Exhibit 4.2


 


 




 





 


INDENTURE,




Dated as of June 20, 2005,





among





RAFAELLA APPAREL GROUP, INC.





as Issuer,





THE GUARANTORS NAMED HEREIN,





as Guarantors,





and





THE BANK OF NEW YORK





as Trustee and as Collateral Agent





11 1/4% SENIOR SECURED NOTES DUE 2011


 


 




 




















 


CROSS
REFERENCE TABLE


 


	
  TIA

  	
   

  	
  Indenture

  
	
  Section

  	
   

  	
  Section

  
	
   

  	
   

  	
   

  
	
  310(a)(1)

  	
   

  	
  7.10(a)

  
	
  (a)(2)

  	
   

  	
  7.10(a)

  
	
  (a)(3)

  	
   

  	
  7.10(a)

  
	
  (a)(4)

  	
   

  	
  N.A.

  
	
  (a)(5)

  	
   

  	
  7.10(a)

  
	
  (b)

  	
   

  	
  7.03; 7.08; 7.10(a)

  
	
  (c)

  	
   

  	
  N.A.

  
	
  311(a)

  	
   

  	
  7.03; 7.11

  
	
  (b)

  	
   

  	
  7.03; 7.11

  
	
  312(a)

  	
   

  	
  2.05

  
	
  (b)

  	
   

  	
  7.07; 11.03

  
	
  (c)

  	
   

  	
  11.03

  
	
  313(a)

  	
   

  	
  7.06

  
	
  (b)

  	
   

  	
  7.06

  
	
  (c)

  	
   

  	
  7.06

  
	
  (d)

  	
   

  	
  7.06

  
	
  314(a)

  	
   

  	
  4.06; 4.21

  
	
  (b)

  	
   

  	
  12.02

  
	
  (c)(1)

  	
   

  	
  4.06; 11.04

  
	
  (c)(2)

  	
   

  	
  11.04

  
	
  (c)(3)

  	
   

  	
  4.06

  
	
  (d)

  	
   

  	
  12.03(c)

  
	
  (e)

  	
   

  	
  11.05

  
	
  (f)

  	
   

  	
  N.A.

  
	
  315(a)

  	
   

  	
  7.01(b)

  
	
  (b)

  	
   

  	
  7.05

  
	
  (c)

  	
   

  	
  7.01(a)

  
	
  (d)

  	
   

  	
  7.01(c)

  
	
  (e)

  	
   

  	
  6.11

  
	
  316(a)(last sentence)

  	
   

  	
  2.09

  
	
  (a)(1)(A)

  	
   

  	
  6.05

  
	
  (a)(1)(B)

  	
   

  	
  6.04

  
	
  (a)(2)

  	
   

  	
  N.A.

  
	
  (b)

  	
   

  	
  6.07

  
	
  (c)

  	
   

  	
  9.04

  
	
  317(a)(1)

  	
   

  	
  6.08

  
	
  (a)(2)

  	
   

  	
  6.09

  
	
  (b)

  	
   

  	
  2.04

  
	
  318(a)

  	
   

  	
  11.01

  
	
  (b)

  	
   

  	
  N.A.

  
	
  (c)

  	
   

  	
  11.01

  



 






N.A. means Not Applicable


 


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


 

















 


TABLE OF CONTENTS


	
   

  	
   

  	
  Page

  
	
   

  	
   

  
	
  ARTICLE ONE
  DEFINITIONS AND INCORPORATION BY REFERENCE

  	
  1

  
	
  Section 1.01

  	
  Definitions

  	
  1

  
	
  Section 1.02

  	
  Incorporation by Reference of TIA

  	
  27

  
	
  Section 1.03

  	
  Rules of Construction

  	
  27

  
	
   

  	
   

  	
   

  
	
  ARTICLE TWO
  THE NOTES

  	
  28

  
	
  Section 2.01

  	
  Form and Dating

  	
  28

  
	
  Section 2.02

  	
  Execution and Authentication; Aggregate
  Principal Amount

  	
  29

  
	
  Section 2.03

  	
  Registrar and Paying Agent

  	
  30

  
	
  Section 2.04

  	
  Obligations of Paying Agent

  	
  30

  
	
  Section 2.05

  	
  Holder Lists

  	
  30

  
	
  Section 2.06

  	
  Transfer and Exchange

  	
  30

  
	
  Section 2.07

  	
  Replacement Notes

  	
  31

  
	
  Section 2.08

  	
  Outstanding Notes

  	
  31

  
	
  Section 2.09

  	
  Treasury Notes; When Notes are Disregarded

  	
  32

  
	
  Section 2.10

  	
  Temporary Notes

  	
  32

  
	
  Section 2.11

  	
  Cancellation

  	
  32

  
	
  Section 2.12

  	
  CUSIP Numbers

  	
  32

  
	
  Section 2.13

  	
  Deposit of Moneys

  	
  33

  
	
  Section 2.14

  	
  Book-Entry Provisions for Global Notes

  	
  33

  
	
  Section 2.15

  	
  Special Transfer Provisions

  	
  34

  
	
  Section 2.16

  	
  Transfers of Global Notes and Physical
  Notes

  	
  36

  
	
   

  	
   

  	
   

  
	
  ARTICLE THREE
  REDEMPTION

  	
  36

  
	
  Section 3.01

  	
  Optional Redemption

  	
  36

  
	
  Section 3.02

  	
  Selection of Notes to be Redeemed

  	
  36

  



 

















 


TABLE
OF CONTENTS


(continued)


	
   

  	
   

  	
  Page

  
	
   

  	
   

  
	
  Section 3.03

  	
  Notice of Redemption

  	
  37

  
	
  Section 3.04

  	
  Effect of Notice of Redemption

  	
  38

  
	
  Section 3.05

  	
  Deposit of Redemption Price

  	
  38

  
	
  Section 3.06

  	
  Notes Redeemed in Part

  	
  39

  
	
   

  	
   

  	
   

  
	
  ARTICLE FOUR
  COVENANTS

  	
  39

  
	
  Section 4.01

  	
  Payment of Notes

  	
  39

  
	
  Section 4.02

  	
  Maintenance of Office or Agency

  	
  39

  
	
  Section 4.03

  	
  Corporate Existence

  	
  39

  
	
  Section 4.04

  	
  Payment of Taxes and Other Claims

  	
  40

  
	
  Section 4.05

  	
  Maintenance of Properties and Insurance;
  Compliance with Laws

  	
  40

  
	
  Section 4.06

  	
  Compliance Certificate; Notice of Default

  	
  40

  
	
  Section 4.07

  	
  Waiver of Stay, Extension or Usury Laws

  	
  41

  
	
  Section 4.08

  	
  Limitation on Incurrence of Additional
  Indebtedness

  	
  41

  
	
  Section 4.09

  	
  Limitation on Restricted Payments

  	
  41

  
	
  Section 4.10

  	
  Limitation on Asset Sales

  	
  45

  
	
  Section 4.11

  	
  Limitation on Dividend and Other Payment
  Restrictions Affecting Restricted Subsidiaries

  	
  47

  
	
  Section 4.12

  	
  Limitation on Issuances and Sales of Equity
  Interests of Subsidiaries

  	
  49

  
	
  Section 4.13

  	
  Limitation on Liens

  	
  49

  
	
  Section 4.14

  	
  Limitations on Transactions with Affiliates

  	
  49

  
	
  Section 4.15

  	
  Additional Subsidiary Guarantees

  	
  51

  
	
  Section 4.16

  	
  Impairment of Security Interest

  	
  52

  
	
  Section 4.17

  	
  Real Estate Mortgages and Filings

  	
  52

  
	
  Section 4.18

  	
  Conduct of Business

  	
  53

  
	
  Section 4.19

  	
  Reports to Holders

  	
  53

  



 


ii

















 


TABLE
OF CONTENTS


(continued)


	
   

  	
   

  	
  Page

  
	
   

  	
   

  
	
  Section 4.20

  	
  Payments for Consent

  	
  54

  
	
  Section 4.21

  	
  Repurchase Upon Change of Control

  	
  54

  
	
  Section 4.22

  	
  Excess Cash Flow Offer

  	
  56

  
	
  Section 4.23

  	
  Restricted Payment Offer

  	
  58

  
	
  Section 4.24

  	
  Additional Interest

  	
  59

  
	
  Section 4.25

  	
  Calculation of Original Issue Discount

  	
  59

  
	
   

  	
   

  	
   

  
	
  ARTICLE FIVE
  SUCCESSOR CORPORATION

  	
  60

  
	
  Section 5.01

  	
  Merger, Consolidation and Sale of Assets

  	
  60

  
	
  Section 5.02

  	
  Successor Entity Substituted

  	
  61

  
	
   

  	
   

  	
   

  
	
  ARTICLE SIX
  DEFAULT AND REMEDIES

  	
  62

  
	
  Section 6.01

  	
  Events of Default

  	
  62

  
	
  Section 6.02

  	
  Acceleration

  	
  63

  
	
  Section 6.03

  	
  Other Remedies

  	
  64

  
	
  Section 6.04

  	
  Waiver of Past Defaults

  	
  64

  
	
  Section 6.05

  	
  Control by Majority

  	
  64

  
	
  Section 6.06

  	
  Limitation on Suits

  	
  65

  
	
  Section 6.07

  	
  Rights of Holders to Receive Payment

  	
  65

  
	
  Section 6.08

  	
  Collection Suit by Trustee or Collateral
  Agent

  	
  65

  
	
  Section 6.09

  	
  Trustee May File Proofs of Claim

  	
  66

  
	
  Section 6.10

  	
  Priorities

  	
  66

  
	
  Section 6.11

  	
  Undertaking for Costs

  	
  66

  
	
  Section 6.12

  	
  Restoration of Rights and Remedies

  	
  67

  
	
   

  	
   

  	
   

  
	
  ARTICLE SEVEN
  TRUSTEE

  	
  67

  
	
  Section 7.01

  	
  Duties of Trustee

  	
  67

  



 


iii

















 


TABLE
OF CONTENTS


(continued)


	
   

  	
   

  	
  Page

  
	
   

  	
   

  
	
  Section 7.02

  	
  Rights of Trustee

  	
  68

  
	
  Section 7.03

  	
  Individual Rights of Trustee

  	
  69

  
	
  Section 7.04

  	
  Trustee’s Disclaimer

  	
  69

  
	
  Section 7.05

  	
  Notice of Default

  	
  70

  
	
  Section 7.06

  	
  Reports by Trustee to Holders

  	
  70

  
	
  Section 7.07

  	
  Compensation and Indemnity

  	
  71

  
	
  Section 7.08

  	
  Replacement of Trustee

  	
  72

  
	
  Section 7.09

  	
  Successor Trustee by Merger, Etc.

  	
  73

  
	
  Section 7.10

  	
  Eligibility; Disqualification

  	
  73

  
	
  Section 7.11

  	
  Preferential Collection of Claims Against
  Issuer

  	
  73

  
	
  Section 7.12

  	
  Trustee as Paying Agent and Collateral
  Agent

  	
  73

  
	
  Section 7.13

  	
  Co-Trustees, Co-Collateral Agent and
  Separate Trustees and Collateral Agent

  	
  73

  
	
  Section 7.14

  	
  Form of Documents Delivered to Trustee

  	
  75

  
	
   

  	
   

  	
   

  
	
  ARTICLE EIGHT
  SATISFACTION AND DISCHARGE OF INDENTURE

  	
  75

  
	
  Section 8.01

  	
  Legal Defeasance and Covenant Defeasance

  	
  75

  
	
  Section 8.02

  	
  Satisfaction and Discharge

  	
  77

  
	
  Section 8.03

  	
  Survival of Certain Obligations

  	
  78

  
	
  Section 8.04

  	
  Acknowledgment of Discharge by Trustee

  	
  78

  
	
  Section 8.05

  	
  Application of Trust Moneys

  	
  79

  
	
  Section 8.06

  	
  Repayment to the Issuer; Unclaimed Money

  	
  79

  
	
  Section 8.07

  	
  Reinstatement

  	
  79

  
	
   

  	
   

  	
   

  
	
  ARTICLE NINE
  AMENDMENTS, SUPPLEMENTS AND WAIVERS

  	
  80

  
	
  Section 9.01

  	
  Without Consent of Holders

  	
  80

  
	
  Section 9.02

  	
  With Consent of Holders

  	
  81

  



 


iv

















 


TABLE
OF CONTENTS


(continued)


	
   

  	
   

  	
  Page

  
	
   

  	
   

  
	
  Section 9.03

  	
  Compliance with TIA

  	
  82

  
	
  Section 9.04

  	
  Revocation and Effect of Consents

  	
  82

  
	
  Section 9.05

  	
  Notation on or Exchange of Notes

  	
  83

  
	
  Section 9.06

  	
  Trustee to Sign Amendments, Etc.

  	
  83

  
	
   

  	
   

  	
   

  
	
  ARTICLE TEN
  GUARANTEE

  	
  83

  
	
  Section 10.01

  	
  Guarantee

  	
  83

  
	
  Section 10.02

  	
  Release of a Guarantor

  	
  84

  
	
  Section 10.03

  	
  Limitation of Guarantors’ Liability

  	
  85

  
	
  Section 10.04

  	
  Guarantors May Consolidate, etc., on
  Certain Terms

  	
  85

  
	
  Section 10.05

  	
  Contribution

  	
  86

  
	
  Section 10.06

  	
  Waiver of Subrogation

  	
  86

  
	
  Section 10.07

  	
  Waiver of Stay, Extension or Usury Laws

  	
  86

  
	
  Section 10.08

  	
  Evidence of Guarantee

  	
  86

  
	
   

  	
   

  	
   

  
	
  ARTICLE ELEVEN
  MISCELLANEOUS

  	
  87

  
	
  Section 11.01

  	
  TIA Controls

  	
  87

  
	
  Section 11.02

  	
  Notices

  	
  87

  
	
  Section 11.03

  	
  Communications by Holders with Other
  Holders

  	
  88

  
	
  Section 11.04

  	
  Certificate and Opinion as to Conditions
  Precedent

  	
  88

  
	
  Section 11.05

  	
  Statements Required in Certificate or
  Opinion

  	
  88

  
	
  Section 11.06

  	
  Rules by Trustee, Paying Agent,
  Registrar

  	
  89

  
	
  Section 11.07

  	
  Legal Holidays

  	
  89

  
	
  Section 11.08

  	
  Governing Law

  	
  89

  
	
  Section 11.09

  	
  No Adverse Interpretation of Other
  Agreements

  	
  89

  
	
  Section 11.10

  	
  No Recourse Against Others

  	
  89

  



 


v

















 


TABLE
OF CONTENTS


(continued)


	
   

  	
   

  	
  Page

  
	
   

  	
   

  
	
  Section 11.11

  	
  Successors

  	
  90

  
	
  Section 11.12

  	
  Duplicate Originals

  	
  90

  
	
  Section 11.13

  	
  Severability

  	
  90

  
	
  Section 11.14

  	
  Waiver of Jury Trial

  	
  90

  
	
   

  	
   

  	
   

  
	
  ARTICLE TWELVE
  SECURITY

  	
  90

  
	
  Section 12.01

  	
  Grant of Security Interest

  	
  90

  
	
  Section 12.02

  	
  Recording and Opinions

  	
  91

  
	
  Section 12.03

  	
  Release of Collateral

  	
  91

  
	
  Section 12.04

  	
  Specified Releases of Collateral

  	
  92

  
	
  Section 12.05

  	
  Release upon Satisfaction or Defeasance of
  all Outstanding Obligations

  	
  93

  
	
  Section 12.06

  	
  Form and Sufficiency of Release

  	
  93

  
	
  Section 12.07

  	
  Purchaser Protected

  	
  93

  
	
  Section 12.08

  	
  Authorization of Actions to be Taken by the
  Collateral Agent Under the Collateral Agreements

  	
  93

  
	
  Section 12.09

  	
  Authorization of Receipt of Funds by the
  Trustee Under the Collateral Agreements

  	
  94

  
	
  Section 12.10

  	
  Intercreditor Agreement

  	
  94

  



 


	
  Exhibit A

  	
  -

  	
  Form of Initial Note

  	
  A-1

  
	
  Exhibit B

  	
  -

  	
  Form of Exchange Note

  	
  B-1

  
	
  Exhibit C

  	
  -

  	
  Form of Legend for Global Notes

  	
  C-1

  
	
  Exhibit D

  	
  -

  	
  Form of Certificate to be Delivered in Connection with Transfers
  to

  	
   

  
	
   

  	
   

  	
  Non-QIB Accredited Investors

  	
  D-1

  
	
  Exhibit E

  	
  -

  	
  Form of Certificate to be Delivered in Connection with Transfers

  	
   

  
	
   

  	
   

  	
  Pursuant to Regulation S

  	
  E-1

  



 


NOTE:            This
Table of Contents shall not, for any purpose, be deemed to be part of this
Indenture.


 


vi

















 


INDENTURE,
dated as of June 20, 2005, among Rafaella Apparel Group, Inc., a
Delaware corporation, (the “Issuer”), the Guarantors (as herein defined)
and The Bank of New York, a New York banking corporation, as Trustee (in such
capacity, the “Trustee”) and Collateral Agent (in such capacity, the “Collateral
Agent”).


 


WITNESSETH:


 


WHEREAS, the
Issuer and the Guarantors (with respect to the Guarantees) have duly authorized
the creation of the Notes and, to provide therefor, the Issuer and the
Guarantors have duly authorized the execution and delivery of this Indenture;
and


 


WHEREAS, all
things necessary to make the Notes, when duly issued and executed by the
Issuer, and authenticated and delivered hereunder, the valid obligations of the
Issuer, and to make this Indenture a valid and binding agreement of each of the
Issuer and the Guarantors, have been done.


 


NOW,
THEREFORE, each party hereto agrees as follows for the benefit of the other
parties and for the equal and ratable benefit of the Holders:


 


ARTICLE ONE



DEFINITIONS AND INCORPORATION BY REFERENCE


 


Section 1.01                                Definitions.


 


“Acceleration
Notice” has the meaning set forth in Section 6.02(a).


 


“Accreted Value” means, as of any date
(the “Specified Date”), with respect to each $1,000 principal amount at
maturity of Notes:


 


(1)                                  if
the Specified Date is one of the following dates (each, a “Semi-Annual
Accrual Date”), the amount set forth opposite such date below:


 


 


	
  Semi-Annual Accrual Date

  	
   

  	
  Accreted Value

  	
   

  
	
  Issue Date

  	
   

  	
  $

  	
  950.00

  	
   

  
	
  December 15, 2005

  	
   

  	
  $

  	
  952.81

  	
   

  
	
  June 15, 2006

  	
   

  	
  $

  	
  955.92

  	
   

  
	
  December 15, 2006

  	
   

  	
  $

  	
  959.23

  	
   

  
	
  June 15, 2007

  	
   

  	
  $

  	
  962.74

  	
   

  
	
  December 15, 2007

  	
   

  	
  $

  	
  966.48

  	
   

  
	
  June 15, 2008

  	
   

  	
  $

  	
  970.44

  	
   

  
	
  December 15, 2008

  	
   

  	
  $

  	
  974.66

  	
   

  
	
  June 15, 2009

  	
   

  	
  $

  	
  979.13

  	
   

  
	
  December 15, 2009

  	
   

  	
  $

  	
  983.89

  	
   

  
	
  June 15, 2010

  	
   

  	
  $

  	
  988.94

  	
   

  
	
  December 15, 2010

  	
   

  	
  $

  	
  994.30

  	
   

  
	
  June 15, 2011

  	
   

  	
  $

  	
  1,000.00

  	
   

  



 

















 


(2)                                  if
the Specified Date occurs between two Semi-Annual Accrual Dates, the sum of (A) the
Accreted Value for the Semi-Annual Accrual Date immediately preceding the
Specified Date and (B) the amount equal to the product of (a) the
difference of (x) the Accreted Value for the immediately following
Semi-Annual Accrual Date and (y) the Accreted Value for the immediately
preceding Semi-Annual Accrual Date and (b) a fraction, the numerator of
which is the number of days actually elapsed from the immediately preceding
Semi-Annual Accrual Date to the Specified Date and the denominator of which is
the number of the days between the two Semi-Annual Accrual Dates, and the
Issuer shall deliver to the Trustee an Officers’ Certificate setting forth such
Accreted Value.


 




                                                “Acquired
Indebtedness” means Indebtedness of a Person or any of its Subsidiaries
existing at the time such Person becomes a Restricted Subsidiary or at the time
it merges or consolidates with or into the Issuer or any of its Restricted
Subsidiaries or assumed in connection with the acquisition of assets from such
Person and in each case not incurred by such Person in connection with,
or in anticipation or contemplation of, such Person becoming a Restricted
Subsidiary or such acquisition, merger or consolidation and which Indebtedness
is without recourse to the Issuer or any of its Subsidiaries or to any of their
respective properties or assets other than the Person or the assets to which
such Indebtedness related prior to the time such Person became a Restricted
Subsidiary or the time of such acquisition, merger or consolidation.


 


“Additional
Interest” has the meaning set forth in the Registration Rights Agreement.


 


“Additional
Notes” means all Notes issued after the Issue Date (other than pursuant to Sections
2.06, 2.07, 2.10 and 3.06 of this Indenture and other
than Exchange Notes) from time to time in accordance with the terms of this
Indenture, including, without limitation, the provisions of Section 2.02.


 


“Administrative
Agent” has the meaning set forth in the definition of the term “Credit
Agreement.”


 


“Affiliate”
means, with respect to any specified Person, any other Person who directly or
indirectly through one or more intermediaries controls, or is controlled by, or
is under common control with, such specified Person. The term “control”
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise; provided, that
Beneficial Ownership of 10% or more of the Voting Equity Interests of the
Person shall be deemed to be control. The terms “controlling” and “controlled”
have meanings correlative of the foregoing.


 


“Affiliate
Transaction” has the meaning set forth in Section 4.14.


 


“Agent”
means any Registrar, Paying Agent or co-Registrar.


 


“Agent
Members” has the meaning set forth in Section 2.14(a) and
means, with respect to the Depositary, Euroclear or Clearstream, a Person who
has an account with the Depositary, Euroclear or Clearstream, respectively (and
with respect to the Depositary, shall include Euroclear and Clearstream).


 


“Alternate Offer”
has the meaning set forth in Section 4.21(d).


 


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


 

















 


“Asset
Acquisition” means:


 


(1)                                  an
Investment by the Issuer or any Restricted Subsidiary in any other Person
pursuant to which such Person shall become a Restricted Subsidiary, or shall be
merged with or into the Issuer or any Restricted Subsidiary, or


 


(2)                                  the
acquisition by the Issuer or any Restricted Subsidiary of the Issuer of the
assets of any Person (other than a Subsidiary of the Issuer) which constitute
all or substantially all of the assets of such Person or comprise any division
or line of business of such Person or any other properties or assets of such
Person other than in the ordinary course of business.


 


“Asset Sale”
means any direct or indirect sale, issuance, conveyance, transfer, lease (other
than operating leases entered into in the ordinary course of business),
assignment or other transfer of:


 


(1)                                  any
Equity Interests of any Restricted Subsidiary; or


 


(2)                                  any
other property or assets of the Issuer or any Restricted Subsidiary other than
in the ordinary course of business;


 


provided,
that Asset Sales shall not include:


 


(a)                                  the
sale, lease, conveyance, disposition or other transfer of all or substantially
all of the assets of the Issuer as permitted under Section 5.01;


 


(b)                                 any
Restricted Payment permitted under Section 4.09, or any Permitted
Investment;


 


(c)                                  the
sale of Cash Equivalents;


 


(d)                                 the
creation of a Permitted Lien (but not the sale or other disposition of the
property subject to such Lien);


 


(e)                                  a
transfer of assets to the Issuer or to a Guarantor or the issuance of Qualified
Equity Interests to the Issuer or to a Restricted Subsidiary;


 


(f)                                    the
sale, disposal, or abandonment of used or worn out equipment of the Issuer or
its Restricted Subsidiaries (including, without limitation, the dissolution of
any Subsidiary of the Issuer to the extent permitted pursuant to this Indenture);


 


(g)                                 the
licensing or grant of rights or interests in intellectual property to the
extent that any such license or grant does not prohibit the Issuer and its
Restricted Subsidiaries from using such intellectual property or require the Issuer
and its Restricted Subsidiaries to pay any fees for any such use; and


 


(h)                                 factoring
of accounts receivable in the ordinary course of business; and


 


(i)                                     any
transaction or series of related transactions that involves assets having
a Fair Market Value of less than $1.0 million.


 

















 


“Authenticating
Agent” has the meaning set forth in Section 2.02.


 


“Bankruptcy
Code” means the Bankruptcy Reform Act of 1978, as amended, and
codified as 11 U.S.C. §101 et  seq.


 


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


 


“Board of
Directors” means, as to any Person, the board of directors or similar
governing body of such Person or any duly authorized committee thereof.


 


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


 


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


 


“Capital
Contribution” means any contribution to the equity of the Issuer from for
which no consideration has been given other than the issuance of Qualified
Equity Interests.


 


“Capital Expenditures” means, for any
period, all direct or indirect (by way of acquisition of securities of a Person
or the expenditure of cash or the transfer of property or the incurrence of
Indebtedness) expenditures in respect of the purchase or other acquisition of
fixed or capital assets determined in conformity with GAAP.


 


“Capitalized
Lease Obligation” means, as to any Person, the obligations of such Person
under a lease that are required to be classified and accounted for as capital
lease obligations under GAAP and, for purposes of this definition, the amount
of such obligations at any date shall be the capitalized amount of such
obligations at such date, determined in accordance with GAAP.


 


“Cash
Equivalents” means:


 


(1)                                  marketable
direct obligations issued by, or unconditionally guaranteed by, the United
States Government or issued by any agency thereof and backed by the full faith
and credit of the United States, in each case maturing within one year from the
date of acquisition thereof;


 


(2)                                  marketable
direct obligations issued by any state of the United States of America or any
political subdivision of any such state or any public instrumentality thereof
maturing within one year from the date of acquisition thereof and, at the time
of acquisition, having one of the two highest ratings obtainable from either
Standard & Poor’s Ratings Group (“S&P”) or Moody’s
Investors Service, Inc. (“Moody’s”);


 

















 


(3)                                  commercial
paper maturing no more than one year from the date of creation thereof and, at
the time of acquisition, having a rating of at least A-1 from S&P or at
least P-1 from Moody’s;


 


(4)                                  certificates
of deposit, Eurodollar time deposits or bankers’ acceptances maturing within
one year from the date of acquisition thereof issued by any bank organized
under the laws of the United States of America or any state thereof or the
District of Columbia or any U.S. branch of a foreign bank having at the date of
acquisition thereof combined net capital and surplus of not less than $250.0
million;


 


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


 


(6)                                  investments
in money market funds which invest substantially all their assets in securities
of the types described in clauses (1) through (5) above.


 


“Change of
Control” means the occurrence of one or more of the following events:


 


(1)                                  any
direct or indirect sale, lease, transfer, conveyance or other disposition
(other than by way of merger or consolidation), in one transaction or a series of
related transactions, of all or substantially all of the assets of the Issuer
and its Subsidiaries, taken as a whole, to any Person or group of related
Persons for purposes of Section 13(d) of the Exchange Act (a “Group”),
other than a transaction in which the transferee is controlled by one or more
Permitted Holders;


 


(2)                                  the
Issuer consolidates with, or merges with or into, any Person, or any Person
consolidates with, or merges with or into, the Issuer, other than (A) a
transaction in which the surviving or transferee Person is a Person that is
controlled by the Permitted Holders or (B) any such transaction where the
Voting Equity Interests of the Issuer outstanding immediately prior to such
transaction is converted into or exchanged for Voting Equity Interests (other
than Disqualified Equity Interests) of the surviving or transferee Person
constituting a majority of the outstanding shares of such Voting Equity Interests
of such surviving or transferee Person (immediately after giving effect to such
issuance);


 


(3)                                  the
approval by the holders of Equity Interests of the Issuer of any plan or
proposal for the liquidation, winding up or dissolution of the Issuer;


 


(4)                                  prior
to the first Public Equity Offering, the Permitted Holders cease for any reason
to be the Beneficial Owner, directly or indirectly, in the aggregate of at
least a majority of the total voting power of the Voting Equity Interests of
the Issuer, whether by virtue of the issuance, sale or other disposition of
Equity Interests of the Issuer, a merger, consolidation or sale of assets
involving the Issuer, a Restricted Subsidiary, any voting trust or other
agreement;


 


(5)                                  subsequent
to the first Public Equity Offering, (a) any Person or Group is or becomes
the Beneficial Owner, directly or indirectly, in the aggregate of more than 35%
of the total voting power of the Voting Equity Interests of the Issuer, and (b) the
Permitted Holders Beneficially Own, directly or indirectly, in the aggregate a
lesser 


 

















 


percentage of the total voting power of the
Voting Equity Interests of the Issuer than such other Person or Group; or


 


(6)                                  individuals
who on the Issue Date constituted the Board of Directors (together with any new
directors whose election by such Board of Directors or whose nomination for
election by the stockholders of the Issuer was approved pursuant to a vote of a
majority of the directors then still in office who were either directors on the
Issue Date or whose election or nomination for election was previously so
approved) cease for any reason to constitute a majority of the Board of
Directors then in office.


 


“Change of
Control Offer” has the meaning set forth in Section 4.21(a).


 


“Change of
Control Payment Date” has its meaning set forth in Section 4.21(b).


 


“Clearstream”
means Clearstream Banking, societe anonyme and
any successor thereto.


 


“Collateral”
shall mean collateral as such term is defined in the Security Agreement, all
property mortgaged under the Mortgages and any other property, whether now
owned or hereafter acquired, upon which a Lien securing the Obligations is
granted or purported to be granted under any Collateral Agreement.


 


“Collateral
Agent” means the Trustee, in its capacity as collateral agent under this
Indenture and the Collateral Agreements, together with any successor in such
capacity.


 


“Collateral
Agreements” means, collectively, the Intercreditor Agreement, the Security
Agreement and each Mortgage, in each case, as the same may be in force
from time to time.


 


“Common
Stock” of any Person means any and all shares, interests or other
participations in, and other equivalents (however designated and whether voting
or non-voting) of such Person’s common stock, whether outstanding on the Issue
Date or issued after the Issue Date, and includes, without limitation, all series and
classes of such common stock.


 


“Consolidated
EBITDA” means for any period, the sum (without duplication) of:


 


(1)                                  Consolidated
Net Income; and


 


(2)                                  to
the extent Consolidated Net Income has been reduced thereby:


 


(j)                                     all
income taxes paid or accrued in accordance with GAAP for such period;


 


(k)                                  Consolidated
Interest Expense, and interest expense attributable to write-offs of deferred
financing costs; and


 


(l)                                     Consolidated
Non-cash Charges less any non-cash items increasing Consolidated Net
Income for such period (other than accruals of revenue in the ordinary course
of business and reversals in such periods of an accrual of, or reserve for a
cash charges in another period). All as determined on a consolidated basis in
accordance with GAAP.


 

















 


“Consolidated
Fixed Charge Coverage Ratio” means the ratio of Consolidated EBITDA of
during the four consecutive full fiscal quarters (the “Four Quarter Period”)
most recently ending on or prior to the date of the transaction or event giving
rise to the need to calculate the Consolidated Fixed Charge Coverage Ratio for
which financial statements are available (the “Transaction Date”) to
Consolidated Fixed Charges for the Four Quarter Period.


 


For purposes
of this definition, “Consolidated EBITDA” and “Consolidated Fixed Charges”
shall be calculated after giving effect on a pro forma basis for the period of
such calculation to:


 


(1)                                  the
incurrence or repayment of any Indebtedness of the Issuer or any of its
Restricted Subsidiaries or the issuance or redemption or other repayment of any
Preferred Stock not meeting the definition of Disqualified Equity Interests by
the Issuer or any of its Restricted Subsidiaries (and the application of the
proceeds thereof) giving rise to the need to make such calculation and any
incurrence or repayment of other Indebtedness or the issuance or redemption or
other repayment of any Preferred Stock not meeting the definition of
Disqualified Equity Interests by the Issuer or any of its Restricted
Subsidiaries (and the application of the proceeds thereof), other than the
incurrence or repayment of Indebtedness in the ordinary course of business for
working capital purposes pursuant to working capital facilities, occurring
during the Four Quarter Period or at any time subsequent to the last day of the
Four Quarter Period and on or prior to the Transaction Date, as if such
incurrence or repayment, as the case may be (and the application of the
proceeds thereof), occurred on the first day of the Four Quarter Period; and


 


(2)                                  any
Asset Sale or Asset Acquisition (including, without limitation, any Asset
Acquisition giving rise to the need to make such calculation as a result of the
Issuer or one of its Restricted Subsidiaries (including any Person who becomes
a Restricted Subsidiary as a result of any such Asset Acquisition) incurring,
assuming or otherwise being liable for Acquired Indebtedness during the Four
Quarter Period or at any time subsequent to the last day of the Four Quarter
Period and on or prior to the Transaction Date), as if such Asset Sale or Asset
Acquisition (including the incurrence, assumption or liability for any such
Indebtedness or Acquired Indebtedness and also including any Consolidated
EBITDA associated with such Asset Acquisition) occurred on the first day of the
Four Quarter Period.


 


Furthermore,
in calculating “Consolidated Fixed Charges” for purposes of determining the
denominator (but not the numerator) of this “Consolidated Fixed Charge Coverage
Ratio”:


 


(1)                                  interest
on outstanding Indebtedness determined on a fluctuating basis as of the
Transaction Date (including Indebtedness actually incurred on the Transaction
Date) and which will continue to be so determined thereafter shall be deemed to
have accrued at a fixed rate per annum equal to the rate of interest on such
Indebtedness in effect on the Transaction Date; and


 


(2)                                  notwithstanding
clause (1) above, interest on Indebtedness determined on a fluctuating
basis, to the extent such interest is covered by agreements relating to
Interest Swap Obligations, shall be deemed to accrue at the rate per annum
resulting after giving effect to the operation of such agreements.


 


Additionally,
any pro forma calculations shall include pro forma adjustments arising out of
events which are directly attributable to an Asset Acquisition, an Asset Sale
or other transaction, are factually 


 

















 


supportable and are expected to have a continuing impact, in each case
determined on a basis consistent with Article 11 of Regulation S-X
promulgated under the Securities Act and as interpreted by the staff of the
Securities and Exchange Commission, which would include cost savings resulting
from head count reduction, closure of facilities and similar restructuring
charges, which pro forma adjustments shall be certified by the chief financial
officer of the Issuer.


 


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


 


(1)                                  Consolidated
Interest Expense (excluding interest that is not required to be paid in cash
during such period, amortization or write-off of deferred financing costs and
debt issuance costs during such period and any premium or penalty paid in
connection with redeeming or retiring Indebtedness prior to the stated maturity
thereof pursuant to the agreements governing such Indebtedness); plus


 


(2)                                  the
product of (x) the amount of all dividend payments on any series of
Preferred Stock of such Person (other than dividends paid in Qualified Equity
Interests) paid, in cash during such period to any Person other than such
Person or any of its Restricted Subsidiaries times (y) a fraction, the
numerator of which is one and the denominator of which is one minus the then
current effective consolidated federal, state and local tax rate of such
Person, expressed as a decimal.


 


“Consolidated
Interest Expense” means, with respect to any Person for any period, the
aggregate of the interest expense of such Person and its consolidated
Subsidiaries for such period, on a consolidated basis, as determined in
accordance with GAAP, and including, without duplication, (a) all
amortization of original issue discount; (b) the interest component of
Capitalized Lease Obligations paid, accrued and/or scheduled to be paid or
accrued by such Person and its Restricted Subsidiaries during such period; and (c) net
cash costs under all Interest Swap Obligations (including amortization of
fees), other than any cash costs paid to unwind Interest Swap Obligations
existing on and prior to the Issue Date.


 


“Consolidated
Net Income” means, for any period, the aggregate net income (or loss) of
the Issuer and its Restricted Subsidiaries for such period on a consolidated
basis, determined in accordance with GAAP; provided, that there shall be
excluded therefrom:


 


(1)                                  after
tax losses and gains from Asset Sales or the disposition of any other assets
not in the ordinary course of business;


 


(2)                                  extraordinary
or non-recurring gains, losses, income and expenses as determined in accordance
with GAAP (including any costs, expenses or charges incurred in connection with
the Transactions), in each case together with any provisions for taxes on such
gains;


 


(3)                                  the
net income (but not loss) of any Subsidiary of the Issuer to the extent that
the declaration of dividends or similar distributions by that Subsidiary of
that income is restricted by a contract, operation of law or otherwise, except
to the extent that such net income is actually, or permitted to be, paid to the
Issuer or a Restricted Subsidiary thereof by the loans, advances, intercompany
transfers, principal repayments or otherwise;


 


(4)                                  the
net income (or loss) of any Person, other than the Issuer or a Restricted
Subsidiary, except to the extent of cash dividends or distributions paid to the
Issuer or to a Restricted Subsidiary by such Person;


 

















 


(5)                                  any
restoration to income of any material contingency reserve, except to the extent
that provision for such reserve was made out of Consolidated Net Income accrued
at any time following the Issue Date;


 


(6)                                  income
or loss attributable to discontinued operations (including, without limitation,
operations disposed of during such period whether or not such operations were
classified as discontinued);


 


(7)                                  all
gains realized on or because of the purchase or other acquisition by the Issuer
or any of its Restricted Subsidiaries of any securities of such Person or any
of its Restricted Subsidiaries;


 


(8)                                  the
cumulative effect of a change in accounting principles;


 


(9)                                  any
non-cash expenses or charges resulting from the grant of stock, stock options
or other equity-based awards;


 


(10)                            in the
case of a successor to the Issuer by consolidation or merger or as a transferee
of the Issuer’s assets, any earnings of the successor corporation prior to such
consolidation, merger or transfer of assets; and


 


(11)                            the
amortization of intangible assets created as a result of purchase accounting in
connection with the Transactions and the amortization of costs incurred and
capitalized in connection with the Transactions.


 


“Consolidated
Non-cash Charges” means, with respect to any Person, for any period, the
aggregate depreciation, amortization and other non-cash items and expenses of
such Person and its consolidated Subsidiaries to the extent they reduce
Consolidated Net Income of such Person for such period, determined on a
consolidated basis in accordance with GAAP (excluding any such charges to the
extent that they represent an accrual of or a reserve for cash charges for any
future period).


 


“Contribution
Agreement” means that Contribution Agreement to be dated the Issue Date
between Rafaella Sportswear, Inc and the Issuer as in effect on the Issue Date.


 


“Corporate
Trust Office” means the office of The Bank of New York at which the trust
created by this Indenture shall, at any particular time, be principally
administered, which office is, at the date of this Indenture, located at 101
Barclay Street, 8 W, New York, NY 10286, Attention:  Corporate Trust Administration.


 


“Covenant
Defeasance” has the meaning set forth in Section 8.01(c).


 


“Credit
Agreement” collectively means the Credit Agreement, dated as of the Issue
Date, between the Issuer and the lenders party thereto (together with their
successors and assigns, the “Lenders”) and HSBC Bank USA, as
administrative agent (in such capacity, together with its successors and
assigns, the “Administrative Agent”), setting forth the terms and
conditions of the senior credit facility, and any subsequent senior credit
facilities, together with the related documents thereto (including, without
limitation, any guarantee agreements and security documents), in each case as
such agreements may be amended, supplemented, modified, renewed, refunded,
replaced, restated, substituted, or refinanced in whole or in part from
time to time, including any agreement extending the maturity of, refinancing,
replacing or otherwise restructuring (including increasing the amount of
available borrowings thereunder (provided that such increase in borrowings is
permitted under clause (2) of the definition of the 


 

















 


term “Permitted Indebtedness”) or adding Subsidiaries of the Issuer as
additional borrowers or guarantors thereunder), whether upon or at any time or
from time to time after termination or otherwise, all or any portion of the
Indebtedness under such agreement or any successor or replacement agreement and
whether by the same or any other agent, lender or group of lenders.


 


“Currency
Agreement” means any foreign exchange contract, currency swap agreement or
other similar agreement or arrangement designed to protect the Issuer or any
Restricted Subsidiary against fluctuations in currency values.


 


“Custodian”
means any receiver, trustee, assignee, liquidator, sequestrator or similar
official under the Bankruptcy Code or any other state or federal bankruptcy or
insolvency law.


 


“Default”
means an event or condition the occurrence of which is, or with the lapse of
time or the giving of notice or both would be, an Event of Default.


 


“Depositary”
means with respect to the Global Notes, The Depositary Trust Company, its
nominees and successors appointed as such hereunder and having become such
pursuant to the applicable provisions of this Indenture.


 


“Disqualified
Equity Interests” means with respect to any Person, any Equity Interest of
such Person that, by its terms or by the terms of any security into which it is
convertible, exercisable or exchangeable, is, or upon the happening of an event
or the passage of time or both would be, required to be redeemed or
repurchased, including at the option of the Holder thereof, by such Person or
any of its Subsidiaries, in whole or in part, or on prior to 91 days following
the Maturity Date of the Notes.


 


Notwithstanding
the foregoing, any Equity Interests that would constitute Disqualified Equity
Interests solely because the Holders thereof have the right to require the Issuer
to repurchase such Equity Interests upon the occurrence of a change of control
or an asset sale shall not constitute Disqualified Equity Interests if the
terms of such Equity Interests expressly provide that the Issuer may not
repurchase or redeem any such Equity Interests pursuant to such provisions
prior to the Issuer’s purchase of the Notes pursuant to Section 4.10
and Section 4.21 of this Indenture.


 


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


 


“Domestic
Restricted Subsidiary” means, with respect to any Person, a Domestic
Subsidiary of such Person that is a Restricted Subsidiary of such Person.


 


“Domestic
Subsidiary” means, with respect to any Person, a Subsidiary of such Person
that is not a Foreign Subsidiary of such Person.


 


“Equity Interests” means:


 


(1)                                  with
respect to any Person that is a corporation, any and all shares, interests,
participations or other equivalents (however designated and whether or not
voting) of corporate stock, including each class of Common Stock and
Preferred Stock of such Person;


 


(2)                                  with
respect to any Person that is not a corporation, any and all partnership,
membership or other equity interests of such Person; and


 

















 


(3)                                  any
warrants, rights or options to purchase any of the instruments or interests
referred to in clause (1) or (2) above.


 


“Equity
Offering” means a Public Equity Offering or any private placement of Common
Stock of the Issuer or any holding company of the Issuer to any Person other
than issuances upon exercise of options by employees of any holding company,
the Issuer or any of the Restricted Subsidiaries.


 


“Escrow
Agreement” means the Escrow Agreement between Acquisition Co., the Issuer,
Ronald Frankel and JP Morgan Chase Bank to be dated as of the Issue Date
pursuant to which the escrow agent will agree to hold in trust $30.0 million,
which shall be disbursed in accordance with its terms (as in effect on the
Issue Date).


 


“Excess Cash Flow” means, for any
fiscal year, the amount, if positive, equal to (A) the Issuer’s
Consolidated EBITDA for such year, minus (B) the sum of (i) Capital
Expenditures made during such fiscal year, (ii) the cash portion of
Consolidated Interest Expense (net of interest income) for such fiscal year, (iii) the
cash portion of all income and franchise taxes paid during such fiscal year,
and (iv) the aggregate principal amount at maturity of the Notes purchased
or redeemed by the Issuer during such fiscal year (excluding any purchase made
pursuant to (i) the Excess Cash Flow Offer and (ii) any and all Net
Proceeds Offers in connection with Assets Sales), (C) plus or minus,
respectively, of any net decrease or increase in Working Capital from the last
day of the immediately preceding fiscal year to the last day of such fiscal
year.


 


“Excess
Cash Flow Offer” has the
meaning set forth in Section 4.22(a).


 


“Excess
Cash Flow Offer Amount” has
the meaning set forth in Section 4.22(a).


 


“Excess
Cash Flow Payment Date” has
the meaning set forth in Section 4.22(b).


 


“Exchange
Notes” means Notes issued in exchange for the Initial Notes or Additional
Notes pursuant to the terms of the Registration Rights Agreement.


 


“Exchange
Offer” means an exchange offer that may be made by the Issuer,
pursuant to the Registration Rights Agreement, to exchange for any and all
Notes a like aggregate principal amount at maturity of Notes registered under
the Securities Act having substantially identical terms to the Notes.


 


“Excluded Restricted
Payment” has the meaning set forth in Section 4.09.


 


“Euroclear”
means Euroclear Bank S.A./N.V., as operator of the Euroclear system, or any
successor securities clearing agency.


 


“Event of
Default” has the meaning set forth in Section 6.01.


 


“Exchange
Act” means the Securities Exchange Act of 1934, as amended, or any
successor statute or statutes thereto.


 


“Fair
Market Value” means, with respect to any asset or property, the price which
could be negotiated in an arm’s length, free market transaction, for cash,
between a willing seller and a willing and able buyer, neither of whom is under
undue pressure or compulsion to complete the transaction. Fair Market Value
shall be determined by the Board of Directors of the Issuer acting in good
faith and shall be evidenced by a Board Resolution of the Board of Directors of
the Issuer delivered to the Trustee.


 

















 


“Foreign
Restricted Subsidiary” means any Restricted Subsidiary that is organized
under the laws of any jurisdiction other than the United States of America, any
state thereof or the District of Columbia.


 


“Foreign
Subsidiary” means, with respect to any Person, any Subsidiary of such
Person that is organized under the laws of any jurisdiction other than the
United States of America, any state thereof or the District of Columbia.


 


“Four
Quarter Period” has the meaning set forth in the definition of “Consolidated
Fixed Charge Coverage Ratio.”


 


“GAAP”
means accounting principles generally accepted in the United States set forth
in the opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as may be approved by a significant
segment of the accounting profession of the United States, which are in effect
as of the Issue Date.


 


“Global
Notes” means, collectively, the 144A Global Notes, the IAI Global Notes,
the Regulation S Permanent Global Notes and the Regulation S Temporary
Global Notes.


 


“Group”
has the meaning set forth in the definition of the term “Change of Control.”


 


“Guarantee”
has the meaning set forth in Section 10.01.


 


“Guarantor”
means (1) each of the Issuer’s Domestic Restricted Subsidiaries existing
on the Issue Date and (2) each of the Issuer’s Domestic Restricted
Subsidiaries that in the future executes a supplemental indenture in which such
Domestic Restricted Subsidiary agrees to be bound by the terms of this
Indenture as a Guarantor; provided that any Person constituting a
Guarantor as described above shall cease to constitute a Guarantor when its
respective Guarantee is released in accordance with the terms of this Indenture.


 


“Heirs”
of any individual means such individual’s estate, spouse, lineal relatives
(including adoptive descendants), administrator, committee or other personal
representative or other estate planning vehicle and any custodian or trustee
for the benefit of any spouse or lineal relatives (including adoptive
descendants) of such individual.


 


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


 


“IAI Global
Notes” has the meaning set forth in Section 2.01.


 


“incur”
has the meaning set forth in Section 4.08.


 


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


 


(1)                                  all
Obligations of such Person for borrowed money;


 


(2)                                  all
Obligations of such Person evidenced by bonds, debentures, notes or other
similar instruments;


 


(3)                                  all
Capitalized Lease Obligations of such Person;


 


(4)                                  all
Obligations of such Person issued or assumed as the deferred purchase price of
property or services, all conditional sale obligations and all Obligations


 

















 


under any title retention agreement (but
excluding trade accounts payable and other accrued liabilities arising in the
ordinary course of business that are not overdue by 90 days or more or are
being contested in good faith by appropriate proceedings promptly instituted
and diligently conducted and any deferred purchase price represented by earn
outs);


 


(5)                                  all
Obligations for the reimbursement of any obligor on any letter of credit,
banker’s acceptance or similar credit transaction, (other than those issued or
incurred in respect of trade payables arising in the ordinary course of
business);


 


(6)                                  guarantees
and other contingent obligations in respect of Indebtedness referred to in
clauses (1) through (5) above and clause (8) below;


 


(7)                                  all
Obligations of any other Person of the type referred to in clauses (1) through
(6) which are secured by any Lien on any property or asset of such Person,
the amount of any such Obligation being deemed to be the lesser of the Fair
Market Value of the property or asset securing such Obligation or the amount of
such Obligation;


 


(8)                                  all
Interest Swap Obligations and all Obligations under Currency Agreements of such
Person; and


 


(9)                                  all
Disqualified Equity Interests issued by such Person with the amount of
Indebtedness represented by such Disqualified Equity Interests being equal to
the greater of its voluntary or involuntary liquidation preference and its
maximum fixed repurchase price, but excluding accrued dividends, if any.


 


For purposes
hereof, the “maximum
fixed repurchase price” of any Disqualified Equity Interests
which does not have a fixed repurchase price shall be calculated in accordance
with the terms of such Disqualified Equity Interests as if such Disqualified
Equity Interests were purchased on any date on which Indebtedness shall be
required to be determined pursuant to this Indenture, and if such price is
based upon, or measured by, the Fair Market Value of such Disqualified Equity
Interests, such Fair Market Value shall be determined reasonably and in good
faith by the board of directors of the issuer of such Disqualified Equity
Interests.


 


“Indemnified
Party” has the meaning set forth in Section 7.07.


 


“Indenture”
means this Indenture, as amended or supplemented from time to time in
accordance with the terms hereof.


 


“Indenture
Documents” means, collectively, this Indenture, the Notes, the Guarantees
and the Collateral Agreements.


 


“Independent
Financial Advisor” means a nationally-recognized accounting, appraisal or
investment banking firm: (1) that does not, and whose directors, officers
and employees or Affiliates do not, have a direct or indirect financial interest
in the Issuer; and (2) that, in the judgment of the Board of Directors of
the Issuer, is otherwise independent and qualified to perform the task for
which it is to be engaged.


 


“Initial
Notes” means the 11 1/4% Senior Secured Notes due 2011 issued on the Issue
Date.


 


“Initial
Purchaser” means Jefferies & Company, Inc.


 

















 


“Institutional
Accredited Investor” means an institution that is an “accredited investor”
as that term is defined in Rule 501(a)(1), (2), (3) or (7) under
the Securities Act.


 


“Intercreditor
Agreement” means the Intercreditor Agreement among the Administrative
Agent, the Trustee, the Collateral Agent, the Issuer and the Guarantors, dated
as of the Issue Date, as the same may be amended, supplemented or modified
from time to time.


 


“Interest
Payment Date” means June 15 and December 15 of each year,
commencing December 15, 2005.


 


“Interest
Swap Obligations” means the obligations of any Person pursuant to any
arrangement with any other Person, whereby, directly or indirectly, such Person
is entitled to receive from time to time periodic payments calculated by
applying either a floating or a fixed rate of interest on a stated notional
amount in exchange for periodic payments made by such other Person calculated
by applying a fixed or a floating rate of interest on the same notional amount
and shall include, without limitation, interest rate swaps, caps, floors,
collars and similar agreements.


 


“Investment”
in any Person means any direct or indirect advance, loan (excluding extensions
of credit to customers or advances, deposits or payments to or with suppliers,
lessors or utilities or for worker’s compensation, in each case, in the
ordinary course of business that are required to be recorded in accordance with
GAAP as accounts receivable, prepaid expenses or deposits on the balance sheet
of such Person and excluding commissions, travel and similar advances to
officers and employees) or capital contribution to (by means of any transfer of
cash or other property to others or any payment for property or services for
the account or use of others), or any purchase or acquisition for value of
Equity Interests, Indebtedness or other similar instruments issued by such
Person. If the Issuer or any Restricted Subsidiary issues, sells or otherwise
disposes of any Equity Interests of a Person that is a Restricted Subsidiary
such that, after giving effect thereto, such Person is no longer a Restricted
Subsidiary, any Investment by the Issuer or any Restricted Subsidiary in such
Person remaining after giving effect thereto will be deemed to be a new
Investment at such time. The acquisition by the Issuer or any Restricted
Subsidiary of a Person that holds an Investment in a third Person will be
deemed to be an Investment by the Issuer or such Restricted Subsidiary in such
third Person at such time. Except as otherwise provided for herein, the amount
of an Investment shall be its fair market value at the time the Investment is
made and without giving effect to subsequent changes in value; provided that,
in the case of an Investment as a result of an acquisition, fair market value
shall mean the book value of the asset constituting such Investment as
reflected on the balance sheet of such Person as of the date of the acquisition
after giving effect to such acquisition.


 


For purposes
of the definition of “Unrestricted Subsidiary,” the definition of “Restricted
Payment” and Section 4.09:


 


(1)                                  “Investment”
shall include the portion (proportionate to the Issuer’s equity interest in
such Subsidiary) of the Fair Market Value of the net assets of any Subsidiary
of the Issuer at the time that such Subsidiary is designated an Unrestricted
Subsidiary; provided, however, that upon a redesignation of such
Subsidiary as a Restricted Subsidiary, the Issuer shall be deemed to continue
to have a permanent “Investment” in an Unrestricted Subsidiary equal to an
amount (if positive) equal to (A) the Issuer’s “Investment” in such
Subsidiary less (B) the portion (proportionate to the Issuer’s equity
interest in such Subsidiary) of the Fair Market Value of the net assets of such
Subsidiary at the time of such redesignation; and


 

















 


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


 


“Issue Date”
means June 20, 2005.


 


“Issuer”
shall have the meaning set forth in the preamble to this Indenture.


 


“Legal
Defeasance” has the meaning set forth in Section 8.01(b).


 


“Legal
Holiday” has the meaning set forth in Section 11.07.


 


“Lenders”
has the meaning set forth in the definition of the term “Credit Agreement.”


 


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


 


“Maturity
Date” means June 15, 2011.


 


“Moody’s”
means Moody’s Investors Service, Inc. and its successors.


 


“Mortgages”
means the mortgages, deeds of trust, deeds to secure Indebtedness or other
similar documents securing Liens on the Premises and/or the Leased Premises, as
well as the other Collateral secured by and described in the mortgages, deeds
of trust, deeds to secure Indebtedness or other similar documents.


 


“Net Cash
Proceeds” means, with respect to any Asset Sale, the proceeds in the form of
cash or Cash Equivalents including payments in respect of deferred payment
obligations when received in the form of cash or Cash Equivalents (other
than the portion of any such deferred payment constituting interest) received
by the Issuer or any of its Restricted Subsidiaries from such Asset Sale net
of:


 


(1)                                  reasonable
out-of-pocket expenses and fees relating to such Asset Sale (including, without
limitation, legal, accounting and investment banking fees and sales commissions
and severance and relocation costs and expenses);


 


(2)                                  all
taxes and other costs and expenses actually paid or estimated by the Issuer (in
good faith) to be payable in cash in connection with such Asset Sale;


 


(3)                                  repayment
of Indebtedness that is secured by the property or assets that are the subject
of such Asset Sale and is required to be repaid in connection with such Asset
Sale; and


 


(4)                                  appropriate
amounts to be provided by the Issuer or any Restricted Subsidiary, as the case may be,
as a reserve, in accordance with GAAP, (i) against any liabilities
associated with such Asset Sale and retained by the Issuer or any Restricted
Subsidiary, as the case may be, after such Asset Sale, including, without
limitation, pension and other post-employment benefit liabilities, liabilities
related to environmental matters and liabilities under any indemnification
obligations associated with such Asset Sale; or (ii) for adjustment in
respect of the sale price of the property or assets that are the subject of
such Asset Sales,


 

















 


provided,
however, that if, after the payment of all taxes with respect to such
Asset Sale, the amount of estimated taxes, if any, pursuant to clause (2) above
exceeded the tax amount actually paid in cash in respect of such Asset Sale,
the aggregate amount of such excess shall, at such time, constitute Net Cash
Proceeds.


 


“Net
Proceeds Offer” has the meaning set forth in Section 4.10.


 


“Net Proceeds
Offer Amount” has the meaning set forth in Section 4.10.


 


“Net
Proceeds Offer Payment Date” has the meaning set forth in Section 4.10.


 


“Net
Proceeds Offer Trigger Date” has the meaning set forth in Section 4.10.


 


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


 


“Notes”
means, collectively, the Initial Notes, the Additional Notes and Exchange Notes.


 


“Obligations”
means all obligations for principal, premium, interest, Additional Interest, penalties,
fees, indemnifications, reimbursements, damages and other liabilities payable
under the documentation governing any Indebtedness.


 


“Offering”
means the offering of the Notes hereunder.


 


“Offering
Circular” means the Offering Circular, dated June 13, 2005, relating
to the offering of the Initial Notes.


 


“Officer”
means (1) with respect to any Person that is a corporation, the Chief
Executive Officer, the President, the Chief Financial Officer, the Controller,
the Secretary or any Vice President of such Person and (2) with respect to
any other Person, the individuals designated to perform functions similar
to those of the officers listed in clause (1).


 


“Officers’
Certificate” means a certificate signed by two Officers of the Issuer, at
least one of whom shall be the principal financial officer of the Issuer, and
delivered to the Trustee. Each such certificate shall comply with Section 314
of the Trust Indenture Act of 1939.


 


“144A
Global Notes” has the meaning set forth in Section 2.01.


 


“Opinion of
Counsel” means a written opinion of counsel who shall meet the requirements
of Section 11.05 hereof. Each such opinion shall comply with Section 314
of the Trust Indenture Act of 1939.


 


“Paying
Agent” has the meaning set forth in Section 2.03.


 


“Permitted
Affiliate Transaction” had the meaning set forth in Section 4.14(b).


 


“Permitted
Business” means any business that is the same as or similar, reasonably
related, complementary or incidental to the business in which the Issuer and
its Restricted Subsidiaries are engaged on the Issue Date.


 


“Permitted
Holders” means Cerberus Capital Management, L.P. or any of its Affiliates,
and any fund or account managed by Cerberus Capital Management, L.P. or any of
its Affiliates.


 

















 


“Permitted
Indebtedness” means, without duplication, each of the following:


 


(1)                                  Indebtedness
under the Notes issued in the Offering and the related Guarantees;


 


(2)                                  Indebtedness
incurred pursuant to the Credit Agreement in an aggregate principal amount at
any time outstanding not to exceed $62.5 million, as such amount may be
reduced from time to time as a result of permanent reductions of the
commitments thereunder as provided in Section 4.10.


 


(3)                                  other
Indebtedness of the Issuer and its Restricted Subsidiaries outstanding on the
Issue Date (other than pursuant to the Credit Agreement), including any
contingent obligation to pay the Stockholders’ Equity Adjustment;


 


(4)                                  Interest
Swap Obligations of the Issuer or any Restricted Subsidiary of the Issuer
covering Indebtedness of the Issuer or any of its Restricted Subsidiaries; provided,
however, that such Interest Swap Obligations are entered into for the
purpose of fixing or hedging interest rates with respect to any fixed or
variable rate Indebtedness that is permitted by this Indenture to be
outstanding to the extent that the notional amount of any such Interest Swap
Obligation does not exceed the principal amount of Indebtedness to which such
Interest Swap Obligation relates;


 


(5)                                  Indebtedness
under Currency Agreements; provided that in the case of Currency Agreements
which relate to Indebtedness, such Currency Agreements do not increase the
Indebtedness of the Issuer and its Restricted Subsidiaries outstanding other
than as a result of fluctuations in foreign currency exchange rates or by
reason of fees, indemnities and compensation payable thereunder;


 


(6)                                  Intercompany
Indebtedness between or among the Issuer or any of its Restricted Subsidiaries;
provided, that (i) if the Issuer or a Guarantor is the obligor on
such Indebtedness and the payee is not the Issuer or a Guarantor, such
Indebtedness must be expressly subordinated to the prior payment in full in
cash of all Obligations then due with respect to the Notes, in the case of the Issuer,
or the Guarantee, in the case of a Guarantor; provided further,
that if, as of any date, any other Person owns or holds any such Indebtedness
or holds a Lien (other than a Permitted Lien) in respect of such Indebtedness,
such date shall be deemed the incurrence of Indebtedness not constituting
Permitted Indebtedness under this clause (6) by the issuer of such
Indebtedness;


 


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


 


(8)                                  Indebtedness
of the Issuer or any of its Restricted Subsidiaries constituting reimbursement
obligations with respect to letters of credit or bankers acceptances for the
account of the Issuer or such Restricted Subsidiary, as the case may be,
including, without limitation, in order to provide security for workers’
compensation claims, self-insurance or similar requirements in the ordinary
course of business, and other reimbursement type obligations regarding workers’
compensation or self-insurance;


 

















 


(9)                                  obligations
in respect of performance, bid and surety bonds and completion guarantees
provided by the Issuer or any Restricted Subsidiary in the ordinary course of
business;


 


(10)                            Indebtedness
represented by Capitalized Lease Obligations and Purchase Money Indebtedness of
the Issuer and its Restricted Subsidiaries incurred in the ordinary course of
business (including Refinancings thereof that do not result in an increase in
the aggregate principal amount of Indebtedness of such Person as of the date of
such proposed Refinancing (plus the amount of any premium required to be paid
under the terms of the instrument governing such Indebtedness and plus the
amount of reasonable expenses incurred by the Issuer in connection with such
Refinancing)) not to exceed $5.0 million at any time outstanding;


 


(11)                            Refinancing
Indebtedness;


 


(12)                            Indebtedness
represented by guarantees by the Issuer or a Restricted Subsidiary of
Indebtedness incurred by the Issuer or a Restricted Subsidiary so long as the
incurrence of such Indebtedness by the Issuer or any such Restricted Subsidiary
is otherwise permitted by the terms of this Indenture;


 


(13)                            Indebtedness
arising from agreements of the Issuer or a Subsidiary providing for
indemnification, adjustment of purchase price or similar obligations, in each
case, incurred in connection with the disposition of any business, assets or
Subsidiary, other than guarantees of Indebtedness incurred by any Person
acquiring all or any portion of such business, assets or Subsidiary for the
purpose of financing such acquisition; provided that the maximum
aggregate liability in respect of all such Indebtedness shall at no time exceed
the gross proceeds actually received by the Issuer and the Subsidiary in
connection with such disposition;


 


(14)                            Indebtedness
of the Issuer or any of its Restricted Subsidiaries to the extent the net
proceeds thereof are promptly used to redeem the Notes in full or deposited to
defease or discharge the Notes, in each case, in accordance with this Indenture;


 


(15)                            contingent
liabilities arising out of endorsement of checks and other negotiable
instruments for deposit or collection in the ordinary course of business;


 


(16)                            Indebtedness
of the Issuer under the Redemption Agreement;


 


(17)                            Indebtedness
resulting from customer charge backs in connection with the Issuer’s factoring
of accounts receivable in the ordinary course of business; and


 


(18)                            additional
Indebtedness of the Issuer and its Restricted Subsidiaries in an aggregate
principal amount not to exceed $15.0 million at any time outstanding.


 


For purposes
of determining compliance with Section 4.08, (a) the
outstanding principal amount of any item of Indebtedness shall be counted only
once, (b) in the event that an item of Indebtedness meets the criteria of
more than one of the categories of Permitted Indebtedness described in clauses (1) through
(18) above or is entitled to be incurred pursuant to the Consolidated Fixed
Charge Coverage Ratio provisions of such covenant, the Issuer shall, in its
sole discretion, classify (or later reclassify) such item of Indebtedness in
any manner that complies with this covenant and (c) Indebtedness incurred
in connection with or in contemplation of, any transaction described in the
definition of the term “Acquired 


 

















 


Indebtedness” shall be deemed to have been incurred by the Issuer or
one of its Restricted Subsidiaries, as the case may be, at the time an
acquired Person becomes such a Restricted Subsidiary (or it is merged into the Issuer
or such a Restricted Subsidiary) or at the time of the acquisition of assets,
as the case may be.


 


“Permitted
Investments” means:


 


(1)                                  Investments
in any Person that is or will become immediately after such Investment a
Guarantor or that will merge or consolidate with or into the Issuer or a
Guarantor, or that transfers or conveys all or substantially all of its assets
to the Issuer or a Guarantor;


 


(2)                                  Investments
in the Issuer by any Restricted Subsidiary; provided that any
Indebtedness evidencing such Investment is unsecured and subordinated, pursuant
to a written agreement, to the Issuer’s Obligations under the Notes and this
Indenture;


 


(3)                                  Investments
in cash and Cash Equivalents;


 


(4)                                  any
Investments the payment for which consists of Qualified Equity Interests of the
Issuer or any parent of the Issuer (which Investment, in the case of a parent,
is contributed to the capital of the Issuer);


 


(5)                                  Currency
Agreements and Interest Swap Obligations entered into in the ordinary course of
the Issuer’s or its Restricted Subsidiaries’ businesses and otherwise in
compliance with this Indenture;


 


(6)                                  Investments
in the Notes;


 


(7)                                  Investments
in securities of trade creditors or customers received pursuant to any plan of
reorganization or similar arrangement upon the bankruptcy or insolvency of such
trade creditors or customers in exchange for claims against such trade
creditors or customers or in good faith settlement of delinquent obligations of
such creditors and customers;


 


(8)                                  Investments
as a result of non-cash consideration received in connection with an Asset Sale
made in compliance with Section 4.10, or a sale or disposition of
assets not constituting an Asset Sale;


 


(9)                                  Investments
in existence on the Issue Date;


 


(10)                            loans
and advances, including advances for travel and moving expenses, to employees,
officers and directors of the Issuer and its Restricted Subsidiaries in the
ordinary course of business for bona fide business purposes and in accordance
with applicable laws not in excess of $500,000 at any one time outstanding;


 


(11)                            advances
to suppliers and customers in the ordinary course of business;


 


(12)                            loans,
guarantees of loans, advances, and other extensions of credit to or on behalf
of current and former officers, directors, employees, and consultants of the Issuer,
a Restricted Subsidiary, or a direct or indirect parent of the Issuer made in
the ordinary course of business for the purpose of permitting such Persons to
purchase Equity 


 

















 


Interests of the Issuer or any direct or
indirect parent of the Issuer, in an amount not to exceed $500,000 million at
any one time outstanding;


 


(13)                            Investments
in joint ventures in an aggregate amount not to exceed $5.0 million at any time
outstanding; and


 


(14)                            additional
Investments in an aggregate amount not to exceed $10.0 million at any time
outstanding.


 


“Permitted
Liens” means the following types of Liens:


 


(1)                                  Liens
for taxes, assessments or governmental charges or claims either (a) not
delinquent or (b) contested in good faith by appropriate proceedings and
as to which the Issuer or its Restricted Subsidiaries shall have set aside on
its books such reserves as may be required pursuant to GAAP;


 


(2)                                  statutory
Liens of landlords and Liens of carriers, warehousemen, mechanics, suppliers,
materialmen, repairmen and other Liens imposed by law or pursuant to customary
reservations or retentions of title incurred in the ordinary course of business
for sums not yet delinquent or being contested in good faith, if such reserve
or other appropriate provision, if any, as shall be required by GAAP shall have
been made in respect thereof;


 


(3)                                  Liens
incurred or deposits made in the ordinary course of business in connection with
workers’ compensation, unemployment insurance and other types of social
security, including any Lien securing letters of credit issued in the ordinary
course of business in connection therewith, or to secure the performance of
tenders, statutory obligations, surety and appeal bonds, bids, leases,
government contracts, performance and return-of-money bonds and other similar
obligations (exclusive of obligations for the payment of borrowed money);


 


(4)                                  survey
exceptions, easements, rights-of-way, zoning restrictions and other similar
charges or encumbrances in respect of real property not interfering in any
material respect with the ordinary conduct of the business of the Issuer or any
of its Restricted Subsidiaries;


 


(5)                                  any
interest or title of a lessor under any Capitalized Lease Obligation permitted
pursuant to clause (10) of the definition of “Permitted Indebtedness;” provided
that such Liens do not extend to any property or assets which is not leased
property subject to such Capitalized Lease Obligation;


 


(6)                                  Liens
securing Purchase Money Indebtedness permitted pursuant to clause (10) of
the definition of “Permitted Indebtedness;” provided, that (a) the
Indebtedness shall not exceed the cost of the property or assets acquired,
together, in the case of real property, with the cost of the construction
thereof and improvements thereto, and shall not be secured by a Lien on any
property or assets of the Issuer or any Restricted Subsidiary other than such
property or assets so acquired or constructed and improvements thereto and (b) the
Lien securing such Indebtedness shall be created within 180 days of such
acquisition or construction or, in the case of a refinancing of any Purchase
Money Indebtedness, within 180 days of such refinancing;


 

















 


(7)                                  Liens
upon 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;


 


(8)                                  Liens
securing reimbursement obligations with respect to commercial letters of credit
which encumber documents and other property relating to such letters of credit
and products and proceeds thereof;


 


(9)                                  Liens
encumbering deposits made to secure obligations arising from statutory,
regulatory, contractual, or warranty requirements of the Issuer or any of its
Restricted Subsidiaries, including rights of offset and set-off;


 


(10)                            Liens
securing Interest Swap Obligations that relate to Indebtedness that is
otherwise permitted under this Indenture;


 


(11)                            Liens
securing Indebtedness under Currency Agreements that are permitted under this
Indenture;


 


(12)                            judgment
Liens not giving rise to an Event of Default so long as such Lien is adequately
bonded and any appropriate legal proceedings which may have been duly
initiated for the review of such judgment shall not have been finally
terminated or the period within such proceedings may be initiated shall
not have expired;


 


(13)                            Liens
securing the Notes originally issued on the Issue Date and all other related
monetary obligations under this Indenture and the Guarantees;


 


(14)                            Liens
securing Indebtedness under the Credit Agreement to the extent such
Indebtedness is permitted under clause (2) of the definition of the term “Permitted
Indebtedness”;


 


(15)                            Liens
securing Refinancing Indebtedness incurred to Refinance any Indebtedness which
has been secured by a Lien permitted under this paragraph and incurred in
accordance with Section 4.08; provided, that such Liens: (i) are
no less favorable to the Holders and are not more favorable to the lienholders
with respect to such Liens than the Liens in respect of the Indebtedness being
Refinanced; and (ii) do not extend to or cover any property or assets of
the Issuer or any of its Restricted Subsidiaries not securing the Indebtedness
so Refinanced;


 


(16)                            Liens
in favor of the Issuer or a Restricted Subsidiary of the Issuer;


 


(17)                            banker’s
Liens, rights of setoff and similar Liens with respect to cash and Cash
Equivalents on deposit in one or more bank accounts in the ordinary course of
business (provided that such bank accounts are not cash collateral
accounts);


 


(18)                            Liens
in favor of customs and revenue authorities or forwarders acting on behalf of
the Issuer and its Subsidiaries to secure payment of customs duties in
connection with the importation of goods;


 

















 


(19)                            judgment
and attachment Liens not giving rise to an Event of Default and notices of lis
pendens and associated rights related to litigation being contested in good
faith by appropriate proceedings and for which adequate reserves have been
made;


 


(20)                            Liens
existing as of the Issue Date and securing Indebtedness permitted to be
outstanding under clause (3) of the definition of the term “Permitted
Indebtedness” to the extent and in the manner such Liens are in effect on
the Issue Date;


 


(21)                            Precautionary
filings of Uniform Commercial Code financing statements regarding
operating leases;


 


(22)                            deposits
made in the ordinary course of business to secure liability to insurance
carriers;


 


(23)                            rights
of a licensor of intellectual property;


 


(24)                            Liens
on Equity Interests of the Issuer or any Restricted Subsidiary in Unrestricted
Subsidiaries that secure non-recourse Indebtedness of the Unrestricted
Subsidiary; and


 


(25)                            Liens
encumbering cash, financial assets and any deposit account or securities
account in which such cash or financial assets are held pursuant to the Escrow
Agreement securing obligations of the Issuer in respect of its deferred
purchase price payment obligations under the Redemption Agreement; provided
that, such Liens shall be released (and shall no longer constitute a “Permitted
Lien”) to the extent any such cash or financial assets are disbursed in
satisfaction of such obligations in accordance with the terms of the Escrow
Agreement.


 


“Person”
means an individual, partnership, corporation, limited liability company,
unincorporated organization, trust or joint venture, or a governmental agency
or political subdivision thereof.


 


“Physical
Notes” has the meaning set forth in Section 2.14(b).


 


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


 


“Premises”
has the meaning set forth in Section 4.17.


 


“Private
Placement Legend” means the legend set forth on the Initial Notes in the form set
forth in Exhibit A to be placed on all Notes issued under this
Indenture, except where otherwise permitted by the provisions of this Indenture.


 


“Public
Equity Offering” means an underwritten public offering of Common Stock of
the Issuer or any holding company of the Issuer pursuant to a registration
statement filed with the SEC (other than on Form S-8).


 


“Purchase
Money Indebtedness” means Indebtedness of the Issuer and its Restricted
Subsidiaries incurred for the purpose of financing all or any part of the
purchase price, or the cost of installation, construction or improvement, of
property or equipment, provided, that the aggregate principal amount of 


 

















 


such Indebtedness does not exceed the lesser of the Fair Market Value
of such property or such purchase price or cost.


 


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


 


“Qualified
Equity Interest” means any Equity Interests that are not Disqualified
Equity Interests.


 


“Rafaella
Sportswear, Inc.” means Rafaella Sportswear, Inc., a Delaware
corporation and the predecessor of the Issuer.


 


“Record
Date” means any of the Record Dates specified in the Notes, whether or not
a Legal Holiday.


 


“Redemption
Agreement” means that Redemption Agreement to be dated the Issue Date among
Rafaella Sportswear, Inc., RA Cerberus Acquisition, LLC and the Issuer as
in effect on the Issue Date.


 


“Redemption
Date” means, when used with respect to any Note to be redeemed, the date
fixed for redemption pursuant to this Indenture and the Notes.


 


“Redemption
Price” means, when used with respect to any Note to be redeemed, the price
fixed for redemption pursuant to this Indenture and the Notes on a Redemption
Date.


 


“Reference
Date” has the meaning set forth in Section 4.09.


 


“Refinance”
means, in respect of any security or Indebtedness, to refinance, extend, renew,
refund, repay, prepay, redeem, defease, replace or retire, or to issue a
security or Indebtedness in exchange or replacement for, such security or
Indebtedness in whole or in part. “Refinanced” and “Refinancing”
shall have correlative meanings.


 


“Refinancing
Indebtedness” means any Refinancing by the Issuer or any Restricted
Subsidiary of the Issuer of Indebtedness incurred in accordance with Section 4.08
(other than pursuant to Permitted Indebtedness) or clauses (1), (3) (except
with respect to any contingent obligations to pay the Stockholders’ Equity
Adjustment) or (11) of the definition of Permitted Indebtedness, in each case
that does not:


 


(1)                                  have
an aggregate principal amount (or, if such Indebtedness is issued with original
issue discount, an aggregate offering price) greater than the sum of (x) the aggregate
principal amount of the Indebtedness being Refinanced (or, if such Indebtedness
being Refinanced is issued with original issue discount, the aggregate accreted
value) as of the date of such proposed Refinancing plus (y) the amount of fees,
expenses, premium, defeasance costs and accrued but unpaid interest relating to
the Refinancing of such Indebtedness being Refinanced;


 


(2)                                  create
Indebtedness with: (a) a Weighted Average Life to Maturity that is less
than the Weighted Average Life to Maturity of the Indebtedness being
Refinanced; or (b) a final maturity earlier than the final maturity of the
Indebtedness being Refinanced; or


 


(3)                                  affect
the security, if any, for such Refinancing Indebtedness (except to the extent
that less security is granted to holders of such Refinancing Indebtedness);


 

















 


If such
Indebtedness being Refinanced is subordinate or junior by its terms to the
Notes, then such Refinancing Indebtedness shall be subordinate by its terms to
the Notes at least to the same extent and in the same manner as the
Indebtedness being Refinanced.


 


“Register”
is defined in Section 2.03.


 


“Registrar”
has the meaning set forth in Section 2.03.


 


“Registration
Rights Agreement” means the Registration Rights Agreement, dated as of the
Issue Date, between the Issuer, the Guarantors and the Initial Purchaser, as
the same may be amended or modified from time to time in accordance with
the terms thereof.


 


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


 


“Regulation
S Permanent Global Note” means a permanent Global Note deposited with or on
behalf of and registered in the name of the Depositary or its nominee, issued
in a denomination equal to the outstanding principal amount at maturity of the
Regulation S Temporary Global Note upon expiration of the Distribution
Compliance Period.


 


“Regulation
S Temporary Global Note” means a temporary Global Note deposited with or on
behalf of and registered in the name of the Depositary or its nominee, issued
in a denomination equal to the outstanding principal amount at maturity of the
Initial Notes or Additional Notes initially sold in reliance on Rule 903
of Regulation S.


 


“Replacement
Assets” means property, plant, equipment or other assets that replace the
properties and assets that were the subject of an Asset Sale or that will be
used or useful in the Permitted Business (including expenditures for
maintenance, repair or improvement of existing properties and assets) or to
acquire all or substantially all of the assets of, or any Equity Interests of,
a Person engaged in a Permitted Business if, after giving effect to such
acquisition of Equity Interests, such Person is or becomes a Restricted
Subsidiary and, if the Asset Sale was with respect to assets of a Guarantor,
such Person is or becomes a Guarantor.


 


“Restricted
Payment” has the meaning set forth in Section 4.09.


 


“Restricted
Payment Amount” has the meaning set forth in Section 4.23(a).


 


“Restricted
Payment Offer” has the meaning set forth in Section 4.23(a).


 


“Restricted
Payment Offer Payment Date” has the meaning set forth in Section 4.23(b).


 


“Restricted
Security” has the meaning assigned to such term in Rule 144(a)(3) under
the Securities Act; provided that the
Trustee shall be entitled to request and conclusively rely on an Opinion of
Counsel with respect to whether any Note constitutes a Restricted Security.


 


“Restricted
Subsidiary” means any Subsidiary of the Issuer that at the time of
determination is not an Unrestricted Subsidiary.


 


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


 


“S&P”
means Standard & Poor’s Ratings Group.


 


“SEC”
has the meaning set forth in Section 4.19.


 

















 


“Secured
Parties” has the meaning set forth in the Security Agreement.


 


“Securities
Act” means the Securities Act of 1933, as amended, and the rules and
regulations of the SEC promulgated thereunder or any successor statute or
statutes thereto.


 


“Security
Agreement” means the Security Agreement, dated as of the Issue Date, made
by the Issuer and the Guarantors in favor of the Collateral Agent, as amended
or supplemented from time to time in accordance with its terms (which Security Agreement shall be
subject to the terms and conditions of the Intercreditor Agreement).


 


“Significant
Subsidiary” with respect to any Person, means any Restricted Subsidiary of
such Person that satisfies the criteria for a “significant subsidiary” set
forth in Rule 1-02(w) of Regulation S-X under the Exchange Act.


 


“Stockholders’
Equity Adjustment” means any stockholders’ equity adjustment payment
pursuant to Sections 3.02 or 3.03 of the Contribution Agreement to Rafaella
Sportswear, Inc.


 


“Subsidiary”
with respect to any Person, means:


 


(1)                                  any
corporation of which the outstanding Equity Interests having at least a
majority of the votes entitled to be cast in the election of directors under ordinary
circumstances shall at the time be owned, directly or indirectly, by such
Person; or


 


(2)                                  any
other Person of which at least a majority of the voting interest under ordinary
circumstances is at the time, directly or indirectly, owned by such Person.


 


“Surviving
Entity” has the meaning set forth in Section 5.01(1)(b).


 


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


 


“Transaction
Date” has the meaning set forth in the definition of the term “Consolidated
Fixed Charge Coverage Ratio.”


 


“Trustee”
has the meaning set forth in the preamble to this Indenture.


 


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


 


“Unrestricted
Subsidiary” means:


 


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


 


(2)                                  any
Subsidiary of an Unrestricted Subsidiary.


 

















 


The Board of
Directors may designate any Subsidiary (including any newly acquired or
newly formed Subsidiary) to be an Unrestricted Subsidiary unless such
Subsidiary owns any Equity Interests of, or owns or holds any Lien on any
property of, the Issuer or any other Subsidiary of the Issuer that is not a
Subsidiary of the Subsidiary to be so designated, provided that:


 


(1)                                  the
Issuer certifies to the Trustee that such designation complies with Section 4.09;
and


 


(2)                                  each
Subsidiary to be so designated and each of 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 of its Restricted Subsidiaries.


 


The Board of
Directors may designate any Unrestricted Subsidiary to be a Restricted
Subsidiary only if:


 


(1)                                  immediately
after giving effect to such designation, the Issuer is permitted to incur at
least $1.00 of additional Indebtedness (other than Permitted Indebtedness)
pursuant to Section 4.08; and


 


(2)                                  immediately
before and immediately after giving effect to such designation, no Default or
Event of Default shall have occurred and be continuing.


 


Any such
designation by the Board of Directors shall be evidenced to the Trustee by
promptly filing with the Trustee a copy of the Board Resolution giving effect
to such designation and an Officers’ Certificate certifying that such
designation complied with the foregoing provisions.


 


“U.S.
Government Obligations” means direct obligations of, and obligations
guaranteed by, the United States of America for the payment of which the full
faith and credit of the United States of America is pledged.


 


“U.S. Legal
Tender” means such coin or currency of the United States which, as at the
time of payment, shall be immediately available legal tender for the payment of
public and private debts.


 


“Voting
Equity Interests” means, with respect to any Person, securities of any class or
classes of Equity Interests of such Person entitling the holders thereof
(whether at all times or only so long as no senior class of stock has
voting power by reason of any contingency) to appoint or vote in the election
of members of the Board of Directors (or equivalent governing body) of such
Person.


 


“Weighted
Average Life to Maturity” means, when applied to any Indebtedness at any
date, the number of years obtained by dividing (1) the then outstanding
aggregate principal amount of such Indebtedness into (2) the sum of the
total of the products obtained by multiplying:


 


(a)                                  the
amount of each then remaining installment, sinking fund, serial maturity or
other required payment of principal, including payment at final maturity, in
respect thereof, by


 


(b)                                 the
number of years (calculated to the nearest one-twelfth) which will elapse
between such date and the making of such payment.


 

















 


“Wholly
Owned Restricted Subsidiary” means any Restricted Subsidiary of the Issuer
of which all the outstanding Equity Interests (other than in the case of a
Foreign Subsidiary, directors’ qualifying shares or an immaterial amount of
shares required to be owned by other Persons pursuant to applicable law) are
owned by the Issuer or any Wholly Owned Subsidiary of the Issuer.


 


 “Working Capital” means as of any date the difference
between (x) current assets of the Issuer (excluding cash and Cash
Equivalents) for such date and (y) current liabilities (excluding short-term
borrowings and current maturities of long-term indebtedness) of the Issuer for
such date, each as determined in accordance with GAAP.


 


Section 1.02                                Incorporation
by Reference of TIA.


 


Whenever this
Indenture refers to a provision of the TIA, such provision is incorporated by
reference in, and made a part of, this Indenture. The following TIA terms
used in this Indenture have the following meanings:


 


“indenture
securities” means the Notes and the Guarantees.


 


“indenture
security holder” means a Holder.


 


“indenture to
be qualified” means this Indenture.


 


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


 


“obligor”
on the indenture securities means the Issuer or the Guarantors or any successor
obligor on such securities.


 


All other TIA
terms used in this Indenture that are defined by the TIA, defined by TIA
reference to another statute or defined by SEC rule or under the TIA and
not otherwise defined herein have the meanings assigned to them either in the
TIA or SEC rule.


 


Section 1.03                                Rules of
Construction.


 


Unless the
context otherwise requires in this or any other Indenture Document:


 


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


 


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


 


(6)                                  when
the words “includes” or “including” are used herein, they shall be deemed to be
followed by the words “without limitation”;


 

















 


(7)                                  all
references to Sections or Articles refer to Sections or Articles of this
Indenture unless otherwise indicated; and


 


(8)                                  unless
otherwise defined or the context otherwise requires, terms for which meanings
are provided in this Indenture shall have such meanings when used in each other
Indenture Document.


 


ARTICLE TWO



THE NOTES


 


Section 2.01                                Form and
Dating.


 


The Initial
Notes and the Additional Notes and the Trustee’s certificate of authentication
thereon shall be substantially in the form of Exhibit A hereto.
The Exchange Notes and the Trustee’s certificate of authentication thereon
shall be substantially in the form of Exhibit B hereto. The
Notes may have notations, legends or endorsements required by law, stock
exchange rule or the Depositary rule or usage to which the Issuer is
subject, if any. The Issuer and the Trustee shall approve the form of the
Notes and any notation, legend or endorsement on them. Each Note shall be dated
the date of its authentication.


 


The terms and
provisions contained in the form of the Notes annexed hereto as Exhibit A
and Exhibit B shall constitute, and are hereby expressly made, a part 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 such terms and provisions and to be bound thereby.


 


Notes offered
and sold in reliance on Rule 144A shall be issued initially in the form of
one or more permanent global notes in registered form, substantially in the form set
forth in Exhibit A (the “144A Global Notes”), deposited with
the Trustee, as custodian for the Depositary, duly executed by the Issuer and
authenticated by the Trustee as hereinafter provided and shall bear the legend
set forth in Exhibit C.


 


Notes offered
and sold to Institutional Accredited Investors in reliance on Rule 501(a)(1),
(2), (3) or (7) under the Securities Act shall be issued initially in
the form of one or more permanent global notes in registered form,
substantially in the form set forth in Exhibit A (the “IAI
Global Notes”), deposited with the Trustee, as custodian for the Depositary,
duly executed by the Issuer and authenticated by the Trustee as hereinafter
provided and shall bear the legend set forth in Exhibit C.


 


Notes offered
and sold in offshore transactions in reliance on Regulation S shall be issued
initially in the form of one or more Regulation S Temporary Global Notes
deposited with the Trustee, as custodian for the Depositary, and registered in
the name of the Depositary or the nominee of the Depositary for the accounts of
designated agents holding on behalf of Euroclear or Clearstream, duly executed
by the Issuer and authenticated by the Trustee as hereinafter provided and
shall bear the legend set forth in Exhibit C.


 


Following the
termination of the Distribution Compliance Period, beneficial interests in a
Regulation S Temporary Global Note will be exchanged for beneficial interests
in a Regulation S Permanent Global Note pursuant to the Applicable Procedures. Simultaneously
with the authentication of a Regulation S Permanent Global Note, the Trustee
will cancel the related Regulation S Temporary Global Note.


 

















 


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


 


The aggregate principal
amount at maturity of any Global Note may from time to time be increased
or decreased by adjustments made on the records of the Trustee, as custodian
for the Depositary, as hereinafter provided.


 


The definitive
Notes shall be typed, printed, lithographed or engraved or produced by any
combination of these methods or may be produced in any other manner
permitted by the rules of any securities exchange on which the Notes may be
listed, all as determined by the Officer executing such Notes, as evidenced by
their execution of such Notes.


 


Section 2.02                                Execution
and Authentication; Aggregate Principal Amount.


 


An Officer
(who shall have been duly authorized by all requisite corporate actions) shall
sign the Notes for the Issuer by manual or facsimile signature.


 


If an Officer
whose signature is on a Note was an Officer at the time of such execution but
no longer holds that office or position at the time the Trustee authenticates
the Note, the Note shall nevertheless be valid.


 


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


 


The Trustee or
its Authenticating Agent (as defined below) shall authenticate (i) Initial
Notes for original issue in the aggregate principal amount at maturity not to
exceed $172,000,000, (ii) Exchange Notes from time to time for issue only
in exchange for a like principal amount at maturity of Initial Notes or
Additional Notes and (iii) subject to compliance with Section 4.08,
one or more series of Additional Notes in an unlimited amount in each case
upon written orders of the Issuer in the form of an Officers’ Certificate,
which Officers’ Certificate shall, in the case of any issuance of Additional Notes,
certify that such issuance is in compliance with Section 4.08. In
addition, each Officers’ Certificate shall specify the amount of Notes to be
authenticated and the date on which the Notes are to be authenticated, whether
the Notes are to be Initial Notes, Exchange Notes or Additional Notes. All
Notes issued under this Indenture shall vote and consent together on all
matters as one class and no series of Notes shall have the right to
vote or consent as a separate class on any matter.


 


The Trustee may appoint
an authenticating agent (the “Authenticating Agent”) reasonably
acceptable to the Issuer to authenticate Notes. Unless otherwise provided in
the appointment, an Authenticating Agent may authenticate Notes whenever
the Trustee may do so. Each reference in this Indenture to authentication
by the Trustee includes authentication by such Authenticating Agent. An
Authenticating Agent has the same rights as an Agent to deal with the Issuer
and Affiliates of the Issuer.


 


The Notes
shall be issuable in fully registered form only, without coupons, in
denominations of $1,000 in principal amount at maturity and any integral
multiple thereof.


 

















 


Section 2.03                                Registrar
and Paying Agent.


 


The Issuer
initially appoints the Trustee as registrar (the “Registrar”), paying
agent (the “Paying Agent”) and agent for service of demand and notices
in connection with the Notes. In addition, the Issuer shall maintain an office
or agency in the Borough of Manhattan, The City of New York, where (a) Notes
may be presented or surrendered for registration of transfer or for
exchange, (b) Notes may be presented or surrendered for payment and (c) notices
and demands to or upon the Issuer in respect of the Notes and this Indenture may be
served. Such office shall initially be at The Bank of New York, 101 Barclay
Street, Floor 8W, New York, New York 10286, Attention:  Corporate Trust Administration. The Registrar
shall keep a register of the Notes and of their transfer and exchange (the “Register”).
The Issuer, upon prior written notice to the Trustee, may have one or more
co-Registrars and one or more additional Paying Agents reasonably acceptable to
the Trustee. The term “Paying Agent” includes any additional Paying Agent. Neither
the Issuer nor any Affiliate of the Issuer may act as Paying Agent.


 


The Issuer
shall enter into an appropriate agency agreement with any Agent not a party to
this Indenture, which agreement shall incorporate the provisions of the TIA and
implement the provisions of this Indenture that relate to such Agent. The Issuer
shall notify the Trustee in writing, in advance, of the name and address of any
such Agent and otherwise be reasonably satisfactory to the Trustee. If the
Issuer fails to maintain a Registrar or Paying Agent, or fails to give the
foregoing notice, the Trustee shall act as such.


 


Any Paying
Agent or Registrar may resign upon thirty (30) days’ written notice to the
Issuer.


 


Section 2.04                                Obligations
of Paying Agent.


 


The Issuer
shall require each Paying Agent other than the Trustee to agree in writing that
such Paying Agent shall hold separate and apart from, and not commingle
with any other properties, for the benefit of the Holders or the Trustee, all
assets held by the Paying Agent for the payment of principal of, or interest
and Additional Interest, if any, on, the Notes (whether such assets have been
distributed to it by the Issuer or any other obligor on the Notes), and the
Issuer and the Paying Agent shall notify the Trustee in writing of any Default
by the Issuer (or any other obligor on the Notes) in making any such payment. The
Issuer at any time may require a Paying Agent to distribute all assets
held by it to the Trustee and account for any assets disbursed and the Trustee may at
any time during the continuance of any payment Default, upon written request to
a Paying Agent, require such Paying Agent to distribute all assets held by it
to the Trustee and to account for any assets distributed. Upon receipt by the
Trustee of all assets that shall have been delivered by the Issuer to the
Paying Agent, the Paying Agent shall have no further liability for such assets.


 


Section 2.05                                Holder
Lists.


 


The Trustee
shall preserve in as current a form as is reasonably practicable the most
recent list available to it of the names and addresses of the Holders and shall
otherwise comply with TIA Section 312(a). If the Trustee is not the
Registrar, the Issuer shall furnish or cause the Registrar to furnish to the
Trustee before each Record Date and at such other times as the Trustee may request
in writing a list as of such date and in such form as the Trustee may reasonably
request of the names and addresses of the Holders, which list may be
conclusively relied upon by the Trustee.


 


Section 2.06                                Transfer
and Exchange.


 


Subject to the
provisions of Sections 2.14 and 2.15, when Notes are presented to
the Registrar or a co-Registrar with a request to register the transfer of such
Notes or to exchange such Notes for an equal 


 

















 


principal amount at maturity of Notes of
other authorized denominations, the Registrar or co-Registrar shall register
the transfer or make the exchange as requested; provided, however,
that the Notes presented or surrendered for registration of transfer or
exchange shall be duly endorsed or accompanied by a written instrument of
transfer in form satisfactory to the Issuer and the Registrar or
co-Registrar, duly executed by the Holder thereof or his attorney duly
authorized in writing and such other documents as the Registrar or co-Registrar
may reasonably require. To permit registrations of transfers and
exchanges, the Issuer shall issue and the Trustee shall authenticate Notes at
the Registrar’s or co-Registrar’s request. No service charge shall be made for
any registration of transfer or exchange, but the Issuer or the Trustee may require
payment of a sum sufficient to cover any transfer tax or similar governmental
charge payable in connection therewith (other than any such transfer taxes or
similar governmental charge payable upon exchanges or transfers pursuant to Section 2.10,
3.06 or 4.10, in which event the Issuer shall be responsible for
the payment of such taxes).


 


The Registrar
or co-Registrar shall not be required to register the transfer or exchange of
any Note (i) during a period beginning at the opening of business fifteen
(15) days before the mailing of a notice of redemption of Notes and ending at
the close of business on the day of such mailing and (ii) selected for
redemption in whole or in part pursuant to Article Three,
except the unredeemed portion of any Note being redeemed in part.


 


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 the Depositary,
in accordance with this Indenture and the Applicable Procedures.


 


Section 2.07                                Replacement
Notes.


 


If a mutilated
Note is surrendered to the Trustee or if the Holder of a Note claims in writing
that the Note has been lost, destroyed or wrongfully taken, then, in the
absence of written notice to the Issuer or the Trustee that such Note has been
acquired by a protected purchaser, the Issuer shall issue and the Trustee shall
authenticate a replacement Note of like tenor and principal amount at maturity
and bearing a number not contemporaneously outstanding if the Trustee’s requirements
are met. Except with respect to mutilated Notes, such Holder must provide an
affidavit of lost certificate and an indemnity bond, sufficient in the judgment
of both the Issuer and the Trustee, to protect the Issuer, the Trustee or any
Agent from any loss which any of them may suffer if a Note is replaced. The
Issuer may charge such Holder for its reasonable out-of-pocket expenses in
replacing a Note, including reasonable fees and expenses of its counsel and of
the Trustee and its counsel. In case any mutilated, lost, destroyed or
wrongfully taken Note has become or is about to become due and payable, the
Issuer in its discretion may pay such Note instead of issuing a new Note
in replacement thereof. Every replacement Note shall constitute an additional
obligation of the Issuer, entitled to the benefits of this Indenture.


 


Section 2.08                                Outstanding
Notes.


 


Notes
outstanding at any time are all the Notes that have been authenticated by the
Trustee except those cancelled by it, those delivered to it for cancellation
and those described in this Section 2.08 as not outstanding. Subject
to the provisions of Section 2.09, a Note does not cease to be
outstanding because the Issuer or any of its Affiliates holds the Note.


 


If a Note is
replaced pursuant to Section 2.07 (other than a mutilated Note
surrendered for replacement), it ceases to be outstanding unless each of the
Issuer and the Trustee receives proof satisfactory to it that the replaced Note
is held by a protected purchaser. A mutilated Note ceases to be outstanding
upon surrender of such Note and replacement thereof pursuant to Section 2.07.


 

















 


If on a
Redemption Date or the Maturity Date the Paying Agent holds U.S. Legal Tender
or U.S. Government Obligations sufficient to pay all of the principal and interest
and Additional Interest, if any, due on the Notes payable on that date and is
not prohibited from paying such money to the Holders thereof pursuant to the
terms of this Indenture, then on and after that date such Notes cease to be
outstanding and interest, and Additional Interest, if any, on them ceases to
accrue.


 


Section 2.09                                Treasury
Notes; When Notes are Disregarded.


 


In determining
whether the Holders of the required principal amount at maturity of Notes have
concurred in any direction, waiver or consent, Notes owned by the Issuer or any
of its Affiliates shall be considered as though they are not outstanding; provided,
that for the purposes of determining whether the Trustee shall be protected in conclusively
relying on any such direction, waiver or consent, only Notes which a Trust
Officer of the Trustee actually knows are so owned shall be so considered. Notes
so owned, which have been pledged in good faith, may be regarded as
outstanding if the pledgee establishes to the satisfaction of the Trustee the
pledgee’s right so to act with respect to such Notes and that the pledgee is
not one of the Issuer or any other obligor upon the Notes or any Affiliate of
the Issuer or of such other obligor. The Issuer shall notify the Trustee, in
writing (which notice shall constitute actual notice for purposes of the
foregoing sentence), when they or any of its Affiliates repurchase or otherwise
acquire Notes, of the aggregate principal amount at maturity of such Notes so
repurchased or otherwise acquired.


 


Section 2.10                                Temporary
Notes.


 


Until
definitive Notes are ready for delivery, the Issuer may prepare and
execute and the Trustee shall authenticate temporary Notes upon receipt of a
written order of the Issuer in the form of an Officers’ Certificate. The
Officers’ Certificate shall specify the amount of temporary Notes to be
authenticated and the date on which the temporary Notes are to be authenticated.
Temporary Notes shall be substantially in the form 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 upon receipt of a written order of the Issuer pursuant to Section 2.06
definitive Notes in exchange for temporary Notes. Until so exchanged, the
temporary Notes shall be entitled to the same benefits under this Indenture as
definitive Notes.


 


Section 2.11                                Cancellation.


 


The Issuer at
any time may deliver Notes previously authenticated hereunder which the
Issuer has acquired in any lawful manner, to the Trustee for cancellation. The
Registrar and the Paying Agent shall forward to the Trustee any Notes
surrendered to them for transfer, exchange or payment. The Trustee, or at the
direction of the Trustee, the Registrar or the Paying Agent, and no one else,
shall cancel all Notes surrendered for transfer, exchange, payment or
cancellation. Subject to Section 2.02, the Issuer may not
issue new Notes to replace Notes that they have paid or delivered to the
Trustee for cancellation. If the Issuer shall acquire 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 2.11.
The Trustee shall dispose of all cancelled Notes in accordance with customary
procedures or, at the written request of the Issuer, shall return the same to
the Issuer.


 


Section 2.12                                CUSIP
Numbers.


 


A “CUSIP”
number shall be printed on the Notes, and the Trustee shall use the CUSIP
number in notices of redemption, purchase or exchange as a convenience to
Holders; provided that any such notice may state
that no representation is made as to the correctness or accuracy of the CUSIP
number printed in 


 

















 


the notice or on the Notes and that reliance may be placed only on
the other identification numbers printed on the Notes. The Issuer shall
promptly notify the Trustee in writing of any change in the CUSIP number.


 


Section 2.13                                Deposit
of Moneys.


 


Prior to 11:00 a.m.
New York City time on each Interest Payment Date and the Maturity Date, the
Issuer shall deposit with the Paying Agent U.S. Legal Tender sufficient to make
cash payments, if any, due on such Interest Payment Date or the Maturity Date,
as the case may be.


 


Section 2.14                                Book-Entry
Provisions for Global Notes.


 


(a)                                  The
Global Notes initially shall (i) be registered in the name of the Depositary
or the nominee of the Depositary, (ii) be delivered to the Trustee as
custodian for the Depositary and (iii) bear legends as set forth in Exhibit C.


 


Members of, or
participants in, the Depositary (“Agent Members”) shall have no rights
under this Indenture with respect to any Global Note held on their behalf by
the Depositary, or the Trustee as its custodian, or under any Global Note, and
the Depositary may be treated by the Issuer, the Trustee and any agent of
the Issuer or the Trustee as the absolute owner of the 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
the Depositary or impair, as between the Depositary and its Agent Members, the
operation of customary practices governing the exercise of the rights of a
Holder of any Note.


 


(b)           Transfers of the
Global Notes shall be limited to transfers in whole, but not in part, to the Depositary,
its successors or their respective nominees. Interests of beneficial owners in
the Global Notes may be transferred or exchanged in accordance with the
Applicable Procedures of the Depositary and the provisions of Section 2.15;
provided, however, that prior to the expiration of the
Distribution Compliance Period, transfers of beneficial interests in the
Regulation S Temporary Global Note may not be made to a U.S. Person or for
the account or benefit of a U.S. Person (other than the Initial Purchaser). In
addition, Notes in the form of certificated Notes in registered form in
substantially the form set forth in Exhibit A hereto (the “Physical
Notes”) shall be transferred to all beneficial owners in exchange for their
beneficial interests in the Global Notes if (i) the Depositary notifies
the Issuer that it is unwilling or unable to continue as Depositary for the
Global Notes and a successor Depositary is not appointed by the Issuer within
ninety (90) days of such notice or (ii) an Event of Default has occurred
and is continuing and the Registrar has received a request from the Depositary
to issue Physical Notes; provided that a beneficial interest in the
Regulation S Temporary Global Note may not be exchanged for a Physical
Note or transferred to a Person who takes delivery thereof in the form of
a Physical Note prior to (A) the expiration of the Distribution Compliance
Period and (B) the receipt by the Registrar of any certificates required
pursuant to Rule 903(b)(3)(ii)(B) under the Securities Act, except in
the case of a transfer pursuant to an exemption from the registration
requirements of the Securities Act other than Rule 903 or Rule 904.


 


(c)                                  Any
beneficial interest in one of the Global Notes that is transferred to a person
who takes delivery in the form of an interest in another Global Note
shall, upon transfer, cease to be an interest in such Global Note and become a
beneficial interest in such other Global Note and, accordingly, shall
thereafter be subject to all transfer restrictions, if any, and other
procedures applicable to a beneficial interest in such other Global Notes for
as long as it remains such an interest.


 

















 


(d)                                 In
connection with any transfer or exchange of a portion of the beneficial
interest in the Global Note to beneficial owners pursuant to paragraph (b) of
this Section 2.14, the Registrar shall (if one or more Physical
Notes are to be issued) reflect on its books and records the date and a
decrease in the principal amount at maturity of the Global Note in an amount
equal to the principal amount at maturity of the beneficial interest in the
Global Note to be transferred, and the Issuer shall execute, and the Trustee
shall authenticate and deliver, one or more Physical Notes of like tenor and
aggregate principal amount at maturity.


 


(e)                                  In
connection with the transfer of an entire Global Note to beneficial owners
pursuant to paragraph (b) of this Section 2.14, the
Global Notes shall be deemed to be surrendered to the Trustee for cancellation,
and the Issuer shall execute, and the Trustee shall authenticate and deliver,
to each beneficial owner identified by the Depositary in exchange for its
beneficial interest in the Global Notes, an equal aggregate principal amount at
maturity of Physical Notes of authorized denominations.


 


(f)                                    Any
Physical Note constituting a Restricted Security delivered in exchange for an
interest in the Global Note pursuant to paragraph (b) or (c) shall,
except as otherwise provided by paragraphs (a)(i)(x) and (c) of
Section 2.15, bear the legend regarding transfer restrictions
applicable to the Physical Notes set forth in Exhibit A, as
applicable.


 


(g)                                 The
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.


 


Section 2.15                                Special
Transfer Provisions.


 


(a)                                  Transfers
to Non-QIB Institutional Accredited Investors and Non-U.S. Persons. The
following provisions shall apply with respect to the registration of any
proposed transfer of a Note constituting a Restricted Security to any
Institutional Accredited Investor which is not a QIB or to any Non-U.S. Person:


 


(i)                                     the Registrar
shall register the transfer of any Note constituting a Restricted Security,
whether or not such Note bears the Private Placement Legend, if (x) the
requested transfer is after June 20, 2007 or (y) (1) in the case
of a transfer to an Institutional Accredited Investor which is not a QIB
(excluding Non-U.S. Persons), the proposed transferee has delivered to the
Registrar a certificate substantially in the form of Exhibit C
hereto or (2) in the case of a transfer to a Non-U.S. Person, the proposed
transferor has delivered to the Registrar a certificate substantially in the form of
Exhibit D hereto; and


 


(ii)                                  if the proposed transferor
is an Agent Member holding a beneficial interest in the Global Note, upon
receipt by the Registrar of (x) the certificate, if any, required by paragraph
(i) above and (y) instructions given in accordance with the
Applicable Procedures and the Registrar’s procedures,


 


whereupon (1) the
Registrar shall reflect on its books and records the date and (if the transfer
does not involve a transfer of outstanding Physical Notes) a decrease in
the principal amount at maturity of the Global Note in an amount equal to the principal
amount at maturity of the beneficial interest in the Global Note to be
transferred, and (2) the Issuer shall execute and the Trustee shall
authenticate and deliver one or more Physical Notes of like tenor and principal
amount at maturity.


 

















 


(b)                                 Transfers
to QIBs. The following provisions shall apply with respect to the
registration of any proposed transfer of a Note constituting a Restricted
Security to a QIB (excluding transfers to Non-U.S. Persons):


 


(i)                                     the
Registrar shall register the transfer if such transfer is being made by a
proposed transferor who has checked the box provided for on the form of
Note stating, or has otherwise advised the Issuer and the Registrar in writing,
that the sale has been made in compliance with the provisions of Rule 144A
to a transferee who has signed the certification provided for on the form of
Note stating, or has otherwise advised the Issuer and the Registrar in writing,
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 QIB 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 it 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)                                  if
the proposed transferee is an Agent Member, and the Notes to be transferred
consist of Physical Notes which after transfer are to be evidenced by an
interest in the Global Note, upon receipt by the Registrar of instructions
given in accordance with the Applicable Procedures and the Registrar’s
procedures, the Registrar shall reflect on its books and records the date and
an increase in the principal amount at maturity of the Global Note in an amount
equal to the principal amount at maturity of the Physical Notes to be
transferred, and the Trustee shall cancel the Physical Notes so transferred.


 


(c)                                  Private
Placement Legend. Upon the transfer, exchange or replacement of Notes not
bearing the Private Placement Legend, the Registrar shall deliver Notes that do
not bear the Private Placement Legend. Upon the transfer, exchange or
replacement of Notes bearing the Private Placement Legend, the Registrar shall
deliver only Notes that bear the Private Placement Legend unless (i) the
circumstance contemplated by paragraph (a)(i)(x) of this Section 2.15
exists or (ii) 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 is delivered to the Registrar. The Registrar
shall not register a transfer of any Note unless such transfer complies with
the restrictions on transfer of such Note set forth in this Indenture. In
connection with any transfer of Notes, each Holder agrees by its acceptance of
the Notes to furnish the Registrar or the Issuer such certifications, legal
opinions or other information as either of them may reasonably require to
confirm that such transfer is being made pursuant to an exemption from, or a
transaction not subject to, the registration requirements of the Securities
Act; provided that the Registrar shall not
be required to determine (but may rely on a determination made by the
Issuer with respect to) the sufficiency of any such certifications, legal
opinions or other information.


 


(d)                                      General.
By its acceptance of any Note bearing the Private Placement Legend, each Holder
of such a Note acknowledges the restrictions on transfer of such Note set forth
in this Indenture and in the Private Placement Legend and agrees that it shall
transfer such Note only as provided in this Indenture.


 


The Registrar
shall retain copies of all letters, notices and other written communications
received pursuant to Section 2.14 or this Section 2.15.
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 written notice to the Registrar.


 

















 


The Trustee
shall have no obligation or duty to monitor, determine or inquire as to
compliance with any restrictions on transfer imposed under this Indenture or
under applicable law with respect to any transfer of any interest in any Note
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
compliance as to form with the express requirements hereof.


 


Section 2.16                                Transfers
of Global Notes and Physical Notes.


 


A transfer of
a Global Note or a Physical Note (including the right to receive principal and
interest, and Additional Interest, if any, payable thereon) may be made
only by the Registrar’s entering the transfer in the Register. Prior to such
entry, the Issuer shall treat the person in whose name such Note is registered
as the owner of the Note for all purposes.


 


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


 


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


 


ARTICLE THREE



REDEMPTION


 


Section 3.01                                Optional
Redemption.


 


The Issuer may, at its
option, redeem the Notes, in whole or in part, at specified times and under
specified conditions, as set forth in Paragraph 5 of the Notes. If the
Issuer elects to redeem Notes pursuant to Paragraph 5 of the Notes, it
shall, at least forty (40) days (or such shorter period as the Trustee may agree)
before the Redemption Date, notify the Trustee and Paying Agent in writing of
the Redemption Date and the Accreted Value of the Notes to be redeemed and the
clause of this Indenture or the Notes pursuant to which the redemption shall
occur. Notwithstanding
anything in this Indenture to the contrary, the Issuer shall not be prohibited
from acquiring Notes by means other than redemption, whether pursuant to an
issuer tender offer, open market transactions or otherwise, so long as such
acquisition does not otherwise violate the terms of this Indenture.


 


Each Officers’
Certificate provided for in this Section 3.01 shall be accompanied
by an Opinion of Counsel stating that such redemption has complied with the
conditions contained herein and in the Notes. Any optional redemption referenced in such Officers’
Certificate may be cancelled by the Issuer at any time prior to a Notice
of Redemption being mailed to any Holder and, thereafter, shall be null and
void.


 


Section 3.02                                Selection
of Notes to be Redeemed. 


 


In the event
that fewer than all of the Notes are to be redeemed pursuant to Paragraph 5
of the Notes, the Trustee shall select the Notes to be redeemed:


 


(1)                                  in
compliance with the requirements of the principal national securities exchange,
if any, on which such Notes are listed; or


 

















 


(2)                                  if
such Notes are not then listed on a national securities exchange, on a pro rata
basis, by lot or by such method as the Trustee may reasonably determine is
fair and appropriate; provided that no
partial redemption will reduce the principal amount at maturity of a Note not
redeemed to less than $1,000; provided further,
that if a partial redemption is made with the proceeds of an Equity Offering
then the Trustee shall select the Notes or portions thereof for redemption only
on a pro rata basis or on as nearly a pro rata
basis as is practicable (subject to the procedures of the Depositary), unless
such method is prohibited.


 


The Trustee
shall make the selection from the Notes outstanding and not previously called
for redemption and shall promptly notify the Issuer in writing of the Notes
selected for redemption and, in the case of any Note selected for partial
redemption, the principal amount at maturity thereof, to be redeemed. Notes in
denominations of $1,000 in principal amount at maturity may be redeemed
only in whole. The Trustee may select for redemption portions (equal to
$1,000 in principal amount at maturity or any integral multiple thereof) of the
principal of Notes that have denominations larger than $1,000. Provisions of
this Indenture that apply to Notes called for redemption also apply to portions
of Notes called for redemption.


 


Section 3.03                                Notice
of Redemption. 


 


At least
thirty (30) days but not more than sixty (60) days before a Redemption Date,
the Issuer shall mail or cause to be mailed a notice of redemption by first class mail,
postage prepaid, to each Holder whose Notes are to be redeemed at its
registered address, with a copy to the Trustee and any Paying Agent. At the
Issuer’s written request, the Trustee shall give the notice of redemption in
the Issuer’s name and at the Issuer’s expense. Failure to give notice of
redemption, or any defect therein to any Holder of any Note selected for
redemption shall not impair or affect the validity of the redemption of any
other Note.


 


Each notice of
redemption shall identify the Notes to be redeemed and shall state:


 


(1)                                  the
Redemption Date;


 


(2)                                  the
Redemption Price and the amount of accrued interest and Additional Interest, if
any, to be paid to (but not including) the Redemption Date;


 


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


 


(4)                                  the
CUSIP number;


 


(5)                                  the
subparagraph of the Notes pursuant to which such redemption is being made;


 


(6)                                  the
place where such Notes called for redemption must be surrendered to the Paying
Agent to collect the Redemption Price plus accrued interest and Additional
Interest, if any, to (but not including) the Redemption Date;


 


(7)                                  that,
unless the Issuer fails to deposit with the Paying Agent funds in satisfaction
of the applicable redemption price and interest and Additional Interest, if any,
and on Notes called for redemption ceases to accrue on and after the Redemption
Date in accordance with Section 3.05, and the only remaining right
of the Holders of such Notes is to receive payment of the Redemption Price plus
accrued interest and Additional 


 

















 


Interest, if any, to (but not including) the
Redemption Date, upon surrender to the Paying Agent of the Notes redeemed;


 


(8)                                  if
any Note is being redeemed in part, the portion of the principal amount at
maturity of such Note to be redeemed and that, after the Redemption Date, and
upon surrender of such Note, a new Note or Notes in the aggregate principal
applicable amount equal to the unredeemed portion thereof shall be issued in the name of the Holder of such
original Note (unless such unredeemed portion is equal to less than $1,000 in
principal amount at maturity) or transferred by book entry upon cancellation of
the original Note; and


 


(9)                                  if
fewer than all the applicable Notes are to be redeemed, the identification of
the particular Notes (or portion thereof) to be redeemed, as well as the
aggregate principal amount at maturity of the applicable Notes to be redeemed
and the aggregate principal amount at maturity of the applicable Notes to be
outstanding after such partial redemption.


 


If any of the
Notes to be redeemed is in the form of a Global Note, then the Issuer
shall modify such notice to the extent necessary to accord with the procedures
of the Depositary applicable to redemption. The notice, if mailed in compliance with the manner
provided herein, shall be presumed to have been given, whether or not the
Holders actually receive such notice.


 


Section 3.04                                Effect
of Notice of Redemption.


 


Once notice of
redemption is mailed in accordance with Section 3.03, Notes or
portions thereof called for redemption shall become irrevocably due and payable
on the Redemption Date and at the Redemption Price plus accrued interest and
Additional Interest, if any, to (but not including) the Redemption Date. Upon
surrender to the Trustee or Paying Agent, such Notes or portions thereof called
for redemption shall be paid at the Redemption Price plus accrued interest and
Additional Interest, if any, thereon to (but not including) the Redemption
Date, but installments of interest, the maturity of which is on or prior to the
Redemption Date, shall be payable to Holders of record at the close of business
on the relevant Record Dates referred to in the Notes.


 


Section 3.05                                Deposit
of Redemption Price.


 


Not later than
12:00 p.m. local time in the place of payment on the Redemption Date, the
Issuer shall deposit with the Paying Agent U.S. Legal Tender sufficient to pay
the Redemption Price plus accrued and unpaid interest and Additional Interest,
if any, to (but not including) the Redemption Date, of all Notes or portions
thereof to be redeemed on that date.


 


The Paying
Agent shall promptly return
to the Issuer any U.S. Legal Tender so deposited which is not required for that
purpose, except with respect to monies owed as obligations to the Trustee
pursuant to Article Seven.


 


If the Issuer
complies with the preceding paragraph, then, unless the Issuer defaults in the
payment of such Redemption Price plus accrued and unpaid interest and
Additional Interest, if any, to (but not including) the Redemption Date, on the
Notes or portions thereof to be redeemed shall cease to accrue on and after the
applicable Redemption Date, whether or not such Notes are presented for
payment.


 

















 


Section 3.06                                Notes
Redeemed in Part.


 


Upon surrender
of a Note that is to be redeemed in part, the Issuer shall issue and the
Trustee shall authenticate for the Holder at the expense of the Issuer a new
Note or Notes equal in principal amount at maturity to the unredeemed portion
of the Note surrendered.


 


ARTICLE FOUR



COVENANTS


 


Section 4.01                                Payment
of Notes.


 


The
Issuer shall pay the principal of, or premium, if any, or interest, and
Additional Interest, if any, on the Notes on the dates and in the manner
provided in the Notes and in this Indenture. An installment of principal of, or
premium, if any, or interest, and Additional Interest, if any, on the Notes
shall be considered paid on the date it is due if the Trustee or Paying Agent
(other than the Issuer or an Affiliate of the Issuer) holds by 12:00 p.m.
on that date U.S. Legal Tender designated for and sufficient to pay the
installment in full. The Issuer shall pay interest on overdue principal at 2.0%
per annum in excess of the rate per annum set forth in the Notes and will pay
interest on overdue installments of interest at the such higher rate to the
extent lawful. The
Trustee or such Paying Agent shall return to the Issuer promptly any money
(including accrued interest) that exceeds such amount of principal, premium, if
any, interest and Additional Interest, if any, paid on the Notes. If a payment
date is a Legal Holiday, payment may be made at that place on the next
succeeding day that is not a Legal Holiday, and no overdue interest shall
accrue on such payment for the intervening period.


 


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 from principal or interest payments
hereunder.


 


Section 4.02                                Maintenance
of Office or Agency.


 


The Issuer
shall maintain the office or agency required under Section 2.03. The
Issuer shall give prior written notice to the Trustee of the location, and any
change in the location, of such office or agency. If at any time the Issuer
shall fail to maintain any such required office or agency or shall fail to
furnish the Trustee with the address thereof, such presentations, surrenders,
notices and demands may be made or served at the Corporate Trust Office of
The Bank of New York (or its successor) and the Issuer hereby appoints The Bank
of New York (or its successor) as its agent to receive all such presentations,
surrenders, notices and demands.


 


Section 4.03                                Corporate
Existence.


 


Except as
otherwise permitted by Article Four, Article Five and Article Ten,
the Issuer shall do or cause to be done, at its own cost and expense, all
things necessary to preserve and keep in full force and effect its corporate
existence and the limited liability company, partnership or corporate existence
of each of the Restricted Subsidiaries in accordance with the respective
organizational documents of each such Restricted Subsidiary and the material
rights (charter and statutory) and franchises of the Issuer and each such
Restricted Subsidiary; provided, however, that the Issuer shall not
be required to preserve any such right or franchise of the Issuer or any right,
franchise or corporate existence with respect to any Restricted Subsidiary, if
the loss thereof would not, individually or in the aggregate, have a material
adverse effect on the Issuer and its Restricted Subsidiaries, taken as a whole.


 

















 


Section 4.04                                Payment
of Taxes and Other Claims.


 


The Issuer shall pay or discharge or cause to
be paid or discharged, before the same shall become delinquent, (i) all
material taxes, assessments and governmental charges (including withholding
taxes and any penalties, interest and additions to taxes) levied or imposed
upon it or any of the Restricted Subsidiaries or its properties or any of the
Restricted Subsidiaries’ properties and (ii) all material lawful claims
for labor, materials and supplies that, if unpaid, might by law become a Lien
upon its properties or any of the Restricted Subsidiaries’ properties; 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 whose
amount, applicability or validity is being or shall be contested in good faith
by appropriate proceedings properly instituted and diligently conducted for
which adequate reserves, to the extent required under GAAP, have been taken.


 


Section 4.05                                Maintenance
of Properties and Insurance; Compliance with Laws.


 


(a)                                  The
Issuer shall, and shall cause each of the Restricted Subsidiaries to, maintain
in good working order and condition in all material respects (subject to
ordinary wear and tear) its properties that are used or useful in the conduct
of its business and that are material to the conduct of such business, and make
all necessary repairs, renewals, replacements, additions, betterments and
improvements thereto and actively conduct and carry on its business.


 


(b)                                 The
Issuer shall maintain insurance (including appropriate self-insurance) against
loss or damage of the kinds that, in the good faith judgment of the Issuer, is
adequate and appropriate for the conduct of the business of the Issuer and the
Restricted Subsidiaries in a prudent manner, with reputable insurers or with
the government of the United States or an agency or instrumentality thereof, in
such amounts, with such deductibles, and by such methods as shall be customary,
in the good faith judgment of the Issuer, for companies similarly situated in
the industry in which the Issuer and the Restricted Subsidiaries are engaged.


 


(c)                                  The
Issuer shall, and shall cause each of the Subsidiaries to, comply with all
applicable statutes, rules, regulations, orders and restrictions of the United
States, all states and municipalities thereof, and of any governmental
department, commission, board, regulatory authority, bureau, agency and
instrumentality of the foregoing, in respect of the conduct of its businesses
and the ownership of its properties, except for such noncompliances as are not
in the aggregate reasonably likely to have a material adverse effect on the
financial condition or results of operations of the Issuer and its
Subsidiaries, taken as a whole, or the ability of the Issuer to perform its
obligations hereunder.


 


Section 4.06                                Compliance
Certificate; Notice of Default.


 


(a)                                  The
Issuer shall deliver to the Trustee, within ninety (90) days after the end of
the Issuer’s fiscal year, an Officers’ Certificate stating that a review of the
activities of the Issuer and the Restricted Subsidiaries during the preceding
fiscal year has been made under the supervision of the signing Officers (one of
whom is the principal executive officer, principal financial officer or
principal accounting officer) with a view to determining whether they have
kept, observed, performed and fulfilled its obligations under this Indenture
and the other Indenture Documents and further stating, as to each such Officer
signing such certificate, that to the best of such Officer’s actual knowledge
the Issuer and the Restricted Subsidiaries during such preceding fiscal year
have kept, observed, performed and fulfilled their respective obligations under
this Indenture and the other Indenture Documents in all material respects and
at the date of such certificate there is no Default or Event of Default that
has occurred and is continuing or, if such signers do know of such Default or
Event of Default, the certificate shall describe the Default or Event of
Default and its status with particularity.


 

















 


(b)                                 The
Issuer shall, so long as any Notes are outstanding, upon any Officer of the
Issuer becoming aware of any Default or Event of Default, deliver to the
Trustee an Officers’ Certificate specifying such Default or Event of Default
within five (5) Business Days of such Officer becoming aware of such
occurrence.


 


Section 4.07                                Waiver
of Stay, Extension or Usury Laws.


 


The Issuer
covenants (to the extent that it may lawfully do so) that it shall not at
any time insist upon, plead, or in any manner whatsoever claim or take the
benefit or advantage of, any stay or extension law or any usury law or other
law that would prohibit or forgive the Issuer from paying all or any portion of
the principal of, premium, if any, or interest or Additional Interest, if any, on
the Notes as contemplated herein, wherever enacted, now or at any time
hereafter in force, or which may affect the covenants or the performance
of this Indenture; and (to the extent that it may lawfully do so) the
Issuer hereby expressly waives all benefit or advantage of any such law, and
covenant that it shall not, by resort to any such law, hinder, delay or impede
the execution of any power herein granted to the Trustee or Collateral Agent,
but shall suffer and permit the execution of every such power as though no such
law had been enacted.


 


Section 4.08                                Limitation
on Incurrence of Additional Indebtedness.


 


The Issuer
will not, and will not permit any of its Restricted Subsidiaries to, directly
or indirectly, create, incur, assume, guarantee, acquire, become liable,
contingently or otherwise, with respect to, or otherwise become responsible for
payment of (collectively, “incur”) any Indebtedness (other than
Permitted Indebtedness). Notwithstanding the foregoing, the Issuer and the
Guarantors may incur Indebtedness (including Acquired Indebtedness and
Disqualified Equity Interests) if on the date of (after giving effect to) the
incurrence of such Indebtedness and the application of the proceeds thereof: (i) no
Default or Event of Default shall have occurred and be continuing and (ii) the
Consolidated Fixed Charge Coverage Ratio of the Issuer will be at least 2.0 to
1.0.


 


Section 4.09                                Limitation
on Restricted Payments.


 


The Issuer
will not, and will not cause or permit any of its Restricted Subsidiaries to,
directly or indirectly:


 


(1)                                  declare
or pay any dividend or make any distribution (other than dividends or
distributions payable (i) in Qualified Equity Interests of the Issuer and (ii) to
the Issuer or a Guarantor) on or in respect of Equity Interests of the Issuer
or its Restricted Subsidiaries;


 


(2)                                  purchase,
redeem or otherwise acquire or retire for value any Equity Interests of the
Issuer, any Restricted Subsidiary, or any Affiliate of the Issuer (other than
any such Equity Interests owned by the Issuer or any Guarantor);


 


(3)                                  make
any principal payment on, purchase, defease, redeem, prepay, decrease or
otherwise acquire or retire for value, prior to any scheduled final maturity,
scheduled repayment or scheduled sinking fund payment, any Indebtedness of the
Issuer or any Restricted Subsidiary that is subordinate or junior in right of
payment to the Notes or a Guarantee (other than Indebtedness of the Issuer or a
Restricted Subsidiary held by the Issuer or a Guarantor and meeting the
definition of Permitted Indebtedness); or


 


(4)                                  make
any Investment (other than Permitted Investments);


 

















 


(each of the
foregoing actions set forth in clauses (1), (2), (3) and (4) being
referred to as a “Restricted Payment”), if at the time of such
Restricted Payment or immediately after giving effect thereto:


 


(i)                                     a
Default or an Event of Default shall have occurred and be continuing;


 


(ii)                                  the
Issuer is not permitted to incur at least $1.00 of additional Indebtedness
(other than Permitted Indebtedness) pursuant to Section 4.08;


 


(iii)                               the
Issuer has not made a Restricted Payment Offer pursuant to Section 4.23
prior to making any Restricted Payment set forth in clauses (1), (2) or (3) above;
or


 


(iv)                              the
aggregate amount of Restricted Payments (including such proposed Restricted
Payment) made subsequent to the Issue Date (the amount expended for such
purposes, if other than in cash, being the Fair Market Value of such property
at the time of the making thereof) shall exceed the sum of:


 


(A)                              50%
of the cumulative Consolidated Net Income (or if cumulative Consolidated Net
Income is a loss, minus 100% of such loss) of the Issuer earned during the
period beginning on the first day of the first full fiscal quarter after the
Issue Date and ending on the last day of the Issuer’s most recent fiscal
quarter ending prior to the date of such Restricted Payment for which financial
statements are available (the “Reference Date”) (treating such period as
a single accounting period); plus


 


(B)                                100%
of the aggregate net proceeds, including the Fair Market Value of property
other than cash, received by the Issuer from any Person (other than a
Subsidiary of the Issuer) from a Capital Contribution or the issuance and sale
subsequent to the Issue Date and on or prior to the date of the Restricted
Payment of Qualified Equity Interests of the Issuer (excluding (i) any net
proceeds from an Equity Offering to the extent used to redeem Notes pursuant to
the provisions described under Section 3.01 and (ii) any funds
contributed or invested by Acquisition Co. with funds paid to Acquisition Co.
pursuant to the Escrow Agreement); plus


 


(C)                                100%
of the aggregate net proceeds, including the Fair Market Value of property
other than cash received from the issuance of Indebtedness or shares of
Disqualified Equity Interests of the Issuer that have been converted into or
exchanged for Qualified Equity Interests of the Issuer subsequent to the Issue
Date and on or prior to the date of the Restricted Payment; plus


 


(D)                               an
amount equal to the sum of (i) the net reduction in the Investments (other
than Permitted Investments) made by the Issuer or any of its Restricted
Subsidiaries subsequent to the Issue Date in any Person resulting from
repurchases, repayments or redemptions of such Investments by such Person,
proceeds realized on the sale of such Investment and proceeds representing the
return of capital (excluding dividends and distributions), in each case
received by the Issuer or any of its Restricted Subsidiaries, and (ii) to
the extent such Person is an Unrestricted Subsidiary, the portion
(proportionate to the Issuer’s equity interest in such Subsidiary) of the Fair
Market Value of the net assets of such Unrestricted Subsidiary at the time such
Unrestricted Subsidiary is designated a 


 






 










 


Restricted Subsidiary; provided, however, that the
foregoing sum shall not exceed, in the case of any such Person or Unrestricted
Subsidiary, the amount of Investments (excluding Permitted Investments)
previously made subsequent to the Issue Date (and treated as a Restricted
Payment) by the Issuer or any of its Restricted Subsidiaries in such Person or
Unrestricted Subsidiary.


 


In the case of
clause (iv)(B) above, any net cash proceeds from Capital Contributions and
issuances and sales of Qualified Equity Interests of the Issuer financed
directly or indirectly using funds borrowed from the Issuer or any Subsidiary
of the Issuer, shall be excluded until and to the extent such borrowing is
repaid.


 


The provisions
set forth in the immediately preceding paragraph do not prohibit (each of the
following an “Excluded Restricted Payment”):


 


(1)                                  the
payment of any dividend or other distribution or redemption within 60 days
after the date of declaration of such dividend or call for redemption if such
payment would have been permitted on the date of declaration or call for
redemption;


 


(2)                                  the
purchase, redemption or other acquisition of any shares of Qualified Equity
Interests of the Issuer either (i) solely in exchange for other shares of
Qualified Equity Interests of the Issuer or (ii) through the application
of the net proceeds of a sale for cash (other than to a Subsidiary of the
Issuer) of Qualified Equity Interests of the Issuer within 60 days after such
sale; provided that the amount of any such net cash proceeds that are
utilized for any such Restricted Payment will be excluded from clause (iv)(B) of
the preceding paragraph;


 


(3)                                  the
purchase, redemption or other acquisition of any Indebtedness of the Issuer or
the Guarantors that is subordinate or junior in right of payment to the Notes
and Guarantees either (i) solely in exchange for Qualified Equity
Interests of the Issuer, or (ii) through the application of net proceeds
of a sale for cash (other than to a Subsidiary of the Issuer) within 60 days
after such sale if no Default or Event of Default would exist after giving
effect thereto, of Refinancing Indebtedness;


 


(4)                                  an
Investment either (i) solely in exchange for shares of Qualified Equity
Interests of the Issuer or (ii) through the application of the net proceeds
of a sale for cash (other than to a Subsidiary of the Issuer) of shares of
Qualified Equity Interests of the Issuer within 60 days after such sale; provided
that the amount of any such net cash proceeds that are utilized for any such
Restricted Payment will be excluded from clause (iv)(B) of the preceding
paragraph;


 


(5)                                  repurchases
of Equity Interests deemed to occur upon exercise of stock options, warrants or
other similar rights if such Equity Interests represents a portion of the
exercise price of such options, warrants or other similar rights;


 


(6)                                  payments,
advances or dividends to any direct or indirect parent entity of the Issuer to
be used by such entity solely to pay its franchise taxes and reasonable
directors’ fees and other fees and expenses owing by it in the ordinary course
of business; provided, that such advances are in an aggregate amount not
to exceed $500,000 in any fiscal year, to the extent actually used by such
entity to pay such taxes, fees and expenses;


 

















 


(7)                                  the
application of the proceeds from the issuance of the Notes on the Issue Date as
described under the “Use of Proceeds” section of the Offering
Circular, including any investment or reinvestment of any amounts in escrow on
or after the Issue Date and the application of any such proceeds after the
Issue Date upon release from escrow in accordance with the terms of the Escrow
Agreement;


 


(8)                                  payments
of the Stockholders’ Equity Adjustment in connection with the Transactions;


 


(9)                                  payments,
advances or dividends to any direct or indirect parent entity of the Issuer to
be used by such entity solely to pay federal, state and local income taxes made
no earlier than five days prior to the date on which such entity is required to
make such payment in an amount not to exceed the aggregate tax liability of the
Issuer and its Restricted Subsidiaries for such calendar year determined as if
the Issuer and its Restricted Subsidiaries were a separate affiliated group (as
defined in Section 1504 of the Internal Revenue Code of 1986, as amended)
filing a consolidated return, or, to the extent applicable, a separate group
filing combined or unitary returns, and then only to the extent that any such
payments are actually paid by such entity to governmental entities;


 


(10)                            so
long as no Default or Event of Default has occurred and is continuing or would
exist after giving effect thereto, the repurchase or other acquisition of
Equity Interests of the Issuer or any direct or indirect parent of the Issuer
from employees, former employees, consultants and former consultants, officers
or former officers, directors or former directors of the Issuer or any of its
subsidiaries (or permitted transferees and Heirs of such employees, former
employees, consultants and former consultants, officers or former officers,
directors or former directors), pursuant to the terms of the agreements
(including employment agreements) or plans (or amendments thereto) approved by
the Board of Directors of the Issuer under which such individuals purchase or
sell or are granted the option to purchase or sell, shares of such Equity
Interests; provided, that the aggregate amount of such repurchases and
other acquisitions in any fiscal year shall not exceed $2.0 million; provided further
that the Issuer may carry over and make in subsequent calendar years, in
addition to the amounts permitted for such calendar year, the amount of such
purchases, redemptions or other acquisitions or retirements for value permitted
to have been made but not made in any preceding calendar year up to a maximum
of $4.0 million in any calendar year; provided  further that such
amount in any calendar year may be increased by an amount not to exceed (i) the
net cash proceeds from the sale of Qualified Equity Interests of the Issuer (or
any direct or indirect parent of the Issuer to the extent such net cash
proceeds are contributed to the common equity of the Issuer) to employees,
officers, directors or consultants of the Issuer and its Restricted
Subsidiaries that occurs after the Issue Date (to the extent the cash proceeds
from the sale of such Equity Interests have not otherwise been applied to the
payment of Restricted Payments) plus (ii) the cash proceeds of
key-man life insurance policies received by the Issuer and its Restricted
Subsidiaries after the date of this Indenture less any amounts
previously applied to the payment of Restricted Payments pursuant to this
clause (10); and provided further that the net cash proceeds
from such sales of Qualified Equity Interests described in subclause (i) of
this clause (10) shall be excluded from clauses (iv)(B) and (C) of
the preceding paragraph to the extent such proceeds have been or are applied to
the payment of Restricted Payments pursuant to this clause (10);


 

















 


(11)                            following
the first Public Equity Offering of the Issuer or any parent of the Issuer
after the date of this Indenture, the payment of dividends on common Equity
Interests of the Issuer, and, in the case of a Public Equity Offering of any
parent of the Issuer, solely for the purpose of paying dividends on the parent’s
common Equity Interests, in an amount not to exceed 6% per annum of the gross
proceeds of such Public Equity Offering received by, and in the case of a
Public Equity Offering of any parent, contributed to the capital of, the
Issuer;


 


(12)                            so
long as no Default or Event of Default shall have occurred or be continuing or
would exist after giving effect thereto, payments not to exceed $200,000 in the
aggregate since the Issue Date to enable the Issuer to make payments to Holders
of its Equity Interests in lieu of issuance of fractional shares of its Equity
Interests;


 


(13)                            the
declaration and payment of dividends and distributions to holders of any class or
series of Disqualified Equity Interests of the Issuer or any of its
Restricted Subsidiaries issued or incurred in accordance with Section 4.08;


 


(14)                            in the
event of a Change of Control, so long as no Default or Event of Default shall
have occurred or be continuing or would exist after giving effect thereto, the
payment, purchase, redemption, defeasance or other acquisition or retirement of
subordinated Indebtedness at a purchase price not greater than 101% of the
principal amount (or, if such subordinated Indebtedness were issued with
original issue discount, 101% of the accreted value) of such subordinated
Indebtedness, plus any accrued and unpaid interest thereon; provided, however,
that prior to such payment, purchase, redemption, defeasance or other
acquisition or retirement, the Issuer (or a third party to the extent permitted
by this Indenture) has made a Change of Control Offer with respect to the Notes
as a result of such Change of Control and has repurchased all Notes validly
tendered and not withdrawn in connection with such Change of Control Offer; and


 


(15)                            other
Restricted Payments in an aggregate amount not to exceed $5.0 million since the
Issue Date.


 


In determining
the aggregate amount of Restricted Payments made subsequent to the Issue Date
in accordance with clause (iv) of the first paragraph of this Section 4.09
amounts expended pursuant to clauses (1), (11), (12), (13),
(14) and (15) shall be included in such calculation.


 


Not later than
the date of making any Restricted Payment, the Issuer shall deliver to the
Trustee an Officers’ Certificate stating that such Restricted Payment complies
with this Indenture and setting forth in reasonable detail the basis upon which
the required calculations were computed, which calculations may be based
upon the Issuer’s latest available internal quarterly financial statements.


 


Section 4.10                                Limitation
on Asset Sales.


 


The Issuer
will not, and will not permit any of its Restricted Subsidiaries to, consummate
an Asset Sale unless:


 


(1)                                  the
Issuer or the applicable Restricted Subsidiary, as the case may be,
receives consideration at the time of such Asset Sale at least equal to the
Fair Market Value of the assets sold or otherwise disposed;


 

















 


(2)                                  at
least 75% of the consideration received by the Issuer or the Restricted
Subsidiary, as the case may be, from such Asset Sale is in the form of
cash, Cash Equivalents or a combination thereof and is received at the time of
such disposition; provided that, for purposes of this covenant, the
following are deemed to be cash:


 


(a)                                  the assumption of
Indebtedness of the Issuer or any Restricted Subsidiary (other than Obligations
in respect of Disqualified Capital Stock or Preferred Stock of the Issuer or
any Restricted Subsidiary) and the release of the Issuer or such Restricted
Subsidiary from all liability on such Indebtedness in connection with such Asset
Sale;


 


(b)                                 securities or other
obligations received by the Issuer or any Restricted Subsidiary from the
transferee that are promptly converted by the Issuer or such Restricted
Subsidiary into cash, to the extent of cash received in that conversion;


 


(c)                                  cash held in escrow
as security for any purchase price settlement, for damages in respect of a
breach of representations and warranties or covenants or for payment of other
contingent obligations in connection with the Asset Sale to the extent such
cash is actually disbursed to the Issuer or such Restricted Subsidiary in
accordance with the terms of such escrow; and


 


(d)                                 Replacement Assets;


 


(3)                                  the
Issuer shall apply, or cause such Restricted Subsidiary to apply, the Net Cash
Proceeds relating to such Asset Sale within 360 days of receipt thereof either:


 


(a)                                  (i) to
repay or prepay Indebtedness under the Credit Agreement and permanently reduce
the corresponding commitments thereunder, (ii) to retire Purchase Money
Indebtedness secured by the asset that was the subject of the Asset Sale and/or
(iii) in the case where the property or asset that was the subject of such
Asset Sale is the property or asset of a Foreign Restricted Subsidiary, to
repay Indebtedness of such Foreign Restricted Subsidiary and, if such debt is
revolving credit Indebtedness, permanently reduce the corresponding commitments
thereunder;


 


(b)                                 to
make an investment in Replacement Assets; or


 


(c)                                  a
combination of repayment and investment permitted by the foregoing clauses (3)(a) and
(3)(b).


 


Pending the
final application of Net Cash Proceeds, the Issuer may temporarily reduce
revolving credit borrowings or invest such Net Cash Proceeds in Cash
Equivalents. On the 361st day after an Asset Sale or such earlier date, if any,
as the Board of Directors of the Issuer or of such Restricted Subsidiary
determines not to apply the Net Cash Proceeds relating to such Asset Sale as
set forth in clauses (3)(a), 3(b) or 3(c) of the preceding paragraph
(each, a “Net Proceeds Offer Trigger Date”), such aggregate amount of
Net Cash Proceeds which have not been applied on or before such Net Proceeds
Offer Trigger Date as permitted in clauses (3)(a), (3)(b) and (3)(c) of
the preceding paragraph (each a “Net Proceeds Offer Amount”) shall be
applied by the Issuer or such Restricted Subsidiary to make an offer to
purchase (the “Net Proceeds Offer”) on a date (the “Net Proceeds
Offer Payment Date”) not less than 30 nor more than 45 days following the
applicable Net Proceeds Offer Trigger Date, from all Holders the maximum 


 

















 


principal amount at maturity of Notes that may be purchased with
the Net Proceeds Offer Amount at a price equal to 100% of the Accreted Value
thereof, plus accrued and unpaid interest and Additional Interest, if any, to
the date of purchase.


 


If at any time
any non-cash consideration received by the Issuer or any Restricted Subsidiary,
as the case may be, in connection with any Asset Sale is converted into or
sold or otherwise disposed of for cash (other than interest received with
respect to any such non-cash consideration), then such conversion or
disposition shall be deemed to be an Asset Sale on the date of such conversion
or disposition, as the case may be, and the Net Cash Proceeds thereof
shall be applied in accordance with this covenant.


 


The Issuer may defer
any Net Proceeds Offer until there is an aggregate unutilized Net Proceeds
Offer Amount equal to or in excess of $5.0 million resulting from one or more
Asset Sales in which case the accumulation of such amount shall constitute a
Net Proceeds Offer Trigger Date (at which time, the entire unutilized Net
Proceeds Offer Amount, and not just the amount in excess of $5.0 million, shall
be applied as required pursuant to this covenant). To the extent that the
aggregate Accreted Value of Notes tendered pursuant to such Net Proceeds Offer
is less than the Net Proceeds Offer Amount, the Issuer and its Restricted
Subsidiaries may use the remaining portion of the Net Proceeds Offer
Amount for general corporate purposes. Upon the completion of each Net Proceeds
Offer, the Net Proceeds Offer Amount will be reset at zero.


 


In the event
of the transfer of substantially all (but not all) of the property and assets
of the Issuer and its Restricted Subsidiaries as an entirety to a Person in a
transaction permitted under Section 5.01 that does not constitute a
Change of Control, the successor entity shall be deemed to have sold the
properties and assets of the Issuer and its Restricted Subsidiaries not so
transferred for purposes of this covenant, and shall comply with the provisions
of this covenant with respect to such deemed sale as if it constituted an Asset
Sale. The Fair Market Value of such properties and assets of the Issuer or its
Restricted Subsidiaries deemed to be sold shall be deemed to be Net Cash
Proceeds for purposes of this covenant.


 


Each notice of
a Net Proceeds Offer shall be mailed first class, postage prepaid, to the
record Holders as shown on the register of Holders within thirty (30) days
following the Net Proceeds Offer Trigger Date, with a copy to the Trustee. Upon
receiving notice of the Net Proceeds Offer, Holders may elect to tender
their Notes in whole or in part in integral multiples of $1,000 at
maturity in exchange for cash. To the extent Holders properly tender Notes in
an amount exceeding the Net Proceeds Offer Amount, Notes of tendering Holders
will be purchased on a pro  rata basis (based on amounts tendered).
A Net Proceeds Offer shall remain open for a period of twenty (20) business
days or such longer period as may be required by law.


 


The Issuer
will comply with the requirements of Rule 14e-1 under the Exchange Act and
any other securities laws and regulations thereunder to the extent such laws
and regulations are applicable in connection with the repurchase of Notes
pursuant to a Net Proceeds Offer. To the extent that the provisions of any
securities laws or regulations conflict with this Section 4.10, the
Issuer shall comply with the applicable securities laws and regulations and
shall not be deemed to have breached its obligations under this Section 4.10
by virtue of such compliance with such securities laws and regulations.


 


Section 4.11                                Limitation
on Dividend and Other Payment Restrictions Affecting Restricted Subsidiaries.


 


The Issuer
will not, and will not cause or permit any of its Restricted Subsidiaries to,
directly or indirectly, create or otherwise cause or permit to exist or become
effective any encumbrance or restriction on the ability of any Restricted
Subsidiary to:


 

















 


(1)                                  pay
dividends or make any other distributions on or in respect of its Equity
Interests;


 


(2)                                  make
loans or advances to, or to pay any Indebtedness or other obligation owed to
the Issuer or any other Restricted Subsidiary; or


 


(3)                                  transfer
any of its property or assets to the Issuer or any other Restricted Subsidiary,
except for such encumbrances or restrictions existing:


 


(a)                                  under
applicable law, rule or regulation;


 


(b)                                 under this
Indenture, the Collateral Agreements and the Guarantees;


 


(c)                                  by reason of
customary non-assignment provisions of any lease of any Restricted Subsidiary
to the extent such provisions restrict the transfer of the lease or the
property leased thereunder;


 


(d)                                 under any
agreement or instrument governing Acquired Indebtedness, which encumbrance or
restriction is not applicable to any Person, or the properties or assets of any
Person, other than the Person or the properties or assets of the Person so
acquired;


 


(e)                                  under the
Credit Agreement and all amendments, modifications, restatements, supplements,
renewals, replacements or substitutions thereof on terms no more adverse to the
Holders and no less favorable or more onerous to the Issuer and its Restricted
Subsidiaries than those contained in the Credit Agreement on the Issue Date;


 


(m)                               by
reason of restrictions on the transfer of assets subject to any Permitted Lien;


 


(g)                                 under customary
agreements to sell assets or Equity Interests permitted to be sold under this
Indenture pending the closing of such sale;


 


(h)                                 under
agreements or instruments relating to Purchase Money Indebtedness or
Capitalized Lease Obligations not incurred in violation of this Indenture; provided,
that such encumbrances and restrictions relate only to the assets financed with
such Indebtedness;


 


(i)                                     by reason of
restrictions on cash or other deposits imposed by customers under contracts or
other arrangements entered into in the ordinary course of business;


 


(j)                                     under
Refinancing Indebtedness incurred to Refinance the Indebtedness issued, assumed
or incurred pursuant to an agreement referred to in clause (b), (d) or (h) above;
provided, that the provisions relating to such encumbrance or
restriction contained in any such Indebtedness are no more adverse to the
Holders and no less favorable or more onerous to the Issuer and its Restricted
Subsidiaries than the provisions relating to such encumbrance or 


 

















 


restriction
contained in agreements referred to in the Indebtedness being Refinanced;


 


(k)                                  under
restrictions in other Indebtedness incurred in compliance with Section 4.08;
provided that such restrictions, taken as a whole, are, in the good
faith judgment of the Issuer’s Board of Directors, no more materially
restrictive with respect to such encumbrances and restrictions than those
contained in the existing agreements referenced in clauses (b), (e) and (f) above;
or


 


(l)                                     under customary
non-assignment provisions in agreements entered into in the ordinary course of
business.


 


Section 4.12                                Limitation
on Issuances and Sales of Equity Interests of Subsidiaries.


 


The Issuer
will not, and will not permit or cause any of its Restricted Subsidiaries to,
transfer, convey, issue or sell any Equity Interests of any Restricted
Subsidiary to any Person (other than to the Issuer or to a Wholly Owned
Restricted Subsidiary and, if necessary, shares of Equity Interests constituting
directors’ qualifying shares); provided, that this provision shall not
prohibit:


 


(1)                                  any
transfer, issuance or sale if, immediately after giving effect thereto, such
Restricted Subsidiary would no longer constitute a Restricted Subsidiary and any
Investment in such Person remaining after giving effect to such issuance or
sale would have been permitted to be made under Section 4.09 if
made on the date of such issuance or sale or


 


(2)                                  the
sale of all of the Equity Interests of a Restricted Subsidiary in compliance
with the provisions of Section 4.10.


 


Section 4.13                                Limitation
on Liens.


 


The Issuer
will not, and will not cause or permit any of its Restricted Subsidiaries to,
directly or indirectly, create, incur, assume or permit or suffer to exist any
Liens (other than Permitted Liens) of any kind against or upon any property or
assets of the Issuer or any of its Restricted Subsidiaries whether owned on the
Issue Date or acquired after the Issue Date, or any proceeds therefrom, or
assign or otherwise convey any right to receive income or profits therefrom.


 


Section 4.14                                Limitations
on Transactions with Affiliates.


 


(a)                                  The
Issuer will not, and will not permit any of its Restricted Subsidiaries to,
directly or indirectly, enter into or permit to exist any transaction or series of
related transactions (including, without limitation, the purchase, sale, lease
or exchange of any property or the rendering of any service) with, or for the
benefit of, any of its Affiliates (each an “Affiliate Transaction”), other
than


 


(x)                                   Permitted
Affiliate Transactions, and


 


(y)                                 Affiliate
Transactions on terms that are no less favorable than those that might
reasonably have been obtained in a comparable transaction at such time on an
arm’s-length basis from a Person that is not an Affiliate of the Issuer or such
Restricted Subsidiary.


 

















 


With respect
to all Affiliate Transactions:


 


(i)                                     the
Issuer shall deliver an Officers’ Certificate to the Trustee certifying that
such transactions are in compliance with clause (a)(y) of the preceding
paragraph;


 


(ii)                                  if
such Affiliate Transaction involves aggregate payments or other property with a
Fair Market Value in excess of $1.0 million, such transaction shall be approved
by a majority of the disinterested members of the Board of Directors of the
Issuer, such approval to be evidenced by a Board Resolution stating that such
members of the Board of Directors have determined that such transaction
complies with the foregoing provisions; and


 


(iii)                               if
such Affiliate Transaction involves an aggregate Fair Market Value of more than
$10.0 million, the Issuer or such Restricted Subsidiary, as the case may be,
shall, prior to the consummation thereof, obtain a favorable opinion as to the
fairness of the financial terms of such transaction or series of related
transactions to the Issuer or the relevant Restricted Subsidiary, as the case may be,
from an Independent Financial Advisor and file the same with the Trustee.


 


(b)                                 The
restrictions set forth in Section 4.14(a) shall not apply to
the following transactions (collectively, “Permitted Affiliate Transactions”):


 


(1)                                  reasonable
fees and compensation paid to directors of the Issuer who are not employees and
to consultants of the Issuer, and indemnity provided on behalf of, officers,
directors, employees or consultants of the Issuer or any Restricted Subsidiary,
in each case, as determined in good faith by the Issuer’s Board of Directors;


 


(2)                                  transactions
exclusively between or among the Issuer and any of its Restricted Subsidiaries
or exclusively between or among Restricted Subsidiaries, provided, that
such transactions are not otherwise prohibited by this Indenture;


 


(3)                                  any
agreement as in effect as of the Issue Date or any transaction contemplated
thereby and any amendment thereto or any replacement agreement thereto so long
as any such amendment or replacement agreement is not more disadvantageous to
the Holders, the Issuer or the Restricted Subsidiaries in any material respect
than the original agreement as in effect on the Issue Date;


 


(4)                                  Restricted
Payments permitted by this Indenture or Permitted Investments;


 


(5)                                  any
merger or other transaction with an Affiliate solely for the purpose of
reincorporating the Issuer in another jurisdiction or creating a holding Issuer
of the Issuer;


 


(6)                                  any
reasonable employment, stock option, stock repurchase, employee benefit
compensation, business expense reimbursement, severance, termination or other
employment-related agreements, arrangements or plans entered into in good faith
by the Issuer or any of its Restricted Subsidiaries in the ordinary course of
business;


 


(7)                                  arrangements
existing on the Issue Date as disclosed in the Offering Circular under the
sections entitled “Certain Relationships and Related Transactions” and 


 

















 


“Management—Consulting and Employment
Agreements” or as amended thereafter (so long as the amended agreement is not
more disadvantageous to the holders of the Notes in any material respect than
such agreement immediately prior to such amendment);


 


(8)                                  issuance
of Qualified Equity Interests of the Issuer and the granting of registration
rights with respect to such Qualified Equity Interests;


 


(9)                                  transactions
with customers, suppliers or purchasers or sellers of goods or services which
are on terms no less favorable to the Issuer and its Restricted Subsidiaries
than those that could be obtained contemporaneously in comparable transactions
with Persons who are not Affiliates; and


 


(10)                            the
reimbursement of out-of-pocket expenses of Cerberus Capital Management, L.P.
and its Affiliates in connection with the Transactions.


 


Section 4.15                                Additional
Subsidiary Guarantees.


 


If the Issuer
or any of its Restricted Subsidiaries acquires or creates another Domestic
Restricted Subsidiary after the Issue Date (other than an Unrestricted
Subsidiary), then the Issuer shall cause such Domestic Restricted Subsidiary
to:


 


(1)                                  execute
and deliver to the Trustee a supplemental indenture in form reasonably
satisfactory to the Trustee pursuant to which such Subsidiary shall
unconditionally guarantee on a senior secured basis all of the Issuer’s
obligations under the Notes and this Indenture on the terms set forth herein;


 


(2)                                  (a) execute
and deliver to the Collateral Agent such amendments to the Collateral
Agreements as the Collateral Agent deems necessary or advisable in order to
grant to the Collateral Agent, for the benefit of the Holders, a perfected
security interest in the Equity Interests of such new Domestic Restricted
Subsidiary and any debt securities of such new Subsidiary, subject to the
Permitted Liens, which are owned by the Issuer or Subsidiary and required to be
pledged pursuant to the Security Agreement, and (b) subject to the terms
of the Intercreditor Agreement, deliver to the Collateral Agent any
certificates representing such Equity Interests and debt securities, together
with (i) in the case of such Equity Interests, undated stock powers or
instruments of transfer, as applicable, endorsed in blank, and (ii) in the
case of such debt securities, endorsed in blank, in each case executed and delivered
by an Officer of the Issuer or such Subsidiary, as the case may be;


 


(3)                                  take
such actions as are necessary or as the Collateral Agent reasonably determines
to be advisable to grant to the Collateral Agent for the benefit of the Holders
a perfected security interest in the assets of such new Domestic Restricted
Subsidiary to the extent required pursuant to the terms of the Collateral
Agreements, subject to the Permitted Liens, including the filing of Uniform Commercial
Code financing statements in such jurisdictions as may be required by the
Security Agreement or by law or as may be reasonably requested by the
Collateral Agent;


 


(4)                                  take
such further action and execute and deliver such other documents specified in
this Indenture or otherwise reasonably requested by the Trustee or the
Collateral Agent to effectuate the foregoing; and


 

















 


(5)                                  deliver
to the Trustee an Opinion of Counsel that such supplemental indenture and any
other documents required to be delivered have been duly authorized, executed and
delivered by such Domestic Restricted Subsidiary and constitutes a legal,
valid, binding and enforceable obligations of such Domestic Restricted
Subsidiary and such other opinions regarding the perfection of such Liens in
the assets of such Domestic Restricted Subsidiary as provided for in this
Indenture.


 


Thereafter,
such Subsidiary shall be a Guarantor for all purposes of this Indenture.


 


Section 4.16                                Impairment
of Security Interest.


 


Neither the Issuer nor any of its Restricted
Subsidiaries will (a) take or omit to take any action
which would adversely affect or impair in any material respect the Liens in
favor of the Collateral Agent with respect to the Collateral, (b) grant to
any Person (other than the Collateral Agent), or permit any Person (other than
the Collateral Agent), to retain any interest whatsoever in the Collateral
other than Permitted Liens or (c) enter into any agreement that requires
the proceeds received from any sale of Collateral to be applied to repay,
redeem, defease or otherwise acquire or retire any Indebtedness of any Person,
other than as permitted by this Indenture, the Notes and the Collateral
Agreements and subject to the terms of the Intercreditor Agreement. The Issuer
shall, and shall cause each Guarantor to, at their sole cost and expense, (i) execute
and deliver all such agreements and instruments as the Collateral Agent or the
Trustee shall reasonably request or as necessary to more fully or accurately
describe the property intended to be Collateral or the obligations intended to
be secured by the Collateral Agreements and (ii) file any such notice
filings or other agreements or instruments as may be reasonably necessary
or desirable under applicable law to perfect the Liens created by the
Collateral Agreements as necessary or at such times and at such places as the
Collateral Agent or the Trustee may reasonably request.


 


Section 4.17                                Real
Estate Mortgages and Filings.


 


With respect
to any fee interest in any real property (individually and collectively, the “Premises”)
(a) owned by the Issuer or a Guarantor on the Issue Date or (b) acquired
by the Issuer or a Guarantor after the Issue Date (other than pursuant to a
Capitalized Lease Obligation or Purchase Money Indebtedness permitted pursuant
to clause (10) of the definition of Permitted Indebtedness), with (i) a
purchase price or (ii) as of the Issue Date, with a Fair Market Value, of
greater than $1.0 million, on the Issue Date in the case of clause (a) and
within 90 days of the acquisition thereof in the case of clause (b), the Issuer
shall deliver to the Collateral Agent (subject to the terms of the
Intercreditor Agreement):


 


(1)                                  as
mortgagee, fully executed counterparts of Mortgages duly executed by the Issuer
or the applicable Guarantor, together with evidence of the completion (or
satisfactory arrangements for the completion), of all recordings and filings of
such Mortgage as may be necessary to create a valid, perfected Lien,
subject to the first priority Lien of the Administrative Agent to secure Credit
Agreement Obligations up to (but not in excess of) the Maximum Priority Debt
Amount, and other Permitted Liens, against the properties purported to be
covered thereby;


 


(2)                                  mortgagee’s
title insurance policies in favor of the Collateral Agent, as mortgagee for the
ratable benefit of the Collateral Agent, the Trustee and the Holders in an
amount equal to 100% of the Fair Market Value of the Premises purported to be
covered by the related Mortgage, insuring that title to such property is
marketable and that the interests created by the Mortgage constitute valid
Liens thereon free and clear of all Liens, defects and encumbrances other than
Permitted Liens, and such policies shall also include, to the extent available,
customary endorsements (the endorsements in title 


 

















 


insurance policies in favor of the
Administrative Agent under the Credit Agreement being deemed customary for this
purpose) and shall be accompanied by evidence of the payment in full of all
premiums thereon; and


 


(3)                                  with
respect to each of the covered Premises, the most recent survey of such
Premises, together with either (i) an updated survey certification in
favor of the Trustee and the Collateral Agent from the applicable surveyor
stating that, based on a visual inspection of the property and the knowledge of
the surveyor, there has been no change in the facts depicted in the survey or (ii) an
affidavit from the Issuer and the Guarantors stating that there has been no
change, other than, in each case, changes that do not materially adversely
affect the use by the Issuer or Guarantor, as applicable, of such Premises for
the Issuer or such Guarantor’s business as so conducted, or intended to be
conducted, at such Premises;


 


provided,
however, that the obligations under this covenant shall not apply until
the Issuer and the Guarantors own real properties with an aggregate Fair Market
Value in excess of $7.5 million.


 


Section 4.18                                Conduct
of Business.


 


The Issuer
will not, and will not permit any of its Restricted Subsidiaries to, engage in
any businesses other than Permitted Businesses.


 


Section 4.19                                Reports
to Holders.


 


Whether or not
required by the rules and regulations of the Securities and Exchange
Commission (the “SEC”), so long as any Notes are outstanding, the Issuer
will furnish to the Trustee and furnish, upon request, to the Holders:


 


(1)                                  all
quarterly and annual information that would be required to be contained in a
filing with the SEC on Forms 10-Q and 10-K if the Issuer were required to file
such Forms, including a “Management’s Discussion and Analysis of Financial
Condition and Results of Operations” that describes the financial condition and
results of operations of the Issuer and its consolidated Subsidiaries (showing
in reasonable detail, either on the face of the financial statements or in the
footnotes thereto and in Management’s Discussion and Analysis of Financial
Condition and Results of Operations, the financial condition and results of
operations of the Issuer and its Restricted Subsidiaries separate from the
financial condition and results of operations of the Unrestricted Subsidiaries
of the Issuer, if any) and, with respect to the annual information only, a
report thereon by the Issuer’s certified independent accountants; provided,
however, that with respect to the fiscal year ended June 30, 2005,
the Issuer will only be required to provide the financial information that
would be required to be contained in Form 10-K (including Management’s
Discussion and Analysis of Financial Conditions and Results of Operations),
which information shall be provided to Holders on or prior to October 31,
2005; and


 


(2)                                  all
current reports that would be required to be filed with the SEC on Form 8-K
if the Issuer were required to file such reports; provided, however,
that the Issuer will only be required to use its reasonable efforts to provide
reports on Form 8K with respect to non-financial information during the
fiscal year ending June 30, 2006,


 


in each case
within the time periods specified in the SEC’s rules and regulations.


 

















 


Notwithstanding
this Section 4.19, the Issuer may satisfy such requirements
prior to the effectiveness of the registration statement contemplated by the
Registration Rights Agreement by filing with the SEC such registration
statement, to the extent that any such registration statement contains
substantially the same information as would be required to be filed by the
Issuer if it were subject to the reporting requirements of Section 13 or
15(d) of the Exchange Act, and by providing the Trustee and Holders with
such Registration Statement (and any amendments thereto) promptly following the
filing thereof.


 


Following the
consummation of the Exchange Offer, whether or not required by the rules and
regulations of the SEC, the Issuer will file a copy of all such information and
reports with the SEC for public availability within the time periods specified
in the SEC’s rules and regulations (unless the SEC will not accept such a
filing). In addition, the Issuer has agreed that, prior to the consummation of
the Exchange Offer, for so long as any Notes remain outstanding, it will
furnish to the Holders upon their request, the information required to be
delivered pursuant to Rule 144(A)(d)(4) under 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 shall not constitute
constructive notice of any information contained therein or determinable from
information contained therein, including the Issuer’s compliance with any of
its covenants hereunder (as to which the Trustee is entitled to rely
exclusively on Officers’ Certificates).


 


Section 4.20                                Payments
for Consent.


 


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


 


Section 4.21                                Repurchase
Upon Change of Control.


 


(a)                                  Upon
the occurrence of a Change of Control, the Issuer will be required to offer to
purchase all or a portion (in integral multiples of $1,000) of each Holder’s
Notes using immediately available funds pursuant to the offer described in
clause (b) below (the “Change of Control Offer”), at a purchase
price in cash equal to 101% of the Accreted Value thereof on the date of
purchase, plus accrued and unpaid interest and Additional Interest, if any, to
the date of purchase.


 


(b)                                 Within
thirty (30) days following the date upon which the Change of Control occurred,
the Issuer shall send, by registered first class mail, postage prepaid, a
notice to each record Holder as shown on the register of Holders, with a copy
to the Trustee, which notice shall govern the terms of the Change of Control
Offer. The notice to the Holders shall contain all instructions and materials
necessary to enable such Holders to tender Notes pursuant to the Change of
Control Offer. Such notice shall state:


 


(1)                                  that
the Change of Control Offer is being made pursuant to this Section 4.21
and that, to the extent lawful, all Notes tendered and not withdrawn shall be
accepted for payment;


 


(2)                                  the
purchase price (including the amount of accrued interest and Additional
Interest, if any) and the purchase date (which shall be no earlier than thirty
(30) days nor later than sixty (60) days from the date such notice is mailed,
other than as may be required by law) (the “Change of Control Payment
Date”);


 

















 


(3)                                  that
any Note not tendered shall continue to accrue interest and Additional Interest,
if any;


 


(4)                                  that,
unless the Issuer defaults in making payment therefor, any Note accepted for
payment pursuant to the Change of Control Offer shall cease to accrue interest,
and Additional Interest, if any, after the Change of Control Payment Date;


 


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


 


(6)                                  that
Holders shall be entitled to withdraw their election if the Paying Agent
receives, not later than five (5) Business Days prior to the Change of
Control Payment Date, a facsimile transmission or letter setting forth the name
of the Holder, the Accreted Value of the Notes the Holder delivered for
purchase and a statement that such Holder is withdrawing its election to have
such Notes purchased;


 


(7)                                  that
Holders whose Notes are purchased only in part shall be issued new Notes
in a principal amount at maturity equal to the unpurchased portion of the Notes
surrendered; provided that each Note purchased and each new Note issued
shall be in an original principal amount at maturity of $1,000 or integral
multiples thereof; and


 


(8)                                  the
circumstances and relevant facts regarding such Change of Control.


 


If any of the
Notes subject to the Change of Control Offer is in the form of a Global
Note, then the Issuer shall modify such notice to the extent necessary to
comply with the procedures of the Depositary applicable to repurchases.


 


On or before
the Change of Control Payment Date, the Issuer shall, to the extent lawful (i) accept
for payment Notes or portions thereof properly tendered pursuant to the Change
of Control Offer, (ii) deposit with the Paying Agent U.S. Legal Tender
sufficient to pay the purchase price plus accrued interest and Additional
Interest, if any, of all Notes or portions thereof so tendered and (iii) deliver
or cause to be delivered to the Trustee the Notes so accepted together with an
Officers’ Certificate stating the aggregate principal amount at maturity of
Notes or portions thereof being purchased by the Issuer. Promptly following
receipt of such Officers’ Certificate, the Paying Agent shall transmit in
accordance with the procedures of the Depositary, if applicable, or mail to the
Holders of Notes so tendered the purchase price for such Notes and the Issuer
shall promptly issue and the Trustee shall promptly authenticate and deliver
(or cause to be transferred by book entry) to each Holder a new Note equal in
principal amount at maturity to any unpurchased portion of the Notes
surrendered; provided that each such new Note shall be in a principal
amount at maturity of $1,000 or an integral multiple thereof. Any Notes not so
accepted shall be promptly returned by the Issuer to the Holders thereof. For
purposes of this Section 4.21, the Trustee shall act as the Paying
Agent.


 


Any amounts
remaining after the purchase of Notes pursuant to a Change of Control Offer
shall be returned by the Trustee to the Issuer, upon written request of the
Issuer.


 


Neither the
Board of Directors of the Issuer nor the Trustee may waive the Issuer’s
obligation to offer to purchase the Notes pursuant to this Section 4.21.


 

















 


(d)                                 The
Issuer will not be required to make a Change of Control Offer upon a Change of
Control if (1) 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 or (2) if, in connection with or in contemplation of any
Change of Control, it or a third party has made an offer to purchase (an “Alternate
Offer”) any and all Notes validly tendered at a cash price equal to or
greater than 101% of the Accreted Value thereof and has purchased all Notes
properly tendered and not withdrawn in accordance with the terms of such
Alternate Offer. 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 the
Change of Control Offer. Notes repurchased pursuant to a Change of Control
Offer will be retired and cancelled.


 


(e)                                  The
Issuer will comply with the requirements of Rule 14e-1 under the Exchange
Act and any other securities laws and regulations thereunder to the extent such
laws and regulations are applicable in connection with the repurchase of Notes
pursuant to a Change of Control Offer. To the extent that the provisions of any
securities laws or regulations conflict with the “Change of Control” 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
the “Change of Control” provisions of this Indenture by virtue thereof.


 


Section 4.22                                Excess
Cash Flow Offer.


 


(a)                                  Within one hundred
(100) days after the end of each fiscal year beginning with the fiscal
year ending June 30, 2006, the Issuer will make an offer (an “Excess
Cash Flow Offer”) to all Holders, on a pro rata basis, to purchase the
maximum principal amount at maturity of Notes for which the sum of 101% of
principal amount at maturity of such Notes, plus accrued and unpaid interest
and Additional Interest, if any, to the date of purchase, is equal to 50% of
the Excess Cash Flow from the previous fiscal year (the “Excess Cash Flow
Offer Amount”). If the aggregate amount paid by the Issuer to Holders of
Notes tendered pursuant to any Excess Cash Flow Offer is less than the related Excess
Cash Flow Offer Amount, the Issuer may, subject to other provisions of this
Indenture, use the amount of such difference for general corporate purposes.


 


Notwithstanding the foregoing, for the
purposes of calculating the Excess Cash Flow Offer Amount, the amount of Excess
Cash Flow for any fiscal year shall not exceed an amount equal to (A) net
cash provided by operating activities plus the net cash provided by
investing activities, each as determined for such fiscal year for the Issuer
and its Subsidiaries on a consolidated basis in accordance with GAAP, minus
(B) the aggregate principal amount at maturity of the Notes purchased or
redeemed by the Issuer during such fiscal year (excluding any purchases made
pursuant to (i) the Excess Cash Flow Offer and (ii) any and all Net
Proceeds Offers in connection with Assets Sales).


 


(b)                                 Each
Excess Cash Flow Offer shall remain open for a period of twenty (20) Business
Days from the date such notice is mailed, or such longer period is required by
law (the last day of such period being the “Excess Cash Flow Payment Date”).
The Issuer must send the Excess Cash Flow Offer, by registered first-class mail,
to each Holder, with a copy to the Trustee. The notice to the Holders shall
contain all instructions and materials necessary to enable such Holders to
tender Notes pursuant to the Excess Cash Flow Offer. Such notice shall state:


 


(1)                                  that
the Excess Cash Flow Offer is being made pursuant to this Section 4.22;


 


(2)                                  the
purchase price (including the amount of accrued interest and Additional
Interest, if any) and the Excess Cash Flow Payment Date;


 

















 


(3)                                  that
any Note not tendered shall continue to accrue interest and Additional
Interest, if any;


 


(4)                                  that,
unless the Issuer defaults in making payment therefor, any Note accepted for
payment pursuant to the Excess Cash Flow Offer shall cease to accrue interest,
and Additional Interest, if any, after the Excess Cash Flow Payment;


 


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


 


(6)                                  that
Holders shall be entitled to withdraw their election if the Paying Agent
receives, not later than five (5) Business Days prior to the Excess Cash
Flow Date, a facsimile transmission or letter setting forth the name of the
Holder, the principal amount at maturity of the Notes the Holder delivered for
purchase and a statement that such Holder is withdrawing its election to have
such Notes purchased; and


 


(7)                                  that
Holders whose Notes are purchased only in part shall be issued new Notes
in a principal amount at maturity equal to the unpurchased portion of the Notes
surrendered; provided that each Note purchased and each new Note issued
shall be in an original principal amount at maturity of $1,000 or integral multiples
thereof.


 


(c)                                  If
only a portion of a Note is purchased pursuant to a Excess Cash Flow Offer, a
new Note in a principal amount at maturity equal to the portion thereof not
purchased will be issued in the name of the Holder thereof upon cancellation of
the original Note (or appropriate adjustments to the amount and beneficial
interests in a Global Note will be made). Notes (or portions thereof) purchased
pursuant to an Excess Cash Flow Offer will be cancelled and cannot be reissued.
If any of the Notes subject to the Excess Cash Flow Offer is in the form of
a Global Note, then the Issuer shall modify such notice to the extent necessary
to comply with the procedures of the Depositary applicable to repurchases.


 


(d)                                 On or before the
Excess Cash Flow Payment Date, the Issuer shall, to the extent lawful (i) accept
for payment Notes or portions thereof properly tendered pursuant to the Excess
Cash Flow Offer, (ii) deposit with the Paying Agent U.S. Legal Tender
sufficient to pay the purchase price plus accrued interest and Additional
Interest, if any, of all Notes or portions thereof so tendered and (iii) deliver
or cause to be delivered to the Trustee the Notes so accepted together with an
Officers’ Certificate stating the aggregate principal amount at maturity of
Notes or portions thereof being purchased by the Issuer. Promptly following
receipt of such Officers’ Certificate, the Paying Agent shall transmit in
accordance with the procedures of the Depositary, if applicable, or mail to the
Holders of Notes so tendered the purchase price for such Notes and the Issuer
shall promptly issue and the Trustee shall promptly authenticate and deliver
(or cause to be transferred by book entry) to each Holder a new Note equal in
principal amount at maturity to any unpurchased portion of the Notes
surrendered; provided that each such new Note shall be in a principal
amount at maturity of $1,000 or an integral multiple thereof. Any Notes not so
accepted shall be promptly returned by the Issuer to the Holders thereof.


 


(e)                                  The
Issuer will comply with the requirements of Rule 14e-1 under the Exchange
Act and any other securities laws and regulations thereunder to the extent such
laws and regulations are applicable in connection with the repurchase of Notes
pursuant to a Excess Cash Flow Offer. To the extent that the provisions of any
securities laws or regulations conflict with this Section 4.22, the
Issuer shall comply 


 

















 


with the applicable securities laws and regulations and shall not be
deemed to have breached its obligations under this Section 4.22 by
virtue thereof.


 


Section 4.23                                Restricted
Payment Offer.


 


(a)                                  If the Issuer
determines that it will seek to make a Restricted Payment (the “Restricted
Payment Amount”) pursuant to clause (1), (2) or (3) of the
first paragraph under Section 4.09 (other than an Excluded
Restricted Payment), the Issuer shall make an offer (a “Restricted Payment
Offer”) to all Holders, on a pro rata basis, to purchase the maximum
principal amount at maturity of Notes for which the sum of 101% of principal
amount at maturity of such Notes, plus accrued and unpaid interest and
Additional Interest, if any, to the date of purchase, is equal to the
Restricted Payment Amount. If the aggregate amount paid by the Issuer to
Holders of Notes tendered pursuant to any Restricted Payments Offer is less
than the related Restricted Payment Amount, the Issuer may, subject to other
provisions of this Indenture, make such Restricted Payment in the amount of
such excess.


 


(b)                                 Each
Restricted Payment Offer shall remain open for a period of twenty (20) Business
Days from the date such notice is mailed, or such longer period is required by
law (the last day of such period being the “Restricted Payment Offer Payment
Date”). The Issuer must send the Restricted Payment Offer, by registered
first-class mail, to each Holder, with a copy to the Trustee. The notice
to the Holders shall contain all instructions and materials necessary to enable
such Holders to tender Notes pursuant to the Restricted Payment Offer. Such
notice shall state:


 


(1)                                  that
the Restricted Payment Offer is being made pursuant to this Section 4.23;


 


(2)                                  the
purchase price (including the amount of accrued interest and Additional
Interest, if any) and the Restricted Payment Offer Payment Date);


 


(3)                                  that
any Note not tendered shall continue to accrue interest and Additional
Interest, if any;


 


(4)                                  that,
unless the Issuer defaults in making payment therefor, any Note accepted for
payment pursuant to the Restricted Payment Offer shall cease to accrue
interest, and Additional Interest, if any, after the Restricted Payment Offer
Payment Date;


 


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


 


(6)                                  that
Holders shall be entitled to withdraw their election if the Paying Agent
receives, not later than five (5) Business Days prior to the Restricted
Payment Offer Payment Date, a facsimile transmission or letter setting forth
the name of the Holder, the principal amount at maturity of the Notes the
Holder delivered for purchase and a statement that such Holder is withdrawing
its election to have such Notes purchased; and


 


(7)                                  that
Holders whose Notes are purchased only in part shall be issued new Notes
in a principal amount at maturity equal to the unpurchased portion of the Notes
surrendered; provided that each Note purchased and each new Note issued
shall be in an original principal amount at maturity of $1,000 or integral
multiples thereof.


 

















 


(c)                                  If
only a portion of a Note is purchased pursuant to a Restricted Payment Offer, a
new Note in a principal amount at maturity equal to the portion thereof not
purchased will be issued in the name of the Holder thereof upon cancellation of
the original Note (or appropriate adjustments to the amount and beneficial
interests in a Global Note will be made). Notes (or portions thereof) purchased
pursuant to an Restricted Payment Offer will be cancelled and cannot be
reissued. If any of the Notes subject to the Restricted Payment Offer is in the
form of a Global Note, then the Issuer shall modify such notice to the
extent necessary to comply with the procedures of the Depositary applicable to
repurchases.


 


(d)                                 On or before the
Restricted Payment Offer Payment Date, the Issuer shall, to the extent lawful (i) accept
for payment Notes or portions thereof properly tendered pursuant to the
Restricted Payment Offer, (ii) deposit with the Paying Agent U.S. Legal
Tender sufficient to pay the purchase price plus accrued interest and
Additional Interest, if any, of all Notes or portions thereof so tendered and (iii) deliver
or cause to be delivered to the Trustee the Notes so accepted together with an
Officers’ Certificate stating the aggregate principal amount at maturity of
Notes or portions thereof being purchased by the Issuer. Promptly following
receipt of such Officers’ Certificate, the Paying Agent shall transmit in
accordance with the procedures of the Depositary, if applicable, or mail to the
Holders of Notes so tendered the purchase price for such Notes and the Issuer
shall promptly issue and the Trustee shall promptly authenticate and deliver
(or cause to be transferred by book entry) to each Holder a new Note equal in
principal amount at maturity to any unpurchased portion of the Notes
surrendered; provided that each such new Note shall be in a principal
amount at maturity of $1,000 or an integral multiple thereof. Any Notes not so
accepted shall be promptly returned by the Issuer to the Holders thereof.


 


(e)                                  The
Issuer will comply with the requirements of Rule 14e-1 under the Exchange
Act and any other securities laws and regulations thereunder to the extent such
laws and regulations are applicable in connection with the repurchase of Notes
pursuant to a Restricted Payment Offer. To the extent that the provisions of
any securities laws or regulations conflict with this Section 4.23,
the Issuer shall comply with the applicable securities laws and regulations and
shall not be deemed to have breached its obligations under this Section 4.23
by virtue thereof.


 


Section 4.24                                Additional
Interest.


 


If Additional
Interest becomes payable by the Issuer pursuant to the Registration Rights
Agreement, the Issuer shall deliver to the Trustee an Officers’ Certificate
stating (i) the amount of Additional Interest due and payable, (ii) the
section of the Registration Rights Agreement pursuant to which Additional
Interest is due and payable and (iii) the date on which Additional
Interest is payable. Unless and until a Trust Officer receives such an Officers’
Certificate, the Trustee may assume without inquiry that no Additional
Interest is payable; provided, that the failure of the Issuer to deliver
to the Trustee such Officers’ Certificate shall not relieve the Issuer of its
obligation to pay any such Additional Interest when due and payable.


 


Section 4.25                                Calculation
of Original Issue Discount.


 


The Issuer
shall file with the Trustee promptly at the end of each calendar year (i) a
written notice specifying the amount of original issue discount (including
daily rates and accrual periods) accrued on Outstanding Notes as of the end of
such year and (ii) such other specific information relating to such
original issue discount as may then be relevant under the Internal Revenue
Code of 1986, as amended from time to time.


 

















 


ARTICLE FIVE



SUCCESSOR CORPORATION


 


Section 5.01                                Merger,
Consolidation and Sale of Assets.


 


The Issuer
will not, in a single transaction or series of related transactions,
consolidate or merge with or into any Person, or sell, assign, transfer, lease,
convey (not including any conveyance, if any, resulting solely from the
creation of any Permitted Lien) or otherwise dispose of (or cause or permit any
Restricted Subsidiary to sell, assign, transfer, lease, convey (not including
any conveyance, if any, resulting solely from the creation of any Permitted
Lien) or otherwise dispose of) all or substantially all of the Issuer’s assets
(determined on a consolidated basis for the Issuer and the Restricted
Subsidiaries) whether as an entirety or substantially as an entirety to any
Person unless:


 


(1)                                  either:


 


(a)                                  the
Issuer shall be the surviving or continuing corporation; or


 


(b)                                 the
Person (if other than the Issuer) formed by such consolidation or into which
the Issuer is merged or the Person which acquires by sale, assignment,
transfer, lease, conveyance or other disposition the properties and assets of
the Issuer and of the Issuer’s Restricted Subsidiaries substantially as an
entirety (the “Surviving Entity”):


 


(x)                                   shall
be an entity organized and validly existing under the laws of the United States
or any State thereof or the District of Columbia; provided, that if such
Person is not a corporation, a co-obligor of the Notes is a corporation; and


 


(y)                                 shall
expressly assume (i) by supplemental indenture (in form and substance
reasonably satisfactory to the Trustee), executed and delivered to the Trustee,
the due and punctual payment of the principal of, and premium, if any, and
interest and Additional Interest, if any, on all of the Notes and the
performance of every covenant of the Notes, this Indenture and the Registration
Rights Agreement on the part of the Issuer to be performed or observed
thereunder and (ii) by amendment, supplement or other instrument (in form and
substance reasonably satisfactory to the Trustee and the Collateral Agent),
executed and delivered to the Trustee, all obligations of the Issuer under the
Collateral Agreements, and in connection therewith shall cause such instruments
to be filed and recorded in such jurisdictions and take such other actions as may be
required by applicable law to perfect or continue the perfection of the Lien
created under the Collateral Agreements on the Collateral owned by or
transferred to the surviving entity;


 


(2)                                  unless
such transaction is (i) a consolidation or merger of the Issuer or any
Restricted Subsidiary, as the case may be, with or into a Guarantor, or a
sale, assignment, transfer, lease, conveyance or other disposition of all or
substantially all of the assets of the Issuer to a Guarantor, (ii) not for
the purpose of evading this provision and not in connection with any other
transaction, and (iii) otherwise complies with the terms of this
Indenture, immediately after giving effect to such transaction and the 


 

















 


assumption contemplated by clause (1)(b)(y)
above (including giving effect to any Indebtedness and Acquired Indebtedness
incurred or anticipated to be incurred in connection with or in respect of such
transaction), the Issuer or such Surviving Entity, as the case may be, is
permitted to incur at least $1.00 of additional Indebtedness pursuant to Section 4.08
or would have a Consolidated Fixed Charge Coverage Ratio at least equal to the Issuer’s
Consolidated Fixed Charge Coverage Ratio immediately preceding such
transaction;


 


(3)                                  unless
such transaction is (i) a consolidation or merger of the Issuer or any
Restricted Subsidiary, as the case may be, with or into a Guarantor, or a
sale, assignment, transfer, lease, conveyance or other disposition of all or
substantially all of the assets of the Issuer to a Guarantor, (ii) not for
the purpose of evading this provision and not in connection with any other
transaction, and (iii) otherwise complies with the terms of this
Indenture, immediately after giving effect to such transaction and the
assumption contemplated by clause (1)(b)(y) above (including, without
limitation, giving effect to any Indebtedness and Acquired Indebtedness
incurred or anticipated to be incurred and any Lien granted in connection with
or in respect of the transaction), no Default or Event of Default shall have
occurred or be continuing; and


 


(4)                                  the
Issuer or the Surviving Entity shall have delivered to the Trustee an Officers’
Certificate and an Opinion of Counsel, each stating that such consolidation,
merger, sale, assignment, transfer, lease, conveyance or other disposition and,
if a supplemental indenture is required in connection with such transaction,
such supplemental indenture comply with the applicable provisions of this
Indenture and that all conditions precedent in this Indenture relating to such
transaction have been satisfied.


 


For purposes
of Section 5.01(1), the transfer (by lease, assignment, sale or
otherwise, in a single transaction or series of transactions) of all or
substantially all of the properties or assets of one or more Restricted
Subsidiaries of the Issuer, the Equity Interests of which constitutes all or
substantially all of the properties and assets of the Issuer, shall be deemed
to be the transfer of all or substantially all of the properties and assets of
the Issuer.


 


This Section 5.01
shall not apply to any merger or consolidation with an Affiliate solely for the
purpose of reincorporating the Issuer in another jurisdiction of the United
States; provided that (x) such Affiliate has no assets, liabilities or
operations immediately prior to such merger or consolidation and (y) the Issuer
has complied with its obligations under Section 12 of the Security
Agreement in connection with such transaction.


 


Section 5.02                                Successor
Entity Substituted.


 


Upon any
consolidation, combination or merger or any transfer of all or substantially
all of the assets of the Issuer in accordance with Section 5.01, in
which the Issuer is not surviving or the continuing corporation, the successor
Person formed by such consolidation or into which the Issuer is merged or to
which such conveyance, lease or transfer is made shall succeed to, and be
substituted for, and may exercise every right and power of, the Issuer
under this Indenture and the Notes with the same effect as if such surviving entity
had been named as such. Upon such substitution, the predecessor Issuer and any
Guarantors that remain Subsidiaries of the Issuer shall be released from their
obligations under this Indenture, the Guarantees and the Collateral Agreements,
except to the extent that such entities remain Subsidiaries of the substituted
entity.


 

















 


ARTICLE SIX



DEFAULT AND REMEDIES


 


Section 6.01                                Events
of Default.


 


The following
events are defined in this Indenture as “Events of Default”:


 


(1)                                  the
failure by the Issuer or the Guarantors to pay interest and Additional
Interest, if any, on any Notes when the same becomes due and payable and the
default continues for a period of thirty (30) consecutive days;


 


(2)                                  the
failure by the Issuer or the Guarantors to pay the principal of or premium, if
any, on any Notes, when such principal becomes due and payable, at maturity,
upon redemption or otherwise (including the failure to make a payment to
purchase Notes tendered pursuant to a Change of Control Offer, a Net Proceeds
Offer Excess Cash Flow Offer or Restricted Payments Offer, when such payments
become due);


 


(3)                                  a
default by the Issuer or the Guarantors in the observance or performance of any
other covenant or agreement contained in this Indenture (other than the payment
of the principal of, or premium, if any, or interest or Additional Interest, if
any, on any Note) or any Collateral Agreement which default continues for a
period of forty-five (45) days after the Issuer receives written notice
specifying the default (and demanding that such default be remedied) from the
Trustee or the Holders of at least 25% of the outstanding principal amount at
maturity of the Notes (except in the case of a default with respect to Section 5.01,
which will constitute an Event of Default with such notice requirement but
without such passage of time requirement);


 


(4)                                  the
failure to pay at final maturity (giving effect to any applicable grace periods
and any extensions thereof) the principal amount of any Indebtedness of the
Issuer or any Restricted Subsidiary other than the Notes and the Guarantees, or
the acceleration of the final stated maturity of any such Indebtedness (which
acceleration is not rescinded, annulled or otherwise cured within thirty (30)
days from the date of acceleration) if the aggregate principal amount of such
Indebtedness, together with the principal amount of any other such Indebtedness
in default for failure to pay principal at final maturity or which has been
accelerated (in each case with respect to which the 30-day period described
above has elapsed), aggregates $7.5 million or more at any time;


 


(5)                                  one
or more judgments in an aggregate amount in excess of $7.5 million shall have
been rendered against the Issuer or any of its Restricted Subsidiaries (other
than any judgment as to which a third party insurer has accepted full coverage)
and such judgments remain undischarged, unpaid or unstayed for a period of sixty
(60) consecutive days after such judgment or judgments become final and
non-appealable;


 


(6)                                  the
Issuer or any Significant Subsidiary (A) commences a voluntary case or
proceeding under the Bankruptcy Code or any other state or federal bankruptcy
or insolvency law with respect to itself, (B) consents to the entry of an
order for relief against it in an involuntary case under the Bankruptcy Code or
any other state or federal bankruptcy or insolvency law, (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; or (E) takes any
corporate action to authorize or effect any of the foregoing;


 

















 


(7)                                  a
court of competent jurisdiction enters an order or decree that (A) is an
order for relief in respect of the Issuer or any Significant Subsidiary in an
involuntary case under the Bankruptcy Code or any other state or federal
bankruptcy or insolvency law, (B) appoints a Custodian of the Issuer or
any Significant Subsidiary or for substantially all of its property or (C) orders
the winding-up or liquidation of its affairs; and, in each case of clauses (A), (B) and (C), and such order or decree shall remain
unstayed and in effect for a period of sixty (60) consecutive days;


 


(8)                                  any
Collateral Agreement at any time for any reason shall cease to be in full force
and effect or ceases to give, in all material respects, the Collateral Agent
the Liens, rights, powers and privileges purported to be created thereby,
superior to and prior to the rights of all third Persons other than the holders
of Permitted Liens and subject to no other Liens except as expressly permitted
by the applicable Collateral Agreement; provided that it will not be an
Event of Default under this clause (8) if the sole result of such failure
of the Collateral Agreements to be fully enforceable is that Collateral subject
to any Liens purported to be granted under such unenforceable Collateral
Agreements, individually or in the aggregate, have a Fair Market Value of less
than $1.0 million;


 


(9)                                  the
Issuer or any of the Guarantors, directly or indirectly, contest in any manner
the effectiveness, validity, binding nature or enforceability of any Collateral
Agreement; or


 


(10)                            any
Guarantee of a Significant Subsidiary ceases to be in full force and effect or
any Guarantee of a Significant Subsidiary is declared to be null and void and
unenforceable or any Guarantee of a Significant Subsidiary is found to be
invalid or any Guarantor that is a Significant Subsidiary denies its liability
under its Guarantee (other than by reason of release of a Guarantor in
accordance with the terms of this Indenture).


 


Section 6.02                                Acceleration.


 


(a)                                  If
an Event of Default (other than an Event of Default specified in Section 6.01(6) or
(7) above with respect to the Issuer) shall occur and be continuing
and has not been waived, the Trustee or the Holders of at least 25% in principal
amount at maturity of outstanding Notes may declare the principal of and
premium, if any, and accrued interest and Additional Interest, if any, on all
the Notes to be due and payable by notice in writing to the Issuer and the
Trustee specifying the Event of Default and that it is a “notice of
acceleration” (the “Acceleration Notice”), and the same shall become
immediately due and payable.


 


(b)                                 If
an Event of Default specified in Section 6.01(6) or (7) above
with respect to the Issuer occurs and is continuing, then all unpaid principal
of, and premium, if any, and accrued and unpaid interest and Additional
Interest, if any, on all of the outstanding Notes shall ipso facto
become and be immediately due and payable without any declaration or other act
on the part of the Trustee or any Holder.


 


(c)                                  At
any time after a declaration of acceleration with respect to the Notes as
described in Section 6.02(a) and (b), the Holders of a
majority in principal amount at maturity of the Notes may rescind and
cancel such declaration and its consequences:


 


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


 

















 


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


 


(iii)                               if the Issuer has paid
to the Trustee its reasonable compensation and reimbursed it for its expenses,
disbursements and advances;


 


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


 


(v)                                 in the event of the
cure or waiver of an Event of Default of the type described in Section 6.01(6) or
(7), the Trustee shall have received an Officers’ Certificate and an
Opinion of Counsel that such Event of Default has been cured or waived.


 


(d)                                 No
such rescission shall affect any subsequent Default or impair any right
consequent thereto.


 


Section 6.03                                Other
Remedies.


 


If an Event of
Default occurs and is continuing, each of the Trustee and the Collateral Agent
may, subject to the
Intercreditor Agreement, pursue any available remedy by
proceeding at law or in equity to collect the payment of principal of, premium,
if any, or interest, or Additional Interest, if any, on the Notes or to enforce
the performance of any provision of the Notes, this Indenture or any Collateral
Agreement.


 


Each of the
Trustee and the Collateral Agent 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, the Collateral Agent 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 to the extent permitted by law.


 


Section 6.04                                Waiver
of Past Defaults.


 


Subject to Sections
2.09, 6.07 and 9.02, the Holders of a majority in principal
amount at maturity of the Notes may waive any existing Default or Event of
Default and its consequences, except (other than as provided in Section 6.02(c))
a default in the payment of the principal of, premium, if any, or interest or
Additional Interest, if any, on any Notes. When a Default or Event of Default
is waived, it is cured and ceases to exist.


 


Section 6.05                                Control
by Majority.


 


Subject to Section 2.09,
the Holders of a majority in principal amount at maturity of the outstanding
Notes may direct the time, method and place of conducting any proceeding
for exercising any remedy available to the Trustee or the Collateral Agent, as
the case may be, or exercising any trust or power conferred on the Trustee
or the Collateral Agent, as the case may be, including, without
limitation, any remedies provided for in Section 6.03. Subject to Section 7.01
and 7.02(f), however, the Trustee or the Collateral Agent, as the case may be,
may refuse to follow any direction (which direction, if sent to the
Trustee or the Collateral Agent, as the case may be, shall be in writing)
that the Trustee or the Collateral Agent, as the case may be, reasonably
believes conflicts with any applicable law or this 


 

















 


Indenture, that the Trustee or the Collateral Agent, as the case may be,
determines in good faith may be unduly prejudicial to the rights of
another Holder, or that may subject the Trustee or the Collateral Agent,
as the case may be, to personal liability; provided
that the Trustee or the Collateral Agent, as the case may be, may take
any other action deemed proper by the Trustee or the Collateral Agent, as the
case may be, which is not inconsistent with such direction (which
direction, if sent to the Trustee or the Collateral Agent, as the case may be,
shall be in writing).


 


Section 6.06                                Limitation
on Suits.


 


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


 


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


 


(2)                                  subject
to Section 2.09, Holders of at least 25% in principal amount at
maturity of the outstanding Notes make a written request to the Trustee to
institute proceedings in respect of that Event of Default;


 


(3)                                  such
Holders offer to the Trustee indemnity reasonably satisfactory to the Trustee
against any loss, liability or expense to be incurred in compliance with such
request;


 


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


 


(5)                                  during
such sixty (60) day period the Holders of a majority in principal amount at
maturity of the outstanding Notes do not give the Trustee a written direction
which, in the opinion of the Trustee, is inconsistent with the request.


 


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


 


Section 6.07                                Rights
of Holders to Receive Payment.


 


Notwithstanding
any other provision of this Indenture, the right of any Holder to receive
payment of principal of, premium, if any, and interest on a Note, on or after
the respective due dates expressed in such Note, or to bring suit for the
enforcement of any such payment on or after such respective dates, shall not be
impaired or affected without the consent of such Holder.


 


Section 6.08                                Collection
Suit by Trustee or Collateral Agent.


 


If an Event of
Default specified in Section 6.01(1) or (2) occurs
and is continuing, the Trustee or the Collateral Agent may recover
judgment (i) in its own name and (ii)(x) in the case of the Trustee,
as trustee of an express trust or (y) in the case of the Collateral Agent,
as collateral agent on behalf of each of the Secured Parties, in each case
against the Issuer or any other obligor on the Notes for the whole amount of
principal of, premium, if any, and accrued interest, remaining unpaid on, the
Notes, together with interest on overdue principal and, to the extent that
payment of such interest, and Additional Interest, if any, is lawful, interest
on overdue installments of interest at the rate set forth in Section 4.01
and such further amount as shall be sufficient to cover the costs and expenses
of collection, including the reasonable compensation, expenses, disbursements
and advances of the Trustee, the Collateral Agent and 


 

















 


their respective agents and counsel and any other amounts due the
Trustee under the Collateral Agreements and Section 7.07.


 


Section 6.09                                Trustee
May File Proofs of Claim.


 


The Trustee is
authorized to file such proofs of claim and other papers or documents as may be
necessary or advisable in order to have the claims of the Trustee (including
any claim for the reasonable compensation, expenses, disbursements and advances
of the Trustee, its agents and counsel) and the Holders allowed in any judicial
proceedings relating to the Issuer or any other obligor upon the Notes, any of
their respective creditors or any of their respective property and shall be
entitled and empowered to collect and receive any monies or other property
payable or deliverable on any such claims and to distribute the same, and any
Custodian in any such judicial proceedings is hereby authorized by each Holder
to make such payments to the Trustee and, in the event that the Trustee shall
consent to the making of such payments directly to the Holders, to pay to the
Trustee any amount due to it for the reasonable compensation, expenses, taxes,
disbursements and advances of the Trustee, its agents and counsel, and any
other amounts due the Trustee under the Collateral Agreements and Section 7.07.
The Issuer’s payment obligations under this Section 6.09 shall be
secured in accordance with the provisions of Section 7.07. Nothing
herein contained shall be deemed to authorize the Trustee to authorize or
consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Notes or
the rights of any Holder thereof, or to authorize the Trustee or the Collateral
Agent, as the case may be, to vote in respect of the claim of any Holder
in any such proceeding.


 


Section 6.10                                Priorities.


 


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


 


First:  to the Trustee, the Collateral Agent, the
Paying Agent and the Registrar for amounts due under Section 7.07
(including payment of all compensation expense, all liabilities incurred and
all advances made by the Trustee or the Collateral Agent, as the case may be,
and the costs and expenses of collection);


 


Second:  if the Holders are forced to proceed against
the Issuer directly without the Trustee or the Collateral Agent, to Holders for
their collection costs;


 


Third:  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, respectively; and


 


Fourth:  to the Issuer or any other obligor on the
Notes, as their interests may appear, or as a court of competent
jurisdiction may direct.


 


The Trustee,
upon prior written notice to the Issuer, may fix a record date and payment
date for any payment to Holders pursuant to this Section 6.10.


 


Section 6.11                                Undertaking
for Costs.


 


All parties to
this Indenture agree, and each Holder by its acceptance of its Note shall be
deemed to have agreed, that in any suit for the enforcement of any right or
remedy under this Indenture or in any suit against the Trustee or the
Collateral Agent, as the case may be, for any action taken or omitted by
it as Trustee or the Collateral Agent, as the case may be, 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 or the Collateral Agent, as the case may be,
a suit by a Holder pursuant to Section 6.07, or a suit by a Holder
or Holders of more than 10% in principal amount at maturity of the then outstanding
Notes.


 


Section 6.12                                Restoration
of Rights and Remedies.


 


If the
Trustee, the Collateral Agent or any Holder has instituted any proceedings to
enforce any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee, the Collateral Agent, or to such Holder, then and in every such
case, subject to any determination in such proceeding, the Issuer, the Trustee,
the Collateral Agent and the Holders shall be restored severally and
respectively to their former positions hereunder and thereafter all rights and
remedies of the Trustee, the Collateral Agent and the Holders shall continue as
though no such proceeding has been instituted.


 


ARTICLE SEVEN



TRUSTEE


 


Section 7.01                                Duties
of Trustee.


 


The duties and
responsibilities of the Trustee shall be as provided by the TIA and as set
forth herein.


 


(a)                                  If
an Event of Default has occurred and is continuing, the Trustee shall exercise
such rights and powers vested in it by this Indenture and use the same degree
of care and skill in its exercise thereof as a prudent person would exercise or
use under the circumstances in the conduct of such person’s own affairs.


 


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


 


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


 


(2)                                  in
the absence of bad faith on its part, the Trustee may conclusively rely,
as to the truth of the statements and the correctness of the opinions expressed
therein, upon certificates or opinions furnished to the Trustee and conforming
to the requirements of this Indenture; provided, however, in case
of any such certificates or opinions furnished to the Trustee which by the
provisions hereof are furnished to the Trustee, the Trustee shall examine the
certificates and opinions to determine whether or not they conform to the
requirements of this Indenture (but need not confirm or investigate the
accuracy of mathematical calculations or other facts stated therein).


 


(c)                                  Notwithstanding
anything to the contrary herein contained, the Trustee may not be relieved
from liability for its own negligent action, its own negligent failure to act,
or its own willful misconduct, except that:


 

















 


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


 


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


 


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


 


(d)                                 No
provision of this Indenture shall require the Trustee to expend or risk its own
funds or otherwise incur any liability. The Trustee shall be under no
obligation to exercise of any of its rights or powers under this Indenture or
the Collateral Agreements at the request, order or direction of any Holders
unless such Holders have offered to the Trustee security and indemnity
reasonably satisfactory to the Trustee against the costs and expenses which may be
incurred by it in compliance with such request, order or direction.


 


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


 


(f)                                    The
Trustee shall not be liable for interest on any money or assets received by it
except as the Trustee may agree in writing with the Issuer. Money and
assets held in trust by the Trustee need not be segregated from other funds or
assets held by the Trustee except to the extent required by law.


 


Section 7.02                                Rights
of Trustee.


 


Subject to Section 7.01:


 


(a)                                  The
Trustee may conclusively rely and shall be fully protected in acting or
refraining from acting upon any resolution, certificate, statement instrument,
opinion, report, request direction, consent, order, bond, note or other paper
or document believed by it to be genuine and to have been signed or presented
by the proper Person. The Trustee need not investigate any fact or matter
stated in the document.


 


(b)                                 Before
the Trustee acts or refrains from acting, it may consult with counsel of
its selection and may require an Officers’ Certificate or an Opinion of
Counsel, or both, which shall conform to Sections 11.04 and 11.05.
The Trustee shall not be liable for any action it takes or omits to take in
good faith in reliance on such Officers’ Certificate or Opinion of Counsel. The
written advice of the Trustee’s counsel or any Opinion of Counsel shall be full
and complete authorization and protection from liability in respect of any
action taken, suffered or omitted by the Trustee hereunder in good faith and in
reliance thereon.


 


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


 


(d)                                 The
Trustee shall not be liable for any action that it takes or omits to take in
good faith which it reasonably believes to be authorized or within its rights
or powers under this Indenture.


 

















 


(e)                                  The
Trustee shall not be bound to make any investigation into the facts or matters
stated in any resolution, certificate, statement, instrument, opinion, notice,
request, direction, consent, order, bond, debenture, 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, upon reasonable notice to the Issuer, to examine the
books, records and premises of the Issuer, personally or by agent or attorney at
the sole expense of the Issuer and to consult with the officers and
representatives of the Issuer, including the Issuer’s accountants and attorneys,
and shall incur no liability or additional liability of any kind by reason of
such inquiry or investigation. Except as expressly stated herein to the
contrary, in no event shall the Trustee have any responsibility to ascertain
whether there has been compliance with any of the covenants or provisions of Articles
Four or Five hereof.


 


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


 


(g)                                 Unless
otherwise specifically provided in this Indenture, any demand, request,
direction or notice from the Issuer shall be sufficient if signed by an Officer
of the Issuer and any resolution of the Board of Directors shall be sufficient
if evidenced by a copy of such resolution certified by an Officer of the Issuer
to have been duly adopted and in full force and effect on the date hereof.


 


(h)                                 The
Trustee shall not be deemed to have notice of any Default or Event of Default
unless a Trust Officer of the Trustee has actual knowledge thereof or shall
have received from the Issuer, any Guarantor or any other obligor upon the
Notes or from any Holder written notice thereof at its address set forth in Section 11.02
hereof, and such notice references the Notes and this Indenture.


 


(i)                                     The
rights, privileges, protections, immunities and benefits given to the Trustee,
including, without limitation, its right to be indemnified, are extended to,
and shall be enforceable by, the Trustee in each of its capacities hereunder,
and each agent, custodian and other Person employed to act hereunder.


 


(j)                                     The
Trustee may request that the Issuer deliver an Officers’ Certificate
setting forth the names of individuals and/or titles of officers authorized at
such time to take specified actions pursuant to this Indenture, which Officers’
Certificate may be signed by any persons authorized to sign an Officers’
Certificate, including any person specified as so authorized in any such
certificate previously delivered and not superseded.


 


(k)                                  The
permissive right of the Trustee to take any action under this Indenture or any
Collateral Agreements shall not be construed as a duty to so act.


 


Section 7.03                                Individual
Rights of Trustee.


 


The Trustee in
its individual or any other capacity may become the owner or pledgee of
Notes and may otherwise deal with the Issuer, any Subsidiary of the Issuer
or their respective Affiliates with the same rights it would have if it were
not Trustee. Any Agent may do the same with like rights. However, the
Trustee must comply with Sections 7.10 and 7.11 of this Indenture,
and the Trustee is subject to TIA Sections 310(b) and 311.


 


Section 7.04                                Trustee’s
Disclaimer.


 


The Trustee
makes no representation as to the validity, adequacy or sufficiency of this
Indenture, the Notes or the Collateral Agreements, and it shall not be
accountable for the Issuer use of the proceeds 


 

















 


from the Notes, and it shall not be responsible for any statement of
the Issuer in this Indenture, the Notes, the Collateral Agreements or any other
documents in connection with the issuance of the Notes other than the Trustee’s
certificate of authentication.


 


Beyond the
exercise of reasonable care in the custody thereof and the fulfillment of its
obligations under this Indenture and the Collateral Agreements, the Trustee
shall have no duty as to any Collateral in its possession or control or in the
possession or control of any agent or bailee or any income thereon or as to
preservation of rights against prior parties or any other rights pertaining
thereto. The Trustee shall be deemed to have exercised reasonable care in the
custody of the Collateral in its possession if the Collateral is accorded
treatment substantially equal to that which it accords its own property. The
Trustee shall not be responsible for filing any financing or continuation statements
or recording any documents or instruments in any public office at any time or
times or otherwise perfecting or maintaining the perfection of any security
interest in the Collateral.


 


The Trustee
makes no representations as to and shall not be responsible for the existence,
genuineness, value, sufficiency or condition of any of the Collateral or as to
the security afforded or intended to be afforded thereby, hereby or by any
Collateral Agreement, or for the validity, perfection, priority or enforceability
of the Liens or security interests in any of the Collateral created or intended
to be created by any of the Collateral Agreements, whether impaired by
operation of law or by reason of any action or omission to act on its part hereunder,
except to the extent such action or omission constitutes gross negligence or
willful misconduct on the part of the Trustee, for the validity or
sufficiency of the Collateral, any Collateral Agreements or any agreement or
assignment contained in any thereof, for the validity of the title of the
Issuer or any Guarantor to the Collateral, for insuring the Collateral or for
the payment of taxes, charges, assessments or Liens upon the Collateral or
otherwise as to the maintenance of the Collateral.


 


Section 7.05                                Notice
of Default.


 


If a Default
or an Event of Default occurs and is continuing and if a Trust Officer has
actual knowledge or has received written notice from the Issuer or any Holder,
the Trustee shall mail to each Holder, with a copy to the Issuer, notice of the
Default or Event of Default within ninety (90) days thereof. Except in the case
of a Default or an Event of Default in payment of principal of, premium, if
any, and interest or Additional Interest, if any, on, any Note, including an
accelerated payment and the failure to make payment on the Change of Control
Payment Date pursuant to a Change of Control Offer and, the Trustee may withhold
the notice if and so long as its Board of Directors, the executive committee of
its Board of Directors or a committee of its directors and/or Trust Officers in
good faith determines that withholding the notice is in the interest of the
Holders.


 


Section 7.06                                Reports
by Trustee to Holders.


 


Within sixty
(60) days after each April 15, beginning with April 15, 2006, the
Trustee shall, to the extent that any of the events described in TIA Section 313(a) occurred
within the previous twelve months, but not otherwise, mail to each Holder a
brief report dated as of such date that complies with TIA Section 313(a). The
Trustee also shall comply with TIA Sections 313(b) and (c).


 


A copy of each
report at the time of its mailing to Holders shall be mailed by the Trustee to
the Issuer and filed by the Issuer with the SEC and each stock exchange or
market, if any, on which the Notes are listed or quoted.


 

















 


The Issuer
shall promptly notify the Trustee in writing if the Notes become listed or
quoted on any stock exchange or market and of any delisting thereof and the
Trustee shall comply with TIA Section 313(d).


 


Section 7.07                                Compensation
and Indemnity.


 


The Issuer
shall pay to the Trustee, Collateral Agent, the Paying Agent and the Registrar
(each an “Indemnified Party”) from time to time compensation for their
respective services as Trustee, Collateral Agent, Paying Agent or Registrar, as
the case may be, as agreed to in writing between each of the Trustee, the
Collateral Agent, the Paying Agent and the Registrar, on the one hand and the
Issuer, on the other. The Trustee’s compensation shall not be limited by any
law on compensation of a trustee of an express trust. The Issuer shall
reimburse each Indemnified Party upon request for all reasonable out-of-pocket
expenses incurred or made by it in connection with the performance of its
duties under, as the case may be, this Indenture or the Collateral
Agreements. Such expenses shall include the reasonable fees and expenses of
each of such Indemnified Party’s agents and counsel.


 


The Issuer and the
Guarantors, jointly and severally, hereby indemnify each Indemnified Party and
its agents, employees, stockholders and directors and officers for, and holds
each of them harmless against, any loss, cost, claim, liability or expense
incurred by any of them except to the extent caused by any negligence, bad
faith or willful misconduct on the part of such Indemnified Party, arising
out of or in connection with this Indenture or the Collateral Agreements, or
the administration of this trust, including the reasonable costs and expenses
of enforcing this Indenture against the Issuer (including this Section 7.07)
and defending themselves against any claim or liability in connection with the
exercise or performance of any of its rights, powers or duties hereunder or
thereunder (including the reasonable fees and expenses of counsel). The Trustee
shall notify the Issuer promptly of any claim asserted against an Indemnified
Party for which such Indemnified Party has advised the Trustee that it may seek
indemnity hereunder or under the Collateral Agreements. Failure by the Trustee
to so notify the Issuer shall not relieve the Issuer of its obligations
hereunder. At the Indemnified Party’s sole discretion, the Issuer shall defend
the claim and the Indemnified Party shall cooperate and may participate in
the defense; provided that any settlement
of a claim shall be approved in writing by the Indemnified Party. Alternatively,
the Indemnified Party may at its option have separate counsel of its own
choosing and the Issuer shall pay the reasonable fees and expenses of such
counsel; provided that the Issuer shall not
be required to pay such fees and expenses if it assumes the Indemnified Party’s
defense and there is no conflict of interest between the Issuer and the
Indemnified Party in connection with such defense as reasonably determined by
the Indemnified Party. The Issuer need not pay for any settlement made without
its written consent, which consent shall not be unreasonably withheld.


 


To secure the
Issuer’s and Guarantors’ payment obligations in this Section 7.07,
each Indemnified Party shall have a lien prior to the Notes on all Collateral
held or collected by the Trustee, in its capacity as Trustee, except assets or
money held in trust to pay principal of or interest on particular Notes.


 


When an
Indemnified Party incurs expenses or renders services after an Event of Default
specified in Section 6.01(6) or (7) occurs, such
expenses (including the reasonable fees and expenses of its counsel) and the
compensation for such services are intended to constitute expenses of
administration under any Bankruptcy Code.


 


The obligations
of the Issuer under this Section 7.07 shall survive the
satisfaction and discharge of this Indenture, termination of the Collateral
Agreements or the resignation or removal of the Trustee.


 


The Trustee
shall comply with the provisions of TIA Section 312(b)(2) to the
extent applicable.


 

















 


Section 7.08                                Replacement
of Trustee.


 


The Trustee may resign
by providing written notice to the Issuer. No resignation or removal of the
Trustee and no appointment of a successor Trustee pursuant to this Section 7.08
shall become effective until the acceptance of appointment by the successor
Trustee in accordance with this Indenture. The Holders of a majority in
aggregate principal amount at maturity of the outstanding Notes may remove
the Trustee by so notifying the Issuer and the Trustee in writing and may appoint
a successor Trustee. The Issuer, by a Board Resolution, may remove the
Trustee if:


 


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


 


(2)                                 the
Trustee is adjudged bankrupt or insolvent or an order for relief is entered with respect to
the Trustee under the Bankruptcy Code or any other state or
federal bankruptcy or insolvency law;


 


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


 


(4)                                  the
Trustee becomes incapable of acting as Trustee hereunder or with
respect to the Notes.


 


If the Trustee
resigns or is removed or if a vacancy exists in the office of Trustee for any
reason, the Issuer shall notify each Holder in writing of such event and shall
promptly appoint a successor Trustee. Within one year after the successor
Trustee takes office, the Holders of a majority in aggregate principal amount
at maturity of the then outstanding Notes may appoint a successor Trustee
to replace the successor Trustee appointed by the Issuer.


 


A successor Trustee shall
deliver a written acceptance of its appointment to the retiring Trustee and to
the Issuer and thereupon the resignation or removal of the retiring Trustee
shall become effective and such successor Trustee, without any further act, deed
or conveyance, shall become vested with all rights, powers, trusts, duties and
obligations of the retiring Trustee and shall immediately duly assign, transfer
and deliver to such successor Trustee all property and money held by such
Trustee so ceasing to act hereunder subject nevertheless to its lien, if any,
provided for in Section 7.07. Such retiring Trustee shall at the
expense of the Issuer and upon payment of the charges of the Trustee then
unpaid, execute and deliver an instrument transferring to such successor
Trustee all the rights, powers and trusts of the retiring Trustee, and shall
duly assign, transfer and deliver to such successor Trustee all property and
money held by such retiring Trustee hereunder. The successor Trustee will mail a notice of its
succession to Holders.


 


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


 


If the Trustee
fails to comply with Section 7.10, any Holder who satisfies the
requirements of TIA Section 310(b) may petition any court of
competent jurisdiction for the removal of the Trustee and the appointment of a
successor Trustee.


 


The Issuer
shall give notice of any resignation and any removal of the Trustee and each
appointment of a successor Trustee to all Holders in writing. Each notice shall
include the name of the successor Trustee and the address of its Corporate
Trust Office.


 

















 


Notwithstanding
any resignation or replacement of the Trustee pursuant to this Section 7.08,
the Issuer’s obligations under Section 7.07 shall continue for the
benefit of the retiring Trustee.


 


Section 7.09                                Successor
Trustee by Merger, Etc.


 


If the Trustee
consolidates with, merges or converts into, or transfers all or substantially
all of its corporate trust business (including the administration of the trust
created by this Indenture) to, another Person, the resulting, surviving or
transferee Person without any further act shall, if such resulting, surviving
or transferee Person is otherwise eligible hereunder, be the successor Trustee;
provided, however, that such Person shall be otherwise qualified
and eligible under this Article Seven.


 


In case any
Notes have been authenticated, but not delivered, by the Trustee then in
office, any successor by merger, conversion or consolidation to such
authenticating Trustee may adopt such authentication and deliver the Notes
so authenticated with the same effect as if such successor Trustee had itself
authenticated such Notes.


 


Section 7.10                                Eligibility;
Disqualification.


 


(a)           This Indenture shall
always have a Trustee who satisfies the requirements of TIA Sections 310(a)(1),
(2), (3) and (5). The Trustee (or, in the case of a corporation included
in a bank holding company system, the related bank holding company) shall have
a combined capital and surplus of at least $100,000,000 as set forth in its
most recent published annual report of condition. In addition, if the Trustee
is a corporation included in a bank holding company system, the Trustee,
independently of such bank holding company, shall meet the capital requirements
of TIA Section 310(a)(2). The Trustee shall comply with TIA Section 310(b);
provided, however, that there shall be excluded from the
operation of TIA Section 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 Section 310(b)(1) are met. The provisions
of TIA Section 310 shall apply to the Issuer, as obligor of the Notes.


 


(b)                                 If
the Trustee has or acquires a conflicting interest within the meaning of the
TIA, the Trustee shall either eliminate such interest or resign, to the extent
and in the manner provided by, and subject to the provisions of, the TIA and this
Indenture.


 


Section 7.11                                Preferential
Collection of Claims Against Issuer.


 


The Trustee
shall comply with TIA Section 311(a), excluding any creditor relationship
listed in TIA Section 311(b). A Trustee who has resigned or been removed
shall be subject to TIA Section 311(a) to the extent indicated
therein.


 


Section 7.12                                Trustee
as Paying Agent and Collateral Agent.


 


References to
the Trustee in Sections 7.01(f), 7.02, 7.03, 7.04,
and 7.07 shall include the Trustee in its role as Paying Agent and as
Collateral Agent.


 


Section 7.13                                Co-Trustees,
Co-Collateral Agent and Separate Trustees and Collateral Agent.


 


(a)                                  At
any time or times, for the purpose of meeting the legal requirements of any
jurisdiction in which any of the Collateral may at the time be located,
the Issuer, the Trustee and the Collateral Agent shall have the power to
appoint, and, upon the written request of the Trustee, the Collateral Agent or
of the Holders of at least 25% in principal amount at maturity of the Notes 


 

















 


outstanding, the Issuer shall for such purpose, join with the Trustee
or the Collateral Agent, as the case may be, in the execution, delivery
and performance of all instruments and agreements necessary or proper to
appoint, one or more Persons approved by the Trustee either to act as
co-trustee, jointly with the Trustee, of all or any part of the
Collateral, to act as co-collateral agent, jointly with the Collateral Agent,
or to act as separate trustees or Collateral Agent of any such property, in
either case with such powers as may be provided in the instrument of
appointment, and to vest in such Person or Persons in the capacity aforesaid,
any property, title, right or power, deemed necessary or desirable, subject to
the other provisions of this Section 7.13.


 


(b)                                 Should
any written instrument from the Issuer be required by any co-trustee,
co-collateral agent or separate trustee or separate collateral agent so
appointed for more fully confirming to such co-trustee or separate trustee such
property, title, right or power, any and all such instruments shall, on
request, be executed, acknowledged and delivered by the Issuer.


 


(c)                                  Every
co-trustee, co-collateral agent or separate trustee or separate collateral
agent shall, to the extent permitted by law, but to such extent only, be
appointed subject to the following terms, namely:


 


(i)                                     The
Notes shall be authenticated and delivered, and all rights, powers, duties and
obligations hereunder in respect of the custody of securities, cash and other
personal property held by, or required to be deposited or pledged with, the
Trustee hereunder, shall be exercised solely, by the Trustee.


 


(ii)                                  The
rights, powers, duties and obligations hereby conferred or imposed upon the
Trustee shall be conferred or imposed upon and exercised or performed by the
Trustee or by the Trustee and such co-trustee or separate trustee, or by the
Collateral Agent and such co-collateral agent or separate collateral agent,
jointly as shall be provided in the instrument appointing such co-trustee or
separate trustee or co-collateral agent or separate collateral agent, except to
the extent that under any law of any jurisdiction in which any particular act
is to be performed, the Trustee shall be incompetent or unqualified to perform such
act, in which event such rights, powers, duties and obligations shall be
exercised and performed by such co-trustee or separate trustee, collateral
agent or co-collateral agent or separate collateral agent.


 


(iii)                               The
Trustee at any time, by an instrument in writing executed by it, with the
concurrence of the Issuer evidenced by a Board Resolution, may accept the
resignation of or remove any co-trustee or separate trustee appointed under
this Section 7.13; provided, that, in case an Event of
Default has occurred and is continuing, the Trustee shall have power to accept
the resignation of, or remove, any such co-trustee, co-collateral agent,
separate trustee or separate collateral agent without the concurrence of the
Issuer. Upon the written request of the Trustee, the Issuer shall join with the
Trustee in the execution, delivery and performance of all instruments and
agreements necessary or proper to effectuate such resignation or removal. A
successor to any co-trustee, co-collateral agent, separate trustee or separate
collateral agent so resigned or removed may be appointed in the manner
provided in this Section 7.13.


 


(iv)                              No
co-trustee, co-collateral agent or separate trustee or separate collateral
agent hereunder shall be personally liable by reason of any act or omission of
any other such trustee or collateral agent hereunder.


 


(v)                                 Any
act of Holders delivered to the Trustee shall be deemed to have been delivered
to each such co-trustee or separate trustee and any act of Holders delivered to
the 


 

















 


Collateral Agent shall be deemed to have been delivered to each such
co-collateral agent or separate collateral agent.


 


Section 7.14                                Form of
Documents Delivered to Trustee.


 


In any case
where several matters are required to be certified by, or covered by an opinion
of, any specified Person, it is not necessary that all such matters be
certified by, or covered by the opinion of, only one such Person, or that they
be so certified or covered by only one document, but one such Person may certify
or give an opinion with respect to some matters and one or more other Persons
as to other matters and any such Person may certify or give an opinion as
to such matters in one or several documents.


 


Any
certificate or opinion of an Officer of the Issuer may be based, insofar
as it relates to legal matters, upon a certificate or opinion, or
representation by, counsel, unless such Officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which his certificate or opinion is based are
erroneous. Any such certificate or opinion of counsel or representation by
counsel may be based, insofar as it relates to factual matters, upon a
certificate or opinion of, or representations by, an officer or officers of the
Issuer stating that the information with respect to such factual matters is in
the possession of the Issuer, unless such counsel knows that the certificate or
opinion or representations with respect to such matters are erroneous.


 


Where any
Person is required to make, give or execute two or more applications, requests,
consents, certificates, statements, opinions or other instruments under this
Indenture, they may, but need not, be consolidated and form one
instrument.


 


ARTICLE EIGHT



SATISFACTION AND DISCHARGE OF INDENTURE


 


Section 8.01                                Legal
Defeasance and Covenant Defeasance.


 


(a)                                  The
Issuer may, at its option and at any time, elect to have either paragraph (b) or
paragraph (c) below be applied to the outstanding Notes and all
obligations of the Guarantors upon compliance with the applicable conditions
set forth in paragraph (d).


 


(b)                                 Upon
the Issuer’s exercise under paragraph (a) of the option applicable
to this paragraph (b), the Issuer and the Guarantors shall be
deemed to have been released and discharged from their obligations with respect
to the outstanding Notes, the Guarantees and the Collateral Agreements on the
date the applicable conditions set forth below are satisfied (hereinafter, “Legal
Defeasance”). For this purpose, such Legal Defeasance means that the Issuer
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 the Sections and matters
under this Indenture referred to in clause (i) and (ii) below,
and the Issuer and the Guarantors shall be deemed to have satisfied all their
other obligations under such Notes and this Indenture, the Guarantees and the
Collateral Agreements, except for the following which shall survive until
otherwise terminated or discharged hereunder: (i) the rights of Holders of
outstanding Notes to receive solely from the trust fund described in paragraph
(d) below and as more fully set forth in such paragraph payments in
respect of the principal of, and premium, if any, and interest and Additional
Interest, if any, on such Notes when such payments are due, (ii) obligations
listed in Section 8.03, subject to compliance with this Section 8.01
and (iii) the rights, powers, trusts, duties and immunities of the Trustee
and the Issuer’s obligations in 


 

















 


connection therewith. The Issuer may exercise
its option under this paragraph (b) notwithstanding the prior
exercise of its option under paragraph (c) below with respect to
the Notes.


 


(c)                                  Upon
the Issuer’s exercise under paragraph (a) of the option applicable
to this paragraph (c), the Issuer and the Restricted Subsidiaries
shall be released and discharged from their obligations under any covenant
contained in Section 4.05, Sections 4.08 through Section 4.23
and Section 5.01(2), with respect to the outstanding Notes on and
after the date the conditions set forth below are satisfied (hereinafter, “Covenant
Defeasance”), and the Notes shall thereafter be deemed to be not “outstanding”
for the purpose of any direction, waiver, consent or declaration or act of
Holders (and the consequences of any thereof) in connection with such
covenants, but shall continue to be deemed “outstanding” for all other purposes
hereunder (it being understood that such Notes shall not be deemed outstanding
for accounting purposes). For this purpose, such Covenant Defeasance means
that, with respect to the outstanding Notes and the 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, in the Guarantees, the Collateral Agreements or in any
other document and such omission to comply shall not constitute a Default or an
Event of Default under Section 6.01, but, except as specified
above, the remainder of this Indenture and such Notes shall be unaffected
thereby. In addition, upon the Issuer’s exercise under paragraph (a) hereof
of the option applicable to this paragraph (c), subject to the
satisfaction of the conditions set forth in paragraph (d) below, Sections
6.01(3) through 6.01(9) (except, in the case of Section 6.01(6) and
6.01(7), with respect only to Significant Subsidiaries) shall not
constitute Events of Default.


 


(d)                                 The
following shall be the conditions to application of either paragraph (b) or
paragraph (c) above to the outstanding Notes:


 


(1)                                  The
Issuer shall have irrevocably deposited in trust with the Trustee, pursuant to
an irrevocable trust to the Trustee, U.S. Legal Tender or non-callable U.S.
Government Obligations or a combination thereof, in such amounts and at such
times as are sufficient, in the opinion of a nationally-recognized firm of
independent public accountants, to pay the principal of, premium, if any, and
interest and Additional Interest, if any, on the outstanding Notes on the
stated dates for payment or redemption, as the case may be; provided,
however, that the Trustee (or other qualifying trustee) shall have
received an irrevocable written order from the Issuer instructing the Trustee
(or other qualifying trustee) to apply such U.S. Legal Tender or the proceeds
of such U.S. Government Obligations to said payments with respect to the Notes
to maturity or redemption;


 


(2)                                  No
Default or Event of Default shall have occurred and be continuing on the date
of such deposit (other than a Default or Event of Default arising from the
failure to comply with Section 4.08 in connection with the
substantially contemporaneous borrowing of funds to fund the deposit referenced
in clause (1) above and/or the granting of any Lien securing such
borrowing) or insofar as Defaults or Events of Default from bankruptcy or
insolvency events are concerned, at any time in the period ending on the 91st
day after the date of such deposit;


 


(3)                                  Such
Legal Defeasance or Covenant Defeasance shall not result in a breach or
violation of, or constitute a default hereunder (other than a Default or Event
of Default arising in connection with the substantially contemporaneous
borrowing of funds to fund the deposit referenced in clause (1) above
and the granting of any Lien securing 


 

















 


such borrowing) or any other material
agreement or instrument to which the Issuer or any of its Restricted Subsidiaries
is a party or by which the Issuer or any of its Restricted Subsidiaries is
bound;


 


(4)                                  (i) In
the event the Issuer elects paragraph (b) above, the Issuer shall
deliver to the Trustee an Opinion of Counsel in the United States of America,
in form and substance reasonably acceptable to the Trustee, to the effect
that (A) the Issuer has received from, or there has been published by, the
Internal Revenue Service a ruling or (B) since the Issue Date, there has
been a change in the applicable federal income tax law, in either case to the
effect that, and based thereon such Opinion of Counsel shall state that,
Holders shall not recognize income, gain or loss for federal income tax
purposes as a result of such Legal Defeasance contemplated hereby and shall be
subject to federal income tax in 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 or (ii) in the event the Issuer elects paragraph (c) above,
the Issuer shall deliver to the Trustee an Opinion of Counsel in the United
States, in form and substance reasonably satisfactory to the Trustee, to
the effect that Holders shall not recognize income, gain or loss for federal
income tax purposes as a result of such Covenant Defeasance contemplated hereby
and shall be subject to federal income tax in 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;


 


(5)                                  The
Issuer shall have delivered to the Trustee an Officers’ Certificate stating
that the deposit under clause (1) was not made by the Issuer with
the intent of preferring the Holders over any other creditors of the Issuer or
with the intent of defeating, hindering, delaying or defrauding any other
creditors of the Issuer or others;


 


(6)                                  The
Issuer shall have delivered to the Trustee an Officers’ Certificate and an
Opinion of Counsel, each stating that all conditions precedent specified herein
relating to the defeasance contemplated by this Section 8.01 have
been complied with; and


 


(7)                                  The
Issuer shall have delivered to the Trustee an Opinion of Counsel (subject to
customary qualifications and exclusions) to the effect that the trust resulting
from the deposit under clause (1) does not constitute, or is
qualified as, a regulated investment company under the Investment Company Act
of 1940, as amended.


 


Notwithstanding
the foregoing, the Opinion of Counsel required by Section 8.01(d)(4)(i) above
with respect to a Legal Defeasance need not be delivered if all Notes not
theretofore delivered to the Trustee for cancellation (1) have become due
and payable or (2) shall become due and payable on the maturity date 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.


 


In the event
all or any portion of the Notes are to be redeemed through such irrevocable
trust, the Issuer must make arrangements reasonably satisfactory to the
Trustee, at the time of such deposit, for the giving of the notice of such
redemption or redemptions by the Trustee in the name and at the expense of the
Issuer.


 


Section 8.02                                Satisfaction
and Discharge.


 


In addition to
the Issuer’s rights under Section 8.01, the Issuer may terminate
all of its obligations under this Indenture (subject to Section 8.03),
and this Indenture, the Notes, the Guarantees and the 


 

















 


Collateral Agreements, and all Liens created thereunder, shall be
discharged and shall cease to be in effect when:


 


(1)                                  either:


 


(a)                                  all
the Notes theretofore authenticated and delivered (except lost, stolen or
destroyed Notes which have been replaced or paid as provided in Section 2.07
and Notes for whose payment money has theretofore been deposited in trust or
segregated and held in trust by the Issuer and thereafter repaid to the Issuer
or discharged from such trust) have been delivered to the Trustee for
cancellation; or


 


(b)                                 all
Notes not theretofore delivered to the Trustee for cancellation (i) have
become due and payable, (ii) will become due and payable at their stated
maturity within one year or (iii) are to be called for redemption within
one year under arrangements reasonably satisfactory to the Trustee, and the
Issuer has irrevocably deposited or caused to be deposited with the Trustee
funds in an amount sufficient to pay and discharge the entire Indebtedness on
the Notes not theretofore delivered to the Trustee for cancellation, for
principal of, premium, if any, and interest and Additional Interest, if any, on
the Notes to the date of deposit together with irrevocable instructions from
the Issuer directing the Trustee to apply such funds to the payment thereof at
maturity or redemption, as the case may be;


 


(2)                                  the
Issuer has paid all other sums payable under this Indenture, the Notes and the
Collateral Agreements by the Issuer; and


 


(3)                                  the
Issuer has delivered to the Trustee an Officers’ Certificate and an Opinion of
Counsel stating that all conditions precedent under this Indenture relating to
the satisfaction and discharge of this Indenture have been complied with.


 


Section 8.03                                Survival
of Certain Obligations.


 


Notwithstanding
the satisfaction and discharge of this Indenture and of the Notes referred to
in Section 8.01 or 8.02, the respective obligations of the
Issuer and the Trustee under Sections  2.03, 2.04, 2.05,
2.06, 2.07,  2.08 and 2.10, Sections 7.07 and
7.08 and Sections 8.05, 8.06 and 8.07 shall survive
until the Notes are no longer outstanding, and thereafter the obligations of
the Issuer and the Trustee under Sections 7.07, 8.04, 8.05
and 8.06 and 8.07 shall survive.


 


Section 8.04                                Acknowledgment
of Discharge by Trustee.


 


Subject to Section 8.07,
after (i) the conditions of Section 8.01 or 8.02 have
been satisfied and (ii) the Issuer has delivered to the Trustee an
Officers’ Certificate and an Opinion of Counsel, each stating that all
conditions precedent referred to in clause (i) above relating to
the satisfaction and discharge of this Indenture have been complied with, the
Trustee, upon written request, shall acknowledge in writing the discharge of
the Issuer’s obligations under this Indenture except for those surviving
obligations specified in Section 8.03 and the Trustee shall execute
and deliver to the Issuer any document reasonably requested by the Issuer to
effect or evidence any release and discharge of Lien or Collateral Agreement
contemplated by Section 12.05.


 

















 


Section 8.05                                Application
of Trust Moneys.


 


The Trustee
shall hold any U.S. Legal Tender or U.S. Government Obligations deposited with
it in the irrevocable trust established pursuant to Section 8.01. The
Trustee shall apply the deposited U.S. Legal Tender or the U.S. Government
obligations, together with earnings thereon, through the Paying Agent, in
accordance with this Indenture and the terms of the irrevocable trust agreement
established pursuant to Section 8.01, to the payment of principal
of, premium, if any, and interest and Additional Interest, if any, on the Notes.
Anything in this Article Eight to the contrary notwithstanding, the
Trustee shall deliver or pay to the Issuer from time to time upon the Issuer’s
request any U.S. Legal Tender or U.S. Government Obligations held by it as
provided in Section 8.01(d) which, in the opinion of a
nationally-recognized firm of independent public accountants expressed in a
written certification thereof delivered to the Trustee, are in excess of the
amount thereof that would then be required to be deposited to effect an
equivalent Legal Defeasance or Covenant Defeasance.


 


Section 8.06                                Repayment
to the Issuer; Unclaimed Money.


 


Subject to Sections
7.07, 8.01 and 8.02, the Trustee and the Paying Agent shall
promptly pay to the Issuer upon written request from the Issuer any excess U.S.
Legal Tender or U.S. Government Obligations held by them at any time. The
Trustee and the Paying Agent shall pay to the Issuer, upon receipt by the
Trustee or the Paying Agent, as the case may be, of a written request from
the Issuer any money held by it for the payment of principal, premium, if any,
or interest and Additional Interest, if any, that remains unclaimed for two years
after payment to the Holders is required, without interest thereon; provided, however,
that the Trustee and the Paying Agent before being required to make any payment
may, but need not, at the expense of the Issuer cause to be published once in a
newspaper of general circulation in the City of New York or mail to each Holder
entitled to such money notice that such money remains unclaimed and that after
a date specified therein, which shall be at least thirty (30) days from the
date of such publication or mailing, any unclaimed balance of such money then
remaining shall be repaid to the Issuer, without interest thereon. After
payment to the Issuer, Holders entitled to money must look solely to the Issuer
for payment as general creditors unless an applicable abandoned property law
designated another Person, and all liability of the Trustee or Paying Agent
with respect to such money shall thereupon cease.


 


Section 8.07                                Reinstatement.


 


If the Trustee
or Paying Agent is unable to apply any U.S. Legal Tender or U.S. Government
Obligations in accordance with Section 8.01 or 8.02 by
reason, including by reason of any order or judgment of any court or
governmental authority enjoining, restraining or otherwise prohibiting such
application, the Issuer’s and each Guarantors’ obligations under this Indenture
and each other Indenture Document to which such person is a party shall be
revived and reinstated as though no deposit had occurred pursuant to Section 8.01
or 8.02 until such time as the Trustee or Paying Agent is permitted to
apply all such U.S. Legal Tender or U.S. Government Obligations in accordance
with Section 8.01 or 8.02; provided,
however, that if the Issuer has made any
payment of premium, if any, or interest and Additional Interest, if any, on or
principal of any Notes because of the reinstatement of their obligations, the
Issuer shall be subrogated to the rights of the Holders of such Notes to
receive such payment from the money or U.S. Government Obligations held by the
Trustee or Paying Agent.


 

















 


ARTICLE NINE



AMENDMENTS, SUPPLEMENTS AND WAIVERS


 


Section 9.01                                Without
Consent of Holders.


 


From time to
time, the Issuer, the Guarantors, the Trustee and, if such amendment,
modification or supplement relates to any Collateral Agreement, the Collateral
Agent, without the consent of the Holders, may amend, modify, waive or
supplement provisions of this Indenture, the Notes, the Guarantees, the
Collateral Agreements, the Registration Rights Agreement or any other agreement
or instrument entered in connection with the Indenture:


 


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


 


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


 


(3)                                  to
provide for the assumption of the Issuer’s or a Guarantor’s obligations to
Holders in accordance with the Section 5.01;


 


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


 


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


 


(6)                                  to
allow any Subsidiary or any other Person to guarantee the Notes;


 


(7)                                  to
release a Guarantor as permitted by this Indenture and the relevant Guarantee;
or


 


(8)                                  if
necessary, in connection with any addition or release of Collateral permitted
under the terms of this Indenture or Collateral Agreements.


 


After an
amendment, modification, waiver or supplement under this Section 9.01
becomes effective, the Issuer (or cause the Trustee to) shall mail to the
Holders affected thereby a notice briefly describing the amendment,
modification, waiver or supplement. Any failure of the Issuer to mail such
notice, or any defect therein, shall not, however, in any way impair or affect
the validity of any such amendment, modification, waiver or supplement.


 


Any
acknowledgment made pursuant to Section 5.4 of the Intercreditor
Agreement or other document or instrument necessary to reinstate the
Intercreditor Agreement in connection with a “New Credit Facility” as defined
thereunder or to add any new or additional agent, lender, group of lenders or
institutional investor under the Credit Agreement (in compliance with the terms
of this Indenture) as a party to the Intercreditor Agreement will not
constitute an amendment, modification or supplement to this Indenture, the
Notes, the Guarantees, or any other Collateral Agreement.


 

















 


Section 9.02                                With
Consent of Holders.


 


The Issuer and
the Guarantors and the Trustee or the Collateral Agent, as applicable,
together, with the written consent of the Holder or Holders of at least a
majority in aggregate principal amount at maturity of the outstanding Notes, may amend
or supplement this Indenture, the Notes, any Collateral Agreement, the
Guarantees or Registration Rights without notice to any other Holders. The
Holder or Holders of a majority in aggregate principal amount at maturity of
the outstanding Notes may waive compliance by the Issuer with any
provision of this Indenture, any Collateral Agreement or the Notes without
notice to any other Holder.


 


Subject to the
Intercreditor Agreement, no portion of the Collateral may be released from
the Lien of the Collateral Agreements (except in accordance with the provisions
of this Indenture and the Collateral Agreements), and none of the Collateral
Agreements or the provisions of this Indenture relating to the Collateral may be
amended or supplemented, and the rights of any Holders thereunder may not
be waived or modified, without, in each case, the consent of the Holders of at
least 66 2/3% in aggregate principal amount at maturity of the then outstanding
Notes.


 


No amendment,
supplement or waiver, including a waiver pursuant to Section 6.04,
shall without the consent of each Holder of each Note affected thereby:


 


(1)                                  reduce
the principal amount at maturity of Notes whose Holders must consent to an
amendment, supplement or waiver of any provision of this Indenture or the
Notes;


 


(2)                                  reduce
the rate of or change or have the effect of changing the time for payment of interest,
including defaulted interest or Additional Interest, on any Notes;


 


(3)                                  reduce
the principal of or change or have the effect of changing the fixed maturity of
any Notes, or change the date on which any Notes may be subject to
redemption or reduce the redemption price therefore;


 


(4)                                  make
any Notes payable in money other than that stated in the Notes;


 


(5)                                  make
any change in provisions of this Indenture protecting the right of each Holder
to receive payment of principal of, premium, if any, interest and Additional
Interest, if any, on such Note on or after the due date thereof or to bring
suit to enforce such payment, or permitting Holders of a majority in principal
amount at maturity of Notes to waive Defaults or Events of Default;


 


(6)                                  after
the Issuer’s obligation to purchase the Notes arises thereunder, amend, change
or modify in any material respect the obligation of the Issuer to make and
consummate a Change of Control Offer after the occurrence of a Change of
Control, make and consummate an Excess Cash Flow Offer, make and consummate a
Restricted Payments Offer or make and consummate a Net Proceeds Offer with
respect to any Asset Sale that has been consummated or, after such Change of
Control has occurred or such Asset Sale has been consummated, modify any of the
provisions or definitions with respect thereto;


 


(7)                                  subordinate
the Notes in rights of payment to any other Indebtedness of the Issuer or any
Guarantor; or


 

















 


(8)                                  release
any Guarantor from any of its obligations under its Guarantee or this Indenture
otherwise than in accordance with the terms of this Indenture.


 


Each of the Trustee and, if such amendment, modification, waiver or
supplement relates to any Collateral Agreement, the Collateral Agent, will be
entitled to receive, and will be fully protected in relying upon, an Opinion of
Counsel and an Officer’s Certificate, each stating that the execution of any
amendment, waiver or supplement described above is authorized pursuant to this
Indenture.


 


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


 


After an
amendment, supplement or waiver under this Section 9.02 becomes
effective, the Issuer shall mail to the Holders affected thereby a notice
briefly describing the amendment, supplement or waiver. Any failure of the
Issuer to mail such notice, or any defect therein, shall not, however, in any
way impair or affect the validity of any such amendment, supplement or waiver.


 


Section 9.03                                Compliance
with TIA.


 


Every
amendment, waiver or supplement of this Indenture, the Notes, the Collateral
Agreements, or the Guarantees shall comply with the TIA as then in effect.


 


Section 9.04                                Revocation
and Effect of Consents.


 


Until an
amendment, waiver or supplement becomes effective, a consent to it by a Holder
is a continuing consent by the Holder and every subsequent Holder of a Note or
portion of a Note that evidences the same debt as the consenting Holder’s Note,
even if notation of the consent is not made on any Note. Subject to the
following paragraph, any such Holder or subsequent Holder may revoke the
consent as to such Holder’s Note or portion of such Note by written notice to
the Trustee and the Issuer received before the date on which the Trustee and if
such amendment, waiver or supplement relates to any Collateral Agreement, the
Collateral Agent, receives an Officers’ Certificate certifying that the Holders
of the requisite principal amount at maturity of Notes have consented (and not
theretofore revoked such consent) to the amendment, supplement or waiver. An
amendment, waiver or supplement shall become effective upon receipt by the
Trustee or the Collateral Agent, as the case may be, of written consents
from the Holders of the requisite percentage in principal amount at maturity of
the outstanding Notes or such Officers’ Certificate, whichever first occurs,
and the execution thereof by the Trustee or the Collateral Agent, as the case may be.


 


The Issuer
may, but shall not be obligated to, fix a record date for the purpose of
determining the Holders entitled to consent to any amendment, supplement or
waiver, which record date shall be either (i) at least thirty (30) days
prior to the first solicitation of such consent or (ii) the date of the
most recent list furnished to the Trustee under Section 2.05. If a
record date is fixed, then notwithstanding the last sentence of 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
revoke any consent previously given, whether or not such Persons continue to be
Holders after such record date. No such consent shall be valid or effective for
more than one hundred twenty (120) days after such record date.


 


After an
amendment, supplement or waiver becomes effective, it shall bind every Holder
unless it makes a change described in any of clauses (1) through (8) of
Section 9.02, in which case, the amendment, supplement or waiver
shall bind only each Holder of a Note who has consented to it and every
subsequent Holder of a Note or portion of a Note that evidences the same debt
as the consenting 


 

















 


Holder’s Note; provided that any
such waiver shall not impair or affect the right of any Holder to receive
payment of principal of, premium, if any, and interest and Additional Interest,
if any, on a Note, on or after the respective due dates expressed in such Note,
or to bring suit for the enforcement of any such payment on or after such
respective dates without the consent of such Holder.


 


Section 9.05                                Notation
on or Exchange of Notes.


 


If an
amendment, supplement or waiver changes the terms of a Note, the Trustee may require
the Holder of the Note to deliver the Note to the Trustee. The Trustee at the
written direction of the Issuer may place an appropriate notation on the
Note about the changed terms and return it to the Holder and the Trustee may place
an appropriate notation on any Note thereafter authenticated. Alternatively, if
the Issuer or the Trustee so determines, the Issuer in exchange for the Note
shall issue and the Trustee shall authenticate a new Note that reflects the
changed terms. Failure to make an appropriate notation, or issue a new Note,
shall not affect the validity and effect of such amendment, supplement or
waiver. Any such notation or exchange shall be made at the sole cost and
expense of the Issuer.


 


Section 9.06                                Trustee
to Sign Amendments, Etc.


 


The Trustee
and/or the Collateral Agent, as applicable, shall execute any amendment,
supplement or waiver authorized pursuant to this Article Nine; provided that the Trustee or the Collateral
Agent, as the case may be, may, but shall not be obligated to, execute any
such amendment, supplement or waiver that affects the rights, duties or
immunities of the Trustee or the Collateral Agent, as the case may be,
under this Indenture, any Collateral Agreement. The Trustee and the Collateral
Agent, as the case may be, shall receive, and shall, subject to Section 7.01
hereof, be fully protected in conclusively relying upon, an Opinion of Counsel
and an Officers’ Certificate each stating that the execution of any amendment,
supplement or waiver authorized pursuant to this Article Nine is
authorized or permitted by this Indenture. Such Opinion of Counsel shall be
paid for by the Issuer.


 


ARTICLE TEN



GUARANTEE


 


Section 10.01                          Guarantee.


 


Each Guarantor
hereby fully, irrevocably and unconditionally, jointly and severally,
unconditionally and irrevocably guarantees (such guarantee to be referred to
herein as the “Guarantee”), to each of the Holders, the Trustee and the
Collateral Agent and their respective successors and assigns that (i) the
principal of, premium, if any and interest and Additional Interest, if any, on
the Notes shall be promptly paid in full when due, subject to any applicable
grace period, whether upon redemption pursuant to the terms of the Notes, by
acceleration or otherwise, and interest on the overdue principal, if any, and
interest on any interest, if any, to the extent lawful, of the Notes and all
other Obligations of the Issuer to the Holders, the Trustee and the Collateral
Agent hereunder, thereunder or under any Collateral Agreement shall be promptly
paid in full or performed, all in accordance with the terms hereof or thereof;
and (ii) in case of any extension of time of payment or renewal of any of
the Notes or of any such other obligations, the same shall be promptly paid in
full when due or performed in accordance with the terms of the extension or
renewal, subject to any applicable grace period, whether at stated maturity, by
acceleration or otherwise, subject, however, in the case of clauses  (i) and
(ii) above, to the limitations set forth in Section 10.03.
The Guarantee of each Guarantor shall rank senior in right of payment to all
subordinated Indebtedness of such Guarantor and equal in right of payment with
all other senior obligations of such Guarantor. Each Guarantor hereby agrees
that its obligations hereunder shall be unconditional, irrespective of the
validity, regularity or enforceability of the Notes, this Indenture or any 


 

















 


Collateral Agreement, the absence of any action to enforce the same,
any waiver or consent by any of the Holders with respect to any provisions
hereof or thereof, any release of any other Guarantor, the recovery of any
judgment against the Issuer, any action to enforce the same or any other
circumstance which might otherwise constitute a legal or equitable discharge or
defense of a Guarantor. Each Guarantor hereby waives diligence, presentment,
demand of payment, filing of claims with a court in the event of insolvency or
bankruptcy of the Issuer, any right to require a proceeding first against the
Issuer, protest, notice and all demands whatsoever, in each case, other than
the defense that the principal of, premium, if any and interest and Additional
Interest, if any, on the Notes shall have been paid in cash, to the extent of
any such payments and covenants that this Guarantee shall not be discharged
except by complete performance of the obligations contained in the Notes, this
Indenture and in this Guarantee. The obligations of each Guarantor are limited
to the maximum amount which, 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, shall result in the obligations
of such Guarantor under the Guarantee not constituting a fraudulent conveyance
or fraudulent transfer under federal or state law. The net worth of any
Guarantor for such purpose shall include any claim of such Guarantor against
the Issuer for reimbursement and any claim against any other Guarantor for
contribution. Each Guarantor may consolidate with or merge into or sell
its assets to the Issuer or another Guarantor without limitation in accordance
with Sections  5.01, 4.10 and 10.04. If any Holder,
the Collateral Agent or the Trustee is required by any court or otherwise to
return to the Issuer, any Guarantor, or any custodian, trustee, liquidator or
other similar official acting in relation to the Issuer or any Guarantor, any
amount paid by the Issuer or any Guarantor to the Trustee, the Collateral Agent
or such Holder, this Guarantee, to the extent theretofore discharged, shall be
reinstated in full force and effect. Each Guarantor further agrees that, as
between each Guarantor, on the one hand, and the Holders, the Collateral Agent
and the Trustee, on the other hand, (x) the maturity of the obligations
guaranteed hereby may be accelerated as provided in Article Six
for the purposes of this Guarantee notwithstanding any stay, injunction or
other prohibition preventing such acceleration in respect of the obligations
guaranteed hereby, and (y) in the event of any acceleration of such
obligations as provided in Article Six, such obligations (whether
or not due and payable) shall forthwith become due and payable by each
Guarantor for the purpose of this Guarantee.


 


Section 10.02                          Release
of a Guarantor.


 


A Guarantor
will be automatically and unconditionally released from its Guarantee (and may subsequently
dissolve) without any action required on the part of the Trustee or any
Holder:


 


(1)                                  if
(a) all of the Equity Interests issued by such Guarantor or all or
substantially all of the assets of such Guarantor are sold or otherwise
disposed of (including by way of merger or consolidation) to a Person other
than the Issuer or any of the Domestic Restricted Subsidiaries or (b) such
Guarantor ceases to be a Restricted Subsidiary, and the Issuer otherwise
complies, to the extent applicable, with Section 4.10, or


 


(2)                                  if
the Issuer designate such Guarantor as an Unrestricted Subsidiary in accordance
with Section 4.09, or


 


(3)                                  if
the Issuer exercises its legal defeasance option or its covenant defeasance
option as described in Section 8.01, or


 

















 


(4)                                  upon
satisfaction and discharge of this Indenture or payment in full of the
principal of, premium, if any, accrued and unpaid interest, and Additional
Interest, if any, on the Notes and all other Obligations that are then due and
payable.


 


The Trustee
shall promptly deliver an appropriate instrument evidencing such release upon
receipt of a request by the Issuer accompanied by an Officers’ Certificate
certifying as to the compliance with this Section 10.02. Any
Guarantor not required to be released hereunder remains liable for the full amount
of its Guarantee as provided in this Article Ten.


 


Section 10.03                          Limitation
of Guarantors’ Liability.


 


Each Guarantor
and, by its acceptance hereof, each of the Holders hereby confirms that it is
the intention of all such parties that the guarantee by such Guarantor pursuant
to its Guarantee not constitute a fraudulent transfer or conveyance for
purposes of any Bankruptcy Code, the Uniform Fraudulent Conveyance Act,
the Uniform Fraudulent Transfer Act or any similar Federal or state law. To
effectuate the foregoing intention, the Holders and such Guarantor hereby
irrevocably agree that the obligations of such Guarantor under the Guarantee
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 Section 10.05, result in the obligations
of such Guarantor under the Guarantee not constituting such fraudulent transfer
or conveyance.


 


Section 10.04                          Guarantors
May Consolidate, etc., on Certain Terms.


 


Each Guarantor
(other than any Guarantor whose Guarantee is to be released in accordance with
the terms of the Guarantee and this Indenture in connection with any
transaction complying with Section 4.10) will not, and the Issuer
will not cause or permit any Guarantor to, consolidate with or merge with or
into any Person other than the Issuer or any other Guarantor unless:


 


(1)                                  the
entity formed by or surviving any such consolidation or merger (if other than
the Issuer or the Guarantors) or to which such sale, lease, conveyance or other
disposition shall have been made is a corporation organized and existing under
the laws of the United States or any State thereof or the District of Columbia;
provided, that if such Person is not a corporation, a co-obligor of the
Notes is a corporation;


 


(2)                                  such
entity assumes (a) by supplemental indenture (in form and substance
reasonably satisfactory to the Trustee), executed and delivered to the Trustee,
all of the obligations of the Guarantor under the Guarantee and the performance
of every covenant of this Indenture and the Registration Rights Agreement and (b) by
amendment, supplement or other instrument (in form and substance
satisfactory to the Trustee and the Collateral Agent) executed and delivered to
the Trustee and the Collateral Agent, all obligations of the Guarantor under
the Collateral Agreements and in connection therewith shall cause such
instruments to be filed and recorded in such jurisdictions and take such other
actions as may be required by applicable law to perfect or continue the
perfection of the Lien created under the Collateral Agreements on the
Collateral owned by or transferred to the surviving entity; and


 


(3)                                  immediately
after giving effect to such transaction, no Default or Event of Default shall
have occurred and be continuing.


 

















 


This Section 10.04
shall not apply to any merger or consolidation with an Affiliate solely for the
purpose of reincorporating the Guarantor in another jurisdiction of the United
States; provided that (x) such Affiliate has no assets, liabilities or
operations immediately prior to such merger or consolidation and (y) the
Guarantor has complied with its obligations under Section 12 of the
Security Agreement in connection with such transaction.


 


Section 10.05                          Contribution.


 


In order to
provide for just and equitable contribution among the Guarantors, the
Guarantors agree, inter se, that each Guarantor that makes a payment or
distribution under a Guarantee shall be entitled to a pro rata
contribution from each other Guarantor hereunder based on the net assets of
each other Guarantor. The preceding sentence shall in no way affect the rights
of the Holders of Notes to the benefits of this Indenture, the Notes or the
Guarantees.


 


Section 10.06                          Waiver
of Subrogation.


 


Each Guarantor
agrees that it shall not be entitled to any right of subrogation in relation to
the Holders in respect of any obligations guaranteed hereby until payment in
full of all obligations guaranteed hereby.


 


Section 10.07                          Waiver
of Stay, Extension or Usury Laws.


 


Each Guarantor
covenants to the extent permitted by law that it shall not at any time insist
upon, plead, or in any manner whatsoever claim or take the benefit or advantage
of, any stay or extension law or any usury law or other law that would prohibit
or forgive such Guarantor from performing its Guarantee as contemplated herein,
wherever enacted, now or at any time hereafter in force, or which may affect
the covenants or the performance of this Guarantee; and each Guarantor hereby
expressly waives to the extent permitted by law all benefit or advantage of any
such law, and covenants that it shall not hinder, delay or impede the execution
of any power herein granted to the Trustee, but shall suffer and permit the
execution of every such power as though no such law had been enacted.


 


Section 10.08                          Evidence
of Guarantee.


 


To evidence
their Guarantee to the Holders set forth in this Article Ten, the
Guarantors hereby agrees to execute the notation of Guarantee in substantially
the applicable forms included in the Notes attached as Exhibit A and
Exhibit B. The notation of Guarantee shall be signed on behalf of
each Guarantor by an Officer, Secretary or an assistant Secretary by manual or
facsimile signature.


 


If an Officer
whose signature is on a notation of the Guarantee was an Officer at the time of
such execution but no longer holds that office or position at the time the
Trustee authenticates a Note on which such notation of Guarantee appears, such
notation of Guarantee shall nevertheless be valid.


 


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


 


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.


 

















 


ARTICLE ELEVEN



MISCELLANEOUS


 


Section 11.01                          TIA
Controls.


 


If 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
required provision shall control. Any provision of the TIA which is required to
be included in a qualified Indenture, but not expressly included herein, shall
be deemed to be included by this reference.


 


Section 11.02                          Notices.


 


Any notices or
other communications required or permitted hereunder shall be in writing, and
shall be sufficiently given if made by hand delivery, by telecopier, regular
mail, or registered or certified mail, postage prepaid, return receipt
requested, addressed as follows:


 


if to the
Issuer:


 


Rafaella Apparel
Group, Inc.

1411 Broadway

2nd Floor

New York, NY 10018

Facsimile No. (212) 764-9725  

Attention:


 


with a copy
to:


 


Schulte Roth &
Zabel, LLP

919 Third Avenue

New York, NY 10022

Facsimile No. (212) 765-5955 

Attention:  Stuart D. Freedman, Esq.


 


if to the
Trustee and Collateral Agent:


 


The Bank of
New York

101 Barclay Street, 8 W
New York, NY 10286

Facsimile No.: (212) 815-5131

Attention:  Corporate Trust Administration


 


with a copy
to:


 


Emmet, Marvin &
Martin, LLP

120 Broadway

New York, NY 10271

Facsimile No. (212) 238-3100

Attention:   Irving
C. Apar, Esq.


 

















 


Each of the
Issuer and the Trustee by written notice to each other may designate
additional or different addresses for notices to such Person. Any notice or
communication to the Issuer shall be deemed to have been given or made as of
the date so delivered if personally delivered; when receipt is acknowledged, if
faxed; and five (5) calendar days after mailing if sent by registered or
certified mail, postage prepaid. Notwithstanding anything to the contrary
contained herein, notices to the Trustee shall be effective only upon actual
receipt by the Trustee.


 


Any notice or
communication mailed to a Holder shall be mailed to such Holder by first class mail
or other equivalent means at such Holder’s address as it appears on the
registration books of the Registrar and shall be sufficiently given to such
Holder if so mailed within the time prescribed.


 


Failure to
mail a notice or communication to a Holder or any defect in it shall not affect
its sufficiency with respect to other Holders. If a notice or communication is
mailed in the manner provided above, it is duly given, whether or not the
addressee receives it, except that notices to the Trustee shall be deemed duly
given only upon receipt.


 


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


 


Section 11.03                          Communications
by Holders with Other Holders.


 


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


 


Section 11.04                          Certificate
and Opinion as to Conditions Precedent.


 


Upon any
request or application by the Issuer or any Guarantor to the Trustee or the
Collateral Agent, as the case may be, to take any action under this
Indenture or any Collateral Agreement, the Issuer shall furnish to the Trustee
or the Collateral Agent, as the case may be, upon request:


 


(1)                                  an
Officers’ Certificate, in form and substance reasonably satisfactory to
the Trustee or the Collateral Agent, as the case may be, stating that, in
the opinion of the signers, all conditions precedent to be performed by the
Issuer or the applicable Guarantor (as the case may be), if any, provided
for in this Indenture or any Collateral Agreement relating to the proposed
action have been complied with; and


 


(2)                                  an
Opinion of Counsel stating that, in the opinion of such counsel, all such
conditions precedent to be performed by the Issuer or the applicable Guarantor
(as the case may be), if any, provided for in this Indenture or any
Collateral Agreement relating to the proposed action have been complied with.


 


Section 11.05                          Statements
Required in Certificate or Opinion.


 


Each
certificate or opinion with respect to compliance with a condition or covenant
provided for in this Indenture or any Collateral Agreement, other than the
Officers’ Certificate required by Section 4.06, shall include:


 

















 


(1)                                  a
statement that the Person 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 Person, he has made such examination or
investigation as is reasonably 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 each such Person, such
condition or covenant has been complied with.


 


Section 11.06                          Rules by
Trustee, Paying Agent, Registrar.


 


The Trustee may make
reasonable rules in accordance with the Trustee’s customary practices for
action by or at a meeting of Holders. The Paying Agent or Registrar may make
reasonable rules for its functions.


 


Section 11.07                          Legal
Holidays.


 


A “Legal
Holiday” used with respect to a particular place of payment is a Saturday,
a Sunday or a day on which banking institutions in New York, New York, in the
city in which the Corporate Trust Office of the Trustee is located or at such
place of payment are not required to be open. If a payment date is a Legal
Holiday at such place, payment may be made at such place on the next
succeeding day that is not a Legal Holiday, and no interest shall accrue for
the intervening period.


 


Section 11.08                          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, AS APPLIED TO CONTRACTS MADE
AND PERFORMED WITHIN THE STATE OF NEW YORK. EACH OF THE PARTIES HERETO AGREES
TO SUBMIT TO THE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK IN ANY
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS INDENTURE.


 


Section 11.09                          No
Adverse Interpretation of Other Agreements.


 


This Indenture
may not be used to interpret another indenture, loan or debt agreement of
the Issuer or any of the Subsidiaries. Any such indenture, loan or debt
agreement may not be used to interpret this Indenture.


 


Section 11.10                          No
Recourse Against Others.


 


A
past, present or future director, officer, employee, manager, stockholder or
incorporator (or a Person forming a limited liability company), agent or member
of the Issuer of any Guarantor as such, of the Issuer or the Guarantors shall
not have any liability for any obligations of the Issuer or the Guarantors
under the Notes, the Guarantees, the Collateral Agreements or this Indenture or
for any claim based on, in respect of or by reason of such obligations or their
creation. Each Holder, by accepting a Note and the 


 

















 


Guarantee, waives and releases all such liability. Such waiver and
release are part of the consideration for the issuance of the Notes.


 


Section 11.11                          Successors.


 


All agreements
of the Issuer and the Guarantors in this Indenture, the Notes, and the
Guarantees shall bind their successors. All agreements of each of the Trustee
and the Collateral Agent in this Indenture shall bind its respective
successors.


 


Section 11.12                          Duplicate
Originals.


 


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


 


Section 11.13                          Severability.


 


In case any
one or more of the provisions in this Indenture, the Notes or in the Guarantees
shall be held invalid, illegal or unenforceable, in any respect for any reason,
the validity, legality and enforceability of any such provision in every other
respect and of the remaining provisions shall not in any way be affected or
impaired thereby, it being intended that all of the provisions hereof shall be
enforceable to the full extent permitted by law.


 


Section 11.14                          Waiver
of Jury Trial.


 


EACH ISSUER
AND EACH GUARANTOR HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED
BY LAW, ANY RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING ARISING OUT OF
OR IN CONNECTION WITH THIS INDENTURE, THE NOTES, THE GUARANTEES, THE COLLATERAL
AGREEMENTS OR THE TRANSACTIONS CONTEMPLATED BY THIS INDENTURE.


 


ARTICLE TWELVE



SECURITY


 


Section 12.01                          Grant
of Security Interest.


 


(a)                                  To
secure the due and punctual payment of the principal of, premium, if any, and
interest, or Additional Interest, if any, on the Notes and amounts due
hereunder and under the Guarantees when and as the same shall be due and
payable, whether on an Interest Payment Date, by acceleration, purchase,
repurchase, redemption or otherwise, and interest on the overdue principal of,
premium, if any, and interest (to the extent permitted by law), if any, on the
Notes and the performance of all other Obligations of the Issuer and the
Guarantors to the Holders, the Collateral Agent or the Trustee under this
Indenture, the Collateral Agreements, the Guarantees and the Notes, the Issuer
and the Guarantors hereby covenant to cause the Collateral Agreements to be
executed and delivered concurrently with this Indenture. The Collateral
Agreements shall provide for the grant by the Issuer and Guarantors party
thereto to the Collateral Agent security interests in the Collateral.


 


(b)                                 Each
Holder, by its acceptance of a Note, (i) appoints the Collateral Agent to
act as its agent (and by its signature below, the Collateral Agent accepts such
appointment) and (ii) consents and agrees to the terms of each Collateral
Agreement, as the same may be in effect or may be amended from time
to time in accordance with their respective terms, and authorizes and directs
the Collateral Agent to 


 

















 


enter into the Collateral Agreements and to
perform its obligations and exercise its rights thereunder in accordance
therewith. The Issuer shall, and shall cause each of the Restricted
Subsidiaries to, do or cause to be done, at its sole cost and expense, all such
actions and things as may be reasonably necessary or proper, or as may be
required by the provisions of the Collateral Agreements, to assure and confirm
to the Collateral Agent the security interests in the Collateral contemplated
hereby and by the Collateral Agreements, as from time to time constituted, so
as to render the same available for the security and benefit of this Indenture
and of the Notes and Guarantees secured hereby, according to the intent and
purpose herein and therein expressed. The Issuer shall, and shall cause each of
the Restricted Subsidiaries to, take any and all actions required or as may be
requested by the Collateral Agent to cause the Collateral Agreements to create
and maintain, as security for the Obligations contained in this Indenture, the
Notes, the Collateral Agreements and the Guarantees valid and enforceable,
perfected (except as expressly provided herein or therein) security interests
in and on all the Collateral, in favor of the Collateral Agent, superior to and
prior to the rights of all third Persons, and subject to no other Liens, in
each case, other than Permitted Liens and except as otherwise expressly
provided herein or therein.


 


Section 12.02                          Recording
and Opinions.


 


(a)                                  Subject
to the Intercreditor Agreement, the Issuer shall, and shall cause each of the
Restricted Subsidiaries to, at their sole cost and expense, take or cause to be
taken all action required to perfect, maintain, preserve and protect the
security interests in the Collateral granted by the Collateral Agreements,
including (i) the filing of financing statements, continuation statements,
collateral assignments and any instruments of further assurance, in such manner
and in such places as may be required by law to preserve and protect fully
the rights of the Holders, the Collateral Agent, and the Trustee under this
Indenture and the Collateral Agreements to all property comprising the
Collateral, and (ii) the delivery of the certificates evidencing the
securities pledged under the Security Agreement, duly endorsed in blank or
accompanied by undated stock powers or other instruments of transfer executed
in blank, it being understood that concurrently with the execution of this
Indenture the Issuer and the Restricted Subsidiaries have delivered financing
statements for filing by the Initial Purchaser or its agents. The Issuer shall
from time to time, or upon the Collateral Agent’s request, promptly pay all
financing and continuation statement recording and/or filing fees, charges and
recording and similar taxes relating to this Indenture, the Collateral
Agreements and any amendments hereto or thereto and any other instruments of
further assurance required pursuant hereto or thereto.


 


(b)                                 The
Issuer shall furnish to the Trustee and the Collateral Agent (if other than the
Trustee), on or within one month of May 15 of each year, commencing May 15,
2006, an Opinion of Counsel either (i) stating that, in the opinion of
such counsel, all action necessary to perfect or continue the perfection of the
security interests created by the Collateral Agreements and reciting the
details of such action or referring to prior Opinions of Counsel in which such
details are given have been taken or (ii) stating that, in the Opinion of
such Counsel, no such action is necessary to perfect or continue the perfection
of any security interest created under any of the Collateral Agreements.


 


Section 12.03                          Release
of Collateral.


 


(a)                                  The
Collateral Agent shall not at any time release Collateral from the security
interests created by the Collateral Agreements unless such release is in
accordance with the provisions of this Indenture and the applicable Collateral
Agreements.


 


(b)                                 Unless
otherwise provided in the Intercreditor Agreement, at any time when a Default
or an Event of Default shall have occurred and be continuing, no release of
Collateral pursuant to the provisions of this Indenture and the Collateral
Agreements (except to the extent specifically provided in any such provision)
shall be effective as against the Holders.


 

















 


(c)                                  The
release of any Collateral from the terms of the Collateral Agreements shall not
be deemed to impair the security under this Indenture in contravention of the
provisions hereof if and to the extent the Collateral is released pursuant to
this Indenture and the Collateral Agreements. To the extent applicable, the
Issuer shall cause TIA Section 314(d) relating to the release of
property from the security interests created by this Indenture and the
Collateral Agreements to be complied with. Any certificate or opinion required
by TIA Section 314(d) may be made by an Officer of the Issuer,
except in cases where TIA Section 314(d) requires that such
certificate or opinion be made by an independent Person, which Person shall be
an independent engineer, appraiser or other expert selected or approved by the
Trustee in the exercise of reasonable care. A Person is “independent” if such
Person (a) is in fact independent, (b) does not have any direct
financial interest or any material indirect financial interest in the Issuer or
in any Affiliate of the Issuer and (c) is not an officer, employee,
promoter, underwriter, trustee, partner or director or person performing
similar functions to any of the foregoing for the Issuer. The Trustee and the
Collateral Agent shall be entitled to receive and rely upon a certificate
provided by any such Person confirming that such Person is independent within
the foregoing definition.


 


(d)                                 Notwithstanding
any provision to the contrary herein, Collateral comprised of accounts
receivable, inventory or (prior to the occurrence and during the continuance of
an Event of Default) the proceeds of the foregoing shall be subject to automatic
release upon sales of such inventory and collection of the proceeds of such
accounts receivable in the ordinary course of business. If requested in writing
by the Issuer, the Trustee shall instruct the Collateral Agent to execute and
deliver such documents, instruments and statements and to take all such other
actions promptly upon receipt of such instructions from the Trustee as the
Issuer may reasonably request to evidence or confirm that the Collateral
falling under this Section 12.03 has been released from the Liens
of each of the Collateral Agreements. The Collateral Agent shall execute and
deliver such documents, instruments and statements and shall take all such
actions promptly upon receipt of such instructions from the Trustee.


 


Section 12.04                          Specified
Releases of Collateral.


 


Subject to Section 12.03,
Collateral may be released from the Lien and security interest created by
the Security Documents at any time or from time to time in accordance with the
provisions of the Collateral Agreements, including the Intercreditor Agreement,
or as provided hereby. Upon the request of the Issuer pursuant to an Officers’
Certificate certifying, and an Opinion of Counsel stating, that all conditions
precedent hereunder have been met and without the consent of any Holder, the
Issuer and the Guarantors will be entitled to releases of assets included in
the Collateral from the Liens securing the obligations under the Notes and the
Guarantees under any one or more of the following circumstances:


 


(1)                                  to
enable the Issuer (or a Guarantor) to consummate asset dispositions permitted
or not prohibited under Section 4.10;


 


(2)                                  if
any Subsidiary that is a Guarantor is released from its Guarantee; or


 


(3)                                  as
required pursuant to the terms of the Intercreditor Agreement.


 


Upon receipt
of such Officers’ Certificate and Opinion of Counsel and any necessary or
proper instruments of termination, satisfaction or release prepared by the
Issuer, the Collateral Agent shall execute, deliver or acknowledge such
instruments or releases to evidence the release of any Collateral permitted to
be released pursuant to this Indenture or the Collateral Agreements, including
the Intercreditor Agreement.


 

















 


Section 12.05                          Release
upon Satisfaction or Defeasance of all Outstanding Obligations.


 


The Liens on,
and pledges of, all Collateral will also be terminated and released upon (i) payment
in full of the principal of, premium, if any, on, accrued and unpaid interest and
Additional Interest, if any, on the Notes and all other Obligations hereunder
and under the Guarantees and the Collateral Agreements that are due and payable
at or prior to the time such principal, premium, if any, accrued and unpaid
interest and Additional Interest, if any, are paid, (ii) a satisfaction
and discharge of this Indenture as described above under Section 8.02
and (iii) the occurrence of a Legal Defeasance or Covenant Defeasance as
described above under Section 8.01.


 


Section 12.06                          Form and
Sufficiency of Release.


 


In the event
that the Issuer or any Guarantor has sold, exchanged, or otherwise disposed of
or proposes to sell, exchange or otherwise dispose of any portion of the
Collateral that may be sold, exchanged or otherwise disposed of by the
Issuer or such Guarantor, and the Issuer or such Guarantor requests in writing
the Collateral Agent to furnish a written disclaimer, release or quit-claim of
any interest in such property under this Indenture and the Collateral
Agreements, the Collateral Agent shall execute, acknowledge and deliver to the
Issuer or such Guarantor (in proper form-prepared by the Issuer or such
Guarantor) such an instrument promptly after satisfaction of the conditions set
forth herein for delivery of any such release. Notwithstanding the preceding
sentence, all purchasers and grantees of any property or rights purporting to
be released herefrom shall be entitled to rely upon any release executed by the
Collateral Agent hereunder as sufficient for the purpose of this Indenture and
as constituting a good and valid release of the property therein described from
the Lien of this Indenture or of the Collateral Agreements.


 


Section 12.07                          Purchaser
Protected.


 


No purchaser
or grantee of any property or rights purporting to be released herefrom shall
be bound to ascertain the authority of the Trustee or the Collateral Agent to
execute the release or to inquire as to the existence of any conditions herein
prescribed for the exercise of such authority; nor shall any purchaser or
grantee of any property or rights permitted by this Indenture to be sold or
otherwise disposed of by the Issuer be under any obligation to ascertain or
inquire into the authority of the Issuer to make such sale or other
disposition.


 


Section 12.08                          Authorization
of Actions to be Taken by the Collateral Agent Under the Collateral Agreements.


 


Subject to the
provisions of the applicable Collateral Agreements, the Trustee and each
Holder, by acceptance of its Note(s) agrees that (a) the Collateral Agent
shall execute and deliver the Collateral Agreements and act in accordance with
the terms thereof, (b) the Collateral Agent may, in its sole discretion
and without the consent of the Trustee or the Holders, take all actions it
deems necessary or appropriate in order to (i) enforce any of the terms of
the Collateral Agreements and (ii) collect and receive any and all amounts
payable in respect of the Obligations of the Issuer and the Guarantors
hereunder and under the Notes, the Guarantees and the Collateral Agreements and
(c) the Collateral Agent shall have power to institute and to maintain
such suits and proceedings as it may deem expedient to prevent any
impairment of the Collateral by any act that may be unlawful or in
violation of the Collateral Agreements or this Indenture, and suits and
proceedings as the Collateral Agent may deem expedient to preserve or
protect its interests and the interests of the Trustee and the Holders in the
Collateral (including the power to institute and maintain suits or proceedings
to restrain the enforcement of or compliance with any legislative or other
governmental enactment, rule or order that may be unconstitutional or
otherwise invalid if the enforcement of, or compliance with, such enactment, rule or



 

















 


order would impair the security interest thereunder or be prejudicial
to the interests of the Collateral Agent, the Holders or the Trustee). Notwithstanding
the foregoing, the Collateral Agent may, at the expense of the Issuer, request
the direction of the Holders with respect to any such actions and upon receipt
of the written consent of the Holders of at least a majority in aggregate principal
amount at maturity of the outstanding Notes, shall take such actions; provided that all actions so taken shall, at
all times, be in conformity with the requirements of the Intercreditor
Agreement.


 


Section 12.09                          Authorization
of Receipt of Funds by the Trustee Under the Collateral Agreements.


 


The Collateral
Agent is authorized to receive any funds for the benefit of itself, the Trustee
and the Holders distributed under the Collateral Agreements and to the extent
not prohibited under the Intercreditor Agreement, for turnover to the Trustee
to make further distributions of such funds to itself, the Trustee and the
Holders in accordance with the provisions of Section 6.10 and the
other provisions of this Indenture.


 


Section 12.10                          Intercreditor
Agreement.


 


This Article Twelve,
the Security Agreement is subject to the terms, limitations and conditions set
forth in the Intercreditor Agreement.


 

















 


SIGNATURES


 


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


 


 


	
   

  	
  RAFAELLA APPAREL GROUP, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Glenn Palmer

  	
   

  
	
   

  	
   

  	
  Name: Glenn Palmer

  
	
   

  	
   

  	
  Title: Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  VERRAZANO, INC., as a Guarantor

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Glenn Palmer

  	
   

  
	
   

  	
   

  	
  Name: Glenn Palmer

  
	
   

  	
   

  	
  Title: President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  THE BANK OF NEW YORK, as Trustee and Collateral Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Beata Hyrniewicka

  	
   

  
	
   

  	
   

  	
  Name: Beata Hyrniewicka

  
	
   

  	
   

  	
  Title: Assistant Treasurer

  



 


Indenture


 






 










EXHIBIT
A


 


[FORM OF NOTE]


 


THIS SECURITY HAS NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), OR ANY STATE SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR
PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED,
ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION UNLESS
SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, SUCH REGISTRATION.


 


THE HOLDER OF THIS
SECURITY, BY ITS ACCEPTANCE HEREOF, (1) REPRESENTS THAT (A) IT IS A “QUALIFIED
INSTITUTIONAL BUYER” (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT),
(B) IT IS A NON-U.S. PURCHASER AND IS ACQUIRING THIS SECURITY IN AN
OFFSHORE TRANSACTION WITHIN THE MEANING OF REGULATION S UNDER THE
SECURITIES ACT, OR (C) IT IS AN INSTITUTIONAL “ACCREDITED INVESTOR” WITHIN
THE MEANING OF SUBPARAGRAPH (a)(1), (2), (3) OR (7) OF RULE 501 UNDER
THE SECURITIES ACT, AND (2) AGREES TO OFFER, SELL OR OTHERWISE TRANSFER
SUCH SECURITY OR ANY INTEREST OR PARTICIPATION HEREIN, PRIOR TO THE DATE (THE “RESALE
RESTRICTION TERMINATION DATE”) WHICH IS TWO YEARS AFTER THE LATER OF THE
ORIGINAL ISSUE DATE HEREOF 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), ONLY (A) TO THE ISSUER OR ANY SUBSIDIARY THEREOF, (B) FOR
SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A
UNDER THE SECURITIES ACT, TO A PERSON IT REASONABLY BELIEVES IS A “QUALIFIED
INSTITUTIONAL BUYER” AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT THAT
PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL
BUYER TO WHICH NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON
RULE 144A, (C) PURSUANT TO OFFERS AND SALES TO NON-U.S. PURCHASERS
THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S
UNDER THE SECURITIES ACT, (D) TO AN INSTITUTIONAL “ACCREDITED INVESTOR”
WITHIN THE MEANING OF SUBPARAGRAPH (A)(1), (2), (3) OR (7) OF RULE 501
UNDER THE SECURITIES ACT THAT IS ACQUIRING THE SECURITY FOR ITS OWN ACCOUNT, OR
FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL ACCREDITED INVESTOR, FOR INVESTMENT
PURPOSES AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY
DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, (E) PURSUANT TO A REGISTRATION
STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT OR (F) PURSUANT
TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT, SUBJECT TO THE ISSUER’S AND THE TRUSTEE’S RIGHT PRIOR TO ANY
SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSE (C), (D) OR (F) TO REQUIRE
THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION
SATISFACTORY TO EACH OF THEM. IN EACH OF THE FOREGOING CASES, A


 


 


A-1

















 


CERTIFICATE OF TRANSFER
IN THE FORM APPEARING ON THE OTHER SIDE OF THIS SECURITY SHALL BE COMPLETED AND
DELIVERED BY THE TRANSFEROR TO THE TRUSTEE.


 


A-2

















 


RAFAELLA APPAREL GROUP, INC.


 


11 1/4% SENIOR SECURED NOTES DUE 2011


 


	
  CUSIP No.

  	
  U.S.$172,000,000

  	
  Initial Aggregate
  Principal Balance

  
	
   

  	
   

  	
   

  
	
  Certificate No.

  	
  U.S.$

  	
  Initial Principal
  Balance of this Certificate

  



 


                This Note is issued with original issue discount for
purposes of Section 1271 et seq. of the Internal Revenue Code. For each
$1,000 of principal amount at maturity of this Note, the issue price is $950.00
and the amount of original issue discount is $50.00. The issue date of this
Note is June 20, 2005.


 


                Rafaella Apparel Group, Inc., a Delaware corporation
(the “Company,” which term includes any successor entity), for value
received promises to pay to ____________ or registered assigns the principal
sum of up to ONE HUNDRED SEVENTY-TWO MILLION AND 00/100 Dollars ($172,000,000),
initial issuance of ____________ Dollars ($____________) (or such principal
amount at maturity as may be set forth in the records of the Trustee
hereinafter referred to in accordance with the Indenture) on June 15,
2011, and to pay interest thereon as hereinafter set forth.


 


                                Interest Rate: 11 1/4%.


 


                                Interest Payment Dates:   Interest
will be payable semi-annually in cash in arrears on December 15 and June 15
of each year, beginning on December 15, 2005.


 


                                Record Dates:    December 1 and
June 1.


 


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


 


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


 


	
   

  	
  RAFAELLA APPAREL
  GROUP, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
  Dated:

  	
   

  	
   

  



 


A-3

















 


TRUSTEE CERTIFICATE OF AUTHENTICATION


 


                                This is one of the 11 1/4% Senior
Secured Notes due 2011 referred to in the within-mentioned Indenture.


 


	
   

  	
  THE BANK OF NEW YORK,
  as Trustee

  
	
   

  	
   

  	
   

  
	
  Dated:

  	
  By:

  	
   

  
	
   

  	
   

  	
  Authorized Signatory

  



 


A-4

















 


(REVERSE OF SECURITY)


 


11 1/4% Senior Secured Note due 2011


 


                                1.             Interest. Rafaella Apparel
Group, Inc., a Delaware corporation (the “Company”), promises to
pay interest on the principal amount at maturity of this Note at the rate per
annum shown above. Interest on the Note will accrue from the most recent date
on which interest has been paid or, if no interest has been paid, from and
including the date of issuance. The Company will pay interest semi-annually in
arrears on each Interest Payment Date, commencing December 15, 2005.
Interest will be computed on the basis of a 360-day year comprised of twelve
30-day months.


 


                                2.             Method of Payment. The
Company shall pay interest on the Notes to the Persons who are the registered
Holders at the close of business on the Record Date immediately preceding the
Interest Payment Date even if the Notes are cancelled on registration of
transfer or registration of exchange after such Record Date, and on or before
such Interest Payment Date. Holders must surrender Notes to a Paying Agent to
collect principal payments. The Company shall pay principal and interest in
money of the United States that at the time of payment is legal tender for
payment of public and private debts (“U.S. Legal Tender”). However, the
Company may pay principal and interest by check payable in such U.S. legal
Tender. The Company may deliver any such interest payment to the Paying Agent
or to a Holder at the Holder’s registered address.


 


                                3.             Paying Agent and Registrar. Initially,
The Bank of New York (the “Trustee”) will act as Paying Agent and
Registrar. The Company may change any Paying Agent, Registrar or co-Registrar
without notice to the Holders.


 


                                4.             Indenture. The Notes and the
Guarantees were issued under an Indenture, dated as of June 20, 2005 (the “Indenture”),
among the Company, the Guarantors named therein and the Trustee (in its
capacities of trustee and collateral agent). Capitalized terms herein are used
as defined in the Indenture unless otherwise defined herein. 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 (15 U.S. Code
§§ 77aaa-77bbbb) (the “TIA”), as in effect on the date of the
Indenture until such time as the Indenture is qualified under the TIA, and
thereafter as in effect on the date on which the Indenture is qualified under
the TIA. Notwithstanding anything to the contrary herein, the Notes are subject
to all such terms, and Holders of Notes are referred to the Indenture and the
TIA for a statement of such terms. The Notes are senior secured obligations of
the Company. Each Holder, by accepting a Note, agrees to be bound by all of the
terms and provisions of the Indenture, as the same may be amended from time to
time.


 


                                5.             Redemption.


 


                                (a)           Optional Redemption Prior to June 15,
2008. At any time prior to June 15, 2008, the Company will be
entitled, at its option, to redeem all or part of the Notes at a redemption
price equal to 100% of Accreted Value of the Notes plus the Applicable Premium
as of, and accrued and unpaid interest and Additional Interest, if any, to, the
redemption date


 


A-5

















 


(subject to the right of
Holders on the relevant record date to receive interest and Additional
Interest, if any, due to the relevant interest payment date). Notice of such
redemption must be mailed by first-class mail to each Holder’s registered
address, not less than 30 nor more than 60 days prior to the redemption date.


 


                “Adjusted Treasury Rate”
means, with respect to any redemption date, (i) the yield, under the
heading that represents the average for the immediately preceding week,
appearing in the most recently published statistical release designated “H.15(519)”
or any successor publication published weekly by the Board of Governors of the
Federal Reserve System that establishes yields on actively traded United States
Treasury securities adjusted to constant maturity under the caption “Treasury
Constant Maturities,” for the maturity corresponding to the Comparable Treasury
Issue (if no maturity is within three months before or after June 15,
2008, yields for the two published maturities most closely corresponding to the
Comparable Treasury Issue shall be determined and the Adjusted Treasury Rate
shall be interpolated or extrapolated from such yields on a straight line
basis, rounding to the nearest month) or (ii) if such release (or any
successor release) is not published during the week preceding the calculation
date or does not contain such yields, the rate per year equal to the
semi-annual equivalent yield to maturity of the Comparable Treasury Issue
(expressed as a percentage of its principal amount) equal to the Comparable
Treasury Price for such redemption date, in each case calculated on the third
Business Day immediately preceding the redemption date, plus 0.50%.


 


                “Applicable Premium”
means, with respect to a Note at any redemption date, the greater of (i) 100%
of the Accreted Value of such Note and (ii) the excess of (A) the
present value at such redemption date of (1) the redemption price of such
Note on June 15, 2008 described below under clause (b) below,
exclusive of any accrued interest, plus (2) all required remaining
scheduled interest payments due on such Note through June 15, 2008,
computed using a discount rate equal to the Adjusted Treasury Rate, over (B) the
Accreted Value of such Note on such redemption date.


 


                “Comparable Treasury Issue”
means the United States Treasury security selected by the Quotation Agent as
having a maturity comparable to the remaining term from the redemption date to
June 15, 2008, that would be utilized, at the time of selection and in
accordance with customary financial practice, in pricing new issues of
corporate debt securities of a maturity most nearly equal to June 15,
2008.


 


                “Comparable Treasury Price”
means, with respect to any redemption date, the average of three, or such
lesser number as is obtained by the Trustee, Reference Treasury Dealer
Quotations for such redemption date.


 


                “Quotation Agent”
means the Reference Treasury Dealer selected by the Trustee after consultation
with the Company.


 


                “Reference Treasury Dealer”
means Jefferies & Company, Inc. and its successors and assigns and one
other nationally recognized investment banking firm selected by the Company
that is a primary U.S. Government securities dealer.


 


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


 


                                (b)           Optional Redemption on or After
June 15, 2008. Except as described under clause (a) above
and clause (c) below, the Notes are not redeemable before June 15,
2008. Thereafter, the Company may redeem the Notes, at its option, in whole or
in part, upon not less than 30 nor more than 60 days’ notice mailed to
each Holder of Notes being redeemed, at the following redemption prices
(expressed as percentages of the Accreted Value thereof) if redeemed during the
twelve-month period commencing on June 15, of the year set forth below:


 




	
  Year

  	
   

  	
  Percentage

  	
   

  
	
  2008

  	
   

  	
  106.125

  	
  %

  
	
  2009

  	
   

  	
  103.063

  	
  %

  
	
  2010 and thereafter

  	
   

  	
  100.000

  	
  %

  






 


In addition, the Company
must pay accrued and unpaid interest on the Notes redeemed.


 


                                (c)           Optional Redemption upon Equity
Offerings. At any time, or from time to time, on or prior to June 15,
2008, the Company may, at its option, use an amount not to exceed the net cash
proceeds of one or more Equity Offerings to redeem up to 35% of the aggregate
principal amount at maturity of the Notes (including Additional Notes, if any)
issued under the Indenture at a redemption price of 112.250% of the Accreted
Value thereof, plus accrued and unpaid interest and Additional Interest, if
any, thereon to the date of redemption; provided that:


 


                (1)           at least 65% of the original principal amount at maturity
of Notes (including Additional Notes, if any) issued under the Indenture (minus
the aggregate principal amount at maturity of Notes redeemed pursuant to Section 4.22
of the Indenture prior to the date of such optional redemption), remains
outstanding immediately after each such redemption; and


 


                (2)           the Company makes such redemption not more than 120 days
after the consummation of any such Equity Offering.


 


                                (d)           Notice of Redemption. Notice
of redemption will be mailed by first-class mail at least 30 days but not more
than 60 days before the Redemption Date to each Holder of Notes to be
redeemed at such Holder’s registered address. Notes in denominations greater
than $1,000 may be redeemed in part.


 


                                6.             Offers to Purchase. Sections
4.10, 4.21, 4.22 and 4.23 of the Indenture provide that after certain Asset
Sales, upon the occurrence of a Change of Control, upon an Excess Cash Flow
Offer and upon a Restricted Payment Offer, respectively, and subject to further
limitations contained therein, the Company will make an offer to purchase
certain amounts of the Notes in accordance with the procedures set forth in the
Indenture.


 


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                                7.             Registration Rights. Pursuant
to the Registration Rights Agreement among the Company, the Guarantors and the
Holders of the Initial Notes, the Company will be obligated to consummate an
Exchange Offer. Upon such exchange offering, the Holders of Notes shall have
the right, subject to compliance with securities laws, to exchange such Notes
for 11 1/4% Senior Secured Notes due 2011, which have ben registered under the
Securities Act (the “Exchange Notes”), in like principal amount and
having terms identical in all material respects to the Initial Notes. The
Holders of the Initial Notes shall be entitled to receive certain Additional
Interest payments in the event such exchange offer is not consummated and upon
certain other conditions, all pursuant to and in accordance with the terms of
the Registration Rights Agreement.


 


                                8.             Denominations; Transfer;
Exchange. The Notes are in registered form, without coupons, in
denominations of $1,000 and integral multiples thereof. A Holder shall register
the transfer of or exchange of Notes in accordance with the Indenture. The
Registrar may require a Holder, among other things, to furnish appropriate
endorsements and transfer documents and to pay any taxes, fees or similar
governmental charges payable in connection therewith as permitted by the
Indenture. The Registrar need not register the transfer of or exchange of any
Notes or portions thereof selected for redemption.


 


                                9.             Persons Deemed Owners. The
registered Holder of a Note shall be treated as the owner of it and the Notes
of which it is composed for all purposes.


 


                                10.           Unclaimed Money. If money for
the payment of principal or interest remains unclaimed for two years, the
Trustee and the Paying Agent may pay the money without interest thereon back to
the Company. After that, all liability of the Trustee and such Paying Agent
with respect to such money shall cease.


 


                                11.           Discharge Prior to Redemption or
Maturity. If the Company at any time deposits with the Trustee U.S. Legal
Tender or U.S. Government Obligations sufficient to pay the principal of and interest
on the Notes to redemption or stated maturity and complies with the other
provisions of the Indenture relating thereto, the Company will be discharged
from certain provisions of the Indenture and the Notes (including certain
covenants, but excluding its obligation to pay the principal of and interest
and Additional Interest, if any, on the Notes).


 


                                12.           Amendment; Supplement; Waiver.
Subject to certain exceptions, (a) the Indenture, the Notes or the
Guarantees may be amended or supplemented with the written consent of the
Holders of at lease a majority in aggregate principal amount at maturity of the
Notes then outstanding, and any existing Default or Event of Default or
noncompliance with any provision may be waived with the written consent of the
Holders of a majority in aggregate principal amount at maturity of the Notes
then outstanding and (b) the Collateral Agreements or the provisions of
the Indenture related to the Collateral may be amended or supplemented with the
written consent of the Holders of at least 66 2/3% in aggregate principal
amount at maturity of the Notes then outstanding. Without consent of any
Holder, the parties thereto may amend or supplement the Indenture, the Notes or
the Guarantees to, among other things, cure any ambiguity, defect or
inconsistency, provide for uncertificated Notes or Guarantees in addition to or
in place of certified Notes or Guarantees, comply with the TIA, or comply with
Article


 


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Five of the Indenture or
make any other change that does not adversely affect in any material respect to
the rights of any Holder or a Note.


 


                                13.           Restrictive Covenants. The
Indenture imposes certain limitations on the ability of the Company and its
Restricted Subsidiaries to, among other things, incur additional Indebtedness
or Liens, make payments in respect of their Equity Interests or certain
Indebtedness, enter into transactions with Affiliates, create dividend or other
payment restrictions affecting Subsidiaries, merge or consolidate with any
other Person, sell, assign, transfer, lease, convey or otherwise dispose of all
or substantially all of its assets or adopt a plan of liquidation. Such
limitations are subject to a number of important qualifications and exceptions.
The Company must annually report to the Trustee on compliance with such
limitations.


 


                                14.           Defaults and Remedies. If an
Event of Default occurs and is continuing, the Trustee or the Holders of at
least 25% in aggregate principal amount at maturity of Notes then outstanding
may declare all the Notes to be due and payable in the manner, at the time and
with the effect provided in the Indenture. Holders of Notes may not enforce the
Indenture except as provided in the Indenture. The Trustee is not obligated to enforce
the Indenture or the Notes unless it has received indemnity satisfactory to it.
The Indenture permits, subject to certain limitations therein provided, Holders
of a majority in aggregate principal amount at maturity of the Notes then
outstanding to direct the Trustee in its exercise of any trust or power. The
Trustee may withhold from Holders of Notes notice of any continuing Default or
Event of Default (except a Default in payment of principal or interest) if it
determines that withholding notice is in their interest.


 


                                15.           Trustee Dealings with Company.
Subject to the terms of the TIA and the Indenture, the Trustee under the
Indenture, in its individual or any other capacity, may become the owner or
pledgee of Notes and may otherwise deal with the Company, is Subsidiaries or
their respective Affiliates as if it were not the Trustee.


 


                                16.           Not Recourse Against Others. Not
past, present or future stockholder, director, officer, employee or
incorporator (or any Person forming a limited liability company), as such, of
the Company or the Guarantors shall have any liability for any obligation of
the Company under the Notes, the Guarantees, the Collateral Agreements or the
Indenture or for any claim based on, in respect of or by reason of such
obligations or their creation. Each Holder of a Note by accepting a Note waives
and releases all such liability. The waiver and release are part of the
consideration for the issuance of the Notes.


 


                                17.           Guarantees. Payment of
principal and interest and Additional Interest, if any (including interest on
overdue principal and overdue interest, if lawful), is unconditionally
guaranteed, jointly and severally, by each of the Guarantors.


 


                                18.           Intercreditor Agreement. Each
Holder, by its acceptance of its Note, agrees to be bound by the terms of the
Intercreditor Agreement and all such replacement Intercreditor Agreements and
each of the Guarantors and the Holders hereby authorize the Trustee and the
Collateral Agent to bind the Holders to the extent provided in the Intercreditor
Agreement.


 


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                                19.           Authentication. This Note
shall not be valid until the Trustee or Authenticating Agent manually signs the
certificate of authentication on this Note.


 


                                20.           Governing Law. THE LAWS OF THE
STATE OF NEW YORK SHALL GOVERN THIS NOTE, THE GUARANTEES, THE COLLATERAL
AGREEMENTS AND THE INDENTURE, WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS.


 


                                21.           Abbreviations and Defined Terms.
Customary abbreviations may be used in the name of a Holder of a Note or an
assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the
entireties), JT TEN (= joint tenants with right of survivorship and not as
tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors
Act).


 


                                22.           Security. The Company’s and
Guarantors’ obligations under the Notes are secured by liens on the Collateral
pursuant to the terms of the Collateral Agreements. The actions of the Trustee
and the Holders of the Notes secured by such liens and the application of
proceeds from the enforcement of any remedies with respect to such Collateral
are limited pursuant to the terms of the Collateral Agreements.


 


                                23.           CUSIP Numbers. Pursuant to a
recommendation promulgated by the Committee on Uniform Security Identification
Procedures, the Company has caused CUSIP numbers to be printed on the Notes as
a convenience to the Holders of the Notes. No representation is made as to the
accuracy of such numbers as printed on the Notes and reliance may be placed
only on the other identification numbers printed thereon.


 


                                The Company will furnish to any
Holder of a Note upon written request and without charge a copy of the
Indenture. Requests may be made to: Rafaella Apparel Group, Inc., 1411
Broadway, 2nd floor, New York, New York 10018.


 


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FORM
OF GUARANTEE


 


                                Each of the undersigned and their
respective successors under the Indenture (collectively, the “Guarantors”)
has jointly and severally with each of the other Guarantors, irrevocably and
unconditionally guaranteed, on a senior secured basis to the extent set forth
in the Indenture, dated as of June 20, 2005, by and among the Issuer, the
Guarantors and The Bank of New York, as Trustee and Collateral Agent (the “Indenture”),
(i) the due and punctual payment of the principal of, premium, if any, and
interest and Additional Interest, if any, on the Notes, whether at maturity, by
acceleration or otherwise, and the due and punctual performance of all other
obligations of the Issuer to the Holders or the Trustee all in accordance with
the terms set forth in Article Ten of the Indenture and (ii) in case of
any extension of time of payment or renewal of any Notes or any of such other
obligations, that the same will be promptly paid in full when due or performed
in accordance with the terms of the extension or renewal, whether at stated
maturity, by acceleration or otherwise. Capitalized terms used herein have the
meanings assigned to them in the Indenture unless otherwise indicated.


 


                                THE OBLIGATIONS OF THE UNDERSIGNED TO
HOLDERS OF THE NOTES AND TO THE TRUSTEE PURSUANT TO THIS NOTATION OF GUARANTEE
(THE “GUARANTEE”) AND THE INDENTURE ARE EXPRESSLY SET FORTH IN ARTICLE
TEN OF THE INDENTURE AND REFERENCE IS HEREBY MADE TO THE INDENTURE FOR THE
PRECISE TERMS OF THE GUARANTEE AND ALL OTHER PROVISIONS OF THE INDENTURE TO
WHICH THE GUARANTEE RELATES. EACH HOLDER OF A NOTE, BY ACCEPTING THE SAME, (A)
AGREES TO AND SHALL BE BOUND BY SUCH PROVISIONS AND (B) APPOINTS THE TRUSTEE
ATTORNEY-IN-FACT FOR SUCH HOLDER FOR SUCH PURPOSES.


 


                                This Guarantee shall be governed by
and construed in accordance with the laws of the State of New York.


 


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                                IN WITNESS WHEREOF, each Guarantor
has caused its Guarantee to be duly executed.


 


	
   

  	
  [NAME OF GUARANTOR],
  as Guarantor

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  



 


 


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