactions, which
properties and assets, if held by the Company instead of such Subsidiaries,
would constitute all or substantially all of the properties and assets of the
Company on a consolidated basis, shall be deemed to be the transfer of all or
substantially all of the properties and assets of the Company.


 


The predecessor Company will be released from
its obligations under this Indenture, and the Successor Company will succeed
to, and be substituted for, and may exercise every right and power of, the
Company under this Indenture, the Collateral Documents and the Intercreditor
Agreement, but, in the case of a lease of all or substantially all its assets,
the predecessor Company will not be released from the obligation to pay the
principal of and interest on the Securities.


 


Notwithstanding the preceding clause (3), (x) any
Restricted Subsidiary may consolidate with, merge into or transfer all or part
of its properties and assets to the Company and (y) the Company may merge
with an Affiliate incorporated solely for the purpose of reincorporating the
Company in another jurisdiction to realize tax benefits; provided that, in the case of a Restricted
Subsidiary that merges into the Company, the Company will not be required to
comply with the preceding clause (4).


 


ARTICLE
V


 


REDEMPTION OF SECURITIES


 


SECTION 5.1.   Redemption.  The Securities may be redeemed (a) as a
whole or from time to time in part, subject to the conditions and at the
redemption prices specified in paragraph 5 of the form of Securities set forth
in Exhibit A and Exhibit B hereto, which are hereby
incorporated by reference and made a part of this Indenture, or (b) as a
whole, and not less than as a whole, subject to the conditions and at the
redemption price specified in Section 5.9(b), in each case together
with accrued and unpaid interest (including Additional Interest) to the
Redemption Date.


 


SECTION 5.2.   Applicability of Article.  Redemption of Securities at the election of
the Company or otherwise, as permitted or required by any provision of this
Indenture, shall be made in accordance with such provision and this Article.


 


SECTION 5.3.   Election to Redeem; Notice to Trustee.  The election of the Company to redeem any
Securities pursuant to Section 5.1 shall be evidenced by a Board
Resolution of the Company.  In case of
any redemption at the election of the Company, the Company shall, upon not
later than 45 days prior to the Redemption Date fixed by the Company
(unless a shorter notice shall be satisfactory to the Trustee), notify the
Trustee of such


 


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Redemption Date and of
the principal amount of Securities to be redeemed and shall deliver to the
Trustee such documentation and records as shall enable the Trustee to select
the Securities to be redeemed pursuant to Section 5.4.  Any such notice may be cancelled at any time
prior to notice of such redemption being mailed to any Holder and shall thereby
be void and of no effect.


 


SECTION 5.4.   Selection by Trustee of Securities to Be
Redeemed.  If less than all the Securities
are to be redeemed at any time pursuant to an optional redemption, the
particular Securities to be redeemed shall be selected not more than
60 days prior to the Redemption Date by the Trustee, from the outstanding
Securities not previously called for redemption, in compliance with the
requirements, as set forth in an Officers’
Certificate delivered by the Company to the Trustee, of the principal
securities exchange, if any, on which such Securities are listed, or, if such
Securities are not so listed, on a pro  rata basis among the Securities, by lot or by such other
method as the Trustee shall deem fair and appropriate (and in such manner as
complies with applicable legal requirements) and which may provide for the
selection for redemption of portions of the principal of the Securities in denominations of $2,000 or integral multiples of
$1,000 in excess thereof; provided, however,
that no such partial redemption shall reduce the portion of the principal
amount of a Security not redeemed to less than $2,000.


 


The Trustee shall promptly notify the Company
in writing of the Securities selected for redemption and, in the case of any
Securities selected for partial redemption, the method it has chosen for the
selection of Securities and the principal amount thereof to be redeemed.


 


For all purposes of this Indenture, unless
the context otherwise requires, all provisions relating to redemption of
Securities shall relate, in the case of any Security redeemed or to be redeemed
only in part, to the portion of the principal amount of such Security which has
been or is to be redeemed.


 


SECTION 5.5.   Notice of Redemption.  Notice of redemption shall be given in the
manner provided for in Section 12.2 not less than 30 nor more than
60 days prior to the Redemption Date, to each Holder of Securities to be
redeemed.  At the Company’s request, the
Trustee shall give notice of redemption in the Company’s name and at the
Company’s expense; provided, however,
that the Company shall deliver to the Trustee, at least 45 days prior to
the Redemption Date (unless a shorter period shall be satisfactory to the
Trustee), an Officers’ Certificate requesting that the Trustee give such notice
at the Company’s expense and setting forth the information to be stated in such
notice as provided in the following items.


 


All notices of redemption shall state:


 


(1)   the Redemption Date,


 


(2)   the redemption price and the amount of accrued
interest (including Additional Interest) to the Redemption Date payable as
provided in Section 5.7, if any,


 


(3)   if less than all outstanding Securities are to be
redeemed, the identification of the particular Securities (or portion thereof)
to be redeemed, as well as the aggregate


 


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principal amount of Securities to be redeemed and the aggregate
principal amount of Securities to be outstanding after such partial redemption,


 


(4)   in case any Security is to be redeemed in part only,
the notice which relates to such Security shall state that on and after the
Redemption Date, upon surrender of such Security, the Holder will receive,
without charge, a new Security or Securities of authorized denominations for
the principal amount thereof remaining unredeemed,


 


(5)   that on the Redemption Date the redemption price
(and accrued interest (including Additional Interest), if any, to the
Redemption Date payable as provided in Section 5.7) will become due
and payable upon each such Security, or the portion thereof, to be redeemed,
and, unless the Company defaults in making the redemption payment, that
interest on Securities called for redemption (or the portion thereof) will
cease to accrue on and after said date,


 


(6)   the place or places where such Securities are to be
surrendered for payment of the redemption price and accrued interest, if any,


 


(7)   the name and address of the Paying Agent,


 


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


 


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


 


(10) the paragraph of the Securities pursuant to which the
Securities are to be redeemed.


 


SECTION 5.6.   Deposit of Redemption Price.  Prior to 10:00 a.m., New York City time,
on any Redemption Date, the Company shall deposit with the Trustee or with a
Paying Agent (or, if the Company or any of the Company’s Subsidiaries is acting
as its own Paying Agent, segregate and hold in trust as provided in Section 2.4)
an amount of money sufficient to pay the redemption price of, Additional
Amounts, if any, and accrued interest (including Additional Interest) on, all
the Securities which are to be redeemed on that date, other than Securities or
portions of Securities called for redemption that are beneficially owned by the
Company and have been delivered by the Company to the Trustee for cancellation.


 


SECTION 5.7.   Securities Payable on Redemption Date.  Notice of redemption having been given as
aforesaid, the Securities or portions of Securities so to be redeemed shall, on
the Redemption Date, become due and payable at the redemption price therein
specified (together with accrued interest, if any, to the Redemption Date), and
from and after such date (unless the Company shall default in the payment of
the redemption price and accrued interest) such Securities shall cease to bear
interest and the only right of the Holders thereof will be to receive payment
of the redemption price and, subject to the next sentence, unpaid interest on
such Securities to the Redemption Date. 
Upon surrender of any such Security for redemption in


 


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accordance with said
notice, such Security shall be paid by the Company at the redemption price,
together with accrued interest, if any, to the Redemption Date.


 


If any Security called for redemption shall
not be so paid upon surrender thereof for redemption, the unpaid principal (and
premium, if any) shall, until paid, bear interest from the Redemption Date at
the rate borne by the Securities.


 


SECTION 5.8.   Securities Redeemed in Part.  Any
Security which is to be redeemed only in part (pursuant to the provisions of this
Article) shall be surrendered at the office or agency of the Company maintained
for such purpose pursuant to Section 3.13 (with, if the Company or
the Trustee so require, due endorsement by, or a written instrument of transfer
in form satisfactory to the Company and the Trustee duly executed by, the
Holder thereof or such Holder’s attorney duly authorized in writing), and the
Company shall execute, and the Trustee shall authenticate and make available
for delivery to the Holder of such Security at the expense of the Company, a
new Security or Securities, of any authorized denomination as requested by such
Holder, in an aggregate principal amount equal to and in exchange for the
unredeemed portion of the principal of the Security so surrendered; provided, that each such new Security will
be in a principal amount of $2,000 or integral multiple of $1,000 in excess
thereof.


 


SECTION 5.9.   Additional Amounts; Optional Tax
Redemption.  (a)  If any taxes, assessments or other
governmental charges are imposed by any jurisdiction where the Company, a
Subsidiary Guarantor or a successor of either (a “Payor”) is organized
or otherwise considered by a taxing authority to be a resident for tax
purposes, any jurisdiction from or through which the Payor makes a payment on
the Securities, or, in each case, any political organization or governmental
authority thereof or therein having the power to tax (the “Relevant Tax
Jurisdiction”) in respect of any payments under the Securities, the Payor
will pay to each Holder of a Security, to the extent it may lawfully do so,
such additional amounts (“Additional Amounts”) as may be necessary in
order that the net amounts paid to such Holder will be not less than the amount
specified in such Security to which such Holder is entitled; provided, however,
the Payor will not be required to make any payment of Additional Amounts for or
on account of:


 


(1)                                  any tax, assessment
or other governmental charge which would not have been imposed but for (A) the
existence of any present or former connection between such Holder (or between a
fiduciary, settlor, beneficiary, member or shareholder of, or possessor of a
power over, such Holder, if such Holder is an estate, trust, partnership,
limited liability company or corporation) and the Relevant Tax Jurisdiction
other than solely by the holding of Securities or by the receipt of principal
or interest in respect of the Securities (including, without limitation, such
Holder (or such fiduciary, settlor, beneficiary, member, shareholder or
possessor) being or having been a citizen or resident thereof or being or
having been present or engaged in trade or business therein or having or having
had a permanent establishment therein) or (B) the presentation of a
Security (where presentation is required) for payment on a date more than 30
days after (x) the date on which such payment became due and payable or (y) the
date on which payment thereof is duly provided for and notice of the
availability of the funds has been given, whichever occurs later (in either case
(x) or (y), except to the


 


94

















 


extent that the Holder would have been entitled to Additional Amounts
had the Security been presented during such 30-day period);


 


(2)                                  any estate,
inheritance, gift, sales, transfer, personal property or similar tax,
assessment or other governmental charge;


 


(3)                                  any tax, assessment
or other governmental charge that is imposed or withheld by reason of the
failure by the Holder or the beneficial owner of the Security to comply with a
reasonable and timely request of the Payor addressed to the Holder to provide
information, documents or other evidence concerning the nationality, residence
or identity of the Holder or such beneficial owner which is required by a
statute, treaty, regulation or administrative practice of the taxing
jurisdiction as a precondition to exemption from all or part of such tax,
assessment or other governmental charge; or


 


(4)                                  any combination of
the above,


 


nor will
Additional Amounts be paid with respect to any payment of the principal of, or
any premium or interest (including Additional Interest)
on, any Security to any Holder who is a fiduciary or partnership or limited
liability company or other than the sole beneficial owner of such payment to
the extent that a beneficiary or settlor with respect to such fiduciary or a
member of such partnership, limited liability company or beneficial owner would
not have been entitled to such Additional Amounts had it been the Holder of such Security.


 


The Payor will provide
the Trustee with the official acknowledgment of the governmental authority in
the Relevant Tax Jurisdiction (or, if such acknowledgment is not available, a
certified copy thereof) evidencing the payment of the withholding taxes by the
Payor.  Copies of such documentation will
be made available to the Holders of the Securities or the Paying Agent, as
applicable, upon request therefor.


 


The Company and the
Subsidiary Guarantors will pay any present or future stamp, court or
documentary taxes, or any other excise or property taxes, charges or similar
levies which arise in any jurisdiction from the execution, delivery or
registration of the Securities or any other document or instrument referred to
therein (other than a transfer of the Securities), or the receipt of any
payments with respect to the Securities, excluding any such taxes, charges or
similar levies imposed by any jurisdiction outside the United States of America
or Canada or any jurisdiction in which a Paying Agent is located, other than
those resulting from, or required to be paid in connection with, the
enforcement of the Securities or any other such document or instrument
following the occurrence of any Event of Default with respect to the
Securities.


 


All references in this Indenture to principal
of, premium, if any, and interest on the Securities will include any Additional
Interest and any Additional Amounts payable by the Payor in respect of such
principal, such premium, if any, and such interest.


 


(b)  The
Payor will be entitled to redeem all, but not less than all, of the Securities
if as a result of any change in or amendment to the laws, regulations or
rulings of any Relevant Tax Jurisdiction or any change in the official
application or interpretation of such laws, regulations or rulings, or any
change in the official application or interpretation of, or any


 


95

















 


execution of or amendment
to, any treaty or treaties affecting taxation to which such Relevant Tax
Jurisdiction is a party (a “Change in Tax Law”) the Payor is or would be
required on the next succeeding interest payment date to pay Additional Amounts
with respect to the Securities as described under Section 5.9(a) and
the Payor delivers to the Trustee an Officers’ Certificate stating that the
payment of such Additional Amounts cannot be avoided by the use of any
reasonable measures available to the Payor and that the Payor is entitled to
redeem the Securities pursuant to their terms. 
The Change in Tax Law must become effective on or after the Issue
Date.  Further, the Payor must deliver to
the Trustee at least 30 days before the redemption date an opinion of counsel
of recognized standing to the effect that the Payor has or will become obligated
to pay Additional Amounts as a result of such Change in Tax Law.  The Payor must also provide the Holders with
notice of the intended redemption at least 30 days and no more than 60 days
before the redemption date and shall comply with all provisions of this Article V.  


 


The redemption
price will equal the principal amount of the Securities plus accrued and unpaid
interest thereon (including Additional Interest), if any to the redemption
date, premium, if any, and Additional Amounts, if any, then due and which
otherwise would be payable.


 


ARTICLE
VI


 


DEFAULTS AND REMEDIES


 


SECTION 6.1.   Events of Default.  Each of the following is an “Event of
Default”:


 


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


 


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


 


(3)   failure by the Company or any Subsidiary Guarantor
to comply with its obligations under Article IV or Section 10.2;


 


(4)   (a)  failure
by the Company to comply for 30 days after the notice specified below with any
of its obligations under Section 3.10 (other than a failure to
purchase Securities when required under this Indenture, which failure shall
constitute an Event of Default under Section 6.1(2)), (b) failure
by the Company or any Subsidiary Guarantor to comply for 30 days after the
notice specified below with any of its obligations under the Collateral
Documents or (c) in the event that a Guarantee of the Securities by
Holdings is required pursuant to Section 3.12(b), failure of such
Guarantee to be effective within 30 days after the notice specified below;


 


(5)   failure by the Company or any Subsidiary Guarantor
to comply with any of its other agreements contained in this Indenture or under
the Securities (other than those


 


96

















 


referred to in clauses (1), (2), (3) or (4) above) and such
Default continues for 60 days after the notice specified below;


 


(6)   default under any mortgage, indenture or instrument
under which there may be issued or by which there may be secured or evidenced
any Indebtedness for money borrowed by the Company or any of its Restricted
Subsidiaries (or the payment of which is guaranteed by the Company or any of
its Restricted Subsidiaries), other than Indebtedness owed to the Company or a
Restricted Subsidiary, whether such Indebtedness or guarantee now exists, or is
created after the date of this Indenture, which default:


 


(a)                                  is caused by a
failure to pay principal of, or interest or premium, if any, on such
Indebtedness prior to the expiration of the grace period provided in such
Indebtedness (“Payment Default”) or


 


(b)                                 results in the
acceleration of such Indebtedness prior to its maturity (the “cross
acceleration provision”);


 


and, in each case, the principal amount of
any such Indebtedness, together with the principal amount of any other such
Indebtedness under which there has been a Payment Default or the maturity of
which has been so accelerated, aggregates $5.0 million or more;


 


(7)   the Company or a Significant Subsidiary or group of
Restricted Subsidiaries that, taken together (as of the latest audited
consolidated financial statements for the Company and its Restricted
Subsidiaries), would constitute a Significant Subsidiary:


 


(a)                                  commences
a voluntary case or proceeding;


 


(b)                                 consents
to the entry of judgment, decree or order for relief against it in an
involuntary case or proceeding;


 


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


 


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


 


(e)                                  consents
to or acquiesces in the institution of a bankruptcy or an insolvency proceeding
against it;


 


(f)                                    takes
any corporate action to authorize or effect any of the foregoing; or


 


(g)                                 takes
any comparable action under any foreign laws relating to insolvency;


 


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


 


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(a)                                  is
for relief in an involuntary case against the Company or a Significant
Subsidiary or group of Restricted Subsidiaries that, taken together (as of the
latest audited consolidated financial statements for the Company and its
Restricted Subsidiaries), would constitute a Significant Subsidiary;


 


(b)                                 appoints
a Custodian for all or substantially all of the property of the Company or a
Significant Subsidiary or group of Restricted Subsidiaries that, taken together
(as of the latest audited consolidated financial statements for the Company and
its Restricted Subsidiaries), would constitute a Significant Subsidiary; or


 


(c)                                  orders
the winding up or liquidation of the Company or a Significant Subsidiary or
group of Restricted Subsidiaries that, taken together (as of the latest audited
consolidated financial statements for the Company and its Restricted
Subsidiaries), would constitute a Significant Subsidiary; and


 


in each case
the order, decree or relief remains unstayed and in effect for 90 days;


 


(9)   failure by the Company or any Significant Subsidiary
or group of Restricted Subsidiaries that, taken together (as of the latest
audited consolidated financial statements for the Company and its Restricted
Subsidiaries), would constitute a Significant Subsidiary to pay final judgments
aggregating in excess of $5.0 million (net of any amounts that a reputable
and creditworthy insurance company has acknowledged liability for in writing),
which judgments are not paid, discharged or stayed for a period of 60 days
(the “judgment default provision”);


 


(10) any Subsidiary Guarantee, any Guarantee of the
Securities by Holdings (if applicable) or any Collateral Document ceases to be
in full force and effect (except as contemplated by the terms of this
Indenture) or is declared null and void in a judicial proceeding or any of
Holdings, the Company or any Subsidiary Guarantor denies or disaffirms its
obligations under this Indenture, any Subsidiary Guarantee, any such Guarantee
of Holdings or any Collateral Document to which it is a party; or


 


(11) with respect to any Collateral having a fair market
value in excess of $5.0 million, individually or in the aggregate, (A) the
security interest under the Collateral Documents, at any time, ceases to be in
full force and effect for any reason other than in accordance with their terms
and the terms of this Indenture and other than the satisfaction in full of all
obligations under this Indenture and discharge of this Indenture, (B) any
security interest created thereunder or under this Indenture is declared
invalid or unenforceable or (C) Holdings, the Company or any Subsidiary
Guarantor asserts, in any pleading in any court of competent jurisdiction, that
any such security interest is invalid or unenforceable.


 


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


 


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Notwithstanding the foregoing, a Default under
clauses (4) or (5) of this Section 6.1 will not
constitute an Event of Default until the Trustee or the Holders of 25% or more
in principal amount of the outstanding Securities notify the Company of the
Default (and the Trustee in case of a notice from Holders), in writing, which
notice shall specify that it constitutes a notice of Default, and the Company
does not cure such Default within the time specified in clauses (4) or
(5) of this Section 6.1 after receipt of such notice.


 


The Company shall deliver to the Trustee,
within 10 days after the Company becomes aware of the occurrence thereof,
written notice in the form of an Officers’ Certificate of any Default or Event
of Default under clauses (3), (4), (5), (6), (7), (8), (9), (10) or (11)
of this Section 6.1, which notice shall contain the status thereof
and a description of the action being taken or proposed to be taken by the
Company in respect thereof.


 


SECTION 6.2.   Acceleration.  If an Event of Default (other than an Event
of Default described in clause (7) or (8) of Section 6.1)
occurs and is continuing, the Trustee by notice to the Company, or the Holders
of at least 25% in principal amount of the outstanding Securities by notice to
the Company and the Trustee, may, and the Trustee at the request of such
Holders shall, declare the principal of, premium, if any, Additional Amounts,
if any, and accrued and unpaid interest (including Additional Interest), if
any, on all the Securities to be due and payable.  Upon such a declaration, such principal,
premium, Additional Amounts and accrued and unpaid interest shall be due and
payable immediately.


 


In the event of a declaration of acceleration
of the Securities because an Event of Default described in clause (6) of
Section 6.1 has occurred and is continuing, the declaration of
acceleration of the Securities shall be automatically annulled if the Default
triggering such Event of Default pursuant to clause (6) of Section 6.1
shall be remedied or cured by the Company or a Restricted Subsidiary or waived
by the holders of the relevant Indebtedness within 20 days after the
declaration of acceleration with respect thereto and if (1) the annulment
of the acceleration of the Securities would not conflict with any judgment or
decree of a court of competent jurisdiction and (2) all existing Events of
Default, except nonpayment of principal, premium or interest on the Securities
that became due solely because of the acceleration of the Securities, have been
cured or waived.


 


If an Event of Default described in
clause (7) or (8) of Section 6.1 occurs and is
continuing, the principal of, premium, if any, Additional Amounts, if any, and
accrued and unpaid interest (including Additional Interest) on all the
Securities will become and be immediately due and payable without any
declaration or other act on the part of the Trustee or any Holders.


 


SECTION 6.3.   Other Remedies.  If an Event of Default occurs and is
continuing, the Trustee may pursue any available remedy by proceeding at law or
in equity to collect the payment of principal of (or premium or Additional
Amounts, if any) or interest (including Additional Interest) on the Securities
or to enforce the performance of any provision of the Securities, this
Indenture, the Subsidiary Guarantees, the Collateral Documents or the
Intercreditor Agreement.


 


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The Trustee may maintain a proceeding even if
it does not possess any of the Securities or does not produce any of them in
the proceeding.  A delay or omission by
the Trustee or any Securityholder in exercising any right or remedy accruing
upon an Event of Default shall not impair the right or remedy or constitute a
waiver of or acquiescence in the Event of Default.  No remedy is exclusive of any other remedy.  All available remedies are cumulative.


 


SECTION 6.4.   Waiver of Past Defaults.  The Holders of a majority in principal amount
of the outstanding Securities by notice to the Trustee (with a copy to the
Company, but the applicable waiver or rescission shall be effective when the
notice is given to the Trustee) may (a) waive, by their consent
(including, without limitation, consents obtained in connection with a purchase
of, or tender offer or exchange offer for, Securities), an existing Default or
Event of Default and its consequences except (i) a Default or Event of
Default in the payment of the principal of, or premium, if any, Additional
Amounts, if any, or interest (including Additional Interest) on a Security or (ii) a
Default or Event of Default in respect of a provision that under Section 9.2
cannot be amended without the consent of each Securityholder affected and (b) rescind
any acceleration with respect to the Securities and its consequences if (1) such
rescission would not conflict with any judgment or decree of a court of
competent jurisdiction and (2) all existing Events of Default, other than
the nonpayment of the principal of, premium, if any, Additional Amounts, if
any, and interest (including Additional Interest) on the Securities that have become
due solely by such declaration of acceleration, have been cured or waived.  When a Default or Event of Default is waived,
it is deemed cured, but no such waiver shall extend to any subsequent or other
Default or Event of Default or impair any consequent right.


 


SECTION 6.5.   Control by Majority.  The Holders of a majority in principal amount
of the outstanding Securities 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.  However, the Trustee may refuse to follow any
direction that conflicts with law or this Indenture, the Securities, the
Subsidiary Guarantees, the Collateral Documents or the Intercreditor Agreement
or, subject to Sections 7.1 and 7.2, that the Trustee
determines is unduly prejudicial to the rights of other Securityholders or
would involve the Trustee in personal liability; provided,
however, that the Trustee may take any other action deemed proper by
the Trustee that is not inconsistent with such direction.  Prior to taking any such action hereunder,
the Trustee shall be entitled to indemnification reasonably satisfactory to it
in its sole discretion against all losses and expenses caused by taking or not
taking such action.


 


SECTION 6.6.   Limitation on Suits.  Subject to Section 6.7, a
Securityholder may not pursue any remedy with respect to this Indenture or the
Securities unless:


 


(1)   such Holder has previously given to the Trustee
written notice stating that an Event of Default is continuing;


 


(2)   Holders of at least 25% in principal amount of the
outstanding Securities have requested that the Trustee pursue the remedy;


 


(3)   such Holders have offered to the Trustee security or
indemnity reasonably satisfactory to it against any loss, liability or expense;


 


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


 


(5)   the Holders of a majority in principal amount of the
outstanding Securities have not given the Trustee a direction that, in the
opinion of the Trustee, is inconsistent with such request during such 60-day
period.


 


A Securityholder may not use this Indenture
to prejudice the rights of another Securityholder or to obtain a preference or
priority over another Securityholder.


 


SECTION 6.7.   Rights of Holders to Receive Payment.  Notwithstanding any other provision of this
Indenture (including, without limitation, Section 6.6), the right
of any Holder to receive payment of principal of, premium (if any), Additional
Amounts (if any) or interest (including Additional Interest) on the Securities
held by such Holder, on or after the respective due dates expressed or provided
for in the Securities, or to bring suit for the enforcement of any such payment
on or after such respective dates, shall not be impaired or affected without
the consent of such Holder.


 


SECTION 6.8.   Collection Suit by Trustee.  If an Event of Default specified in
clauses (1) or (2) of Section 6.1 occurs and is
continuing, the Trustee may recover judgment in its own name and as trustee of
an express trust against the Company for the whole amount then due and owing
(together with interest on any unpaid interest to the extent lawful) and the
amounts provided for in Section 7.7.


 


SECTION 6.9.   Trustee May File Proofs of Claim.  The Trustee may file such proofs of claim and
other papers or documents as may be necessary or advisable in order to have the
claims of the Trustee (including any claim for the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel)
and the Securityholders allowed in any judicial proceedings relative to the
Company, its Subsidiaries or its or their respective creditors or properties
and, unless prohibited by law or applicable regulations, may be entitled and
empowered to participate as a member of any official committee of creditors
appointed in such matter and may vote on behalf of the Holders in any election
of a trustee in bankruptcy or other Person performing similar functions, and
any Custodian in any such judicial proceeding is hereby authorized by each
Holder to make payments to the Trustee and, in the event that the Trustee shall
consent to the making of such payments directly to the Holders, to pay to the
Trustee any amount due it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and its counsel, and any
other amounts due the Trustee under Section 7.7.


 


No provision of this Indenture 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 Securities or the rights of any Holder thereof or to
authorize the Trustee to vote in respect of the claim of any Holder in any such
proceeding.


 


SECTION 6.10.   Priorities.  (a)  
With respect to the First Priority Collateral, if the Trustee collects
any money or property pursuant to this Article VI, or pursuant to
the


 


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foreclosure
or other remedial provisions contained in the Collateral Documents or the
Intercreditor Agreement (including any money or property deposited into the
First Priority Collateral Account in connection therewith), it shall pay out
the money or property in the following order:


 


FIRST:  to the Trustee for amounts due to it under Section 7.7
and to the Collateral Agent for fees and expenses incurred under the Collateral
Documents or the Intercreditor Agreement;


 


SECOND:  to Securityholders for amounts due and unpaid
on the Securities for principal, premium, if any, and interest, ratably,
without preference or priority of any kind, according to the amounts due and
payable on the Securities for principal, premium, if any, Additional Amounts,
if any, and interest (including Additional Interest), respectively;


 


THIRD:  to the administrative
agent under the Working Capital Facility for amounts due and unpaid under the
Working Capital Facility until the obligations thereunder are paid in full; and


 


FOURTH:  to the Company.


 


(b)  With respect to the Second Priority Collateral, if the
Trustee collects any money or property pursuant to this Article VI,
or pursuant to the foreclosure or other remedial provisions contained in the
Collateral Documents or the Intercreditor Agreement (including any money or
property deposited into the Second Priority Collateral Account in connection
therewith), it shall pay out the money or property in the following order:


 


FIRST:  to the Trustee for amounts due to it under Section 7.7
and to the Collateral Agent for fees and expenses incurred under the Collateral
Documents or the Intercreditor Agreement;


 


SECOND: to Securityholders for
amounts due and unpaid on the Securities for principal, premium, if any,
Additional Amounts, if any, and interest (including Additional Interest),
ratably, without preference or priority of any kind, according to the amounts
due and payable on the Securities for principal, premium, if any, and interest,
respectively; and


 


THIRD:  to the Company or, to the extent the Trustee
collects any amount for any Subsidiary Guarantor, to such Subsidiary Guarantor;


 


provided, however,
that the payments set forth above shall be made only after the satisfaction and
discharge in full of the security interest and lien of the administrative agent
under the Working Capital Facility with respect to the Second Priority
Collateral pursuant to the Working Capital Facility and related documents.


 


(c)   The Trustee may fix a
record date and payment date for any payment to Securityholders pursuant to
this Section.  At least 15 days
before such record date, the Company 


 


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shall mail to each
Securityholder and the Trustee a notice that states the record date, the
payment date and amount to be paid.


 


SECTION 6.11.   Undertaking for Costs.  In any suit for the enforcement of any right
or remedy under this Indenture or in any suit against the Trustee for any
action taken or omitted by it as Trustee, a court in its discretion may require
the filing by any party litigant in the suit of an undertaking to pay the costs
of the suit, and the court in its discretion may assess reasonable costs,
including reasonable attorneys’ fees and expenses, against any party litigant
in the suit, having due regard to the merits and good faith of the claims or
defenses made by the party litigant. 
This Section does not apply to a suit by the Trustee, a suit by the
Company, a suit by a Holder pursuant to Section 6.7 or a suit by
Holders of more than 10% in outstanding principal amount of the Securities.


 


ARTICLE VII



 TRUSTEE


 


SECTION 7.1.   Duties of Trustee.  (a)  If an Event of Default has occurred
and is continuing, the Trustee or the Collateral Agent shall exercise the
rights and powers vested in it by this Indenture and use the same degree of
care and skill in their exercise as a prudent Person would exercise or use
under the circumstances in the conduct of such person’s own affairs; provided that the Trustee and the Collateral Agent will be
under no obligation to exercise any of the rights or powers under this
Indenture, the Securities, the Subsidiary Guarantees, the Collateral Documents
or the Intercreditor Agreement at the request or direction of any of the
Holders unless such Holders have offered the Trustee or the Collateral Agent
indemnity or security reasonably satisfactory to each of them against loss,
liability or expense.


 


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


 


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


 


(2)   in the absence of bad faith on its part, the Trustee
may conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon certificates, opinions or orders furnished
to the Trustee and conforming to the requirements of this Indenture, the
Securities, the Subsidiary Guarantees, the Collateral Documents or the
Intercreditor Agreement, as applicable. 
However, in the case of any such certificates or opinions which by any
provisions hereof are specifically required to be furnished to the Trustee, the
Trustee shall examine such certificates and opinions to determine whether or
not they conform to the requirements of this Indenture, the Securities, the
Subsidiary Guarantees, the Collateral Documents or the Intercreditor Agreement,
as the case may be (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 liability for its own
negligent action, its own negligent failure to act or its own willful
misconduct, except that:


 


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


 


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


 


(3)   the Trustee shall not be liable with respect to any
action it takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.5; and


 


(4)   No provision of this Indenture, the Securities, the
Subsidiary Guarantees, the Collateral Documents or the Intercreditor Agreement
shall require the Trustee to expend or risk its own funds or otherwise incur
financial liability in the performance of any of its duties hereunder or
thereunder or in the exercise of any of its rights or powers, if it shall have
reasonable grounds to believe that repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it.


 


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


 


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


 


(f)  Money held in trust by the Trustee need not be segregated
from other funds except to the extent required by law, the Collateral
Documents, the Intercreditor Agreement or by Section 11.8.


 


(g)  Every provision of this Indenture relating to the conduct or
affecting the liability of or affording protection to the Trustee shall be
subject to the provisions of this Section and to the provisions of the
TIA.


 


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


 


SECTION 7.2.   Rights of Trustee.  Subject to Section 7.1:


 


(a)  The Trustee may conclusively rely
on any document (whether in its original or facsimile form) reasonably believed
by it to be genuine and to have been signed or presented by the proper
person.  The Trustee need not investigate
any fact or matter stated in the document. The Trustee shall receive and retain
financial reports and statements of the Company as provided herein, but shall
have no duty to review or analyze such reports or statements to determine
compliance with covenants or other obligations of the Company.


 


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


 


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


 


(d)  The Trustee shall not be liable for any action it takes or
omits to take in good faith which it believes to be authorized or within its
rights or powers, unless the Trustee’s conduct constitutes willful misconduct
or negligence.


 


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


 


(f)  The Trustee shall not be deemed to have notice of any Default
or Event of Default or whether any entity or group of entities constitutes a
Significant Subsidiary unless a Trust Officer of the Trustee has actual
knowledge thereof or unless written notice of any event which is in fact such a
Default or of any such Significant Subsidiary is received by the Trustee at the
corporate trust office of the Trustee specified in Section 12.2,
and such notice references the Securities and this Indenture.


 


(g)  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 to each agent, custodian and other Person
employed to act hereunder.


 


(h)  The Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Indenture, the Securities, the
Subsidiary Guarantees, the Collateral Documents or the Intercreditor Agreement
at the request, order or direction of any of the Holders pursuant to the
provisions of this Indenture, unless such Holders shall have offered to the
Trustee security or indemnity reasonably satisfactory to it against the costs,
expenses and liabilities which may be incurred therein or thereby.


 


(i)  The Trustee shall not be deemed to have knowledge of any fact
or matter unless such fact or matter is known to a Trust Officer of the
Trustee.


 


(j)  Whenever in the administration of this Indenture, the
Securities, the Subsidiary Guarantees, the Collateral Documents or the
Intercreditor Agreement the Trustee shall deem it desirable that a matter be
proved or established prior to taking, suffering or omitting any action
hereunder or thereunder, the Trustee (unless other evidence be herein
specifically prescribed) may request and in the absence of bad faith or willful
misconduct on its part, rely upon an Officers’ Certificate.


 


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(k)  In no event shall the Trustee be responsible or liable for
any 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.


 


SECTION 7.3.   Individual Rights of Trustee.  The Trustee in its individual or any other
capacity may become the owner or pledgee of Securities and may otherwise deal
with the Company, Subsidiary Guarantors or their Affiliates with the same
rights it would have if it were not Trustee. 
Any Paying Agent, Registrar, co-registrar or co-paying agent may do the
same with like rights.  However, the
Trustee must comply with Sections 7.10 and 7.11.  In addition, the Trustee shall be permitted
to engage in transactions with the Company; provided,
however, that if the Trustee acquires any conflicting interest under
the TIA, the Trustee must (i) eliminate such conflict within 90 days
of acquiring such conflicting interest, (ii) apply to the SEC for
permission to continue acting as Trustee or (iii) resign.


 


SECTION 7.4.   Trustee’s Disclaimer.  The Trustee shall not be responsible for and
makes no representation as to the validity or adequacy of this Indenture, the
Subsidiary Guarantees, the Collateral Documents, the Intercreditor Agreement or
the Securities, shall not be accountable for the Company’s use of the proceeds
from the sale of the Securities, shall not be responsible for the use or
application of any money received by any Paying Agent other than the Trustee or
any money paid to the Company pursuant to the terms of this Indenture and shall
not be responsible for any statement of the Company in this Indenture or in any
document issued in connection with the sale of the Securities or in the
Securities other than the Trustee’s certificate of authentication.


 


SECTION 7.5.   Notice of Defaults.  If a Default or Event of Default occurs and
is continuing and if a Trust Officer has actual knowledge thereof, the Trustee
shall mail by first class mail to each Securityholder at the address set forth
in the Securities Register notice of the Default or Event of Default within
90 days after it is actually known to a Trust Officer. Except in the case
of a Default or Event of Default in payment of principal of, premium (if any),
or interest on any Security (including payments pursuant to the optional redemption
or required repurchase provisions of such Security), the Trustee may withhold
the notice if and so long as a committee of its Trust Officers in good faith
determines that withholding the notice is in the interests of Securityholders.


 


SECTION 7.6.   Reports by Trustee to Holders.  Within 60 days after each January 15
beginning January 15, 2010, the Trustee shall mail to each Securityholder
a brief report dated as of such January 15 that complies with TIA
§ 313(a) if and to the extent required thereby.  The Trustee also shall comply with TIA
§ 313(b) and TIA § 313(c).


 


A copy of each report at the time of its
mailing to Securityholders shall be filed with the SEC and each stock exchange
(if any) on which the Securities are listed. 
The Company agrees to notify promptly the Trustee whenever the
Securities become listed on any stock exchange and of any delisting thereof and
the Trustee shall comply with TIA § 313(d).


 


SECTION 7.7.   Compensation and Indemnity.  The Company shall pay to the Trustee from
time to time reasonable compensation for its services hereunder and under the


 


106

















 


Securities,
the Subsidiary Guarantees, the Collateral Documents and the Intercreditor
Agreement as the Company and the Trustee shall from time to time agree in
writing.  The Trustee’s compensation
shall not be limited by any law on compensation of a trustee of an express
trust.  The Company shall reimburse the
Trustee upon request for all reasonable out-of-pocket expenses incurred or made
by it, including, but not limited to, costs of collection, costs of preparing
reports, certificates and other documents, costs of preparation and mailing of
notices to Securityholders.  Such
expenses shall include the reasonable compensation and expenses, disbursements
and advances of the Trustee’s agents, counsel, accountants and experts.  The Company shall indemnify the Trustee
against any and all loss, liability, damages, claims or expense (including
reasonable attorneys’ fees and expenses) incurred by it without willful
misconduct, negligence or bad faith on its part in connection with the
administration of this trust and the performance of its duties hereunder and
under the Securities, the Subsidiary Guarantees, the Collateral Documents and
the Intercreditor Agreement, including the costs and expenses of enforcing this
Indenture (including this Section 7.7), the Securities, the
Subsidiary Guarantees, the Collateral Documents and the Intercreditor Agreement
and of defending itself against any claims (whether asserted by any
Securityholder, the Company or otherwise). 
The Trustee shall notify the Company promptly of any claim for which it
may seek indemnity of which it has received written notice.  Failure by the Trustee to so notify the Company
shall not relieve the Company of its obligations hereunder.  The Company shall defend the claim and the
Trustee shall provide reasonable cooperation at the Company’s expense in the
defense.  The Trustee may have separate
counsel and the Company shall pay the fees and expenses of such counsel; provided that the Company shall not be
required to pay the fees and expenses of such separate counsel if it assumes
the Trustee’s defense, and, in the reasonable judgment of outside counsel to
the Trustee, there is no conflict of interest between the Company and the
Trustee in connection with such defense.


 


To secure the Company’s payment obligations
in this Section 7.7, the Trustee shall have a lien prior to the
Securities on all money or property held or collected by the Trustee other than
money or property held in trust to pay principal of and interest on particular
Securities.  Such lien shall survive the
satisfaction and discharge of this Indenture. 
The Trustee’s right to receive payment of any amounts due under this Section 7.7
shall not be subordinate to any other liability or Indebtedness of the Company.


 


The Company’s payment obligations pursuant to
this Section shall survive the discharge of this Indenture.  Without prejudice to any other rights
available to the Trustee under applicable law, when the Trustee incurs expenses
after the occurrence of a Default specified in clause (7) or
clause (8) of Section 6.1, the expenses are intended to
constitute expenses of administration under any Bankruptcy Law.


 


SECTION 7.8.   Replacement of Trustee.  The Trustee may resign at any time by so
notifying the Company in writing.  The
Holders of a majority in principal amount of the Securities may remove the
Trustee by so notifying the removed Trustee in writing and may appoint a
successor Trustee with the Company’s written consent, which consent will not be
unreasonably withheld.  The Company shall
remove the Trustee if:


 


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


 


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(2)   the Trustee is adjudged bankrupt or insolvent;


 


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


 


(4)   the Trustee otherwise becomes incapable of acting.


 


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


 


A successor Trustee shall deliver a written
acceptance of its appointment to the retiring Trustee and to the Company.  Thereupon the resignation or removal of the
retiring Trustee shall become effective, and the successor Trustee shall have
all the rights, powers and duties of the Trustee under this Indenture.  The successor Trustee shall mail a notice of
its succession to Securityholders.  The
retiring Trustee shall promptly transfer all property held by it as Trustee to
the successor Trustee, subject to the lien provided for in Section 7.7.


 


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


 


If the Trustee fails to comply with Section 7.10,
unless the Trustee’s duty to resign is stayed as provided in TIA § 310(b),
any Securityholder, who has been a bona fide holder of a Security for at least
six months, may petition any court of competent jurisdiction for the removal of
the Trustee and the appointment of a successor Trustee.


 


Notwithstanding the replacement of the
Trustee pursuant to this Section 7.8, the Company’s obligations
under Section 7.7 shall continue for the benefit of the retiring
Trustee.


 


SECTION 7.9.   Successor Trustee by Merger.  If the Trustee consolidates with, merges or
converts into, or transfers all or substantially all its corporate trust
business or assets to, another corporation or banking association, the
resulting, surviving or transferee corporation without any further act shall be
the successor Trustee.


 


In case at the time such successor or
successors by merger, conversion or consolidation to the Trustee shall succeed
to the trusts created by this Indenture, any of the Securities shall have been
authenticated but not delivered, any such successor to the Trustee may adopt
the certificate of authentication of any predecessor trustee, and deliver such
Securities so authenticated; and in case at that time any of the Securities
shall not have been authenticated, any successor to the Trustee may
authenticate such Securities either in the name of any predecessor hereunder or
in the name of the successor to the Trustee; provided
that the right to adopt the certificate of authentication of any predecessor
Trustee or authenticate Securities in the name of any predecessor Trustee shall
only apply to its successor or successors by merger, consolidation or
conversion.


 


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SECTION 7.10.   Eligibility; Disqualification.  This Indenture shall always have a Trustee
that satisfies the requirements of TIA § 310(a)(1), (2) and (5) in
every respect.  The Trustee shall have a
combined capital and surplus of at least $100 million as set forth in its
most recent published annual report of condition.  The Trustee shall comply with TIA
§ 310(b); provided, however, that there
shall be excluded from the operation of TIA § 310(b)(1) any indenture
or indentures under which other securities or certificates of interest or
participation in other securities of the Company are outstanding if the
requirements for such exclusion set forth in TIA § 310(b)(1) are met.


 


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


 


SECTION 7.12.   Trustee’s Application for Instruction
from the Company.  Any application by
the Trustee for written instructions from the Company may, at the option of the
Trustee, set forth in writing any action proposed to be taken or omitted by the
Trustee under this Indenture and the date on and/or after which such action
shall be taken or such omission shall be effective.  The Trustee shall not be liable for any
action taken by, or omission of, the Trustee in accordance with a proposal
included in such application on or after the date specified in such application
(which date shall not be less than three Business Days after the date any
Officer of the Company actually receives such application, unless any such
Officer shall have consented in writing to any earlier date) unless prior to
taking any such action (or the effective date in the case of an omission), the
Trustee shall have received written instructions in response to such
application specifying the action to be taken or omitted.


 


ARTICLE VIII



 DISCHARGE OF INDENTURE; DEFEASANCE


 


SECTION 8.1.   Discharge of Liability on Securities;
Defeasance.  (a)  Subject to Section 8.1(c),
when (i)(x) the Company delivers to the Trustee all outstanding Securities
(other than Securities replaced or paid pursuant to Section 2.10)
for cancellation or (y) all outstanding Securities not theretofore
delivered for cancellation have become due and payable, whether at maturity or
upon redemption or will 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 pursuant to Article V
hereof and the Company or any Subsidiary Guarantor irrevocably deposits or
causes to be deposited with the Trustee as trust funds in trust solely for the
benefit of the Holders money in U.S. dollars in an amount, non-callable U.S.
Government Obligations, which through the scheduled payment of principal and
interest in respect thereof in accordance with their terms will provide, not
later than the due date of any payment, money in an amount, or a combination of
U.S. dollars and such U.S. Government Obligations, sufficient without
consideration of any reinvestment of interest to pay and discharge the entire
indebtedness on such Securities not theretofore delivered to the Trustee for
cancellation for principal, premium, if any, and accrued interest to the date
of maturity or redemption; (ii) no Default or Event of Default shall have
occurred and be continuing on the date of such deposit or


 


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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, any other instrument to which
the Company or any Subsidiary Guarantor is a party or by which the Company or
any Subsidiary Guarantor is bound; (iii) the Company or any Subsidiary
Guarantor have paid or caused to be paid all sums payable under this Indenture,
the Securities, the Subsidiary Guarantees, the Collateral Documents and the
Intercreditor Agreement; and (iv) the Company has delivered irrevocable
instructions to the Trustee under this Indenture to apply the deposited money
toward the payment of such Securities at maturity or the Redemption Date, as
the case may be, then the Trustee shall acknowledge satisfaction and discharge
of this Indenture and release of all Liens on the Collateral with respect to
the Securities on demand of the Company (accompanied by an Officers’
Certificate and an Opinion of Counsel stating that all conditions precedent
specified herein relating to the satisfaction and discharge of this Indenture
have been complied with) and at the cost and expense of the Company.  If U.S. Government Obligations shall have
been deposited in connection with such satisfaction and discharge, then as a
further condition to such satisfaction and discharge, the Trustee shall have
received a certificate from a nationally recognized firm of independent
accountants to the effect set forth in Section 8.2(2).


 


(b)  Subject to Sections 8.1(c) and 8.2,
the Company at any time may terminate (i) all its obligations under the
Securities, this Indenture, the Collateral Documents and the Intercreditor
Agreement (including all Liens on the Collateral) (“legal defeasance option”),
and after giving effect to such legal defeasance, any omission to comply with
such obligations shall no longer constitute a Default or Event of Default or (ii) its
obligations under Section 3.2, Section 3.3, Section 3.4,
Section 3.5, Section 3.6, Section 3.7, Section 3.8,
Section 3.9, Section 3.10, Section 3.11, Section 3.12,
Section 3.16, Section 3.19 and Section 4.1(3),
and the Company 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 with such
covenants shall no longer constitute a Default or an Event of Default under Section 6.1(4) and
Section 6.1(5) (to the extent applicable to such defeased
covenants), Section 6.1(6), Section 6.1(7) (with
respect to Significant Subsidiaries), Section 6.1(8) (with
respect to Significant Subsidiaries), Section 6.1(9), Section 6.1(10) and
Section 6.1(11), and the events specified in such Sections shall no
longer constitute an Event of Default (clause (ii) being referred to
as the “covenant defeasance option”), but except as specified above, the
remainder of this Indenture, the Securities, the Collateral Documents and the
Intercreditor Agreement shall be unaffected thereby.  The Company may exercise its legal defeasance
option notwithstanding its prior exercise of its covenant defeasance
option.  If the Company exercises its
legal defeasance option, the Subsidiary Guarantees in effect at such time shall
terminate and the Liens on the Collateral shall terminate and shall be released
with respect to the Securities.


 


If the Company exercises its legal defeasance
option, payment of the Securities may not be accelerated because of an Event of
Default.  If the Company exercises its
covenant defeasance option, payment of the Securities may not be accelerated
because of an Event of Default specified in Section 6.1(4) (as
such Section relates to Section 3.10 and Section 3.12(b)),
Section 6.1(5) (to the extent applicable to Section 3.2,
Section 3.3, Section 3.4, Section 3.5, Section 3.6,
Section 3.7, Section 3.8, Section 3.9, Section 3.11,
Section 3.12(a), Section 3.16 and Section 3.19)),
Section 6.1(6), Section 6.1(7) (with respect only
to Significant Subsidiaries),


 


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Section 6.1(8) (with
respect only to Significant Subsidiaries), Section 6.1(9), Section 6.1(10) and
Section 6.1(11), or because of the failure of the Company to comply
with Section 4.1(3).


 


Upon satisfaction of the conditions set forth
herein and upon request and expense of the Company, the Trustee shall
acknowledge in writing the discharge of those obligations that the Company
terminates.


 


(c)  Notwithstanding the provisions of Sections 8.1(a) and
(b) to the extent relating to a legal defeasance, the Company’s
obligations in Sections 2.2, 2.3, 2.4, 2.5,
2.6, 2.10, 2.11, 2.12, 2.13, 3.13, 3.14,
3.15, 3.17, 3.18, 6.7, 7.7 and 7.8
and in this Article VIII shall survive until the Securities have
been paid in full.  Thereafter, the
Company’s obligations in Sections 7.7, 8.4 and 8.5
shall survive.


 


SECTION 8.2.   Conditions to Defeasance.  The Company may exercise its legal defeasance
option or its covenant defeasance option only if:


 


(1)   the Company irrevocably deposits in trust with the
Trustee for the benefit of the Holders money in U.S. dollars in an amount, or
U.S. Government Obligations, which through the scheduled payment of principal
and interest in respect thereof in accordance with their terms will provide,
not later than the due date of any payment, money in an amount, or a
combination of U.S. dollars or such U.S. Government Obligations, sufficient
without consideration of any reinvestment of interest, to pay and discharge the
principal, premium, if any, and interest on the Securities to maturity or
redemption, as the case may be;


 


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


 


(3)   no Default or Event of Default shall have occurred
and be continuing on the date of such deposit or, with respect to Events of
Default under Sections 6.1(7) and (8), on the later of (i) the
91st day after such date of deposit or (ii) the day ending on the day
following the expiration of the longest preference period under any bankruptcy
law applicable to the Company in respect of such deposit;


 


(4)   such deposit shall not result in a breach or
violation of, or constitute a Default under, this Indenture, the Securities,
the Subsidiary Guarantees, the Collateral Documents, the Intercreditor Agreement
or any other agreement or instrument to which the Company or any of its
Subsidiaries is a party or by which the Company or any of its Subsidiaries is
bound;


 


(5)   the Company shall have delivered to the Trustee an
Opinion of Counsel (subject to customary assumptions and exclusions) to the
effect that (A) the Securities and (B) assuming no intervening
bankruptcy of the Company between the date of deposit and the 91st day
following the deposit and that no Holder of the Securities is an insider of


 


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the Company, after the 91st day following the deposit, the trust funds
will not be subject to the effect of any applicable bankruptcy, insolvency,
reorganization or similar laws affecting creditors’ right generally;


 


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


 


(7)   the Company shall have delivered to the Trustee an
Opinion of Counsel (subject to customary assumptions and exclusions) stating
that (i) the Securityholders will not recognize income, gain or loss for
U.S. federal income tax purposes as a result of such deposit and 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 deposit and
defeasance had not occurred and (ii) in the case of the legal defeasance
option, such Opinion of Counsel must be based on a ruling by the Internal
Revenue Service or other change in the applicable U.S. law;


 


(8)   if the Securities are to be redeemed prior to Stated
Maturity, notice of such redemption shall have been duly given pursuant to this
Indenture or provision therefor satisfactory to the Trustee shall have been
made; and


 


(9)   the Company delivers to the Trustee an Officers’
Certificate and an Opinion of Counsel, each stating that all conditions
precedent provided for herein relating to either the legal defeasance option or
covenant defeasance option, as the case may be, as contemplated by this Article VIII
have been complied with.


 


SECTION 8.3.   Application of Trust Money.  The Trustee shall hold in trust all money or
U.S. Government Obligations (including proceeds thereof) deposited with it
pursuant to this Article VIII. 
It shall apply the deposited money and the money from U.S. Government
Obligations through the Paying Agent and in accordance with this Indenture and
the Securities to the Holders of the Securities of all sums due in respect of
the payment of principal of, premium, if any, and accrued interest on the
Securities.


 


SECTION 8.4.   Repayment to the Company.  The Trustee and the Paying Agent shall
promptly turn over to the Company upon request any excess money, U.S.
Government Obligations or securities held by them upon payment of all the
obligations under this Indenture.


 


Subject to any applicable abandoned property
law, the Trustee and the Paying Agent shall pay to the Company upon request any
money held by them for the payment of principal of or premium, if any, or
interest on the Securities that remains unclaimed by the Holders thereof for
two years, and, thereafter, Securityholders entitled to the money must look to
the Company for payment as unsecured general creditors and the Trustee and the
Paying Agent shall have no further liability with respect to such money.


 


SECTION 8.5.   Indemnity for U.S. Government Obligations.  The Company shall pay and shall indemnify the
Trustee against any tax, fee or other charge imposed on or


 


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assessed
against deposited U.S. Government Obligations or the principal and interest
received on such U.S. Government Obligations.


 


SECTION 8.6.   Reinstatement.  If the Trustee or Paying Agent is unable to
apply any money or U.S. Government Obligations in accordance with this Article VIII
by reason of any legal proceeding or by reason of any order or judgment of any
court or governmental authority enjoining, restraining or otherwise prohibiting
such application, the obligations of the Company and each Subsidiary Guarantor
under this Indenture, the Securities, the Subsidiary Guarantees, the Collateral
Documents and the Intercreditor Agreement shall be revived and reinstated as
though no deposit had occurred pursuant to this Article VIII until
such time as the Trustee or Paying Agent is permitted to apply all such money
or U.S. Government Obligations in accordance with this Article VIII;
provided, however, that, if the Company
or the Subsidiary Guarantors have made any payment of principal, premium, if
any, Additional Amounts, if any, or interest (including Additional Interest) on
any Securities because of the reinstatement of their obligations, the Company
or Subsidiary Guarantors, as the case may be, shall be subrogated to the rights
of the Holders of such Securities to receive such payment from the money or
U.S. Government Obligations held by the Trustee or Paying Agent.


 


The Trustee’s rights under this Article VIII
shall survive termination of this Indenture.


 


ARTICLE IX



 AMENDMENTS


 


SECTION 9.1.   Without Consent of Holders.  The Company, the Subsidiary Guarantors and
the Trustee may amend or supplement this Indenture, the Securities, the
Subsidiary Guarantees, the Collateral Documents and the Intercreditor Agreement
without notice to or consent of any Securityholder:


 


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


 


(2)   to comply with (i) Article IV in
respect of the assumption by a Successor Company of the obligations of the
Company under this Indenture, the Securities, the Registration Rights
Agreement, the Collateral Documents and the Intercreditor Agreement and (ii) Article X
in respect of the assumption by a Person of the obligations of a Subsidiary
Guarantor under its Subsidiary Guarantee, this Indenture, the Registration
Rights Agreement, the Collateral Documents and the Intercreditor Agreement;


 


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


 


(4)   to add Guarantees with respect to the Securities or
release a Subsidiary Guarantor from its Subsidiary Guarantee from its
obligations under its Subsidiary Guarantee or this Indenture in accordance with
this Indenture;


 


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(5)   to pledge or grant a security interest in favor of
the Collateral Agent as additional security for the payment and performance of
the Company’s and Subsidiary Guarantors’ obligations with respect to the
Securities and the Subsidiary Guarantees thereof, in any property or assets,
including any that are required to be mortgaged, pledged or hypothecated or in
which a security interest is required to be granted, to the Collateral Agent
pursuant to the Collateral Documents or otherwise;


 


(6)   to release Liens in favor of the Collateral Agent in
the Collateral as provided in accordance with Section 11.6;


 


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


 


(8)   to make any change that does not adversely affect
the rights of any Securityholder or, in the case of the Intercreditor
Agreement, that does not adversely affect the rights of any Securityholder in
any material respect;


 


(9)   to comply with any requirement of the SEC in
connection with the qualification of this Indenture under the TIA;


 


(10) to provide for the appointment of a successor trustee;
provided that the successor trustee is
otherwise qualified and eligible to act as such under the terms of this
Indenture;


 


(11) to provide for the issuance of the Exchange
Securities, which will have terms substantially identical in all respects to
the Initial Securities or the Additional Securities, as the case may be (except
that the transfer restrictions contained in the Initial Securities or the
Additional Securities, if any, will be modified or eliminated, as appropriate),
and which will be treated, together with any outstanding Initial Securities or
Additional Securities, as a single class of securities; or


 


(12) to conform the text of this Indenture, the Securities
or the Subsidiary Guarantees to any provision under the heading “Description of
notes” in the Offering Memorandum to the extent that such provision in the
Offering Memorandum is intended to be a verbatim recitation of a provision of
this Indenture, the Securities or the Subsidiary Guarantees.


 


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


 


SECTION 9.2.   With Consent of Holders.  The Company, the Subsidiary Guarantors and
the Trustee may amend or supplement this Indenture, the Securities, the
Subsidiary Guarantees, the Collateral Documents and the Intercreditor Agreement
without notice to any Securityholder but with the written consent of the
Holders of at least a majority in principal amount of the Securities then
outstanding (including, without limitation, consents obtained in connection
with a purchase of, or tender offer or exchange offer for, Securities).  Any


 


114

















 


past
default or compliance with the provisions of this Indenture, the Securities,
the Subsidiary Guarantees, the Collateral Documents or the Intercreditor
Agreement may be waived with the written consent of the Holders of at least a
majority in principal amount of the Securities then outstanding (including,
without limitation, consents obtained in connection with a purchase of, or
tender offer or exchange offer for, Securities).  However, without the consent of each
Securityholder affected, an amendment, supplement or waiver may not:


 


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


 


(2)   reduce the stated rate of or extend the stated time
for payment of interest, Additional Interest or Additional Amounts on any
Security;


 


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


 


(4)   reduce the premium payable upon the redemption or
repurchase of any Security or change the time at which any Security may or shall
be redeemed or repurchased as described under Section 3.5, Section 3.10,
Article V or paragraph 5 of any Security or any similar
provision, whether through an amendment or waiver of Section 3.5, Section 3.10,
Article V or paragraph 5 of any Security, definitions or
otherwise (except amendments to the definition of “Change of Control” and “Permitted
Holder”);


 


(5)   make any Security payable in money other than that
stated in the Security;


 


(6)   impair the right of any Holder to receive payment of
principal of, premium, if any, Additional Amounts, if any, and interest
(including Additional Interest) on such Holder’s Securities on or after the due
dates therefor or to institute suit for the enforcement of any payment on or
with respect to such Holder’s Securities;


 


(7)   make any change to this Section 9.2;


 


(8)   modify the Subsidiary Guarantees in any manner
adverse to the Holders; or


 


(9)   release all or substantially all of the Collateral
other than in accordance with Section 11.6, the Collateral
Documents and the Intercreditor Agreement.


 


In addition,
without the consent of 75% in aggregate principal amount of Securities then
outstanding, an amendment, supplement or waiver may not:


 


(1)   modify any Collateral Document or the provisions in
this Indenture dealing with Collateral Documents or application of trust moneys
in any manner adverse to the Holders of the Securities or otherwise release any
Collateral other than in accordance with this Indenture, the Collateral
Documents and the Intercreditor Agreement; or


 


(2)   modify the Intercreditor Agreement in any manner
adverse to the Holders of the Securities in any material respect other than in
accordance with the terms of this Indenture, the Collateral Documents and the
Intercreditor Agreement.


 


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It shall not be necessary for the consent of
the Holders under this Section to approve the particular form of any
proposed amendment, supplement or waiver, but it shall be sufficient if such
consent approves the substance thereof. 
A consent to any amendment, supplement or waiver under this Indenture by
any Holder of the Securities given in connection with a tender or exchange of
such Holder’s Securities will not be rendered invalid by such tender or
exchange.


 


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


 


SECTION 9.3.   Compliance with Trust Indenture Act.  Every amendment or supplement to this
Indenture, the Securities, the Subsidiary Guarantees, the Collateral Documents
or the Intercreditor Agreement shall comply with the TIA as then in effect.


 


SECTION 9.4.   Revocation and Effect of Consents and
Waivers.  A consent to an amendment,
supplement or a waiver by a Holder of a Security shall bind the Holder and
every subsequent Holder of that Security or portion of the Security that
evidences the same debt as the consenting Holder’s Security, even if notation
of the consent or waiver is not made on the Security.  Any such Holder or subsequent Holder may
revoke the consent or waiver as to such Holder’s Security or portion of the
Security if the Trustee receives the notice of revocation before the date the
amendment, supplement or waiver becomes effective or otherwise in accordance
with any related solicitation documents. 
After an amendment, supplement or waiver becomes effective, it shall
bind every Securityholder unless it makes a change described in any of
clauses (1) through (9) of Section 9.2, in that case
the amendment, supplement, waiver or other action shall bind each
Securityholder who has consented to it and every subsequent Securityholder that
evidences the same debt as the consenting Holder’s Securities.  An amendment, supplement or waiver shall
become effective upon receipt by the Trustee of the requisite number of written
consents under Section 9.1 or 9.2 as applicable.


 


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


 


SECTION 9.5.   Notation on or Exchange of Securities.  If an amendment, supplement or waiver changes
the terms of a Security, the Trustee may require the Holder of the Security to
deliver it to the Trustee.  The Trustee
may place an appropriate notation on the Security regarding the changed terms
and return it to the Holder. 
Alternatively, if the Company or the Trustee so determine, the Company
in exchange for the Security shall issue and the Trustee shall authenticate a
new Security that reflects the changed terms. 
Failure to make the appropriate notation or to issue a new Security
shall not affect the validity of such amendment.


 


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SECTION 9.6.   Trustee to Sign Amendments.  The Trustee shall sign any amendment,
supplement or waiver authorized pursuant to this Article IX if the
amendment, supplement or waiver does not adversely affect the rights, duties,
liabilities or immunities of the Trustee. 
If it does, the Trustee may but need not sign it.  In signing any amendment, supplement or
waiver the Trustee shall be entitled to receive indemnity reasonably satisfactory
to it and shall be provided with, and (subject to Sections 7.1 and 7.2)
shall be fully protected in relying upon, an Officers’ Certificate and an
Opinion of Counsel stating that such amendment, supplement or waiver is
authorized or permitted by this Indenture and that such amendment, supplement
or waiver is the legal, valid and binding obligation of the Company and any
Subsidiary Guarantors, enforceable against them in accordance with its terms,
subject to customary exceptions, and complies with the provisions hereof
(including Section 9.3).


 


ARTICLE X



 SUBSIDIARY GUARANTEE


 


SECTION 10.1.   Subsidiary Guarantee.  Subject to the provisions of this Article X,
each Subsidiary Guarantor hereby fully, unconditionally and irrevocably
guarantees, as primary obligor and not merely as surety, jointly and severally
with each other Subsidiary Guarantor, to each Holder of the Securities, to the
extent lawful, and the Trustee the full and punctual payment when due, whether
at maturity, by acceleration, by redemption or otherwise, of the principal of,
premium, if any, Additional Amounts, if any, and interest (including Additional
Interest) on the Securities and all other obligations and liabilities of the
Company under this Indenture (including without limitation interest (including
Additional Interest) accruing after the filing of any petition in bankruptcy,
or the commencement of any insolvency, reorganization or like proceeding,
relating to the Company or any Subsidiary Guarantor whether or not a claim for
post-filing or post-petition interest is allowed in such proceeding and the
obligations under Section 7.7), the Registration Rights Agreement,
the Collateral Documents and the Intercreditor Agreement (all the foregoing
being hereinafter collectively called the “Obligations”).  Each Subsidiary Guarantor agrees that the
Obligations will rank equally in right of payment with other Indebtedness of
such Subsidiary Guarantor, except to the extent such other Indebtedness is
subordinate to the Obligations.  Each
Subsidiary Guarantor further agrees (to the extent permitted by law) that the
Obligations may be extended or renewed, in whole or in part, without notice or
further assent from it, and that it will remain bound under this Article X
notwithstanding any extension or renewal of any Obligation.


 


Each Subsidiary Guarantor waives presentation
to, demand of payment from and protest to the Company of any of the Obligations
and also waives notice of protest for nonpayment.  Each Subsidiary Guarantor waives notice of
any default under the Securities or the Obligations.


 


Each Subsidiary Guarantor further agrees that
its Subsidiary Guarantee herein constitutes a Guarantee of payment when due
(and not a Guarantee of collection) and waives any right to require that any
resort be had by any Holder to any security held for payment of the
Obligations.


 


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Except as set forth in Section 10.2,
the obligations of each Subsidiary Guarantor hereunder shall not be subject to
any reduction, limitation, impairment or termination for any reason (other than
payment of the Obligations in full), including any claim of waiver, release,
surrender, alteration or compromise, and shall not be subject to any defense of
setoff, counterclaim, recoupment or termination whatsoever or by reason of the
invalidity, illegality or unenforceability of the Obligations or
otherwise.  Without limiting the
generality of the foregoing, the obligations of each Subsidiary Guarantor
herein shall not be discharged or impaired or otherwise affected by (a) the
failure of any Holder to assert any claim or demand or to enforce any right or
remedy against the Company or any other person under this Indenture, the
Securities or any other agreement or otherwise; (b) any extension or
renewal of any thereof; (c) any rescission, waiver, amendment or modification
of any of the terms or provisions of this Indenture, the Securities or any
other agreement; (d) the release of any security held by any Holder or the
Collateral Agent for the Obligations or any of them; (e) the failure of
any Holder to exercise any right or remedy against any other Subsidiary
Guarantor; (f) any change in the ownership of the Company; (g) any
default, failure or delay, willful or otherwise, in the performance of the
Obligations, or (h) any other act or thing or omission or delay to do any
other act or thing which may or might in any manner or to any extent vary the
risk of any Subsidiary Guarantor or would otherwise operate as a discharge of
such Subsidiary Guarantor as a matter of law or equity.


 


Each Subsidiary Guarantor agrees that its
Subsidiary Guarantee herein shall remain in full force and effect until payment
in full of all the Obligations or such Subsidiary Guarantor is released from
its Subsidiary Guarantee upon the merger or the sale of all the Capital Stock
or assets of the Subsidiary Guarantor or otherwise in compliance with Section 10.2
or Article VIII.  Each
Subsidiary Guarantor further agrees that its Subsidiary Guarantee herein shall
continue to be effective or be reinstated, as the case may be, if at any time
payment, or any part thereof, of principal of, premium, if any, or interest on
any of the Obligations is rescinded or must otherwise be restored by any Holder
upon the bankruptcy or reorganization of the Company or otherwise.


 


In furtherance of the foregoing and not in
limitation of any other right which any Holder has at law or in equity against
any Subsidiary Guarantor by virtue hereof, upon the failure of the Company to
pay any of the Obligations when and as the same shall become due, whether at
maturity, by acceleration, by redemption or otherwise, each Subsidiary
Guarantor hereby promises to and will, upon receipt of written demand by the
Trustee, forthwith pay, or cause to be paid, in cash, to the Trustee or the
Trustee on behalf of the Holders an amount equal to the sum of (i) the
unpaid amount of such Obligations then due and owing and (ii) accrued and
unpaid interest (including Additional Interest) on such Obligations then due
and owing (but only to the extent not prohibited by law).


 


Each Subsidiary Guarantor further agrees
that, as between such Subsidiary Guarantor, on the one hand, and the Holders,
on the other hand, (x) the maturity of the Obligations guaranteed hereby
may be accelerated as provided in this Indenture for the purposes of its
Subsidiary Guarantee herein, notwithstanding any stay, injunction or other
prohibition preventing such acceleration in respect of the Obligations
guaranteed hereby and (y) in the event of any such declaration of
acceleration of such Obligations, such Obligations (whether or not due 


 


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and payable)
shall forthwith become due and payable by the Subsidiary Guarantor for the
purposes of this Subsidiary Guarantee.


 


Each Subsidiary Guarantor also agrees to pay
any and all reasonable costs and expenses (including reasonable attorneys’
fees) incurred by the Trustee or the Holders in enforcing any rights under this
Section.


 


Neither the Company nor the Subsidiary
Guarantors shall be required to make a notation on the Securities to reflect
any Subsidiary Guarantee or any release, termination or discharge thereof and
any such notation shall not be a condition to the validity of any Subsidiary
Guarantee.


 


SECTION 10.2.   Limitation on Liability; Termination,
Release and Discharge.


 


(a)    Any term or provision
of this Indenture to the contrary notwithstanding, the obligations of each
Subsidiary Guarantor hereunder will be limited to the maximum amount as will,
after giving effect to all other contingent and fixed liabilities of such Subsidiary
Guarantor (including, without limitation, any guarantees under the Working
Capital Facility) and after giving effect to any collections from or payments
made by or on behalf of any other Subsidiary Guarantor in respect of the
obligations of such other Subsidiary Guarantor under its Subsidiary Guarantee
or pursuant to its contribution obligations under this Indenture, result in the
obligations of such Subsidiary Guarantor under its Subsidiary Guarantee not
constituting a fraudulent conveyance or fraudulent transfer under federal or
state law and not otherwise being void or voidable under any similar laws
affecting the rights of creditors generally.


 


(b)   The Company will not
permit any Subsidiary Guarantor to consolidate with or merge with or into any
Person (other than the Company or another Subsidiary Guarantor), or convey,
transfer or lease all or substantially all of the assets of any Subsidiary
Guarantor (other than to the Company or another Subsidiary Guarantor), unless:


 


(1)           (A) if such entity remains a Subsidiary
Guarantor, the resulting, surviving or transferee Person will be a corporation,
partnership, trust or limited liability company organized and existing under
the laws of the United States of America, any State of the United States or the
District of Columbia (or Canada, in the case of a Subsidiary Guarantor
organized in Canada); (B) immediately after giving effect to such
transaction (and treating any Indebtedness that becomes an obligation of the
resulting, surviving or transferee Person or any Restricted Subsidiary as a
result of such transaction as having been Incurred by such Person or such
Restricted Subsidiary at the time of such transaction), no Default of Event of
Default shall have occurred and be continuing; (C) the resulting, surviving
or transferee Person (if not such Subsidiary Guarantor) assumes all the
obligations of such Subsidiary Guarantor pursuant to a supplemental indenture
in form and substance reasonably satisfactory to the Trustee under the
Securities, this Indenture, the Collateral Documents, the Intercreditor
Agreement and the Registration Rights Agreement and shall cause such
amendments, supplements or other instruments to be executed, filed and recorded
in such jurisdictions as may be required by applicable law to preserve and
protect the Lien on the Collateral pledged by or transferred to the surviving
entity, together with such financing statements or comparable documents as may
be required to perfect any security interest in such Collateral which may be
perfected by the filing 


 


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of a financing
statement or similar document under the Uniform Commercial Code or other
similar statute or regulation of the relevant states or jurisdictions in each
case in a form reasonably satisfactory to the Trustee; and (D) the Company
will have delivered to the Trustee an Officers’ Certificate and an Opinion of
Counsel, each stating that such consolidation, merger or transfer and such
supplemental indenture (if any) comply with this Indenture; and


 


(2)           the transaction is made in compliance with Section 3.5
(it being understood that only such portion of the Net Available Cash as is
required to be applied on the date of such transaction in accordance with the
terms of this Indenture needs to be applied in accordance therewith at such
time), Section 3.9 and this Section 10.2.


 


Upon the sale or disposition of a Subsidiary Guarantor (by merger,
consolidation, the sale of its Capital Stock or the sale of all or
substantially all of its assets (other than by lease)) and whether or not the
Subsidiary Guarantor is the surviving corporation in such transaction, to a
Person which is not the Company or a Restricted Subsidiary, such Subsidiary
Guarantor will be automatically released from all its obligations under this
Indenture and its Subsidiary Guarantee, the Registration Rights Agreement, the
Collateral Documents to which it is a party and the Intercreditor Agreement,
such Subsidiary Guarantee will terminate and the Liens, if any, on the Collateral
pledged by such Subsidiary Guarantor pursuant to the Collateral Documents shall
be released with respect to the Securities if (x) the sale or other
disposition is in compliance with this Indenture, including Section 3.5
(it being understood that only such portion of the Net Available Cash as is
required to be applied on the date of such transaction in accordance with the
terms of this Indenture needs to be applied in accordance therewith at such
time), Section 3.9 and this Section 10.2 and (y) all
the obligations of such Subsidiary Guarantor under all Credit Facilities and
related documentation and any other agreements relating to any other
Indebtedness of the Company or its Restricted Subsidiaries terminate upon
consummation of such transaction.


 


(c)  Each Subsidiary Guarantor will be deemed released from all
its obligations under this Indenture, its Subsidiary Guarantee, the
Registration Rights Agreement, the Collateral Documents to which it is a party
and the Intercreditor Agreement, and such Subsidiary Guarantee will terminate,
upon the legal defeasance of the Securities or upon satisfaction and discharge
of this Indenture, in each case pursuant to the provisions of Article VIII
hereof.


 


(d)  Each Subsidiary Guarantor will be released from its obligations
under this Indenture, its Subsidiary Guarantee, the Registration Rights
Agreement, the Collateral Documents to which it is a party and the
Intercreditor Agreement if the Company designates such Subsidiary Guarantor as
an Unrestricted Subsidiary and such designation complies with the other
applicable provisions of this Indenture.


 


SECTION 10.3.   Right of Contribution.  Each Subsidiary Guarantor hereby agrees that
to the extent that any Subsidiary Guarantor shall have paid more than its
proportionate share of any payment made on the obligations under the Subsidiary
Guarantees, such Subsidiary Guarantor shall be entitled to seek and receive
contribution from and against the Company or any other Subsidiary Guarantor who
has not paid its proportionate share of such payment.  The provisions of this Section 10.3
shall in no respect limit the obligations and liabilities of each Subsidiary
Guarantor to the Trustee and the Holders and each Subsidiary


 


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Guarantor
shall remain liable to the Trustee and the Holders for the full amount
guaranteed by such Subsidiary Guarantor hereunder.


 


SECTION 10.4.   No Subrogation.  Notwithstanding any payment or payments made
by each Subsidiary Guarantor hereunder, no Subsidiary Guarantor shall be
entitled to be subrogated to any of the rights of the Trustee or any Holder
against the Company or any other Subsidiary Guarantor or any collateral
security or guarantee or right of offset held by the Trustee or any Holder for
the payment of the Obligations, nor shall any Subsidiary Guarantor seek or be
entitled to seek any contribution or reimbursement from the Company or any
other Subsidiary Guarantor in respect of payments made by such Subsidiary
Guarantor hereunder, until all amounts owing to the Trustee and the Holders by
the Company on account of the Obligations are paid in full.  If any amount shall be paid to any Subsidiary
Guarantor on account of such subrogation rights at any time when all of the
Obligations shall not have been paid in full, such amount shall be held by such
Subsidiary Guarantor in trust for the Trustee and the Holders, segregated from
other funds of such Subsidiary Guarantor, and shall, forthwith upon receipt by
such Subsidiary Guarantor, be turned over to the Trustee in the exact form
received by such Subsidiary Guarantor (duly indorsed by such Subsidiary
Guarantor to the Trustee, if required), to be applied against the Obligations.


 


ARTICLE XI



 COLLATERAL AND SECURITY


 


SECTION 11.1.   The Collateral.


 


(a)  The due and punctual payment of the principal of, premium, if
any, Additional Amounts, if any, and interest (including Additional Interest)
on the Securities and the Guarantees thereof when and as the same shall be due
and payable, whether on an interest payment date, at maturity, by acceleration,
repurchase, redemption or otherwise, interest on the overdue principal of and
interest (to the extent permitted by law), if any, on the Securities and the
Guarantees thereof and performance of all other obligations under this
Indenture, including, without limitation, the obligations of the Company set
forth in Section 7.7 and Section 8.5 herein, and the
Securities and the Guarantees thereof and the Collateral Documents, shall be
secured by (i) first-priority Liens and security interests and (ii) second-priority
Liens and security interests, in each case subject to Permitted Liens, as
provided in the Collateral Documents which the Company and the Subsidiary
Guarantors, as the case may be, have entered into simultaneously with the
execution of this Indenture and will be secured by all Collateral Documents
hereafter delivered as required or permitted by this Indenture, the Collateral
Documents and the Intercreditor Agreement. 
The Company and the Subsidiary Guarantors hereby agree that the
Collateral Agent shall hold the Collateral in trust for the benefit of all of
the Holders and the Trustee, in each case pursuant to the terms of the
Collateral Documents and the Intercreditor Agreement and the Collateral Agent
is hereby authorized to execute and deliver the Collateral Documents and the
Intercreditor Agreement.


 


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(b)  Each Holder, by its acceptance of any Securities and the
Guarantees thereof, consents and agrees to the terms of the Collateral
Documents and the Intercreditor Agreement (including, without limitation, the
provisions providing for foreclosure) as the same may be in effect or may be
amended from time to time in accordance with their terms and authorizes and directs
the Collateral Agent to perform its obligations and exercise its rights under
the Collateral Documents and the Intercreditor Agreement in accordance
therewith.


 


(c)  The Trustee and each Holder, by accepting the Securities and
the Guarantees thereof, acknowledges that, as more fully set forth in the
Collateral Documents and the Intercreditor Agreement, the Collateral as now or
hereafter constituted shall be held for the benefit of all the Holders and the
Trustee, and that the Lien of this Indenture and the Collateral Documents in
respect of the Trustee and the Holders is subject to and qualified and limited
in all respects by the Collateral Documents and the Intercreditor Agreement and
actions that may be taken thereunder.


 


SECTION 11.2.   Further Assurances.


 


(a)  The Company will, and will cause each Subsidiary Guarantor
to, at their sole expense, do or cause to be done all acts and things which may
be required, or which the Trustee from time to time may reasonably request,
which request the Trustee shall not be obligated to make, to assure and confirm
that the Collateral Agent holds, for the benefit of the Holders of the
Securities and the Guarantees thereof and the Trustee, duly created,
enforceable and perfected first or second priority Liens and security
interests, as applicable, in the Collateral (subject to Permitted Liens) as
contemplated by the Collateral Documents and the Intercreditor Agreement.


 


(b)  As necessary, or upon reasonable request of the Trustee,
which request the Trustee shall not be obligated to make, the Company will, and
will cause each Subsidiary Guarantor to, at their sole expense, promptly
execute, acknowledge and deliver such Collateral Documents, the Intercreditor
Agreement, instruments, certificates, notices and other documents and take such
other actions as shall be required or which the Trustee may reasonably request
to create, perfect, protect, assure, transfer, confirm or enforce the Liens and
benefits intended to be conferred as contemplated by this Indenture, the Collateral
Documents and the Intercreditor Agreement for the benefit of the Holders of the
Securities and the Guarantees thereof and the Trustee, including with respect
to after-acquired Collateral.  If the
Company or such Subsidiary fails to do so, the Trustee is hereby irrevocably
authorized and empowered, with full power of substitution, to execute,
acknowledge and deliver such Collateral Documents, the Intercreditor Agreement,
instruments, certificates, notices and other documents and, subject to the
provisions of the Collateral Documents and the Intercreditor Agreement, take
such other actions in the name, place and stead of the Company or such
Subsidiary, but the Trustee will have no obligation to do so and no liability
for any action taken or omitted by it in good faith in connection therewith.


 


(c)  The Company will otherwise comply with the provisions of TIA
§314(b).  Promptly after the
effectiveness of this Indenture, to the extent required by the TIA, the Company
shall deliver the opinion(s) required by Section 314(b)(1) of
the TIA.  Subsequent to the execution and
delivery of this Indenture, to the extent required by the TIA, the Company
shall furnish to the Trustee on or prior to each anniversary of the Issue Date,
an Opinion of 


 


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Counsel, dated as of
such date, stating either that (i) in the opinion of such counsel, all
action has been taken with respect to any filing, re-filing, recording or
re-recording with respect to the Collateral as is necessary to maintain the
Lien on the Collateral in favor of the Holders or (ii) in the opinion of
such counsel, that no such action is necessary to maintain such Lien.


 


(d)  The Company will cause TIA §313(b), relating to reports, and
TIA §314(d), relating to the release of property and the substitution therefor
of any property to be pledged as Collateral for the Securities and the
Guarantees therefor, to be complied with, whether or not this Indenture is
qualified under the TIA. Any certificate or opinion required by TIA §314(d) may
be made by an Officer of the Company except in cases where TIA §314(d) requires
that such certificate or opinion be made by an independent Person, which Person
will be an independent engineer, appraiser or other expert reasonably satisfactory
to the Trustee. Notwithstanding anything to the contrary in this paragraph, the
Company will not be required to comply with all or any portion of TIA §314(d) if
it determines, in good faith based on advice of counsel, that under the terms
of TIA §314(d) and/or any interpretation or guidance as to the meaning
thereof of the SEC and its staff, including “no action” letters or exemptive
orders, all or any portion of TIA §314(d) is inapplicable to one or a
series of released Collateral.


 


SECTION 11.3.   After-Acquired
Property.  Subject to Permitted Liens
and the terms of the Collateral Documents, upon the acquisition by the Company
or any Subsidiary Guarantor after the Issue Date of (1) any assets, including,
but not limited to, subject to Section 11.5, any after-acquired real
property or any equipment or fixtures which constitute accretions, additions or
technological upgrades to the equipment or fixtures that form part of the First
Priority Collateral or Second Priority Collateral, as applicable, or (2) any
Additional Assets out of the Net Cash Proceeds from any issuance of Additional
Securities or in compliance with Section 3.5, the Company or such
Subsidiary Guarantor shall execute and deliver such mortgages, deeds of trust,
security instruments, financing statements, title insurance, certificates and
Opinions of Counsel as may be necessary to vest in the Collateral Agent a
perfected security interest, subject only to Permitted Liens, in such
after-acquired property and to have such after-acquired property added to the
Collateral, and thereupon all provisions of this Indenture, the Securities, the
Note Security Agreement and the Intercreditor Agreement relating to the
Collateral shall be deemed to relate to such after-acquired property to the
same extent and with the same force and effect.


 


In addition, if,
after the Issue Date, the Company or any Restricted Subsidiary grants any Lien
on any leasehold interest in real property, the Company or such Subsidiary
Guarantor shall execute and deliver such mortgages, deeds of trust, security
instruments, financing statements, title insurance, certificates and Opinions
of Counsel as may be necessary to vest in the Collateral Agent a perfected
security interest, subject only to Permitted Liens, in such leasehold interest
and to have such leasehold interest added to the Collateral, and thereupon all
provisions of this Indenture, the Securities, the Note Security Agreement and
the Intercreditor Agreement relating to the Collateral shall be deemed to
relate to such leasehold interest to the same extent and with the same force
and effect.


 


SECTION 11.4.   Impairment of Security Interest.  Neither the Company nor any of its Restricted
Subsidiaries shall take or omit to take any action which would materially
adversely affect or impair the Liens in favor of the Collateral Agent and the
Holders of the


 


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Securities
with respect to the Collateral. Neither the Company nor any of its Restricted
Subsidiaries shall grant to any Person, or permit any Person to retain (other
than the Collateral Agent), any interest whatsoever in the Collateral, other
than Permitted Liens. Neither the Company nor any of its Restricted
Subsidiaries shall enter into any agreement that requires the proceeds received
from any sale of Collateral to be applied to repay, redeem, defease or
otherwise acquire or retire any Indebtedness of any Person, other than as
permitted by this Indenture, the Securities, the Subsidiary Guarantees, the
Collateral Documents and the Intercreditor Agreement. The Company shall, and
shall cause each Subsidiary Guarantor to, at its sole cost and expense, execute
and deliver all such agreements and instruments as necessary, or as the Trustee
shall reasonably request, to more fully or accurately describe the assets and
property intended to be Collateral or the obligations intended to be secured by
the Collateral Documents.


 


SECTION 11.5.   Real Estate Mortgages and Filings.  With respect to any fee interest in any real
property (individually and collectively, the “Premises”)
owned by the Company or a Subsidiary Guarantor on the Issue Date or, subject to
Permitted Liens, acquired by the Company or a Subsidiary Guarantor after the
Issue Date:


 


(1)   the Company shall deliver to the Collateral Agent,
as mortgagee or beneficiary, as applicable, fully executed counterparts of
Mortgages, each dated as of the Issue Date or within three Business Days of the
date of acquisition of such property, as the case may be, duly executed by the
Company or the applicable Subsidiary Guarantor, together with evidence of the
completion (or satisfactory arrangements for the completion) of all recordings
and filings of such Mortgage (and payment of any taxes or fees in connection
therewith) as may be necessary to create a valid, perfected Lien, subject to
Permitted Liens, against the properties purported to be covered thereby;


 


(2)   the Collateral Agent shall have received mortgagee’s
title insurance policies in favor of the Collateral Agent, as mortgagee for the
ratable benefit of itself and the Holders of the Securities in the amounts and
in the form necessary, with respect to the property purported to be covered by
such Mortgage, to insure that title to such property is marketable and that the
interests created by the Mortgage constitute valid Liens thereon free and clear
of all Liens, defects and encumbrances, other than Permitted Liens, and such
policies shall also include, to the extent available, such other necessary
endorsements and shall be accompanied by evidence of the payment in full of all
premiums thereon; and


 


(3)   the Company shall, or shall cause the Subsidiary
Guarantors to, deliver to the Collateral Agent (x) with respect to each of
the covered Premises owned on the Issue Date, such filings, surveys (or any
updates or affidavits that the title company may reasonably require in
connection therewith), local counsel opinions and fixture filings, along with
such other documents, instruments, certificates and agreements, as the
Collateral Agent and its counsel shall reasonably request, and (y) with
respect to each of the covered Premises acquired after the Issue Date, such
filings, surveys, instruments, certificates, agreements and/or other documents
necessary to comply with clauses (1) and (2) above and to perfect the
Collateral Agent’s security interest in such acquired covered


 


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Premises, together with such local counsel opinions as the Collateral
Agent and its counsel shall reasonably request.


 


SECTION 11.6.   Release of Liens on the Collateral.


 


(a)  The Liens on the Collateral will be
released with respect to the Securities:


 


(1)   in
whole, upon payment in full of the
principal of, accrued and unpaid interest (including Additional
Interest, if any), premium, if any, and Additional
Amounts, if any, on the Securities;


 


(2)   in
whole, upon satisfaction and discharge of this Indenture as set forth in Section 8.1(a) hereof;


 


(3)   in
whole, upon a legal defeasance as set forth in Section 8.1(b) hereof;


 


(4)   in
part, as to any property constituting Collateral (A) that is sold or
otherwise disposed of by the Company or any of its Restricted Subsidiaries in a
transaction permitted by Section 3.5 or the Collateral Documents,
to the extent of the interest sold or disposed of, (B) that is cash or Net
Available Cash withdrawn from the Collateral Account for any one or more
purposes permitted by Section 3.5(a), (C) that is of the
nature described in clause (3), clause (4), clause (8), clause (9), clause (10) or
clause (11) of the proviso in the definition of “Asset Disposition” and is
subject to a disposition as therein provided, (D) that constitute Excess
Collateral Proceeds that remain unexpended after the conclusion of a Collateral
Disposition Offer conducted in accordance with this Indenture, (E) that is
owned or at any time acquired by a Subsidiary of the Company that has been
released from its Subsidiary Guarantee in accordance with this Indenture,
concurrently with the release thereof, (F) that is Capital Stock of a Subsidiary
of the Company to the extent necessary for such Subsidiary not to be
subject to any requirement pursuant to Rule 3-16 or Rule 3-10 of
Regulation S-X under the Securities Act, due to the fact that such Subsidiary’s
Capital Stock secures the Securities, to file separate financial statements
with the SEC (or any other governmental agency) or
(G) otherwise in accordance with, and as expressly provided for under,
this Indenture, including, without limitation, Article X; and


 


(5)   with the consent of
Holders of 75% or more of the outstanding principal amount of the Securities,
unless such release involves all or substantially all of the Collateral, in
which case such release will require the consent of each Holder affected
thereby (including, without limitation, consents obtained in connection with a
tender offer or exchange offer for, or purchase of, Securities);


 


provided, that, in the case of any release in
whole pursuant to this Section 11.6(a), all amounts owing to the
Trustee under this Indenture, the Securities, the Subsidiary Guarantees, the
Registration Rights Agreement, the Collateral Documents and the Intercreditor
Agreement have been paid.


 


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(b)  To the extent applicable, the Company and each Subsidiary
Guarantor will furnish to the Trustee, prior to each proposed release of
Collateral pursuant to the Collateral Documents and this Indenture:


 


(1)   an Officers’ Certificate requesting such release;


 


(2)   an Officers’ Certificate and an Opinion of Counsel
to the effect that all conditions precedent provided for in this Indenture and
the Collateral Documents to such release have been complied with;


 


(3)   a form of such release (which release shall be in
form reasonably satisfactory to the Trustee and shall provide that the
requested release is without recourse or warranty to the Trustee);


 


(4)   all documents required by TIA §314(d), this
Indenture, the Collateral Documents and the Intercreditor Agreement; and


 


(5)   an Opinion of Counsel to the effect that such
accompanying documents constitute all documents required by TIA §314(d), this
Indenture, the Collateral Documents and the Intercreditor Agreement.


 


Upon compliance by the Company or the
Subsidiary Guarantors, as the case may be, with the conditions precedent set
forth above, and upon delivery by the Company or such Subsidiary Guarantor to
the Trustee of an Opinion of Counsel to the effect that such conditions
precedent have been complied with, the Trustee or the Collateral Agent shall
promptly cause to be released and reconveyed to the Company, or the Subsidiary
Guarantors, as the case may be, the released Collateral.


 


(c)  For purposes of the TIA, the release of any Collateral from
the terms of the Collateral Documents will not be deemed to impair the security
under this Indenture in contravention of the provisions hereof or affect the
Lien of this Indenture or the Collateral Documents if and to the extent the
Collateral is released pursuant to this Indenture, the Collateral Documents or
the Intercreditor Agreement or upon the termination of this Indenture.


 


SECTION 11.7.   Authorization of Actions to be Taken by
the Trustee or the Collateral Agent Under the Collateral Documents.


 


(a)  Subject to the provisions of the Collateral Documents and the
Intercreditor Agreement, each of the Trustee or the Collateral Agent may, in
its sole discretion and without the consent of the Holders, on behalf of the
Holders, take all actions it deems necessary or appropriate in order to (a) enforce
any of its rights or any of the rights of the Holders under the Collateral
Documents and the Intercreditor Agreement and (b) collect and receive any
and all amounts payable in respect of the Collateral in respect of the
obligations of the Company and the Subsidiaries hereunder and thereunder.  Subject to the provisions of the Collateral
Documents and the Intercreditor Agreement, the Trustee or the Collateral Agent
shall have the power to institute and to maintain such suits and proceedings as
it may deem expedient to prevent any impairment of the Collateral by any acts
that may be unlawful or in violation of the Collateral Documents, the
Intercreditor Agreement or this Indenture, and such suits and proceedings as
the 


 


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Trustee or the
Collateral Agent may deem expedient to preserve or protect its interest and the
interests of the Holders in the Collateral (including power to institute and
maintain suits or proceedings to restrain the enforcement of or compliance with
any legislative or other governmental enactment, rule or order that may be
unconstitutional or otherwise invalid if the enforcement of, or compliance
with, such enactment, rule or order would impair the security interest
hereunder or be prejudicial to the interests of the Holders or the Trustee).


 


(b)  The Trustee or the Collateral Agent shall not be responsible
for the existence, genuineness or value of any of the Collateral or for the
validity, perfection, priority or enforceability of the Liens in any of the
Collateral, whether impaired by operation of law or by reason of any action or
omission to act on its part hereunder, except to the extent such action or
omission constitutes negligence, bad faith or willful misconduct on the part of
the Trustee or the Collateral Agent, for the validity or sufficiency of the
Collateral or any agreement or assignment contained therein, for the validity
of the title of the Company to the Collateral, for insuring the Collateral or
for the payment of taxes, charges, assessments or Liens upon the Collateral or
otherwise as to the maintenance of the Collateral. The Trustee or the
Collateral Agent shall have no responsibility for recording, filing,
re-recording or refiling any financing statement, continuation statement,
document, instrument or other notice in any public office at any time or times
or to otherwise take any action to perfect or maintain the perfection of any
security interest granted to it under the Collateral Documents or otherwise.


 


(c)  Where any provision of this Indenture requires that
additional property or assets be added to the Collateral, the Company and each
Subsidiary Guarantor shall deliver to the Trustee or the Collateral Agent the
following:


 


(i)           a request from the Company that such
Collateral be added;


 


(ii)           the form of instrument
adding such Collateral, which, based on the type and location of the property
subject thereto, shall be in substantially the form of the applicable
Collateral Documents entered into on the date of this Indenture, with such
changes thereto as the Company shall consider appropriate, or in such other
form as the Company shall deem proper; provided
that any such changes or such form are administratively satisfactory to the
Trustee or the Collateral Agent;


 


(iii)          an Officers’ Certificate
to the effect that the Collateral being added is in the form, consists of the
assets and is in the amount or otherwise has the fair market value required by
this Indenture;


 


(iv)          an Officers’ Certificate
and Opinion of Counsel to the effect that all conditions precedent provided for
in this Indenture to the addition of such Collateral have been complied with,
which Opinion of Counsel shall also opine as to the creation and perfection of
the Collateral Agent’s Lien on such Collateral and as to the due authorization,
execution, delivery, validity and enforceability of the Collateral Document
being entered into; and


 


127














 


(v)                                 such financing statements,
if any, as the Company shall deem necessary to perfect the Collateral Agent’s
security interest in such Collateral.


 


(d) 
The Trustee or the Collateral Agent, in giving any consent or approval under
the Collateral Documents or the Intercreditor Agreement, shall be entitled to
receive, as a condition to such consent or approval, an Officers’ Certificate
and an Opinion of Counsel to the effect that the action or omission for which
consent or approval is to be given does not adversely affect the interests of
the Holders or impair the security of the Holders in contravention of the
provisions of this Indenture, the Collateral Documents and the Intercreditor
Agreement, and the Trustee or the Collateral Agent shall be fully protected in
giving such consent or approval on the basis of such Officers’ Certificate and
Opinion of Counsel.


 


SECTION 11.8.  
Collateral Accounts.


 


(a) 
The Trustee is authorized to receive any funds for the benefit of the Holders
distributed under, and in accordance with, the Collateral Documents, and to
make further distributions of such funds to the Holders according to the
provisions of this Indenture, the Collateral Documents and the Intercreditor
Agreement.


 


(b) 
Prior to the Issue Date, the Trustee shall have established the Collateral
Accounts, which shall at all times hereafter until this Indenture shall have
terminated, be maintained with, and under the sole control of, the
Trustee.  The Collateral Accounts shall be
trust accounts and shall be established and maintained by the Trustee at one of
its corporate trust offices (which may include the New York corporate trust
office) and all Collateral shall be credited thereto.  All cash and Cash Equivalents received by the
Trustee from Asset Dispositions of Collateral, Recovery Events, Asset Swaps
involving the transfer of Collateral, foreclosures of or sales of the
Collateral, issuances of Additional Securities and other awards or proceeds
pursuant to the Collateral Documents, including earnings, revenues, rents,
issues, profits and income from the Collateral received pursuant to the
Collateral Documents, shall be deposited in the First Priority Collateral
Account, in the case of proceeds from First Priority Collateral, or in the
Second Priority Collateral Account, in the case of proceeds from Second
Priority Collateral, and thereafter shall be held, applied and/or disbursed by
the Trustee in accordance with the terms of this Indenture (including, without
limitation, Section 2.1(a), Section 3.5, Section 6.10
and Section 11.8(a).  In
connection with any and all deposits to be made into the Collateral Accounts
under this Indenture, the Collateral Documents or the Intercreditor Agreement,
the Trustee and/or the Collateral Agent, as applicable, shall receive an Officers’
Certificate identifying which Collateral Account shall receive such deposit and
directing the Trustee and/or the Collateral Agent to make such deposit.


 


(c) 
Pending the distribution of funds in the Collateral Account in accordance with
the provisions hereof and provided that no Event of Default shall have occurred
and be continuing, the Company may direct the Trustee to invest such funds in
Cash Equivalents specified in such direction, such investments to mature by the
times such funds are needed hereunder and such direction to certify that such
funds constitute Cash Equivalents and that no Event of Default shall have
occurred and be continuing.  So long as
no Event of Default shall have occurred and be continuing, the Company may
direct the Trustee to sell, liquidate or cause the redemption of any such
investments, such direction to certify that no Event of Default shall 


 


128

















 


have occurred and be continuing.
Any gain or income on any investment of funds in the Collateral Account shall
be credited to the Collateral Account. The Trustee shall have no liability for
any loss incurred in connection with any investment or any sale, liquidation or
redemption thereof made in accordance with the provisions of this Section 11.8(c).


 


ARTICLE XII




MISCELLANEOUS


 


SECTION 12.1.   Trust Indenture Act Controls.  If and to the extent that any provision of
this Indenture limits, qualifies or conflicts with another provision which is
required to be included in this Indenture by the TIA, the provision required by
the TIA shall control.  Each Subsidiary
Guarantor in addition to performing its obligations under its Subsidiary
Guarantee shall perform such other obligations as may be imposed upon it with
respect to this Indenture under the TIA.


 


SECTION 12.2.   Notices.  Any notice or communication shall be in
writing and delivered in person, sent by facsimile, delivered by commercial
courier service or mailed by first-class mail, postage prepaid, addressed as
follows:


 


if
to the Company or to any Subsidiary Guarantor:


 


Cellu
Tissue Holdings Inc.

1855 Lockeway Drive, Suite 501

Alpharetta, Georgia 30004

Attention:  David J. Morris


Telecopy:  (678) 393-2657


 


with
a copy to:


 


King & Spalding LLP


1185 Avenue of the Americas


New York, New York 10036-4003


Attention: Tracy Kimmel


Telecopy:  (212) 566-2222


 


if
to the Trustee, at its corporate trust office, which corporate trust office for
purposes of this Indenture is at the date hereof located at:


 


The
Bank of New York Mellon Trust Company, N.A.

222 Berkeley Street, 2nd Floor

Boston, Massachusetts 02116

Attention: Corporate Trust Administration


Telecopy:  (617) 351-2401


 


129

















 


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


 


Any notice or communication to the Company or the
Subsidiary Guarantors shall be deemed to have been given or made as of the date
so delivered if personally delivered; when answered back, if telexed; when
receipt is acknowledged, if telecopied; and five calendar days after mailing if
sent by registered or certified mail, postage prepaid (except that a notice of
change of address shall not be deemed to have been given until actually
received by the addressee).  Any notice
or communication to the Trustee shall be deemed delivered upon receipt.


 


Any notice or communication mailed to a
Securityholder shall be mailed to the Securityholder at the Securityholder’s
address as it appears in the Securities Register and shall be sufficiently
given if so mailed within the time prescribed.


 


Failure to mail a notice or communication to a
Securityholder or any defect in it shall not affect its sufficiency with
respect to other Securityholders.  If a
notice or communication is mailed in the manner provided above, it is duly
given, whether or not the addressee receives it, except that notices to the
Trustee shall be effective only upon receipt.


 


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


 


SECTION 12.3.   Communication by Holders with other
Holders.  Securityholders may
communicate pursuant to TIA § 312(b) with other Securityholders with
respect to their rights under this Indenture or the Securities.  The Company, the Trustee, the Registrar and
anyone else shall have the protection of TIA § 312(c).


 


SECTION 12.4.   Certificate and Opinion as to Conditions
Precedent.  Upon any request or
application by the Company to the Trustee to take or refrain from taking any
action under this Indenture, the Collateral Documents or the Intercreditor
Agreement (except in connection with the original issuance of Securities on the
date hereof), the Company shall furnish to the Trustee:


 


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


 


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


 


SECTION 12.5.   Statements Required in Certificate or
Opinion.  Each certificate or opinion
with respect to compliance with a covenant or condition provided for in this
Indenture shall include:


 


130

















 


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


 


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


 


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


 


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


 


In giving such Opinion of Counsel, counsel may rely
as to factual matters on an Officers’ Certificate or on certificates of public
officials.


 


SECTION 12.6.   When Securities Disregarded.  In determining whether the Holders of the
required aggregate principal amount of Securities have concurred in any
direction, waiver or consent, Securities owned by the Company, any Subsidiary
Guarantor or any Affiliate of them shall be disregarded and deemed not to be
outstanding, except that, for the purpose of determining whether the Trustee
shall be protected in relying on any such direction, waiver or consent, only
Securities which the Trustee actually knows are so owned shall be so
disregarded.  Also, subject to the
foregoing, only Securities outstanding at the time shall be considered in any
such determination.


 


SECTION 12.7.   Rules by Trustee, Paying Agent and
Registrar.  The Trustee may make
reasonable rules for action by, or at meetings of, Securityholders.  The Registrar and the Paying Agent may make
reasonable rules for their functions.


 


SECTION 12.8.   Legal Holidays.  A “Legal Holiday” is a Saturday, a
Sunday or other day on which commercial banking institutions are authorized or
required to be closed in New York, New York. 
If a payment date is a Legal Holiday, payment shall be made on the next
succeeding day that is not a Legal Holiday, and no interest shall accrue for
the intervening period.  If a regular
record date is a Legal Holiday, the record date shall not be affected.


 


SECTION 12.9.   GOVERNING LAW.  THIS INDENTURE, THE SECURITIES AND THE
SUBSIDIARY GUARANTEES SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NEW YORK.  EACH
OF THE PARTIES HERETO AGREES TO SUBMIT TO THE JURISDICTION OF THE STATE COURTS
OF, AND THE FEDERAL COURTS LOCATED IN, THE STATE OF NEW YORK IN ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS INDENTURE, THE SECURITIES OR THE
SUBSIDIARY GUARANTEES.


 


SECTION 12.10.   No Recourse Against Others.  An
incorporator, director, officer, employee or stockholder of the Company or any
Subsidiary Guarantor, solely by reason of this status, shall not have any
liability for any obligations of the Company or any Subsidiary Guarantor under
the Securities, this Indenture, the Collateral Documents, the Intercreditor
Agreement or the Subsidiary Guarantees or for any claim based on, in respect of
or by reason of 


 


131

















 


such
obligations or their creation.  By
accepting a Security, each Securityholder waives and releases all such
liability.  The waiver and release are a
part of the consideration for the issuance of the Securities.


 


SECTION 12.11.   Successors.  All agreements of the Company and each
Subsidiary Guarantor in this Indenture and the Securities shall bind their
respective successors.  All agreements of
the Trustee in this Indenture shall bind its successors.


 


SECTION 12.12.   Multiple Originals.  The parties may sign any number of copies of
this Indenture.  Each signed copy shall be
an original, but all of them together represent the same agreement.  One signed copy is enough to prove this
Indenture.


 


SECTION 12.13.   Qualification of Indenture.  The Company has agreed to qualify this
Indenture under the TIA in accordance with the terms and conditions of the
Registration Rights Agreement and to pay all reasonable costs and expenses
(including attorneys’ fees and expenses for the Company, the Trustee and the
Holders) incurred in connection therewith, including, but not limited to, costs
and expenses of qualification of this Indenture and the Securities and printing
this Indenture and the Securities.  The
Trustee shall be entitled to receive from the Company any such Officers’
Certificates, Opinions of Counsel or other documentation as it may reasonably
request in connection with any such qualification of this Indenture under the
TIA.


 


SECTION 12.14.   Table of Contents; Headings.  The table of contents, cross-reference sheet
and headings of the Articles and Sections of this Indenture have been inserted
for convenience of reference only, are not intended to be considered a part
hereof and shall not modify or restrict any of the terms or provisions hereof.


 


SECTION 12.15.   WAIVERS OF JURY TRIAL.  THE COMPANY, THE SUBSIDIARY GUARANTORS AND
THE TRUSTEE HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY
LEGAL ACTION OR PROCEEDING RELATING TO THIS INDENTURE, THE SECURITIES, THE
SUBSIDIARY GUARANTEES, ANY COLLATERAL DOCUMENT OR THE INTERCREDITOR AGREEMENT
AND FOR ANY COUNTERCLAIM THEREIN.


 


SECTION 12.16.   Intercreditor Agreement Controls.  Notwithstanding any contrary provision in
this Indenture, the Indenture is subject to the provisions of the Intercreditor
Agreement.  The Company, the Subsidiary
Guarantors and the Trustee acknowledge and agree to be bound by the provisions
of the Intercreditor Agreement.


 


SECTION 12.17.   Force Majeure.  In no event shall the Trustee be responsible
or liable for any failure or delay in the performance of its obligations
hereunder arising out of or caused by, directly or indirectly, forces beyond
its 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 and hardware) services, it
being understood that the Trustee shall use reasonable best efforts which are
consistent with accepted practices in the banking industry to resume performance
as soon as practicable under the circumstances.


 


132

















 


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


 


 


	
   

  	
  CELLU TISSUE HOLDINGS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David J. Morris

  
	
   

  	
  Name: David J. Morris

  
	
   

  	
  Title: Chief Financial
  Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  CELLU TISSUE —
  CITYFOREST LLC

  
	
   

  	
  CELLU TISSUE
  CORPORATION — NATURAL

  
	
   

  	
  DAM

  
	
   

  	
  CELLU TISSUE
  CORPORATION — NEENAH

  
	
   

  	
  CELLU TISSUE LLC

  
	
   

  	
  CELLU TISSUE — LONG ISLAND,
  LLC

  
	
   

  	
  CELLU TISSUE —
  THOMASTON, LLC

  
	
   

  	
  INTERLAKE ACQUISITION
  CORPORATION

  
	
   

  	
  LIMITED

  
	
   

  	
  MENOMINEE ACQUISITION
  CORPORATION

  
	
   

  	
  VAN PAPER COMPANY

  
	
   

  	
  VAN TIMBER COMPANY

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David J. Morris

  
	
   

  	
  Name: David J. Morris

  
	
   

  	
  Title: Chief Financial
  Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  COASTAL PAPER COMPANY

  
	
   

  	
   

  	
   

  
	
   

  	
  By: Van Paper Company, its managing partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David J. Morris

  
	
   

  	
  Name: David J. Morris

  
	
   

  	
  Title: Chief Financial
  Officer

  



 

















 


	
   

  	
  THE BANK OF NEW YORK MELLON TRUST

  COMPANY, N.A., as Trustee

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Vaneta Bernard

  
	
   

  	
  Name: Vaneta Bernard

  
	
   

  	
  Title: Vice President

  



 

















 


EXHIBIT A


 


[FORM OF FACE OF NOTE]


 


[Applicable Restricted Securities Legend]

[Depository Legend, if applicable]


 


	
  No. [      ]

  	
   

  	
  Principal
  Amount
  $[                      ]

  
	
   

  	
   

  	
  CUSIP
  NO.

  



 


CELLU TISSUE HOLDINGS, INC.


 


111⁄2% Senior Secured Note, Series A, due
2014


 


Cellu Tissue Holdings Inc., a Delaware corporation,
promises to pay to [Cede & Co.],* or its registered assigns, the
principal sum of
                              
Dollars, [as revised by the Schedule of Increases and Decreases in Global
Security attached hereto],* on June 1, 2014.


 


 


Interest Payment Dates:  June 1 and December 1

Record Dates:  May 15 and November 15


 


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


 


	
   

  	
  CELLU TISSUE HOLDINGS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  



 






 *             Insert in Global Securities only


 


A-1

















 


TRUSTEE’S CERTIFICATE OF
   AUTHENTICATION


 


THE BANK OF NEW YORK MELLON TRUST COMPANY,
N.A.,

as Trustee, certifies

that this is one of

the Securities referred

to in the Indenture.


 


	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
  Authorized
  Officer

  	
   

  	
  Date:
                      ,
  2009

  



 


A-2














 


[FORM OF REVERSE SIDE OF NOTE]

CELLU TISSUE HOLDINGS, INC.


 


111⁄2% Senior Secured Note, Series A, due
2014


 


1.   Interest


 


Cellu Tissue Holdings Inc., a Delaware corporation
(such corporation, and its successors and assigns under the Indenture
hereinafter referred to, being herein called the “Company”), promises to
pay interest on the principal amount of this Security at the rate per annum
shown above.


 


The Company will pay interest semiannually on June 1
and December 1 of each year commencing December 1, 2009.  Interest on the Securities will accrue from
the most recent date to which interest has been paid on the Securities or, if
no interest has been paid, from June 3, 2009.  The Company shall pay interest on overdue
principal, and on overdue premium or Additional Amounts, if any (plus interest
on such interest to the extent lawful), at the rate borne by the Securities to
the extent lawful.  Interest will be
computed on the basis of a 360-day year of twelve 30-day months.


 


If an exchange offer (the “Exchange Offer”)
registered under the Securities Act is not consummated or a shelf registration
statement (the “Shelf Registration Statement”) under the Securities Act
with respect to resales of the Securities is not declared effective by the SEC
on or before the date that is 366 days after the Issue Date (the “Target
Registration Date”) in accordance with the terms of the Registration Rights
Agreement, dated as of June 3, 2009 (the “Registration Rights Agreement”),
among the Company, the Subsidiary Guarantors and the initial purchasers named
therein, the annual interest rate borne by the Securities shall be increased
from the rate shown above by 0.25% per annum for the first 90-day period
immediately following such date and by an additional 0.25% per annum with respect
to each subsequent 90-day period, up to a maximum additional rate of 1.00% per
annum thereafter, until the Exchange Offer is completed, the Shelf Registration
Statement is declared effective or until June 3, 2011, unless such period
is extended, as described in the Registration Rights Agreement.  The Holder of this Note is entitled to the
benefits of such Registration Rights Agreement. 
Additional Interest shall be paid to the same Persons, in the same
manner and at the same times as regular interest.


 


2.   Method
of Payment


 


By no later than 10:00 a.m. (New York City
time) on the date on which any principal of, premium, if any, or interest on
any Security is due and payable, the Company shall irrevocably deposit with the
Trustee or the Paying Agent money sufficient to pay such principal, premium, if
any, Additional Amounts, if any, and/or interest (including Additional
Interest).  The Company will pay interest
(except Defaulted Interest) to the Persons who are registered Holders of
Securities at the close of business on the May 15 or November 15 next
preceding the interest payment date even if Securities are cancelled,
repurchased or redeemed after the record date and on or before the interest
payment date.  Holders must surrender
Securities to a Paying Agent to 


 


A-3

















 


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


 


3.   Paying
Agent and Registrar


 


Initially, The Bank of New York Mellon Trust
Company, N.A. (the “Trustee”) will act as Trustee, Paying Agent and
Registrar.  The Company may appoint and
change any Paying Agent, Registrar or co-registrar without notice to any
Securityholder.  The Company or any of
its domestically organized, wholly owned Subsidiaries may act as Paying Agent,
Registrar or co-registrar.


 


4.   Indenture


 


The Company issued the Securities under an Indenture
dated as of June 3, 2009 (as it may be amended or supplemented from time
to time in accordance with the terms thereof, the “Indenture”), among
the Company, the Subsidiary Guarantors and the Trustee.  The terms of the Securities include those
stated in the Indenture and those made part of the Indenture by reference to
the Trust Indenture Act of 1939 (15 U.S.C. §§ 77aaa-77bbbb) as in
effect on the date of the Indenture (the “Act”).  Capitalized terms used herein and not defined
herein have the meanings ascribed thereto in the Indenture.  The Securities are subject to all terms and
provisions of the Indenture, and Securityholders are referred to the Indenture
and the Act for a statement of those terms.


 


The Securities are secured senior obligations of the
Company.  The aggregate principal amount of
Securities that may be authenticated and delivered under the Indenture is
unlimited, provided that at least
the Net Cash Proceeds from any issuance of Additional Securities are invested
in Additional Assets in accordance with the Indenture.  This Security is one of the 111⁄2% Senior
Secured Notes, Series A, due 2014 referred to in the Indenture.  The Securities include (i) $255,000,000
aggregate principal amount of the Company’s 111⁄2% Senior Secured Notes, Series A,
due 2014 issued under the Indenture on June 3, 2009 (herein called “Initial
Securities”), (ii) if and when issued, additional 111⁄2% Senior Secured
Notes, Series A, due 2014 or 111⁄2% Senior Secured Notes, Series B, due
2014 of the Company that may be issued from time to time under the Indenture
subsequent to June 3, 2009 (herein called “Additional Securities”)
as provided in Section 2.1(a) of the Indenture and (iii) if
and when issued, the Company’s 111⁄2% Senior Secured Notes, Series B, due
2014 that may be issued from time to time under the Indenture in exchange for
Initial Securities or Additional Securities in an offer 


 


A-4

















 


registered under the
Securities Act as provided in the Registration Rights Agreement (herein called “Exchange
Securities”).  The Initial
Securities, Additional Securities and Exchange Securities are treated as a
single class of securities under the Indenture and shall be secured by first
and second priority Liens and security interests, subject to Permitted Liens,
in the Collateral.  The Indenture imposes
certain limitations on the incurrence of indebtedness, the making of restricted
payments, the sale of assets and subsidiary stock, the incurrence of certain
liens, sale-leaseback transactions, the sale of capital stock of restricted
subsidiaries, the making of payments for consents, the entering into of
agreements that restrict distribution from restricted subsidiaries and the
consummation of mergers and consolidations. 
The Indenture also imposes requirements with respect to the provision of
financial information and the provision of guarantees of the Securities by
certain subsidiaries.


 


To guarantee the due and punctual payment of the
principal, premium, if any, and interest (including post-filing or
post-petition interest) on the Securities and all other amounts payable by the
Company under the Indenture, the Securities, the Registration Rights Agreement,
the Collateral Documents and the Intercreditor Agreement when and as the same
shall be due and payable, whether at maturity, by acceleration or otherwise,
according to the terms of the Securities and the Indenture, the Subsidiary
Guarantors have unconditionally guaranteed (and future guarantors, together
with the Subsidiary Guarantors, will unconditionally Guarantee), jointly and severally,
such obligations on a senior, secured basis pursuant to the terms of the
Indenture.


 


5.   Redemption


 


Except as set forth below, the Securities will not
be redeemable at the option of the Company prior to June 1, 2011.  On and after such date, the Securities will
be redeemable, at the Company’s option, in whole or in part, at any time upon
not less than 30 nor more than 60 days prior notice mailed by first-class
mail to each Holder’s registered address, at the following redemption prices
(expressed in percentages of principal amount), plus accrued and unpaid
interest (including Additional Interest) 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 12-month period commencing on
June 1 of the years set forth below:


 


	
  Period

  	
   

  	
  Redemption

  Price

  	
   

  
	
  2011

  	
   

  	
  111.500

  	
  %

  
	
  2012

  	
   

  	
  105.750

  	
  %

  
	
  2013 and thereafter

  	
   

  	
  100.000

  	
  %

  



 


In addition, at any time and from time to time prior
to June 1, 2011, the Company may redeem in the aggregate up to 35% of the
original principal amount of the Securities with 


 


A-5

















 


the Net Cash Proceeds of one
or more Equity Offerings by the Company or with the Net Cash Proceeds of one or
more Equity Offerings by Holdings that are contributed to the Company as common
equity capital at a redemption price (expressed as a percentage of principal
amount) of 111.500% of the principal amount thereof, plus accrued and unpaid
interest (including Additional Interest), if any, to the redemption date
(subject to the right of Holders of record on the relevant record date to
receive interest due on the relevant interest payment date); provided, that:


 


(1)           at
least 65% of the original principal amount of the Securities (calculated after
giving effect to any issuance of Additional Notes) must remain outstanding
after each such redemption; and


 


(2)           each
such redemption occurs within 60 days of the date of closing of such
Equity Offering.


 


If the optional redemption date is on or after an
interest record date and on or before the related interest payment date, the
accrued and unpaid interest (including Additional Interest), if any, will be
paid on the optional redemption date to the Person in whose name the Security
is registered at the close of business on such record date, and no additional
interest will be payable to Holders whose Securities will be subject to
redemption by the Company.


 


In the case of any partial redemption, selection of
the Securities for redemption will be made by the Trustee in compliance with
the requirements of the principal national securities exchange, if any, on
which the Securities are listed or, if the Securities are not listed, then on a
pro rata basis, by lot or by such other method as the Trustee in its sole
discretion shall deem to be fair and appropriate, although no Security of
$2,000 in original principal amount or less will be redeemed in part.  If any Security is to be redeemed in part
only, the notice of redemption relating to such Security shall state the
portion of the principal amount thereof to be redeemed. A new Security in
principal amount equal to the unredeemed portion thereof will be issued in the
name of the Holder thereof upon cancellation of the original Security.  On and after the redemption date, interest
will cease to accrue on Securities or portions thereof called for redemption as
long as the Company has deposited with the Paying Agent funds in satisfaction
of the applicable redemption price pursuant to the Indenture.


 


In addition, at any time prior to June 1, 2011,
upon not less than 30 nor more than 60 days’ notice mailed by firstclass mail
to each holder’s registered address, the Company may redeem the Securities, in
whole but not in part, at a redemption price equal to 100% of the principal
amount thereof plus the Applicable Premium plus accrued and unpaid interest, if
any, to the redemption date (subject to the right of holders of record on the
relevant record date to receive interest due on the relevant interest payment
date).


 


“Applicable Premium” means, with respect to a
Security at any Redemption Date, the greater of (i) 1.0% of the principal
amount of such Security and (ii) the excess, if any, of (A) the
present value as of such date of redemption of (1) the redemption price of
such Security on June 1, 2011 (such redemption price being described in
this Section 5) plus (2) all required interest payments due on
such Security through June 1, 2011, computed using a discount rate 


 


A-6

















 


equal to the Treasury Rate
plus 50 basis points, over (B) the then-outstanding principal amount of
such Security.


 


“Treasury Rate” means the yield to maturity at the
time of computation 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, any publicly available source or similar market data))
most nearly equal to the period from the redemption date to June 1, 2011;
provided, however, that if the period from the redemption date to June 1,
2011 is not equal to the constant maturity of a United States Treasury security
for which a weekly average yield is given, the Treasury Rate shall be obtained
by linear interpolation (calculated to the nearest one-twelfth of a year) from
the weekly average yields of United States Treasury securities for which such
yields are given, except that if the period from the redemption date to June 1,
2011 is less than one year, the weekly average yield on actually traded United
States Treasury securities adjusted to a constant maturity of one year shall be
used.


 


Prior to the mailing of any notice of redemption of
the Securities, the Company shall deliver to the Trustee an Officers’
Certificate stating that the Company is entitled to effect such redemption,
accompanied by an opinion of counsel satisfactory to the Trustee, acting
reasonably, that the conditions precedent to the right of redemption have
occurred.  Any such notice to the Trustee
may be cancelled at any time prior to notice of such redemption being mailed to
any Holder and shall thereby be void and of no effect.  The Company will be bound to redeem the
Securities on the date fixed for redemption.


 


The Company is not required to make any mandatory
redemption payments or sinking fund payments with respect to the Securities.


 


The Company may acquire Notes by means other than a
redemption, whether by tender offer, open market purchases, negotiated
transactions or otherwise, in accordance with applicable securities laws, so
long as such acquisition does not otherwise violate the terms of the Indenture.


 


6.   Additional Amounts; Optional Tax Redemption


 


If any taxes,
assessments or other governmental charges are imposed by any jurisdiction where
the Company, a Subsidiary Guarantor or a successor of either (a “Payor”)
is organized or otherwise considered by a taxing authority to be a resident for
tax purposes, any jurisdiction from or through which the Payor makes a payment
on the Securities, or, in each case, any political organization or governmental
authority thereof or therein having the power to tax (the “Relevant Tax
Jurisdiction”) in respect of any payments under the Securities, the Payor
will pay to each Holder of a Security, to the extent it may lawfully do so,
such additional amounts (“Additional Amounts”) as may be necessary in
order that the net amounts paid to such Holder will be not less than the amount
specified in such Security to which such Holder is entitled; provided, however,
the Payor will not be required to make any payment of Additional Amounts for or
on account of:


 


A-7

















 


(1)                                  any tax, assessment or other
governmental charge which would not have been imposed but for (A) the
existence of any present or former connection between such Holder (or between a
fiduciary, settlor, beneficiary, member or shareholder of, or possessor of a
power over, such Holder, if such Holder is an estate, trust, partnership,
limited liability company or corporation) and the Relevant Tax Jurisdiction
other than solely by the holding of Securities or by the receipt of principal
or interest in respect of the Securities (including, without limitation, such
Holder (or such fiduciary, settlor, beneficiary, member, shareholder or
possessor) being or having been a citizen or resident thereof or being or
having been present or engaged in trade or business therein or having or having
had a permanent establishment therein) or (B) the presentation of a
Security (where presentation is required) for payment on a date more than 30
days after (x) the date on which such payment became due and payable or (y) the
date on which payment thereof is duly provided for and notice of the
availability of the funds has been given, whichever occurs later (in either
case (x) or (y), except to the extent that the Holder would have been
entitled to Additional Amounts had the Security been presented during such
30-day period);


 


(2)                                  any estate, inheritance,
gift, sales, transfer, personal property or similar tax, assessment or other
governmental charge;


 


(3)                                  any tax, assessment or other
governmental charge that is imposed or withheld by reason of the failure by the
Holder or the beneficial owner of the Security to comply with a reasonable and
timely request of the Payor addressed to the Holder to provide information,
documents or other evidence concerning the nationality, residence or identity
of the Holder or such beneficial owner which is required by a statute, treaty,
regulation or administrative practice of the taxing jurisdiction as a
precondition to exemption from all or part of such tax, assessment or other
governmental charge; or


 


(4)                                  any combination of the
above,


 


nor will
Additional Amounts be paid with respect to any payment of the principal of, or
any premium or interest (including
Additional Interest) on, any Security to any Holder who is a fiduciary or
partnership or limited liability company or other than the sole beneficial
owner of such payment to the extent that a beneficiary or settlor with respect
to such fiduciary or a member of such partnership, limited liability company or
beneficial owner would not have been entitled to such Additional Amounts had it
been the
Holder of such Security.


 


The Payor will
provide the Trustee with the official acknowledgment of the governmental
authority in the Relevant Tax Jurisdiction (or, if such acknowledgment is not
available, a certified copy thereof) evidencing the payment of the withholding
taxes by the Payor.  Copies of such
documentation will be made available to the Holders of the Securities or the
Paying Agent, as applicable, upon request therefor.


 


The Company and the
Subsidiary Guarantors will pay any present or future stamp, court or
documentary taxes, or any other excise or property taxes, charges or similar
levies which arise in any jurisdiction from the execution, delivery or
registration of the Securities or any other 


 


A-8

















 


document or
instrument referred to therein (other than a transfer of the Securities), or
the receipt of any payments with respect to the Securities, excluding any such
taxes, charges or similar levies imposed by any jurisdiction outside the United
States of America or Canada or any jurisdiction in which a Paying Agent is
located, other than those resulting from, or required to be paid in connection with,
the enforcement of the Securities or any other such document or instrument
following the occurrence of any Event of Default with respect to the
Securities.


 


All references in the Indenture to principal of,
premium, if any, and interest on the Securities will include any Additional
Interest and any Additional Amounts payable by the Payor in respect of such
principal, such premium, if any, and such interest.


 


The Payor will be entitled to redeem all, but not
less than all, of the Securities if as a result of any change in or amendment
to the laws, regulations or rulings of any Relevant Tax Jurisdiction or any
change in the official application or interpretation of such laws, regulations
or rulings, or any change in the official application or interpretation of, or
any execution of or amendment to, any treaty or treaties affecting taxation to
which such Relevant Tax Jurisdiction is a party (a “Change in Tax Law”)
the Payor is or would be required on the next succeeding interest payment date
to pay Additional Amounts with respect to the Securities as described under Section 5.9(a) of
the Indenture and the Payor delivers to the Trustee an Officers’ Certificate
stating that the payment of such Additional Amounts cannot be avoided by the
use of any reasonable measures available to the Payor and that the Payor is
entitled to redeem the Securities pursuant to their terms.  The Change in Tax Law must become effective
on or after the Issue Date.  Further, the
Payor must deliver to the Trustee at least 30 days before the redemption date
an opinion of counsel of recognized standing to the effect that the Payor has
or will become obligated to pay Additional Amounts as a result of such Change
in Tax Law.  The Payor must also provide
the Holders with notice of the intended redemption at least 30 days and no more
than 60 days before the redemption date and shall comply with all provisions of
Article V of the Indenture.  The
redemption price will equal the principal amount of the Securities plus accrued
and unpaid interest thereon (including Additional Interest), if any to the
redemption date, premium, if any, and Additional Amounts, if any, then due and
which otherwise would be payable.


 


7.   Repurchase Provisions


 


If a Change of Control occurs, unless the Company
has exercised its right to redeem all of the Securities as described under
paragraph 5 of the Securities, each Holder will have the right to require the
Company to repurchase from each Holder all or any part (equal to $2,000 or an
integral multiple of $1,000 in excess thereof) of such Holder’s Securities at a
purchase price in cash equal to 101% of the principal amount thereof, plus
accrued and unpaid interest, if any, to the date of purchase (subject to the
right of Holders of record on the relevant record date to receive interest due
on the relevant interest payment date) as provided in, and subject to the terms
of, the Indenture.


 


8.   Denominations; Transfer; Exchange


 


The Securities are in registered form without
coupons in denominations of principal amount of $2,000 and whole multiples of
$1,000 in excess thereof.  A Holder may
transfer or exchange Securities in accordance with the Indenture.  The Registrar may require a 


 


A-9

















 


Holder, among other things,
to furnish appropriate endorsements or transfer documents and to pay a sum
sufficient to cover any taxes and fees required by law or permitted by the
Indenture.  The Registrar need not
register the transfer of or exchange of any Security (A) for a period
beginning (1) 15 days before the mailing of a notice of an offer to
repurchase or redeem Securities and ending at the close of business on the day
of such mailing or (2) 15 days before an interest payment date and
ending on such interest payment date or (B) called for redemption, except
the unredeemed portion of any Security being redeemed in part.


 


9.   Persons
Deemed Owners


 


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


 


10.   Unclaimed
Money


 


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


 


11.   Defeasance


 


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


 


12.   Amendment,
Supplement, Waiver


 


Subject to certain exceptions set forth in the
Indenture, (i) the Indenture, the Securities, the Subsidiary Guarantees,
the Collateral Documents or the Intercreditor Agreement may be amended or
supplemented by the Company, Subsidiary Guarantors and Trustee with the written
consent of the Holders of at least a majority in principal amount of the then outstanding
Securities and (ii) any default (other than with respect to nonpayment or
in respect of a provision that cannot be amended without the written consent of
each Securityholder affected) or noncompliance with any provision may be waived
with the written consent of the Holders of a majority in principal amount of
the then outstanding Securities.  Subject
to certain exceptions set forth in the Indenture, without the consent of any
Securityholder, the Company, Subsidiary Guarantors and the Trustee may amend or
supplement the Indenture, the Securities, the Subsidiary Guarantees, the
Collateral Documents or the Intercreditor Agreement to cure any ambiguity,
omission, defect or inconsistency, to comply with Article IV or Article X
of the Indenture, to provide for uncertificated Securities in addition to, or
in place of, certificated Securities, to add Guarantees with respect to the
Securities, to release Subsidiary Guarantors upon their designation as
Unrestricted Subsidiaries or otherwise in accordance with the Indenture, to
secure the Securities, to release Liens in favor of the Collateral Agent in the



 


A-10

















 


Collateral as provided under
the collateral release provisions, to add additional covenants of the Company,
to surrender rights and powers conferred on the Company, to comply with any
requirement of the SEC in connection with qualifying the Indenture under the
Act, to make any change that does not adversely affect the rights of any
Securityholder or, in the case of the Intercreditor Agreement, that does not
adversely affect the rights of any Securityholder in any material respect, to
provide for the issuance of Exchange Securities, to provide for the appointment
of a successor trustee or to conform the text of the Indenture, the Securities
or the Subsidiary Guarantee to any provision under the heading “Description of
notes” in the Offering Memorandum to the extent that such provision in the
Offering Memorandum is intended to be a verbatim recitation of a provision of
the Indenture, the Securities or the Subsidiary Guarantees.


 


13.   Defaults
and Remedies


 


Under the Indenture, Events of Default include (each
of which is described in greater detail in the Indenture) (i) default for
30 days in payment of interest, Additional Interest or Additional Amounts
when due on the Securities; (ii) default in payment of principal or
premium, if any, on the Securities at Stated Maturity, upon required repurchase
or upon optional redemption pursuant to paragraph 5 of the Securities,
upon declaration or otherwise; (iii) the failure by the Company or any
Subsidiary Guarantor to comply with its obligations under Article IV
or Section 10.2 of the Indenture; (iv) failure by the Company
to comply for 30 days after written notice with any of its obligations
under the covenants described under Section 3.10 of the Indenture
(other than a failure to purchase Securities when required under the Indenture,
which failure shall constitute an Event of Default under clause (ii) above)
or failure by the Company or any Subsidiary Guarantor to comply for 30 days
after written notice with any of its obligations under the Collateral Documents
or, in the event that a Guarantee of the Securities by Holdings is required
pursuant to Section 3.12(b), failure of such Guarantee to be
effective within 30 days after written notice; (v) the failure by the
Company to comply for 60 days after written notice with its other
agreements contained in the Indenture or under the Securities (other than those
referred to in clause (i), (ii), (iii) or (iv) above); (vi) default
under any mortgage, indenture or instrument under which there may be issued or
by which there may be secured or evidenced any Indebtedness for money borrowed
by the Company or any of its Restricted Subsidiaries (or the payment of which
is guaranteed by the Company or any of its Restricted Subsidiaries), other than
Indebtedness owed to the Company or a Restricted Subsidiary, whether such
Indebtedness or guarantee now exists, or is created after the date of the
Indenture, which default (a) is caused by a failure to pay principal of,
or interest or premium, if any, on such Indebtedness prior to the expiration of
the grace period provided in such Indebtedness (“payment default”) or (b) results
in the acceleration of such Indebtedness prior to its maturity (the “cross
acceleration provision”) and, in each case, the principal amount of any
such Indebtedness, together with the principal amount of any other such
Indebtedness under which there has been a payment default or the maturity of
which has been so accelerated, aggregates $5.0 million or more; (vii) certain
events of bankruptcy, insolvency or reorganization of the Company or a
Significant Subsidiary or group of Restricted Subsidiaries that, taken together
(as of the latest audited consolidated financial statements for the Company and
its Restricted Subsidiaries), would constitute a Significant Subsidiary (the “bankruptcy
provisions”); (viii) failure by the Company or any Significant
Subsidiary or group of Restricted Subsidiaries that, taken together (as of the
latest audited consolidated financial statements for the Company and its
Restricted Subsidiaries), would constitute a Significant Subsidiary to pay
final judgments aggregating in excess of $5.0 million 


 


A-11

















 


(net of any amounts that a
reputable and creditworthy insurance company has acknowledged liability for in
writing), which judgments are not paid, discharged, waived or stayed for a
period of 60 days (the “judgment default provision”); (ix) any
Subsidiary Guarantee, any Guarantee of the Securities by Holdings (if
applicable) or any Collateral Document ceases to be in full force and effect
(except as contemplated by the terms of the Indenture) or is declared null and
void in a judicial proceeding or any of Holdings, the Company or any Subsidiary
Guarantor denies or disaffirms its obligations under the Indenture, any
Subsidiary Guarantee, any such Guarantee of Holdings or any Collateral Document
to which it is a party or the Intercreditor Agreement; or (x) with respect
to any Collateral having a fair market value in excess of $5.0 million,
individually or in the aggregate, (A) the security interest under the
Collateral Documents, at any time, ceases to be in full force and effect for
any reason other than in accordance with their terms and the terms of the
Indenture and other than the satisfaction in full of all obligations under the
Indenture and discharge of the Indenture, (B) any security interest created
thereunder or under the Indenture is declared invalid or unenforceable or (C) Holdings,
the Company or any Subsidiary Guarantor asserts, in any pleading in any court
of competent jurisdiction, that any such security interest is invalid or
unenforceable.  However, a default under
clause (iv) or (v) will not constitute an Event of Default until
the Trustee or the Holders of at least 25% in principal amount of the
outstanding Securities notify the Company of the Default and the Company does
not cure such Default within the time specified in clause (iv) or (v) hereof
after receipt of such notice.


 


If an Event of Default (other than an Event of
Default described in (vii) hereof) occurs and is continuing, the Trustee
by notice to the Company, or the Holders of at least 25% in principal amount of
the outstanding Securities by notice to the Company and the Trustee, may, and
the Trustee at the request of such Holders shall, declare all the Securities to
be due and payable immediately.  If an
Event of Default described in clause (vii) hereof occurs and is
continuing, the principal of, premium, if any, Additional Amounts, if any, and
accrued and unpaid interest (including Additional Interest) on all the
Securities will become and be immediately due and payable without any
declaration or other act on the part of the Trustee or any Holders.


 


Securityholders may not enforce the Indenture or the
Securities except as provided in the Indenture. 
The Trustee may refuse to enforce the Indenture or the Securities unless
it receives reasonable indemnity or security. 
Subject to certain limitations, Holders of a majority in principal
amount of the Securities may direct the Trustee in its exercise of any trust or
power.  The Trustee may withhold from
Securityholders notice of any continuing Default or Event of Default (except a
Default or Event of Default in payment of principal or interest) if it
determines that withholding notice is in their interest.


 


14.   Trustee
Dealings with the Company


 


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


 


A-12

















 


15.   No
Recourse Against Others


 


An incorporator, director, officer, employee or
stockholder of each of the Company or any Subsidiary Guarantor, solely by
reason of this status, shall not have any liability for any obligations of the
Company or any Subsidiary Guarantor under the Securities, the Indenture, the
Collateral Documents, the Intercreditor Agreement or the Subsidiary Guarantees
or for any claim based on, in respect of or by reason of such obligations or
their creation.  By accepting a Security,
each Securityholder waives and releases all such liability.  The waiver and release are a part of the consideration
for the issuance of the Securities.


 


16.   Authentication


 


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


 


17.   Abbreviations


 


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


 


18.   CUSIP,
Common Code and ISIN Numbers


 


The Company has caused CUSIP, Common Code and ISIN
numbers, if applicable, to be printed on the Securities and has directed the
Trustee to use CUSIP, Common Code and ISIN numbers, if applicable, in notices
of redemption or purchase as a convenience to Securityholders.  No representation is made as to the accuracy
of such numbers either as printed on the Securities or as contained in any
notice of redemption or purchase and reliance may be placed only on the other
identification numbers placed thereon.


 


19.   Governing
Law


 


This Security shall be governed by, and construed in
accordance with, the laws of the State of New York.


 


The Company will furnish to any Securityholder upon
written request and without charge to the Securityholder a copy of the
Indenture, which has in it the text of this Security in larger type.  Requests may be made to:


 


Cellu Tissue Holdings Inc.

1855 Lockeway Drive, Suite 501

Alpharetta, Georgia 30004

Attention:  David J. Morris


 


A-13

















 


20.   USA
Patriot Act


 


The
parties hereto acknowledge that in accordance with Section 326 of the
U.S.A. PATRIOT Act, the Trustee 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 the 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.


 


A-14














 


ASSIGNMENT
FORM


 


To assign this Security, fill in the form below:


 


I or we assign and transfer this Security to:


 


	
   

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

  
	
   

  
	
  (Insert assignee’s social
  security or tax I.D. No.)

  



 


and irrevocably appoint
                      
agent to transfer this Security on the books of the Company.  The agent may substitute another to act for him.


 


	
   

  	
   

  	
   

  
	
  Date:

  	
   

  	
   

  	
  Your Signature:

  	
   

  
	
   

  	
   

  	
   

  
	
  Signature Guarantee:

  	
   

  	
   

  	
   

  
	
  (Signature
  must be guaranteed)

  
	
   

  
	
   

  
	
  Sign exactly as your name
  appears on the other side of this Security.

  
						



 


The signature(s) should be guaranteed by
an eligible guarantor institution (banks, stockbrokers, savings and loan
associations and credit unions with membership in an approved signature
guarantee medallion program), pursuant to S.E.C. Rule 17Ad-15.


 


The undersigned hereby certifies that it o is / o is not an
Affiliate of the Company and that, to its knowledge, the proposed transferee o is / o is not an
Affiliate of the Company.


 


In connection with any
transfer or exchange of any of the Securities evidenced by this certificate
occurring prior to the date that is one year after the later of the date of
original issuance of such Securities and the last date, if any, on which such
Securities were owned by the Company or any Affiliate of the Company, the
undersigned confirms that such Securities are being:


 


CHECK ONE BOX BELOW:


 


	
  (1)

  	
   ̈

  	
  acquired for the
  undersigned’s own account, without transfer; or

  
	
   

  	
   

  	
   

  
	
  (2)

  	
   ̈

  	
  transferred to the
  Company; or

  
	
   

  	
   

  	
   

  
	
  (3)

  	
   ̈

  	
  transferred pursuant to
  and in compliance with Rule 144A under the Securities Act of 1933, as
  amended (the “Securities Act”); or

  
	
   

  	
   

  	
   

  
	
  (4)

  	
   ̈

  	
  transferred pursuant to an
  effective registration statement under the Securities Act; or

  



 


A-15

















 


	
  (5)

  	
   ̈

  	
  transferred pursuant to
  and in compliance with Regulation S under the Securities Act; or

  
	
   

  	
   

  	
   

  
	
  (6)

  	
   ̈

  	
  transferred to an
  institutional “accredited investor” (as defined in Rule 501(a)(1), (2),
  (3) or (7) under the Securities Act), that has furnished to the Trustee
  a signed letter containing certain representations and agreements (the form
  of which letter appears as Section 2.8 of the Indenture); or

  
	
   

  	
   

  	
   

  
	
  (7)

  	
   ̈

  	
  transferred pursuant to
  another available exemption from the registration requirements of the
  Securities Act of 1933, as amended.

  



 


Unless one of the boxes is checked, the
Trustee will refuse to register any of the Securities evidenced by this
certificate in the name of any person other than the registered Holder thereof;
provided, however, that if box
(5), (6) or (7) is checked, the Company may require, prior to
registering any such transfer of the Securities, in its sole discretion, such
legal opinions, certifications and other information as the Company may
reasonably request to confirm that such transfer is being made pursuant to an
exemption from, or in a transaction not subject to, the registration
requirements of the Securities Act of 1933, as amended, such as the exemption
provided by Rule 144 under such Act.


 


	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Signature

  
	
   

  	
   

  	
   

  
	
  Signature Guarantee:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  (Signature
  must be guaranteed)

  	
   

  	
  Signature

  



 


The signature(s) should be guaranteed by
an eligible guarantor institution (banks, stockbrokers, savings and loan
associations and credit unions with membership in an approved signature
guarantee medallion program), pursuant to S.E.C. Rule 17Ad-15.


 


TO BE COMPLETED BY PURCHASER IF BOX (1) OR
(3) ABOVE IS CHECKED.


 


The undersigned represents
and warrants that it is purchasing this Security for its own account or an
account with respect to which it exercises sole investment discretion and that
it and any such account is a “qualified institutional buyer” within the meaning
of Rule 144A under the Securities Act of 1933, as amended, and is aware
that the sale to it is being made in reliance on Rule 144A and
acknowledges that it has received such information regarding the Company as the
undersigned has requested pursuant to Rule 144A or has determined not to
request such information and that it is aware that the transferor is relying
upon the undersigned’s foregoing representations in order to claim the
exemption from registration provided by Rule 144A.


 


	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Dated:

  



 


A-16

















 


[TO BE ATTACHED TO GLOBAL SECURITIES]


 


SCHEDULE OF INCREASES OR DECREASES IN GLOBAL
SECURITY


 


The
following increases or decreases in this Global Security have been made:


 


	
  Date of

  Exchange

  	
   

  	
  Amount
  of decrease in Principal

  Amount of this Global Security

  	
   

  	
  Amount
  of increase in Principal

  Amount of this Global Security

  	
   

  	
  Principal
  Amount of this Global

  Security following such

  decrease or increase

  	
   

  	
  Signature
  of authorized

  signatory of Trustee or

  Securities Custodian

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  



 


A-17

















 


OPTION OF HOLDER TO ELECT PURCHASE


 


If you elect to have this Security purchased by the
Company pursuant to Section 3.5 or 3.10 of the Indenture, check either
box:


 


	
   ̈

  	
   

  	
   ̈

  
	
  3.5

  	
   

  	
  3.10

  



 


If you want to elect to have only part of this
Security purchased by the Company pursuant to Section 3.5 or Section 3.10
of the Indenture, state the amount in principal amount (must be in
denominations of $2,000 or an integral multiple of $1,000 in excess
thereof): 
$                                                                                        
and specify the denomination or denominations (which shall not be less than the
minimum authorized denomination) of the Securities to be issued to the Holder
for the portion of the within Security not being repurchased (in the absence of
any such specification, one such Security will be issued for the portion not
being repurchased):
                                  .


 


 


	
  Date:

  	
                  

  	
   

  	
  Your Signature

  	
   

  
	
   

  	
   

  	
  (Sign exactly as your name
  appears on the other side of the Security)

  
	
   

  	
   

  
	
  Signature Guarantee:

  	
   

  
	
   

  	
  (Signature must be guaranteed)

  
						



 


The signature(s) should be guaranteed by
an eligible guarantor institution (banks, stockbrokers, savings and loan
associations and credit unions with membership in an approved signature
guarantee medallion program), pursuant to S.E.C. Rule 17Ad-15.


 


A-18














 


SUBSIDIARY
GUARANTEE


 


Pursuant to the Indenture (the “Indenture”) dated as of June 3,
2009  among Cellu Tissue Holdings, Inc.,
the Subsidiary Guarantors party thereto (each a “Subsidiary Guarantor”
and collectively the “Subsidiary Guarantors”) and The Bank of New York
Mellon Trust Company, N.A., as trustee (the “Trustee”), each Subsidiary Guarantor, subject to the
provisions of Article X of the Indenture, hereby fully,
unconditionally and irrevocably guarantees, as primary obligor and not merely
as surety, jointly and severally with each other Subsidiary Guarantor, to each
Holder of the Securities, to the extent lawful, and the Trustee the full and
punctual payment when due, whether at maturity, by acceleration, by redemption
or otherwise, of the principal of, premium, if any, Additional Amounts, if any,
and interest (including Additional Interest) on the Securities and all other
obligations and liabilities of the Company under the Indenture (including
without limitation interest (including Additional Interest) accruing after the
filing of any petition in bankruptcy, or the commencement of any insolvency,
reorganization or like proceeding, relating to the Company or any Subsidiary
Guarantor whether or not a claim for post-filing or post-petition interest is allowed
in such proceeding and the obligations under Section 7.7 of the
Indenture), the Registration Rights Agreement, the Collateral Documents and the
Intercreditor Agreement (all the foregoing being hereinafter collectively
called the “Obligations”).  Each
Subsidiary Guarantor agrees that the Obligations will rank equally in right of
payment with other Indebtedness of such Subsidiary Guarantor, except to the
extent such other Indebtedness is subordinate to the Obligations.  Each Subsidiary Guarantor further agrees (to
the extent permitted by law) that the Obligations may be extended or renewed,
in whole or in part, without notice or further assent from it, and that it will
remain bound under this Subsidiary Guarantee notwithstanding any extension or
renewal of any Obligation.


 


Each Subsidiary Guarantor waives presentation to,
demand of payment from and protest to the Company of any of the Obligations and
also waives notice of protest for nonpayment. 
Each Subsidiary Guarantor waives notice of any default under the
Securities or the Obligations.


 


Each Subsidiary Guarantor further agrees that its
Subsidiary Guarantee herein constitutes a Guarantee of payment when due (and
not a Guarantee of collection) and waives any right to require that any resort
be had by any Holder to any security held for payment of the Obligations.


 


Except as set forth in Section 10.2 of
the Indenture, the obligations of each Subsidiary Guarantor hereunder shall not
be subject to any reduction, limitation, impairment or termination for any
reason (other than payment of the Obligations in full), including any claim of
waiver, release, surrender, alteration or compromise, and shall not be subject
to any defense of setoff, counterclaim, recoupment or termination whatsoever or
by reason of the invalidity, illegality or unenforceability of the Obligations
or otherwise.  Without limiting the
generality of the foregoing, the obligations of each Subsidiary Guarantor
herein shall not be discharged or impaired or otherwise affected by (a) the
failure of any Holder to assert any claim or demand or to enforce any right or
remedy against the Company or any other person under the Indenture, the
Securities or any other agreement or otherwise; (b) any extension or
renewal of any thereof; (c) any rescission, waiver, amendment or
modification of any of the terms or provisions of the 


 


A-19

















 


Indenture, the Securities or
any other agreement; (d) the release of any security held by any Holder or
the Collateral Agent for the Obligations or any of them; (e) the failure
of any Holder to exercise any right or remedy against any other Subsidiary
Guarantor; (f) any change in the ownership of the Company; (g) any
default, failure or delay, willful or otherwise, in the performance of the
Obligations, or (h) any other act or thing or omission or delay to do any
other act or thing which may or might in any manner or to any extent vary the
risk of any Subsidiary Guarantor or would otherwise operate as a discharge of
such Subsidiary Guarantor as a matter of law or equity.


 


Each Subsidiary Guarantor agrees that its Subsidiary
Guarantee herein shall remain in full force and effect until payment in full of
all the Obligations or such Subsidiary Guarantor is released from its Subsidiary
Guarantee upon the merger or the sale of all the Capital Stock or assets of the
Subsidiary Guarantor or otherwise in compliance with Section 10.2
or Article VIII of the Indenture. 
Each Subsidiary Guarantor further agrees that its Subsidiary Guarantee
herein shall continue to be effective or be reinstated, as the case may be, if
at any time payment, or any part thereof, of principal of, premium, if any, or
interest on any of the Obligations is rescinded or must otherwise be restored
by any Holder upon the bankruptcy or reorganization of the Company or
otherwise.


 


In furtherance of the foregoing and not in
limitation of any other right which any Holder has at law or in equity against
any Subsidiary Guarantor by virtue hereof, upon the failure of the Company to
pay any of the Obligations when and as the same shall become due, whether at
maturity, by acceleration, by redemption or otherwise, each Subsidiary
Guarantor hereby promises to and will, upon receipt of written demand by the
Trustee, forthwith pay, or cause to be paid, in cash, to the Trustee or the
Trustee on behalf of the Holders an amount equal to the sum of (i) the
unpaid amount of such Obligations then due and owing and (ii) accrued and
unpaid interest (including Additional Interest) on such Obligations then due
and owing (but only to the extent not prohibited by law).


 


Each Subsidiary Guarantor further agrees that, as
between such Subsidiary Guarantor, on the one hand, and the Holders, on the
other hand, (x) the maturity of the Obligations guaranteed hereby may be
accelerated as provided in the Indenture for the purposes of its Subsidiary
Guarantee herein, notwithstanding any stay, injunction or other prohibition
preventing such acceleration in respect of the Obligations guaranteed hereby
and (y) in the event of any such declaration of acceleration of such
Obligations, such Obligations (whether or not due and payable) shall forthwith
become due and payable by the Subsidiary Guarantor for the purposes of this
Subsidiary Guarantee.


 


Each Subsidiary Guarantor also agrees to pay any and
all reasonable costs and expenses (including reasonable attorneys’ fees)
incurred by the Trustee or the Holders in enforcing any rights under this
Subsidiary Guarantee.


 


A-20

















 


	
   

  	
  CELLU TISSUE —
  CITYFOREST LLC

  
	
   

  	
  CELLU TISSUE CORPORATION — NATURAL

  
	
   

  	
  DAM

  
	
   

  	
  CELLU TISSUE CORPORATION — NEENAH

  
	
   

  	
  CELLU TISSUE LLC

  
	
   

  	
  CELLU TISSUE — LONG
  ISLAND, LLC

  
	
   

  	
  CELLU TISSUE —
  THOMASTON, LLC

  
	
   

  	
  INTERLAKE ACQUISITION CORPORATION

  
	
   

  	
  LIMITED

  
	
   

  	
  MENOMINEE ACQUISITION
  CORPORATION

  
	
   

  	
  VAN PAPER COMPANY

  
	
   

  	
  VAN TIMBER COMPANY,

  
	
   

  	
  as Subsidiary Guarantors

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  COASTAL PAPER COMPANY,

  
	
   

  	
  as a Subsidiary Guarantor

  
	
   

  	
   

  
	
   

  	
  By:  Van Paper
  Company, its managing partner

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  



 


A-21

















 


EXHIBIT B


 


[FORM OF FACE OF SERIES B NOTE]


 


[Depository Legend, if applicable]


 


	
  No. [      ]

  	
   

  	
  Principal
  Amount
  $[                      ]

  
	
   

  	
   

  	
  CUSIP
  NO.

  



 


CELLU TISSUE HOLDINGS, INC.


 


111⁄2% Senior Secured Note, Series B, due
2014


 


Cellu Tissue Holdings Inc., a Delaware corporation,
promises to pay to [Cede & Co.],* or its registered assigns, the
principal sum of
[                              ]
Dollars[, as revised by the Schedule of Increases and Decreases in Global
Security attached hereto],* on June 1, 2014.


 


Interest Payment Dates:  June 1 and December 1


 


Record Dates: 
May 15 and November 15


 


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


 


	
   

  	
  CELLU TISSUE HOLDINGS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  



 






 *     Insert in Global Securities only


 


B-1

















 


TRUSTEE’S CERTIFICATE OF


AUTHENTICATION


 


THE BANK OF NEW YORK MELLON TRUST COMPANY,
N.A.,

as Trustee, certifies

that this is one of

the Securities referred

to in the Indenture.


 


	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
  Authorized Officer

  	
  Date:

  	
                      

  	
  , 2009

  



 


B-2














 


[FORM OF REVERSE SIDE OF SERIES B
NOTE]

CELLU TISSUE HOLDINGS, INC.


 


111⁄2% Senior Secured Note, Series B, due
2014


 


1.   Interest


 


Cellu Tissue Holdings Inc., a Delaware corporation
(such corporation, and its successors and assigns under the Indenture hereinafter
referred to, being herein called the “Company”), promises to pay
interest on the principal amount of this Security at the rate per annum shown
above.


 


The Company will pay interest semiannually on June 1
and December 1 of each year commencing December 1, 2009.  Interest on the Securities will accrue from
the most recent date to which interest has been paid on the Securities or, if
no interest has been paid, from June 3, 2009.  The Company shall pay interest on overdue
principal, and on overdue premium or Additional Amounts, if any (plus interest
on such interest to the extent lawful), at the rate borne by the Securities to
the extent lawful.  Interest will be
computed on the basis of a 360-day year of twelve 30-day months.


 


2.   Method of Payment


 


By no later than 10:00 a.m. (New York City
time) on the date on which any principal of, premium, if any, or interest on
any Security is due and payable, the Company shall irrevocably deposit with the
Trustee or the Paying Agent money sufficient to pay such principal, premium, if
any, Additional Amounts, if any, and/or interest.  The Company will pay interest (except
Defaulted Interest) to the Persons who are registered Holders of Securities at
the close of business on the May 15 or November 15 next preceding the
interest payment date even if Securities are cancelled, repurchased or redeemed
after the record date and on or before the interest payment date.  Holders must surrender Securities to a Paying
Agent to collect principal payments.  The
Company will pay principal, premium, if any, and interest in money of the
United States that at the time of payment is legal tender for payment of public
and private debts. Payments in respect of Securities represented by a Global
Security (including principal, premium, if any, and interest) will be made by
the transfer of immediately available funds to the accounts specified by The
Depository Trust Company or any successor depository. The Company will make all
payments in respect of a Definitive Security (including principal, premium, if
any, and interest) by mailing a check to the registered address of each Holder
thereof; provided, however, that payments on the
Securities may also be made, in the case of a Holder of at least $1,000,000
aggregate principal amount of Securities, by wire transfer to a U.S. dollar
account maintained by the payee with a bank in the United States if such Holder
elects payment by wire transfer by giving written notice to the Trustee or the
Paying Agent to such effect designating such account no later than 15 days
immediately preceding the relevant due date for payment (or such other date as
the Trustee may accept in its discretion).


 


B-3

















 


3.   Paying
Agent and Registrar


 


Initially, The Bank of New York Mellon Trust
Company, N.A. (the “Trustee”) will act as Trustee, Paying Agent and
Registrar.  The Company may appoint and
change any Paying Agent, Registrar or co-registrar without notice to any
Securityholder.  The Company or any of
its domestically organized, wholly owned Subsidiaries may act as Paying Agent,
Registrar or co-registrar.


 


4.   Indenture


 


The Company issued the Securities under an Indenture
dated as of June 3, 2009 (as it may be amended or supplemented from time
to time in accordance with the terms thereof, the “Indenture”), among
the Company, the Subsidiary Guarantors and the Trustee.  The terms of the Securities include those
stated in the Indenture and those made part of the Indenture by reference to
the Trust Indenture Act of 1939 (15 U.S.C. §§ 77aaa-77bbbb) as in
effect on the date of the Indenture (the “Act”).  Capitalized terms used herein and not defined
herein have the meanings ascribed thereto in the Indenture.  The Securities are subject to all terms and
provisions of the Indenture, and Securityholders are referred to the Indenture
and the Act for a statement of those terms.


 


The Securities are secured senior obligations of the
Company.  The aggregate principal amount
of Securities that may be authenticated and delivered under the Indenture is
unlimited, provided that at least
the Net Cash Proceeds from any issuance of Additional Securities are invested
in Additional Assets in accordance with the Indenture.  This Security is one of the 111⁄2% Senior
Secured Notes, Series A, due 2014 referred to in the Indenture.  The Securities include (i) $255,000,000
aggregate principal amount of the Company’s 111⁄2% Senior Secured Notes, Series A,
due 2014 issued under the Indenture on June 3, 2009 (herein called “Initial
Securities”), (ii) if and when issued, additional 111⁄2% Senior Secured
Notes, Series A, due 2014 or 111⁄2% Senior Secured Notes, Series B, due
2014 of the Company that may be issued from time to time under the Indenture
subsequent to June 3, 2009 (herein called “Additional Securities”)
as provided in Section 2.1(a) of the Indenture and (iii) if
and when issued, the Company’s 111⁄2% Senior Secured Notes, Series B, due
2014 that may be issued from time to time under the Indenture in exchange for
Initial Securities or Additional Securities in an offer registered under the
Securities Act as provided in the Registration Rights Agreement (herein called “Exchange
Securities”).  The Initial
Securities, Additional Securities and Exchange Securities are treated as a
single class of securities under the Indenture and shall be secured by first
and second priority Liens and security interests, subject to Permitted Liens,
in the Collateral.  The Indenture imposes
certain limitations on the incurrence of indebtedness, the making of restricted
payments, the sale of assets and subsidiary stock, the incurrence of certain
liens, sale-leaseback transactions, the sale of capital stock of restricted
subsidiaries, the making of payments for consents, the entering into of
agreements that restrict distribution from restricted subsidiaries and the
consummation of mergers and consolidations. 
The Indenture also imposes requirements with respect to the provision of
financial information and the provision of guarantees of the Securities by
certain subsidiaries.


 


To guarantee the due and punctual payment of the
principal, premium, if any, and interest (including post-filing or
post-petition interest) on the Securities and all other amounts 


 


B-4

















 


payable by the Company under
the Indenture, the Securities, the Registration Rights Agreement, the
Collateral Documents and the Intercreditor Agreement when and as the same shall
be due and payable, whether at maturity, by acceleration or otherwise,
according to the terms of the Securities and the Indenture, the Subsidiary
Guarantors have unconditionally guaranteed (and future guarantors, together
with the Subsidiary Guarantors, will unconditionally Guarantee), jointly and
severally, such obligations on a senior, secured basis pursuant to the terms of
the Indenture.


 


5.   Redemption


 


Except as set forth below, the Securities will not
be redeemable at the option of the Company prior to June 1, 2011.  On and after such date, the Securities will
be redeemable, at the Company’s option, in whole or in part, at any time upon
not less than 30 nor more than 60 days prior notice mailed by first-class
mail to each Holder’s registered address, at the following redemption prices
(expressed in percentages of principal amount), plus accrued and unpaid
interest (including Additional Interest) 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 12-month period commencing on
June 1 of the years set forth below:


 


	
  Period

  	
   

  	
  Redemption

  Price

  	
   

  
	
  2011

  	
   

  	
  111.500

  	
  %

  
	
  2012

  	
   

  	
  105.750

  	
  %

  
	
  2013 and thereafter

  	
   

  	
  100.000

  	
  %

  



 


In addition, at any time and from time to time prior
to June 1, 2011, the Company may redeem in the aggregate up to 35% of the
original principal amount of the Securities with the Net Cash Proceeds of one
or more Equity Offerings by the Company or with the Net Cash Proceeds of one or
more Equity Offerings by Holdings that are contributed to the Company as common
equity capital at a redemption price (expressed as a percentage of principal
amount) of 111.500% of the principal amount thereof, plus accrued and unpaid
interest (including Additional Interest), if any, to the redemption date
(subject to the right of Holders of record on the relevant record date to
receive interest due on the relevant interest payment date); provided, that:


 


(1)           at
least 65% of the original principal amount of the Securities (calculated after
giving effect to any issuance of Additional Notes) must remain outstanding
after each such redemption; and


 


(2)           each
such redemption occurs within 60 days of the date of closing of such
Equity Offering.


 


B-5

















 


If the optional redemption date is on or after an interest
record date and on or before the related interest payment date, the accrued and
unpaid interest (including Additional Interest), if any, will be paid on the
optional redemption date to the Person in whose name the Security is registered
at the close of business on such record date, and no additional interest will
be payable to Holders whose Securities will be subject to redemption by the
Company.


 


In the case of any partial redemption, selection of
the Securities for redemption will be made by the Trustee in compliance with
the requirements of the principal national securities exchange, if any, on
which the Securities are listed or, if the Securities are not listed, then on a
pro rata basis, by lot or by such other method as the Trustee in its sole discretion
shall deem to be fair and appropriate, although no Security of $2,000 in
original principal amount or less will be redeemed in part.  If any Security is to be redeemed in part
only, the notice of redemption relating to such Security shall state the
portion of the principal amount thereof to be redeemed. A new Security in
principal amount equal to the unredeemed portion thereof will be issued in the
name of the Holder thereof upon cancellation of the original Security.  On and after the redemption date, interest
will cease to accrue on Securities or portions thereof called for redemption as
long as the Company has deposited with the Paying Agent funds in satisfaction
of the applicable redemption price pursuant to the Indenture.


 


In addition, at any time prior to June 1, 2011,
upon not less than 30 nor more than 60 days’ notice mailed by firstclass mail
to each holder’s registered address, the Company may redeem the Securities, in
whole but not in part, at a redemption price equal to 100% of the principal
amount thereof plus the Applicable Premium plus accrued and unpaid interest, if
any, to the redemption date (subject to the right of holders of record on the
relevant record date to receive interest due on the relevant interest payment
date).


 


“Applicable Premium” means, with respect to a
Security at any Redemption Date, the greater of (i) 1.0% of the principal
amount of such Security and (ii) the excess, if any, of (A) the
present value as of such date of redemption of (1) the redemption price of
such Security on June 1, 2011 (such redemption price being described in
this Section 5) plus (2) all required interest payments due on
such Security through June 1, 2011, computed using a discount rate equal
to the Treasury Rate plus 50 basis points, over (B) the then-outstanding
principal amount of such Security.


 


“Treasury Rate” means the yield to maturity at the
time of computation 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, any publicly available source or similar market data)) most nearly
equal to the period from the redemption date to June 1, 2011; provided,
however, that if the period from the redemption date to June 1, 2011 is
not equal to the constant maturity of a United States Treasury security for
which a weekly average yield is given, the Treasury Rate shall be obtained by
linear interpolation (calculated to the nearest one-twelfth of a year) from the
weekly average yields of United States Treasury securities for which such
yields are given, except that if the period from the redemption date to June 1,
2011 is less than one year, the weekly average yield on actually traded United
States Treasury securities adjusted to a constant maturity of one year shall be
used.


 


B-6

















 


Prior to the mailing of any notice of redemption of
the Securities, the Company shall deliver to the Trustee an Officers’
Certificate stating that the Company is entitled to effect such redemption,
accompanied by an opinion of counsel satisfactory to the Trustee, acting
reasonably, that the conditions precedent to the right of redemption have
occurred.  Any such notice to the Trustee
may be cancelled at any time prior to notice of such redemption being mailed to
any Holder and shall thereby be void and of no effect.  The Company will be bound to redeem the
Securities on the date fixed for redemption.


 


The Company is not required to make any mandatory
redemption payments or sinking fund payments with respect to the Securities.


 


The Company may acquire Notes by means other than a
redemption, whether by tender offer, open market purchases, negotiated
transactions or otherwise, in accordance with applicable securities laws, so
long as such acquisition does not otherwise violate the terms of the Indenture.


 


6.   Additional
Amounts; Optional Tax Redemption


 


If any taxes,
assessments or other governmental charges are imposed by any jurisdiction where
the Company, a Subsidiary Guarantor or a successor of either (a “Payor”)
is organized or otherwise considered by a taxing authority to be a resident for
tax purposes, any jurisdiction from or through which the Payor makes a payment
on the Securities, or, in each case, any political organization or governmental
authority thereof or therein having the power to tax (the “Relevant Tax
Jurisdiction”) in respect of any payments under the Securities, the Payor
will pay to each Holder of a Security, to the extent it may lawfully do so,
such additional amounts (“Additional Amounts”) as may be necessary in
order that the net amounts paid to such Holder will be not less than the amount
specified in such Security to which such Holder is entitled; provided, however,
the Payor will not be required to make any payment of Additional Amounts for or
on account of:


 


(1)           any tax,
assessment or other governmental charge which would not have been imposed but
for (A) the existence of any present or former connection between such
Holder (or between a fiduciary, settlor, beneficiary, member or shareholder of,
or possessor of a power over, such Holder, if such Holder is an estate, trust,
partnership, limited liability company or corporation) and the Relevant Tax
Jurisdiction other than solely by the holding of Securities or by the receipt
of principal or interest in respect of the Securities (including, without
limitation, such Holder (or such fiduciary, settlor, beneficiary, member,
shareholder or possessor) being or having been a citizen or resident thereof or
being or having been present or engaged in trade or business therein or having
or having had a permanent establishment therein) or (B) the presentation
of a Security (where presentation is required) for payment on a date more than
30 days after (x) the date on which such payment became due and payable or
(y) the date on which payment thereof is duly provided for and notice of
the availability of the funds has been given, whichever occurs later (in either
case (x) or (y), except to the extent that the Holder would have been
entitled to Additional Amounts had the Security been presented during such
30-day period);


 


B-7

















 


(2)           any estate,
inheritance, gift, sales, transfer, personal property or similar tax,
assessment or other governmental charge;


 


(3)           any tax,
assessment or other governmental charge that is imposed or withheld by reason
of the failure by the Holder or the beneficial owner of the Security to comply
with a reasonable and timely request of the Payor addressed to the Holder to
provide information, documents or other evidence concerning the nationality,
residence or identity of the Holder or such beneficial owner which is required
by a statute, treaty, regulation or administrative practice of the taxing
jurisdiction as a precondition to exemption from all or part of such tax,
assessment or other governmental charge; or


 


(4)           any combination
of the above,


 


nor will
Additional Amounts be paid with respect to any payment of the principal of, or
any premium or interest (including
Additional Interest) on, any Security to any Holder who is a fiduciary or
partnership or limited liability company or other than the sole beneficial
owner of such payment to the extent that a beneficiary or settlor with respect
to such fiduciary or a member of such partnership, limited liability company or
beneficial owner would not have been entitled to such Additional Amounts had it
been the
Holder of such Security.


 


The Payor will
provide the Trustee with the official acknowledgment of the governmental
authority in the Relevant Tax Jurisdiction (or, if such acknowledgment is not
available, a certified copy thereof) evidencing the payment of the withholding
taxes by the Payor.  Copies of such
documentation will be made available to the Holders of the Securities or the
Paying Agent, as applicable, upon request therefor.


 


The Company and the
Subsidiary Guarantors will pay any present or future stamp, court or
documentary taxes, or any other excise or property taxes, charges or similar
levies which arise in any jurisdiction from the execution, delivery or
registration of the Securities or any other document or instrument referred to
therein (other than a transfer of the Securities), or the receipt of any
payments with respect to the Securities, excluding any such taxes, charges or
similar levies imposed by any jurisdiction outside the United States of America
or Canada any jurisdiction in which a Paying Agent is located, other than those
resulting from, or required to be paid in connection with, the enforcement of
the Securities or any other such document or instrument following the
occurrence of any Event of Default with respect to the Securities.


 


All references in the Indenture to principal of,
premium, if any, and interest on the Securities will include any Additional
Interest and any Additional Amounts payable by the Payor in respect of such
principal, such premium, if any, and such interest.


 


The Payor will be entitled to redeem all, but not
less than all, of the Securities if as a result of any change in or amendment
to the laws, regulations or rulings of any Relevant Tax Jurisdiction or any
change in the official application or interpretation of such laws, regulations
or rulings, or any change in the official application or interpretation of, or
any execution of or amendment to, any treaty or treaties affecting taxation to
which such Relevant Tax Jurisdiction is a party (a “Change in Tax Law”)
the Payor is or would be required on the next succeeding interest payment date
to pay Additional Amounts with respect to the Securities as described 


 


B-8

















 


under Section 5.9(a) of
the Indenture and the Payor delivers to the Trustee an Officers’ Certificate
stating that the payment of such Additional Amounts cannot be avoided by the
use of any reasonable measures available to the Payor and that the Payor is
entitled to redeem the Securities pursuant to their terms.  The Change in Tax Law must become effective
on or after the Issue Date.  Further, the
Payor must deliver to the Trustee at least 30 days before the redemption date
an opinion of counsel of recognized standing to the effect that the Payor has
or will become obligated to pay Additional Amounts as a result of such Change
in Tax Law.  The Payor must also provide
the Holders with notice of the intended redemption at least 30 days and no more
than 60 days before the redemption date and shall comply with all provisions of
Article V of the Indenture.  The
redemption price will equal the principal amount of the Securities plus accrued
and unpaid interest thereon (including Additional Interest), if any to the
redemption date, premium, if any, and Additional Amounts, if any, then due and
which otherwise would be payable.


 


7.   Repurchase
Provisions


 


If a Change of Control occurs, unless the Company
has exercised its right to redeem all of the Securities as described under paragraph
5 of the Securities, each Holder will have the right to require the Company to
repurchase from each Holder all or any part (equal to $2,000 or an integral
multiple of $1,000 in excess thereof) of such Holder’s Securities at a purchase
price in cash equal to 101% of the principal amount thereof, plus accrued and
unpaid interest, if any, to the date of purchase (subject to the right of
Holders of record on the relevant record date to receive interest due on the
relevant interest payment date) as provided in, and subject to the terms of,
the Indenture.


 


8.   Denominations;
Transfer; Exchange


 


The Securities are in registered form without
coupons in denominations of principal amount of $2,000 and whole multiples of
$1,000 in excess thereof.  A Holder may transfer
or exchange Securities in accordance with the Indenture.  The Registrar may require a Holder, among
other things, to furnish appropriate endorsements or transfer documents and to
pay a sum sufficient to cover any taxes and fees required by law or permitted
by the Indenture.  The Registrar need not
register the transfer of or exchange of any Security (A) for a period
beginning (1) 15 days before the mailing of a notice of an offer to
repurchase or redeem Securities and ending at the close of business on the day
of such mailing or (2) 15 days before an interest payment date and ending
on such interest payment date or (B) called for redemption, except the
unredeemed portion of any Security being redeemed in part.


 


9.   Persons
Deemed Owners


 


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


 


10.   Unclaimed
Money


 


If money for the payment of principal premium, if
any, or interest remains unclaimed for two years, the Trustee or Paying Agent
shall pay the money back to the Company at its request unless an abandoned
property law designates another Person. 
After any such 


 


B-9

















 


payment, Holders entitled to
the money must look only to the Company for payment as general creditors unless
an abandoned property law designates another person and not to the Trustee for
payment.


 


11.   Defeasance


 


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


 


12.   Amendment,
Supplement, Waiver


 


Subject to certain exceptions set forth in the
Indenture, (i) the Indenture, the Securities, the Subsidiary Guarantees,
the Collateral Documents or the Intercreditor Agreement may be amended or
supplemented by the Company, Subsidiary Guarantors and Trustee with the written
consent of the Holders of at least a majority in principal amount of the then
outstanding Securities and (ii) any default (other than with respect to nonpayment
or in respect of a provision that cannot be amended without the written consent
of each Securityholder affected) or noncompliance with any provision may be
waived with the written consent of the Holders of a majority in principal
amount of the then outstanding Securities. 
Subject to certain exceptions set forth in the Indenture, without the
consent of any Securityholder, the Company, Subsidiary Guarantors and the
Trustee may amend or supplement the Indenture, the Securities, the Subsidiary
Guarantees, the Collateral Documents or the Intercreditor Agreement to cure any
ambiguity, omission, defect or inconsistency, to comply with Article IV or
Article X of the Indenture, to provide for uncertificated Securities in
addition to, or in place of, certificated Securities, to add Guarantees with
respect to the Securities, to release Subsidiary Guarantors upon their
designation as Unrestricted Subsidiaries or otherwise in accordance with the
Indenture, to secure the Securities, to release Liens in favor of the
Collateral Agent in the Collateral as provided under the collateral release
provisions, to add additional covenants of the Company, to surrender rights and
powers conferred on the Company, to comply with any requirement of the SEC in
connection with qualifying the Indenture under the Act, to make any change that
does not adversely affect the rights of any Securityholder or, in the case of
the Intercreditor Agreement, that does not adversely affect the rights of any
Securityholder in any material respect, to provide for the issuance of Exchange
Securities, to provide for the appointment of a successor trustee or to conform
the text of the Indenture, the Securities or the Subsidiary Guarantees to any
provision under the heading “Description of notes” in the Offering Memorandum
to the extent that such provision in the Offering Memorandum is intended to be
a verbatim recitation of a provision of the Indenture, the Securities or the
Subsidiary Guarantees.


 


13.   Defaults
and Remedies


 


Under the Indenture, Events of Default include (each
of which is described in greater detail in the Indenture) (i) default for
30 days in payment of interest, Additional Interest or Additional Amounts
when due on the Securities; (ii) default in payment of principal or
premium, if any, on the Securities at Stated Maturity, upon required repurchase
or upon optional 


 


B-10

















 


redemption pursuant to
paragraph 5 of the Securities, upon declaration or otherwise; (iii) the
failure by the Company or any Subsidiary Guarantor to comply with its
obligations under Article IV or Section 10.2 of the
Indenture; (iv) failure by the Company to comply for 30 days after
written notice with any of its obligations under the covenants described under Section 3.10
of the Indenture (other than a failure to purchase Securities when required
under the Indenture, which failure shall constitute an Event of Default under
clause (ii) above) or failure by the Company or any Subsidiary
Guarantor to comply for 30 days after written notice with any of its
obligations under the Collateral Documents or, in the event that a Guarantee of
the Securities by Holdings is required pursuant to Section 3.12(b),
failure of such Guarantee to be effective within 30 days after written notice; (v) the
failure by the Company to comply for 60 days after written notice with its
other agreements contained in the Indenture or under the Securities (other than
those referred to in clause (i), (ii), (iii) or (iv) above); (vi) default
under any mortgage, indenture or instrument under which there may be issued or
by which there may be secured or evidenced any Indebtedness for money borrowed
by the Company or any of its Restricted Subsidiaries (or the payment of which
is guaranteed by the Company or any of its Restricted Subsidiaries), other than
Indebtedness owed to the Company or a Restricted Subsidiary, whether such
Indebtedness or guarantee now exists, or is created after the date of the
Indenture, which default (a) is caused by a failure to pay principal of,
or interest or premium, if any, on such Indebtedness prior to the expiration of
the grace period provided in such Indebtedness (“payment default”) or (b) results
in the acceleration of such Indebtedness prior to its maturity (the “cross
acceleration provision”) and, in each case, the principal amount of any
such Indebtedness, together with the principal amount of any other such
Indebtedness under which there has been a payment default or the maturity of
which has been so accelerated, aggregates $5.0 million or more; (vii) certain
events of bankruptcy, insolvency or reorganization of the Company or a
Significant Subsidiary or group of Restricted Subsidiaries that, taken together
(as of the latest audited consolidated financial statements for the Company and
its Restricted Subsidiaries), would constitute a Significant Subsidiary (the “bankruptcy
provisions”); (viii) failure by the Company or any Significant
Subsidiary or group of Restricted Subsidiaries that, taken together (as of the
latest audited consolidated financial statements for the Company and its
Restricted Subsidiaries), would constitute a Significant Subsidiary to pay
final judgments aggregating in excess of $5.0 million (net of any amounts
that a reputable and creditworthy insurance company has acknowledged liability
for in writing), which judgments are not paid, discharged, waived or stayed for
a period of 60 days (the “judgment default provision”); (ix) any
Subsidiary Guarantee, any Guarantee of the Securities by Holdings (if applicable)
or any Collateral Document ceases to be in full force and effect (except as
contemplated by the terms of the Indenture) or is declared null and void in a
judicial proceeding or any of Holdings, the Company or any Subsidiary Guarantor
denies or disaffirms its obligations under the Indenture, any Subsidiary
Guarantee, any such Guarantee of Holdings or any Collateral Document to which
it is a party or the Intercreditor Agreement; or (x) with respect to any
Collateral having a fair market value in excess of $5.0 million, individually
or in the aggregate, (A) the security interest under the Collateral
Documents, at any time, ceases to be in full force and effect for any reason
other than in accordance with their terms and the terms of the Indenture and
other than the satisfaction in full of all obligations under the Indenture and
discharge of the Indenture, (B) any security interest created thereunder
or under the Indenture is declared invalid or unenforceable or (C) Holdings,
the Company or any Subsidiary Guarantor asserts, in any pleading in any court
of competent jurisdiction, that any such security interest is invalid or
unenforceable.  However, a default under
clause (iv) or (v) will not 


 


B-11

















 


constitute an Event of
Default until the Trustee or the Holders of at least 25% in principal amount of
the outstanding Securities notify the Company of the Default and the Company
does not cure such Default within the time specified in clause (iv) or
(v) hereof after receipt of such notice.


 


If an Event of Default (other than an Event of
Default described in (vii) hereof) occurs and is continuing, the Trustee
by notice to the Company, or the Holders of at least 25% in principal amount of
the outstanding Securities by notice to the Company and the Trustee, may, and
the Trustee at the request of such Holders shall, declare all the Securities to
be due and payable immediately.  If an
Event of Default described in clause (vii) hereof occurs and is
continuing, the principal of, premium, if any, Additional Amounts, if any, and
accrued and unpaid interest (including Additional Interest) on all the
Securities will become and be immediately due and payable without any
declaration or other act on the part of the Trustee or any Holders.


 


Securityholders may not enforce the Indenture or the
Securities except as provided in the Indenture. 
The Trustee may refuse to enforce the Indenture or the Securities unless
it receives reasonable indemnity or security. 
Subject to certain limitations, Holders of a majority in principal
amount of the Securities may direct the Trustee in its exercise of any trust or
power.  The Trustee may withhold from
Securityholders notice of any continuing Default or Event of Default (except a
Default or Event of Default in payment of principal or interest) if it
determines that withholding notice is in their interest.


 


14.   Trustee
Dealings with the Company


 


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


 


15.   No
Recourse Against Others


 


An incorporator, director, officer, employee or
stockholder of each of the Company or any Subsidiary Guarantor, solely by
reason of this status, shall not have any liability for any obligations of the
Company or any Subsidiary Guarantor under the Securities, the Indenture, the
Collateral Documents, the Intercreditor Agreement or the Subsidiary Guarantees
or for any claim based on, in respect of or by reason of such obligations or
their creation.  By accepting a Security,
each Securityholder waives and releases all such liability.  The waiver and release are a part of the
consideration for the issuance of the Securities.


 


16.   Authentication


 


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


 


B-12

















 


17.   Abbreviations


 


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


 


18.   CUSIP,
Common Code and ISIN Numbers


 


The Company has caused CUSIP, Common Code and ISIN
numbers, if applicable, to be printed on the Securities and has directed the
Trustee to use CUSIP, Common Code and ISIN numbers, if applicable, in notices
of redemption or purchase as a convenience to Securityholders.  No representation is made as to the accuracy
of such numbers either as printed on the Securities or as contained in any
notice of redemption or purchase and reliance may be placed only on the other
identification numbers placed thereon.


 


19.   Governing
Law


 


This Security shall be governed by, and construed in
accordance with, the laws of the State of New York.


 


The Company will furnish to any Securityholder upon
written request and without charge to the Securityholder a copy of the
Indenture which has in it the text of this Security in larger type.  Requests may be made to:


 


Cellu
Tissue Holdings Inc.

1855 Lockeway Drive, Suite 501

Alpharetta, Georgia 30004

Attention:  David J. Morris


 


20.   USA
Patriot Act


 


The parties hereto acknowledge that in accordance
with Section 326 of the U.S.A. PATRIOT Act, the Trustee 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 the 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.


 


B-13














 


ASSIGNMENT FORM


 


To assign this Security, fill in the form
below:


 


I or we assign and transfer this Security to:


	
   

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

  



 


	
   

  
	
  (Insert assignee’s social
  security or tax I.D. No.)

  



 


and irrevocably appoint
                        
agent to transfer this Security on the books of the Company.  The agent may substitute another to act for
him.


 


	
   

  	
   

  	
   

  
	
  Date:

  	
   

  	
   

  	
  Your Signature

  	
   

  
	
   

  	
   

  	
   

  
	
  Signature Guarantee:

  	
   

  	
   

  	
   

  
	
  (Signature must be
  guaranteed)

  
	
   

  
	
   

  
	
  Sign exactly as your name
  appears on the other side of this Security.

  
							



 


The signature(s) should be guaranteed by
an eligible guarantor institution (banks, stockbrokers, savings and loan
associations and credit unions with membership in an approved signature
guarantee medallion program), pursuant to S.E.C. Rule 17Ad-15.


 


B-14

















 


[TO BE ATTACHED TO GLOBAL SECURITIES]


 


SCHEDULE OF INCREASES OR DECREASES IN GLOBAL
SECURITY


 


The
following increases or decreases in this Global Security have been made:


 


	
  Date of

  Exchange

  	
   

  	
  Amount
  of decrease in Principal

  Amount of this Global Security

  	
   

  	
  Amount
  of increase in Principal

  Amount of this Global Security

  	
   

  	
  Principal
  Amount of this Global

  Security following such

  decrease or increase

  	
   

  	
  Signature
  of authorized

  signatory of Trustee or

  Securities Custodian

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  



 


B-15

















 


OPTION OF HOLDER TO ELECT PURCHASE


 


If you elect to have this Security purchased by the
Company pursuant to Section 3.5 or 3.10 of the Indenture, check either
box:


 


	
   ̈

  	
   

  	
   ̈

  
	
  3.5

  	
   

  	
  3.10

  



 


If you want to elect to have only part of this
Security purchased by the Company pursuant to Section 3.5 or Section 3.10
of the Indenture, state the amount in principal amount (must be in denominations
of $2,000 or an integral multiple of $1,000 in excess thereof):
$                                                                                        
and specify the denomination or denominations (which shall not be less than the
minimum authorized denomination) of the Securities to be issued to the Holder
for the portion of the within Security not being repurchased (in the absence of
any such specification, one such Security will be issued for the portion not
being repurchased): 
                                  .


 


	
  Date:

  	
   

  	
    Your
  Signature:

  	
   

  
	
   

  	
   

  	
  (Sign exactly as your name
  appears on the other side of the Security)

  
	
   

  	
   

  
	
  Signature Guarantee:

  	
   

  
	
   

  	
  (Signature must be guaranteed)

  
						



 


The signature(s) should be guaranteed by
an eligible guarantor institution (banks, stockbrokers, savings and loan
associations and credit unions with membership in an approved signature
guarantee medallion program), pursuant to S.E.C. Rule 17Ad-15.


 


B-16

















 


SUBSIDIARY
GUARANTEE


 


Pursuant to the Indenture (the “Indenture”) dated as of June 3,
2009  among Cellu Tissue Holdings, Inc.,
the Subsidiary Guarantors party thereto (each a “Subsidiary Guarantor”
and collectively the “Subsidiary Guarantors”) and The Bank of New York
Mellon Trust Company, N.A., as trustee (the “Trustee”), each Subsidiary Guarantor, subject to the
provisions of Article X of the Indenture, hereby fully,
unconditionally and irrevocably guarantees, as primary obligor and not merely
as surety, jointly and severally with each other Subsidiary Guarantor, to each
Holder of the Securities, to the extent lawful, and the Trustee the full and
punctual payment when due, whether at maturity, by acceleration, by redemption
or otherwise, of the principal of, premium, if any, Additional Amounts, if any,
and interest (including Additional Interest) on the Securities and all other
obligations and liabilities of the Company under the Indenture (including
without limitation interest (including Additional Interest) accruing after the
filing of any petition in bankruptcy, or the commencement of any insolvency,
reorganization or like proceeding, relating to the Company or any Subsidiary
Guarantor whether or not a claim for post-filing or post-petition interest is
allowed in such proceeding and the obligations under Section 7.7 of
the Indenture), the Registration Rights Agreement, the Collateral Documents and
the Intercreditor Agreement (all the foregoing being hereinafter collectively
called the “Obligations”).  Each
Subsidiary Guarantor agrees that the Obligations will rank equally in right of
payment with other Indebtedness of such Subsidiary Guarantor, except to the
extent such other Indebtedness is subordinate to the Obligations.  Each Subsidiary Guarantor further agrees (to
the extent permitted by law) that the Obligations may be extended or renewed,
in whole or in part, without notice or further assent from it, and that it will
remain bound under this Subsidiary Guarantee notwithstanding any extension or
renewal of any Obligation.


 


Each Subsidiary Guarantor waives presentation to,
demand of payment from and protest to the Company of any of the Obligations and
also waives notice of protest for nonpayment. 
Each Subsidiary Guarantor waives notice of any default under the
Securities or the Obligations.


 


Each Subsidiary Guarantor further agrees that its
Subsidiary Guarantee herein constitutes a Guarantee of payment when due (and
not a Guarantee of collection) and waives any right to require that any resort
be had by any Holder to any security held for payment of the Obligations.


 


Except as set forth in Section 10.2 of
the Indenture, the obligations of each Subsidiary Guarantor hereunder shall not
be subject to any reduction, limitation, impairment or termination for any
reason (other than payment of the Obligations in full), including any claim of
waiver, release, surrender, alteration or compromise, and shall not be subject
to any defense of setoff, counterclaim, recoupment or termination whatsoever or
by reason of the invalidity, illegality or unenforceability of the Obligations
or otherwise.  Without limiting the
generality of the foregoing, the obligations of each Subsidiary Guarantor
herein shall not be discharged or impaired or otherwise affected by (a) the
failure of any Holder to assert any claim or demand or to enforce any right or
remedy against the Company or any other person under the Indenture, the
Securities or any other agreement or otherwise; (b) any extension or
renewal of any thereof; (c) any rescission, waiver, amendment or modification
of any of the terms or provisions of the 


 


B-17

















 


Indenture, the Securities or
any other agreement; (d) the release of any security held by any Holder or
the Collateral Agent for the Obligations or any of them; (e) the failure
of any Holder to exercise any right or remedy against any other Subsidiary
Guarantor; (f) any change in the ownership of the Company; (g) any
default, failure or delay, willful or otherwise, in the performance of the
Obligations, or (h) any other act or thing or omission or delay to do any
other act or thing which may or might in any manner or to any extent vary the
risk of any Subsidiary Guarantor or would otherwise operate as a discharge of
such Subsidiary Guarantor as a matter of law or equity.


 


Each Subsidiary Guarantor agrees that its Subsidiary
Guarantee herein shall remain in full force and effect until payment in full of
all the Obligations or such Subsidiary Guarantor is released from its
Subsidiary Guarantee upon the merger or the sale of all the Capital Stock or
assets of the Subsidiary Guarantor or otherwise in compliance with Section 10.2
or Article VIII of the Indenture. 
Each Subsidiary Guarantor further agrees that its Subsidiary Guarantee
herein shall continue to be effective or be reinstated, as the case may be, if
at any time payment, or any part thereof, of principal of, premium, if any, or
interest on any of the Obligations is rescinded or must otherwise be restored
by any Holder upon the bankruptcy or reorganization of the Company or
otherwise.


 


In furtherance of the foregoing and not in
limitation of any other right which any Holder has at law or in equity against
any Subsidiary Guarantor by virtue hereof, upon the failure of the Company to
pay any of the Obligations when and as the same shall become due, whether at
maturity, by acceleration, by redemption or otherwise, each Subsidiary
Guarantor hereby promises to and will, upon receipt of written demand by the
Trustee, forthwith pay, or cause to be paid, in cash, to the Trustee or the
Trustee on behalf of the Holders an amount equal to the sum of (i) the
unpaid amount of such Obligations then due and owing and (ii) accrued and
unpaid interest (including Additional Interest) on such Obligations then due
and owing (but only to the extent not prohibited by law).


 


Each Subsidiary Guarantor further agrees that, as
between such Subsidiary Guarantor, on the one hand, and the Holders, on the
other hand, (x) the maturity of the Obligations guaranteed hereby may be
accelerated as provided in the Indenture for the purposes of its Subsidiary
Guarantee herein, notwithstanding any stay, injunction or other prohibition
preventing such acceleration in respect of the Obligations guaranteed hereby
and (y) in the event of any such declaration of acceleration of such
Obligations, such Obligations (whether or not due and payable) shall forthwith
become due and payable by the Subsidiary Guarantor for the purposes of this
Subsidiary Guarantee.


 


Each Subsidiary Guarantor also agrees to pay any and
all reasonable costs and expenses (including reasonable attorneys’ fees)
incurred by the Trustee or the Holders in enforcing any rights under this
Subsidiary Guarantee.


 


B-18

















 


	
   

  	
  CELLU TISSUE — CITYFOREST
  LLC

  
	
   

  	
  CELLU TISSUE CORPORATION — NATURAL

  
	
   

  	
  DAM

  
	
   

  	
  CELLU TISSUE CORPORATION — NEENAH

  
	
   

  	
  CELLU TISSUE LLC

  
	
   

  	
  CELLU TISSUE — LONG
  ISLAND, LLC

  
	
   

  	
  CELLU TISSUE —
  THOMASTON, LLC

  
	
   

  	
  INTERLAKE ACQUISITION CORPORATION

  
	
   

  	
  LIMITED

  
	
   

  	
  MENOMINEE ACQUISITION
  CORPORATION

  
	
   

  	
  VAN PAPER COMPANY

  
	
   

  	
  VAN TIMBER COMPANY,

  
	
   

  	
  as Subsidiary Guarantors

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  COASTAL PAPER COMPANY,

  
	
   

  	
  as a Subsidiary Guarantor

  
	
   

  	
   

  
	
   

  	
  By:  Van Paper
  Company, its managing partner

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  



 


B-19

















 


EXHIBIT C


 


FORM OF INDENTURE SUPPLEMENT TO ADD SUBSIDIARY
GUARANTORS


 


This Supplemental Indenture, dated as of
[              
    ], 20     (this “Supplemental
Indenture” or “Guarantee”), among [name
of future Guarantor] (the “Guarantor”), Cellu Tissue Holdings, Inc.
(together with its successors and assigns, the “Company”), each other
then existing Subsidiary Guarantor under the Indenture referred to below, and
The Bank of New York Mellon Trust Company, N.A., as Trustee under the Indenture
referred to below.


 


W I T N E S S E T H:


 


WHEREAS, the Company, the Subsidiary Guarantors and
the Trustee have heretofore executed and delivered an Indenture, dated as of June 3,
2009 (as amended, supplemented, waived or otherwise modified, the “Indenture”),
providing for the issuance of an aggregate principal amount of $255.0 million
of 111⁄2% Senior Secured Notes due 2014 of the Company (the “Securities”);


 


WHEREAS, Section 3.12 of the Indenture
provides that after the Issue Date the Company is required to cause each
Restricted Subsidiary (other than a Foreign Subsidiary that does not Guarantee
any Indebtedness of the Company or any Restricted Subsidiary) created or
acquired by the Company or one or more Restricted Subsidiaries or Holdings, in
the event that Holdings Guarantees any Indebtedness of the Company or any of
its Restricted Subsidiaries, to execute and deliver to the Trustee a
supplemental indenture pursuant to which such Subsidiary (or Holdings, if
applicable) will unconditionally Guarantee, on a joint and several basis with
the other Subsidiary Guarantors, the full and prompt payment of the principal
of, premium, if any, and interest on the Securities on a secured basis; and


 


WHEREAS, pursuant to Section 9.1 of the
Indenture, the Trustee and the Company are authorized to execute and deliver
this Supplemental Indenture to amend or supplement the Indenture, without the
consent of any Securityholder;


 


NOW, THEREFORE, in consideration of the foregoing
and for other good and valuable consideration, the receipt of which is hereby
acknowledged, the Guarantor, the Company, the other Subsidiary Guarantors and
the Trustee mutually covenant and agree for the equal and ratable benefit of
the Holders of the Securities as follows:


 


ARTICLE I


 


Definitions


 


SECTION 1.1  Defined
Terms.  As used in this Supplemental
Indenture, terms defined in the Indenture or in the preamble or recital hereto
are used herein as therein defined.  The
words “herein,” “hereof” and “hereby” and other words of similar import used in
this


 


C-1

















 


Supplemental Indenture refer to this
Supplemental Indenture as a whole and not to any particular section hereof.


 


ARTICLE II


 


Agreement to be Bound; Guarantee


 


SECTION 2.1  Agreement
to be Bound.  The Guarantor hereby
becomes a party to the Indenture as a Subsidiary Guarantor and as such will
have all of the rights and be subject to all of the obligations and agreements
of a Subsidiary Guarantor under the Indenture. 
The Guarantor hereby becomes a party to the Note Security Agreement as a
Grantor (as defined therein) thereunder with the same force and effect as if
originally named therein as a Grantor and as such hereby assumes all
obligations and liabilities of a Grantor thereunder.  The Guarantor agrees to be bound by all of
the provisions of the Indenture, the Collateral Documents and the Intercreditor
Agreement applicable to a Subsidiary Guarantor and to perform all of the
obligations and agreements of a Subsidiary Guarantor under the Indenture, the
Collateral Documents and the Intercreditor Agreement.


 


SECTION 2.2   Guarantee.  The Guarantor agrees, on a joint and several
basis with all the existing Subsidiary Guarantors, to fully, unconditionally
and irrevocably Guarantee to each Holder of the Securities and the Trustee the
Obligations pursuant to Article X of the Indenture on a secured
basis.


 


ARTICLE III


 


Miscellaneous


 


SECTION 3.1   Notices.  All notices and other communications to the
Guarantor shall be given as provided in the Indenture to the Guarantor, at its
address set forth below, with a copy to the Company as provided in the
Indenture for notices to the Company.


 


SECTION 3.2   Parties.  Nothing expressed or mentioned herein is
intended or shall be construed to give any Person, firm or corporation, other
than the Holders and the Trustee, any legal or equitable right, remedy or claim
under or in respect of this Supplemental Indenture or the Indenture or any
provision herein or therein contained.


 


SECTION 3.3   Governing Law.  This Supplemental Indenture shall be governed
by, and construed in accordance with, the laws of the State of New York.


 


SECTION 3.4   Severability Clause.  In case any provision in this Supplemental
Indenture 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 and such provision shall be ineffective only to the extent
of such invalidity, illegality or unenforceability.


 


SECTION 3.5   Ratification of Indenture; Supplemental
Indentures Part of Indenture. 
Except as expressly amended hereby, the Indenture is in all respects
ratified and


 


C-2

















 


confirmed and all the terms, conditions and
provisions thereof shall remain in full force and effect.  This Supplemental Indenture shall form a part
of the Indenture for all purposes, and every Holder of Securities heretofore or
hereafter authenticated and delivered shall be bound hereby.  The Trustee makes no representation or
warranty as to the validity or sufficiency of this Supplemental Indenture or
with respect to the recitals contained herein, all of which recitals are made
solely by the other parties hereto.


 


SECTION 3.6   Counterparts.  The parties hereto may sign one or more
copies of this Supplemental Indenture in counterparts, all of which together
shall constitute one and the same agreement.


 


SECTION 3.7   Headings.  The headings of the Articles and the sections
in this Guarantee are for convenience of reference only and shall not be deemed
to alter or affect the meaning or interpretation of any provisions hereof.


 


C-3

















 


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


 


	
   

  	
  [SUBSIDIARY GUARANTOR],

  
	
   

  	
  as a Guarantor

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  [Address]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  THE BANK OF NEW YORK MELLON TRUST

  COMPANY, N.A., as Trustee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CELLU TISSUE HOLDINGS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  



 

















 


The following
schedules and exhibits have been deleted herefrom, but are available to the
Commission upon request:


 


SCHEDULE 3.4

SCHEDULE 3.8


 


EXHIBIT D       Form of Note
Security Agreement

EXHIBIT E        Form of Mortgage

EXHIBIT F        Form of
Intercreditor Agreement