Exhibit 4.1

	
 
    


 

 

CROWN MEDIA HOLDINGS, INC.,

 

THE GUARANTORS NAMED HEREIN

 

AND

 

THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A.,
 AS TRUSTEE, TRANSFER AGENT, REGISTRAR, AUTHENTICATION AGENT AND
 PAYING AGENT

 

10.5% Senior Notes due 2019

 




 

INDENTURE

 

Dated as of July 14, 2011

 




 

	
 
    


 











 

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)
    	
 
    	
7.3;7.8; 7.10
    
	
(c)
    	
 
    	
7.10
    
	
311 (a)
    	
 
    	
7.11
    
	
(b)
    	
 
    	
7.11
    
	
(c)
    	
 
    	
N.A.
    
	
312 (a)
    	
 
    	
2.5
    
	
(b)
    	
 
    	
13.3
    
	
(c)
    	
 
    	
13.3
    
	
313 (a)
    	
 
    	
7.6
    
	
(b)(1)
    	
 
    	
7.6
    
	
(b)(2)
    	
 
    	
7.6
    
	
(c)
    	
 
    	
7.6
    
	
(d)
    	
 
    	
7.6
    
	
314 (a)(4)
    	
 
    	
3.11; 3.16; 13.5
    
	
(b)
    	
 
    	
N.A.
    
	
(c)(1)
    	
 
    	
13.4
    
	
(c)(2)
    	
 
    	
13.4
    
	
(c)(3)
    	
 
    	
N.A.
    
	
(e)
    	
 
    	
13.5
    
	
315 (a)
    	
 
    	
7.1
    
	
(b)
    	
 
    	
7.5; 13.2
    
	
(c)
    	
 
    	
7.1
    
	
(d)
    	
 
    	
7.1
    
	
(e)
    	
 
    	
6.11
    
	
316 (a)(last sentence)
    	
 
    	
13.6
    
	
(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)
    	
 
    	
13.1
    


 

N.A. means Not Applicable.

 

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

 











 

Table of Contents

 

	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    
	
ARTICLE   I DEFINITIONS AND INCORPORATION BY REFERENCE
    	
1
    
	
 
    	
 
    
	
SECTION 1.1.
    	
Definitions
    	
1
    
	
SECTION 1.2.
    	
Other   Definitions
    	
22
    
	
SECTION 1.3.
    	
Incorporation   by Reference of Trust Indenture Act
    	
22
    
	
SECTION 1.4.
    	
Rules of   Construction
    	
23
    
	
SECTION 1.5.
    	
Acts of   Holders
    	
23
    
	
 
    	
 
    
	
ARTICLE   II THE NOTES
    	
24
    
	
 
    	
 
    
	
SECTION 2.1.
    	
Form,   Dating and Terms
    	
24
    
	
SECTION 2.2.
    	
Execution   and Authentication
    	
29
    
	
SECTION 2.3.
    	
Registrar   and Paying Agent
    	
30
    
	
SECTION 2.4.
    	
Paying   Agent To Hold Money in Trust
    	
31
    
	
SECTION 2.5.
    	
Holder   Lists
    	
31
    
	
SECTION 2.6.
    	
Transfer   and Exchange
    	
31
    
	
SECTION 2.7.
    	
[Reserved]
    	
34
    
	
SECTION 2.8.
    	
Form of   Certificate To Be Delivered in Connection with Transfers Pursuant to   Regulation S
    	
34
    
	
SECTION 2.9.
    	
Mutilated,   Destroyed, Lost or Stolen Notes
    	
35
    
	
SECTION 2.10.
    	
Outstanding   Notes
    	
35
    
	
SECTION 2.11.
    	
Temporary   Notes
    	
36
    
	
SECTION 2.12.
    	
Cancellation
    	
36
    
	
SECTION 2.13.
    	
Payment   of Interest; Defaulted Interest
    	
37
    
	
SECTION 2.14.
    	
CUSIP,   Common Code and ISIN Numbers
    	
37
    
	
 
    	
 
    
	
ARTICLE   III COVENANTS
    	
38
    
	
 
    	
 
    
	
SECTION 3.1.
    	
Payment   of Notes
    	
38
    
	
SECTION 3.2.
    	
Limitation   on Incurrence of Indebtedness and Issuance of Disqualified Stock and   Preferred Stock
    	
38
    
	
SECTION 3.3.
    	
Limitation   on Restricted Payments
    	
42
    
	
SECTION 3.4.
    	
Dividend   and Other Payment Restrictions Affecting Restricted Subsidiaries
    	
47
    
	
SECTION 3.5.
    	
Limitation   on Asset Sales
    	
48
    
	
SECTION 3.6.
    	
Limitation   on Liens
    	
50
    
	
SECTION 3.7.
    	
Limitation   on Guarantees of Indebtedness by Restricted Subsidiaries
    	
51
    
	
SECTION 3.8.
    	
Transactions   with Affiliates
    	
51
    
	
SECTION 3.9.
    	
[Reserved]
    	
53
    
	
SECTION 3.10.
    	
Change   of Control
    	
53
    
	
SECTION 3.11.
    	
Reports   and Other Information
    	
54
    
	
SECTION 3.12.
    	
Maintenance   of Office or Agency
    	
56
    
	
SECTION 3.13.
    	
Corporate   Existence
    	
56
    
	
SECTION 3.14.
    	
Payment   of Taxes
    	
56
    
	
SECTION 3.15.
    	
[Reserved]
    	
56
    
	
SECTION 3.16.
    	
Compliance   Certificate
    	
56
    
	
SECTION 3.17.
    	
Reserved
    	
57
    
	
SECTION 3.18.
    	
[Reserved]
    	
57
    
	
SECTION 3.19.
    	
Statement   by Officers as to Default
    	
57
    
	
SECTION 3.20.
    	
Suspension   of Certain Covenants
    	
57
    


 

i











 

	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    
	
ARTICLE   IV SUCCESSOR COMPANY
    	
58
    
	
 
    	
 
    
	
SECTION 4.1.
    	
Merger,   Consolidation or Sale of All or Substantially All Assets
    	
58
    
	
 
    	
 
    
	
ARTICLE   V REDEMPTION OF SECURITIES
    	
59
    
	
 
    	
 
    
	
SECTION 5.1.
    	
Notices   to Trustee
    	
59
    
	
SECTION 5.2.
    	
Selection   of Notes To Be Redeemed or Purchased
    	
59
    
	
SECTION 5.3.
    	
Notice   of Redemption
    	
60
    
	
SECTION 5.4.
    	
Effect   of Notice of Redemption
    	
60
    
	
SECTION 5.5.
    	
Deposit   of Redemption or Purchase Price
    	
60
    
	
SECTION 5.6.
    	
Notes   Redeemed or Purchased in Part
    	
61
    
	
SECTION 5.7.
    	
Optional   Redemption
    	
61
    
	
SECTION 5.8.
    	
Mandatory   Redemption
    	
62
    
	
 
    	
 
    
	
ARTICLE   VI DEFAULTS AND REMEDIES
    	
62
    
	
 
    	
 
    
	
SECTION 6.1.
    	
Events   of Default
    	
62
    
	
SECTION 6.2.
    	
Acceleration
    	
63
    
	
SECTION 6.3.
    	
Other   Remedies
    	
64
    
	
SECTION 6.4.
    	
Waiver   of Past Defaults
    	
64
    
	
SECTION 6.5.
    	
Control   by Majority
    	
65
    
	
SECTION 6.6.
    	
Limitation   on Suits
    	
65
    
	
SECTION 6.7.
    	
Rights   of Holders To Receive Payment
    	
65
    
	
SECTION 6.8.
    	
Collection   Suit by Trustee
    	
65
    
	
SECTION 6.9.
    	
Trustee   May File Proofs of Claim
    	
65
    
	
SECTION 6.10.
    	
Priorities
    	
66
    
	
SECTION 6.11.
    	
Undertaking   for Costs
    	
66
    
	
 
    	
 
    
	
ARTICLE   VII TRUSTEE
    	
66
    
	
 
    	
 
    
	
SECTION 7.1.
    	
Duties   of Trustee
    	
66
    
	
SECTION 7.2.
    	
Rights   of Trustee
    	
67
    
	
SECTION 7.3.
    	
Individual   Rights of Trustee
    	
69
    
	
SECTION 7.4.
    	
Trustee’s   Disclaimer
    	
69
    
	
SECTION 7.5.
    	
Notice   of Defaults
    	
69
    
	
SECTION 7.6.
    	
Reports   by Trustee to Holders
    	
69
    
	
SECTION 7.7.
    	
Compensation   and Indemnity
    	
69
    
	
SECTION 7.8.
    	
Replacement   of Trustee
    	
70
    
	
SECTION 7.9.
    	
Successor   Trustee by Merger
    	
71
    
	
SECTION 7.10.
    	
Eligibility;   Disqualification
    	
71
    
	
SECTION 7.11.
    	
Preferential   Collection of Claims Against the Issuer
    	
71
    
	
SECTION 7.12.
    	
Trustee’s   Application for Instruction from the Issuer
    	
71
    
	
 
    	
 
    
	
ARTICLE   VIII LEGAL DEFEASANCE AND COVENANT DEFEASANCE
    	
71
    
	
 
    	
 
    
	
SECTION 8.1.
    	
Option   to Effect Legal Defeasance or Covenant Defeasance; Defeasance
    	
71
    
	
SECTION 8.2.
    	
Legal   Defeasance and Discharge
    	
71
    
	
SECTION 8.3.
    	
Covenant   Defeasance
    	
72
    
	
SECTION 8.4.
    	
Conditions   to Legal or Covenant Defeasance
    	
72
    
	
SECTION 8.5.
    	
Deposited   Money and Government Securities To Be Held in Trust; Other Miscellaneous   Provisions
    	
73
    
	
SECTION 8.6.
    	
Repayment   to the Issuer
    	
74
    
	
SECTION 8.7.
    	
Reinstatement
    	
74
    


 

ii











 

	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    
	
ARTICLE   IX AMENDMENTS
    	
74
    
	
 
    	
 
    
	
SECTION 9.1.
    	
Without   Consent of Holders
    	
74
    
	
SECTION 9.2.
    	
With   Consent of Holders
    	
75
    
	
SECTION 9.3.
    	
Compliance   with Trust Indenture Act
    	
77
    
	
SECTION 9.4.
    	
Revocation   and Effect of Consents and Waivers
    	
77
    
	
SECTION 9.5.
    	
Notation   on or Exchange of Notes
    	
77
    
	
SECTION 9.6.
    	
Trustee   To Sign Amendments
    	
77
    
	
 
    	
 
    
	
ARTICLE   X GUARANTEE
    	
77
    
	
 
    	
 
    
	
SECTION 10.1.
    	
Guarantee
    	
77
    
	
SECTION 10.2.
    	
Limitation   on Liability; Termination, Release and Discharge
    	
79
    
	
SECTION 10.3.
    	
Right of   Contribution
    	
80
    
	
SECTION 10.4.
    	
No   Subrogation
    	
80
    
	
SECTION 10.5.
    	
Benefits   Acknowledged
    	
81
    
	
 
    	
 
    
	
ARTICLE   XI RESERVED
    	
81
    
	
 
    	
 
    
	
ARTICLE   XII SATISFACTION AND DISCHARGE
    	
81
    
	
 
    	
 
    
	
SECTION 12.1.
    	
Satisfaction   and Discharge
    	
81
    
	
SECTION 12.2.
    	
Application   of Trust Money
    	
82
    
	
 
    	
 
    
	
ARTICLE   XIII MISCELLANEOUS
    	
82
    
	
 
    	
 
    
	
SECTION 13.1.
    	
Trust   Indenture Act Controls
    	
82
    
	
SECTION 13.2.
    	
Notices
    	
82
    
	
SECTION 13.3.
    	
Communication   by Holders with other Holders
    	
83
    
	
SECTION 13.4.
    	
Certificate   and Opinion as to Conditions Precedent
    	
83
    
	
SECTION 13.5.
    	
Statements   Required in Certificate or Opinion
    	
84
    
	
SECTION 13.6.
    	
When   Notes Disregarded
    	
84
    
	
SECTION 13.7.
    	
Rules by   Trustee, Paying Agent and Registrar
    	
84
    
	
SECTION 13.8.
    	
Legal   Holidays
    	
84
    
	
SECTION 13.9.
    	
GOVERNING   LAW
    	
84
    
	
SECTION 13.10.
    	
USA   Patriot Act
    	
84
    
	
SECTION 13.11.
    	
No   Recourse Against Others
    	
84
    
	
SECTION 13.12.
    	
Successors
    	
85
    
	
SECTION 13.13.
    	
Multiple   Originals
    	
85
    
	
SECTION 13.14.
    	
Qualification   of Indenture
    	
85
    
	
SECTION 13.15.
    	
Table of   Contents; Headings
    	
85
    
	
SECTION 13.16.
    	
WAIVERS   OF JURY TRIAL
    	
85
    
	
SECTION 13.17.
    	
Force   Majeure
    	
85
    


 

	
EXHIBIT A
    	
Form of Note
    
	
EXHIBIT B
    	
Form of Indenture   Supplement to Add Future Guarantors
    


 

iii




 









 

INDENTURE dated as of July 14, 2011, among CROWN MEDIA HOLDINGS, INC., a Delaware corporation (the “Issuer”), the Guarantors named herein and THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., a national banking association organized and existing under the laws of the United States, as Trustee, and as transfer agent, Registrar, authentication agent and Paying Agent (the “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 Issuer’s 10.5% Senior Notes, due 2019, issued on the date hereof (the “Initial Notes”), (ii) if and when issued, an unlimited principal amount of additional Notes (the “Additional Notes”) as provided in Section 2.1(a) and (iii) if and when issued, the Issuer’s 10.5% Senior Notes, due 2019 that may be issued from time to time in exchange for Initial Notes or any Additional Notes in an offer registered under the Securities Act as provided in the Registration Rights Agreement, as hereinafter defined (the “Exchange Notes” and, together with the Initial Notes and Additional Notes, the “Notes”):

 

ARTICLE I

 

DEFINITIONS AND INCORPORATION BY REFERENCE

 

SECTION 1.1.                                 Definitions.

 

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

 

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

 

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

 

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

 

“Affiliate” of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person.  For purposes of this definition, “control” (including, with correlative meanings, the terms “controlling,” “controlled by” and “under common control with”), as used with respect to any Person, shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise.

 

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

 

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

 

(2)                                  the excess, if any, of (a) the present value at such Redemption Date of (i) the redemption price of such Note at July 15, 2015 (such redemption price being set forth in the table in Section 5.7(d)) plus (ii) all required interest payments due on such Note through July 15, 2015 (excluding accrued but unpaid interest to the Redemption Date), computed using a discount rate equal to the Treasury Rate as of such Redemption Date plus 50 basis points; over (b) the principal amount of such Note.

 

“Asset Sale” means:

 

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

 











 

(2)                                  the issuance or sale of Equity Interests of any Restricted Subsidiary (other than Preferred Stock of Restricted Subsidiaries issued in compliance with Section 3.2), whether in a single transaction or a series of related transactions,

 

in each case, other than:

 

(a)                                  any disposition of Cash Equivalents, any disposition in the ordinary course of business of excess, obsolete, damaged or worn out or surplus assets, or other assets no longer used or useful in the ordinary course of business, or any disposition of inventory or goods (or other tangible or intangible assets) in the ordinary course of business of the Issuer and its Restricted Subsidiaries;

 

(b)                                 the disposition of all or substantially all of the assets of the Issuer in a manner permitted pursuant to Section 4.1 or any disposition that constitutes a Change of Control;

 

(c)                                  the making of any Restricted Payment that is permitted to be made, and is made, under Section 3.3 and the making of any Permitted Investments (other than any Permitted Investment in Cash Equivalents or Investment Grade Securities made pursuant to clause (2) of the definition of “Permitted Investment”);

 

(d)                                 any disposition of property or assets or issuance or sale of Equity Interests of any Restricted Subsidiary in any transaction or series of related transactions with an aggregate fair market value of less than $10.0 million;

 

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

 

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

 

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

 

(h)                                 solely for purposes of clause (i) of the first paragraph of Section 3.5, foreclosures, condemnation or any similar action on assets;

 

(i)                                     the granting of a Lien that is permitted under Section 3.6;

 

(j)                                     the unwinding of non-speculative Hedging Obligations entered into in the ordinary course of business;

 

(k)                                  any financing transaction with respect to property constructed, acquired, replaced, repaired or improved (including any reconstruction, refurbishment, renovation and/or development of real property) by the Issuer or any Restricted Subsidiary after the Issue Date, including any Sale and Lease-Back Transaction permitted by the Indenture; and

 

(l)                                     any surrender or waiver of contractual rights or the settlement, release or surrender of contractual rights or other litigation claims in the ordinary course of business.

 

“Asset Sale Offer” has the meaning set forth in the fourth paragraph under Section 3.5.

 

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

 

“Capital Stock” means:

 

2











 

(1)                                  in the case of a corporation, corporate stock;

 

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

 

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

 

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

 

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

 

“Cash Equivalents” means:

 

(1)                                  U.S. dollars;

 

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

 

(3)                                  certificates of deposit, time deposits and eurodollar time deposits with maturities of one year or less from the date of acquisition, bankers’ acceptances with maturities not exceeding one year and overnight bank deposits, in each case with any commercial bank having capital and surplus of not less than $500.0 million;

 

(4)                                  repurchase obligations for underlying securities of the types described in clauses (2), (3) and (8) entered into with any financial institution meeting the qualifications specified in clause (3) above and in U.S. dollars;

 

(5)                                  commercial paper rated at least P-2 by Moody’s or at least A-2 by S&P and in each case maturing within 12 months after the date of creation thereof, in U.S. dollars;

 

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

 

(7)                                  investment funds investing substantially all of their assets in securities of the types described in clauses (1) through (6) above;

 

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

 

(9)                                  Investments with weighted average maturities of 12 months or less from the date of acquisition in money market funds rated A (or the equivalent thereof) or better by S&P or A (or the equivalent thereof) or better by Moody’s and in each case in U.S. dollars; and

 

3











 

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

 

Notwithstanding the foregoing, Cash Equivalents shall include amounts denominated in currencies other than U.S. dollars; provided that such amounts are converted into U.S. dollars as promptly as practicable and in any event within ten Business Days following the receipt of such amounts.

 

“Cash Management Services” means any of the following to the extent not constituting a line of credit (other than an overnight overdraft facility that is not in default):  ACH transactions, treasury and/or cash management services, including, without limitation, controlled disbursement services, overdraft facilities that are not in default, foreign exchange facilities, deposit and other accounts and merchant services.

 

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

 

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

 

(2)                                  the Issuer becomes aware of (by way of a report or any other filing pursuant to Section 13(d) of the Exchange Act, proxy, vote, written notice or otherwise) the acquisition by any Person or group (within the meaning of Section 13(d)(3) or Section 14(d)(2) of the Exchange Act, or any successor provision), including any group acting for the purpose of acquiring, holding or disposing of securities (within the meaning of Rule 13d-5(b)(1) under the Exchange Act), other than a Permitted Holder, in a single transaction or in a related series of transactions, by way of merger, consolidation or other business combination or purchase of beneficial ownership (within the meaning of Rule 13d-3 under the Exchange Act, or any successor provision) of 50% or more of the total voting power of the Voting Stock of (a) the Issuer (other than Parent) or (b) any Parent holding directly or indirectly a majority of the total voting power of the Voting Stock of the Issuer; or

 

(3)                                  the adoption by the stockholders of the Issuer of a plan or proposal for the liquidation or dissolution of the Issuer.

 

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

 

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

 

(2)                                  consolidated capitalized interest of such Person and its Restricted Subsidiaries for such period, whether paid or accrued; less

 

(3)                                  interest income for such period.

 

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

 

4











 

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

 

(1)                                  any net after-tax effect of extraordinary, non-recurring or unusual gains or losses, costs, charges or expenses (including any such amounts relating to the Transactions), restructuring, severance, relocation costs and curtailments or modifications to pension and post-retirement employee benefit plans shall be excluded;

 

(2)                                  the cumulative effect of a change in accounting principles during such period shall be excluded;

 

(3)                                  any net after-tax effect of income (loss) from disposed, abandoned or discontinued operations and any net after-tax gains or losses on disposal of disposed, abandoned or discontinued operations shall be excluded;

 

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

 

(5)                                  the Consolidated Net Income for such period of any Person that is not a Subsidiary, or is an Unrestricted Subsidiary, or that is accounted for by the equity method of accounting, shall be excluded; provided that Consolidated Net Income of the Issuer shall be increased by the amount of dividends or distributions or other payments that are actually paid in Cash Equivalents (or to the extent converted into Cash Equivalents) to the referent Person or a Restricted Subsidiary thereof in respect of such period (without duplication for purposes of Section 3.3 of any amounts included under Section 3.3(a)(C)(iii));

 

(6)                                  solely for the purpose of determining the amount available for Restricted Payments under Section 3.3(a)(C)(i), the Consolidated Net Income (if positive) for such period of any Restricted Subsidiary (other than any Guarantor) shall be excluded to the extent the declaration or payment of dividends or similar distributions by that Restricted Subsidiary of its Consolidated Net Income is not at the date of determination permitted without any prior governmental approval (which has not been obtained) or, directly or indirectly, is otherwise restricted by the operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule, or governmental regulation applicable to that Restricted Subsidiary or its stockholders, unless such restriction with respect to the payment of dividends or similar distributions has been legally waived; provided that Consolidated Net Income of the Issuer will be increased by the amount of dividends or other distributions or other payments actually paid in Cash Equivalents (or to the extent converted into Cash Equivalents) to the Issuer or a Restricted Subsidiary thereof in respect of such period, to the extent not already included therein;

 

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

 

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

 

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

 

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(10)                            any (i) non-cash compensation charge or expense recorded from grants of stock appreciation or similar rights, stock options, restricted stock or other rights and (ii) income (loss) attributable to deferred compensation plans or trusts shall be excluded;

 

(11)                            any unrealized net gains and losses resulting from Hedging Obligations or embedded derivatives that require similar accounting treatment and the application of Accounting Standards Codification Topic 815, Derivatives and Hedging, and related pronouncements shall be excluded;

 

(12)                            any unrealized net gains and losses resulting from currency translation gains or losses related to currency remeasurements of Indebtedness (including any unrealized net gains or losses resulting from hedge agreements for currency exchange risk) shall be excluded; and

 

(13)                            any net income or loss included in the consolidated financial statements of such Person and its Restricted Subsidiaries as noncontrolling interests due to the application of Accounting Standards Codification Topic 810, Consolidation, shall be excluded.

 

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

 

Notwithstanding the foregoing, for the purpose of Section 3.3 only (other than Section 3.3(a)(C)(iii)), there shall be excluded from Consolidated Net Income any income arising from any sale or other disposition of Restricted Investments made by the Issuer and its Restricted Subsidiaries, any repurchases and redemptions of Restricted Investments from the Issuer and its Restricted Subsidiaries, any repayments of loans and advances which constitute Restricted Investments by the Issuer or any of its Restricted Subsidiaries, any sale of the stock of an Unrestricted Subsidiary or any distribution or dividend from an Unrestricted Subsidiary, in each case only to the extent such amounts increase the amount of Restricted Payments permitted under Section 3.3(a)(C)(iii).

 

“Consolidated Total Indebtedness” means, as at any date of determination, an amount equal to the sum of (1) the aggregate amount of all outstanding Indebtedness of the Issuer and its Restricted Subsidiaries consisting of Indebtedness for borrowed money, Obligations in respect of Capitalized Lease Obligations and debt obligations evidenced by promissory notes and similar instruments and (2) the aggregate amount of all outstanding Disqualified Stock of the Issuer and all Disqualified Stock and Preferred Stock of its Restricted Subsidiaries, with the amount of such Disqualified Stock and Preferred Stock equal to the greater of their respective voluntary or involuntary liquidation preferences and Maximum Fixed Repurchase Prices, in each case determined in accordance with GAAP; provided that Indebtedness of the Issuer and its Restricted Subsidiaries under any revolving credit facility or line of credit as at any date of determination shall be determined using the Average Quarterly Balance of such Indebtedness for the most recently ended four fiscal quarters for which internal financial statements are available as of such date of determination (the “Reference Period”).  For purposes hereof, (a) the “Maximum Fixed Repurchase Price” of any Disqualified Stock or Preferred Stock that does not have a fixed repurchase price shall be calculated in accordance with the terms of such Disqualified Stock or Preferred Stock as if such Disqualified Stock or Preferred Stock were purchased on any date on which Consolidated Total Indebtedness shall be required to be determined pursuant to the Indenture, and, if such price is based upon, or measured by, the fair market value of such Disqualified Stock or Preferred Stock, such fair market value shall be determined reasonably and in Good Faith by the Issuer, (b) “Average Quarterly Balance” means, with respect to any Indebtedness incurred by the Issuer or its Restricted Subsidiaries under a revolving facility or line of credit, the quotient of (x) the sum of each Individual Quarterly Balance for each fiscal quarter ended on or prior to such date of determination and included in the Reference Period divided by (y) 4, and (c) “Individual Quarterly Balance” means, with respect to any Indebtedness incurred by the Issuer or its Restricted Subsidiaries under a revolving credit facility or line of credit during any fiscal quarter of the Issuer, the quotient of (x) the sum of the aggregate outstanding principal amount of all such Indebtedness at the end of each day of such quarter divided by (y) the number of days in such fiscal quarter.

 

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

 

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

 

(2)                                  to advance or supply funds:

 

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

 

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

 

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

 

“Credit Facilities” means, with respect to the Issuer or any of its Restricted Subsidiaries, one or more debt facilities, including the Senior Secured Credit Facilities or any other financing arrangements (including, without limitation, commercial paper facilities or indentures) providing for revolving credit loans, term loans, debt securities, letters of credit or other indebtedness, including any notes, mortgages, guarantees, collateral documents, instruments and agreements executed in connection therewith, and any amendments, supplements, modifications, extensions, renewals, restatements or refunding thereof (including any commercial paper facilities or indentures) that replace, refund or refinance any part of such loans, letters of credit or other indebtedness, including any such notes, mortgages, guarantees collateral documents, instruments and agreements thereunder, including any such amending, supplementing, modifying, extending, renewing, restating or refunding facility or arrangement (including such commercial paper facilities or indentures) that increases the amount permitted to be borrowed thereunder or alters the maturity thereof (provided that such increase in borrowings is permitted under Section 3.2) or adds Restricted Subsidiaries as additional borrowers or guarantors thereunder and whether by the same or any other agent, lender or investor or group of agents, lenders or investors.

 

“Default” means any event that is, or with the passage of time or the giving of notice or both would be, an Event of Default; provided that any Default that results solely from the taking of an action that would have been permitted but for the continuation of a previous Default will be deemed to be cured if such previous Default is cured prior to becoming an Event of Default.

 

“Designated Non-cash Consideration” means the fair market value of non-cash consideration received by the Issuer or a Restricted Subsidiary in connection with an Asset Sale that is so designated as Designated Non-cash Consideration pursuant to an Officer’s Certificate, setting forth the basis of such valuation, executed by a responsible financial or accounting officer of the Issuer, less the amount of Cash Equivalents received in connection with a subsequent sale of or collection on such Designated Non-cash Consideration.

 

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

 

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“EBITDA” means, with respect to any Person for any period, the Consolidated Net Income of such Person for such period, and, without duplication,

 

(1)                                  increased (to the extent any such amounts were deducted or excluded in computing Consolidated Net Income) and not added back in the definition thereof by:

 

(a)                                  provision for taxes based on income or profits or capital, including, without limitation, state, franchise and similar taxes and foreign withholding taxes of such Person paid or accrued during such period (including payments made or amounts accrued pursuant to any tax-sharing agreement); plus

 

(b)                                 Fixed Charges of such Person for such period (including, (x) net losses on Hedging Obligations or other derivative instruments entered into for the purpose of hedging interest rate risk and (y) costs of surety bonds in connection with financing activities, plus amounts excluded from the definition of “Consolidated Interest Expense” pursuant to clauses 1(v) through 1(z) thereof); plus

 

(c)                                  the total amount of depreciation and amortization expense (excluding capitalized film costs), including the amortization of deferred financing fees, of such Person and its Restricted Subsidiaries for such period on a consolidated basis and determined in accordance with GAAP; plus

 

(d)                                 any expenses or charges (other than depreciation or amortization expense) related to any Equity Offering, Permitted Investment, acquisition, disposition, recapitalization or the incurrence of Indebtedness permitted to be incurred by the Indenture (including a refinancing thereof) (whether or not successful) or an amendment or modification of any debt instrument, including:

 

(i)                                     such fees, expenses or charges related to the Transactions; and

 

(ii)                                  any amendment or other modification of the Notes and the Senior Secured Credit Facilities; plus

 

(e)                                  any other non-cash charges, expenses or losses for such period, excluding any such charge that represents an accrual or reserve for a cash expenditure for a future period; plus

 

(f)                                    any costs or expense incurred by the Issuer or a Restricted Subsidiary pursuant to any management equity plan or stock option plan or any other management or employee benefit plan or agreement or any stock subscription or shareholder agreement, to the extent that such cost or expenses are funded with cash proceeds contributed to the capital of the Issuer or net cash proceeds of an issuance of Equity Interests of the Issuer (other than Disqualified Stock), solely to the extent that such net cash proceeds are excluded from the calculation set forth in Section 3.3(a)(C); plus

 

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

 

(h)                                 net realized losses from Hedging Obligations or embedded derivatives that require similar accounting treatment and the application of Accounting Standard Codification Topic 815, Derivatives and Hedging, and related pronouncements;

 

(2)                                  decreased (without duplication) by:  (a) non-cash gains increasing Consolidated Net Income of such Person for such period, excluding any non-cash gains to the extent they represent the reversal 

 

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of an accrual or reserve for a potential cash item that reduced EBITDA in any prior period and any non-cash gains with respect to cash actually received in a prior period so long as such cash did not increase EBITDA in such prior period; plus (b) any net realized income or gains from Hedging Obligations or embedded derivatives that require similar accounting treatment and the application of Accounting Standard Codification Topic 815, Derivatives and Hedging, and related pronouncements; and

 

(3)                                  increased or decreased by (without duplication), as applicable, any adjustments resulting from the application of Accounting Standards Codification Topic 460, Guarantees, or any comparable regulation.

 

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

 

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

 

(1)                                  public offerings with respect to the Issuer’s common stock registered on Form S-4 or Form S-8; and

 

(2)                                  issuances to any Subsidiary of the Issuer.

 

“Event of Default” has the meaning set forth in Section 6.1.

 

“Excess Proceeds” has the meaning set forth in Section 3.5.

 

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

 

“Fixed Charges” means, with respect to any Person for any period, the sum, of:

 

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

 

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

 

“Foreign Subsidiary” means, with respect to any Person, (1) any Restricted Subsidiary of such Person that is not organized or existing under the laws of the United States, any state thereof, the District of Columbia or any territory thereof and (2) any Restricted Subsidiary of such Foreign Subsidiary.

 

“GAAP” means generally accepted accounting principles in the United States which are in effect on the Issue Date.

 

“Good Faith by the Issuer” means the decision in good faith by a responsible financial officer of the Issuer; provided that if such decision involves a determination of fair market value in excess of $10.0 million, the decision is made in good faith by the board of directors (or a committee thereof) of the Issuer.

 

“Government Securities” means securities that are:

 

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

 

(2)                                  obligations of a Person controlled or supervised by and acting as an agency or instrumentality of the United States of America the timely payment of which is unconditionally guaranteed as a full faith and credit obligation by the United States of America, which, in either case, are not callable or redeemable at the option of the issuers thereof, and shall also include a depository receipt issued by a bank 

 

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(as defined in Section 3(a)(2) of the Securities Act), as custodian with respect to any such Government Securities or a specific payment of principal of or interest on any such Government Securities held by such custodian for the account of the holder of such depository receipt; provided that (except as required by law) such custodian is not authorized to make any deduction from the amount payable to the holder of such depository receipt from any amount received by the custodian in respect of the Government Securities or the specific payment of principal of or interest on the Government Securities evidenced by such depository receipt.

 

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

 

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

 

“Guarantor” means each Restricted Subsidiary that provides a Guarantee in accordance with the Indenture; provided that upon release or discharge of such Restricted Subsidiary from its Guarantee in accordance with the Indenture, such Restricted Subsidiary shall cease to be a Guarantor.

 

“Hallmark Agreements” means the HCC Credit Agreement, Stockholders’ Agreement, Registration Rights Agreement, Tax Sharing Agreement, state tax sharing agreement, Hallmark Hall of Fame Programming License Agreement, intercompany services agreement, Hallmark trademark license agreements, lease guarantees with Hallmark Cards, as such agreements may be amended, restated, modified, supplemented, extended or renewed (so long as any such amendment, restatement, modification, supplement, extension or renewal is not materially more disadvantageous to the Holders (as determined in Good Faith by the Issuer) when taken as a whole as compared to the applicable agreement as in effect on the Issue Date).

 

“Hallmark Hall of Fame Programming License Agreement” means the programming license agreement, dated January 1, 2008, by and between Crown Media United States and Hallmark Hall of Fame Productions, Inc.

 

“HCC Credit Agreement” means the Recapitalization Credit Agreement, dated as of June 29, 2010 among the Issuer, Parent, as Lender, and each of the other credit parties thereto.

 

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

 

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

 

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

 

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

 

(a)                                  in respect of borrowed money;

 

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

 

(c)                                  representing the balance deferred and unpaid of the purchase price of any property (including Capitalized Lease Obligations), except (i) any such balance that constitutes an obligation in respect of a commercial letter of credit, a trade payable or similar obligation to a trade creditor, in each case accrued in the ordinary course of business (and with respect to commercial 

 

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letters of credit, repaid in a timely manner) and (ii) any earn-out obligations until such obligation becomes a liability on the balance sheet of such Person in accordance with GAAP and is not paid after becoming due and payable; or

 

(d)                                 representing any Hedging Obligations;

 

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

 

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

 

(3)                                  to the extent not otherwise included, the obligations of the type referred to in clause (1) of a third Person secured by a Lien on any asset owned by such first Person, whether or not such Indebtedness is assumed by such first Person, the amount of such Indebtedness being calculated as the lesser of the fair market value (as determined in Good Faith by the Issuer) of such asset as of such date of determination and the amount of such Indebtedness secured by a Lien on such asset.

 

Indebtedness shall not include (i) Contingent Obligations incurred in the ordinary course of business, (ii) Cash Management Services or (iii) Indebtedness that has been defeased or satisfied and discharged in accordance with the terms of the documents governing such Indebtedness and which Indebtedness is no longer reflected as debt on the Issuer’s and its Restricted Subsidiaries’ financial statements.

 

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

 

“Initial Purchaser” means J.P. Morgan Securities LLC, the initial purchaser of the Notes pursuant to the purchase agreement entered into with the Issuer and the Guarantors on the date of the Offering Memorandum.

 

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

 

“Investment Grade Securities” means:

 

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

 

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

 

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

 

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

 

“Investments” means, with respect to any Person, all investments by such Person in other Persons (including Affiliates) in the form of loans (including guarantees), advances or capital contributions (excluding accounts receivable, credit card and debit card receivables, trade credit, advances to customers, commission, travel and similar advances to officers and employees, in each case made in the ordinary course of business), purchases or other 

 

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acquisitions for consideration of Indebtedness, Equity Interests or other securities issued by any other Person and investments that are required by GAAP to be classified on the balance sheet (excluding the footnotes) of the Issuer in the same manner as the other investments included in this definition to the extent such transactions involve the transfer of cash or other property.  For purposes of the definition of “Unrestricted Subsidiary” and Section 3.3:

 

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

 

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

 

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

 

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

 

(3)                                  if the Issuer 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 Issuer, the Issuer shall be deemed to have made an Investment on the date of any such sale or disposition equal to the fair market value of the Capital Stock of such Subsidiary not sold or disposed of.

 

“Issue Date” means July 14, 2011.

 

“Issuer” has the meaning set forth in the preamble.

 

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

 

“Leverage Ratio” as of any date of determination, means the ratio of:

 

(1)                                  Consolidated Total Indebtedness of the Issuer and its Restricted Subsidiaries at the time of determination, to

 

(2)                                  the Issuer’s EBITDA for the most recently ended four full fiscal quarters for which financial statements are available immediately preceding the date on which such event for which such calculation is being made shall occur;

 

provided, however, that:

 

(a)                                  if the Issuer or any Restricted Subsidiary has incurred, repaid, repurchased, redeemed, retired, defeased or otherwise discharged 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 Leverage Ratio involves an incurrence, repayment, repurchase, redemption, retirement, defeasement or other discharge of Indebtedness, EBITDA and Consolidated Interest Expense for such period will be calculated after giving effect on a pro forma basis to such incurrence, repayment, repurchase, redemption, retirement, defeasement or other discharge of Indebtedness as if such Indebtedness had been incurred or repaid, repurchased, redeemed, retired, defeased or otherwise discharged on the first day of such period;

 

(b)                                 if since the beginning of such period the Issuer or any Restricted Subsidiary will have made any Asset Sale or disposed of or discontinued any company, division, operating unit, segment, 

 

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business, group of related assets or line of business or if the transaction giving rise to the need to calculate the Leverage Ratio includes such an Asset Sale, EBITDA, Consolidated Interest Expense and Indebtedness for such period will be calculated after giving pro forma effect thereto (including the incurrence of any Indebtedness) as if such Asset Sale, disposition or discontinuation occurred on the first day of such period;

 

(c)                                  if since the beginning of such period the Issuer 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 Issuer 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 or group of related assets or line of business, EBITDA, Consolidated Interest Expense and Indebtedness 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

 

(d)                                 if since the beginning of such period any Person (that subsequently became a Restricted Subsidiary or was merged with or into the Issuer or any Restricted Subsidiary since the beginning of such period) will have incurred any Indebtedness or discharged any Indebtedness or made any disposition or any Investment or acquisition of assets that would have required an adjustment pursuant to clause (a), (b) or (c) above if made by the Issuer or a Restricted Subsidiary during such period, EBITDA, Consolidated Interest Expense and Indebtedness for such period will be calculated after giving pro forma effect thereto as if such transaction occurred on the first day of such period.

 

The pro forma calculations will be determined in good faith by a responsible financial or accounting Officer of the Issuer and calculated on a basis consistent with Regulation S-X under the Securities Act and may include adjustments that do not comply with Regulation S-X; provided that such adjustments are factually supportable, reasonably identifiable and set forth in an Officer’s Certificate delivered to the Trustee and have been realized at the time that such pro forma calculation is made or are reasonably expected to be realized within twelve months following the consummation of the transaction to which such pro forma calculation relates.  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).

 

“Lien” means, with respect to any asset, any mortgage, lien (statutory or otherwise), pledge, hypothecation, charge, security interest, preference, priority or encumbrance of any kind in respect of such asset, whether or not filed, recorded or otherwise perfected under applicable law, including any conditional sale or other title retention agreement, any Capitalized Lease Obligation in connection therewith, any option or other agreement to sell or give a security interest in and any filing of or agreement to give any financing statement under the Uniform Commercial Code (or equivalent statutes) of any jurisdiction; provided that in no event shall an operating lease be deemed to constitute a Lien.

 

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

 

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

 

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

 

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

 

“Offering Memorandum” means that certain offering memorandum dated June 29, 2011 covering the Notes issued on the Issue Date.

 

“Officer” means the Chairman of the Board, the Chief Executive Officer, the President, any Senior Vice President or Vice President, the Treasurer or any Assistant Treasurer or the Secretary or any Assistant Secretary of the Issuer or any other Person, as the case may be.

 

“Officer’s Certificate” means a certificate signed on behalf of the Issuer by an Officer of the Issuer or on behalf of any other Person, as the case may be.

 

“Opinion of Counsel” means a written opinion from legal counsel who is acceptable to the Trustee and that meets the requirements set forth in the Indenture.  The counsel may be an employee of or counsel to the Issuer or the Trustee.

 

“Parent” means H C Crown, LLC, a subsidiary of Hallmark Cards, Inc.

 

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

 

“Permitted Holder” means Hallmark Cards, Inc. and its Subsidiaries.

 

“Permitted Investments” means:

 

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

 

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

 

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

 

(a)                                  such Person becomes a Restricted Subsidiary; or

 

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

 

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

 

(4)                                  any Investment in securities or other assets not constituting cash, Cash Equivalents or Investment Grade Securities and received in connection with an Asset Sale made pursuant to Section 3.5 or any other disposition of assets not constituting an Asset Sale;

 

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

 

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

 

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

 

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

 

(c)                                  in resolution of litigation, arbitration or other disputes;

 

(7)                                  Hedging Obligations permitted under clause (10) of Section 3.2;

 

(8)                                  Investments the payment for which consists of Equity Interests (exclusive of Disqualified Stock) or the net cash proceeds from the issuance of Equity Interests (exclusive of Disqualified Stock) of the Issuer; provided, however, that such Equity Interests will not increase the amount available for Restricted Payments under clause (3) of the first paragraph under Section 3.3(a)(C);

 

(9)                                  guarantees of Indebtedness permitted under Section 3.2;

 

(10)                            any transaction to the extent it constitutes an Investment that is permitted and made in accordance with the provisions of Section 3.8(b) (except transactions described in clauses (2), (8), (9) and (10) of such section);

 

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

 

(12)                            additional Investments having an aggregate fair market value, taken together with all other Investments made pursuant to this clause (12) that are at that time outstanding (without giving effect to the sale of an Unrestricted Subsidiary to the extent the proceeds of such sale do not consist of cash or marketable securities), not to exceed the greater of $15.0 million and 2.0% of Total Assets (with the fair market value of each Investment being measured at the time made and without giving effect to subsequent changes in value);

 

(13)                            advances to, or guarantees of Indebtedness of, officers, directors and employees not in excess of $5.0 million outstanding at any one time, in the aggregate;

 

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

 

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

 

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

 

15











 

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

 

(2)                                  Liens imposed by law, such as carriers’, warehousemen’s, materialmen’s, repairmen’s and mechanics’ Liens, in each case for sums not yet overdue for a period of more than 30 days (or if more than 30 days overdue, which are unfiled and regarding which no other enforcement action has been taken) or being contested in good faith by appropriate proceedings or other Liens arising out of judgments or awards against such Person with respect to which such Person shall then be proceeding with an appeal or other proceedings for review if adequate reserves with respect thereto are maintained on the books of such Person in accordance with GAAP;

 

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

 

(4)                                  Liens in favor of issuers of performance, surety, bid, indemnity, warranty, release, appeal or similar bonds or with respect to other regulatory requirements or letters of credit or bankers’ acceptances issued, and completion guarantees provided for, in each case pursuant to the request of and for the account of such Person in the ordinary course of its business;

 

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

 

(6)                                  Liens securing Indebtedness permitted to be incurred pursuant to Section 3.2(b)(4); provided, however, that the Lien may not extend to any other property owned by such Person or any of its Restricted Subsidiaries at the time the Lien is incurred (other than assets and property affixed or appurtenant thereto), and the Indebtedness (other than any interest thereon) secured by the Lien may not be incurred more than 180 days after the later of the acquisition, completion of construction, repair, improvement, addition or commencement of full operation of the property subject to the Lien;

 

(7)                                  Liens existing on the Issue Date (with the exception of Liens securing the Senior Secured Credit Facilities on the Issue Date, which will be deemed incurred pursuant to clause (33) of this definition);

 

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

 

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

 

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(10)                            Liens securing Indebtedness or other obligations of a Restricted Subsidiary owing to the Issuer or another Restricted Subsidiary permitted to be incurred in accordance with Section 3.2;

 

(11)                            Liens securing Hedging Obligations and Cash Management Services entered into in the ordinary course of business (and not for speculative purposes);

 

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

 

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

 

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

 

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

 

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

 

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

 

(18)                            other Liens securing obligations incurred in the ordinary course of business which obligations do not exceed $15.0 million at any one time outstanding;

 

(19)                            Liens securing judgments for the payment of money not constituting an Event of Default under clause (7) of Section 6.1(a), so long as such Liens are adequately bonded and any appropriate legal proceedings that may have been duly initiated for the review of such judgment have not been finally terminated or the period within which such proceedings may be initiated has not expired;

 

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

 

(21)                            Liens (i) of a collection bank arising under Section 4-208 of the Uniform Commercial Code on items in the course of collection, (ii) attaching to commodity trading accounts or other commodity brokerage accounts incurred in the ordinary course of business and (iii) in favor of banking institutions arising as a matter of law encumbering deposits (including the right of set-off) and which are within the general parameters customary in the banking industry;

 

(22)                            Liens deemed to exist in connection with Investments in repurchase agreements permitted under Section 3.2; provided that such Liens do not extend to any assets other than those that are the subject of such repurchase agreement;

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(31)                            Liens securing Indebtedness permitted to be incurred under Credit Facilities, including any letter of credit facility relating thereto pursuant to the terms of Section 3.2(b)(1);

 

(32)                            Liens in favor of various entertainment industry guilds on motion picture rights required pursuant to collective bargaining agreements with such guilds securing residuals and other contingent payment rights in respect of such motion picture rights; and

 

(33)                            Liens incurred to secure Obligations in respect of any Indebtedness (other than Subordinated Indebtedness) permitted to be incurred pursuant to Section 3.2(a); provided that, with respect to Liens securing Obligations permitted under this clause (33), at the time of incurrence and after giving pro forma effect thereto, the Secured Leverage Ratio would be no greater than 2.00 to 1.00.

 

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

 

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

 

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

 

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“Qualified Equity Offering” means any public offering of the Capital Stock of the Issuer.

 

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

 

“Registration Rights Agreement” means (i) the Registration Rights Agreement related to the Notes dated as of the Issue Date, among the Issuer, the Guarantors and the Initial Purchasers, as amended or supplemented, and (ii) any other registration rights agreement entered into in connection with the issuance of Additional Notes in a private offering by the Issuer after the Issue Date.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“Senior Management” means the Chief Executive Officer and the Chief Financial Officer of the Issuer.

 

“Senior Secured Credit Facilities” means the Credit Facilities under the Credit Agreement to be entered into as of the Issue Date, as amended, restated, supplemented or otherwise modified from time to time, by and among the Issuer, as borrower, the guarantors party thereto, the lenders party thereto, and JPMorgan Chase Bank, N.A., as administrative agent, including any guarantees, collateral documents, instruments and agreements executed in connection therewith.

 

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

 

“Similar Business” means any business conducted or proposed to be conducted by the Issuer and its Restricted Subsidiaries on the Issue Date or any business that is similar, reasonably related, incidental, complementary or ancillary thereto, including without limitation in broadcasting, cable, direct-to-home and other media businesses.

 

“Stockholders Agreement” means the stockholders agreement, dated June 29, 2010, among the Issuer, Hallmark Cards, Incorporated and Parent.

 

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

 

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

 

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

 

“Subsidiary” means, with respect to any Person:

 

(1)                                  any corporation, association, or other business entity (other than a partnership, joint venture, limited liability company or similar entity) of which more than 50% of the total voting power of shares of Capital Stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time of determination owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of that Person or a combination thereof; and

 

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

 

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

 

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

 

“Tax Sharing Agreement” means the Federal Tax Sharing Agreement dated March 11, 2003, as amended on June 29, 2010, by and between the Issuer and Hallmark Cards, Incorporated.

 

“TIA” means the Trust Indenture Act.

 

“Total Assets” means, as of any date, the total assets of the Issuer and its Restricted Subsidiaries on a consolidated basis, as shown on the most recent internal consolidated balance sheet of the Issuer and its Restricted Subsidiaries prepared in good faith by Senior Management of the Issuer.

 

“Transaction” means the issuance of the Notes and the entry into the Senior Secured Credit Facilities and the application of the proceeds thereof, to be consummated on the Issue Date.

 

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

 

20











 

market data)) most nearly equal to the period from the Redemption Date to July 15, 2015; provided, however, that if the period from the Redemption Date to July 15, 2015 is less than one year, the weekly average yield on actually traded United States Treasury securities adjusted to a constant maturity of one year will be used.

 

“Trust Indenture Act” means the Trust Indenture Act of 1939, as amended, and the rules and regulations of the SEC promulgated thereunder.

 

“Trust Officer” shall mean, when used with respect to the Trustee, any trust officer or any other officer of the Trustee who shall have direct responsibility for the administration of this Indenture or to whom any corporate trust matter is referred because of such person’s knowledge of and familiarity with the particular subject.

 

“Unrestricted Subsidiary” means:

 

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

 

(2)                                  any Subsidiary of an Unrestricted Subsidiary.

 

The Issuer may designate any Subsidiary of the Issuer (including any existing Subsidiary and any newly acquired or newly formed Subsidiary) to be an Unrestricted Subsidiary unless such Subsidiary or any of its Subsidiaries owns any Equity Interests or Indebtedness of, or owns or holds any Lien on, any property of, the Issuer or any Restricted Subsidiary (other than solely any Subsidiary of the Subsidiary to be so designated); provided that each of (a) the Subsidiary to be so designated and (b) its Subsidiaries, has not at the time of designation, and does not thereafter, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable with respect to any Indebtedness pursuant to which the lender has recourse to any of the assets of the Issuer or any Restricted Subsidiary.

 

The Issuer 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 and the Issuer or the relevant Restricted Subsidiary would be able to incur at least $1.00 of additional Indebtedness of the relevant Restricted Subsidiary pursuant to Section 3.2, on a pro forma basis taking into account such designation.

 

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

 

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

 

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

 

(1)                                  the sum of the products obtained by multiplying (x) the number of years from the date of determination to the date of each then remaining installment, sinking fund, serial maturity or other required payment of principal, including payment at final maturity, in respect thereof, of such Indebtedness, or redemption or similar payment with respect to such Disqualified Stock or Preferred Stock, by (y) the amount of such payments; by

 

(2)                                  the sum of all such payments.

 

“Wholly-Owned Subsidiary” of any Person means a Subsidiary of such Person, 100% of the outstanding Equity Interests of which (other than directors’ qualifying shares) shall at the time be owned by such Person or by one or more Wholly-Owned Subsidiaries of such Person.

 

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SECTION 1.2.                                 Other Definitions.

 

	
Term
    	
 
    	
Defined in Section
    
	
“Additional   Restricted Notes”
    	
 
    	
2.1(b)
    
	
“Affiliate   Transaction”
    	
 
    	
3.8
    
	
“Agent Members”
    	
 
    	
2.1(e)(iii)
    
	
“Asset Sale Offer”
    	
 
    	
3.5(b)
    
	
“Authenticating   Agent”
    	
 
    	
2.2
    
	
“Change of Control   Offer”
    	
 
    	
3.10
    
	
“Change of Control   Payment”
    	
 
    	
3.10
    
	
“Change of Control   Payment Date”
    	
 
    	
3.10
    
	
“Clearstream”
    	
 
    	
2.1(b)
    
	
“Covenant   Defeasance”
    	
 
    	
8.3
    
	
“Defaulted   Interest”
    	
 
    	
2.13
    
	
“Euroclear”
    	
 
    	
2.1(b)
    
	
“Event of Default”
    	
 
    	
6.1 (a)
    
	
“Exchange Global   Note”
    	
 
    	
2.1(b)
    
	
“Global Notes”
    	
 
    	
2.1(b)
    
	
“Guaranteed   Obligations”
    	
 
    	
10.1
    
	
“incur”
    	
 
    	
3.2(a)
    
	
“incurrence”
    	
 
    	
3.2(a)
    
	
“Issuer Order”
    	
 
    	
2.2
    
	
“Legal Defeasance”
    	
 
    	
8.2
    
	
“Notes Register”
    	
 
    	
2.3
    
	
“Paying Agent”
    	
 
    	
2.3
    
	
“protected   purchaser”
    	
 
    	
2.9
    
	
“Redemption Date”
    	
 
    	
5.7(a)
    
	
“Refinancing   Indebtedness”
    	
 
    	
3.2(b)(13)
    
	
“Refunding Capital   Stock”
    	
 
    	
3.3(b)(2)
    
	
“Registrar”
    	
 
    	
2.3
    
	
“Regulation S   Global Note”
    	
 
    	
2.1(b)
    
	
“Regulation S   Notes”
    	
 
    	
2.1(b)
    
	
“Reinstatement   Date”
    	
 
    	
3.20
    
	
“Resale   Restriction Termination Date”
    	
 
    	
2.6(b)
    
	
“Restricted   Payments”
    	
 
    	
3.3(a)
    
	
“Restricted   Period”
    	
 
    	
2.1(b)
    
	
“Rule 144A Global   Note”
    	
 
    	
2.1(b)
    
	
“Rule 144A Notes”
    	
 
    	
2.1(b)
    
	
“Special Interest   Payment Date”
    	
 
    	
2.13(a)
    
	
“Special Record   Date”
    	
 
    	
2.13(a)
    
	
“Successor   Company”
    	
 
    	
4.1(a)(1)
    
	
“Successor Person”
    	
 
    	
10.2(b)(i)
    
	
“Suspended   Covenants”
    	
 
    	
3.20
    
	
“Suspension   Period”
    	
 
    	
3.20
    
	
“Tax Group”
    	
 
    	
3.3(b)(10)
    


 

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 Notes.

 

“indenture security holder” means a Holder.

 

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“indenture to be qualified” means this Indenture.

 

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

 

“obligor” on the indenture securities means the Issuer 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.

 

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 Notes 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.

 

SECTION 1.5.            Acts of Holders.

 

(a)                                  Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given or taken by Holders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Holders in person or by an agent duly appointed in writing.  Except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments or record or both are delivered to the Trustee and, where it is hereby expressly required, to the Issuer.  Proof of execution of any such instrument or of a writing appointing any such agent, or the holding by any Person of a Note, shall be sufficient for any purpose of this Indenture and (subject to Section 7.1) conclusive in favor of the Trustee and the Issuer, if made in the manner provided in this Section 1.5.

 

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

 

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

 

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

 

(e)                                  The Issuer may, in circumstances permitted by the Trust Indenture Act, set a record date for purposes of determining the identity of Holders entitled to give any request, demand, authorization, direction, notice, consent, waiver or take any other act, or to vote or consent to any action by vote or consent authorized or permitted to be given or taken by Holders.

 

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

 

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

 

(h)                                 The Issuer may fix a record date for the purpose of determining the Persons who are beneficial owners of interests in any Global Note held by DTC entitled under the procedures of such depositary to make, give or take, by a proxy or proxies duly appointed in writing, any request, demand, authorization, direction, notice, consent, waiver or other action provided in this Indenture to be made, given or taken by Holders.  If such a record date is fixed, the Holders on such record date or their duly appointed proxy or proxies, and only such Persons, shall be entitled to make, give or take such request, demand, authorization, direction, notice, consent, waiver or other action, whether or not such Holders remain Holders after such record date.  No such request, demand, authorization, direction, notice, consent, waiver or other action shall be valid or effective if made, given or taken more than 120 days after such record date.

 

ARTICLE II

 

THE NOTES

 

SECTION 2.1.                                 Form, Dating and Terms.

 

(a)                                  The aggregate principal amount of Notes that may be authenticated and delivered under this Indenture is unlimited.  The Initial Notes issued on the date hereof shall be in an aggregate principal amount of $300,000,000.  In addition, the Issuer may issue, from time to time in accordance with the provisions of this Indenture, Additional Notes (as provided herein) and Exchange Notes.  Furthermore, Notes may be authenticated and delivered upon registration of transfer, exchange or in lieu of, other Notes pursuant to Sections 2.2, 2.6, 2.9, 2.11, 5.6 or 9.5, in connection with an Asset Sale 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 Issuer may not issue any Additional Notes, unless such issuance is in compliance with Section 3.2.

 

The Notes shall be known and designated as “10.50% Senior Notes due 2019” of the Issuer.

 

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

 

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

 

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

 

In authenticating and delivering Additional Notes, the Trustee shall be entitled to receive and shall be fully protected in conclusively relying upon, in addition to the Opinion of Counsel and Officer’s Certificate required by Section 13.4, an Opinion of Counsel as to the due authorization, execution, delivery, validity and enforceability of such Additional Notes.

 

The Initial Notes, the Additional Notes and the Exchange Notes shall be considered collectively as a single class for all purposes of this Indenture.  Holders of the Initial Notes, the Additional Notes and the Exchange Notes shall 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 Notes, the Additional Notes or the Exchange Notes 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 Notes are established by action taken pursuant to Board Resolutions of the Issuer, a copy of an appropriate record of such action shall be certified by the Secretary or any Assistant Secretary of the Issuer and delivered to the Trustee, at or prior to the delivery of the Officer’s Certificate or the indenture supplemental hereto setting forth the terms of the Additional Notes.

 

(b)                                 The Initial Notes are being offered and sold by the Issuer pursuant to a Purchase Agreement, dated June 29, 2011, among the Issuer, the Guarantors and the Initial Purchaser.  The Initial Notes and any Additional Notes (if issued as Restricted Notes) (the “Additional Restricted Notes”) shall be resold initially only to (i) QIBs in reliance on Rule 144A and (ii) Non-U.S. Persons in reliance on Regulation S.  Such Initial Notes and Additional Restricted Notes may thereafter be transferred to, among others, QIBs and purchasers in reliance on Regulation S, in each case in accordance with the procedure described herein.  Additional Notes offered after the date hereof may be offered and sold by the Issuer from time to time pursuant to one or more purchase agreements in accordance with applicable law.

 

Initial Notes and Additional Restricted Notes 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 Note 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 Notes Custodian, as custodian for DTC, duly executed by the Issuer 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 Notes Custodian, as custodian for DTC or its nominee, as hereinafter provided.

 

Initial Notes and any Additional Restricted Notes 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 permanent global Note substantially in the form of Exhibit A including appropriate legends as set forth in Section 2.1(d) (the “Regulation S Global Note”).  The Regulation S Note will be deposited upon issuance with, or on behalf of, the Notes Custodian, as custodian for the 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 after the later of the commencement of the offering of the Initial Notes and the Issue Date (such period through and including such 40th day, the “Restricted Period”), interests in the Regulation S Global Note may only be transferred to non-U.S. persons pursuant to Regulation S or to QIBs under Rule 144A 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 

 

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interests are held through Euroclear or Clearstream, Euroclear and Clearstream shall 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, shall 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 Notes Custodian, as custodian for DTC or its nominee, as hereinafter provided.

 

Exchange Notes exchanged for interests in the Rule 144A Notes and the Regulation S Notes shall be issued in the form of a permanent global Note, substantially in the form of Exhibit B, which is hereby incorporated by reference and made a part of this Indenture, deposited with the Notes Custodian, as custodian for DTC, as hereinafter provided, including the appropriate legend set forth in Section 2.1(d) (the “Exchange Global Note”).  The Exchange Global Note shall be deposited upon issuance with, or on behalf of, the Notes Custodian, as custodian for DTC, duly executed by the Issuer 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.

 

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

 

The principal of (and premium, if any) and interest on the Notes shall be payable at the office or agency of Paying Agent or Registrar designated by the Issuer maintained for such purpose in the United States or at such other office or agency of the Issuer as may be maintained for such purpose pursuant to Section 2.3 of this Indenture; provided, however, that, at the option of the Issuer, each installment of interest may be paid by (i) check delivered to addresses of the Persons entitled thereto as such addresses shall appear on the Notes 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 Notes represented by a Global Note (including principal, premium, if any, and interest) shall be made by wire transfer of immediately available funds to the accounts specified by the Holder or Holders thereof.  Payments in respect of Notes represented by Definitive Notes (including principal, premium, if any, and interest) held by a Holder of at least $1,000,000 aggregate principal amount shall 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 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 Notes may have notations, legends or endorsements required by law, stock exchange rule or usage, in addition to those set forth on Exhibit A and in Section 2.1(d).  The Issuer shall approve any notation, endorsement or legend on the Notes.  Each Note shall be dated the date of its authentication.  The terms of the Notes set forth in Exhibit A are part of the terms of this Indenture and, to the extent applicable, the Issuer, the Guarantors and the Trustee, by their execution and delivery of this Indenture, expressly agree to be bound by such terms.

 

(c)                                  Denominations.  The Notes 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 Note or an Additional Note issued as a Restricted Note is sold under an effective registration statement or (ii) an Initial Note or an Additional Note issued as a Restricted Note is exchanged for an Exchange Note in connection with an effective registration statement, in each case pursuant to the Registration Rights Agreement or a similar agreement or (iii) the Trustee receives an Opinion of Counsel reasonably satisfactory to the Issuer 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:

 

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

 

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THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION.  NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, SUCH REGISTRATION.  THE HOLDER OF THIS SECURITY, BY ITS ACCEPTANCE HEREOF, AGREES ON ITS OWN BEHALF AND ON BEHALF OF ANY INVESTOR ACCOUNT FOR WHICH IT HAS PURCHASED SECURITIES, TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE (THE “RESALE RESTRICTION TERMINATION DATE”) THAT IS [IN THE CASE OF THE RULE 144A GLOBAL NOTE:  ONE YEAR AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF, THE ORIGINAL ISSUE DATE OF THE ISSUANCE OF ANY ADDITIONAL NOTES AND THE LAST DATE ON WHICH THE ISSUER OR ANY AFFILIATE OF THE ISSUER WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF SUCH SECURITY),] [IN THE CASE OF THE REGULATION S GLOBAL NOTE:  40 DAYS AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE DATE ON WHICH THIS SECURITY (OR ANY PREDECESSOR OF SUCH SECURITY) WAS FIRST OFFERED TO PERSONS OTHER THAN DISTRIBUTORS (AS DEFINED IN RULE 902 OF REGULATION S) IN RELIANCE ON REGULATION S], ONLY (A) TO THE ISSUER OR ANY SUBSIDIARY THEREOF, (B) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A 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 OR (E) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE ISSUER’S AND THE REGISTRAR’S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSES (D) OR (E) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/ OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM.  THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE.  [IN THE CASE OF THE REGULATION S GLOBAL NOTE:  BY ITS ACQUISITION HEREOF, THE HOLDER HEREOF REPRESENTS THAT IT IS NOT A U.S. PERSON NOR IS IT PURCHASING FOR THE ACCOUNT OF A U.S. PERSON AND IS ACQUIRING THIS SECURITY IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH REGULATION S UNDER THE SECURITIES ACT.]

 

BY ITS ACQUISITION OF THIS SECURITY THE HOLDER AND ANY SUBSEQUENT TRANSFEREE HEREOF WILL BE DEEMED TO HAVE REPRESENTED AND WARRANTED THAT EITHER (1) NO PORTION OF THE ASSETS USED BY SUCH HOLDER OR ANY TRANSFEREE TO ACQUIRE OR 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 A PLAN, INDIVIDUAL RETIREMENT ACCOUNT OR OTHER ARRANGEMENT THAT IS 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 ANY SUCH PLAN, ACCOUNT OR ARRANGEMENT, OR (2) 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 APPLICATION SIMILAR LAWS.

 

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(2)                                  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 ISSUER 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.

 

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.

 

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

 

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

 

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

 

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

 

(iv)           In connection with the transfer of an entire Global Note to beneficial owners pursuant to Section 2.1(f), such Global Note shall be deemed to be surrendered to the Trustee for cancellation, and the Issuer 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 Note, an equal aggregate principal amount of Definitive Notes of authorized denominations.

 

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(v)              The registered Holder of a Global Note 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 Notes.

 

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

 

(f)                                    Definitive Notes.  Except as provided below, owners of beneficial interests in Global Notes shall not be entitled to receive Definitive Notes.  If required to do so pursuant to any applicable law or regulation, beneficial owners may obtain Definitive Notes in exchange for their beneficial interests in a Global Note upon written request in accordance with DTC’s and the Registrar’s procedures.  In addition, Definitive Notes shall be transferred to all beneficial owners in exchange for their beneficial interests in a Global Note if (A) DTC notifies the Issuer that it is unwilling or unable to continue as depositary for such Global Note 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 Issuer within 90 days of such notice or, (B) the Issuer in its sole discretion executes and delivers to the Trustee and Registrar an Officer’s Certificate stating that such Global Note 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 second preceding sentence or in clause (A), (B) or (C) of the preceding sentence, the Issuer shall promptly make available to the Registrar a reasonable supply of Definitive Notes.

 

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

 

(ii)               If a Definitive Note is transferred or exchanged for a beneficial interest in a Global Note, the Trustee shall (x) cancel such Definitive Note, (y) record an increase in the principal amount of such Global Note 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 Definitive Note, the Issuer shall execute, and the Trustee shall authenticate and make available for delivery, to the transferring Holder a new Definitive Note representing the principal amount not so transferred.

 

(iii)            If a Definitive Note is transferred or exchanged for another Definitive Note, (x) the Trustee shall cancel the Definitive Note being transferred or exchanged, (y) the Issuer shall execute, and the Trustee shall authenticate and make available for delivery, one or more new Definitive Notes 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 Note (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 Note, the Issuer shall execute, and the Trustee shall authenticate and make available for delivery to the Holder thereof, one or more Definitive Notes in authorized denominations having an aggregate principal amount equal to the untransferred or unexchanged portion of the canceled Definitive Notes, registered in the name of the Holder thereof.

 

(g)                                 Additional Notes.  The Trustee shall have the right to decline to authenticate and deliver any Additional Notes if the Trustee determines that such action may not lawfully be taken by the Issuer or if the Trustee in good faith by its board of directors or board of trustee, executive committee, or a trust committee of directors or trustees or Trust Officers shall determine that such action would expose the Trustee to personal liability to existing Holders.

 

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

 

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A Note shall not be valid until an authorized officer of the Trustee manually authenticates the Note.  The signature of the Trustee on a Note shall be conclusive evidence that such Note has been duly and validly authenticated and issued under this Indenture.  A Note 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 (or the Authenticating Agent (as described below)) shall authenticate and make available for delivery:  (1) Initial Notes for original issue on the Issue Date in an aggregate principal amount of $300,000,000, (2) subject to the terms of this Indenture, Additional Notes for original issue in an unlimited principal amount, and (3) Exchange Notes 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 Notes or Additional Notes of an equal principal amount and (4) under the circumstances set forth in Section 2.6(e), Initial Notes in the form of an Unrestricted Global Note, in each case upon a written order of the Issuer signed by one Officer (the “Issuer Order”).  Such Issuer Order shall specify whether the Notes shall be in the form of Definitive Notes or Global Notes, the amount of the Notes to be authenticated and the date on which the original issue of Notes is to be authenticated and whether the Notes are to be Initial Notes, Additional Notes or Exchange Notes.

 

The Trustee may appoint an agent (the “Authenticating Agent”) reasonably acceptable to the Issuer to authenticate the Notes.  Any such instrument shall be evidenced by an instrument signed by a Trust Officer, a copy of which shall be furnished to the Issuer.  Unless limited by the terms of such appointment, any such Authenticating Agent may authenticate Notes 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 Issuer or any 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 Issuer or any 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 Notes authenticated or delivered prior to such consolidation, merger, conveyance, transfer, lease or other disposition may (but shall not be required), from time to time, at the request of the successor Person, be exchanged for other Notes 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 Notes surrendered for such exchange and of like principal amount; and the Trustee, upon the Issuer Order of the successor Person, shall authenticate and make available for delivery Notes as specified in such order for the purpose of such exchange.  If Notes 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 Notes, such successor Person, at the option of the Holders but without expense to them, shall provide for the exchange of all Notes at the time outstanding for Notes authenticated and delivered in such new name.

 

SECTION 2.3.                                 Registrar and Paying Agent.

 

The Issuer shall maintain an office or agency where Notes may be presented for registration of transfer or for exchange (the “Registrar”) and an office or agency where Notes may be presented for payment (the “Paying Agent”).  The Registrar shall keep a register reflecting the ownership of the Notes outstanding and their transfer and exchange (the “Notes Register”).  The Issuer 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 Issuer 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 TIA.  The agreement shall implement the provisions of this Indenture that relate to such agent.  The Issuer shall notify the Trustee of the name and address of each such agent.  If the Issuer 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 Issuer or any Guarantor may act as Paying Agent, Registrar or transfer agent.

 

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The Issuer initially appoints the Trustee as Registrar, Paying Agent and transfer agent for the Notes.  The Issuer may change any Registrar, Paying Agent or transfer agent without prior notice to the Holders, but upon written notice to such Registrar, Paying Agent or transfer 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 Issuer and such successor Registrar, Paying Agent or transfer agent, as the case may be, and delivered to the Trustee or (ii) notification to the Trustee that the Trustee shall serve as Registrar, Paying Agent or transfer agent until the appointment of a successor in accordance with clause (i) above.  The Registrar, Paying Agent or transfer agent may resign at any time upon written notice to the Issuer and the Trustee.

 

SECTION 2.4.                                 Paying Agent To Hold Money in Trust.

 

By no later than 11:00 a.m. (New York City time) on the date on which any principal of, premium, if any, or interest on any Note is due and payable, the Issuer shall deposit with the Paying Agent a sum sufficient in immediately available funds to pay such principal, premium or interest when due.  The Issuer 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 Holders or the Trustee all money held by such Paying Agent for the payment of principal of, premium, if any, or interest on the Notes (whether such assets have been distributed to it by the Issuer or other obligors on the Notes), shall notify the Trustee in writing of any default by the Issuer or any Guarantor in making any such payment and shall during the continuance of any default by the Issuer (or any other obligor upon the Notes) in the making of any payment in respect of the Notes, 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 Notes together with a full accounting thereof.  If the Issuer or a Subsidiary of the Issuer acts as Paying Agent, it shall segregate the money held by it as Paying Agent and hold it as a separate trust fund.  The Issuer 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 Issuer or a Subsidiary of the Issuer) shall have no further liability for the money delivered to the Trustee.  Upon any bankruptcy, reorganization or similar proceeding with respect to the Issuer, the Trustee shall serve as Paying Agent for the Notes.

 

SECTION 2.5.                                 Holder Lists.

 

The Trustee shall preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of Holders 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 Issuer, on its own behalf and on behalf of each of the 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 Trustee may reasonably require of the names and addresses of Holders and the Issuer shall otherwise comply with TIA § 312(a).

 

SECTION 2.6.                                 Transfer and Exchange.

 

(a)                                  General.  A Holder may transfer or exchange a Note (or a beneficial interest therein) to another Person or exchange a Note (or a beneficial interest therein) for another Note or Notes of any authorized denomination by presenting to the Registrar and 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 Registrar shall promptly register any transfer or exchange that meets the requirements of this Section 2.6 by noting the same in the Notes Register, and no transfer or exchange shall be effective until it is registered in such register.  The transfer or exchange of any Note (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 Note (or a beneficial interest therein), the applicable rules and procedures of DTC, Euroclear and Clearstream.  The Registrar shall refuse to register any requested transfer or exchange that does not comply with this paragraph.  Any action with respect to transfers and exchanges of the Notes pursuant to this Section 2.6 may be taken by the Registrar whenever the Trustee may do so, and each reference in this Section 2.6 to the Trustee shall include the Registrar.

 

(b)                                 Transfers of Rule 144A Notes.  The following provisions shall apply with respect to any proposed registration of transfer of a Rule 144A Note prior to the date which is one year after the later of the date of its original 

 

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issue and the last date on which the Issuer or any Affiliate of the Issuer was the owner of such Notes (or any predecessor thereto) (the “Resale Restriction Termination Date”):

 

(i)                  a registration of transfer of a Rule 144A 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 Note 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 Issuer 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; and

 

(ii)               a registration of transfer of a Rule 144A Note or a beneficial interest therein to a Non-U.S. Person shall be made upon receipt by the Registrar of a certificate substantially in the form set forth in Section 2.8 from the proposed transferee and, if requested by the Issuer, 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 Note 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 Issuer 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; and

 

(ii)               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 Registrar of a certificate substantially in the form set forth in Section 2.8 hereof from the proposed transferor and, if requested by the Issuer, receipt by the Registrar of an opinion of counsel, certification and/or other information satisfactory to the Issuer.

 

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 2.7, Section 2.8 or any additional certification, it being understood that the Registrar shall have no obligation to verify that any such transfer is in accordance with applicable law.

 

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

 

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(e)                                  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 Issuer 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.

 

(f)                                    Obligations with Respect to Transfers and Exchanges of Notes.

 

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

 

(ii)               No service charge shall be made to a Holder for any registration of transfer or exchange, but the Issuer 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 Section 2.2, 2.6, 2.11, 3.5, 3.10, 5.6 or 9.5).

 

(iii)            The Issuer (and the Registrar) shall not be required to register the transfer of or exchange of any Note (A) for a period beginning (1) 15 days before the delivery of a notice of an offer to repurchase or redeem Notes and ending at the close of business on the day of such delivery or (2) 15 days before an interest payment date and ending on such interest payment date or (B) called for redemption or tendered (and not withdrawn) for repurchase in connection with a Change of Control Offer, an Asset Sale Offer or other tender offer, except the unredeemed or untendered portion of any Note being redeemed or tendered in part.

 

(iv)           Prior to the due presentation for registration of transfer of any Note, the Issuer, the Trustee, the Paying Agent or the Registrar may deem and treat the person in whose name a Note is registered as the owner of such Note for the purpose of receiving payment of principal of, premium, if any, and (subject to the ninth paragraph of Section 2.1(b) and paragraph 2 of the forms of Notes attached hereto as Exhibits A and B) interest on such Note and for all other purposes whatsoever, including without limitation the transfer or exchange of such Note, whether or not such Note is overdue, and none of the Issuer, the Trustee, the Paying Agent or the Registrar shall be affected by notice to the contrary.

 

(v)              Any Definitive Note delivered in exchange for an interest in a Global Note 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 Note set forth in Section 2.1(d).

 

(vi)           All Notes 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 Notes surrendered upon such transfer or exchange.

 

(g)                                 No Obligation of the Trustee.

 

(i)                  The Trustee shall have no responsibility or obligation to any beneficial owner of a Global Note, 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 Notes 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 Notes (or other security or property) under or with respect to such Notes.  All notices and communications to be given to the Holders and all payments to be made to Holders in respect of the Notes 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 Note).  The rights of beneficial owners in any Global Note shall be exercised only through DTC subject to the applicable rules and procedures of DTC.  The Trustee may conclusively rely and shall be fully protected in conclusively 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 

 

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any interest in any Note (including any transfers between or among DTC participants, members or beneficial owners in any Global Note) other than to require delivery of such certificates and other documentation or evidence as are expressly required by, and to do so if and when expressly required by, the terms of this Indenture, and to examine the same to determine substantial compliance as to form with the express requirements hereof.  The Trustee shall not have any responsibility for any actions taken or not taken by DTC.

 

SECTION 2.7.                                 [Reserved].

 

SECTION 2.8.                                 Form of Certificate To Be Delivered in Connection with Transfers Pursuant to Regulation S.

 

In connection with the transfer of any Regulation S Note or a beneficial interest therein to a non-U.S. Person, the following certificate shall be delivered to the Registrar pursuant to Section 2.6(c):

 

	
 
    	
[Date]
    


 

Crown Media Holdings, Inc.
 c/o The Bank of New York Mellon Trust Company, N.A.

 

	
Re:
    	
Crown Media Holdings,   Inc. (the “Issuer”)
    
	
 
    	
 
    
	
 
    	
10.5% Senior Notes due   2019 (the “Notes”)
    


 

Ladies and Gentlemen:

 

In connection with our proposed sale of $[              ] aggregate principal amount of the Notes, 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 Notes 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 Issuer and, to our knowledge, the transferee of the Notes [is] [is not] an Affiliate of the Issuer.

 

You and the Issuer 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 certificate have the meanings set forth in Regulation S.

 

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Very truly yours,
    
	
 
    	
 
    
	
 
    	
[Name of Transferor]
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Authorized   Signature
    	
 
    


 

SECTION 2.9.                                 Mutilated, Destroyed, Lost or Stolen Notes.

 

If a mutilated Note is surrendered to the Registrar or if the Holder of a Note claims that the Note has been lost, destroyed or wrongfully taken, the Issuer shall issue and the Trustee shall authenticate a replacement Note if the requirements of Section 8-405 of the Uniform Commercial Code are met, such that the Holder (a) satisfies the Issuer or the Trustee that such Note has been lost, destroyed or wrongfully taken within a reasonable time after such Holder 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 Issuer or Trustee prior to the Note 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 Note, a protected purchaser of the Note for which such replacement Note was issued presents for payment or registration such replaced Note, the Trustee or the Issuer shall be entitled to recover such replacement Note 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 Issuer or the Trustee in connection therewith.  Such Holder shall furnish an indemnity bond sufficient in the judgment of the Issuer and the Trustee to protect the Issuer, the Trustee, the Paying Agent and the Registrar from any loss which any of them may suffer if a Note is replaced, and, in the absence of notice to the Issuer, any Guarantor or the Trustee that such Note has been acquired by a protected purchaser, the Issuer shall execute, and upon receipt of an Issuer Order, the Trustee shall authenticate and make available for delivery, in exchange for any such mutilated Note or in lieu of any such destroyed, lost or stolen Note, a new Note of like tenor and principal amount, bearing a number not contemporaneously outstanding.

 

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

 

Upon the issuance of any new Note under this Section 2.9, the Issuer or the Trustee may require that such Holder pay a sum sufficient to cover any tax or other governmental charge that 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 2.9 every new Note issued pursuant to this Section in lieu of any mutilated, destroyed, lost or stolen Note shall constitute an original additional contractual obligation of the Issuer, any Guarantor (if applicable) and any other obligor upon the Notes, whether or not the mutilated, destroyed, lost or stolen Note 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 Notes duly issued hereunder.

 

The provisions of this Section 2.9 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 Notes.

 

SECTION 2.10.                           Outstanding Notes.

 

Notes outstanding at any time are all Notes authenticated by the Trustee except for those (a) cancelled by the Trustee, (b) delivered to the Trustee for cancellation or (c) described in this Section 2.10 as not outstanding.  A Note does not cease to be outstanding in the event the Issuer or an Affiliate of the Issuer holds the Note; provided, however, that (i) for purposes of determining which Notes are outstanding for consent or voting purposes hereunder, the provisions of Section 13.6 shall apply and (ii) in determining whether the Trustee shall be protected in making a 

 

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determination whether the Holders of the requisite principal amount of outstanding Notes are present at a meeting of Holders of Notes 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 Notes which a Trust Officer actually knows to be held by the Issuer or an Affiliate of the Issuer shall not be considered outstanding.

 

If a Note is replaced pursuant to Section 2.9 (other than a mutilated Note surrendered for replacement), it ceases to be outstanding unless the Trustee and the Issuer receive proof satisfactory to them that the replaced Note is held by a protected purchaser.  A mutilated Note ceases to be outstanding upon surrender of such Note and replacement pursuant to Section 2.9.

 

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 Notes (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 Holders on that date pursuant to the terms of this Indenture, then on and after that date such Notes (or portions thereof) cease to be outstanding and interest on them ceases to accrue.

 

SECTION 2.11.                           Temporary Notes.

 

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

 

SECTION 2.12.                           Cancellation.

 

The Issuer at any time may deliver Notes to the Trustee for cancellation.  The Registrar and the Paying Agent shall forward to the Trustee any Notes surrendered to them for registration of transfer, exchange or payment.  The Trustee and no one else shall cancel all Notes surrendered for registration of transfer, exchange, payment or cancellation and dispose of such Notes in accordance with its internal policies and customary procedures including delivery of a certificate describing such Notes disposed (subject to the record retention requirements of the Exchange Act) or delivery of copies of canceled Notes to the Issuer pursuant to written direction by one Officer.  If the Issuer or any Guarantor acquires any of the Notes, such acquisition shall not operate as a redemption or satisfaction of the Indebtedness represented by such Notes unless and until the same are surrendered to the Trustee for cancellation pursuant to this Section 2.12.  The Issuer may not issue new Notes to replace Notes 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 Note have either been exchanged for Definitive Notes, transferred, redeemed, repurchased or canceled, such Global Note 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 Note is exchanged for Definitive Notes, transferred in exchange for an interest in another Global Note, redeemed, repurchased or canceled, the principal amount of Notes represented by such Global Note shall be reduced and an adjustment shall be made on the books and records of the Trustee (if it is then the Notes Custodian for such Global Note) with respect to such Global Note, by the Trustee or the Notes Custodian, to reflect such reduction.

 

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SECTION 2.13.                           Payment of Interest; Defaulted Interest.

 

Interest on any Note 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 Note (or one or more Predecessor Notes) is registered at the close of business on the regular record date for such payment at the office or agency of the Registrar maintained for such purpose pursuant to Section 2.3.

 

Any interest on any Note which is payable, but is not paid when the same becomes due and payable and for which 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 Notes (such defaulted interest and interest thereon herein collectively called “Defaulted Interest”) shall be paid by the Issuer, at its election in each case, as provided in clause (a) or (b) below:

 

(a)                              The Issuer may elect to make payment of any Defaulted Interest to the Persons in whose names the Notes (or their respective predecessor Notes) 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 Issuer shall notify the Trustee in writing of the amount of Defaulted Interest proposed to be paid on each Note 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 Issuer shall deposit with the Trustee an amount of money equal to the aggregate amount proposed to be paid in respect of such Defaulted Interest or shall make arrangements satisfactory to the Trustee for such deposit prior to the date of the proposed payment, and such money when deposited shall be held in trust for the benefit of the Persons entitled to such Defaulted Interest as in this Section 2.13(a).  Thereupon the Issuer 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.  Not less than 15 Business Days prior to the Special Interest Payment Date, the Issuer shall notify the Trustee of such Special Record Date, and in the name and at the expense of the Issuer, 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 13.2, 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 Notes (or their respective predecessor Notes) are registered at the close of business on such Special Record Date and shall no longer be payable pursuant to the provisions in Section 2.13(b).

 

(b)                             The Issuer may make payment of any Defaulted Interest in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Notes may be listed, and upon such notice as may be required by such exchange, if, after notice given by the Issuer to the Trustee of the proposed payment pursuant to this Section 2.13(b), such manner of payment shall be deemed practicable by the Trustee.

 

Subject to the foregoing provisions of this Section 2.13, each Note delivered under this Indenture upon registration of, transfer of or in exchange for or in lieu of any other Note shall carry the rights to interest accrued and unpaid, and to accrue, which were carried by such other Note.

 

SECTION 2.14.                           CUSIP, Common Code and ISIN Numbers.

 

The Issuer in issuing the Notes may use “CUSIP,” “Common Code” and “ISIN” numbers and, if so, the 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 Notes 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 Notes, 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 Issuer shall promptly notify the Trustee in writing of any change in the CUSIP, Common Code and ISIN numbers.

 

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ARTICLE III

 

COVENANTS

 

SECTION 3.1.                                 Payment of Notes.  The Issuer shall pay the principal of, premium, if any, and interest (including Additional Interest) on the Notes on the dates and in the manner provided in the Notes and in this Indenture.  Principal, premium, 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, and interest (including Additional Interest) then due.

 

The Issuer shall pay interest on overdue principal at the rate specified therefor in the Notes, 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 Issuer 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 Incurrence of Indebtedness and Issuance of Disqualified Stock and Preferred Stock.

 

(a)                                  The Issuer shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise (collectively, “incur” and collectively, an “incurrence”) with respect to any Indebtedness (including Acquired Indebtedness), and the Issuer shall not issue any shares of Disqualified Stock and shall not permit any Restricted Subsidiary to issue any shares of Disqualified Stock or Preferred Stock; provided, however, that the Issuer may incur Indebtedness (including Acquired Indebtedness) and issue shares of Disqualified Stock, and any of the Guarantors may incur Indebtedness (including Acquired Indebtedness), and issue shares of Disqualified Stock and Preferred Stock, if the Leverage Ratio on a consolidated basis for the Issuer and its Restricted Subsidiaries’ most recently ended four fiscal quarters for which internal financial statements are available immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock or Preferred Stock is issued would have been less than 4.25 to 1.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred, or the Disqualified Stock or Preferred Stock had been issued, as the case may be, and the application of proceeds therefrom had occurred at the beginning of such four-quarter period.

 

(b)                                 The foregoing limitations of Section 3.2(a) shall not apply to:

 

(1)                                  the incurrence of Indebtedness under Credit Facilities (including the Senior Secured Credit Facilities) by the Issuer or any of the Guarantors and the issuance and creation of letters of credit and bankers’ acceptances thereunder (with letters of credit and bankers’ acceptances being deemed to have a principal amount equal to the face amount thereof), up to an aggregate principal amount of $240.0 million outstanding at any one time, less the aggregate principal amount of all principal repayments of Credit Facilities with the proceeds from Asset Sales made pursuant to Section 3.5(1)(a) or (b) in satisfaction of the requirements of Section 3.5;

 

(2)                                  the incurrence by the Issuer and any Guarantor of Indebtedness represented by the Notes (including any Guarantee) (other than any Additional Notes) and exchange notes issued in respect of the Notes (including any exchange notes issued with respect to any Additional Notes incurred in compliance with this Indenture), and any Guarantee thereof;

 

(3)                                  Indebtedness of the Issuer and its Restricted Subsidiaries in existence on the Issue Date (other than Indebtedness described in Sections 3.2(b)(1) and 3.2(b)(2));

 

(4)                                  Indebtedness (including Capitalized Lease Obligations) incurred or Disqualified Stock issued by the Issuer or any of its Restricted Subsidiaries, or Preferred Stock issued by a Restricted Subsidiary, 

 

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in each case to finance the purchase, lease, construction, repair, maintenance, installation or improvement of property (real or personal), plant or equipment that is used or useful in a Similar Business, whether through the direct purchase of assets or the Capital Stock of any Person owning such assets in an aggregate principal amount not to exceed $25.0 million at any one time outstanding;

 

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

 

(6)                                  Indebtedness arising from agreements of the Issuer or its Restricted Subsidiaries providing for indemnification, adjustment of purchase price or similar obligations, in each case incurred or assumed in connection with the disposition of any business, assets or a Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or a Subsidiary for the purpose of financing such acquisition; provided, however, that the maximum assumable liability in respect of all such Indebtedness shall at no time exceed the gross proceeds including non-cash proceeds (the fair market value of such non-cash proceeds being measured at the time received and without giving effect to any subsequent changes in value) actually received by the Issuer and its Restricted Subsidiaries in connection with such disposition;

 

(7)                                  Indebtedness of the Issuer owing to a Restricted Subsidiary; provided that any such Indebtedness owing to a Non-Guarantor Subsidiary is expressly subordinated in right of payment to the Notes; provided, further, that any subsequent issuance or transfer of any Capital Stock or any other event which results in any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or any other subsequent transfer of any such Indebtedness (except to the Issuer or another Restricted Subsidiary) shall be deemed, in each case, to be an incurrence of such Indebtedness not permitted by this Section 3.2(b)(7);

 

(8)                                  Indebtedness of a Restricted Subsidiary owing to the Issuer or another Restricted Subsidiary; provided that if a Guarantor incurs such Indebtedness owing to a Non-Guarantor Subsidiary, such Indebtedness is expressly subordinated in right of payment to the Guarantee of the Notes of such Guarantor; provided, further, that any subsequent issuance or transfer of any Capital Stock or any other event which results in any such other Restricted Subsidiary ceasing to be a Restricted Subsidiary or any subsequent transfer of any such Indebtedness (except to the Issuer or another Restricted Subsidiary) shall be deemed, in each case, to be an incurrence of such Indebtedness not permitted by this Section 3.2(b)(8);

 

(9)                                  shares of Preferred Stock of a Restricted Subsidiary issued to the Issuer or another Restricted Subsidiary; provided that any subsequent issuance or transfer of any Capital Stock or any other event which results in any such other Restricted Subsidiary ceasing to be a Restricted Subsidiary or any other subsequent transfer of any such shares of Preferred Stock (except to the Issuer or another of its Restricted Subsidiaries) shall be deemed, in each case, to be an issuance of such shares Preferred Stock not permitted by this Section 3.2(b)(9);

 

(10)                            Hedging Obligations (excluding Hedging Obligations entered into for speculative purposes) for the purpose of limiting interest rate risk, exchange rate risk or commodity pricing risk;

 

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

 

(12)                            Indebtedness or Disqualified Stock of the Issuer and Indebtedness, Disqualified Stock or Preferred Stock of any Restricted Subsidiary not otherwise permitted hereunder in an aggregate principal amount or liquidation preference, which when aggregated with the principal amount and liquidation preference 

 

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of all other Indebtedness, Disqualified Stock and Preferred Stock then outstanding and incurred pursuant to this Section 3.2(b)(12), does not at any one time outstanding exceed $25.0 million;

 

(13)                            the incurrence or issuance by the Issuer of Indebtedness or Disqualified Stock or the incurrence or issuance by a Restricted Subsidiary of Indebtedness, Disqualified Stock or Preferred Stock which serves to refund or refinance any Indebtedness incurred or Disqualified Stock or Preferred Stock issued as permitted under Section 3.2(a) and Section 3.2(b)(2), Section 3.2(b)(3), Section 3.2(b)(4), this Section 3.2(b)(13) and Section 3.2(b)(14) below or any Indebtedness incurred or Disqualified Stock or Preferred Stock issued to so refund or refinance such Indebtedness, Disqualified Stock or Preferred Stock including additional Indebtedness incurred or Disqualified Stock or Preferred Stock issued to pay premiums (including tender premiums), defeasance costs and fees and expenses in connection therewith (the “Refinancing Indebtedness”) prior to its respective maturity; provided, however, that such Refinancing Indebtedness:

 

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

 

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

 

(C)                                shall not include:

 

(x)                                 Indebtedness, Disqualified Stock or Preferred Stock of a Non-Guarantor Subsidiary that refinances Indebtedness, Disqualified Stock or Preferred Stock of the Issuer or a Guarantor; or

 

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

 

(D)                             shall not be in a principal amount in excess of 102% of the aggregate principal amount (or if issued with original issue discount, the aggregate accreted value) of, premium, if any, on, accrued interest on and related fees and expenses (including tender premiums) of, the Indebtedness being refunded or refinanced; and

 

(E)                               shall not have a stated maturity date prior to the earlier of the stated maturity of the Indebtedness being so refunded or refinanced or the stated maturity of the Notes.

 

(14)                            Indebtedness, Disqualified Stock or Preferred Stock of (x) the Issuer or a Restricted Subsidiary incurred or issued to finance an acquisition or (y) Persons that are acquired by the Issuer or any Restricted Subsidiary or merged into or consolidated with the Issuer or a Restricted Subsidiary in accordance with the terms of this Indenture; provided that after giving effect to such acquisition, merger or consolidation, either (a) the Issuer would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Leverage Ratio test set forth in Section 3.2(a) or (b) the Leverage Ratio of the Issuer and its Restricted Subsidiaries is no greater than immediately prior to such acquisition, merger or consolidation;

 

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

 

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(16)                            Indebtedness owed on a short-term basis of no longer than 30 days to banks or financial institutions incurred in the ordinary course of business that arises in connection with ordinary banking arrangements to manage cash balances of the Issuer and its Subsidiaries;

 

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

 

(18)                            (a) any guarantee by the Issuer or a Guarantor of Indebtedness or other obligations of any Restricted Subsidiary so long as the incurrence of such Indebtedness is permitted under the terms of the Indenture; provided that if such Indebtedness is by its express terms subordinated in right of payment to the Guarantee of such Restricted Subsidiary, any such guarantee of the Issuer or such Guarantor with respect to such Indebtedness shall be subordinated in right of payment to the Notes or such Guarantors’ Guarantee with respect to the Notes substantially to the same extent as such Indebtedness is subordinated to the Guarantee of such Restricted Subsidiary, as applicable;

 

(b)                               any guarantee by a Restricted Subsidiary of Indebtedness of the Issuer so long as the incurrence of such Indebtedness is permitted under the terms of the Indenture and such guarantee is incurred in accordance with Section 3.7; provided that if such Indebtedness is by its express terms subordinated in right of payment to the Notes, any such guarantee of such Restricted Subsidiary with respect to such Indebtedness shall be subordinated in right of payment to the Notes or such Restricted Subsidiary Guarantee with respect to the Notes substantially to the same extent as such Indebtedness is subordinated to the Notes, as applicable; or

 

(c)                                any guarantee by a Non-Guarantor Subsidiary of Indebtedness of another Non-Guarantor Subsidiary incurred in accordance with the terms of the Indenture;

 

(19)                            Indebtedness of the Issuer or any of its Restricted Subsidiaries consisting of the financing of insurance premiums or take-or-pay obligations contained in supply arrangements; and

 

(20)                            Indebtedness consisting of Indebtedness issued by the Issuer or any of its Restricted Subsidiaries to current or former officers, members of the board of managers or directors and employees and consultants thereof, their respective estates, spouses or former spouses, in each case to finance, either directly or through promissory notes issued to such persons, the purchase or redemption of Equity Interests of the Issuer to the extent described in Section 3.3(b)(4).

 

(c)                                  For purposes of determining compliance with this covenant, in the event that an item of Indebtedness, Disqualified Stock or Preferred Stock (or any portion thereof) meets the criteria of more than one of the categories of permitted Indebtedness, Disqualified Stock or Preferred Stock described in Section 3.2(b)(1) through Section 3.2(b)(19) or is entitled to be incurred pursuant to Section 3.2(a), the Issuer, in its sole discretion, shall classify or reclassify (and shall be entitled to divide an item of Indebtedness into more than one of the types of Indebtedness described in Section 3.2(a) and Section 3.2(b), subject to the last sentence of this Section 3.2(c)) such item of Indebtedness, Disqualified Stock or Preferred Stock (or any portion thereof).  Additionally, all or any portion of any item of Indebtedness may later be reclassified and redivided as having been incurred pursuant to any category of permitted Indebtedness described in Section 3.2(b)(1) through Section 3.2(b)(19) above or pursuant to Section 3.2(a) so long as such Indebtedness is permitted to be incurred pursuant to such provision at the time of reclassification and redivision.  Notwithstanding the foregoing, all Indebtedness outstanding under the Senior Secured Credit Facilities on the Issue Date and all Indebtedness (or the portion thereof) incurred under clause (1) of the preceding paragraph to repay, refund or refinance any such amounts, shall be treated as incurred under Section 3.2(b)(1) and may not later be reclassified.

 

Accrual of interest or dividends, the accretion of accreted value, the accretion or amortization of original issue discount and the payment of interest or dividends in the form of additional Indebtedness, Disqualified Stock or Preferred Stock shall not be deemed to be an incurrence of Indebtedness, Disqualified Stock or Preferred Stock for purposes of this Section 3.2.

 

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For purposes of determining compliance with any U.S. dollar-denominated restriction on the incurrence of Indebtedness, the U.S. dollar-equivalent principal amount of Indebtedness denominated in a foreign currency shall be calculated based on the relevant currency exchange rate in effect on the date such Indebtedness was incurred, in the case of term debt, or first committed, in the case of revolving credit debt; provided that if such Indebtedness is incurred to refinance other Indebtedness denominated in a foreign currency, and such refinancing would cause the applicable U.S. dollar-denominated restriction to be exceeded if calculated at the relevant currency exchange rate in effect on the date of such refinancing, such U.S. dollar-denominated restriction shall be deemed not to have been exceeded so long 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 Issuer or any Restricted Subsidiary may incur pursuant to this Section 3.2 shall not be deemed to be exceeded solely as a result of fluctuations in exchange rates or currency values.  For purposes of determining compliance with, and the outstanding principal amount of, any particular Indebtedness incurred pursuant to this Section 3.2, any other obligation of the obligor on such Indebtedness (or of any other Person that could have incurred such Indebtedness under this Section 3.2) arising under any Guarantee, Lien or letter of credit, bankers’ acceptance or other similar instrument or obligation supporting such Indebtedness shall be disregarded to the extent that such Guarantee, Lien or letter of credit, bankers’ acceptance or other similar instrument or obligation secures the principal amount of such Indebtedness.

 

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

 

The Issuer shall not, and shall not permit any Guarantor to, directly or indirectly, incur any Indebtedness (including Acquired Indebtedness) that is subordinated or junior in right of payment to any Indebtedness of the Issuer or such Guarantor, as the case may be, unless such Indebtedness is expressly subordinated in right of payment to the Notes or such Guarantor’s Guarantee to the extent and in the same manner as such Indebtedness is subordinated to other Indebtedness of the Issuer or such Guarantor, as the case may be.

 

For purposes of this Indenture, (1) unsecured Indebtedness shall not be treated as subordinated or junior to Secured Indebtedness merely because it is unsecured and (2) senior Indebtedness shall not be treated as subordinated or junior to any other senior Indebtedness merely because it has a junior priority with respect to the same collateral or is secured by different collateral.

 

SECTION 3.3.                                 Limitation on Restricted Payments.

 

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

 

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

 

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

 

(B)                                dividends or distributions by a Restricted Subsidiary to the Issuer or any other Restricted Subsidiary (and if such Restricted Subsidiary is not a Wholly-Owned Subsidiary, to its other holders of common stock on a pro rata basis) so long as, in the case of any dividend or distribution payable on or in respect of any class or series of securities issued by a Restricted Subsidiary other than a Wholly-Owned Subsidiary, the Issuer or a Restricted Subsidiary receives at least its pro rata share of such dividend or distribution in accordance with its Equity Interests in such class or series of securities;

 

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

 

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

 

(A)                              Indebtedness permitted under Sections 3.2(b)(7) and 3.2(b)(8); or

 

(B)                                the purchase, repurchase, defeasance or other acquisition of Subordinated Indebtedness acquired 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

 

(iv)                              make any Restricted Investment

 

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

 

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

 

(B)                                immediately after giving effect to such transaction on a pro forma basis, the Issuer could incur $1.00 of additional Indebtedness under Section 3.2(a); and

 

(C)                                such Restricted Payment, together with the aggregate amount of all other Restricted Payments made by the Issuer and its Restricted Subsidiaries after the Issue Date (including Restricted Payments permitted by Sections 3.3(b)(1) and (7) but excluding all other Restricted Payments permitted by Section 3.3(b)), is less than the sum of (without duplication):

 

(i)                                     100% of EBITDA of the Issuer for the period (taken as one accounting period) commencing on July 1, 2011 to the end of the Issuer’s most recently ended fiscal quarter for which internal financial statements are available at the time of such Restricted Payment (or, in the case that EBITDA for such period is a deficit, minus 100% of such deficit) less 1.4 times Consolidated Interest Expense for the same period; plus

 

(ii)                                  100% of the aggregate net cash proceeds and the fair market value (as determined in Good Faith by the Issuer) of marketable securities or other property received by the Issuer since immediately after the Issue Date from:

 

(A)                              capital contributions;

 

(B)                                the issue or sale of Equity Interests of the Issuer, but, to the extent such amounts have been applied to Restricted Payments made in accordance with clause (b)(5)(A) of this Section, excluding cash proceeds and the fair market value of marketable securities or other property received from the sale of:  Equity Interests to employees, members of the board of managers or directors or consultants of the Issuer, any Parent and the Issuer’s Subsidiaries after the Issue Date; or

 

(C)                                the issue or sale of debt securities of the Issuer or any of its Restricted Subsidiaries (other than debt securities held by any of its Subsidiaries) that have been converted into or exchanged for such Equity Interests of the Issuer or any Parent;

 

provided, however, that this clause (b) shall not include the proceeds from (W) Refunding Capital Stock (as defined below), (X) Equity Interests or convertible debt securities of the Issuer sold to a 

 

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Restricted Subsidiary and (Y) Disqualified Stock or debt securities that have been converted into Disqualified Stock; plus

 

(iii)                               100% of the aggregate amount of cash and the fair market value of marketable securities or other property received by the Issuer by means of:

 

(A)                              the sale or other disposition (other than to the Issuer or a Restricted Subsidiary) of Restricted Investments made by the Issuer or its Restricted Subsidiaries and repurchases and redemptions of such Restricted Investments from the Issuer or its Restricted Subsidiaries and repayments of loans or advances, and releases of guarantees, which constitute Restricted Investments by the Issuer or its Restricted Subsidiaries, in each case after the Issue Date; or

 

(B)                                the sale or other disposition (other than to the Issuer or a Restricted Subsidiary) of the stock of an Unrestricted Subsidiary or a dividend or other distribution from an Unrestricted Subsidiary (other than in each case to the extent of the amount of the Investment in such Unrestricted Subsidiary made by the Issuer or a Restricted Subsidiary pursuant to Section 3.3(b)(6) or to the extent of the amount of the Investment that constituted a Permitted Investment), in each case after the Issue Date; plus

 

(iv)                            in the case of the designation of an Unrestricted Subsidiary as a Restricted Subsidiary or the merger or consolidation of an Unrestricted Subsidiary into the Issuer or a Restricted Subsidiary or the transfer of all or substantially all of the assets of an Unrestricted Subsidiary to the Issuer or a Restricted Subsidiary after the Issue Date, the fair market value of the Investment in such Unrestricted Subsidiary (or the assets transferred), as determined in Good Faith by the Issuer or, if such fair market value exceeds $35.0 million, in writing by an Independent Financial Advisor, at the time of the designation of such Unrestricted Subsidiary as a Restricted Subsidiary or at the time of such merger or consolidation or transfer of assets (after taking into consideration any Indebtedness associated with the Unrestricted Subsidiary so designated or merged or consolidated or Indebtedness associated with the assets so transferred), to the extent of the amount of the Investment that constituted a Permitted Investment.

 

(b)                                 The foregoing provisions of Section 3.3(a) hereof shall not prohibit:

 

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

 

(2)                                  the purchase, redemption, repurchase, retirement or other acquisition of any Equity Interests or Subordinated Indebtedness of the Issuer or any Equity Interests of any Parent, in exchange for, or out of the proceeds of, the substantially concurrent sale or issuance (other than to a Subsidiary of the Issuer or to an employee stock ownership plan or any trust established by the Issuer or any of its Subsidiaries) of, Equity Interests of the Issuer or any Parent to the extent contributed to the Issuer (in each case, other than any Disqualified Stock) (“Refunding Capital Stock”);

 

(3)                                  the purchase, redemption, repurchase, defeasance or other acquisition or retirement for value of Subordinated Indebtedness of the Issuer or a Guarantor made by exchange for, or out of the proceeds of, the substantially concurrent sale of, new Indebtedness of the Issuer or such Guarantor, as the case may be, which is incurred in compliance with Section 3.2(b)(13);

 

(4)                                  the purchase, redemption, repurchase, defeasance or other acquisition or retirement for value of Disqualified Stock of the Issuer or a Guarantor made by exchange for, or out of the proceeds of, the substantially concurrent sale or issuance of, new Disqualified Stock of the Issuer or such Guarantor, as the case may be, which is incurred in compliance with Section 3.2(b)(13);

 

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(5)                                  a Restricted Payment to pay for the repurchase or other acquisition or retirement for value of Equity Interests (other than Disqualified Stock) of the Issuer held by any future, present or former employee, officer, manager, member of the board of directors or consultant of the Issuer or any of its Subsidiaries (permitted transferees, assigns, estates or heirs of such employee, officer, manager, member of the board of directors or consultant), pursuant to any management equity plan or stock option plan or any other management or employee benefit plan or agreement; provided, however, that the aggregate Restricted Payments made under this Section 3.3(b)(5) do not exceed in any calendar year $3.0 million (with unused amounts in any calendar year being carried over to succeeding calendar years subject to a maximum (without giving effect to the following proviso) of $6.0 million in any calendar year); although such amount in any fiscal year may be increased by an amount not to exceed:

 

(A)                            the net cash proceeds from the sale of Equity Interests (other than Disqualified Stock) of the Issuer and, to the extent contributed to the Issuer, Equity Interests of any Parent, in each case to existing or former employees, officers, directors, management or consultants of the Issuer or any Restricted Subsidiary that occurs after the Issue Date, to the extent the cash proceeds from the sale of such Capital Stock have not otherwise been applied to the payment of Restricted Payments (provided that the amount of net cash proceeds from such sales or contributions that is utilized for redemptions or repurchases pursuant to this clause (5) will be excluded from clause (b)(ii) of the preceding paragraph); plus

 

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

 

(C)                              the amount of Restricted Payments previously made with the cash proceeds described in Sections 3.3(b)(5)(A) and (B);

 

(6)                                  repurchases, redemption or other acquisition, cancellation or retirement of Equity Interests (a) deemed to occur upon exercise of stock options or warrants if such Equity Interests represent a portion of the exercise price of such options or warrants, (b) made in lieu of withholding taxes resulting from the exercise or exchange of options, warrants, other rights to purchase or acquire Equity Interests or other securities convertible into or exchangeable for Equity Interest;

 

(7)                                  other Restricted Payments in an aggregate amount, taken together with all other Restricted Payments made pursuant to this Section 3.3(b)(7) (less the amount of capital returned from such Investment to the extent the proceeds of such return of capital consist of, or have been subsequently sold or transferred for, Cash Equivalents or marketable securities and have not been added to Section 3.3(a)(C)(iii) not to exceed $20.0 million at the time made;

 

(8)                                  the payment, purchase, redemption, defeasance or other acquisition or retirement for value of any Preferred Stock or Subordinated Indebtedness pursuant to and in accordance with the provisions similar to Section 3.5 and Section 3.10; provided that all Notes tendered by Holders in connection with a Change of Control Offer or Asset Sale Offer, as applicable, have been repurchased, redeemed or acquired for value;

 

(9)                                  cash payments in lieu of the issuance of fractional shares or interests in connection with the exercise or exchange of warrants, options or other rights or securities convertible into or exchangeable for Equity Interests of the Issuer; provided that any such cash payment shall not be for the purpose of evading the limitation of this Section 3.3;

 

(10)                            the declaration and payment of cash dividends, distributions, loans or other transfers by the Issuer or any Restricted Subsidiary to any Parent in amounts required for such Parent to pay, in each case without duplication:

 

(A)                              for so long as the Issuer is a member of a consolidated, combined or similar income Tax group (a “Tax Group”) of which a direct or indirect parent company of the Issuer is the 

 

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common parent, in amounts required for such parent company to pay foreign, U.S. federal, state, and/or local consolidated, combined or similar income Taxes, in accordance with the Tax Sharing Agreement and the State Tax Sharing Agreement dated May 9, 2000, each as in effect on the Issue Date or as thereafter amended in a manner not adverse to the Holders in any material respect;

 

(B)                              fees and expenses (including franchise or similar taxes) required to maintain the corporate existence, customary salary, bonus and other benefits payable to, and indemnities provided on behalf of, officers and employees of any Parent, if applicable, and general corporate overhead expenses of any Parent, in each case to the extent such fees and expenses are attributable to the ownership or operation of the Issuer, if applicable, and its Restricted Subsidiaries; provided that for so long as such Parent owns no assets other than the Capital Stock in the Issuer or another Parent, such fees and expenses shall be deemed for purposes of this Section 3.3(b)(10) to be so attributable to such ownership or operation;

 

(11)                            in the event the Transactions are consummated, any payments made in connection with the Transactions and described in this offering memorandum;

 

(12)                            the distribution, by dividend or otherwise, of shares of Capital Stock of Unrestricted Subsidiaries to the extent the Investments in such Unrestricted Subsidiaries were Restricted Investments; provided that the primary assets of such Unrestricted Subsidiary are not cash or Cash Equivalents;

 

(13)                            payments to Hallmark Cards, Inc. or any of its subsidiaries pursuant to the terms of one or more service agreements, tax-sharing agreements, programming arrangements, marketing arrangements or intellectual property licensing agreements pursuant to Hallmark Agreements; and

 

(14)                            annual dividends not in excess of 6% of the Net Cash Proceeds of any Qualified Equity Offering following the Issue Date;

 

provided, however, that at the time of, and after giving effect to, any Restricted Payment permitted under Sections 3.3(b)(5), (7) and (12), no Default shall have occurred and be continuing or would occur as a consequence thereof.

 

The amount of all Restricted Payments (other than cash) will be the fair market value (as determined in Good Faith by the Issuer) on the date of such Restricted Payment of the assets or securities proposed to be paid, transferred or issued by the Issuer or such Restricted Subsidiary, as the case may be, pursuant to such Restricted Payment.

 

For purposes of determining compliance with this Section 3.3, if, at the time a Restricted Payment or Permitted Investment (or any portion thereof) is made such Restricted Payment or Permitted Investment (or any portion thereof) meets the criteria of more than one of the categories of Restricted Payments described in Section 3.3(b)(1) through (14) above or Investments described in the clauses of the definition of “Permitted Investments,” the Issuer, in its sole discretion, shall classify (and shall be entitled to divide and classify) such Restricted Payment or Permitted Investment (or any portion thereof).

 

For purposes of designating any Restricted Subsidiary as an Unrestricted Subsidiary, all outstanding Investments by the Issuer and its Restricted Subsidiaries (except to the extent repaid) in the Subsidiary so designated shall be deemed to be Investments in an amount determined as set forth in the last sentence of the definition of “Investment.”  Such designation shall be permitted only if a Restricted Payment in such amount would be permitted at such time, whether pursuant to this Section 3.3 or pursuant to the definition of “Permitted Investments,” and if such Subsidiary otherwise meets the definition of an “Unrestricted Subsidiary.”

 

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SECTION 3.4.                                 Dividend and Other Payment Restrictions Affecting Restricted Subsidiaries.

 

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

 

(1)                                (A) pay dividends or make any other distributions to the Issuer or any of its Restricted Subsidiaries on its Capital Stock or with respect to any other interest or participation in, or measured by, its profits (it being understood that the priority of any Preferred Stock in receiving dividends or liquidating distributions prior to dividends or liquidating distributions paid on Common Stock shall not be deemed a restriction on the ability to make distributions on Capital Stock), or (B) pay any Indebtedness owed to the Issuer or any of its Restricted Subsidiaries;

 

(2)                                make loans or advances to the Issuer or any of its Restricted Subsidiaries (it being understood that the subordination of loans or advances made to the Issuer or any Restricted Subsidiary to other Indebtedness incurred by the Issuer or any Restricted Subsidiary shall not be deemed a restriction on the ability to make loans or advances); or

 

(3)                                sell, assign, transfer, lease, convey or otherwise dispose of any of its properties or assets to the Issuer or any of its Restricted Subsidiaries,

 

(b)                                 The restrictions in Section 3.4(a) shall not apply (in each case) to encumbrances or restrictions existing under or by reason of:

 

(i)                  contractual encumbrances or restrictions contained in the Senior Secured Credit Facilities and the related documentation and related Hedging Obligations and Cash Management Obligations or any other agreement or instrument in effect at or entered into on the Issue Date;

 

(ii)               this Indenture, the Notes and the Guarantees (including any exchange notes and related guarantees);

 

(iii)            purchase money obligations, mortgage financings, Capitalized Lease Obligations and similar obligations permitted under the Indenture that impose restrictions of the nature discussed in Section 3.4(a) on the property acquired, financed, designed, leased, constructed, repaired, maintained, installed or improved in connection therewith or thereby (including any proceeds thereof, accessions thereto and any upgrades or improvements thereto);

 

(iv)           applicable law or any applicable rule, regulation, order, authorization, permit or license;

 

(v)              any agreement or other instrument of a Person acquired by the Issuer or any Restricted Subsidiary in existence at the time of such acquisition (or at the time it merges with or into the Issuer or any Restricted Subsidiary or is assumed in connection with the acquisition of assets from such Person (but, in each case, not created in contemplation thereof), which encumbrance or restriction is not applicable to any Person, or the properties or assets of any Person, other than such Person and its Subsidiaries, or the property or assets of such Person and its Subsidiaries, so acquired (including their respective after-acquired assets);

 

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

 

(vii)        Secured Indebtedness otherwise permitted to be incurred pursuant to Section 3.2 and 3.6 that limit the right of the debtor to dispose of the assets securing such Indebtedness or subject to such Liens;

 

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(viii)     restrictions on Cash Equivalents or other deposits or net worth imposed by customers, suppliers and landlords under contracts entered into in the ordinary course of business or as required by insurance surety or bonding companies;

 

(ix)             customary provisions in joint venture agreements or arrangements, limited liability company agreements and other similar agreements relating solely to such joint venture; provided that with respect to any joint venture agreement relating to a Restricted Subsidiary, such provisions are not materially more disadvantageous to the Holders than is customary in comparable agreements or arrangements as determined in Good Faith by the Issuer;

 

(x)                customary (as determined in Good Faith by the Issuer) provisions contained in leases, subleases, licenses, sublicenses or other agreements, in each case, entered into in the ordinary course of business;

 

(xi)             any agreement or instrument relating to any Indebtedness or Preferred Stock of a Restricted Subsidiary permitted to be incurred subsequent to the Issue Date pursuant to Section 3.2 if (A) such encumbrances and restrictions, when taken as a whole, are either (x) not materially more disadvantageous to the Holders than is customary in comparable financings or (y) not materially more disadvantageous to the Holders than those applicable in either the Indenture or the Senior Secured Credit Facilities as in effect on the Issue Date, in each case, as determined by the Issuer in Good Faith, and (B) either (x) the Issuer determines in Good Faith that such encumbrance or restriction will not adversely affect the Issuer’s ability to make principal and interest payments on the Notes as and when they come due or (y) such encumbrances and restrictions apply only during the continuance of a default in respect of a payment or financial maintenance covenant relating to such Indebtedness;

 

(xii)          covenants to maintain net worth, total assets or liquidity and similar financial responsibility covenants under contracts with customers or suppliers in the ordinary course of business; and

 

(xiii)       any such encumbrances or restrictions imposed by any amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings of the contracts, instruments or obligations referred to in clauses (i) through (xii) above; provided that such amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings are, in the good faith judgment of the Issuer, not materially more restrictive with respect to such encumbrance and other restrictions taken as a whole than those prior to such amendment, modification, restatement, renewal, increase, supplement, refunding, replacement or refinancing.

 

SECTION 3.5.                                 Limitation on Asset Sales.

 

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

 

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

 

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

 

(A)                              any liabilities (as shown on the Issuer’s or such Restricted Subsidiary’s most recent balance sheet or in the footnotes thereto, or if incurred or accrued subsequent to the date of such balance sheet, such liabilities that would have been shown on such balance sheet or in the footnotes thereto if such incurrence or accrual had taken place on or prior to the date of such balance sheet, as determined in Good Faith by the Issuer) of the Issuer or such Restricted Subsidiary, other than liabilities that are by their terms subordinated to the Notes, that are assumed by the 

 

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transferee of any such assets and for which the Issuer and all of its Restricted Subsidiaries have been validly released from further liability therefor;

 

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

 

(C)                                any Designated Non-cash Consideration received by the Issuer or such Restricted Subsidiary in such Asset Sale having an aggregate fair market value, taken together with all other Designated Non-cash Consideration received pursuant to this clause (c) that is at that time outstanding, not to exceed the greater of (i) $25.0 million and (ii) 3.0% of Total Assets at the time of receipt of the Designated Non-cash Consideration, with the fair market value of each item of Designated Non-cash Consideration being measured at the time received and without giving effect to subsequent changes in value,

 

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

 

(b)                                 Within 365 days after the receipt of any Net Proceeds of any Asset Sale, the Issuer or such Restricted Subsidiary, at its option, may apply the Net Proceeds from such Asset Sale,

 

(1)                                to reduce or repay:

 

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

 

(b)                               Obligations under other Indebtedness (other than Subordinated Indebtedness) of the Issuer or any Guarantor (and to correspondingly reduce commitments with respect thereto); provided that, to the extent the Issuer reduces Obligations under such Indebtedness, the Issuer shall equally and ratably reduce Obligations under the Notes as provided in Section 5.7 through open-market purchases (to the extent such purchases are at or above 100% of the principal amount thereof) or by making an offer (in accordance with the procedures set forth below for an Asset Sale Offer) to all Holders to purchase their Notes at 100% of the principal amount thereof, plus the amount of accrued but unpaid interest, if any, and Additional Interest, if any, on the amount of Notes that would otherwise be prepaid; or

 

(c)                                Indebtedness of a Non-Guarantor Subsidiary, other than Indebtedness owed to the Issuer or another Restricted Subsidiary (and to correspondingly reduce commitments with respect thereto); or

 

(2)                                to make (a) an Investment in the Capital Stock of any business that becomes a Restricted Subsidiary or is merged with or into the Issuer or one of its Restricted Subsidiaries as a result of such transaction, (b) capital expenditures or (c) acquisitions of properties or other assets (other than working capital assets), which in the case of each of clause (a), (b) and (c) are used or useful in a Similar Business or replace the businesses, properties and/or assets that are the subject of such Asset Sale; provided that, in the case of each of clause (a), (b) and (c), a binding commitment shall be treated as a permitted application of the Net Proceeds under this Section 3.5(b)(2) from the date of such commitment so long as the Issuer or such other Restricted Subsidiary enters into such commitment with the good faith expectation that such Net Proceeds shall be applied to satisfy such commitment within 180 days of such commitment (an “Acceptable Commitment”) and, in the event any Acceptable Commitment is later cancelled or terminated for any reason before the Net Proceeds are applied in connection therewith, then such Net Proceeds shall constitute Excess Proceeds.

 

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In addition, the Issuer may satisfy the foregoing obligations with respect to the Net Proceeds (or such lesser amount that the Issuer determines) from an Asset Sale by making an Asset Sale Offer with respect to such Net Proceeds prior to the expiration of the application period.

 

Any Net Proceeds from the Asset Sale that are not invested or applied as provided and within the time period set forth in the first sentence of the preceding paragraph shall be deemed to constitute “Excess Proceeds.”  When the aggregate amount of Excess Proceeds exceeds $10.0 million, the Issuer shall make an offer to all Holders and, if required by the terms of any Indebtedness that is pari passu with the Notes (“Pari Passu Indebtedness”), to the holders of such Pari Passu Indebtedness (an “Asset Sale Offer”), to purchase the maximum aggregate principal amount of the Notes and such Pari Passu Indebtedness that may be purchased out of the Excess Proceeds at an offer price in cash in an amount equal to 100% of the principal amount thereof, plus accrued and unpaid interest and Additional Interest, if any, to the date fixed for the closing of such offer, in accordance with the procedures set forth in this Indenture.  The Issuer shall commence an Asset Sale Offer with respect to Excess Proceeds within twenty Business Days after the date that Excess Proceeds exceed the threshold set forth above by delivering the notice required pursuant to the terms of this Indenture, with a copy to the Trustee or otherwise in accordance with the procedures of DTC.

 

To the extent that the aggregate amount of Notes and such Pari Passu Indebtedness tendered pursuant to an Asset Sale Offer is less than the Excess Proceeds, the Issuer may use any remaining Excess Proceeds for any purposes not in violation of other covenants contained in this Indenture.  If the aggregate principal amount of Notes or the Pari Passu Indebtedness surrendered by such holders thereof exceeds the amount of Excess Proceeds, the Trustee shall select the Notes and the Issuer or agent for such Pari Passu Indebtedness shall select such Pari Passu Indebtedness to be purchased on a pro rata basis (and, in the case of the Notes, otherwise in accordance with the procedures of DTC) based on the accreted value or principal amount of the Notes or such Pari Passu Indebtedness tendered, in each case certified to the Trustee in an Officer’s Certificate.  Upon completion of any such Asset Sale Offer, the amount of Excess Proceeds shall be reset at zero.

 

Pending the final application of any Net Proceeds pursuant to this Section 3.5, the Issuer may apply such Net Proceeds temporarily to reduce Indebtedness outstanding under a revolving credit facility or otherwise use such Net Proceeds in any manner not prohibited by this Indenture.

 

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

 

SECTION 3.6.                                 Limitation on Liens.  The Issuer shall not, and shall not permit any Restricted Subsidiary to, directly or indirectly, create, incur, assume or suffer to exist any Lien (except Permitted Liens) (each, an “Initial Lien”) that secures obligations under any Indebtedness or any related guarantee, on any asset or property of the Issuer or any Restricted Subsidiary, or any income or profits therefrom, unless:

 

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

 

(b)                             in all other cases, the Notes or the Guarantees are secured by a Lien on such asset or property, or income or profits therefrom, that is pari passu with or senior in priority to such Liens,

 

except that the foregoing shall not apply to Liens securing the Notes and the related Guarantees.

 

Any Lien created for the benefit of the Holders pursuant to this Section 3.6 shall provide by its terms that such Lien shall be automatically and unconditionally released and discharged upon the release and discharge of the Initial Lien that gave rise to the obligation to so secure the Notes.

 

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SECTION 3.7.                                 Limitation on Guarantees of Indebtedness by Restricted Subsidiaries.

 

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

 

(A)                            such Restricted Subsidiary within 30 days executes and delivers a supplemental indenture and joinder or supplement to the Registration Rights Agreement (if such Restricted Subsidiary’s registration obligations thereunder have not yet been completed) providing for a senior Guarantee by such Restricted Subsidiary, except that with respect to a guarantee of Indebtedness of the Issuer or any Restricted Subsidiary, if such Indebtedness is by its express terms subordinated in right of payment to the Notes or, in the case of a Guarantor, such Guarantor’s Guarantee, any such guarantee by such Restricted Subsidiary with respect to such Indebtedness shall be subordinated in right of payment to the Notes or such Guarantor’s Guarantee substantially to the same extent as such Indebtedness is subordinated to the Notes or such Guarantor’s Guarantee;

 

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

 

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

 

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

 

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

 

provided that this Section 3.7 shall not be applicable to any guarantee of any Restricted Subsidiary that existed at the time such Person became a Restricted Subsidiary and was not incurred in connection with, or in contemplation of, such Person becoming a Restricted Subsidiary.

 

The Issuer may elect, in its sole discretion, to cause any Subsidiary that is not otherwise required to be a Guarantor to become a Guarantor, in which case such Subsidiary shall only be required to comply with Sections 3.7(a)(C)(1) and (2) above.

 

SECTION 3.8.                                 Transactions with Affiliates.

 

(a)                                  The Issuer shall not, and shall not permit any of its Restricted Subsidiaries to, make any payment to, or sell, assign, transfer, lease, convey or otherwise dispose of any of its properties or assets to, or purchase any property or assets from, or enter into or make or amend any transaction, contract, agreement, understanding, loan, advance or guarantee with, or for the benefit of, any Affiliate of the Issuer (each of the foregoing, an “Affiliate Transaction”) involving aggregate payments or consideration in excess of $2.0 million, unless:

 

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

 

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(2)                                the Issuer delivers to the Trustee with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate payments or consideration (a) in excess of $15.0 million, a resolution adopted by the majority of the board of directors of the Issuer approving such Affiliate Transaction and set forth in an Officer’s Certificate certifying that such Affiliate Transaction complies with Section 3.8(a)(1) above and (b) in excess of $40.0 million, a written opinion of an Independent Financial Advisor stating that such Affiliate Transaction is fair to the Issuer or the Restricted Subsidiary, as applicable, from a financial point of view or complies with Section 3.8(a)(1) above.

 

(b)                                 The foregoing provisions shall not apply to the following:

 

(1)                                transactions between or among the Issuer or any of its Restricted Subsidiaries (including any Guarantees issued by the Issuer or any of its Restricted Subsidiary for the benefit of the Issuer or a Restricted Subsidiary, as the case may be, in accordance with Section 3.2);

 

(2)                                Restricted Payments permitted by Section 3.3 and Permitted Investments (other than pursuant to clause (3) or (12) of the definition thereof);

 

(3)                                the payment of reasonable and customary fees and compensation paid to, and indemnities and reimbursements provided for the benefit of, former, current or future officers, directors, employees or consultants of the Issuer or any of its Restricted Subsidiaries, as determined in Good Faith by the Issuer;

 

(4)                                any agreement or arrangement as in effect as of the Issue Date, or any amendment, modification, supplement thereto or extension or renewal thereof (so long as any such amendment, modification, supplement, extension or renewal is not materially more disadvantageous to the Holders (as determined in Good Faith by the Issuer) when taken as a whole as compared to the applicable agreement as in effect on the Issue Date);

 

(5)                                the Transactions and the payment of all fees and expenses related to the Transactions or any of the transactions contemplated in connection therewith, as applicable, in each case as disclosed in the Offering Memorandum;

 

(6)                                transactions with customers, clients, suppliers, or purchasers or sellers of goods or services, in each case in the ordinary course of business and otherwise not in violation of the terms of this Indenture which are fair to the Issuer and its Restricted Subsidiaries or are on terms at least as favorable as might reasonably have been obtained at such time from an unaffiliated party, in each case as determined in Good Faith by the Issuer;

 

(7)                                to the extent not otherwise prohibited under this Indenture, the issuance or transfer of Equity Interests (other than Disqualified Stock) to Affiliates of the Issuer and the granting of registration and other customary rights in connection therewith or any contribution to the capital of the Issuer or any Restricted Subsidiary;

 

(8)                                payments or loans (or cancellation of loans) to employees or consultants of the Issuer or any of its Restricted Subsidiaries and employment agreements, stock option plans, restricted stock plans, bonus programs and other similar arrangements with such employees or consultants which, in each case, are approved in Good Faith by the Issuer and in accordance with applicable law; and

 

(9)                                transactions with a Person (other than an Unrestricted Subsidiary) that is an Affiliate of the Issuer solely because the Issuer or a Restricted Subsidiary owns an equity interest in or otherwise controls such Person;

 

(10)                          transactions in which the Issuer or any Restricted Subsidiary delivers to the Trustee a letter or opinion from an Independent Financial Advisor stating that such transaction is fair to the Issuer or such Restricted Subsidiary from a financial point of view or stating that the terms are not materially less favorable, when taken as a whole, than those that might reasonably have been obtained by the Issuer or such 

 

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Restricted Subsidiary in a comparable transaction at such time on an arms-length basis from a Person that is not an Affiliate; and

 

(11)                          transactions with Affiliates in their capacity as holders of Indebtedness or Capital Stock of the Issuer or any Restricted Subsidiary, so long as (i) such Affiliates are treated no more favorably than holders of such Indebtedness or Capital Stock generally and (ii) after giving effect to such transaction, such Affiliates hold no more than 5% of the proposed or outstanding issue amount of such class of Indebtedness or Capital Stock.

 

SECTION 3.9.                                 [Reserved].

 

SECTION 3.10.                           Change of Control.

 

(a)                                  If a Change of Control occurs, unless the Issuer has previously or concurrently delivered a redemption notice with respect to all the outstanding Notes pursuant to Section 5.7 the Issuer shall make an offer to purchase all of the Notes pursuant to the offer described below (the “Change of Control Offer”) at a price in cash (the “Change of Control Payment”) equal to 101% of the aggregate principal amount thereof plus accrued and unpaid interest and Additional Interest, if any, to the date of purchase, subject to the right of Holders of record of the Notes on the relevant record date to receive interest due on the relevant interest payment date.  Within 30 days following any Change of Control, the Issuer shall deliver notice of such Change of Control Offer, with a copy to the Trustee and to each Holder of Notes to the address of such Holder in accordance with the procedures of DTC with the following information:

 

(1)                                  that a Change of Control Offer is being made pursuant to this Section 3.10, and that all Notes properly tendered pursuant to such Change of Control Offer shall be accepted for payment by the Issuer;

 

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

 

(3)                                  that any Note not properly tendered shall remain outstanding and continue to accrue interest;

 

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

 

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

 

(6)                                  that Holders shall be entitled to withdraw their tendered Notes and their election to require the Issuer to purchase such Note; provided that the Paying Agent receives, not later than the expiration time of the Change of Control Offer, a facsimile transmission or letter setting forth the name of the Holder of the Notes, the principal amount of Notes tendered for purchase and a statement that such Holder is withdrawing its tendered Notes and its election to have such Notes purchased;

 

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

 

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(8)                                  if such notice is delivered prior to the occurrence of a Change of Control (for the avoidance of doubt, in the circumstances described in clause (d) of this Section 3.10, prior to the completion of such transaction) stating that the Change of Control Offer is conditional on the occurrence of such Change of Control; and

 

(9)                                  the other instructions, as determined by the Issuer, consistent with this Section 3.10, that a Holder must follow.

 

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

 

(1)                                accept for payment all Notes issued by it or portions thereof properly tendered and not withdrawn pursuant to the Change of Control Offer;

 

(2)                                deposit with the Paying Agent an amount equal to the aggregate Change of Control Payment in respect of all Notes or portions thereof so tendered and not withdrawn; and

 

(3)                                deliver, or cause to be delivered, to the Trustee for cancellation the Notes so tendered and not withdrawn together with an Officer’s Certificate to the Trustee stating that such Notes or portions thereof have been tendered to and purchased by the Issuer.

 

The Paying Agent shall promptly deliver to each Holder the Change of Control Payment for any such Notes properly tendered, and the Trustee shall cause to be transferred by book entry (or promptly authenticate and deliver in the case of certificated Notes) to each Holder a new Note equal in principal amount to any unpurchased portion of the Notes surrendered, if any; provided that each new Note shall be in a principal amount of $2,000 or an integral multiple of $1,000 in excess thereof.  The Issuer shall publicly announce the principal amount of the Notes or portions thereof properly tendered and not withdrawn pursuant to the Change of Control Offer on or as soon as practicable after the Change of Control Payment Date.

 

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

 

(d)                                 Notwithstanding anything to the contrary in this Section 3.10, a Change of Control Offer may be made in advance of a Change of Control, conditional upon such Change of Control, if a definitive agreement is in place for the Change of Control at the time of making of the Change of Control Offer.

 

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

 

SECTION 3.11.                           Reports and Other Information.

 

(a)                                  Notwithstanding that the Issuer may not be subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act or otherwise report on an annual and quarterly basis on forms provided for such annual and quarterly reporting pursuant to rules and regulations promulgated by the SEC, the Issuer shall file with the SEC within 15 days after the dates set forth below:

 

(1)                                within 90 days after the end of each fiscal year, all financial information that would be required to be contained in an annual report on Form 10-K, or any successor or comparable form, filed with the SEC, including a “Management’s discussion and analysis of financial condition and results of operations” 

 

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and a report on the annual financial statements by the Issuer’s independent registered public accounting firm;

 

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

 

(3)                                within the applicable number of days specified in the SEC’s rules and regulations, all current reports that would be required to be filed with the SEC on Form 8-K, or any successor or comparable form, if the Issuer were required to file with the SEC;

 

in each case, in a manner that complies in all material respects with the requirements specified in such form.

 

Notwithstanding the foregoing, the Issuer shall not be so obligated to file such reports with the SEC if the SEC does not permit such filing, so long as, at the Issuer’s expense and by the applicable date the Issuer would be required to file such information pursuant to this Section 3.11, the Issuer posts copies of such information required by the immediately preceding paragraph on a website (which may be nonpublic and may be maintained by the Issuer or a third party) to which access shall be given to the Trustee, Holders, prospective investors in the Notes (which prospective investors shall be limited to “qualified institutional buyers” within the meaning of Rule 144A of the Securities Act or non-U.S. persons (as defined in Regulation S under the Securities Act) that certify their status as such to the reasonable satisfaction of the Issuer), and securities analysts and market making financial institutions that are reasonably satisfactory to the Issuer.  The Trustee shall have no responsibility for determining whether or not such information has been posted and if the information in clause (3) has been posted to a website not maintained by the SEC, then the Issuer shall provide prompt notice of such posting to the Trustee.

 

To the extent any such information is not so filed or posted, as applicable, within the time periods specified above and such information is subsequently filed or posted, as applicable, the Issuer shall be deemed to have satisfied its obligations with respect thereto at such time and any Default with respect thereto shall be deemed to have been cured; provided that such cure shall not otherwise affect the rights of the Holders under Article VI if Holders of at least 25% in principal amount of the then total outstanding Notes have declared the principal, premium, if any, interest and any other monetary obligations on all the then outstanding Notes to be due and payable immediately and such declaration shall not have been rescinded or cancelled prior to such cure.

 

In addition, to the extent not satisfied by the foregoing, the Issuer shall, for so long as any Notes are outstanding, furnish to Holders and to securities analysts and prospective investors, upon their request, the information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act.

 

(b)                                 The Issuer shall hold quarterly conference calls that are publicly accessible promptly after the Issuer’s earnings for the prior fiscal period have been made available, beginning when earnings for the quarter ended September 30, 2011 have been made available pursuant to this Section 3.11.  No fewer than three Business Days prior to the date of each such conference call, the Issuer shall issue a press release to an appropriate U.S. wire service announcing the time and the date of such conference call and directing the beneficial owners of, and prospective investors in, the Notes and securities analysts how to access such conference call.  The Trustee shall have no responsibility for determining whether or not such conference calls have been held.

 

(c)                                  If the Issuer has designated any of its Subsidiaries as Unrestricted Subsidiaries and such Unrestricted Subsidiaries, either individually or collectively would otherwise have been a Significant Subsidiary then the annual and quarterly financial information required under this Section 3.11 shall include a reasonably detailed presentation, as determined in good faith by Senior Management of the Issuer, either on the face of the financial statements or in the footnotes to the financial statements and in the “Management’s discussion and analysis of financial condition and results of operations” section, of the financial condition and results of operations of the Issuer and its Restricted Subsidiaries separate from the financial condition and results of operations of such Unrestricted Subsidiaries.

 

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(d)                                 Notwithstanding the foregoing, such requirements shall be deemed satisfied prior to the commencement of the offering of the Exchange Notes or the effectiveness of the Shelf Registration Statement by the filing with the SEC of any registration statement relating to the exchange offer pursuant to the Registration Rights Agreement or other filing, and any amendments thereto, with such financial information that satisfies Regulation S-X of the Securities Act.

 

Delivery of such reports, information and documents to the Trustee is for informational purposes only and the Trustee’s receipt of such reports shall not constitute constructive notice of any information contained therein or determinable from information contained therein, including the Issuer’s compliance with any of its covenants under the Indenture (as to which the Trustee is entitled to rely exclusively on an Officer’s Certificate).

 

SECTION 3.12.                           Maintenance of Office or Agency.

 

The Issuer shall maintain an office or agency where the Notes may be presented or surrendered for payment, and where, if applicable, the Notes may be surrendered for registration of transfer or exchange.  The office of the Trustee located 601 Travis Street, 16th Floor, Houston, TX 77002, shall be such office or agency of the Issuer, unless the Issuer shall designate and maintain some other office or agency for one or more of such purposes.  The Issuer shall give prompt written notice to the Trustee of any change in the location of any such office or agency.  If at any time the Issuer shall fail to maintain any such required office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the corporate trust office of the Trustee, and the Issuer hereby appoints the Trustee as its agent to receive all such presentations, surrenders, notices and demands.

 

The Issuer may also from time to time designate one or more other offices or agencies where the Notes may be presented or surrendered for any or all such purposes and may from time to time rescind any such designation.  The Issuer shall 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 3.13.                           Corporate Existence.  Except as otherwise provided in this Article III, Article IV and Section 10.2(b), the Issuer shall do or cause to be done all things necessary to preserve and keep in full force and effect its corporate existence and the corporate, partnership, limited liability company or other existence of each Restricted Subsidiary and the rights (charter and statutory), licenses and franchises of the Issuer and each Restricted Subsidiary; provided, however, that the Issuer 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 Issuer determines that the preservation thereof is no longer desirable in the conduct of the business of the Issuer and each of its Restricted Subsidiaries, taken as a whole, and that the loss thereof is not, and shall not be, disadvantageous in any material respect to the Holders.

 

SECTION 3.14.                           Payment of Taxes.  The Issuer shall pay or discharge or cause to be paid or discharged, before the same shall become delinquent, all material taxes, assessments and governmental charges levied or imposed upon the Issuer or any Restricted Subsidiary; provided, however, that the Issuer 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 the Issuer by appropriate proceedings and for which appropriate reserves, if necessary (in the good faith judgment of management of the Issuer), are being maintained in accordance with GAAP or where the failure to effect such payment shall not be materially disadvantageous to the Holders.

 

SECTION 3.15.                           [Reserved].

 

SECTION 3.16.                           Compliance Certificate.  The Issuer shall deliver to the Trustee, within 120 days after the end of each Fiscal Year, an Officer’s Certificate in compliance with Trust Indenture Act Section 314(a)(4) stating that to the knowledge of the Officer executing the Officer’s Certificate, the Issuer is in compliance in all material respects with all conditions and covenants contained in this Indenture or, if a Default or Event of Default shall have occurred, describing all such Defaults or Events of Default of which he or she may have knowledge.  For the purposes of this paragraph, such compliance shall be determined without regard to any grace period or requirement of notice provided under this Indenture.

 

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SECTION 3.17.                           Reserved.

 

SECTION 3.18.                           [Reserved].

 

SECTION 3.19.                           Statement by Officers as to Default.  The Issuer shall deliver to the Trustee within 15 Business Days after the Issuer becomes aware of any Event of Default that has occurred or is continuing or an event which, with notice or the lapse of time or both, would constitute an Event of Default, a statement specifying such Event of Default.

 

SECTION 3.20.                           Suspension of Certain Covenants.  Following the first day (a) the Notes have an Investment Grade Rating from both of the Rating Agencies and (b) no Default has occurred and is continuing under this Indenture, the Issuer and its Restricted Subsidiaries shall not be subject to Sections 3.2,  3.3, 3.4, 3.5, 3.7 (but not with respect to any Guarantor that is guaranteeing the Notes at the time the Suspension Period commences and provided that such covenant shall apply to any Restricted Subsidiary that is guaranteeing Indebtedness upon any Reinstatement Date), 3.8 and 4.1(a)(4) (collectively, the “Suspended Covenants”).

 

If at any time the Notes’ credit rating is downgraded from an Investment Grade Rating by any Rating Agency or if a Default or Event of Default occurs and is continuing, then the Suspended Covenants shall thereafter be reinstated as if such covenants had never been suspended (the “Reinstatement Date”) and be applicable pursuant to the terms of this Indenture (including in connection with performing any calculation or assessment to determine compliance with the terms of this Indenture), unless and until the Notes subsequently attain an Investment Grade Rating and no Default or Event of Default is in existence (in which event the Suspended Covenants shall no longer be in effect for such time that the Notes maintain an Investment Grade Rating and no Default or Event of Default is in existence); provided, however, that no Default, Event of Default or breach of any kind shall be deemed to exist under this Indenture, the Registration Rights Agreement, the Notes or the Guarantees with respect to the Suspended Covenants based on, and none of the Issuer or any of its Subsidiaries shall bear any liability for, any actions taken or events that occurred during the Suspension Period (as defined below), including any actions taken at any time pursuant to any contractual obligation arising prior to the Reinstatement Date, regardless of whether such actions or events would have been permitted if the applicable Suspended Covenants remained in effect during such period.  The period of time between the date of suspension of the covenants and the Reinstatement Date is referred to as the “Suspension Period.”

 

On the Reinstatement Date, all Indebtedness incurred during the Suspension Period shall be classified by the Issuer to have been incurred pursuant to Section 3.2(b)(3); provided that all Indebtedness outstanding on the Reinstatement Date under any Credit Facility shall be deemed incurred under Section 3.2(b)(1) (up to the maximum amount of such Indebtedness permitted by such clause and after giving effect to Indebtedness Incurred prior to the Suspension Period and outstanding on the Reinstatement Date).

 

On the Reinstatement Date, all Restricted Payments made during the Suspension Period shall be classified as having been made pursuant to Section 3.3(a) or, at the Issuer’s option, any of the clauses of Section 3.3(b) or of the definition in this Indenture of “Permitted Investments.”  Accordingly, Restricted Payments made during the Suspension Period shall reduce the amount available to be made as Restricted Payments under Section 3.3(a) or, if applicable, such clauses.

 

During any period when the Suspended Covenants are suspended, the board of directors of the Issuer may not designate any of the Issuer’s Subsidiaries as Unrestricted Subsidiaries pursuant to this Indenture.

 

The Issuer shall provide an Officer’s Certificate to the Trustee indicating the occurrence of any Suspension Period or Reinstatement Date.  The Trustee shall have no obligation to (i) independently determine or verify if such events have occurred, (ii) make any determination regarding the impact of actions taken during the Suspension Period on the Issuer’s future compliance with its covenants or (iii) notify the Holders of any Suspension Period or Reinstatement Date.  In the absence of such Officer’s Certificate, the Trustee shall be entitled to conclusively assume that no such Suspension Period or Reinstatement Date has occurred.

 

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ARTICLE IV

 

SUCCESSOR COMPANY

 

SECTION 4.1.                                 Merger, Consolidation or Sale of All or Substantially All Assets.

 

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

 

(1)                                  the Issuer is the surviving Person or the Person formed by or surviving any such consolidation or merger (if other than the Issuer) or to which such sale, assignment, transfer, lease, conveyance or other disposition shall have been made is a Person organized or existing under the laws of the jurisdiction of organization of the Issuer or the laws of the United States, any state thereof, the District of Columbia or any territory thereof (the Issuer or such Person, as the case may be, being herein called the “Successor Company”); provided that in the case where the Successor Company is not a corporation or trust, a co-obligor of the Notes is a corporation;

 

(2)                                  the Successor Company, if other than the Issuer, expressly assumes all the obligations of the Issuer under this Indenture and the Notes pursuant to supplemental indentures or other documents or instruments in form reasonably satisfactory to the Trustee and assumes by written agreement all of the obligations of the Issuer under the Registration Rights Agreement (if the Issuer’s registration obligations thereunder have not yet been completed);

 

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

 

(4)                                  immediately after giving pro forma effect to such transaction and any related financing transactions, as if such transactions had occurred at the beginning of the applicable four-quarter period, (a) the Successor Company would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Leverage Ratio test set forth in Section 3.2(a) or (b) the Leverage Ratio for the Successor Company and its Restricted Subsidiaries would be less than the Leverage Ratio for the Issuer and its Restricted Subsidiaries immediately prior to such transaction;

 

(5)                                  each Guarantor, unless it is the other party to the transactions described above, in which case Section 10.2(b) shall apply, shall have by supplemental indenture confirmed that its Guarantee shall apply to such Person’s obligations under this Indenture, the Notes and the Registration Rights Agreement (if such Guarantor’s registration obligations thereunder have not yet been completed); and

 

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

 

(b)                                 The Successor Company shall succeed to, and be substituted for, the Issuer under this Indenture, the Notes and the Registration Rights Agreement (if the Issuer’s registration obligations thereunder have not yet been completed).

 

(c)                                  Notwithstanding Sections 4.1(a)(3) and (a)(4),

 

(1)                                  any Non-Guarantor Subsidiary may consolidate with or merge into or transfer all or part of its properties and assets to the Issuer or another Restricted Subsidiary,

 

(2)                                  the Issuer or any Guarantor may consolidate with, merge into or transfer all or part of its properties and assets to the Issuer or a Guarantor, as applicable, and

 

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(3)                                  the Issuer may consolidate or merge with an Affiliate of the Issuer solely for the purpose of reincorporating the Issuer in any state of the United States, the District of Columbia or any territory of the United States.

 

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

 

(d)                                 The predecessor company shall be released from its obligations under the Notes and this Indenture or its Guarantee, as the case may be, and the Successor Company shall succeed to, and be substituted for, and may exercise every right and power of, the Issuer under the Notes and this Indenture or the Guarantor under its Guarantee, respectively, but, in the case of a lease of all or substantially all its assets, the predecessor shall not be released from the obligation to pay the principal of and interest on the Notes or its obligations under the Guarantee, as the case may be.

 

ARTICLE V

 

REDEMPTION OF SECURITIES

 

SECTION 5.1.                                 Notices to Trustee.

 

If the Issuer elects to redeem Notes pursuant to the optional redemption provisions of Section 5.7 hereof, it must furnish to the Holders with a copy to the Trustee, unless otherwise agreed with the Trustee, at least 30 days but not more than 60 days before a redemption date, an Officer’s Certificate setting forth:

 

(1)                                  the clause of this Indenture pursuant to which the redemption shall occur;

 

(2)                                  the redemption date;

 

(3)                                  the principal amount of Notes to be redeemed; and

 

(4)                                  the redemption price.

 

Any redemption referenced in such Officer’s Certificate may be cancelled by the Issuer at any time prior to notice of redemption being mailed to any Holder and thereafter shall be null and void.

 

SECTION 5.2.                                 Selection of Notes To Be Redeemed or Purchased.

 

If the Issuer is redeeming or purchasing less than all of the Notes issued by it at any time, pursuant to Section 5.7 or purchased in an Asset Sale Offer or a Change of Control Offer pursuant to Section 3.10, the Trustee or the applicable registrar shall select the Notes to be redeemed (a) if the Notes are listed on any national securities exchange, in compliance with the requirements of the principal national securities exchange on which the Notes are listed, (b) on a pro rata basis (to the extent practicable) or (c) by lot or such other similar method in accordance with the procedures of DTC.

 

No Notes of $2,000 or less may be redeemed in part, and the unredeemed portion of the Notes must be equal to $2,000 in principal amount or integral multiples of $1,000 in excess thereof.  In the event of partial redemption, the particular Notes to be redeemed or purchased shall be selected, unless otherwise provided herein, not less than 30 nor more than 60 days prior to the redemption or purchase date by the Trustee or the applicable registrar from the outstanding Notes not previously called for redemption or purchase.

 

The Trustee or the applicable registrar shall promptly notify the Issuer in writing of the Notes selected for redemption or purchase and, in the case of any Note selected for partial redemption or purchase, the principal 

 

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amount thereof to be redeemed or purchased.  Notes and portions of Notes selected shall be in amounts of $2,000 or an integral multiple of $1,000 in excess thereof, except that if all of the Notes of a Holder are to be redeemed or purchased, the entire outstanding amount of Notes held by such Holder, even if not a multiple of $1,000, shall be redeemed or purchased.  Except as provided in the preceding sentence, provisions of this Indenture that apply to Notes called for redemption or purchase also apply to portions of Notes called for redemption or purchase.

 

SECTION 5.3.                                 Notice of Redemption.  Notices of redemption shall be delivered (a) to the Trustee at least 15 days before the Redemption Date (as defined below), or if the Trustee is to give notice of redemption to Holders, at least 45 days before the Redemption Date and (b) at least 30 days but not more than 60 days before a Redemption Date, to each Holder of record whose Notes are to be redeemed at such Holder’s registered address or otherwise in accordance with the procedures of DTC, except that redemption notices may be delivered more than 60 days prior to a Redemption Date if the notice is issued in connection with a defeasance of the Notes or a satisfaction and discharge of this Indenture pursuant to Article VIII or XII hereof.

 

The notice shall identify the Notes (including the CUSIP number) to be redeemed and shall state:

 

(1)                                  the Redemption Date;

 

(2)                                  the redemption price;

 

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

 

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

 

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

 

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

 

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

 

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

 

At the Issuer’s written request, the Trustee shall give the notice of redemption in the Issuer’s name and at its expense; provided, however, that the Issuer has delivered to the Trustee, at least 45 days prior to the Redemption Date (or such shorter period as the Trustee shall agree), an Officer’s Certificate requesting that the Trustee give such notice and setting forth the information to be stated in such notice as provided in the preceding paragraph.

 

SECTION 5.4.                                 Effect of Notice of Redemption.  Once notice of redemption is delivered in accordance with Section 5.3 hereof, Notes called for redemption shall become irrevocably due and payable on the Redemption Date at the redemption price.  Notice of redemption pursuant to Section 5.7(b) may, at the Issuer’s discretion, be subject to one or more conditions precedent, including, but not limited to, completion of the related Equity Offering and may be given prior to the completion thereof.

 

SECTION 5.5.                                 Deposit of Redemption or Purchase Price.  Prior to 11:00 a.m. (New York City time) on the redemption or purchase date, the Issuer shall deposit with the Trustee or with the Paying Agent money sufficient to pay the redemption or purchase price of and accrued interest and Additional Interest, if any, on, all Notes to be redeemed or purchased on that date.  The Trustee or the Paying Agent shall promptly return to the Issuer any money deposited with the Trustee or the Paying Agent by the Issuer in excess of the amounts necessary to pay the redemption 

 

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or purchase price of, and accrued interest and Additional Interest, if any, on, all Notes to be redeemed or purchased.

 

If the Issuer complies with the provisions of the preceding paragraph, on and after the redemption or purchase date, interest shall cease to accrue on the Notes or the portions of Notes called for redemption or purchase.  If a Note is redeemed or purchased on or after an interest record date but on or prior to the related interest payment date, then any accrued and unpaid interest shall be paid to the Person in whose name such Note was registered at the close of business on such record date.  If any Note called for redemption or purchase is not so paid upon surrender for redemption or purchase because of the failure of the Issuer to comply with the preceding paragraph, interest shall be paid on the unpaid principal, from the redemption or purchase date until such principal is paid, and to the extent lawful on any interest not paid on such unpaid principal, in each case at the rate provided in the Notes and in Section 3.1 hereof.

 

SECTION 5.6.                                 Notes Redeemed or Purchased in Part.  Upon surrender of a Note that is redeemed or purchased in part, the Issuer shall issue and, upon receipt of an Issuer Order, the Trustee shall authenticate for the Holder at the expense of the Issuer a new Note equal in principal amount to the unredeemed or unpurchased portion of the Note surrendered; provided,  that each such new Note shall be in a principal amount of $2,000 or integral multiple of $1,000 in excess thereof.

 

SECTION 5.7.                                 Optional Redemption.

 

(a)                                  At any time prior to July 15, 2015, the Issuer may redeem all or a part of the Notes on one or more occasions, upon notice as provided in Section 5.3, at a redemption price equal to 100% of the principal amount of Notes redeemed, plus the Applicable Premium as of, and accrued and unpaid interest thereon and Additional Interest, if any, to, but excluding the date of redemption (the “Redemption Date”), subject to the rights of Holders of record on the relevant record date to receive interest due on the relevant interest payment date.

 

(b)                                 Prior to July 15, 2014, the Issuer may, at its option, upon notice as provided in Section 5.3, redeem up to 35% of the aggregate principal amount of the Notes issued under this Indenture on one or more occasions, at a redemption price equal to 110.500% of the aggregate principal amount of the Notes, plus accrued and unpaid interest thereon and Additional Interest, if any, to, but excluding, the applicable Redemption Date, subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date, with the net cash proceeds of one or more Equity Offerings; provided that (a) at least 65% of the aggregate principal amount of Notes issued under this Indenture remains outstanding immediately after the occurrence of each such redemption and (b) each such redemption occurs within 90 days following the date of closing of each such Equity Offering.

 

(c)                                  Except pursuant to clause (a) or (b) of this Section 5.7, the Notes shall not be redeemable at the Company’s option prior to July 15, 2015.

 

(d)                                 On and after July 15, 2015 the Issuer may redeem all or a part of the Notes on one or more occasions, upon notice as provided in Section 5.3, at the redemption prices (expressed as percentages of principal amount of the Notes to be redeemed) set forth in the table below, plus accrued and unpaid interest thereon and Additional Interest, if any, to, but excluding, the applicable Redemption Date, subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date, if redeemed during the twelve-month period beginning on July 15 of each of the years indicated in the table below:

 

 

	
Period
    	
 
    	
Percentage
    	
 
    
	
2015 
    	
 
    	
105.250
    	
%
    
	
2016 
    	
 
    	
102.625
    	
%
    
	
2017 and thereafter 
    	
 
    	
100.000
    	
%
    


 

(e)                                  Unless the Issuer defaults in the payment of the redemption price, interest shall cease to accrue on the Notes or portions thereof called for redemption on the applicable Redemption Date.

 

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(f)                                    Any redemption pursuant to this Section 5.7 shall be made pursuant to the provisions of Sections 5.1 through 5.6.

 

SECTION 5.8.                                 Mandatory Redemption.  Except as set forth in Section 3.5 and Section 3.10 hereof, the Issuer is not required to make mandatory redemption or sinking fund payments with respect to the Notes.

 

ARTICLE VI

 

DEFAULTS AND REMEDIES

 

SECTION 6.1.                                 Events of Default.

 

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

 

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

 

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

 

(3)                                  failure by the Issuer or any Guarantor to comply with its obligations under Section 4.1 and Section 10.2(b);

 

(4)                                  failure by the Issuer or the Guarantors to comply for 30 days with any of their obligations under Section 3.10 (in each case, other than a failure to purchase Notes which constitutes an Event of Default under Section 6.1(a)(1) or Section 6.1(a)(2));

 

(5)                                  failure by the Issuer or any Guarantor for 60 days after receipt of written notice given by the Trustee or the Holders of not less than 25% in principal amount of the outstanding Notes to comply with any of its other obligations, covenants or agreements contained in this Indenture or the Notes;

 

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

 

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

 

(B)                                the principal amount of such Indebtedness, together with the principal amount of any other such Indebtedness in default for failure to pay principal at its stated final maturity (after giving effect to any applicable grace periods), or the maturity of which has been so accelerated, is in excess of $25.0 million in the aggregate;

 

(7)                                  failure by the Issuer or any Significant Subsidiary (or group of Restricted Subsidiaries that together (determined as of the most recent consolidated financial statements of the Issuer for a fiscal period end provided as required under Section 3.11) would constitute a Significant Subsidiary) to pay final judgments by a court or courts of competent jurisdiction aggregating in excess of $25.0 million, which final judgments remain unpaid, undischarged and unstayed for a period of more than 60 days after such judgment becomes final;

 

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(8)                                  the Issuer or any Significant Subsidiary (or any group of Restricted Subsidiaries that together (determined as of the most recent consolidated financial statements of the Issuer for a fiscal period end provided as required under Section 3.11) would constitute a Significant Subsidiary pursuant to or within the meaning of any Bankruptcy Law:

 

(A)                              commences a voluntary case or proceeding;

 

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

 

(C)                                consents to the appointment of a custodian of it or for substantially all 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; or

 

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

 

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

 

(A)                              is for relief against the Issuer or any Significant Subsidiary (or any group of Restricted Subsidiaries that together (determined as of the most recent consolidated financial statements of the Issuer for a fiscal period end provided as required under Section 3.11) would constitute a Significant Subsidiary, in an involuntary case;

 

(B)                                appoints a custodian of the Issuer or any Significant Subsidiary (or any group of Restricted Subsidiaries that together (determined as of the most recent consolidated financial statements of the Issuer for a fiscal period end provided as required under Section 3.11) would constitute a Significant Subsidiary, for substantially all of its property; or

 

(C)                                orders the winding up or liquidation of the Issuer or any Significant Subsidiary (or any group of Restricted Subsidiaries that together (determined as of the most recent consolidated financial statements of the Issuer for a fiscal period end provided as required under Section 3.11), would constitute a Significant Subsidiary; or

 

(D)                               or any similar relief is granted under any foreign laws;

 

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

 

(10)                            the Guarantee of any Significant Subsidiary (or group of Restricted Subsidiaries that together (determined as of the most recent consolidated financial statements of the Issuer for a fiscal period end provided as required under Section 3.11) would constitute a Significant Subsidiary) shall for any reason cease to be in full force and effect or be declared null and void or any responsible officer of any Guarantor that is a Significant Subsidiary (or the responsible officers of any group of Restricted Subsidiaries that, taken together (determined as of the most recent consolidated financial statements of the Issuer for a fiscal period end provided as required under Section 3.11) would constitute a Significant Subsidiary), as the case may be, denies that such Subsidiary has any further liability under its or their Guarantee(s) or gives notice to such effect, other than by reason of the termination of this Indenture or the release of any such Guarantee in accordance with this Indenture.

 

SECTION 6.2.                                 Acceleration.  If any Event of Default (other than an Event of Default described in Section 6.1(a)(8) or Section 6.1(a)(9)) occurs and is continuing under this Indenture, the Trustee by written notice to the 

 

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Issuer, or the Holders of at least 25% in principal amount of the then total outstanding Notes by written notice to the Issuer and the Trustee, may, and the Trustee at the request of such Holders shall, declare the principal of, premium, if any, and accrued and unpaid interest (including Additional Interest), if any, and any other monetary obligations on all the then outstanding Notes to be due and payable immediately.  Upon the effectiveness of such notice, such principal, premium and accrued and unpaid interest (including Additional Interest) and any other monetary obligations on all the then outstanding Notes shall be due and payable immediately.

 

If an Event of Default described in Section 6.1(a)(8) or Section 6.1(a)(9) occurs with respect to the Issuer and is continuing, the principal of, premium, if any, and accrued and unpaid interest (including Additional Interest) and any other monetary obligations on all the Notes shall become and be immediately due and payable without any declaration or other act or notice on the part of the Trustee or any Holders.

 

If a declaration of acceleration of the Notes has occurred because an Event of Default specified in Section 6.1(a)(6) has occurred and is continuing, the declaration of the acceleration of the Notes shall be annulled, waived and rescinded, automatically and without any action by the Trustee or the Holders, if within 20 days after such Event of Default arose:

 

(w)                               if the default that is the basis for such Event of Default has been cured or remedied by the Issuer or a Restricted Subsidiary or waived by the Holders of the relevant Indebtedness;

 

(x)                                   such annulment would not conflict with any judgment or decree of a court of competent jurisdiction;

 

(y)                                 all amounts owed to the Trustee in connection with such Event of Default have been paid; and

 

(z)                                   all existing Events of Default, other than nonpayment of principal, premium or interest on the Notes that become due solely because of the acceleration of the Notes, have been cured or waived.

 

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, if any) or interest (including Additional Interest) on the Notes or to enforce the performance of any provision of the Notes, this Indenture or the Guarantees.

 

The Trustee may maintain a proceeding even if it does not possess any of the Notes or does not produce any of them in the proceeding.  A delay or omission by the Trustee or any Holder 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 then outstanding Notes by notice to the Trustee (with a copy to the Issuer, but the applicable waiver or rescission shall be effective when the notice is given to the Trustee) may, if all fees, costs and expenses incurred by the Trustee in connection with such Default or Event of Default have been paid, on behalf of the Holders of all the Notes, (a) waive, by their consent (including, without limitation, consents obtained in connection with a purchase of, or tender offer or exchange offer for, Notes), an existing Default or Event of Default and its consequences under this Indenture except (i) a continuing Event of Default in the payment of the principal of, or premium, if any, or interest (including Additional Interest) on a Note held by a non-consenting Holder other than the non-payment of interest or premium, if any, on the principal of such Note that became due solely because of the acceleration of such Note 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 Holder affected and (b) rescind any acceleration and its consequences with respect to the Notes provided that such rescission would not conflict with any judgment of a court of competent jurisdiction.  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.

 

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SECTION 6.5.                                 Control by Majority.  The Holders of a majority in principal amount of the total outstanding Notes may direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or of exercising any trust or power conferred on the Trustee.  However, the Trustee may refuse to follow any direction that conflicts with law or this Indenture, the Notes or the Guarantees or, subject to Sections 7.1 and 7.2,that the Trustee determines is unduly prejudicial to the rights of other Holders 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 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 Holder may not pursue any remedy with respect to this Indenture or the Notes unless:

 

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

 

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

 

(3)                                  Holders have offered and, if requested, provided to the Trustee indemnity or security reasonably satisfactory to the Trustee against any loss, liability or expense;

 

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

 

(5)                                Holders of a majority in principal amount of the total outstanding Notes have not given the Trustee a direction inconsistent with such request within such 60-day period.

 

A Holder may not use this Indenture to prejudice the rights of another Holder or to obtain a preference or priority over another Holder (it being understood that the Trustee does not have an affirmative duty to ascertain whether or not such actions or forbearances are unduly prejudicial to such Holders).

 

SECTION 6.7.                                 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), or interest (including Additional Interest) on the Notes held by such Holder, on or after the respective due dates expressed or provided for in the Notes, 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 Section 6.1(a)(1) or Section 6.1(a)(2) occurs and is continuing, the Trustee may recover judgment in its own name and as trustee of an express trust against the Issuer 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 Holders allowed in any judicial proceedings relative to the Issuer, 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.

 

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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 Notes 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)                                  If the Trustee collects any money or property pursuant to this Article VI, 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;

 

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

 

THIRD:  to the Issuer, or to the extent the Trustee collects any amount for any Guarantor, to such Guarantor.

 

(b)                                 The Trustee may fix a record date and payment date for any payment to Holders pursuant to this Section 6.10.  At least 15 days before such record date, the Issuer shall deliver to each Holder 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 6.11 does not apply to a suit by the Trustee, a suit by the Issuer, 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 Notes.

 

ARTICLE VII

 

TRUSTEE

 

SECTION 7.1.                                 Duties of Trustee.

 

(a)                                  If an Event of Default has occurred and is continuing, the Trustee shall exercise the rights and powers vested in it by this Indenture and use the same degree of care and skill in 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 shall be under no obligation to exercise any of the rights or powers under this Indenture, the Notes or the Guarantees at the request or direction of any of the Holders unless the Holders have offered the Trustee indemnity or security reasonably satisfactory to the Trustee against any 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 Notes or the Guarantees, 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 

 

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to determine whether or not they conform to the requirements of this Indenture, the Notes or the Guarantees, as the case may be (but need not confirm or investigate the accuracy of mathematical calculations or other facts stated therein).

 

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

 

(1)                                  this paragraph does not limit the effect of paragraph (b) of this Section 7.1;

 

(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 Notes or the Guarantees 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 7.1.

 

(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 Issuer.

 

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

 

(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 7.1 and to the provisions of the TIA.

 

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

 

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

 

(a)                              The Trustee may conclusively rely on and shall be fully protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order or other paper or 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 Issuer 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 Issuer.

 

(b)                             Before the Trustee acts or refrains from acting, it may require an Officer’s 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 Officer’s Certificate or Opinion of Counsel.

 

(c)                              The Trustee may execute any of the trusts and powers hereunder or perform any duties hereunder either directly by or through its attorneys and agents and shall not be responsible for the misconduct or negligence of any agent or attorney appointed with due care by it hereunder.

 

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(d)                             In the absence of willful misconduct or negligence, 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, conferred upon it by this Indenture.

 

(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 Notes or the Guarantees 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 Notes or the Guarantees 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 unless written notice of any event which is in fact such a Default or Event of Default is received by a Trust Officer of the Trustee at the corporate trust office of the Trustee specified in Section 13.2, and such notice references the Notes 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 Trustee, 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 Notes or the Guarantees at the request, order or direction of any of the Holders pursuant to the provisions of this Indenture, unless the 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 actually known to a Trust Officer of the Trustee.

 

(j)                                 Whenever in the administration of this Indenture, the Notes or the Guarantees 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, in the absence of negligence, bad faith or willful misconduct on its part, conclusively rely upon an Officer’s Certificate.

 

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

 

(l)                                 The Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, report, notice, request, direction, consent, order, bond, debenture, coupon or other paper or document, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee shall determine to make such further inquiry or investigation, it shall be entitled to examine, during business hours and upon reasonable notice, the books, records and premises of the Issuer and the Restricted Subsidiaries, personally or by agent or attorney, and shall incur no liability or additional liability of any kind to Holders by reason of such inquiry or investigation.

 

(m)                           The Trustee shall not be required to give any bond or surety in respect of the performance of its powers and duties hereunder.

 

(n)                             The Trustee may request that the Issuer deliver a certificate setting forth the names of individuals and/or titles of officers authorized at such time to take specified actions pursuant to this Indenture 

 

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or the Notes.  The Trustee shall be entitled to conclusively rely upon such certificate until a new certificate is delivered.

 

(o)                             The right of the Trustee to perform any discretionary or permissive act enumerated in this Indenture shall not be construed as a duty.

 

(p)                             The Trustee is authorized to obey and comply, in any manner it or its counsel deems appropriate, with all writs, order, judgments, awards, decrees issued or process entered by any court or arbitral tribunal with respect to this Indenture and if the Trustee so complies, it shall not be liable to any party hereto or to any other party or person notwithstanding that any such writ, order, judgment, award, decree or process may be subsequently reversed, modified, annulled, set aside, vacated or found to have been entered without competent jurisdiction.

 

SECTION 7.3.                                 Individual Rights of Trustee.  The Trustee in its individual or any other capacity may become the owner or pledgee of Notes and may otherwise deal with the Issuer, 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 Issuer; provided, however, that if the Trustee acquires any conflicting interest under the TIA, the Trustee must (i) eliminate such conflict within 90 days after 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 Guarantees or the Notes, shall not be accountable for the Issuer’s use of the proceeds from the sale of the Notes, 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 Issuer pursuant to the terms of this Indenture and shall not be responsible for any statement of the Issuer in this Indenture or in any document issued in connection with the sale of the Notes or in the Notes 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 (pursuant to Section 7.2(f) hereof), the Trustee shall mail by first class mail to each Holder at the address set forth in the Notes 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 relating to the payment of principal of, premium (if any), or interest on any Note (including payments pursuant to the optional redemption or required repurchase provisions of such Note), 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 Holders.  In addition, subject to Section 6.5, the Trustee shall have no obligation to accelerate the Notes if in the judgment of the Trustee acceleration is not in the interest of the Holders subject to Section 7.1.

 

SECTION 7.6.                                 Reports by Trustee to Holders.  Within 60 days after each May 15, beginning May 15, 2012, the Trustee shall deliver to each Holder a brief report dated as of such May 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 delivery to Holders shall be filed with the SEC and each stock exchange (if any) on which the Notes are listed.  The Issuer agrees to notify promptly the Trustee in writing whenever the Notes 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 Issuer shall pay to the Trustee from time to time such compensation for its services hereunder and under the Notes and the Guarantees as the Issuer and such party 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 Issuer 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 delivery of notices to Holders.  Such expenses shall include the reasonable compensation and expenses, disbursements and advances of the respective agents, counsel, accountants and experts of the Trustee.  The Issuer 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 

 

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misconduct or gross negligence on its part in connection with the administration of this trust and the performance of its duties hereunder and under the Notes and the Guarantees, including the costs and expenses of enforcing this Indenture (including this Section 7.7), the Notes and the Guarantees and of defending itself against any claims (other than any asserted by the Issuer).  The Trustee shall notify the Issuer 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 Issuer shall not relieve the Issuer of its obligations hereunder.  Other than with respect to any claims brought by the Issuer, the Issuer shall defend the claim and the Trustee shall provide reasonable cooperation at the Issuer’s expense in the defense.  The Trustee may have separate counsel and the Issuer shall pay the fees and expenses of such counsel; provided that the Issuer shall not be required to pay the fees and expenses of such separate counsel if it assumes such party’s defense, and, in the reasonable judgment of outside counsel to such party, there is no conflict of interest between the Issuer and such party in connection with such defense.

 

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

 

The Issuer’s obligations pursuant to this Section 7.7 shall survive the discharge of this Indenture and the resignation or removal of the Trustee.  Without prejudice to any other rights available to the Trustee under applicable law, when the Trustee incurs expenses or renders services after the occurrence of a Default specified in clause (8) or clause (9) of Section 6.1, the expenses (including the reasonable fees and expenses of its counsel) are intended to constitute expenses of administration under any Bankruptcy Law.

 

SECTION 7.8.                                 Replacement of Trustee.  The Trustee or any other Registrar, Paying Agent or Authenticating Agent may resign at any time by so notifying the Issuer in writing not less than 30 days prior to the effective date of such resignation.  The Holders of a majority in principal amount of the Notes may remove the Trustee or any other Registrar, Paying Agent or Authenticating Agent by so notifying the removed party in writing not less than 30 days prior to the effective date of such removal and may appoint a successor Trustee, Registrar, Paying Agent or Authenticating Agent, as the case may be, with the Issuer’s written consent, which consent shall not be unreasonably withheld.  The Issuer shall remove the Trustee if:

 

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

 

(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 Issuer or by the Holders of a majority in principal amount of the Notes 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 Issuer shall promptly appoint a successor Trustee.

 

A successor Trustee shall deliver a written acceptance of its appointment to the retiring Trustee and to the Issuer.  Thereupon the resignation or removal of the retiring Trustee shall become effective, and the successor Trustee shall have all the rights, powers and duties of the Trustee under this Indenture.  The successor Trustee shall deliver a notice of its succession to Holders.  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 30 days after the retiring Trustee resigns or is removed, the retiring Trustee or the Holders of at least 10% in principal amount of the Notes may petition, at the Issuer’s expense, any court of competent jurisdiction for the appointment of a successor Trustee.

 

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If the Trustee fails to comply with Section 7.10, unless the Trustee’s duty to resign is stayed as provided in TIA § 310(b), any Holder, who has been a bona fide holder of a Note 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.

 

As used in this Section 7.8, the term “Trustee” shall also include the Registrar, Paying Agent or Authenticating Agent, as the case may be.

 

Notwithstanding the replacement of the Trustee pursuant to this Section 7.8, the Issuer’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 Notes 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 Notes so authenticated; and in case at that time any of the Notes shall not have been authenticated, any successor to the Trustee may authenticate such Notes 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 Notes in the name of any predecessor Trustee shall only apply to its successor or successors by merger, consolidation or conversion.

 

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 $100.0 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 Issuer 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 Issuer.  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 Issuer.  Any application by the Trustee for written instructions from the Issuer 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 Issuer 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

 

LEGAL DEFEASANCE AND COVENANT DEFEASANCE

 

SECTION 8.1.                                 Option to Effect Legal Defeasance or Covenant Defeasance; Defeasance.  The Issuer may, at its option and at any time, elect to have either Section 8.2 or 8.3 hereof be applied to all outstanding Notes upon compliance with the conditions set forth below in this Article VIII.  The Issuer may exercise Legal Defeasance notwithstanding its prior exercise of Covenant Defeasance.

 

SECTION 8.2.                                 Legal Defeasance and Discharge.  Upon the Issuer’s exercise under Section 8.1 hereof of the option applicable to this Section 8.2, the Issuer and each of the Guarantors shall, subject to the satisfaction of 

 

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the conditions set forth in Section 8.4 hereof, be deemed to have been discharged from their obligation with respect to all outstanding Notes (including the Guarantees) on the date the conditions set forth below are satisfied (hereinafter, “Legal Defeasance”).  For this purpose, Legal Defeasance means that the Issuer and the Guarantors shall be deemed to have paid and discharged the entire Indebtedness represented by the outstanding Notes (including the Guarantees), which shall thereafter be deemed to be “outstanding” only for the purposes of Section 8.5 hereof and the other Sections of this Indenture referred to in clauses (1) and (2) below, and to have satisfied all of their other obligations under such Notes, the Guarantees and this Indenture (and the Trustee, on demand of and at the expense of the Issuer, shall execute proper instruments acknowledging the same) and to have cured all then existing Events of Default, except for the following provisions which shall survive until otherwise terminated or discharged hereunder:

 

(1)                                  the rights of Holders to receive payments in respect of the principal of, premium, if any, and interest on the Notes when such payments are due solely out of the trust referred to in Section 8.4 hereof;

 

(2)                                  the Issuer’s obligations with respect to Notes under Article II concerning issuing temporary Notes, registration of such Notes, mutilated, destroyed, lost or stolen Notes and Section 3.12 hereof concerning the maintenance of an office or agency for presentation or surrender of the Notes for payment;

 

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

 

(4)                                  this Article VIII with respect to provisions relating to Legal Defeasance.

 

SECTION 8.3.                                 Covenant Defeasance.  Upon the Issuer’s exercise under Section 8.1 hereof of the option applicable to this Section 8.3, the Issuer and each of the Guarantors shall, subject to the satisfaction of the conditions set forth in Section 8.4 hereof, be released from each of their obligations under Sections 3.2, 3.3, 3.4, 3.5, 3.6, 3.7, 3.8, 3.10, 3.11, 3.14 and 3.20, and Sections 4.1(a)(4) and 10.2(b)(v) with respect to the outstanding Notes on and after the date the conditions set forth in Section 8.4 hereof are satisfied (hereinafter, “Covenant Defeasance”), and the Notes shall thereafter be deemed not “outstanding” for the purposes of any direction, waiver, consent or declaration or act of Holders (and the consequences of any thereof) in connection with such covenants, but shall continue to be deemed “outstanding” for all other purposes hereunder.  For this purpose, Covenant Defeasance means that, with respect to the outstanding Notes and Guarantees, the Issuer and the Guarantors may omit to comply with and shall have no liability in respect of any term, condition or limitation set forth in any such covenant, whether directly or indirectly, by reason of any reference elsewhere herein to any such covenant or by reason of any reference in any such covenant to any other provision herein or in any other document and such omission to comply shall not constitute a Default or an Event of Default under Section 6.1 hereof, but, except as specified above, the remainder of this Indenture and such Notes and Guarantees shall be unaffected thereby.  In addition, upon the Issuer’s exercise under Section 8.1 hereof of the option applicable to this Section 8.3, subject to the satisfaction of the conditions set forth in Section 8.4 hereof, Sections 6.1(a)(3) (with respect only to Sections 4.1(a)(4) and 10.2(b)(v)), 6.1(a)(4), 6.1(a)(5), 6.1(a)(6), 6.1(a)(7), 6.1(a)(8) (with respect only to a Restricted Subsidiary that is a Significant Subsidiary or any group of Restricted Subsidiaries that taken together would constitute a Significant Subsidiary), 6.1(a)(9) (with respect only to a Restricted Subsidiary that is a Significant Subsidiaries or any group of Restricted Subsidiaries that taken together would constitute a Significant Subsidiary), and 6.1(a)(10) hereof shall not constitute Events of Default.

 

SECTION 8.4.                                 Conditions to Legal or Covenant Defeasance.  In order to exercise either Legal Defeasance or Covenant Defeasance under either Section 8.2 or 8.3 hereof:

 

(1)                                  the Issuer shall have irrevocably deposited with the Trustee or as specified by the Trustee, in trust, for the benefit of the Holders, cash in U.S. dollars, Government Securities, or a combination thereof, in such amounts as shall be sufficient, in the opinion of a nationally recognized firm of independent public accountants, to pay the principal of, premium, if any, and interest due on the Notes on the stated maturity date or on the redemption date, as the case may be, of such principal, premium, if any, or interest on such Notes, and the Issuer must specify whether such Notes are being defeased to maturity or to a particular redemption date;

 

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

 

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

 

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

 

in either case to the effect that, and based thereon such Opinion of Counsel shall confirm that the Holders shall not recognize income, gain or loss for U.S. federal income tax purposes, as applicable, as a result of such Legal Defeasance and shall be subject to such U.S. federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Legal Defeasance had not occurred;

 

(3)                                  in the case of Covenant Defeasance, the Issuer shall have delivered to the Trustee, an Opinion of Counsel reasonably acceptable to the Trustee confirming that, subject to customary assumptions and exclusions, the Holders shall not recognize income, gain or loss for U.S. federal income tax purposes as a result of such Covenant Defeasance and shall 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 Covenant Defeasance had not occurred;

 

(4)                                no Default (other than that resulting from borrowing funds to be applied to make such deposit and any similar and simultaneous deposit relating to other Indebtedness, and, in each case the granting of Liens in connection therewith) shall have occurred and be continuing on the date of such deposit;

 

(5)                                  such Legal Defeasance or Covenant Defeasance must not result in a breach or violation of, or constitute a default under the Senior Secured Credit Facilities or any other material agreement or instrument (other than this Indenture) to which the Issuer or any Guarantor is a party or by which the Issuer or any Guarantor is bound (other than that resulting from borrowing funds to be applied to make such deposit and any similar and simultaneous deposit relating to other Indebtedness and, in each case, the granting of Liens in connection therewith);

 

(6)                                  the Issuer shall have delivered to the Trustee an Opinion of Counsel, to the effect that, as of the date of such opinion and subject to customary assumptions and exclusions following the deposit, the trust funds shall not be subject to the effect of Section 547 of Title 11 of the United States Code;

 

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

 

(8)                                  the Issuer shall have delivered to the Trustee, an Officer’s Certificate and an Opinion of Counsel (which Opinion of Counsel may be subject to customary assumptions and exclusions) each stating that all conditions precedent provided for or relating to the Legal Defeasance or the Covenant Defeasance, as the case may be, have been complied with.

 

SECTION 8.5.                                 Deposited Money and Government Securities To Be Held in Trust; Other Miscellaneous Provisions.  Subject to Section 8.6 hereof, all money and non-callable Government Securities (including the proceeds thereof) deposited with the Trustee (or other qualifying trustee, collectively for purposes of this Section 8.5, the “Trustee”) pursuant to Section 8.4 hereof in respect of the outstanding Notes shall be held in trust and applied by the Trustee, in accordance with the provisions of such Notes and this Indenture, to the payment, either directly or through any Paying Agent (including the Issuer acting as Paying Agent) as the Trustee may determine, to the Holders of such Notes of all sums due and to become due thereon in respect of principal, premium and Additional 

 

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Interest, if any, and interest, but such money need not be segregated from other funds except to the extent required by law.

 

The Issuer shall pay and indemnify the Trustee against any tax, fee or other charge imposed on or assessed against the cash or non-callable Government Securities deposited pursuant to Section 8.4 hereof or the principal and interest received in respect thereof other than any such tax, fee or other charge which by law is for the account of the Holders of the outstanding Notes.

 

Notwithstanding anything in this Article VIII to the contrary, the Trustee shall deliver or pay to the Issuer from time to time upon the request of the Issuer any money or non-callable Government Securities held by it as provided in Section 8.4 hereof which, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee (which may be the opinion delivered under Section 8.4(1) hereof), are in excess of the amount thereof that would then be required to be deposited to effect an equivalent Legal Defeasance or Covenant Defeasance.

 

SECTION 8.6.                                 Repayment to the Issuer.  Any money deposited with the Trustee or any Paying Agent, or then held by the Issuer, in trust for the payment of the principal of, premium or Additional Interest, if any, or interest on, any Note and remaining unclaimed for two years after such principal, premium or Additional Interest, if any, or interest has become due and payable shall be paid to the Issuer on its request unless an abandoned property law designates another Person or (if then held by the Issuer) shall be discharged from such trust; and the Holder of such Note shall thereafter be permitted to look only to the Issuer for payment thereof unless an abandoned property law designates another Person, and all liability of the Trustee or such Paying Agent with respect to such trust money, and all liability of the Issuer as trustee thereof, shall thereupon cease; provided, however, that the Trustee or such Paying Agent, before being required to make any such repayment, may at the expense of the Issuer cause to be published once, in The New York Times and The Wall Street Journal (national edition), notice that such money remains unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date of such notification or publication, any unclaimed balance of such money then remaining shall be repaid to the Issuer.

 

SECTION 8.7.                                 Reinstatement.  If the Trustee or Paying Agent is unable to apply any money or U.S. dollars or non-callable Government Securities in accordance with Section 8.2 or 8.3 hereof, as the case may be, by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, then the Issuer’s and the Guarantors’ obligations under this Indenture and the Notes and the Guarantees shall be revived and reinstated as though no deposit had occurred pursuant to Section 8.2 or 8.3 hereof until such time as the Trustee or Paying Agent is permitted to apply all such money in accordance with Section 8.2 or 8.3 hereof, as the case may be; provided, however, that, if the Issuer makes any payment of principal of, premium or Additional Interest, if any, or interest on, any Note following the reinstatement of its obligations, the Issuer shall be subrogated to the rights of the Holders of such Notes to receive such payment from the money or non-callable Government Securities held by the Trustee or Paying Agent.

 

ARTICLE IX

 

AMENDMENTS

 

SECTION 9.1.                                 Without Consent of Holders.  Notwithstanding Section 9.2 of this Indenture, the Issuer, any Guarantor (with respect to this Indenture and the Guarantee to which it is a party, except that no existing Guarantor need execute a supplemental indenture pursuant to clause (9) below) and the Trustee may amend or supplement this Indenture, the Notes, and any Guarantee without the consent of any Holder:

 

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

 

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

 

(3)                                  to comply with Article IV or Section 10.2(b);

 

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(4)                                to make any change that would surrender any right or power conferred upon the Issuer or any Guarantor or provide any other additional rights or benefits to the Holders or that does not adversely affect the legal rights under this Indenture of any such Holder;

 

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

 

(6)                                  to evidence and provide for the acceptance and appointment under this Indenture of a successor Trustee hereunder pursuant to the requirements hereof;

 

(7)                                  to provide for the issuance of exchange notes or private exchange notes, which are identical to exchange notes except that they are not freely transferable;

 

(8)                                  to add a Guarantor under this Indenture;

 

(9)                                to conform the text of this Indenture, the Notes or the Guarantees to any provision under the heading “Description of notes” in the Offering Memorandum to the extent that such provision in the Offering Memorandum was intended to be a verbatim recitation of a provision of this Indenture, the Notes or the Guarantees, as provided in an Officer’s Certificate; or

 

(10)                            to provide for the issuance of Additional Notes under this Indenture;

 

(11)                            to secure the Notes; or

 

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

 

Subject to Section 9.2, upon the request of the Issuer, and upon receipt by the Trustee of the documents described in Section 13.4 hereof, the Trustee shall join with the Issuer and the Guarantors in the execution of such amended or supplemental indenture unless such amended or supplemental indenture directly affects the Trustee’s own rights, duties or immunities under this Indenture or otherwise, in which case the Trustee may in its discretion, but shall not be obligated to, enter into such amended or supplemental Indenture.

 

After an amendment or supplement under this Section 9.1 becomes effective, the Issuer, with the assistance of the Trustee, shall provide to Holders a notice briefly describing such amendment or supplement.  The failure to give such notice to all Holders, or any defect therein, shall not impair or affect the validity of an amendment or supplement under this Section 9.1.

 

SECTION 9.2.                                 With Consent of Holders.  Except as provided below in this Section 9.2, the Issuer, the Guarantors and the Trustee may amend or supplement this Indenture, the Notes and any Guarantee issued hereunder with the consent of the Holders of at least a majority in aggregate principal amount of the Notes then outstanding, including consents obtained in connection with a purchase of, or tender offer or exchange offer for, Notes, and, subject to Sections 6.4 and 6.7 hereof, any existing Default or Event of Default (other than a Default or Event of Default in the payment of the principal of, premium, if any, and Additional Interest, if any, or interest on the Notes, except a payment default resulting from an acceleration that has been rescinded) or compliance with any provision of this Indenture, the Notes and the Guarantees may be waived with the consent of the Holders of a majority in principal amount of the then outstanding Notes, other than Notes beneficially owned by the Issuer or its Affiliates (including consents obtained in connection with a purchase of or tender offer or exchange offer for the Notes).  Section 2.10 hereof and Section 13.6 hereof shall determine which Notes are considered to be “outstanding” for the purposes of this Section 9.2.

 

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Upon the request of the Issuer, and upon the filing with the Trustee of evidence satisfactory to the Trustee of the consent of the Holders of Notes as aforesaid, and upon receipt by the Trustee of the documents described in Section 13.4 hereof, the Trustee shall join with the Issuer and the Guarantors in the execution of such amended or supplemental indenture unless such amended or supplemental indenture directly affects the Trustee’s own rights, duties or immunities under this Indenture or otherwise, in which case the Trustee may in its discretion, but shall not be obligated to, enter into such amended or supplemental Indenture.

 

Without the consent of each affected Holder, an amendment or waiver may not, with respect to any Notes held by a non-consenting Holder:

 

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

 

(2)                                  reduce the principal of or change the fixed stated maturity of any such Note or reduce the premium payable upon the redemption or repurchase of any Note or change the periods during which or events under which any Note may be redeemed at a particular price, whether through an amendment or waiver of provisions in the covenants, definitions or otherwise (except amendments to the definition of “Change of Control”);

 

(3)                                  reduce the rate of or extend the time for payment of interest on any Note;

 

(4)                                  waive a Default in the payment of principal of or premium, if any, or interest on the Notes, except a rescission of acceleration of the Notes by the Holders of at least a majority in aggregate principal amount of the Notes and a waiver of the payment default that resulted from such acceleration, or in respect of a covenant or provision contained in this Indenture or any Guarantee which cannot be amended or modified without the consent of all Holders;

 

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

 

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

 

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

 

(8)                                  make any change to or modify the ranking of the Notes that would adversely affect the Holders;

 

(9)                                  except as expressly permitted by this Indenture, modify the Guarantees of any Significant Subsidiary (or group of Restricted Subsidiaries that together (determined as of the most recent consolidated financial statements of the Issuer for a fiscal period end provided as required under Section 3.11) would constitute a Significant Subsidiary), in any manner adverse to the Holders of the Notes; or

 

(10)                          make any changes in these amendments and waiver provisions.

 

It shall not be necessary for the consent of the Holders under this Indenture 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 Notes given in connection with a tender or exchange of such Holder’s Notes shall not be rendered invalid by such tender or exchange.

 

After an amendment or supplement under this Section 9.2 becomes effective, the Issuer, with the assistance of the Trustee, shall provide to the Holders a notice briefly describing such amendment or supplement.  The failure 

 

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to give such notice to all Holders, or any defect therein, shall not impair or affect the validity of an amendment or supplement.

 

SECTION 9.3.                                 Compliance with Trust Indenture Act.  Every amendment or supplement to this Indenture, any Guarantee and the Notes shall be set forth in an amended or supplemental indenture that complies with the TIA as then in effect.

 

SECTION 9.4.                                 Revocation and Effect of Consents and Waivers.  Until an amendment, supplement or waiver becomes effective, a consent to it by a Holder of a Note is a continuing consent by the Holder of a Note and every subsequent Holder of a Note or portion of a Note that evidences the same debt as the consenting Holder’s Note, even if notation of the consent or waiver is not made on any Note.  However, any such Holder of a Note or subsequent Holder of a Note may revoke the consent or waiver as to such Holder’s Note or portion of its Note if the Trustee receives written notice of revocation before the date the amendment, supplement or waiver becomes effective.  An amendment, supplement or waiver becomes effective in accordance with its terms and thereafter binds every Holder.

 

The Issuer may, but shall not be obligated to, fix a record date for the purpose of determining the Holders entitled to 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 Holders at such record date (or their duly designated proxies), and only those Persons, shall be entitled to give such consent or to revoke any consent previously given or to take any such action, whether or not such Persons continue to be Holders after such record date.  No such consent shall be valid or effective for more than 120 days after such record date.

 

SECTION 9.5.                                 Notation on or Exchange of Notes.  The Trustee may place an appropriate notation about an amendment, supplement or waiver on any Note thereafter authenticated.  The Issuer in exchange for all Notes may issue and the Trustee shall, upon receipt of an Issuer Order, authenticate new Notes that reflect the amendment, supplement or waiver.

 

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

 

SECTION 9.6.                                 Trustee To Sign Amendments.  The Trustee shall sign any amended or supplemental indenture authorized pursuant to this Article IX if the amendment or supplement does not adversely affect the rights, duties, liabilities or immunities of the Trustee.  In executing any amended or supplemental indenture, the Trustee shall be entitled to receive and (subject to Sections 7.1 and 7.2 hereof) shall be fully protected in conclusively relying upon, in addition to the documents required by Section 13.4 hereof, an Officer’s Certificate and an Opinion of Counsel stating that the execution of such amended or supplemental indenture is authorized or permitted by this Indenture.

 

ARTICLE X

 

GUARANTEE

 

SECTION 10.1.                           Guarantee.  Subject to the provisions of this Article X, each Guarantor hereby fully, unconditionally and irrevocably guarantees, as primary obligor and not merely as surety, jointly and severally with each other Guarantor, to each Holder of the Notes, 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, and 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 Issuer or any 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) on the Notes and all other obligations and liabilities of the Issuer under this Indenture (including without limitation interest (including Additional Interest)) and the Registration Rights Agreement (all the foregoing being hereinafter collectively called the “Guaranteed Obligations”).  Each Guarantee shall be on an unsecured senior basis.  Each Guarantor agrees that the Guaranteed Obligations shall (i) rank equally in right of payment with other existing and future senior Indebtedness of each such Guarantor, (ii) be effectively subordinated to all Secured Indebtedness of each such Guarantor to the 

 

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extent of the value of the assets securing such Indebtedness and (iii) shall be senior in right of payment to all existing and future Subordinated Indebtedness of each such Guarantor.

 

To evidence its Guarantee set forth in this Section 10.1, each Guarantor hereby agrees that this Indenture (or a supplemental indenture to this Indenture) shall be executed on behalf of such Guarantor by an Officer of such Guarantor.

 

Each Guarantor hereby agrees that its Guarantee set forth in this Section 10.1 hereof shall remain in full force and effect notwithstanding the absence of the endorsement of any notation of such Guarantee on the Notes.

 

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

 

Upon execution of this Indenture by the parties that are Guarantors on the Issue Date, the Guarantees set forth in this Indenture shall be deemed duly delivered, without any further action by any Person, on behalf of the Guarantors.  Upon execution of a supplemental indenture to this Indenture by the parties that become Guarantors after the Issue Date, the Guarantees set forth in this Indenture shall be deemed duly delivered, without any further action by any Person, on behalf of such Guarantors.  Following the Issue Date, the delivery of any Note by the Trustee, after the authentication thereof hereunder, shall constitute due delivery of the Guarantee set forth in this Indenture on behalf of the Guarantors.

 

Each Guarantor further agrees (to the extent permitted by law) that the Guaranteed Obligations may be extended or renewed, in whole or in part, without notice or further assent from it, and that it shall remain bound under this Article X notwithstanding any extension or renewal of any Guaranteed Obligation.

 

Each Guarantor waives presentation to, demand of payment from and protest to the Issuer of any of the Guaranteed Obligations and also waives notice of protest for nonpayment.  Each Guarantor waives notice of any default under the Notes or the Guaranteed Obligations.

 

Each Guarantor further agrees that its 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 Guaranteed Obligations.

 

Except as set forth in Section 10.2, the obligations of each Guarantor hereunder shall not be subject to any reduction, limitation, impairment or termination for any reason (other than payment of the Guaranteed 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 Guaranteed Obligations or otherwise.  Without limiting the generality of the foregoing, the Guaranteed Obligations of each 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 Issuer or any other person under this Indenture, the Notes 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 Notes or any other agreement; (d) the failure of any Holder to exercise any right or remedy against any other Guarantor; (e) any change in the ownership of the Issuer; (f) any default, failure or delay, willful or otherwise, in the performance of the Guaranteed Obligations, or (g) 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 Guarantor or would otherwise operate as a discharge of such Guarantor as a matter of law or equity.

 

Each Guarantor agrees that its Guarantee herein shall remain in full force and effect until payment in full of all the Guaranteed Obligations or such Guarantor is released from its Guarantee in compliance with Section 10.2, Article VIII or Article XII.  Each Guarantor further agrees that its 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 Guaranteed Obligations is rescinded or must otherwise be restored by any Holder upon the bankruptcy or reorganization of the Issuer or otherwise.

 

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In furtherance of the foregoing and not in limitation of any other right which any Holder has at law or in equity against any Guarantor by virtue hereof, upon the failure of the Issuer to pay any of the Guaranteed Obligations when and as the same shall become due, whether at maturity, by acceleration, by redemption or otherwise, each Guarantor hereby promises to and shall, upon receipt of written demand by the Trustee, forthwith pay, or cause to be paid, in cash, to the Holders or the Trustee on behalf of the Holders an amount equal to the sum of (i) the unpaid amount of such Guaranteed Obligations then due and owing and (ii) accrued and unpaid interest (including Additional Interest) on such Guaranteed Obligations then due and owing (but only to the extent not prohibited by law) (including interest accruing after the filing of any petition in bankruptcy or the commencement of any insolvency, reorganization or like proceeding relating to the Issuer or any Guarantor whether or not a claim for post-filing or post-petition interest is allowed in such proceeding).

 

Each Guarantor further agrees that, as between such Guarantor, on the one hand, and the Holders, on the other hand, (x) the maturity of the Guaranteed Obligations guaranteed hereby may be accelerated as provided in this Indenture for the purposes of its Guarantee herein, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the Guaranteed Obligations guaranteed hereby and (y) in the event of any such declaration of acceleration of such Guaranteed Obligations, such Guaranteed Obligations (whether or not due and payable) shall forthwith become due and payable by the Guarantor for the purposes of this Guarantee.

 

Each Guarantor also agrees to pay any and all costs and expenses (including reasonable attorneys’ fees and expenses) incurred by the Trustee or the Holders in enforcing any rights under this Section 10.1.

 

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 Guarantor hereunder shall be limited to the maximum amount as shall, after giving effect to all other contingent and fixed liabilities of such Guarantor and after giving effect to any collections from or payments made by or on behalf of any other Guarantor in respect of the obligations of such other Guarantor under its Guarantee or pursuant to its contribution obligations under this Indenture, result in the obligations of such Guarantor under its 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)                                 Subject to Section 10.2(c), the Issuer shall not permit any Guarantor to consolidate or merge with or into or wind up into (whether or not such Guarantor is the surviving corporation), or sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of its properties or assets, in one or more related transactions, to any Person unless:

 

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

 

(ii)               the Successor Person, if other than such Guarantor, expressly assumes all the obligations of such Guarantor under this Indenture and such Guarantor’s related Guarantee pursuant to supplemental indentures in form reasonably satisfactory to the Trustee and assumes by written agreement all of the obligations of such Guarantor under the Registration Rights Agreement (if such Guarantor’s registration obligations thereunder have not yet been completed);

 

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

 

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

 

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(v)              the transaction is made not in violation of Section 3.5, if applicable.

 

(c)                                  The Successor Person shall succeed to, and be substituted for, such Guarantor under this Indenture, such Guarantor’s Guarantee and the Registration Rights Agreement (if such Guarantor’s registration obligations thereunder have not yet been completed).  Notwithstanding the foregoing, any Guarantor may (i) consolidate or merge with or into or wind up into or sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of its properties and assets to another Guarantor or the Issuer or (ii) consolidate or merge with or into an Affiliate of the Issuer solely for the purpose of reincorporating or reorganizing the Guarantor in the United States, any state thereof, the District of Columbia or any territory thereof.  Notwithstanding the foregoing, any Restricted Subsidiary may liquidate or dissolve if the board of directors of the Issuer determines in good faith that such liquidation or dissolution is in the best interests of the Issuer and is not materially disadvantageous to the Holders.

 

(d)                                 The predecessor company shall be released from its obligations under the Guarantee and this Indenture and the Successor Person shall succeed to, and be substituted for, and may exercise every right and power of, such Guarantor under the Guarantee and this Indenture, but, in the case of a lease of all or substantially all of its assets, the predecessor shall not be released from the obligation of the Guarantee.

 

(e)                                  Any Guarantee by a Guarantor of the Notes shall be automatically and unconditionally released and discharged upon:

 

(1)                                  (A) any sale, exchange, disposition or transfer (by merger or otherwise) of (x) the Capital Stock of such Guarantor, after which the applicable Guarantor is no longer a Restricted Subsidiary, or (y) all or substantially all the assets of such Guarantor, which sale, exchange, disposition or transfer in each case does not violate the applicable provisions of this Indenture;

 

(B)                              the release or discharge of the guarantee by such Guarantor of its guarantee of obligations under the Senior Secured Credit Facilities, or of any such other guarantee which resulted in the creation of Guarantor’s Guarantee, except a release or discharge resulting from payment under such guarantee;

 

(C)                              the proper designation of any Restricted Subsidiary that is a Guarantor as an Unrestricted Subsidiary in compliance with the applicable provisions of this Indenture; or

 

(D)                             the Issuer exercising its legal defeasance option or covenant defeasance option as described in Article VIII or if its obligations under this Indenture are discharged in accordance with Article XII; and

 

(2)                                  Such Guarantor delivering to the Trustee an Officer’s Certificate and an Opinion of Counsel, each stating that all conditions precedent provided for in this Indenture relating to such transaction and the release of such Guarantor’s Guarantee have been complied with.

 

SECTION 10.3.                           Right of Contribution.  Each Guarantor hereby agrees that any Guarantor that makes a payment on the obligations under the Guarantees shall be entitled, upon payment in full of all obligations under the Guarantees, to a contribution from each other Guarantor in an amount equal to such other Guarantor’s pro rata portion of such payment.  The obligations of each Guarantor shall be limited as necessary to prevent such Guarantor’s Guarantee from constituting a fraudulent conveyance under applicable law.  The provisions of this Section 10.3 shall in no respect limit the obligations and liabilities of each Guarantor to the Trustee and the Holders, and each Guarantor shall remain liable to the Trustee and the Holders for the full amount guaranteed by such Guarantor hereunder.

 

SECTION 10.4.                           No Subrogation.  Notwithstanding any payment or payments made by each Guarantor hereunder, no Guarantor shall be entitled to be subrogated to any of the rights of the Trustee or any Holder against the Issuer or any other Guarantor or any guarantee or right of offset held by the Trustee or any Holder for the payment of the Guaranteed Obligations, nor shall any Guarantor seek or be entitled to seek any contribution or reimbursement from the Issuer or any other Guarantor in respect of payments made by such Guarantor hereunder, until all amounts owing to the Trustee and the Holders by the Issuer on account of the Guaranteed Obligations are paid in full.  If any amount shall be paid to any Guarantor on account of such subrogation rights at any time when all of the 

 

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Guaranteed Obligations shall not have been paid in full, such amount shall be held by such Guarantor in trust for the Trustee and the Holders, segregated from other funds of such Guarantor, and shall, forthwith upon receipt by such Guarantor, be turned over to the Trustee in the exact form received by such Guarantor (duly indorsed by such Guarantor to the Trustee, if required), to be applied against the Guaranteed Obligations.

 

SECTION 10.5.                           Benefits Acknowledged.  Each Guarantor acknowledges that it shall receive direct and indirect benefits from the financing arrangements contemplated by this Indenture and that the guarantee and waivers made by it pursuant to its Guarantee are knowingly made in contemplation of such benefits.

 

ARTICLE XI

 

RESERVED

 

ARTICLE XII

 

SATISFACTION AND DISCHARGE

 

SECTION 12.1.                           Satisfaction and Discharge.  This Indenture (except for the rights, benefits, protections of the Trustee and the Issuer’s obligations to the Trustee) shall be discharged and shall cease to be of further effect as to all Notes, when:

 

(a)                              either:

 

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

 

(ii)               all Notes not theretofore delivered to the registrar for cancellation have become due and payable by reason of the making of a notice of redemption or otherwise, 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 by the Trustee in the name, and at the expense, of the Issuer, and the Issuer or any Guarantor has irrevocably deposited or caused to be deposited with the Trustee or as specified by the Trustee as trust funds in trust solely for the benefit of the Holders, cash in U.S. dollars, Government Securities, or a combination thereof, in such amounts as shall be sufficient without consideration of any reinvestment of interest to pay and discharge the entire Indebtedness on the Notes not theretofore delivered to the registrar for cancellation for principal, premium, if any, and accrued interest to the date of maturity or redemption;

 

(b)                             no Default (other than that resulting from borrowing funds to be applied to make such deposit and any similar and simultaneous deposit relating to other Indebtedness and, in each case, the granting of Liens in connection therewith) with respect to this Indenture or the Notes shall have occurred and be continuing on the date of such deposit or shall occur as a result of such deposit and such deposit shall not result in a breach or violation of, or constitute a default under, the Senior Secured Credit Facilities or any other material agreement or instrument (other than this Indenture) to which the Issuer or any Guarantor is a party or by which the Issuer or any Guarantor is bound (other than that resulting from borrowing funds to be applied to make such deposit and any similar and simultaneous deposit relating to other Indebtedness and, in each case, the granting of Liens in connection therewith);

 

(c)                              the Issuer has paid or caused to be paid all sums payable by it under this Indenture; and

 

(d)                             the Issuer has delivered irrevocable instructions to the Trustee to apply the deposited money toward the payment of the Notes at maturity or the redemption date, as the case may be.

 

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

 

Notwithstanding the satisfaction and discharge of this Indenture, if money has been deposited with the Trustee pursuant to clause (a)(ii) of this Section 12.1, the provisions of Sections 12.2 and 8.6 hereof shall survive.

 

SECTION 12.2.                           Application of Trust Money.  Subject to the provisions of Section 8.6 hereof, all money deposited with the Trustee pursuant to Section 12.1 hereof shall be held in trust and applied by it, in accordance with the provisions of the Notes and this Indenture, to the payment, either directly or through any Paying Agent (including the Issuer acting as its own Paying Agent) as the Trustee may determine, to the Persons entitled thereto, of the principal (and premium and Additional Interest, if any) and interest for whose payment such money has been deposited with the Trustee; but such money need not be segregated from other funds except to the extent required by law.

 

If the Trustee or Paying Agent is unable to apply any money or Government Securities in accordance with Section 12.1 hereof by reason of any legal proceeding or by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, the Issuer’s and any Guarantor’s obligations under this Indenture and the Notes shall be revived and reinstated as though no deposit had occurred pursuant to Section 12.1 hereof; provided that if the Issuer has made any payment of principal of, premium or Additional Interest, if any, or interest on, any Notes because of the reinstatement of its obligations, the Issuer shall be subrogated to the rights of the Holders of such Notes to receive such payment from the money or Government Securities held by the Trustee or Paying Agent.

 

ARTICLE XIII

 

MISCELLANEOUS

 

SECTION 13.1.                           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 Guarantor in addition to performing its obligations under its Guarantee shall perform such other obligations as may be imposed upon it with respect to this Indenture under the TIA.

 

SECTION 13.2.                           Notices.  Any notice or communication shall be in writing and delivered in person, sent by facsimile, sent by electronic mail, delivered by commercial courier service or mailed by certified first-class mail, postage prepaid, return receipt requested, addressed as follows:

 

if to Issuer or to any Guarantor:

 

Crown Media Holdings, Inc.
 12700 Ventura Boulevard, Suite 200
 Studio City, CA 91604
 Attn:  Charles Stanford
 Facsimile No.:  818-755-2452

 

with a copy to:

 

Holland & Hart LLP
 6380 S. Fiddlers Green Circle
 Englewood, CO 80111
 Attn:  Amy L. Bowler
 Facsimile No.:  303-290-1606

 

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:

 

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

601 Travis Street, 16th Floor
 Houston, TX 77002
 Attn: Corporate Trust
 Phone: 713-483-6536
 Fax: 713-483-6954

 

The Issuer 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 Trustee, Issuer or the Guarantors shall be deemed to have been given or made as of the date so delivered if personally delivered; when receipt is acknowledged, if delivered by facsimile; and on the day received or rejected if sent by commercial courier service or by registered or certified mail, postage prepaid, as shown on the tracking report or return receipt, as applicable.  Any notice or communication to the Trustee shall be deemed delivered upon receipt.

 

Any notice or communication delivered to a Holder shall be delivered to the Holder at the Holder’s address as it appears in the Notes Register and shall be sufficiently given if so delivered within the time prescribed.

 

Failure to deliver a notice or communication to a Holder or any defect in it shall not affect its sufficiency with respect to other Holders.  If a notice or communication is delivered 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.

 

Notwithstanding any other provision of this Indenture or any Note, where this Indenture provides for notice of any event (including any notice of redemption) to any Holder of a global Note, such notice shall be sufficiently given if given to DTC or any other applicable depositary for such Note (or its designee) according to the applicable rules and procedures of DTC or such depositary.

 

The parties hereto authorize the Trustee to rely upon and comply with instructions or directions sent via unsecured facsimile or email transmission and Trustee shall not be liable for any loss, liability or expense of any kind incurred by the parties hereto, or any third party, due to the Trustee’s reliance upon and compliance with instructions or directions given by unsecured facsimile or email transmission, provided, however, that such losses have not arisen from the negligence or willful misconduct of the Trustee.

 

SECTION 13.3.                           Communication by Holders with other Holders.  Holders may communicate pursuant to TIA § 312(b) with other Holders with respect to their rights under this Indenture or the Notes.  The Issuer, the Trustee, the Registrar and anyone else shall have the protection of TIA § 312(c).

 

Notwithstanding any other provision of this Indenture or any Note, where this Indenture or any Note provides for notice of any event (including any notice of redemption) to a Holder of a Global Note (whether by mail or otherwise), such notice shall be sufficiently given if given to DTC for such Note (or its designee), pursuant to the customary procedures of DTC.

 

SECTION 13.4.                           Certificate and Opinion as to Conditions Precedent.  Upon any request or application by the Issuer to the Trustee to take or refrain from taking any action under this Indenture, the Issuer shall furnish to the Trustee:

 

(1)                                  an Officer’s 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 relating to the proposed action have been complied with; and

 

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(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 13.5.                           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:

 

(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 Officer’s Certificate or on certificates of public officials.

 

SECTION 13.6.                           When Notes Disregarded.  In determining whether the Holders of the required aggregate principal amount of Notes have concurred in any direction, waiver or consent, Notes owned by the Issuer, any 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 Notes which the Trustee actually knows are so owned shall be so disregarded.  Also, subject to the foregoing, only Notes outstanding at the time shall be considered in any such determination.

 

SECTION 13.7.                           Rules by Trustee, Paying Agent and Registrar.  The Trustee may make reasonable rules for action by, or at meetings of, Holders.  The Registrar and the Paying Agent may make reasonable rules for their functions.

 

SECTION 13.8.                           Legal Holidays.  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 13.9.                           GOVERNING LAW.  THIS INDENTURE, THE NOTES AND THE 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 (INCLUDING THE GUARANTEES SET FORTH HEREIN) OR THE NOTES.

 

SECTION 13.10.                     USA Patriot Act.  The parties hereto acknowledge that in accordance with Section 326 of the USA Patriot Act, the Trustee, like all financial institutions and in order to help fight the funding of terrorism and money laundering, is required to obtain, verify, and record information that identifies each person or legal entity that establishes a relationship or opens an account.  The parties to this Indenture agree that they shall provide the Trustee with such information as they may request in order to satisfy the requirements of the USA Patriot Act.

 

SECTION 13.11.                     No Recourse Against Others.  An incorporator, director, officer, manager, member, employee or stockholder of the Issuer or any Guarantor or any Parent, solely by reason of this status, shall not have any liability for any obligations of the Issuer or any Guarantor under the Notes, the Guarantees or this Indenture or for any claim based on, in respect of or by reason of such obligations or their creation.  By accepting a Note, each 

 

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Holder waives and releases all such liability to the extent permitted under applicable law.  The waiver and release are a part of the consideration for the issuance of the Notes.

 

SECTION 13.12.                     Successors.  All agreements of the Issuer and each Guarantor in this Indenture and the Notes shall bind their respective successors.  All agreements of the Trustee in this Indenture shall bind its successors.

 

SECTION 13.13.                     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.  The exchange of copies of this Indenture and of signature pages by facsimile or PDF transmission shall constitute effective execution and delivery of this Indenture as to the parties hereto and may be used in lieu of the original Indenture for all purposes.  Signatures of the parties hereto transmitted by facsimile or PDF shall be deemed to be their original signatures for all purposes.

 

SECTION 13.14.                     Qualification of Indenture.  The Issuer 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 reasonable attorneys’ fees and expenses for the Issuer, the Trustee and the Holders) incurred in connection therewith, including, but not limited to, costs and expenses of qualification of this Indenture and the Notes and printing this Indenture and the Notes.  The Trustee shall be entitled to receive from the Issuer any such Officer’s Certificates, Opinions of Counsel or other documentation as it may reasonably request in connection with any such qualification of this Indenture under the TIA.

 

SECTION 13.15.                     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 13.16.                     WAIVERS OF JURY TRIAL.  THE ISSUER, THE GUARANTORS, THE TRUSTEE AND THE AGENT HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS INDENTURE, THE NOTES OR THE GUARANTEES AND FOR ANY COUNTERCLAIM THEREIN.

 

SECTION 13.17.                     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.

 

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

 

	
 
    	
CROWN MEDIA HOLDINGS, INC.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Andrew Rooke
    
	
 
    	
 
    	
Name: Andrew Rooke
    
	
 
    	
 
    	
Title: Executive Vice   President and Chief Financial Officer
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
CM INTERMEDIARY, LLC
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Andrew Rooke
    
	
 
    	
 
    	
Name: Andrew Rooke
    
	
 
    	
 
    	
Title: Vice President and   Chief Financial Officer
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
CROWN MEDIA UNITED STATES, LLC
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Andrew Rooke
    
	
 
    	
 
    	
Name: Andrew Rooke
    
	
 
    	
 
    	
Title: Vice President and   Chief Financial Officer
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
CITI TEEVEE LLC
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Andrew Rooke
    
	
 
    	
 
    	
Name: Andrew Rooke
    
	
 
    	
 
    	
Title: Vice President and   Chief Financial Officer
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
DOONE CITY PICTURES LLC
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Andrew Rooke
    
	
 
    	
 
    	
Name: Andrew Rooke
    
	
 
    	
 
    	
Title: Vice President and   Chief Financial Officer
    


 

[Signature Page to the Indenture]

 











 

	
 
    	
THE BANK OF NEW YORK MELLON   TRUST COMPANY, N.A.,
    
	
 
    	
as Trustee, Transfer Agent,   Registrar,
    
	
 
    	
Authentication Agent and Paying   Agent
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Marcella Burgess
    
	
 
    	
 
    	
Name: Marcella Burgess
    
	
 
    	
 
    	
Title: Vice President
    


 

[Signature Page to the Indenture]

 












 

EXHIBIT A:  Form of Note

 

[FORM OF FACE OF NOTE]

 

[Applicable Restricted Notes Legend]

[Depository Legend, if applicable]

 

	
No.   [    ]
    	
Principal Amount   $[                  ]   [as
    
	
 
    	
revised by the Schedule   of Increases and
    
	
 
    	
Decreases in Global Note   attached hereto](1)
    
	
 
    	
CUSIP NO.                                       (2)
    


 

CROWN MEDIA HOLDINGS, INC.

 

10.50% Senior Notes due 2019

 

Crown Media Holdings, Inc., a Delaware corporation (the “Issuer”), promises to pay to [Cede & Co.](1), or its registered assigns, the principal sum of                          Dollars, [as revised by the Schedule of Increases and Decreases in Global Note attached hereto](1), on July 15, 2019.

 

Interest Payment Dates:  January 15 and July 15, commencing on January 15, 2012

 

Record Dates:  January 1 and July 1

 

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

 




(1)                                  Insert in Global Notes only

 

(2)                                  144A – 228411 AC8
 Reg S– U21671 AA7

 











 

IN WITNESS WHEREOF, the Issuer has caused this instrument to be duly executed.

 

	
 
    	
CROWN MEDIA HOLDINGS,   INC.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    


 

2











 

TRUSTEE’S CERTIFICATE OF 

AUTHENTICATION

THE BANK OF NEW YORK MELLON

TRUST COMPANY, N.A., 

as Trustee, certifies that this is one of

the Notes referred to in the Indenture.

 

 

	
By:
    	
 
    	
 
    	
 
    
	
 
    	
Authorized   Signatory
    	
 
    	
Date:
    	
 
    


 

3











 

[FORM OF REVERSE SIDE OF NOTE]

CROWN MEDIA HOLDINGS, INC.

 

10.5% Senior Notes due 2019

 

Capitalized terms used herein and not defined herein have the meanings ascribed thereto in the Indenture.

 

1.                                       Interest

 

Crown Media Holdings, Inc., a Delaware corporation (such corporation, and its successors and assigns under the Indenture hereinafter referred to, being herein called the “Issuer”), promises to pay interest on the principal amount of this Note at the rate of 10.5% per annum, which shall accrue from the most recent date to which interest has been paid or, if no interest has been paid, from July 14, 2011.  The Issuer shall pay interest on overdue principal at the rate specified herein, and it shall pay interest on overdue installments of interest (including Additional Interest) at the same rate to the extent lawful.  Interest on the Notes shall be computed on the basis of a 360-day year comprised of twelve 30-day months.

 

The Issuer shall make each interest payment in cash semi-annually in arrears on January 15 and July 15 of each year, commencing on January 15, 2012, or if any such day is not a Business Day, on the next succeeding Business Day (each, an “Interest Payment Date”) to Holders of record of Notes on the immediately preceding January 1 and July 1.

 

In addition to the rights provided to Holders under the Indenture, Holders of Registrable Securities shall have all rights set forth in the Registration Rights Agreement, dated as of July 14, 2011, among the Issuer, the Guarantors named therein and the other parties named on the signature pages thereto (the “Registration Rights Agreement”), including the right to receive Additional Interest in certain circumstances.  If applicable, 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 11:00 a.m. (New York City time) on the date on which any principal of, premium, if any, or interest on any Note is due and payable, the Issuer shall deposit with the Paying Agent a sum sufficient in immediately available funds to pay such principal, premium or interest when due.  Interest on any Note which is payable, and is timely paid or duly provided for, on any interest payment date shall be paid to the Person in whose name such Note (or one or more Predecessor Notes) is registered at the close of business on the preceding January 1 and July 1; provided, however, that, at the option of the Issuer, the principal of (and premium, if any) and interest may be paid by (i) check delivered to addresses of the Persons entitled thereto as such addresses shall appear on the Notes 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 Notes represented by a Global Note (including principal, premium, if any, and interest) shall be made by wire transfer of immediately available funds to the accounts specified by the Holder or Holders thereof.

 

3.                                       Paying Agent and Registrar

 

The Issuer initially appoints The Bank of New York Mellon Trust Company, N.A. (in its capacity as “Trustee”) as Transfer Agent, Registrar and Paying Agent for the Notes.  The Issuer may change any Registrar or Paying Agent without prior notice to the Holders.  The Issuer or any Guarantor may act as Paying Agent, Registrar or transfer agent.

 

4.                                       Indenture

 

The Issuer issued the Notes under an Indenture, dated as of July 14, 2011 (as it may be amended or supplemented from time to time in accordance with the terms thereof, the “Indenture”), among the Issuer, the Guarantors 

 

4











 

and the Trustee.  The terms of the Notes include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939, as amended, and the rules and regulations of the SEC promulgated thereunder, as in effect on the date of the Indenture (the “Act”).  The Notes are subject to all terms and provisions of the Indenture, and Holders are referred to the Indenture and the Act for a statement of those terms.  To the extent any provision of this Note conflicts with the express provisions of the Indenture, the provisions of the Indenture shall govern and be controlling.

 

The Notes are senior unsecured obligations of the Issuer.  The aggregate principal amount of Notes that may be authenticated and delivered under the Indenture is unlimited.  This Note is one of the 10.5% Senior Notes due 2019 referred to in the Indenture.  The Notes include (i) $300,000,000 principal amount of the Issuer’s 10.5% Senior Notes, due 2019 issued under the Indenture on July 14, 2011 (the “Initial Notes”), (ii) if and when issued, additional notes that may be issued from time to time under the Indenture subsequent to July 14, 2011 (the “Additional Notes”) as provided in Section 2.1(a) of the Indenture and (iii) if and when issued, the Issuer’s 10.5% Senior Notes due 2019 that may be issued from time to time under the Indenture in exchange for Initial Notes or Additional Notes in an offer registered under the Securities Act as provided in the Registration Rights Agreement (herein called “Exchange Notes”).  The Initial Notes, the Additional Notes and the Exchange Notes shall be considered collectively as a single class for all purposes of the Indenture.  The Indenture imposes certain limitations on the incurrence of indebtedness and issuance of disqualified stock and preferred stock, the making of restricted payments, the sale of assets and subsidiary stock, the incurrence of certain liens, 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 Notes by certain subsidiaries of the Issuer.

 

5.                                       Guarantees

 

To guarantee the due and punctual payment of the principal, premium, if any, and interest (including post-filing or post-petition interest) on the Notes and all other amounts payable by the Issuer under the Indenture and the Notes when and as the same shall be due and payable, whether at maturity, by acceleration or otherwise, according to the terms of the Notes and the Indenture, the Guarantors shall unconditionally guarantee (and future guarantors, together with the Guarantors, shall unconditionally Guarantee), jointly and severally, such obligations on a senior unsecured basis pursuant to the terms of the Indenture.

 

6.                                       Redemption

 

At any time prior to July 15, 2015, the Issuer may redeem all or a part of the Notes on one or more occasions, upon notice as described under Section 5.3 of the Indenture, at a redemption price equal to 100% of the principal amount of Notes redeemed, plus the Applicable Premium (as defined below) as of, and accrued and unpaid interest thereon and Additional Interest, if any, to but excluding, the date of redemption (the “Redemption Date”), subject to the rights of Holders of record on the relevant record date to receive interest due on the relevant interest payment date.

 

Prior to July 15, 2014, the Issuer may, at its option, upon notice as described under Section 5.3 of the Indenture, redeem up to 35% of the aggregate principal amount of the Notes issued under the Indenture on one or more occasions at a redemption price equal to 110.500% of the aggregate principal amount of the Notes, plus accrued and unpaid interest and Additional Interest, thereon, if any, to but excluding the applicable Redemption Date, subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date, with the net cash proceeds of one or more Equity Offerings; provided that (a) at least 65% of the aggregate principal amount of Notes originally issued under the Indenture remains outstanding immediately after the occurrence of each such redemption and (b) each such redemption occurs within 90 days of the date of closing of each such Equity Offering.

 

Except as set forth above, the Notes shall not be redeemable at the Issuer’s option prior to July 15, 2015.

 

On and after July 15, 2015, the Issuer may redeem all or a part of the Notes on one or more occasions, upon notice as described under Section 5.3 of the Indenture, at the redemption prices (expressed as percentages of principal amount of the Notes to be redeemed) set forth in the table below, plus accrued and unpaid interest thereon and 

 

5











 

Additional Interest, if any, to but excluding the applicable Redemption Date, subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date, if redeemed during the twelve-month period beginning on July 15 of each of the years indicated in the table below:

 

	
Period
    	
 
    	
Percentage
    	
 
    
	
2015 
    	
 
    	
105.250
    	
%
    
	
2016 
    	
 
    	
102.625
    	
%
    
	
2017 and thereafter 
    	
 
    	
100.000
    	
%
    


 

Unless the Issuer defaults in the payment of the redemption price, interest shall cease to accrue on the Notes or portions thereof called for redemption on the applicable Redemption Date.

 

Any redemption pursuant to this paragraph 6 shall be made pursuant to the provisions of Sections 5.1 through 5.6 of the Indenture.

 

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

 

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

 

(2)                                  the excess, if any, of:  (a) the present value at such Redemption Date of (i) the redemption price of such Note at July 15, 2015 (such redemption price being set forth in the table appearing above), plus (ii) all required interest payments due on such Note through July 15, 2015 (excluding accrued but unpaid interest to the Redemption Date), computed using a discount rate equal to the Treasury Rate as of such Redemption Date plus 50 basis points; over (b) the principal amount of such Note.

 

“Treasury Rate” means, as of any Redemption Date, the yield to maturity as of such Redemption Date of United States Treasury securities with a constant maturity (as compiled and published in the most recent Federal Reserve Statistical Release H.15 (519) that has become publicly available at least two Business Days prior to the Redemption Date (or, if such Statistical Release is no longer published, any publicly available source of similar market data)) most nearly equal to the period from the Redemption Date to July 15, 2015; provided, however, that if the period from the Redemption Date to July 15, 2015 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.

 

Except as set forth in paragraph 7 below, the Issuer is not required to make mandatory redemption or sinking fund payments with respect to the Notes.

 

7.                                   Repurchase Provisions

 

If a Change of Control occurs, unless the Issuer has previously or concurrently delivered a redemption notice with respect to all the outstanding Notes as described in Section 5.7 of the Indenture, the Issuer shall make an offer to purchase all of the Notes pursuant to the Change of Control Offer at a price in cash equal to 101% of the aggregate principal amount thereof plus accrued and unpaid interest and Additional Interest, if any, to but excluding the date of purchase, subject to the right of Holders of record of the Notes on the relevant record date to receive interest due on the relevant interest payment date as provided in, and subject to the terms of, the Indenture.

 

In addition, under the circumstances set forth in Section 3.5 of the Indenture, the Issuer shall be required to make an offer to purchase Notes with the Excess Proceeds of certain Asset Sales.

 

8.                                   Denominations; Transfer; Exchange

 

The Notes shall be issuable only in fully registered form, without coupons, and only in denominations of principal amount of $2,000 and any integral multiple of $1,000 in excess thereof.  A Holder may transfer or exchange Notes 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 tax and fees required by law or permitted by the Indenture.  The Issuer and the Registrar shall not be required to register the transfer of or 

 

6











 

exchange of any Note (A) for a period beginning (1) 15 days before the delivery of a notice of an offer to repurchase or redeem Notes and ending at the close of business on the day of such delivery or (2) 15 days before an interest payment date and ending on such interest payment date or (B) called for redemption or tendered (and not withdrawn) for repurchases in connection with a Change of Control Offer, an Asset Sale Offer or other tender offer, except the unredeemed or untendered portion of any Note being redeemed or tendered in part.

 

9.                                   Persons Deemed Owners

 

The registered Holder of this Note 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 Issuer 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 Issuer 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 Issuer at any time may terminate some or all of its obligations under the Notes and the Indenture if the Issuer deposits with the Trustee money or Government Securities for the payment of principal, premium, if any, and interest on the Notes to redemption or maturity, as the case may be.

 

12.                             Amendment, Supplement, Waiver

 

Subject to certain exceptions contained in the Indenture, the Indenture and the Notes may be amended, or default may be waived, with the written consent of the Holders of a majority in principal amount of the outstanding Notes.  Without notice to or the consent of any Holder, the Issuer, the Guarantors and the Trustee may amend or supplement the Indenture, any Guarantee and the Notes as provided in the Indenture.

 

13.                             Defaults and Remedies

 

If an Event of Default (other than an Event of Default relating to certain events of bankruptcy, insolvency or reorganization of the Issuer or certain Restricted Subsidiaries) occurs and is continuing, the Trustee by written notice to the Issuer, or the Holders of at least 25% in principal amount of the total outstanding Notes by written notice to the Issuer and the Trustee, may, and the Trustee at the request of such Holders shall, declare the principal of, premium, if any then outstanding, and accrued and unpaid interest (including Additional Interest), if any, and any other monetary then outstanding obligations on all the Notes to be due and payable immediately.  Upon the effectiveness of such notice, such principal, premium and accrued and unpaid interest (including Additional Interest) and any other monetary obligations shall be due and payable immediately.  If a bankruptcy, insolvency or reorganization of the Issuer occurs and is continuing, the principal of, premium, if any, and accrued and unpaid interest (including Additional Interest) and any other monetary obligations on all the Notes shall become and be immediately due and payable without any declaration or other act on the part of the Trustee or any Holders.  Under certain circumstances, the Holders of a majority in principal amount of the outstanding Notes may rescind any such acceleration with respect to the Notes and its consequences.

 

14.                             Trustee Dealings with the Issuer

 

Subject to certain limitations set forth in the Indenture, the Trustee in its individual or any other capacity may become the owner or pledgee of Notes and may otherwise deal with the Issuer, Guarantors or their Affiliates with the same rights it would have if it were not Trustee.

 

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15.                             No Recourse Against Others

 

An incorporator, director, officer, manager, member, employee or stockholder of the Issuer or any Guarantor or Parent, solely by reason of this status, shall not have any liability for any obligations of the Issuer or any Guarantor under the Notes, the Guarantees or the Indenture or for any claim based on, in respect of or by reason of such obligations or their creation.  By accepting a Note, each Holder waives and releases all such liability to the extent permitted under applicable law.  The waiver and release are a part of the consideration for the issuance of the Notes.

 

16.                             Authentication

 

This Note shall not be valid until the Trustee authenticates the Note.

 

17.                             Abbreviations

 

Customary abbreviations may be used in the name of a Holder 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 Issuer has caused CUSIP, Common Code and ISIN numbers, if applicable, to be printed on the Notes 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 Holders.  No representation is made as to the accuracy of such numbers either as printed on the Notes or as contained in any notice of redemption or purchase and reliance may be placed only on the other identification numbers placed thereon.

 

19.                             Governing Law

 

This Note shall be governed by, and construed in accordance with, the laws of the State of New York.

 

The Issuer shall furnish to any Holder upon written request and without charge to the Holder a copy of the Indenture.  Requests may be made to:

 

Crown Media Holdings, Inc.

12700 Ventura Boulevard, Suite 200

Studio City, CA  91604

Attn:  Charles Stanford

Facsimile No.:  818-755-2452

 

with a copy to:

 

Holland & Hart LLP

6380 S. Fiddlers Green Circle

Englewood, CO  80111

Attn:  Amy L. Bowler

Facsimile No.:  303.290.1606

 

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ASSIGNMENT FORM

 

To assign this Note, fill in the form below:

 

I or we assign and transfer this Note 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 Note on the books of the Issuer.  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 Note.
    


 

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 Issuer and that, to its knowledge, the proposed transferee o is / o is not an Affiliate of the Issuer.

 

In connection with any transfer or exchange of any of the Notes evidenced by this certificate occurring prior to the date that is one year after the later of the date of original issuance of such Notes and the last date, if any, on which such Notes were owned by the Issuer or any Affiliate of the Issuer, the undersigned confirms that such Notes are being:

 

CHECK ONE BOX BELOW:

 

	
 
    	
 
    	
 
    
	
(1)
    	
o
    	
acquired for the undersigned’s own account,   without transfer; or
    
	
 
    	
 
    	
 
    
	
(2)
    	
o
    	
transferred to the Issuer; or
    
	
 
    	
 
    	
 
    
	
(3)
    	
o
    	
transferred pursuant to and in compliance with   Rule 144A under the Securities Act of 1933, as amended (the “Securities   Act”); or
    
	
 
    	
 
    	
 
    
	
(4)
    	
o
    	
transferred pursuant to an effective registration   statement under the Securities Act; or
    
	
 
    	
 
    	
 
    
	
(5)
    	
o
    	
transferred pursuant to and in compliance with   Regulation S under the Securities Act; or
    
	
 
    	
 
    	
 
    
	
(6)
    	
o
    	
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 shall refuse to register any of the Notes evidenced by this certificate in the name of any person other than the registered Holder thereof; provided, however, that if box (5) or (6) is 

 

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checked, the Issuer may require, prior to registering any such transfer of the Notes, in its sole discretion, such legal opinions, certifications and other information as the Issuer 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 Note 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 Issuer 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:
    


 

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[TO BE ATTACHED TO GLOBAL NOTES]

SCHEDULE OF INCREASES OR DECREASES IN GLOBAL NOTES

 

The following increases or decreases in this Global Note have been made:

 

 

	
Date of
   Exchange
    	
 
    	
Amount of decrease in
   Principal Amount of this
   Global Note
    	
 
    	
Amount of increase in
   Principal Amount of this
   Global Note
    	
 
    	
Principal Amount of this
   Global Note following such
   decrease or increase
    	
 
    	
Signature of authorized
   signatory of Trustee or
   Notes Custodian
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    


 

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OPTION OF HOLDER TO ELECT PURCHASE

 

If you elect to have this Note purchased by the Issuer pursuant to Section 3.5 or 3.10 of the Indenture, check either box:

 

	
o     
    	
     o
    
	
3.5    
    	
    3.10
    


 

 

If you want to elect to have only part of this Note purchased by the Issuer pursuant to Section 3.5 or 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 Notes to be issued to the Holder for the portion of the within Note not being repurchased (in the absence of any such specification, one such Note shall be issued for the portion not being repurchased):                              

 

	
Date:
    	
 
    	
 
    	
Your Signature
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
(Sign exactly as your name appears on the   other side of the Note)
    
	
 
    	
 
    
	
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.

 

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EXHIBIT B:  Form of Indenture Supplement to Add Future Guarantors

 

FORM OF SUPPLEMENTAL INDENTURE TO ADD FUTURE GUARANTORS

 

This Supplemental Indenture is entered into as of                                    (this “Supplemental Indenture”), by and among [NAME OF FUTURE GUARANTOR] (the “New Guarantor”), a subsidiary of Crown Media Holdings, Inc., a Delaware corporation (the “Issuer”), The Bank of New York Mellon Trust Company, N.A., a banking corporation organized and existing under the laws of the United States (the “Trustee”), as Trustee, and as transfer agent, registrar, authentication agent and paying agent (the “Trustee”) under the Indenture referred to below.

 

W I T N E S S E T H:

 

WHEREAS, the Issuer and the Trustee have heretofore executed and delivered an Indenture dated as of July 14, 2011 (as supplemented, waived or otherwise modified, the “Indenture”), providing for the issuance of an aggregate principal amount of $300.0 million of 10.5% Senior Notes due 2019 of the Issuer (the “Notes”);

 

WHEREAS, the Indenture provides that under certain circumstances the New Guarantor shall execute and deliver to the Trustee a supplemental indenture pursuant to which the New Guarantor shall unconditionally guarantee all of the Issuer’s Obligations under the Notes and the Indenture on the terms and conditions set forth herein and under the Indenture (the “Guarantee”); and

 

WHEREAS, pursuant to Section 9.1 of the Indenture, the Trustee is authorized to execute and deliver this Supplemental Indenture.

 

NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the parties mutually covenant and agree for the equal and ratable benefit of the Holders 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 Supplemental Indenture refer to this Supplemental Indenture as a whole and not to any particular section hereof

 

ARTICLE II

 

REPRESENTATIONS;  AGREEMENT TO BE BOUND; GUARANTEE

 

SECTION 2.1                          Representations.  The New Guarantor represents and warrants to the Trustee as follows:

 

(i)                                      It is duly organized, validly existing and in good standing under the laws of its jurisdiction of organization.

 

(ii)                                   The execution, delivery and performance by it of this Supplemental Indenture have been authorized and approved by all necessary corporate or limited liability company action on its part.

 

SECTION 2.2                          Agreement To Be Bound.  The New Guarantor hereby becomes a party to the Indenture as a Guarantor and as such shall have all of the rights and be subject to all of the obligations and agreements of a Guarantor under the Indenture.  The New Guarantor agrees to be bound by all of the provisions of the Indenture applicable to a Guarantor and to perform all of the obligations and agreements of a Guarantor under the Indenture.

 

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SECTION 2.3                          Guarantee.  The New Guarantor agrees, on a joint and several basis with all the existing Guarantors, to fully, unconditionally and irrevocably Guarantee to each Holder of the Notes and the Trustee the Guaranteed Obligations pursuant to Article X of the Indenture on a senior unsecured basis.

 

ARTICLE III

 

MISCELLANEOUS

 

SECTION 3.1                          Notices.  All notices and other communications to the New Guarantor shall be given as provided in the Indenture to the New Guarantor, at its address set forth below, with a copy to the Issuer as provided in the Indenture for notices to the Issuer.

 

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 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 Notes 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.  The exchange of copies of this Supplemental Indenture and of signature pages by facsimile or PDF transmission shall constitute effective execution and delivery of this Supplemental Indenture as to the parties hereto and may be used in lieu of the original Supplemental Indenture for all purposes.  Signatures of the parties hereto transmitted by facsimile or PDF shall be deemed to be their original signatures for all purposes.

 

SECTION 3.7                          Headings.  The headings of the Articles and the sections in this Supplemental Indenture are for convenience of reference only and shall not be deemed to alter or affect the meaning or interpretation of any provisions hereof.

 

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

 

	
 
    	
[NEW GUARANTOR],
    
	
 
    	
as a Guarantor
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
[Address]
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
THE BANK OF NEW YORK MELLON   TRUST COMPANY, N.A., as Trustee, Transfer Agent, Registrar, Authentication Agent and   Paying Agent
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    


 

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