Document:

Exhibit 4.1

 

 

 

INDENTURE,

 

Dated as of April 22, 2004,

 

AMONG

 

ATLANTIC EXPRESS TRANSPORTATION CORP.,

 

as Issuer,

 

THE BANK OF
NEW YORK,

 

as Trustee and Collateral Agent,

 

 

AND

 

 

THE GUARANTORS NAMED HEREIN,

 

as Guarantors,

 

 

$105,000,000 12% Senior Secured Notes due
2008

$10,000,000 Senior Secured Floating Rate
Notes due 2008

 

 

 

 

CROSS-REFERENCE
TABLE

 

	
  TIA

  Section

  	
   

  	
  Indenture

  Section

  
	
  310

  	
  (a)(1)

  	
   

  	
  7.10

  
	
   

  	
  (a)(2)

  	
   

  	
  7.10

  
	
   

  	
  (a)(3)

  	
   

  	
  7.10

  
	
   

  	
  (a)(4)

  	
   

  	
  N.A.

  
	
   

  	
  (a)(5)

  	
   

  	
  7.10

  
	
   

  	
  (b)

  	
   

  	
  7.08; 7.10

  
	
   

  	
  (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)

  	
   

  	
  N.A.

  
	
   

  	
  (b)

  	
   

  	
  12.03

  
	
   

  	
  (c)(1)

  	
   

  	
  N.A.

  
	
   

  	
  (c)(2)

  	
   

  	
  N.A.

  
	
   

  	
  (c)(3)

  	
   

  	
  N.A.

  
	
   

  	
  (d)

  	
   

  	
  12.04

  

 

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

 

	
  ARTICLE ONE

  DEFINITIONS AND INCORPORATION BY REFERENCE

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 1.01.

  	
  Definitions

  	
   

  
	
  SECTION 1.02.

  	
  Incorporation by
  Reference of Trust Indenture Act

  	
   

  
	
  SECTION 1.03.

  	
  Rules of Construction

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE TWO

  THE NOTES

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 2.01.

  	
  Form and Dating

  	
   

  
	
  SECTION 2.02.

  	
  Execution and
  Authentication; Aggregate Principal Amount

  	
   

  
	
  SECTION 2.03.

  	
  Registrar and Paying
  Agent

  	
   

  
	
  SECTION 2.04.

  	
  Obligations of Paying
  Agent

  	
   

  
	
  SECTION 2.05.

  	
  Holder Lists

  	
   

  
	
  SECTION 2.06.

  	
  Transfer and Exchange

  	
   

  
	
  SECTION 2.07.

  	
  Replacement Notes

  	
   

  
	
  SECTION 2.08.

  	
  Outstanding Notes

  	
   

  
	
  SECTION 2.09.

  	
  Treasury Notes; When
  Notes Are Disregarded

  	
   

  
	
  SECTION 2.10.

  	
  Temporary Notes

  	
   

  
	
  SECTION 2.11.

  	
  Cancellation

  	
   

  
	
  SECTION 2.12.

  	
  CUSIP Numbers

  	
   

  
	
  SECTION 2.13.

  	
  Deposit of Moneys

  	
   

  
	
  SECTION 2.14.

  	
  Book-Entry Provisions
  for Global Notes

  	
   

  
	
  SECTION 2.15.

  	
  Special Transfer
  Provisions

  	
   

  
	
  SECTION 2.16.

  	
  Issuance of PIK Notes

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE THREE

  REDEMPTION

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 3.01.

  	
  Optional Redemption

  	
   

  
	
  SECTION 3.02.

  	
  Selection of Notes to
  Be Redeemed

  	
   

  
	
  SECTION 3.03.

  	
  Notice of Redemption

  	
   

  
	
  SECTION 3.04.

  	
  Effect of Notice of
  Redemption

  	
   

  
	
  SECTION 3.05.

  	
  Deposit of Redemption
  Price

  	
   

  
	
  SECTION 3.06.

  	
  Notes Redeemed in Part

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE FOUR

  COVENANTS

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 4.01.

  	
  Payment of Notes

  	
   

  
	
  SECTION 4.02.

  	
  Maintenance of Office
  or Agency

  	
   

  
	
  SECTION 4.03.

  	
  Corporate Existence

  	
   

  
	
  SECTION 4.04.

  	
  Payment of Taxes and
  Other Claims

  	
   

  
	
  SECTION 4.05.

  	
  Maintenance of
  Properties and Insurance

  	
   

  
	
  SECTION 4.06.

  	
  Compliance
  Certificate; Notice of Default

  	
   

  
	
  SECTION 4.07.

  	
  Compliance with Laws

  	
   

  

 

i

 

	
  SECTION 4.08.

  	
  Reports to Holders

  	
   

  
	
  SECTION 4.09.

  	
  Waiver of Stay,
  Extension or Usury Laws

  	
   

  
	
  SECTION 4.10.

  	
  Limitation on
  Restricted Payments

  	
   

  
	
  SECTION 4.11.

  	
  Limitation on
  Transactions with Affiliates

  	
   

  
	
  SECTION 4.12.

  	
  Limitation on
  Incurrence of Additional Indebtedness

  	
   

  
	
  SECTION 4.13.

  	
  Limitation on Dividend
  and Other Payment Restrictions Affecting Restricted Subsidiaries

  	
   

  
	
  SECTION 4.14.

  	
  Additional Subsidiary
  Guarantees

  	
   

  
	
  SECTION 4.15.

  	
  Limitation on Change
  of Control

  	
   

  
	
  SECTION 4.16.

  	
  Limitation on Asset
  Sales

  	
   

  
	
  SECTION 4.17.

  	
  Impairment of Security
  Interest

  	
   

  
	
  SECTION 4.18.

  	
  Limitation on Liens

  	
   

  
	
  SECTION 4.19.

  	
  Conduct of Business

  	
   

  
	
  SECTION 4.20.

  	
  Limitation on Issuances
  and Sales of Capital Stock of Subsidiaries

  	
   

  
	
  SECTION 4.21.

  	
  Offer to Repurchase
  with Excess Cash Flow

  	
   

  
	
  SECTION 4.22.

  	
  Payments For Consent

  	
   

  
	
  SECTION 4.23.

  	
  Real Estate Mortgages
  and Recordings

  	
   

  
	
  SECTION 4.24.

  	
  Maintenance of Net
  Leverage

  	
   

  
	
  SECTION 4.25.

  	
  Maintenance of
  Consolidated EBITDA

  	
   

  
	
  SECTION 4.26.

  	
  Limitation on Capital
  Expenditures

  	
   

  
	
  SECTION 4.27.

  	
  Key Man Life Insurance

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE FIVE

  SUCCESSOR CORPORATION

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 5.01.

  	
  Merger, Consolidation
  and Sale of Assets

  	
   

  
	
  SECTION 5.02.

  	
  Successor Corporation
  Substituted

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE SIX

  DEFAULT AND REMEDIES

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 6.01.

  	
  Events of Default

  	
   

  
	
  SECTION 6.02.

  	
  Rights of the Company

  	
   

  
	
  SECTION 6.03.

  	
  Acceleration

  	
   

  
	
  SECTION 6.04.

  	
  Other Remedies

  	
   

  
	
  SECTION 6.05.

  	
  Waiver of Past
  Defaults

  	
   

  
	
  SECTION 6.06.

  	
  Control by Majority

  	
   

  
	
  SECTION 6.07.

  	
  Limitation on Suits

  	
   

  
	
  SECTION 6.08.

  	
  Rights of Holders to
  Receive Payment

  	
   

  
	
  SECTION 6.09.

  	
  Collection Suit by
  Trustee or Collateral Agent

  	
   

  
	
  SECTION 6.10.

  	
  Trustee May File
  Proofs of Claim

  	
   

  
	
  SECTION 6.11.

  	
  Priorities

  	
   

  
	
  SECTION 6.12.

  	
  Undertaking for Costs

  	
   

  
	
  SECTION 6.13.

  	
  Restoration of Rights
  and Remedies

  	
   

  

 

ii

 

	
  ARTICLE SEVEN

  TRUSTEE

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 7.01.

  	
  Duties of Trustee

  	
   

  
	
  SECTION 7.02.

  	
  Rights of Trustee

  	
   

  
	
  SECTION 7.03.

  	
  Individual Rights of
  Trustee

  	
   

  
	
  SECTION 7.04.

  	
  Trustee’s Disclaimer

  	
   

  
	
  SECTION 7.05.

  	
  Notice of Default

  	
   

  
	
  SECTION 7.06.

  	
  Reports by Trustee to
  Holders

  	
   

  
	
  SECTION 7.07.

  	
  Compensation and
  Indemnity

  	
   

  
	
  SECTION 7.08.

  	
  Replacement of Trustee

  	
   

  
	
  SECTION 7.09.

  	
  Successor Trustee by
  Merger, Etc

  	
   

  
	
  SECTION 7.10.

  	
  Eligibility;
  Disqualification

  	
   

  
	
  SECTION 7.11.

  	
  Preferential
  Collection of Claims Against Company

  	
   

  
	
  SECTION 7.12.

  	
  Trustee as Collateral
  Agent

  	
   

  
	
  SECTION 7.13.

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

  	
   

  
	
  SECTION 7.14.

  	
  Form of Documents
  Delivered to Trustee

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE EIGHT

  SATISFACTION AND DISCHARGE OF INDENTURE

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 8.01.

  	
  Legal Defeasance and
  Covenant Defeasance

  	
   

  
	
  SECTION 8.02.

  	
  Satisfaction and
  Discharge

  	
   

  
	
  SECTION 8.03.

  	
  Survival of Certain
  Obligations

  	
   

  
	
  SECTION 8.04.

  	
  Acknowledgment of
  Discharge by Trustee

  	
   

  
	
  SECTION 8.05.

  	
  Application of Trust
  Moneys

  	
   

  
	
  SECTION 8.06.

  	
  Repayment to the
  Company; Unclaimed Money

  	
   

  
	
  SECTION 8.07.

  	
  Reinstatement

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE NINE

  AMENDMENTS, SUPPLEMENTS AND WAIVERS

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 9.01.

  	
  Without Consent of
  Holders

  	
   

  
	
  SECTION 9.02.

  	
  With Consent of
  Holders

  	
   

  
	
  SECTION 9.03.

  	
  Compliance with TIA

  	
   

  
	
  SECTION 9.04.

  	
  Revocation and Effect
  of Consents

  	
   

  
	
  SECTION 9.05.

  	
  Notation on or
  Exchange of Notes

  	
   

  
	
  SECTION 9.06.

  	
  Trustee to Sign
  Amendments, Etc

  	
   

  
	
  SECTION 9.07.

  	
  Conformity with Trust
  Indenture Act

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE TEN

  GUARANTEE

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 10.01.

  	
  Guarantee

  	
   

  
	
  SECTION 10.02.

  	
  Release of a
  Guarantor

  	
   

  
	
  SECTION 10.03.

  	
  Limitation of
  Guarantor’s Liability

  	
   

  
	
  SECTION 10.04.

  	
  Guarantors May
  Consolidate, etc., on Certain Terms

  	
   

  
	
  SECTION 10.05.

  	
  Contribution

  	
   

  
	
  SECTION 10.06.

  	
  Waiver of
  Subrogation

  	
   

  
	
  SECTION 10.07.

  	
  Evidence of
  Guarantee

  	
   

  
	
  SECTION 10.08.

  	
  Waiver of Stay,
  Extension or Usury Laws

  	
   

  

 

iii

 

	
  ARTICLE ELEVEN

  MISCELLANEOUS

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 11.01.

  	
  Trust Indenture Act
  Controls

  	
   

  
	
  SECTION 11.02.

  	
  Notices

  	
   

  
	
  SECTION 11.03.

  	
  Communications by
  Holders with Other Holders

  	
   

  
	
  SECTION 11.04.

  	
  Certificate and
  Opinion as to Conditions Precedent

  	
   

  
	
  SECTION 11.05.

  	
  Statements Required
  in Certificate or Opinion

  	
   

  
	
  SECTION 11.06.

  	
  Rules by Trustee,
  Paying Agent, Registrar

  	
   

  
	
  SECTION 11.07.

  	
  Legal Holidays

  	
   

  
	
  SECTION 11.08.

  	
  Governing Law

  	
   

  
	
  SECTION 11.09.

  	
  No Adverse
  Interpretation of Other Agreements

  	
   

  
	
  SECTION 11.10.

  	
  No Recourse Against
  Others

  	
   

  
	
  SECTION 11.11.

  	
  Successors

  	
   

  
	
  SECTION 11.12.

  	
  Duplicate Originals

  	
   

  
	
  SECTION 11.13.

  	
  Severability

  	
   

  
	
  SECTION 11.14.

  	
  Waiver of Jury Trial

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE TWELVE

  SECURITY INTERESTS

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 12.01.

  	
  Security Interest

  	
   

  
	
  SECTION 12.02.

  	
  Intentionally
  Omitted

  	
   

  
	
  SECTION 12.03.

  	
  Recording and
  Opinions

  	
   

  
	
  SECTION 12.04.

  	
  Release of
  Collateral

  	
   

  
	
  SECTION 12.05.

  	
  Specified Releases
  of Collateral

  	
   

  
	
  SECTION 12.06.

  	
  Release upon
  Satisfaction or Defeasance of all Outstanding Obligations

  	
   

  
	
  SECTION 12.07.

  	
  Form and Sufficiency
  of Release

  	
   

  
	
  SECTION 12.08.

  	
  Purchaser Protected

  	
   

  
	
  SECTION 12.09.

  	
  Authorization of
  Actions to Be Taken by the Collateral Agent Under the Security Documents

  	
   

  
	
  SECTION 12.10.

  	
  Authorization of
  Receipt of Funds by the Collateral Agent Under the Security Documents

  	
   

  

 

iv

 

	
  Exhibit A-1

  	
  -

  	
  Form of Initial Fixed Rate Note

  	
   

  
	
  Exhibit A-2

  	
  -

  	
  Form of Initial Floating Rate Note

  	
   

  
	
  Exhibit B-1

  	
  -

  	
  Form of Exchange Fixed Rate Note

  	
   

  
	
  Exhibit B-2

  	
  -

  	
  Form of Exchange Floating Rate Note

  	
   

  
	
  Exhibit C-1

  	
  -

  	
  Form of Legend for Global Notes

  	
   

  
	
  Exhibit C-2

  	
  -

  	
  Form of Private Placement Legend

  	
   

  
	
  Exhibit D

  	
  -

  	
  Form of Certificate to Be Delivered in
  Connection with

  Transfers to Non-QIB Accredited Investors

  	
   

  
	
  Exhibit E

  	
  -

  	
  Form of Certificate to Be Delivered in
  Connection with

  Transfers Pursuant to Regulation S

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  NOTE:

  	
   

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

  	
   

  

 

v

 

INDENTURE, dated as of April
22, 2004, among Atlantic Express Transportation Corp., a New York corporation
(the “Company”), 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 Company and the
Guarantors (with respect to the Guarantees) have duly authorized the creation
of an issue of 12% Senior Secured Notes due 2008 (the “Initial Fixed Rate
Notes”) and Senior Secured Floating Rate Notes due 2008 (the “Initial
Floating Rate Notes,” and together with the Initial Fixed Rate Notes, the “Initial
Notes”), and 12% Senior Secured Exchange Notes due 2008 (the “Exchange
Fixed Rate Notes”) and Senior Secured Floating Rate Exchange Notes due 2008
(the “Exchange Floating Rate Notes,” and together with the Exchange
Fixed Rate Notes, the “Exchange Notes,” and the Exchange Notes
collectively with the Initial Notes, any Additional Notes (as herein defined)
and any PIK Notes (as herein defined), the “Notes”) and the Guarantees
(as herein defined) and, to provide therefor, the Company and the Guarantors
have duly authorized the execution and delivery of this Indenture; and

 

WHEREAS, all things necessary
to make the Notes and Guarantees, when each are duly issued and executed by the
Company and the Guarantors, as applicable, and authenticated and delivered
hereunder, the valid obligations of each of the Company and the Guarantors,
respectively, and to make this Indenture a valid and binding agreement of each
of the Company 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 6.03(a).

 

“Acquired Indebtedness”
means Indebtedness of a Person or any of its Subsidiaries existing at the time
such Person becomes a Restricted Subsidiary of the Company or at the time it
merges or consolidates with or into the Company or any of its Restricted
Subsidiaries or assumed in connection with the acquisition of assets from such
Person.

 

“Additional Fixed Rate
Notes” means any Additional Notes permitted to be issued in accordance with
this Indenture that are designated as Fixed Rate Notes in accordance with Section
2.02.

 

“Additional Floating Rate
Notes” means any Additional Notes permitted to be issued in accordance with
this Indenture that are designated as Floating Rate Notes in accordance with Section
2.02.

 

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

 

 

“Additional Notes”
has the meaning set forth in Section 2.02 and means any Notes that are
not Exchange Notes or PIK Notes issued after the Issue Date from time to time
in accordance with the terms of this Indenture including, without limitation,
the provisions of Sections 2.02 and 4.12.

 

“Additional PIK Interest”
has the meaning specified in the Notes.

 

“Administrative Agent”
means, at any time, the Person serving at such time as the “Administrative
Agent” under the Credit Agreement or any other representative of the lenders
then most recently designated by a majority of the lenders under the Credit
Agreement in a written notice delivered to the Collateral Agent and the
Trustee.

 

“AETG” means Atlantic
Express Transportation Group, a New York corporation.

 

“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; and the terms
“controlling” and “controlled” have meanings correlative of the foregoing.

 

“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
Depository, Euroclear or Clearstream, a Person who has an account with the
Depository, Euroclear or Clearstream, respectively (and, with respect to the
Depository, shall include Euroclear and Clearstream).

 

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

 

“Asset Acquisition”
means (1) an Investment by the Company or any Restricted Subsidiary of the
Company in any other Person pursuant to which such Person shall become a
Restricted Subsidiary of the Company or any Restricted Subsidiary of the
Company, or shall be merged with or into the Company or any Restricted
Subsidiary of the Company, or (2) the acquisition by the Company or any
Restricted Subsidiary of the Company of the assets of any Person (other than a
Restricted Subsidiary of the Company) 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 for value by the Company or any of its Restricted
Subsidiaries (including any Sale and Leaseback Transaction) to any Person other
than the Company or a Wholly Owned Subsidiary of the Company that is a
Guarantor of:  (1) any Capital
Stock of any Restricted Subsidiary of the Company; or (2) any other
property or assets of the Company or any of its Restricted Subsidiaries other
than in the ordinary course of business; provided, however, that
“Asset Sale” shall not include: 
(a) a transaction or series of related transactions for which the
Company or its Restricted Subsidiaries receive aggregate consideration of less
than $1.0 million; (b) the sale, lease, conveyance, disposition or
other transfer of all or substantially all of the assets (determined on a
consolidated basis) of the Company as permitted under Section 5.01;
(c) any Restricted Payment permitted by Section 4.10 or that
constitutes a Permitted Investment; (d) the sale of Cash Equivalents; (e)
the sale or other disposition of used, worn out, obsolete or surplus assets;
(f) sales

 

2

 

or
grants of licenses to use the Company’s or any Restricted Subsidiary’s patents,
trade secrets, know-how and technology to the extent that such license does not
prohibit the licensor from using the patent, trade secret, know-how or
technology or require any payments by the Company or its Restricted
Subsidiaries for any such use; (g) the sale of assets currently owned by Jersey
Bus Sales, Inc.; (h) the sale of real property in Bordentown, New Jersey and
improvements thereon currently owned by Jersey Business Land Co., Inc.; and (i)
the sale of the assets currently owned by Atlantic North Casualty Company.

 

“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.

 

“Board of Directors”
means, as to any Person, the board of directors (or equivalent governing body,
partner or member) 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 Expenditures”
means, without duplication, for any period, with respect to any Person, (a) the
additions to property, plant and equipment and other capital expenditures of
such Person and its
Restricted Subsidiaries that are (or should be) set forth in a consolidated
statement of cash flows of such Person and its Restricted Subsidiaries for such
period prepared in accordance with GAAP (provided that buses contributed by
AETG to the Company as paid-in capital shall not be included in this definition
for the Company), and (b) Capital Lease Obligations incurred by such Person and
its Restricted Subsidiaries during such period.

 

“Capital Stock”
means:

 

(1)           with respect to any Person that is a
corporation, any and all shares, interests, rights to purchase, warrants,
options, 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; and

 

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

 

“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;

 

3

 

(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 S&P or Moody’s or, if Moody’s and
S&P cease to exist, any other nationally recognized statistical rating
organization designated by the Board of Directors of the Company;

 

(3)           commercial paper maturing no more than one year from the
date it is created 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 or, if Moody’s and
S&P cease to exist, any other nationally recognized statistical rating
organization designated by the Board of Directors of the Company;

 

(4)           time deposits, certificates of deposit 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;

 

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

 

(7)           overnight deposits and demand deposit accounts (in the
respective local currencies) maintained in the ordinary course of business.

 

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

 

(1)           prior to the first public offering of common shares of the
Company, the Permitted Holders cease to be the “beneficial owner” (as defined
in Rules 13d-3 and 13d-5 under the Exchange Act), directly or indirectly, of a
majority in the aggregate of the total voting power of the Voting Stock of the
Company;

 

(2)           after the first public offering of common shares of the
Company after the Issue Date, any “person” (as such term is used in Sections
13(d) and 14(d) of the Exchange Act), other than one or more Permitted Holders,
is or becomes the beneficial owner (as defined in clause (1) above,
except that for purposes of this clause (2) such person shall be deemed
to have “beneficial ownership” of all shares that any such person has the right
to acquire, whether such right is exercisable immediately or only after the
passage of time), directly or indirectly, of more than 50% of the total voting
power of the Voting Stock of the Company;

 

(3)           individuals who on the Issue Date constituted the Board of
Directors of the Company (together with any new directors whose election by
such Board of Directors of the Company or whose nomination for election by the
stockholders of the Company was approved by a vote of a majority of the
directors of the Company 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 of the Company then in office;

 

(4)           the adoption of a plan relating to the liquidation or
dissolution of the Company; or

 

4

 

(4)           the sale of all or substantially all the assets of the
Company (determined on a consolidated basis) to another Person (other than, in
all such cases, a Person that is controlled by one or more of the Permitted
Holders), other than a transaction following which each transferee becomes an
obligor in respect of the Notes and a Subsidiary of the transferor of such
assets.

 

“Change of Control Date”
has the meaning set forth in Section 4.15(b).

 

“Change of Control Offer”
has the meaning set forth in Section 4.15(a).

 

“Change of Control
Payment Date” has the meaning set forth in Section 4.15(b)(2).

 

“Clearstream” means
Clearstream Banking, societe anonyme.

 

“Collateral” has the
meaning set forth in the Security Agreement.

 

“Collateral Agent”
means the collateral agent for the Trustee and the Holders under the Security
Documents, which shall initially be The Bank of New York, a New York banking
corporation.

 

“Commission” means
the Securities and Exchange Commission.

 

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

 

“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 shares, whether outstanding on the Issue Date or issued after
the Issue Date, and includes, without limitation, all series and classes of
such common shares.

 

“Company” means the
party named as such in this Indenture until a successor replaces it pursuant to
this Indenture and thereafter means such successor.

 

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

 

(1)           Consolidated Net Income; and

 

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

 

(a)           all income taxes of such Person and its Restricted
Subsidiaries paid or accrued in accordance with GAAP for such period;

 

(b)           Consolidated Interest Expense, amortization expense and
depreciation expense;

 

(c)           Consolidated Non-cash Charges less any non-cash items
increasing Consolidated Net Income for such period; and

 

(d)           restructuring and reorganization costs, including charges,
fees, expenses, exit payments and all other items related to the Plan of
Reorganization,

 

5

 

less (without duplication), to the extent Consolidated
Net Income has been increased, forgiveness of indebtedness from continuing
operations relating to the Plan of Reorganization; in each case, on a
consolidated basis for such Person and its Restricted Subsidiaries and
determined in accordance with GAAP.

 

“Consolidated Fixed
Charge Coverage Ratio” means, with respect to any Person, the ratio of
Consolidated EBITDA of such Person 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 of such
Person for the Four Quarter Period. In addition to and without limitation of
the foregoing, 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 such
Person 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 (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 other disposition or Asset Acquisition
(including, without limitation, any Asset Acquisition giving rise to the need
to make such calculation as a result of such Person 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 and also including any Consolidated EBITDA
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 Asset Sale or other disposition or Asset Acquisition (including the
incurrence, assumption or liability for any such Indebtedness or Acquired
Indebtedness) occurred on the first day of the Four Quarter Period; provided
that the Consolidated EBITDA of any Person acquired shall be included
only to the extent includible pursuant to the definition of “Consolidated Net
Income.” If such Person or any of its Restricted Subsidiaries directly or
indirectly guarantees Indebtedness of a third Person, the immediately preceding
sentence shall give effect to the incurrence of such guaranteed Indebtedness as
if such Person or any Restricted Subsidiary of such Person had directly
incurred or otherwise assumed such guaranteed Indebtedness.

 

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
average rate of interest on such Indebtedness during the Four Quarter Period
ending on or prior to 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.

 

6

 

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

 

(1)           Consolidated Interest Expense; plus

 

(2)           the product of (x) the amount of all dividend payments on
any series of Preferred Stock of such Person or its Restricted Subsidiaries
(other than dividends paid solely in Qualified Capital Stock) paid, accrued or
scheduled to be paid or accrued during such period, 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 sum, without
duplication, of the aggregate of the interest expense (including
payment-in-kind interest) of such Person and its Restricted 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), and excluding
amortization or write-off of deferred financing costs and debt issuance costs
of such Person and its consolidated Restricted Subsidiaries during such period
and any premium or penalty paid in connection with redeeming or retiring
Indebtedness of such Person and its consolidated Restricted Subsidiaries prior
to the stated maturity thereof pursuant to the agreements governing such
Indebtedness.

 

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

 

(1)           after-tax gains and losses from Asset Sales (without regard
to the $1.0 million limitation set forth in the definition thereof) or
abandonments or reserves relating thereto;

 

(2)           after-tax items classified as extraordinary or
nonrecurring gains;

 

(3)           the net income (but not loss) of any Restricted Subsidiary
of the referent Person to the extent that the declaration of dividends or
similar distributions by that Restricted Subsidiary of that income is
restricted by a contract, operation of law or otherwise;

 

(4)           the net income of any Person, other than a Restricted
Subsidiary of the referent Person, except to the extent of cash dividends or
distributions paid to the referent Person or to a Wholly Owned Subsidiary of
the referent Person 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

 

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

 

(8)           in the case of a successor to the referent Person by
consolidation or merger or as a transferee of the referent Person’s assets, any
earnings of the successor corporation prior to such consolidation, merger or
transfer of assets.

 

“Consolidated Net Worth”
of any Person means the consolidated stockholders’ equity of such Person,
determined on a consolidated basis in accordance with GAAP, less (without duplication)
amounts attributable to Disqualified Capital Stock of such Person.

 

“Consolidated Non-cash
Charges” means, with respect to any Person, for any period, the aggregate
depreciation, amortization and other non-cash expenses of such Person and its
Restricted Subsidiaries reducing Consolidated Net Income of such Person and its
Restricted Subsidiaries for such period, determined on a consolidated basis in
accordance with GAAP (excluding any such charges constituting an extraordinary
item or loss or any such charge which requires an accrual of or a reserve for
cash charges for any future period).

 

“Corporate Trust Office”
means the office of the Trustee at which the corporate trust business of the
Trustee shall, at any particular time, be principally administered.

 

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

 

“Credit Agreement”
means the Second Amended and Restated Loan and Security Agreement dated as of
the Issue Date, between the Company and the lenders party thereto (the “Lenders”)
and Congress Financial Corporation, as Administrative Agent, together with the
related documents thereto (including, without limitation, any guarantee
agreements and security documents), in each case as such agreements may be
amended, restated, supplemented, refinanced, replaced, refunded or otherwise
modified from time to time (including any agreement increasing the amount of
available borrowings thereunder, provided  that such increase in
borrowings is permitted under the definition of the term “Permitted
Indebtedness”, or adding Restricted Subsidiaries of the Company as additional
borrowers or guarantors thereunder), 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 Company or any of its
Restricted Subsidiaries against fluctuations in currency values.

 

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

 

“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.

 

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

 

“Disqualified Capital
Stock” means that portion of any Capital Stock which, by its terms (or by
the terms of any security into which it is convertible or for which it is
exchangeable at the option of the holder thereof), or upon the happening of any
event (other than an event which would constitute a Change of Control), matures
or is mandatorily redeemable, pursuant to a sinking fund obligation or
otherwise, or is redeemable at the sole option of the holder thereof (except in
each case, upon the

 

8

 

occurrence
of a Change of Control) on or prior to the first anniversary of the final
maturity date of the Notes for cash or is convertible into or exchangeable for
debt securities of the Company or its Subsidiaries at any time prior to such
anniversary.

 

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

 

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

 

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

 

“Excess Cash Flow”
means for any twelve month period, Consolidated EBITDA for the Company for such
twelve month period, adjusted (without duplication) as follows: (i) minus
the cash portion of Consolidated Interest Expense (net of interest income) for
such twelve month period, (ii) minus all federal, state and foreign
income taxes, including pre-petition priority taxes, actually paid in cash by
the Company and its Restricted Subsidiaries in such twelve month period, (iii) minus
all capital expenditures made during such twelve month period by the Company
and its Restricted Subsidiaries, (iv) minus any net increase of the
difference between (1) current assets, other than cash and Cash Equivalents, and
(2) current liabilities, other than federal, state and foreign income tax
payables and pre-petition priority tax payables, of the Company and its
Restricted Subsidiaries for such twelve month period, (v) minus all
amortization payments or other payments or prepayments, otherwise permitted in
compliance with this Indenture, made by the Company and its Restricted
Subsidiaries for such twelve month period, of principal of Indebtedness
(including in respect of Capitalized Lease Obligations) incurred or outstanding
in compliance with this Indenture, other than any payment or prepayment of
Indebtedness that is revolving Indebtedness except to the extent that there is
an equivalent permanent reduction of commitments thereunder, and (vi) minus
the aggregate principal amount of any notes purchased, redeemed or otherwise
acquired or retired for value directly or indirectly by the Company on or after
the Issue Date whether pursuant to open market transactions, negotiated
transactions, a Change of Control Offer, a Net Proceeds Offer, any optional
redemption in compliance with this Indenture, or otherwise other than pursuant
to an Excess Cash Flow Offer and so long as such amount has not been previously
used to reduce the calculation of Excess Cash Flow pursuant to this definition.

 

“Excess Cash Flow Offer”
has the meaning set forth in Section 4.21(a).

 

“Excess Cash Flow Offer
Amount” has the meaning set forth in Section 4.21(a).

 

“Excess Cash Flow Offer
Period” has the meaning set forth in Section 4.21(a).

 

“Excess Cash Flow
Purchase Date” has the meaning set forth in Section 4.21(b)(2).

 

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

 

“Exchange Fixed Rate
Notes” has the meaning set forth in the preamble to this Indenture.

 

9

 

“Exchange Floating Rate
Notes” has the meaning set forth in the preamble to this Indenture.

 

“Exchange Notes” has
the meaning set forth in the preamble to this Indenture and means the Notes, if
any, issued under Section 2.02 pursuant to an Exchange Offer.

 

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

 

“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 Company acting reasonably and in good
faith and shall be evidenced by a Board Resolution of the Board of Directors of
the Company, delivered to the Trustee.

 

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

 

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

 

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

 

“Foreign Subsidiary”
means, with respect to any Person, any Subsidiary of such Person (1) which is
organized under the laws of any jurisdiction outside of the United States of
America, (2) which conducts the major portion of its business outside of the
United States of America and (3) all or substantially all of the property and
assets of which are located outside of the United States of America.

 

“Four Quarter Period”
has the meaning set forth in the definition of the term “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 Note” has the
meaning set forth in Section 2.01.

 

“Guarantee” has the
meaning set forth in Section 10.01

 

“Guarantor” means (1)
all existing Domestic Subsidiaries of the Company and (2) each of the Company’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, but excluding Atlantic North
Casualty Company; 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.

 

10

 

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

 

“incur” has the
meaning set forth in Section 4.12.

 

“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, 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 consistent with the
Company’s past practice);

 

(5)           all Obligations for the reimbursement of any obligor on
any letter of credit, banker’s acceptance or similar credit transaction,
whether or not then due;

 

(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) above which are secured by any Lien
on any property or asset of such Person, the amount of such Obligation being
deemed to be the lesser of the Fair Market Value of such property or asset or
the amount of the Obligation so secured;

 

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

 

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

 

Notwithstanding the
foregoing, insurance financing payable shall not be deemed to be Indebtedness.

 

For purposes hereof, the
“maximum fixed repurchase price” of any Disqualified Capital Stock which does
not have a fixed repurchase price shall be calculated in accordance with the
terms of such Disqualified Capital Stock as if such Disqualified Capital Stock
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 Capital Stock, such
Fair Market Value shall be determined reasonably and in good faith by the Board
of Directors of the issuer of such Disqualified Capital Stock.

 

11

 

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

 

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

 

“Initial Fixed Rate Notes”
has the meaning set forth in the preamble to this Indenture.

 

“Initial Floating Rate
Notes” has the meaning set forth in the preamble to this Indenture.

 

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

 

“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 between the Administrative Agent and the
Collateral Agent, dated as of the Issue Date, as the same may be amended,
supplemented, modified or replaced from time to time; provided that any
replacement thereof shall be substantially similar to the Intercreditor
Agreement so replaced.

 

“Interest Payment Date”
means the stated maturity of an installment of interest on the Notes.

 

“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” means,
with respect to any Person, any direct or indirect loan or other extension of
credit (including, without limitation, a guarantee) 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 by such Person of any Capital Stock, bonds, notes,
debentures or other securities or evidences of Indebtedness issued by, any
Person. “Investment” shall exclude (a) extensions of trade credit by the
Company and its Restricted Subsidiaries on commercially reasonable terms in
accordance with normal trade practices of the Company and (b) commission,
travel and similar advances to officers and employees of such Person made in the
ordinary course of business. For the purposes of Section 4.10 hereof,
(i) “Investment” shall include and be valued at the Fair Market Value of the
net assets of any Restricted Subsidiary at the time that such Restricted
Subsidiary is designated an Unrestricted Subsidiary and shall exclude the Fair
Market Value of the net assets of any Unrestricted Subsidiary at the time that
such Unrestricted Subsidiary is designated a Restricted Subsidiary and (ii) the
amount of any Investment shall be the original cost of such Investment plus the
cost of all additional Investments by the Company or any of its Restricted
Subsidiaries, without any adjustments for increases or decreases in value, or
write-ups, write-downs or write-offs with respect to such Investment, reduced
by the payment of dividends or distributions in connection with such Investment
or any other

 

12

 

amounts
received in respect of such Investment; provided  that no such
payment of dividends or distributions or receipt of any such other amounts
shall reduce the amount of any Investment if such payment of dividends or
distributions or receipt of any such amounts would be included in Consolidated
Net Income.

 

“Issue Date” means
April 22, 2004, the date of original issuance of the Notes.

 

“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).

 

“Management Agreements”
means the Advisory Services Agreement, dated December 24, 2003, by and among
AETG, the Company and GSCP, Inc., and the Management Agreement, dated February
10, 2004, by and among the Company, Atlantic Transit II Corp., and Atlantic
School Bus Corp.

 

“Maturity Date” means
April 15, 2008.

 

“Moody’s” means
Moody’s Investors Service, Inc.

 

“Mortgages” means the
mortgages, deeds of trust, deeds to secure debt or other similar documents
delivered by the Company or any of its Domestic Restricted Subsidiaries
pursuant to the terms of this Indenture which create, in favor of the
Collateral Agent, Liens on any fee interest in Pledged Real Estate as
collateral security for the payment obligations of the Company under this
Indenture and Notes or of such Domestic Restricted Subsidiary under its
Guarantee, as the case may be.

 

“Motor Vehicles” has
the meaning set forth in the Security Agreement.

 

“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 Company 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);

 

(2)           all taxes and other costs and expenses actually paid or
estimated by the Company (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 that is required to be
repaid in connection with such Asset Sale; and

 

(4)           appropriate amounts to be provided by the Company or any
Restricted Subsidiary, as the case may be, as a reserve, in accordance with
GAAP, against any liabilities associated with such Asset Sale and retained by the
Company or any Restricted Subsidiary, as the case may be, after such Asset
Sale, including, without limitation, pension and other post-employment benefit
liabilities,

 

13

 

liabilities
related to environmental matters and liabilities under any indemnification
obligations associated with such Asset Sale;

 

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 Debt” means,
with respect to any Person, as of any date of determination, the difference of
(i) the aggregate amount of Indebtedness covered by, without duplication, clauses
(1), (2) and (3) of the definition of “Indebtedness” of such Person and
its Restricted Subsidiaries outstanding as of such date, minus  (ii) the aggregate amount of cash and
Cash Equivalents on hand of such Person and its Restricted Subsidiaries as of
such date.

 

“Net
Leverage” means, with respect to any Person, as of the last day of the
fiscal quarter for which the calculation is being made (the “Determination
Date”), the ratio of the Net Debt of such Person and its Restricted
Subsidiaries as of such Determination Date to the Consolidated EBITDA of such
Person and its Restricted Subsidiaries during the four consecutive full
quarters (the “Determination Period”) most ending on such Determination
Date, with such calculation to be made as promptly as practicable and in any
event within 10 days of the date upon which financial statements as of and for
such Determination Date and Determination Period are available. In addition to
and without limitation of the foregoing, for the purposes of this definition,
“Consolidated EBITDA” shall be calculated after giving effect on a pro forma
basis (consistent with the provisions below) for the period of such calculation
to:

 

(1)            any Asset Sale or other disposition
or Asset Acquisition or other acquisition (including through mergers or
consolidations) occurring during such Determination Period or at any time
subsequent to the last day of such Determination Period and on or prior to the
Determination Date, as if such Asset Sale or other disposition or Asset
Acquisition (including any related incurrence, assumption or liability for any
Indebtedness or Acquired Indebtedness in connection therewith) occurred on the
first day of the Determination Period; provided that the Consolidated
EBITDA of any Person acquired shall be included only to the extent includible
pursuant to the definition of “Consolidated Net Income;” and

 

(2)            any renegotiation,
modification, amendment or supplement to any contract, agreement or instrument
to which the Company or any of its Restricted Subsidiaries is a party, or under
which the Company or any of it Restricted Subsidiaries is bound, or to any
contractual obligations or rights of the Company or any of its Restricted
Subsidiaries thereunder, occurring during such Determination Period or at any
time, subsequent to the last day of such Determination Period and on or prior
to the Determination Date, as if such renegotiation, modification, amendment or
supplement had occurred on the first day of the Determination Period; provided, however,
that in no event shall the amount of “Consolidated EBITDA” (as such amount is
adjusted pursuant to the pro forma adjustments set forth in clause (1)
above and this clause (2)) used for the purposes of calculating “Net
Leverage” exceed 150% of the amount of “Consolidated EBITDA” as calculated
prior to the application of the pro forma adjustments set forth in clause
(1) above and this clause (2); provided  further, that
if such Person or any of its Restricted Subsidiaries directly or indirectly
guarantees Indebtedness of a third Person, this sentence shall give effect to
the incurrence of such guaranteed Indebtedness, without duplication, as if such
Person or and Restricted Subsidiary of such Person had directly incurred or
otherwise assumed such guaranteed Indebtedness.

 

“Net Proceeds Offer”  has the meaning set forth in Section 4.16.

 

“Net Proceeds Offer
Amount”  has the meaning set forth
in Section 4.16.

 

14

 

“Net Proceeds Offer
Payment Date”  has the meaning set
forth in Section 4.16.

 

“Net Proceeds Offer
Trigger Date”  has the meaning set
forth in Section 4.16.

 

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

 

“Notes” has the
meaning set forth in the preamble to this Indenture and means the Initial
Notes, the Additional Notes, if any, the PIK Notes, if any, and the Exchange
Notes treated as a single class of securities, as amended or supplemented from
time to time in accordance with the terms hereof, that are issued pursuant to
this Indenture.

 

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

 

“Offering Circular”
means the offering circular of the Company dated April 16, 2004 with respect to
the offer and sale of the Initial Notes.

 

“Officer” means, with
respect to any Person, the Chairman of the Board, the Chief Executive Officer,
the President, any Vice President, the Chief Financial Officer, the Treasurer,
the Controller or the Secretary of such Person, or any other officer designated
by the Board of Directors serving in a similar capacity.

 

“Officers’ Certificate”
means, with respect to any Person, a certificate signed by two Officers or by
an Officer and either an Assistant Treasurer or an Assistant Secretary of such
Person and otherwise complying with the requirements of Sections 11.04
and 11.05, as they relate to the making of an Officers’ Certificate.

 

“Opinion of Counsel”
means a written opinion from legal counsel, who may be counsel for the Company
and who is reasonably acceptable to the Trustee, complying with the
requirements of Sections 11.04 and 11.05, as they relate to the
giving of an Opinion of Counsel.

 

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

 

“Permitted Amount”
means an amount equal to (i) $100,000 for fiscal year 2004; and (ii) for
each fiscal year thereafter, 1.05 times the Permitted Amount for the
immediately preceding fiscal year.

 

“Permitted Holders”
means GSCP (NJ), Inc., a Delaware corporation, and its Affiliates.

 

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

 

(1)           Indebtedness under the Notes issued on the Issue Date or
in the Exchange Offer with respect to such Notes issued on the Issue Date in an
aggregate outstanding principal amount not to exceed $115.0 million and the
related Guarantees;

 

(2)           Indebtedness incurred pursuant to the Credit Agreement in
an aggregate principal amount at any time outstanding not to exceed $20.0
million;

 

(3)           other Indebtedness of the Company and its Restricted
Subsidiaries outstanding on the Issue Date (other than Indebtedness outstanding
under the Credit Agreement);

 

15

 

(4)           Interest Swap Obligations of the Company or any of its
Restricted Subsidiaries covering Indebtedness of the Company 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, at the time of the
incurrence thereof, the principal amount of Indebtedness to which such Interest
Swap Obligation relates;

 

(5)           Indebtedness of a Restricted Subsidiary of the Company to
the Company or to another Restricted Subsidiary for so long as such
Indebtedness is held by the Company or a Restricted Subsidiary of the Company,
in each case subject to no Lien by anyone other than the Company; provided
that (a) any such Indebtedness is subordinated, pursuant to a written
agreement, to such Subsidiary’s Obligations under this Indenture and its
Guarantee and (b) if as of any date any Person other than the Company or a
Guarantor owns or holds any such Indebtedness or holds a Lien in respect of
such Indebtedness, such date shall be deemed the incurrence of Indebtedness not
constituting Permitted Indebtedness by the issuer of such Indebtedness (unless
such Indebtedness may otherwise be incurred pursuant to the terms of this
Indenture);

 

(6)           Indebtedness of the Company to a Restricted Subsidiary of
the Company for so long as such Indebtedness is held by a Restricted Subsidiary
of the Company, in each case subject to no Lien; provided  that
(a) any such Indebtedness is subordinated, pursuant to a written agreement by
the holder thereof, to the Company’s obligations under this Indenture and the
Notes and (b) if as of any date any Person other than a Restricted Subsidiary
owns or holds any such Indebtedness or any Person holds a Lien in respect of
such Indebtedness, such date shall be deemed the incurrence of Indebtedness not
constituting Permitted Indebtedness by the Company (unless such Indebtedness
may otherwise be incurred pursuant to the terms of this Indenture);

 

(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, however, that such
Indebtedness is extinguished within three Business Days of incurrence;

 

(8)           Indebtedness of the Company or any of its Restricted
Subsidiaries represented by (i) letters of credit for the account of the
Company or such Restricted Subsidiary, as the case may be, in order to provide
security for performance bonds, bankers’ acceptances, surety or appeal bonds,
workers’ compensation claims, automobile liability loss fund claims, payment
obligations in connection with self-insurance or similar requirements incurred
in the ordinary course of business or (ii) performance bonds, appeal bonds,
surety bonds, insurance obligations or bonds and other similar bonds or
obligations incurred in the ordinary course of business;

 

(9)           Indebtedness represented by Capitalized Lease Obligations
and Purchase Money Obligations of the Company and its Restricted Subsidiaries
existing on the Issue Date, and Indebtedness represented by Capitalized Lease
Obligations and Purchase Money Obligations of the Company and its Restricted
Subsidiaries after the Issue Date up to, but not exceeding $3.5 million at any
time outstanding;

 

(10)         Refinancing Indebtedness;

 

(11)         Guarantees by the Company or a Restricted Subsidiary of the
Company of Indebtedness incurred by the Company or a Restricted Subsidiary of
the Company so long as the incurrence of such Indebtedness by the Company or
any such Restricted Subsidiary is otherwise permitted by the terms hereof;

 

16

 

(12)         Indebtedness arising from agreements of the Company or a
Subsidiary of the Company 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 Company and
the Subsidiary of the Company in connection with such disposition;

 

(13)         Reimbursement obligations for letters of credit issued under
the Credit Agreement in an aggregate principal amount not to exceed $10.0
million at any time outstanding; and

 

(14)         additional Indebtedness of the Company and its Restricted
Subsidiaries in an aggregate principal amount not to exceed $5.0 million at any
time outstanding (which amount may, but need not be, incurred in whole or in
part under the Credit Agreement).

 

For purposes of determining
compliance with Section 4.12 hereof, (i) 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 (14) above or is
entitled to be incurred pursuant to the Consolidated Fixed Charge Coverage
Ratio provisions of such covenant, the Company shall, in its sole discretion,
classify (or later reclassify) such item of Indebtedness in any manner that
complies with this covenant, (ii) the amount of Indebtedness issued at a price
which is less than the principal amount thereof shall be equal to the original
issue price of such Indebtedness and (iii) 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
Company or one of its Restricted Subsidiaries, as the case may be, at the time
an acquired Person becomes such a Restricted Subsidiary (or is merged into the
Company or such a Restricted Subsidiary) or at the time of the acquisition of
assets, as the case may be. Accrual of interest, accretion or amortization of
original issue discount, the payment of interest on any Indebtedness in the
form of additional Indebtedness with the same terms, and the payment of
dividends on Disqualified Capital Stock in the form of additional shares of the
same class of Disqualified Capital Stock will not be deemed to be an incurrence
of Indebtedness or an issuance of Disqualified Capital Stock for purposes of Section
4.12.

 

“Permitted Investments”
means:

 

(1)           Investments by the Company or any Restricted Subsidiary of
the Company in any Person that is or will become immediately after such
Investment a Guarantor or Foreign Restricted Subsidiary of the Company or that
will merge or consolidate into the Company or a Guarantor or Foreign Restricted
Subsidiary of the Company;

 

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

 

(3)           Investments in cash and Cash Equivalents;

 

(4)           loans and advances to employees, officers and directors of
the Company and its Restricted Subsidiaries not in excess of $100,000 at any
one time outstanding;

 

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

 

17

 

(6)           Investments in the Notes;

 

(7)           Investments in securities of trade creditors or customers
received (a) 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 (b) in settlement of
delinquent obligations of, and other disputes, with customers, suppliers and
others in each case arising in the ordinary course of business or otherwise in
satisfaction of a judgment;

 

(8)           Investments made by the Company or its Restricted
Subsidiaries as a result of an Asset Sale made in compliance with Section
4.16;

 

(9)           Investments made by the Company or its Restricted
Subsidiaries;

 

(a)          consisting of consideration received
in connection with an Asset Sale made in compliance with Section 4.16;
or

 

(b)           consisting of consideration received by the Company or any
of its Restricted Subsidiaries in connection with a transaction that would be
an Asset Sale if it consisted of aggregate consideration received by the
Company or any of its Restricted Subsidiaries of $1.0 million or more.

 

(10)         Investments of a Person or any of its Subsidiaries existing
at the time such Person becomes a Restricted Subsidiary of the Company or at
the time such Person merges or consolidates with the Company or any of its
Restricted Subsidiaries, in either case in compliance with this Indenture; provided
that such Investments were not made by such Person in connection with,
or in anticipation or contemplation of, such Person becoming a Restricted
Subsidiary of the Company or such merger or consolidation;

 

(11)         Investments in existence on the Issue Date;

 

(12)         guarantees of Indebtedness to the extent permitted pursuant
to Section 4.12;

 

(13)         Investments in Atlantic North Casualty Company but only to
the extent necessary under applicable law to pay the insurance deductible
obligations of the Company and its Subsidiaries consistent with current
practice on the Issue Date; and

 

(14)         additional Investments (including Investments in joint
ventures and Unrestricted Subsidiaries) not to exceed $1.0 million at any time
outstanding.

 

“Permitted Liens”
means the following types of Liens:

 

(1)           Liens for taxes, assessments or governmental charges or
claims that are either (a) not delinquent or (b) being contested in good faith
by appropriate proceedings and as to which the Company or any of its Restricted
Subsidiaries shall have set aside on its books such reserves if any, as shall
be required pursuant to GAAP, and Liens for taxes to be paid pursuant to the
Plan of Reorganization;

 

(2)           statutory and common law 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

 

18

 

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 automobile insurance policies, workers’
compensation, unemployment insurance and other types of social security,
including any Lien securing letters of credit issued in the ordinary course of
business consistent with past practice 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)           Liens arising by reason of any judgment of any court, but
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 which such proceedings may be initiated shall not have expired;

 

(5)           licenses, sublicenses, leases, subleases, 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 Company and that of its Restricted
Subsidiaries, taken as a whole;

 

(6)           any interest or title of a lessor under any Capitalized
Lease Obligation or operating lease permitted pursuant to clause (9) 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;

 

(7)           Liens securing Capitalized Lease Obligations and Purchase
Money Indebtedness permitted pursuant to clause (9) of the definition of
“Permitted Indebtedness”; provided, however, that in the
case of Purchase Money Indebtedness (a) the Indebtedness shall not exceed the
cost of the real property acquired, together with the cost of the construction
thereof and improvements thereto, and shall not be secured by any property or
assets of the Company or any Restricted Subsidiary of the Company other than
such property and improvements thereto so acquired or constructed and
improvements thereon 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;

 

(8)           Liens (a) upon specific items of inventory or other goods
and proceeds of any Person securing such Person’s obligations in respect of
bankers’ acceptances or similar credit transactions issued or created for the
account of such Person to facilitate the purchase, shipment or storage of such
inventory or other goods, (b) 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, or (c)
encumbering deposits made to secure obligations arising from statutory,
regulatory, contractual, or warranty requirements of the Company or any of its
Restricted Subsidiaries, including rights of offset and set-off;

 

(9)           Liens (a) securing Interest Swap Obligations which
Interest Swap Obligations relate to Indebtedness that is otherwise permitted
under this Indenture, or (b) securing Indebtedness under Currency Agreements
and Commodity Agreements that are permitted under this Indenture;

 

(10)         Liens securing Acquired Indebtedness incurred in accordance
with Section 4.12 (including, without limitation clause (9) of
the definition of “Permitted Indebtedness”), provided  that:

 

19

 

(a)           such Liens secured such Acquired Indebtedness at the time
of and prior to the incurrence of such Acquired Indebtedness by the Company or
a Restricted Subsidiary of the Company and were not granted in connection with,
or in anticipation of, the incurrence of such Acquired Indebtedness by the
Company or a Restricted Subsidiary of the Company; and

 

(b)           such Liens do not extend to or cover any property or
assets of the Company or of any of its Restricted Subsidiaries other than the
property or assets that secured the Acquired Indebtedness prior to the time
such Indebtedness became Acquired Indebtedness of the Company or a Restricted
Subsidiary of the Company and are no more favorable to the lienholders than
those securing the Acquired Indebtedness prior to the incurrence of such
Acquired Indebtedness by the Company or a Restricted Subsidiary of the Company;

 

(11)         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;

 

(12)         Liens securing the Notes, the Additional Notes (if any), the
PIK Notes (if any), this Indenture and the Guarantees;

 

(13)         Liens on property or assets of the Company or any Restricted
Subsidiary (and the proceeds thereof), other than the Motor Vehicles, securing
Indebtedness under the Credit Agreement to the extent such Indebtedness is
permitted under clauses (2), (13) and (14) of the
definition of the term “Permitted Indebtedness;”

 

(14)         Liens of the Company or a Guarantor on stock or assets of
any Restricted Subsidiary of the Company;

 

(15)         Liens securing Refinancing Indebtedness which is incurred to
Refinance any Indebtedness which has been secured by a Lien permitted hereunder
and which has been incurred in accordance with Section 4.12; provided,
however, 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 Company or any of its
Restricted Subsidiaries not securing the Indebtedness so Refinanced;

 

(16)         Liens in the ordinary course of business not exceeding $5.0
million at any one time outstanding that (a) are not incurred in connection
with borrowing money and (b) do not materially detract from the value of the
property or materially impair its use;

 

(17)         Liens by reason of judgment or decree not otherwise
resulting in an Event of Default;

 

(18)         Liens securing Indebtedness permitted to be incurred
pursuant to clause (14) of the definition of “Permitted Indebtedness”;

 

(19)         Liens on insurance financing payables; and

 

(22)         Liens arising out of conditional sale, title retention,
consignment or similar arrangements for the sale of goods entered into by the
Company or any of its Restricted Subsidiaries in the ordinary course of
business.

 

20

 

“Permitted Prior Liens”
means (1) Liens described in clauses (1), (6), (7), (10),
(11) or (13) (but excluding any Liens on Pledged Real Estate
other than the real property and fixtures thereon located in Ridgewood, New
York) of the definition of “Permitted Liens” and (2) Liens that arise by
operation of law and are not voluntarily granted, to the extent entitled by law
to priority over the security interests created by the Security Documents.

 

“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.

 

“PIK Fixed Rate Notes”
means additional Fixed Rate Notes paid as interest pursuant to Paragraph 1 of
the Fixed Rate Notes.

 

“PIK Floating Rate Notes”
means additional Floating Rate Notes paid as interest pursuant to
Paragraph 1 of the Floating Rate Notes.

 

“PIK Notes” mean, collectively,
PIK Fixed Rate Notes and PIK Floating Rate Notes.

 

“Plan of Reorganization”
means the First Amended Joint Plan of Reorganization of the Company and its
affiliated debtors, as filed with the U.S. Bankruptcy Court in the Southern
District of New York on September 4, 2003 and which went effective as of
December 24, 2003.

 

“Pledged Real Estate”
has the meaning set forth in Section 4.23.

 

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

 

“Premises” has the
meaning set forth in Section 4.23.

 

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

 

“Private Placement Legend”
means the legend initially set forth on the Notes in the form set forth in Exhibit
C-2.

 

“pro forma” means,
with respect to any calculation made or required to be made pursuant to the terms
of this Indenture, a calculation made in accordance with Article 11 of
Regulation S-X under the Securities Act, as determined by the Board of
Directors of the Company in consultation with its independent public
accountants.

 

“Purchase Money
Indebtedness” means Indebtedness of the Company 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 or other related assets and any refinancing thereof.

 

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

 

“Qualified Capital Stock”
means any Capital Stock that is not Disqualified Capital Stock.

 

21

 

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

 

“Redemption Date”
means, when used with respect to any Note to be redeemed, the date fixed for
redemption of such Note 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.

 

“Reference Date” has
the meaning set forth in Section 4.10.

 

“Refinance” means, in
respect of any security or Indebtedness, to refinance, extend, renew, refund,
repay, prepay, redeem, defease 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 Company or any of its  Restricted Subsidiaries of Indebtedness incurred in accordance
with Section 4.12 (other than Permitted Indebtedness) or pursuant to clause
(1) or (3) of the definition of Permitted Indebtedness, in each case
that does not:

 

(1)           result in an increase in the aggregate principal amount of
Indebtedness (or accreted value) of such Person as of the date of such proposed
Refinancing (plus accrued interest, if any, 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 Company and its
Restricted Subsidiaries in connection with such Refinancing);

 

(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; provided
that (x) if such Indebtedness being Refinanced is Indebtedness of the
Company, then such Refinancing Indebtedness shall be Indebtedness solely of the
Company or a Guarantor and (y) if such Indebtedness being Refinanced is
subordinate or junior to the Notes, then such Refinancing Indebtedness shall be
subordinate to the Notes at least to the same extent and in the same manner as
the Indebtedness being Refinanced;

 

(3)           other than as permitted by clause 2(b)(x) above,
change any of the respective obligors on such Refinancing Indebtedness; or

 

(4)           afford the holders of such Refinancing Indebtedness
covenants, defaults, rights or remedies taken as a whole more burdensome to the
obligors than those contained in the Indebtedness being refinanced.

 

“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 Company, the Guarantors and the Initial Purchaser, as the
same may be amended or modified from time to time in accordance with the terms
thereof, and, with respect to any Additional Notes, one or more registration
rights agreements among the Company, the Guarantors and the other parties
thereto, as such agreement(s) may be amended or modified from time to time in
accordance with the terms thereof, relating to rights given by the Company to
the purchasers of Additional Notes to register such Additional Notes under the
Securities Act.

 

22

 

“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 Depository or its nominee, issued in a denomination equal to the
outstanding principal amount of the Regulation S Temporary Global Note upon
expiration of the Restricted Period.

 

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

 

“Released Interests”
has the meaning set forth in Section 12.05(a).

 

“Replacement Assets”
has the meaning set forth in Section 4.16(3)(b).

 

“Restricted Payment”
has the meaning set forth in Section 4.10.

 

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

 

“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”
of any Person means any Subsidiary of such Person which 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.

 

“Sale and Leaseback
Transaction” means any direct or indirect arrangement with any Person or to
which any such Person is a party, providing for the leasing to the Company or a
Restricted Subsidiary of any property, whether owned by the Company or any
Restricted Subsidiary at the Issue Date or later acquired, which has been or is
to be sold or transferred by the Company or such Restricted Subsidiary to such
Person or to any other Person from whom funds have been or are to be advanced
by such Person on the security of such Property other than: (a) arrangements
between the Company and any of its Wholly Owned Subsidiaries or between its
Wholly Owned Subsidiaries or (b) any arrangement whereby the transfer involves
fixed or capital assets and is consummated within 120 days after the date the
Company or any of its Restricted Subsidiaries acquire or finish construction of
such fixed or capital assets.

 

“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 Commission promulgated thereunder.

 

“Security Agreement”
means the Security Agreement, dated as of the Issue Date, made by the Company
and the Guarantors in favor of the Collateral Agent, as amended or supplemented
from time to time in accordance with its terms.

 

23

 

“Security Documents”
means the Intercreditor Agreement, the Security Agreement and all other
security agreements, pledge agreements, collateral assignments, mortgages,
collateral agency agreements, control agreements, deeds of trust or other
grants or transfers for security executed and delivered by the Company or any
other obligor creating (or purporting to create) a Lien upon Collateral in
favor of the Collateral Agent, in each case, as amended, modified, renewed,
restated or replaced, in whole or in part, from time to time, in accordance
with its terms.

 

“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 as such regulation is in effect as of
the Issue Date.

 

“Subsidiary” with
respect to any Person, means:

 

(1)           any corporation of which the outstanding Capital Stock
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 one or more Subsidiaries of such Person (or any combination
thereof); 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 or one or more Subsidiaries of such Person (or
any combination thereof).

 

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

 

“Taxes” has the
meaning set forth in Section 4.10(5).

 

“TIA” means the Trust
Indenture Act of 1939 (15 U.S.C. §§ 77aaa-77bbbb), as amended, as in
effect on the date of this Indenture, except as otherwise set forth in Section
9.03.

 

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

 

“Trust Officer” means
any officer of the Trustee assigned by the Trustee to administer this Indenture
or, in the case of a successor trustee, an officer assigned to the department,
division or group performing the corporation trust work of such successor and
assigned to administer this Indenture.

 

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

 

“Unrestricted Subsidiary”
of any Person means:

 

(1)           any Subsidiary of such Person that at the time of
determination shall be or continue to be designated an Unrestricted Subsidiary
by the Board of Directors of such Person 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
Capital Stock of, or owns or holds any Lien on any property of, the Company or
any other Subsidiary of the Company that is not a Subsidiary of the Subsidiary
to be so designated, provided  that:

 

24

 

(1)           the Company certifies to the Trustee that such designation
complies with Section 4.10; 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 Company 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
Company is able to incur at least $1.00 of additional Indebtedness (other than
Permitted Indebtedness) in compliance with Section 4.12; 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 non-callable direct obligations of, and non-callable
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.

 

“U.S. Person” means a
Person who is a U.S. person, as defined in Regulation S.

 

“Voting Stock” means,
with respect to any Person, securities of any class or classes of Capital Stock
in 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 vote in the election of members of the Board of Directors of such Person.

 

“Weighted Average Life to
Maturity” means, when applied to any Indebtedness at any date, the number
of years obtained by dividing (a) the then outstanding aggregate principal
amount of such Indebtedness into (b) the sum of the total of the products
obtained by multiplying (i) 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 (ii) the number of years
(calculated to the nearest one-twelfth) which will elapse between such date and
the making of such payment.

 

“Wholly Owned Subsidiary”
of any Person means any Restricted Subsidiary of such Person of which all the
outstanding Capital Stock (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 such Person or
any Wholly Owned Subsidiary of such Person.

 

25

 

SECTION 1.02. 
Incorporation by Reference of Trust Indenture Act.

 

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.

 

“indenture security
holder” means a Holder.

 

“indenture to be
qualified” means this Indenture.

 

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

 

“obligor” with
respect to the Notes means the Company or any other obligor on the Notes.

 

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

 

SECTION 1.03. 
Rules of Construction.

 

Unless the context otherwise
requires:

 

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

 

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

 

(3)           “or” is not exclusive;

 

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

 

(7)           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 Related Document (as
defined in the Security Agreement).

 

26

 

ARTICLE TWO

 

THE NOTES

 

SECTION 2.01. 
Form and Dating.

 

The Initial Fixed Rate
Notes, any Additional Fixed Rate Notes and any PIK Fixed Rate Notes, and, in
each case, the Trustee’s certificate of authentication thereon shall be
substantially in the form of Exhibit A-1 hereto.  The Initial Floating Rate Notes, any
Additional Floating Rate Notes and any PIK Floating Rate Notes, and, in each
case, the Trustee’s certificate of authentication thereon shall be
substantially in the form of Exhibit A-2 hereto.  The Exchange Fixed Rate Notes and the
Trustee’s certificate of authentication thereon shall be substantially in the
form of Exhibit B-1 hereto.  The
Exchange Floating Rate Notes and the Trustee’s certificate of authentication
thereon shall be substantially in the form of Exhibit B-2 hereto.  The Notes may have notations, legends or
endorsements required by law, stock exchange rule or Depository rule or
usage.  The Company 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.  PIK Fixed Rate
Notes will bear interest (including interest paid on the date of the maturity
of the Notes) and Additional Interest, if any, in a matter identical to all
other Fixed Rate Notes issued under this Indenture.  PIK Floating Rate Notes will bear interest (including interest
paid on the date of the maturity of the Notes) and Additional Interest, if any,
in a matter identical to all other Floating Rate Notes issued under this
Indenture.

 

The terms and provisions
contained in the forms of the Notes annexed hereto as Exhibit A-1, Exhibit
A-2, Exhibit B-1 and Exhibit B-2, shall constitute, and are
hereby expressly made, a part of this Indenture and, to the extent applicable,
the Company, 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-1 or Exhibit A-2, as applicable, hereto (“Global
Notes”), deposited with the Trustee, as custodian for the Depository, duly
executed by the Company and authenticated by the Trustee as hereinafter
provided and shall bear the legend set forth in Exhibit C-1.

 

Notes offered and sold 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 deposited
with the Trustee, as custodian for the Depository, duly executed by the Company
and authenticated by the Trustee as hereinafter provided and shall bear the
legend set forth in Exhibit C-1.

 

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 Depository, and registered in
the name of the Depository or the nominee of the Depository for the accounts of
designated agents holding on behalf of Euroclear or Clearstream, duly executed
by the Company and authenticated by the Trustee as hereinafter provided and
shall bear the legend set forth in Exhibit C-1.

 

Following the termination of
the Restricted Period, beneficial interests in the 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.

 

27

 

The provisions of the
“Operating Procedures of the Euroclear System” and the “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 Clearstream.

 

The aggregate principal
amount 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
Depository, 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 Company 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 shall
authenticate (i) Initial Fixed Rate Notes for original issue in the
aggregate principal amount not to exceed $105,000,000, (ii) Initial
Floating Rate Notes for original issue in the aggregate principal amount not to
exceed $10,000,000, (iii) Exchange Fixed Rate Notes from time to time for issue
only in exchange for a like principal amount of Initial Fixed Rate Notes, (iv)
Exchange Floating Rate Notes from time to time for issue only in exchange for a
like principal amount of Initial Floating Rate Notes, (v) subject to
compliance with Section 4.12, one or more series of Notes for original
issue after the Issue Date in an unlimited amount (“Additional Notes”)
and (vi) PIK Fixed Rate Notes and PIK Floating Rate Notes for original issue in
the aggregate principal amounts required pursuant to Paragraph 1 of the Notes,
in each case upon written orders of the Company executed by an Officer of the
Company, which written orders shall, in the case of any issuance of Additional
Notes, certify that such issuance is in compliance with Section 4.12.  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, Additional Notes or PIK Notes, shall further specify the amount
of such Notes to be issued as Global Notes or Physical Notes and shall further
specify whether the Notes are to by Fixed Rate Notes or Floating Rate
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 Company 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

 

28

 

Agent.  An Authenticating Agent has the same rights
as an Agent to deal with the Company and Affiliates of the Company.

 

The Notes shall be issuable
in fully registered form only, without coupons, in denominations of $1,000 in
principal amount and any integral multiple thereof, except that PIK Notes may
be issued in smaller denominations.

 

SECTION 2.03. 
Registrar and Paying Agent.

 

The Company shall maintain
an office or agency which shall initially be the office of the Trustee 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 (“Registrar”),
(b) Notes may be presented or surrendered for payment (“Paying Agent”)
and (c) notices and demands to or upon the Company in respect of the Notes
and this Indenture may be served.  The
Registrar shall keep a register of the Notes and of their transfer and
exchange.  The Company, 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 Company nor
any Affiliate of the Company may act as Paying Agent.

 

The Company 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 Company 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 Company fails to maintain a Registrar or Paying Agent, or fails
to give the foregoing notice, the Trustee shall act as such.

 

The Company initially
appoints the Trustee as Registrar, Paying Agent and agent for service of
demands and notices in connection with the Notes.  The Paying Agent or Registrar may resign upon thirty (30) days’
written notice to the Company.

 

SECTION 2.04. 
Obligations of Paying Agent.

 

The Company 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 on, the Notes
(whether such assets have been distributed to it by the Company or any other
obligor on the Notes), and the Company and the Paying Agent shall notify the
Trustee in writing of any Default by the Company (or any other obligor on the
Notes) in making any such payment.  The
Company 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 Company 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 Company 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

 

29

 

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 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 Company 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 Company 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 Company 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, 4.15, 4.16 or 9.05, in which event
the Company 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 Depository, 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 Company upon its request or the Trustee that such Note
has been acquired by a protected purchaser, the Company shall issue and the
Trustee shall authenticate a replacement Note of like tenor and principal
amount and bearing a number not contemporaneously outstanding if the Trustee’s
requirements are met.  Except with
respect to mutilated Notes, if required by the Trustee or the Company, such
Holder must provide an affidavit of lost certificate and an indemnity bond or other
indemnity, sufficient in the judgment of both the Company and the Trustee, to
protect the Company, the Trustee or any Agent from any loss which any of them
may suffer if a Note is replaced.  The
Company 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.  Every
replacement Note shall constitute an additional obligation of the Company,
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 Company or any of its Affiliates holds the Note.

 

30

 

If a Note is replaced
pursuant to Section 2.07 (other than a mutilated Note surrendered for
replacement), it ceases to be outstanding unless the Trustee receives proof
satisfactory to it that the replaced Note is held by a bona  fide
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 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 on them ceases to accrue.

 

SECTION 2.09. 
Treasury Notes; When Notes Are Disregarded.

 

In determining whether the
Holders of the required principal amount of Notes have concurred in any
direction, waiver, consent or notice, Notes owned by the Company or any of its
Affiliates shall be considered as though they are not outstanding, except that
for the purposes of determining whether the Trustee shall be protected in
relying on any such direction, waiver or consent, only Notes which the Trustee
actually knows are so owned shall be so considered.  The Company shall notify the Trustee, in writing (which notice
shall constitute actual notice for purposes of the foregoing sentence), when it
or any of its Affiliates repurchases or otherwise acquires Notes, of the
aggregate principal amount of such Notes so repurchased or otherwise acquired.

 

SECTION 2.10. 
Temporary Notes.

 

Until definitive Notes are
ready for delivery, the Company may prepare and execute and the Trustee shall
authenticate temporary Notes upon receipt of a written order of the Company 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
Company considers appropriate for temporary Notes.  Without unreasonable delay, the Company shall prepare and the
Trustee shall authenticate upon receipt of a written order of the Company
pursuant to Section 2.02 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 Company at any time may
deliver Notes previously authenticated hereunder which the Company 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
2.07, the Company may not issue new Notes to replace Notes that it has paid
or delivered to the Trustee for cancellation. 
If the Company 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 Company, shall
return the same to the Company.

 

31

 

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 Company shall
promptly notify the Trustee 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 Company
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 Depository or the nominee of such
Depository, (ii) be delivered to the Trustee as custodian for such
Depository and (iii) bear legends as set forth in Exhibit C-1.

 

Members of, or participants
in, the Depository (“Agent Members”) shall have no rights under this
Indenture with respect to any Global Note held on their behalf by the
Depository, or the Trustee as its custodian, or under any Global Note, and the
Depository may be treated by the Company, the Trustee and any agent of the
Company or the Trustee as the absolute owner of the Global Note for all
purposes whatsoever.  Notwithstanding
the foregoing, nothing herein shall prevent the Company, the Trustee or any
agent of the Company or the Trustee from giving effect to any written
certification, proxy or other authorization furnished by the Depository or
impair, as between the Depository and its Agent Members, the operation of
customary practices 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 Depository, 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 Depository and
the provisions of Section 2.15; provided, however, that
prior to the expiration of the Restricted Period, transfers of beneficial
interests in the Regulation S Temporary Global Note may not be made to a U.S.
Person or for the account or benefit of a U.S. Person (other than the Initial
Purchaser).  In addition, Notes in the
form of certificates Notes in registered form in substantially the form set
forth in Exhibits A-1 and A-2 hereto (the “Physical Notes”)
shall be transferred to all beneficial owners in exchange for their beneficial
interests in the Global Notes if (i) the Depository notifies the Company
that it is unwilling or unable to continue as Depository for the Global Notes
and a successor Depository is not appointed by the Company 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 Depository 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 Restricted 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.

 

32

 

(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), 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 of the Global Note in an amount
equal to the principal amount of the beneficial interest in the Global Note to
be transferred, and the Company shall execute, and the Trustee shall
authenticate and deliver, one or more Physical Notes of like tenor and
aggregate principal amount.

 

(e)           In connection with the transfer of an
entire Global Note to beneficial owners pursuant to paragraph (b), the
Global Notes shall be deemed to be surrendered to the Trustee for cancellation,
and the Company shall execute, and the Trustee shall authenticate and deliver,
to each beneficial owner identified by the Depository in exchange for its
beneficial interest in the Global Notes, an equal aggregate principal amount 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-1 or Exhibit A-2, as
applicable, hereto.

 

(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 April 22, 2006 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 D 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 E 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 of the Global Note
in an amount equal to the principal amount of the beneficial interest in the
Global Note to be transferred, and

 

33

 

(2) the Company shall execute and the Trustee
shall authenticate and deliver one or more Physical Notes of like tenor and
principal amount.

 

(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 Company 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 Company 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 Company 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 of the Global Note in an amount equal to the principal amount 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) there is
delivered to the Registrar an Opinion of Counsel reasonably satisfactory to the
Company and the Trustee to the effect that neither such legend nor the related
restrictions on transfer are required in order to maintain compliance with the
provisions of the Securities Act.  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 Company 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 Company 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 Company shall have the right to inspect
and

 

34

 

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.

 

SECTION 2.16. 
Issuance of PIK Notes. 
With respect to any PIK Notes required to be issued in connection with
the payment of Additional PIK Interest, the Company shall deliver to the
Trustee, no later than one Business Day prior to the relevant Interest Payment
Date an order to authenticate and deliver such PIK Notes.  Any PIK Notes shall, after being executed
and authenticated pursuant to Section 2.02, be (i) delivered by the
Trustee to the Holders as of the relevant record date at such Holders’
registered address if the Notes are then held in the form of Physical Notes or
(ii) deposited with or on behalf of the Depository for the benefit of the
beneficial owners of the Notes as of the relevant record date if the Notes are
held in the form of Global Notes.

 

ARTICLE THREE

 

REDEMPTION

 

SECTION 3.01. 
Optional Redemption.

 

The Company 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 Company elects to redeem Notes
pursuant to Paragraph 5 of the Notes, it shall, at least sixty (60) days before
the Redemption Date, furnish to the Trustee and Paying Agent an Officers’
Certificate setting forth the Redemption Date and the principal amount of the
Notes to be redeemed and the clause of this Indenture pursuant to which the
redemption shall occur.

 

Each Officers’ Certificate
provided for in this Section 3.01 shall be accompanied by an Opinion of
Counsel stating that such redemption shall comply with the conditions contained
herein and in the Notes.

 

SECTION 3.02. 
Selection of Notes to Be Redeemed.

 

If 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 or by such method as the Trustee
may reasonably determine is fair and appropriate, provided  that
no partial redemption will reduce the principal amount of a Note not redeemed
to less than $1,000; and provided, further, that if a partial redemption
is made with the proceeds of an Equity Offering then the selection of the Notes
or portions thereof for redemption shall be made by the Trustee only on a pro
rata basis or on as nearly a pro  rata basis as is practicable
(subject to the procedures of the Depository), 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 Company in writing of the Notes selected for
redemption and, in the case of any Note selected for partial redemption, the
principal amount thereof, to be redeemed. 
Notes in denominations of $1,000 may be redeemed only in whole.  The Trustee may select for redemption
portions (equal to $1,000 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 fifteen (15) days
but not more than sixty (60) days before a Redemption Date, the Company shall
mail or cause to be mailed a notice of redemption by first class mail, postage
prepaid, to

 

35

 

each
Holder whose Notes are to be redeemed at its registered address, with a copy to
the Trustee and any Paying Agent.  At
the Company’s written request, the Trustee shall give the notice of redemption
in the Company’s name and at the Company’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, if any, to be paid;

 

(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, if any;

 

(7)           that, unless the Company fails to
deposit with the Paying Agent funds in satisfaction of the applicable
redemption price, interest 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, if any, 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 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 amount equal to the unredeemed portion thereof shall
be issued; and

 

(9)           if fewer than all the Notes are to be
redeemed, the identification of the particular Notes (or portion thereof) to be
redeemed, as well as the aggregate principal amount of Notes to be redeemed and
the aggregate principal amount of 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 Company shall modify such
notice to the extent necessary to accord with the procedures of the Depository
applicable to redemption.

 

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, if any.  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 thereon to 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.

 

36

 

SECTION 3.05. 
Deposit of Redemption Price.

 

Not later than 10:00 a.m.
local time in the place of payment on the Redemption Date, the Company shall
deposit with the Paying Agent U.S. Legal Tender sufficient to pay the
Redemption Price plus accrued interest, if any, of all Notes or portions
thereof to be redeemed on that date.

 

The Paying Agent shall
promptly return to the Company 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 Company complies with
the preceding paragraph, then, unless the Company defaults in the payment of
such Redemption Price plus accrued interest, if any, interest on the Notes 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 Company shall issue and the Trustee shall
authenticate for the Holder at the expense of the Company a new Note or Notes
equal in principal amount to the unredeemed portion of the Note surrendered.

 

ARTICLE FOUR

 

COVENANTS

 

SECTION 4.01. 
Payment of Notes.

 

The Company shall pay the
principal of, or premium, if any, or interest 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 on the Notes shall be considered paid on the date it is due
if the Trustee or Paying Agent (other than the Company or an Affiliate of the
Company) holds on that date U.S. Legal Tender designated for and sufficient to
pay the installment in full and is not prohibited from paying such money to the
Holders pursuant to the terms of this Indenture.

 

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

 

SECTION 4.02. 
Maintenance of Office or Agency.

 

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

 

SECTION 4.03. 
Corporate Existence.

 

Except as otherwise
permitted by Article Five, the Company 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

 

37

 

existence
and the corporate existence of each of its Subsidiaries in accordance with the
respective organizational documents of each such Subsidiary and the material
rights (charter and statutory) and franchises of the Company and each such
Subsidiary; provided, however, that the Company shall not be
required to preserve, with respect to itself, any material right or franchise
and, with respect to any of its Subsidiaries, any such existence, material
right or franchise, if the Board of Directors of the Company, shall determine
in good faith that the preservation thereof is no longer desirable in the
conduct of the business of the Company and its Subsidiaries, taken as a whole.

 

SECTION 4.04. 
Payment of Taxes and Other Claims.

 

The Company shall pay or
discharge or cause to be paid or discharged, before the same shall become
delinquent, (i) all material taxes, assessments and governmental charges
(including withholding taxes and any penalties, interest and additions to
taxes) levied or imposed upon it or any of its Restricted Subsidiaries or its
properties or any of its 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 its Restricted Subsidiaries’
properties; provided, however, that the Company shall not be
required to pay or discharge or cause to be paid or discharged any such tax,
assessment, charge or claim 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.

 

(a)           The Company shall, and shall cause
each of its Restricted Subsidiaries to, maintain its properties in good working
order and condition in all material respects (subject to ordinary wear and
tear) and make all necessary repairs, renewals, replacements, additions,
betterments and improvements thereto and actively conduct and carry on its
business; provided, however, that nothing in this Section 4.05
shall prevent the Company or any of its Restricted Subsidiaries from
discontinuing the operation and maintenance of any of its properties if such
discontinuance is, in the good faith judgment of the Board of Directors or
other governing body of the Company or the Subsidiary concerned, as the case
may be, desirable in the conduct of its businesses and is not disadvantageous
in any material respect to the Holders.

 

(b)           The Company shall maintain insurance
(including appropriate self-insurance) against loss or damage of the kinds
that, in the good faith judgment of the Company, are adequate and appropriate
for the conduct of the business of the Company and its 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 Company, for companies similarly situated in the industry and
otherwise in accordance with the Security Agreement.

 

SECTION 4.06. 
Compliance Certificate; Notice of Default.

 

(a)           The Company and each Guarantor shall
deliver to the Trustee, within ninety (90) days after the end of the Company’s
fiscal year, an Officers’ Certificate stating that a review of its activities
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 it has kept, observed, performed and fulfilled its obligations under
this Indenture and further stating, as to each such Officer signing such
certificate, that to the best of such Officer’s actual knowledge the Company
during such preceding fiscal year has kept, observed, performed and fulfilled
each and every condition and covenant under this Indenture and no Default or
Event of

 

38

 

Default occurred during
such year 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.  The Officers’ Certificate shall also notify the Trustee should
the Company elect to change the manner in which it fixes its fiscal year end.

 

(b)           The annual financial statements
delivered pursuant to Section 4.08 shall be accompanied by a written
report of the Company’s independent accountants (who shall be a firm of
established national reputation) that in conducting their audit of such
financial statements nothing has come to their attention that would lead them
to believe that the Company has violated any provisions hereof insofar as they
relate to accounting matters or, if any such violation has occurred, specifying
the nature and period of existence thereof, it being understood that such
accountants shall not be liable directly or indirectly to any Person for any
failure to obtain knowledge of any such violation.

 

(c)           (i) If
any Default or Event of Default has occurred and is continuing or (ii) if
any Holder seeks to exercise any remedy hereunder with respect to a claimed
Default under this Indenture or the Notes, the Company shall deliver to the
Trustee, at its address set forth in Section 11.02, by registered or
certified mail or by telegram, telex or facsimile transmission followed by hard
copy by registered or certified mail an Officers’ Certificate specifying such
event, notice or other action and the status thereof within five (5) Business
Days of any such officer becoming aware of such occurrence (provided  that
such officers shall provide such certification at least annually whether or not
they know of any Default or Event of Default).

 

(d)           Not later than the date of making any
Restricted Payment pursuant to Section 4.10, the Company 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 Company’s latest available internal quarterly financial
statements.

 

SECTION 4.07. 
Compliance with Laws.

 

The Company shall, and shall
cause each of its 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 Company and its Subsidiaries, taken as a whole or the ability
of the Company to perform its obligations hereunder.

 

SECTION 4.08. 
Reports to Holders.

 

Following the 90th day after
the Issue Date, whether or not required by the rules and regulations of the
Commission, so long as any Notes are outstanding, the Company will furnish to
the Trustee and file with the Commission for public availability (unless the
Commission will not accept such a filing):

 

(1)           all quarterly and annual financial
information that would be required to be contained in a filing with the Commission
on Forms 10-Q and 10-K if the Company 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 Company and its consolidated Subsidiaries (showing in
reasonable detail, either on the face of the financial statements or in

 

39

 

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 Company
and its Restricted Subsidiaries separate from the financial condition and
results of operations of the Unrestricted Subsidiaries of the Company, if any)
and, with respect to the annual information only, a report thereon by the
Company’s certified independent accounts; provided, that certifications
required under the Sarbanes-Oxley Act and any corresponding rules of the
Commission will be required to be provided only to the extent required of
so-called “voluntary filers”; and

 

(2)           all current reports that would be
required to be filed with the Commission on Form 8-K if the Company were
required to file such reports, in each case within the time periods specified
in the Commission’s rules and regulations.

 

In addition, following the
consummation of the Exchange Offer, whether or not required by the rules and
regulations of the Commission, the Company will file a copy of all such
information and reports with the Commission for public availability within the
time periods specified in the Commission’s rules and regulations (unless the
Commission will not accept such a filing). 
In addition, for so long as any Notes remain outstanding, the Company
will furnish to the Holders upon their written request, the information
required to be delivered pursuant to Rule 144(A)(d)(4) under the Securities
Act.

 

SECTION 4.09. 
Waiver of Stay, Extension or Usury Laws.

 

The Company and each of the
Guarantors 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 Company and each of the Guarantors
from paying all or any portion of the principal of, premium, if any, or
interest 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 Company
and each of the Guarantors hereby expressly waives 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 4.10. 
Limitation on Restricted Payments.

 

The Company 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 on or in respect of shares of Capital Stock of the Company or
its Restricted Subsidiaries to holders of such Capital Stock, other than (i)
dividends or distributions payable in Qualified Capital Stock of the Company,
(ii) dividends or distributions payable to the Company or another of its
Restricted Subsidiaries, (iii) dividends or distributions by a Restricted
Subsidiary of the Company that is not  a
Wholly Owned Subsidiary of the Company to holders of its Capital Stock on a pro
rata basis and (iv) dividends or distributions in amounts permitted
pursuant to clause (5) below;

 

(2)           purchase, redeem or otherwise acquire
or retire for value any Capital Stock of the Company or its Restricted
Subsidiaries or any warrants, rights or options to purchase or acquire shares
of any class of such Capital Stock;

 

(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

 

40

 

scheduled sinking fund
payment, any Indebtedness of the Company or any Guarantor that is subordinate
or junior in right of payment to the Notes or a Guarantee and any deposit with
respect to the foregoing;

 

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

 

(5)           make any
payments to any Person in any calendar year in respect of taxes, levies,
charges, duties, withholdings or other charges imposed by any governmental
authority or any interest, penalties or other liabilities with respect thereto
(collectively, “Taxes”) in amounts that exceed the aggregate Tax
liability of the Company and its Restricted Subsidiaries for such calendar year
determined for this purpose as if the Company 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, to the extent made to Persons
other than governmental entities, are actually paid by such Persons to
governmental entities (after taking into account the Tax attributes of members
of any actual consolidated, combined or unitary returns that include the
Company and any Restricted Subsidiaries and the application of refunds or
credits of overpayments of Tax made in previous calendar years);

 

(each of the foregoing actions set forth in clauses
(1), (2), (3), (4) and (5) 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; or

 

(ii)           the Company is not able to incur at
least $1.00 of additional Indebtedness (other than Permitted Indebtedness) in
compliance with Section 4.12; or

 

(iii)          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 as determined in good faith by the Board
of Directors of the Company at the time of the making thereof) shall exceed the
sum of:

 

(v)           50% of the cumulative Consolidated
Net Income (or if cumulative Consolidated Net Income is a negative number, 100%
of such Consolidated Net Income) of the Company earned from the beginning of
the first fiscal quarter commencing after the Issue Date and ending on the last
day of the Company’s last fiscal quarter ending prior to the date the
Restricted Payment occurs for which internal financial statements are available
(the “Reference Date”) (treating such period as a single accounting
period); plus

 

(w)          100% of the aggregate net cash
proceeds received by the Company from any Person (other than a Subsidiary of
the Company) from the issuance and sale subsequent to the Issue Date and on or
prior to the Reference Date of Qualified Capital Stock of the Company or
contributions in respect thereof or warrants, options or other rights to
acquire Qualified Capital Stock of the Company; plus

 

(x)            100% of the aggregate net cash
proceeds received from the issuance of Indebtedness or shares of Disqualified
Capital Stock of the Company that

 

41

 

have been
converted into or exchanged for Qualified Capital Stock of the Company
subsequent to the Issue Date and on or prior to the Reference Date; plus

 

(y)           without duplication of any amounts
included in clause (iii)(w) above, 100% of the aggregate net cash
proceeds of any equity contribution received by the Company from a holder of
the Company’s Capital Stock subsequent to the Issue Date and on or prior to the
Reference Date; plus

 

(z)            without duplication, to the extent
not included in Consolidated Net Income the sum of (1) the aggregate amount
returned in cash on or with respect to Investments (other than Permitted
Investments) made after the Issue Date whether through interest payments,
principal payments, dividends or other distributions or payments, (2) the net
cash proceeds received by the Company or any of its Restricted Subsidiaries
from the disposition of all or any portion of such Investments (other than to a
Subsidiary of the Company) and (3) upon redesignation of an Unrestricted
Subsidiary as a Restricted Subsidiary, the fair market value of such Subsidiary
(valued in each case as provided in the definition of “Investment”); provided,
however, that the sum of clauses (1), (2) and (3)
above will not exceed the aggregate amount of all such Investments made by the
Company or any Restricted Subsidiary in the relevant Person or Unrestricted
Subsidiary after the Issue Date.

 

In the case of clauses (iii)(w) and (x)
above, any net cash proceeds from issuances and sales of Qualified Capital
Stock of the Company financed directly or indirectly using funds borrowed from
the Company or any Subsidiary of the Company, shall be excluded until and to
the extent such borrowing is repaid.

 

Notwithstanding the
foregoing, the provisions set forth in the immediately preceding paragraph do
not prohibit:

 

(1)           the payment of any dividend within 60
days after the date of declaration of such dividend if such payment would have
been permitted on the date of declaration;

 

(2)           if no Default or Event of Default
shall have occurred and be continuing or would exist after giving effect
thereto, the acquisition of any shares of Qualified Capital Stock of the
Company, through one or more of: (i) an exchange solely for other shares of
Qualified Capital Stock of the Company or (ii) the application of net proceeds
of a substantially concurrent sale for cash (other than to a Subsidiary of the
Company) of shares of Qualified Capital Stock of the Company or a substantially
concurrent contribution in respect thereof;

 

(3)           if no Default or Event of Default
shall have occurred and be continuing or would exist after giving effect
thereto, the acquisition of any Indebtedness of the Company or the Guarantors
that is subordinate or junior in right of payment to the Notes and Guarantees
through one or more of: (i) an exchange for shares of Qualified Capital Stock
of the Company, or (ii) the application of net proceeds of a substantially
concurrent sale for cash (other than to a Subsidiary of the Company) of (a)
shares of Qualified Capital Stock of the Company or (b) Refinancing
Indebtedness;

 

(4)           if no Default or Event of Default
shall have occurred and be continuing or would exist after giving effect
thereto, an Investment in exchange for Qualified Capital Stock of the Company
or through the application of the net proceeds of a substantially concurrent
sale for cash (other than to a Subsidiary of the Company) or other issuance of
shares of Qualified Capital Stock of the Company or a substantially concurrent
contribution in respect thereof;

 

42

 

(5)           if no Default of Event of Default
shall have occurred and be continuing or would exist after giving effect
thereto, Restricted Payments in an aggregate amount not to exceed $2.0 million
subsequent to the Issue Date;

 

(6)           distributions, loans or advances to
AETG in an aggregate amount not to exceed the Permitted Amount during any
fiscal year; provided, that such amounts are used by AETG to pay
ordinary operating expenses;

 

(7)           if no Default or Event of Default
shall have occurred and be continuing, payments or distributions to, or
dividends, distributions or advances to AETG to allow AETG to make payments or distributions
to, dissenting stockholders pursuant to applicable law, pursuant to or in
connection with a consolidation, merger or transfer of assets that complies
with the provisions of this Indenture applicable to mergers, consolidations and
transfers of all or substantially all of the Company’s property and assets;

 

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

 

(9)           any purchase or redemption of
Indebtedness that ranks junior to the notes utilizing any Net Cash Proceeds
remaining after the Company has complied with the requirements of Section
4.15 and Section 4.16 hereof; and

 

(10)         the payment of taxes pursuant to the
Plan of Reorganization.

 

In
determining the aggregate amount of Restricted Payments made subsequent to the
Issue Date in accordance with clause (iii) of the second immediately preceding
paragraph, amounts expended pursuant to clauses (1), 2(ii), 3(ii)(a)
and (4) of the immediately preceding paragraph shall be included in such
calculation.

 

Not
later than the date of making any Restricted Payment, the Company 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 Company’s latest available
internal quarterly financial statements.

 

SECTION 4.11. 
Limitation on Transactions with Affiliates.

 

(a)           The Company 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)
Affiliate Transactions permitted under paragraph (b) below 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 Company or
such Restricted Subsidiary.

 

All Affiliate Transactions
(and each series of related Affiliate Transactions which are similar or part of
a common plan) involving aggregate payments or other property with a Fair
Market Value in excess of $1.0 million shall be approved by a majority of the
disinterested members of the Board of Directors of the Company or such
Restricted Subsidiary, as the case may be, such approval to be evidenced by a
Board Resolution stating that such Board of Directors has determined that such

 

43

 

transaction
complies with the foregoing provisions. If the Company or any of its Restricted
Subsidiaries enters into an Affiliate Transaction (or a series of related
Affiliate Transactions related to a common plan) that involves an aggregate
Fair Market Value of more than $5.0 million, the Company or such Restricted
Subsidiary, as the case may be, shall, prior to the consummation thereof,
obtain a favorable opinion as to the fairness of such transaction or series of
related transactions to the Company or the relevant Restricted Subsidiary, as
the case may be, from a financial point of view, from an Independent Financial
Advisor and file the same with the Trustee.

 

(b)           The restrictions set forth in the
first paragraph of this covenant shall not apply to:

 

(1)           reasonable fees and compensation paid
to and indemnity provided on behalf of officers, directors, employees or
consultants of the Company or any of its Restricted Subsidiaries as determined
in good faith by the Company’s Board of Directors or senior management;

 

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

 

(3)           any agreement as in effect or entered
into as of the Issue Date or any amendment thereto or any transaction
contemplated thereby (including pursuant to any amendment thereto and any extension
of the maturity thereof) and any replacement agreement thereto so long as any
such amendment or replacement agreement is not more disadvantageous to the
Holders in any material respect than the original agreement as in effect on the
Issue Date;

 

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

 

(5)           the issuance of securities or other
payments, awards or grants in cash, securities or otherwise pursuant to, or the
funding of, employment arrangements, stock options and stock ownership plans or
similar employee benefit plans approved by the Board of Directors of the
Company in good faith and loans to employees of the Company and its
Subsidiaries which are approved by the Board of Directors of the Company in
good faith;

 

(6)           fees payable pursuant to the
Management Agreement as in effect on the Issue Date or pursuant to any
amendment, restatement or replacement thereof to the extent that such
amendment, restatement or replacement does not provide for any fees or other payments
in excess of those set forth in the Management Agreement as in effect on the
Issue Date;

 

(7)           the payment of all fees and expenses
related to the Plan of Reorganization; and

 

(8)           common insurance policies obtained
for AETG, the Company or any Subsidiary of AETG or the Company in accordance
with past practice for which AETG or the Company is reimbursed with premiums
and deductible obligations attributable to AETG, the Company or any Subsidiary
of AETG or the Company.

 

SECTION 4.12. 
Limitation on Incurrence of Additional Indebtedness.

 

The Company 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 (including, without limitation,
Acquired Indebtedness) other than Permitted Indebtedness and any PIK

 

44

 

Notes
required to be issued to the Holders pursuant to this Indenture and the Notes; provided,
however, that the Company or any of its Restricted Subsidiaries that is
or, upon such incurrence, becomes a Guarantor may incur Indebtedness if:

 

(1) on the date of the
incurrence of such Indebtedness the Consolidated Fixed Charge Coverage Ratio of
the Company will be, after giving effect to the incurrence of such
Indebtedness, is greater than:

 

(a)           2.25 to 1.0 prior to the first
anniversary of the Issue Date,

 

(b)           2.5 to 1.0 on and after the first
anniversary of the Issue Date and prior to the second anniversary of the Issue
Date, and

 

(c)           3.0 to 1.0 on and after the second
anniversary of the Issue Date; and

 

(2)           no Default or Event of Default shall
have occurred and be continuing at the time of or as a consequence of the
incurrence of such Indebtedness.

 

SECTION 4.13. 
Limitation on Dividend and Other Payment Restrictions Affecting
Restricted Subsidiaries.

 

The Company will not, and
will not cause or permit any of its Restricted Subsidiaries other than a
Restricted Subsidiary that has executed a guarantee 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 of the
Company to:

 

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

 

(2)           make loans or advances or to pay any
Indebtedness or other obligation owed to the Company or any other of its
Restricted Subsidiaries; or

 

(3)           transfer any of its property or
assets to the Company or any other of its Restricted Subsidiaries, except for
such encumbrances or restrictions existing under or by reason of:

 

(a)           applicable law, rule, regulation,
order, grant or governmental permit;

 

(b)           this Indenture, the Notes, the
Exchange Notes, the Guarantees and the Security Agreement;

 

(c)           customary non-assignment provisions
of any contract or any lease governing a leasehold interest of any Restricted
Subsidiary of the Company;

 

(d)           any 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)           the Credit Agreement and other
agreements governing existing Indebtedness as in effect on the Issue Date and
any amendments, modifications, restatements, renewals, increases,

 

45

 

supplements, refundings,
replacements or refinancings of those agreements; provided, that the
amendments, modifications, restatements, renewals, increases, supplements,
refundings, replacement or refinancings are no more restrictive, taken as a
whole, with respect to such dividend and other payment restrictions than those
contained in those agreements on the Issue Date;

 

(f)            agreements existing or entered into
on the Issue Date to the extent and in the manner such agreements are in effect
on the Issue Date;

 

(g)           an agreement governing Indebtedness
incurred to Refinance the Indebtedness issued, assumed or incurred pursuant to
an agreement referred to in clause (b), (d) or (e) above; provided,
however, that the provisions relating to such encumbrance or restriction
contained in any such Indebtedness are no less favorable to the Company in any
material respect as determined by the Board of Directors of the Company in its
reasonable and good faith judgment than the provisions relating to such
encumbrance or restriction contained in agreements referred to in such clause
(b), (d) or (e);

 

(h)           purchase money obligations for
property acquired in the ordinary course of business or Capitalized Lease
Obligations that impose customary restrictions on the property so acquired or
leased;

 

(i)            contracts for the sale of assets of
capital stock, including, without limitation, customary restrictions with
respect to a Restricted Subsidiary of the Company pursuant to an agreement that
has been entered into for the sale or disposition of all or substantially all
of the Capital Stock or assets of such Restricted Subsidiary;

 

(j)            secured Indebtedness otherwise
permitted to be incurred pursuant to Section 4.12 and 4.18 that
limit the right of the debtor to dispose of the assets securing such
Indebtedness;

 

(k)           customary provisions in joint venture
agreements and other similar agreements entered into in the ordinary course of
business;

 

(l)            customary net worth and restrictions
on transfer, assignment or subletting provisions contained in leases and other
agreements entered into by the Company or any of its Restricted Subsidiaries;

 

(m)          any agreement governing Indebtedness
permitted to be incurred pursuant to Section 4.12; provided
that the provisions relating to such encumbrance or restriction contained in
such Indebtedness, taken as a whole, are no less favorable to the Company in
any material respect as determined by the Board of Directors of the Company in
its reasonable and good faith judgment that the provisions contained in the
Credit Agreement or in this Indenture as in effect on the Issue Date;

 

(n)           Refinancing Indebtedness; provided
that the restrictions contained in the agreements governing such Refinancing
Indebtedness are not materially more restrictive, taken as a whole, than those
contained in the agreements governing the Indebtedness being Refinanced;

 

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

 

(p)           restrictions with respect to a
Subsidiary of the Company that was not a Subsidiary of the Company on the Issue
Date in existence at the time such Person becomes a Subsidiary of the Company
(but not created as a result of or in anticipation of such Person becoming a
Subsidiary of

 

46

 

the Company); provided,
that such restrictions are not applicable to any other Person or the properties
or assets of any other Person.

 

SECTION 4.14. 
Additional Subsidiary Guarantees.

 

If the Company or any of its
Subsidiaries shall organize, acquire or otherwise invest in another Domestic
Restricted Subsidiary that is not a Guarantor, then such transferee or acquired
or other Subsidiary shall:

 

(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 Company’s obligations under the Notes and this Indenture on
the terms set forth herein;

 

(2)           if required by the second paragraph
of Section 4.18, (a) execute and deliver to the Collateral Agent and the
Trustee such amendments to the Security Documents as the Collateral Agent deems
necessary or advisable in order to grant to the Collateral Agent, for the
benefit of the Holders, a perfected first priority security interest in the
Capital Stock of such Subsidiary, subject to the Liens permitted pursuant to
the second paragraph Section 4.18, which are owned by the Company or any
Subsidiary and required to be pledged pursuant to the Security Agreement, (b)
deliver to Collateral Agent the certificates representing such Capital Stock,
together with undated stock powers or instruments of transfer, as applicable,
endorsed in blank;

 

(3)           cause such Subsidiary to take such
other actions necessary or advisable to grant to the Collateral Agent for the
benefit of the Holders and the Trustee a perfected first priority security
interest in the Collateral of such Subsidiary, subject to Permitted Prior
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 Subsidiary
and constitute the legal, valid, binding and enforceable obligations of such
Subsidiary as provided for in this Indenture.

 

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

 

SECTION 4.15. 
Limitation on Change of Control.

 

(a)           Upon the occurrence of a Change of
Control, the Company shall make an offer to purchase all outstanding Notes
pursuant to the requirements described in clause (b) below (the “Change
of Control Offer”) at a purchase price in cash equal to 101% of the
principal amount thereof on the date of purchase plus accrued and unpaid
interest and Additional Interest and Additional PIK Interest (which, for such
purpose shall be payable in cash), if any, to the date of purchase.

 

(b)           Within thirty (30) days following the
date upon which the Change of Control occurred (the “Change of Control Date”),
the Company shall send, by registered first class mail, postage prepaid, an
offer to each record Holder as shown on the register of Holders, with a copy to
the Trustee,

 

47

 

which offer 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 offer shall state:

 

(1)           that the Change of Control Offer is
being made pursuant to this Section 4.15 and that all Notes tendered and
not withdrawn shall be accepted for payment;

 

(2)           the purchase price (including the
amount of accrued interest) and the purchase date (which shall be no earlier
than thirty (30) days nor later than sixty (60) days from the date such offer
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;

 

(4)           that, unless the Company defaults in
making payment therefor, any Note accepted for payment pursuant to the Change
of Control Offer shall cease to accrue interest 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 offer 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 telegram, telex,
facsimile transmission or letter setting forth the name of the Holder, the
principal amount 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 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 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
Company shall modify such notice to the extent necessary to comply with the
procedures of the Depository applicable to repurchases.

 

On or before the Change of
Control Payment Date, the Company shall (i) accept for payment all 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, 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 of Notes or portions thereof being purchased by the Company.  The Paying Agent shall promptly mail to the
Holders of Notes so tendered the purchase price for such Notes and the Company
shall promptly issue and the Trustee shall promptly authenticate and mail (or
cause to be transferred by book entry) to each Holder a new Note equal in
principal amount to any unpurchased portion of the Notes surrendered; provided
that each such new Note shall be in a principal amount of $1,000 or an
integral

 

48

 

multiple
thereof.  Any Notes not so accepted
shall be promptly mailed by the Company to the Holders thereof.  For purposes of this Section 4.15,
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 Company.

 

Notwithstanding anything to
the contrary contained herein, neither the Board of Directors of the Company
nor the Trustee may waive the Company’s obligation to offer to purchase the
Notes pursuant to this Section 4.15.

 

The Company shall comply
with the requirements of Rule 14e-1 under the Exchange Act and any other
securities laws and regulations thereunder to the extent such laws and
regulations are applicable in connection with the repurchase of Notes pursuant
to a Change of Control Offer.  To the
extent the provisions of any securities laws or regulations conflict with the
provisions under this Section 4.15, the Company shall comply with the
applicable securities laws and regulations and shall not be deemed to have
breached its obligations under this Section 4.15 by virtue thereof.

 

The Company shall not be
required to make a Change of Control Offer upon a Change of Control if a third
party makes the Change of Control Offer in the manner, at the times and otherwise
in compliance with the requirements of this Section 4.15 and purchases
all Notes validly tendered and not withdrawn under such Change of Control
Offer.

 

SECTION 4.16. 
Limitation on Asset Sales. 
The Company will not, and will not permit any of its Restricted
Subsidiaries to, consummate an Asset Sale unless:

 

(1)           the Company 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 of (as determined in good faith by senior management or,
in the case of an Asset Sale in excess of $5.0 million, the Company’s Board of
Directors);

 

(2)           at least 75% of the consideration
received by the Company or the Restricted Subsidiary, as the case may be, from
such Asset Sale shall be in the form of cash or Cash Equivalents and is
received at the time of such disposition; provided  that (a) the
amount of any liabilities (as shown on the most recent applicable balance
sheet) of the Company or such Restricted Subsidiary (other than liabilities
that are by their terms subordinated to the Notes) that are assumed by the
transferee of any such assets shall be deemed to be cash for the purposes of
this clause (2) so long as the documents governing such liabilities
provide that there is no further recourse to the Company or any of its
Subsidiaries with respect to such liabilities and (b) any securities, notes or
other obligations received by the Company or any such Restricted Subsidiary
from the transferee that are contemporaneously, subject to ordinary settlement
periods, converted by the Company or such Restricted Subsidiary into cash,
shall be deemed to be cash to the extent of the cash received in that
conversion; and

 

(3)           upon the consummation of an Asset
Sale, the Company shall apply, or cause such Restricted Subsidiary to apply,
the Net Cash Proceeds relating to such Asset Sale within 179 days of receipt
thereof:

 

(a)           to repay Indebtedness under the
Credit Agreement;

 

(b)           to make an investment in properties
and assets that replace the properties and assets that were the subject of such
Asset Sale or in the business of the Company and its Restricted Subsidiaries as
existing on the Issue Date (“Replacement Assets”); or

 

49

 

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

 

On the 180th day after an
Asset Sale or such earlier date, if any, as the senior management or the Board
of Directors of the Company 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) and 3(c) of the immediately 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 immediately preceding paragraph (each a “Net Proceeds Offer Amount”)
shall be applied by the Company 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 60 days following the
applicable Net Proceeds Offer Trigger Date, from all Holders on a pro rata
basis, that amount of Notes equal to the Net Proceeds Offer Amount at a price
equal to 100% of the principal amount of the Notes to be purchased, plus
accrued and unpaid interest and Additional Interest and Additional PIK Interest
(which, for such purpose, shall be payable in cash), if any, thereon, to the
date of purchase; provided, however, that if at any time any
non-cash consideration received by the Company or any of its Restricted
Subsidiaries, 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 constitute an Asset Sale hereunder 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 Section 4.16.

 

The Company 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 the immediately preceding paragraph).

 

In the event of the transfer
of substantially all (but not all) of the property and assets of the Company
and its Restricted Subsidiaries as an entirety to a Person in a transaction
permitted under Section 5.01, which transaction does not constitute a
Change of Control, the successor corporation shall be deemed to have sold the
properties and assets of the Company and its Restricted Subsidiaries not so
transferred for purposes of this covenant, and shall comply with the provisions
of clause (3) of the first paragraph of this Section 4.16 with
respect to such deemed sale as if it constituted an Asset Sale. In addition,
the Fair Market Value of such properties and assets of the Company or its
Restricted Subsidiaries deemed to be sold shall be deemed to be Net Cash
Proceeds for purposes of this Section 4.16.

 

Each notice of a Net
Proceeds Offer shall be mailed to the record Holders as shown on the register
of Holders within 25 days following the Net Proceeds Offer Trigger Date, with a
copy to the Trustee, and shall comply with the procedures set forth in this
Indenture. 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 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).  To the extent that the aggregate amount of
the notes tendered pursuant to a Net Proceeds Offer is less than the Net
Proceeds Offer Amount, the Company may use such excess Net Proceeds Offer Amount
for general corporate purposes or for any other purposes not prohibited by this
Indenture.  Upon completion of any such
Net Proceeds Offer, the Net Proceeds Offer Amount shall be reset at zero.  A Net Proceeds Offer shall remain open for a
period of 20 Business Days or such longer period as may be required by law.

 

50

 

Pending the final
application of the Net Cash Proceeds, the Company and any its Restricted
Subsidiaries may temporarily reduce Indebtedness or otherwise use such Net Cash
Proceeds in any manner not prohibited by this Indenture.

 

The Company 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 4.16, the Company shall comply
with the applicable securities laws and regulations and shall not be deemed to
have breached its obligations under Section 4.16 by virtue thereof.

 

SECTION 4.17. 
Impairment of Security Interest.

 

Neither the Company nor any
of its Restricted Subsidiaries will take or omit to take any action which would
materially adversely affect or impair the Liens in favor of the Collateral
Agent, on behalf of itself, the Trustee and the Holders, with respect to the
Collateral. Neither the Company nor any of its Restricted Subsidiaries shall
grant to any Person, or permit any Person to retain (other than the Collateral
Agent), any interest whatsoever in the Collateral other than Permitted Liens.
Neither the Company nor any of its Restricted Subsidiaries will 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, the Security Documents and the Intercreditor Agreement. The Company
shall, and shall cause each Guarantor to, at their sole cost and expense,
execute and deliver all such agreements and instruments as the Collateral Agent
or the Trustee shall reasonably request to more fully or accurately describe
the property intended to be Collateral or the obligations intended to be
secured by the Security Documents. The Company shall, and shall cause each
Restricted Subsidiary of the Company to, at their sole cost and expense, file
any such notice filings or other agreements or instruments as may be required
under applicable law to perfect the Liens created by the Security Documents at
such times and at such places as the Collateral Agent or the Trustee may
reasonably request.

 

SECTION 4.18. 
Limitation on Liens.

 

The Company 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
Company or any of its Restricted Subsidiaries, other than the Capital Stock of
any Subsidiary of the Company to the extent permitted by the immediately
following paragraph, 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.

 

The Company will not, and
will not cause or permit any of its Restricted Subsidiaries to, create, incur,
assume or permit or suffer to exist any Liens (other than Liens pursuant to clauses
(1), (4), (10), (12), (14) and (17) of the definition of
Permitted Liens) of any kind against or upon the Capital Stock of any
Subsidiary of the Company, whether owned on the Issue Date or acquired after
the Issue Date, unless all payments due under this Indenture and the Notes are
secured on an equal and ratable basis with the obligations so secured until
such time as such obligations are no longer secured by a Lien.

 

SECTION 4.19. 
Conduct of Business.

 

The Company and its
Restricted Subsidiaries will not engage in any businesses which are not the
same, similar or reasonably related, complementary or ancillary to the
businesses in which the

 

51

 

Company
and its Restricted Subsidiaries are engaged on the Issue Date except to such
extent as would not be material to the Company and its Restricted Subsidiaries
taken as a whole.

 

SECTION 4.20. 
Limitation on Issuances and Sales of Capital Stock of Subsidiaries.

 

The Company will not permit
or cause any of its Restricted Subsidiaries to issue or sell any Capital Stock
(other than to the Company or a Wholly Owned Subsidiary of the Company and
other than directors’ qualifying shares) or permit any Person (other than the
Company or a Wholly Owned Subsidiary of the Company and other than directors’
qualifying shares) to own or hold any Capital Stock of any Restricted
Subsidiary of the Company or any Lien or security interest therein; provided,
however, that this Section 4.20 shall not prohibit the sale
of all of the Capital Stock of a Restricted Subsidiary in compliance with the
provisions of Section 4.16.

 

SECTION 4.21. 
Offer to Repurchase with Excess Cash Flow.

 

(a)           Within 75 days after the end of each
twelve month period ending September 30 for which Excess Cash Flow was in excess
of $2.5 million, beginning with the twelve month period ending September 30,
2005, the Company shall make an offer (the “Excess Cash Flow Offer”) to
all Holders to purchase the maximum principal amount of Notes that may be
purchased with 50% of Excess Cash Flow for such twelve month period (the “Excess
Cash Flow Offer Amount”), at a purchase price in cash equal to 100% of the
principal amount of the Notes to be purchased, plus accrued and unpaid interest
and Additional Interest and Additional PIK Interest (which, for such purpose,
shall be payable in cash), if any, to the date of such purchase.  Each Excess Cash Flow Offer will remain open
for a period of 20 business days and no longer, unless a longer period is required
by law (the “Excess Cash Flow Offer Period”).  Promptly after the termination of the Excess Cash Flow Offer
Period, the Company shall purchase and mail or deliver payment (up to the
Excess Cash Flow Offer Amount) for the Notes or portions thereof tendered, pro
rata (based on amounts tendered) or by such other method as may be
required by law, or, if less than the Excess Cash Flow Offer Amount has been
tendered, all Notes tendered pursuant to the Excess Cash Flow Offer.  Upon receiving notice of the Excess Cash
Flow Offer, Holders may elect to tender their Notes, in whole or in part, in
integral multiples of $1,000 in exchange for cash.  If any Excess Cash Flow remains after consummation of an Excess
Cash Flow Offer, the Company may use each remaining Excess Cash Flow for any
purpose not otherwise prohibited by this Indenture or the Security
Agreement.  Upon completion of each
Excess Cash Flow Offer, the amount of Excess Cash Flow will be reset at zero.

 

(b)           Within 75 days after the end of each
twelve month period ending September 30 for which Excess Cash Flow was in
excess of $2.5 million, beginning with the twelve month period ending September
30, 2005, the Company shall send, by registered first-class mail, postage
prepaid, an offer to each Holder, with a copy to the Trustee, which offer will
govern the terms of the Excess Cash Flow Offer.  Such offer shall state:

 

(1)           that the Excess Cash Flow Offer is
being made pursuant to this Section 4.21 and that all Notes tendered and
not withdrawn shall be accepted for payment;

 

(2)           the purchase price (including the
amount of accrued interest) and the purchase date (which shall be no earlier
than thirty (30) days nor later than sixty (60) days from the date such offer
is mailed, other than as may be required by law) (the “Excess Cash Flow
Purchase Date”);

 

(3)           that any Note not tendered shall
continue to accrue interest;

 

52

 

(4)           that, unless the Company defaults in
making payment therefor, any Note accepted for payment pursuant to the Excess
Cash Flow Offer shall cease to accrue interest after the Excess Cash Flow
Purchase Date;

 

(5)           that Holders electing to have a Note
purchased pursuant to an 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 offer prior to the close of business on the third Business Day prior to the
Excess Cash Flow Purchase 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 Purchase Date, a telegram, telex,
facsimile transmission or letter setting forth the name of the Holder, the
principal amount 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 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 of $1,000 or integral multiples thereof.

 

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

 

On or before the Excess Cash
Flow Purchase Date, the Company shall (i) accept for payment all 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, 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 of Notes or portions thereof being purchased by the
Company.  The Paying Agent shall
promptly mail to the Holders of Notes so tendered the purchase price for such
Notes and the Company shall promptly issue and the Trustee shall promptly
authenticate and mail (or cause to be transferred by book entry) to each Holder
a new Note equal in principal amount to any unpurchased portion of the Notes
surrendered; provided  that each such new Note shall be in a
principal amount of $1,000 or an integral multiple thereof.  Any Notes not so accepted shall be promptly
mailed by the Company 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 an Excess Cash Flow Offer shall be returned
by the Trustee to the Company.

 

Notwithstanding anything to
the contrary contained herein, neither the Board of Directors of the Company
nor the Trustee may waive the Company’s obligation to offer to purchase the
Notes pursuant to this Section 4.21.

 

The Company shall comply
with the requirements of Rule 14e-1 under the Exchange Act and any other
securities laws and regulations thereunder to the extent such laws and
regulations are applicable in connection with the repurchase of Notes pursuant
to an Excess Cash Flow Offer.  To the
extent the provisions of any securities laws or regulations conflict with the
provisions under this Section 4.21, the Company shall comply with the
applicable securities laws and regulations and shall not be deemed to have
breached its obligations under this Section 4.21 by virtue thereof.

 

53

 

SECTION 4.22. 
Payments For Consent.  The
Company 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, the
Registration Rights Agreement, any Security Document or the Intercreditor
Agreement unless such consideration 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 4.23. 
Real Estate Mortgages and Recordings.

 

With respect to any fee
interest in the real property, except in the case of Jersey Business Land Co.,
Inc. the real property in Bordentown, New Jersey currently owned by it
(individually and collectively, the “Premises”), owned by the Company or
a Domestic Restricted Subsidiary on the Issue Date or acquired by the Company
or a Domestic Restricted Subsidiary after the Issue Date with (1) a purchase
price or (2) as of the date such real property is acquired, a Fair Market
Value, of greater than $200,000 (“Pledged Real Estate”):

 

(1)           the Company will deliver to the Collateral
Agent, as mortgagee, fully-executed counterparts of Mortgages, duly executed by
the Company or the applicable Domestic Restricted Subsidiary, together with
evidence of the completion (or satisfactory arrangements for the completion),
of all recordings and filings of such Mortgage as may be necessary or, in the
reasonable opinion of the Collateral Agent desirable, to create a valid,
perfected Lien, subject to Permitted Liens, against the properties purported to
be covered thereby;

 

(2)           the Company will deliver to the
Collateral Agent 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, a revolving credit endorsement and such other
endorsements as the Collateral Agent shall reasonably request and shall be
accompanied by evidence of the payment in full of all premiums thereon; and

 

(3)           the Company will deliver to the
Collateral Agent, 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 Company and the Guarantors
state that there has been no change, other than, in each case, changes that do
not materially adversely affect the use by the Company or Guarantor, as
applicable, of such Premises for the Company or such Guarantor’s business as so
conducted, or intended to be conducted, at such Premises.

 

The Company
will use commercially reasonable efforts to deliver all items required to be
delivered pursuant to clauses (1), (2) and (3) above, 90
days after the Issue Date (in the case of real property owned by the Company or
any Domestic Restricted Subsidiary as of the Issue Date) and 90 days after the
date of acquisition (in the case of real property acquired by the Company or
any Domestic Restricted Subsidiary after the Issue Date).

 

54

 

SECTION 4.24. 
Maintenance of Net Leverage. 
For so long as the Notes remain outstanding, as of the last day of each
fiscal quarter of the Company (beginning with the fiscal quarter of the Company
ending on September 30, 2006) the Net Leverage of the Company and its
Restricted Subsidiaries shall not exceed 3.0 to 1.0.

 

SECTION 4.25. 
Maintenance of Consolidated EBITDA.  For so long as the Notes remain outstanding, on the last day of
each fiscal quarter of the Company (beginning on the last day of the first
fiscal quarter of the Company ending after the Issue Date), the Consolidated
EBITDA of the Company during the four consecutive full fiscal quarters of the
Company ending as of such date shall not be less than $23.0 million.

 

SECTION 4.26. 
Limitation on Capital Expenditures.  From and after July 1, 2004, the Company will not, and will not
cause or permit any of its Restricted Subsidiaries to, directly or indirectly,
make any Capital Expenditure if at the time of such Capital Expenditure, or
immediately after giving effect thereto, the aggregate amount of Capital
Expenditures (including the proposed Capital Expenditure) made by the Company
and its Restricted Subsidiaries since the first day of the Company’s then
current fiscal year exceeds the sum of (a) $15.0 million, plus  (b) if the aggregate amount of Capital
Expenditures made by the Company and its Restricted Subsidiaries during the
immediately preceding fiscal year equaled less than $15.0 million, the
difference of (i) $15.0 million, minus(ii) the aggregate amount of Capital Expenditures made by the
Company and its Restricted Subsidiaries during the Company’s immediately
preceding fiscal year.

 

SECTION 4.27. 
Key Man Life Insurance. 
The Company shall use its commercially reasonable efforts to obtain, on
or prior to the 90th day following the Issue Date, a “key man” life insurance
policy, payable to the Company or a Wholly Owned Subsidiary of the Company, on
the life of Domenic Gatto, the Company’s Chief Executive Officer and President,
in an amount not less than $3.0 million, and shall thereafter, for so long the
Notes remain outstanding, (i) use its commercially reasonable efforts to
maintain in effect such policy (provided,
that, if, for any reason, such policy shall not remain in effect, the Company
shall use its commercially reasonable efforts to promptly obtain a substitute
policy in an amount not less than $3.0 million), (ii) not cause or permit any
assignment or change in the beneficiary thereunder except to the Company or a
Wholly Owned Subsidiary of the Company, and (iii) not borrow against such
policy.

 

ARTICLE FIVE

 

SUCCESSOR CORPORATION

 

SECTION 5.01. 
Merger, Consolidation and Sale of Assets.  The Company 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 or otherwise dispose
of (or cause or permit any Restricted Subsidiary of the Company to sell,
assign, transfer, lease, convey or otherwise dispose of) all or substantially
all of the Company’s assets (determined on a consolidated basis for the Company
and the Company’s Restricted Subsidiaries) whether as an entirety or
substantially as an entirety to any Person unless:

 

(1)           either:

 

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

 

(b)           the Person (if other than the Company) formed by such
consolidation or into which the Company is merged or the Person which acquires
by sale, assignment, transfer, lease,

 

55

 

conveyance
or other disposition the properties and assets of the Company and of the
Company’s Restricted Subsidiaries substantially as an entirety (the “Surviving
Entity”):

 

(x)            shall be a corporation organized and validly existing
under the laws of the United States or any State thereof or the District of
Columbia; and

 

(y)           shall expressly assume, (i) by supplemental indenture (in
form and substance satisfactory to the Trustee), executed and delivered to the
Trustee, the due and punctual payment of the principal of, and premium, if any,
interest on and Additional Interest and Additional PIK Interest, if any, on all
of the Notes and the performance of every covenant of the Notes, this
Indenture, the Security Documents and the Registration Rights Agreement on the
part of the Company to be performed or observed thereunder and (ii) by
amendment, supplement or other instrument (in form and substance satisfactory
to the Trustee and the Collateral Agent), executed and delivered to the
Trustee, all obligations of the Company under the Security Documents, 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
Security Documents on the Collateral owned by or transferred to the surviving
entity;

 

(2)           immediately after giving effect to such transaction on a
pro forma basis and the assumption contemplated by clause (1)(b)(y)
above (including giving effect to any Indebtedness (including Acquired
Indebtedness) incurred or anticipated to be incurred in connection with or in
respect of such transaction), the Company or such Surviving Entity, as the case
may be, (a) shall have a Consolidated Net Worth at least equal to the
Consolidated Net Worth of the Company immediately prior to such transaction and
(b) shall be able to incur at least $1.00 of additional Indebtedness (other
than Permitted Indebtedness) in compliance with Section 4.12;

 

(3)           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 (including 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 Company or the Surviving Entity, as the case may be,
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.

 

Notwithstanding the
foregoing, (a) the merger of the Company with an Affiliate incorporated solely
for the purpose of reincorporating the Company in another jurisdiction in the
United States or any State thereof of the District of Columbia shall be
permitted and (b) the merger of any Restricted Subsidiary of the Company into
the Company or the transfer, lease, conveyance or other disposition of all or
substantially all of the assets of a Restricted Subsidiary of the Company to
the Company shall be permitted so long as the Company delivers to the trustee
an Officers’ Certificate stating that the purpose of such merger, transfer,
lease, conveyance or other disposition is not to consummate a transaction that
would otherwise be prohibited by this covenant.

 

For purposes of the
foregoing, 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

 

56

 

more
Restricted Subsidiaries of the Company the Capital Stock of which constitutes
all or substantially all of the properties and assets of the Company, shall be
deemed to be the transfer of all or substantially all of the properties and
assets of the Company.

 

SECTION 5.02. 
Successor Corporation Substituted.  Upon any consolidation, combination or merger or any transfer of
all or substantially all of the assets of the Company in accordance with the
foregoing, in which the Company is not the continuing corporation, the
successor Person formed by such consolidation or into which the Company 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 Company
under this Indenture and the Notes with the same effect as if such surviving
entity had been named as such. Upon such substitution the Company and any
Guarantors that remain Subsidiaries of the Company shall be released from this
Indenture and the Notes.

 

ARTICLE SIX

 

DEFAULT AND REMEDIES

 

SECTION 6.01. 
Events of Default.

 

Each of the following is an
“Event of Default”:

 

(1)           the Company or any Guarantor fails to
pay the premium, if any, interest and Additional Interest and Additional PIK
Interest, if any, on any Notes or any other amount (other than principal for
the Notes) when the same becomes due and payable and the default continues for
a period of thirty (30) days;

 

(2)           the Company or any Guarantor fails to
pay the principal 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 or a Net
Proceeds Offer);

 

(3)           a default occurs 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 and Additional PIK Interest, if any, on any Note and other
than a default in the observance or performance of Section 4.24) or any
Security Document which default continues for a period of 45 days after
the Company 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 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 Company or any Guarantor fails to
pay at final stated maturity (giving effect to any applicable grace periods and
any extensions thereof) the principal amount of any Indebtedness of the Company
or any of its Restricted Subsidiaries, or the acceleration of the final stated
maturity of any such Indebtedness (which acceleration is not rescinded,
annulled or otherwise cured within 20 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 20-day period described above has elapsed), exceeds $7.5
million or more at any time;

 

57

 

(5)           one or more judgments in an aggregate
amount in excess of $7.5 million (which are not covered by a reputable and
solvent third party insurer as to which such insurer has not disclaimed
coverage) shall have been rendered against the Company or any of its Restricted
Subsidiaries and such judgments remain undischarged, unpaid or unstayed for a
period of 60 consecutive days after such judgment or judgments become final and
non-appealable;

 

(6)           the Company or any Significant
Subsidiary (A) commences a voluntary case or proceeding under any Bankruptcy
Code with respect to itself, (B) consents to the entry of a judgment, decree or
order for relief against it in an involuntary case or proceeding under any
Bankruptcy Code, (C) consents to the appointment of a Custodian of it or for
substantially all of its property, (D) consents to or acquiesces in the
institution of a bankruptcy or an insolvency proceeding against it, (E) makes a
general assignment for the benefit of its creditors; or (F) takes any
corporate action to authorize or effect any of the foregoing;

 

(7)           a court of competent jurisdiction enters
a judgment, decree or order for relief in respect of the Company or any
Significant Subsidiary in an involuntary case or proceeding under any
Bankruptcy Code, which shall (A) approve as properly filed a petition
seeking reorganization, arrangement, adjustment or composition in respect of
the Company or any Significant Subsidiary, (B) appoint a Custodian of the
Company or any Significant Subsidiary or for substantially all of its property
or (C) order the winding-up or liquidation of its affairs; and such
judgment, decree or order shall remain unstayed and in effect for a period of
sixty (60) consecutive days;

 

(8)           any Security Document at any time for
any reason shall cease to be in full force and effect, or shall cease to grant
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 Security Document;

 

(9)           the Company or any of the
Subsidiaries, directly or indirectly, contest in any manner the effectiveness,
validity, binding nature or enforceability of any Security Document; or

 

(10)         any Guarantee of a Guarantor that is a
Significant Subsidiary ceases to be in full force and effect or any Guarantee
of a Guarantor that is a Significant Subsidiary is declared to be null and void
and unenforceable or any Guarantee of a Guarantor that is 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
the release of such Guarantor in accordance with the terms hereof).

 

SECTION 6.02. 
Rights of the Company.

 

So long as no Event of
Default has occurred and is continuing, and subject to certain terms and
conditions in this Indenture, the Credit Agreement, the Security Documents and
the Intercreditor Agreement, the Company shall be entitled to receive all cash
dividends, interest and other payments made upon or with respect to the Capital
Stock of any of its Subsidiaries held as Collateral and to exercise any voting,
consensual and other rights pertaining to such Capital Stock.  Upon the occurrence and during the continuance
of an Event of Default, subject to the terms of the Intercreditor Agreement,
upon notice from the Collateral Agent, (a) all of the Company’s rights to
exercise such voting, consensual or other rights shall cease and all such
rights shall become vested in the Collateral Agent, which, to the extent
permitted by law, shall have the sole right to exercise such voting, consensual
or other rights, (b) all of the Company’s rights to receive all cash dividends,
interest and other payments made upon or with

 

58

 

respect
to the Collateral shall cease, and such cash dividends, interest and other
payments shall be paid to the Collateral Agent or the Lender, and (c) the
Collateral Agent may sell the Collateral or any part thereof in accordance with
the Security Documents, subject to the terms of the Intercreditor
Agreement.  All funds distributed under
the Security Documents by the Collateral Agent shall be distributed by the
Collateral Agent in accordance with the provisions of the Intercreditor Agreement
and this Indenture.

 

SECTION 6.03. 
Acceleration.

 

(a)           If an Event of Default (other than an
Event of Default specified in Sections 6.01(6) or (7) above with
respect to the Company) shall occur and be continuing and has not been waived,
the Trustee or the Holders of at least 25% in principal amount of outstanding
Notes may declare the principal of and premium, if any, accrued interest and
Additional Interest, if any, on all the Notes, including any Additional PIK
Interest (which, for this purpose, will be payable in cash), to be due and
payable by notice in writing to the Company and the Trustee specifying the
respective Event of Default and that it is a “notice of acceleration” (the “Acceleration
Notice”), and the same shall become immediately due and payable, or if
there are any amounts outstanding under the Credit Agreement, it shall become
immediately due and payable upon the first to occur of an acceleration under
the Credit Agreement or five business days after receipt by the Company and the
Administrative Agent under the Credit Agreement of such Acceleration Notice
(but only if such Event of Default is then continuing).

 

(b)           If an Event of Default specified in Sections
6.01(6) or (7) above with respect to the Company 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, including any Additional PIK Interest (which, for this purpose, will be
payable in cash), shall automatically 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 6.03(a)
or (b), the Holders of a majority in principal amount of the Notes may
rescind and cancel such declaration and its consequences:  (1) if the rescission would not conflict
with any judgment or decree; (2) if all existing Events of Default have been
cured or waived except nonpayment of principal, premium, if any, interest or
Additional Interest and Additional PIK Interest, if any, that has become due
solely because of the acceleration; (3) to the extent the payment of such
interest is lawful, interest on overdue installments of interest and overdue
principal and premium, if any, and Additional Interest and Additional PIK
Interest, if any, which has become due otherwise than by such declaration of
acceleration, has been paid; (4) if the Company has paid the Trustee its
reasonable compensation and reimbursed the Trustee for its expenses,
disbursements and advances; and (5) in the event of the cure or waiver of an
Event of Default of the type described in Section 6.01(8), the Trustee
shall have received an Officers’ Certificate and an Opinion of Counsel that
such Event of Default has been cured or waived.  No such rescission shall affect any subsequent Default or impair
any right consequent thereto.

 

SECTION 6.04. 
Other Remedies.

 

If an Event of Default
occurs and is continuing, the Trustee may pursue any available remedy by
proceeding at law or in equity to collect the payment of principal of, premium,
if any, or interest on the Notes or to enforce the performance of any provision
of the Notes, this Indenture, any Security Document or any Guarantee.

 

The Trustee or 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

 

59

 

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 6.05. 
Waiver of Past Defaults.

 

Subject to Sections 2.09,
6.08 and 9.02, The Holders of a majority in principal amount of
the Notes may waive any existing Default or Event of Default, and its
consequences, except (other than as provided in Section 6.03(c)) a
default in the payment of the principal of or premium, if any, interest or
Additional Interest and Additional PIK Interest, if any, on any Notes or in
respect of a covenant or provision which under this Indenture cannot be
modified or amended without the consent of the Holder of each Note then
outstanding.  When a Default or Event of
Default is waived, it is cured and ceases.

 

SECTION 6.06. 
Control by Majority.

 

Subject to Section 2.09,
the Holders of a majority in principal amount of the outstanding Notes may
direct the time, method and place of conducting any proceeding for any remedy
available to the Trustee or exercising any trust or power conferred on the
Trustee, including, without limitation, any remedies provided for in Section
6.04.  Subject to Section 7.01
and 7.02(f), however, the Trustee may refuse to follow any request,
order or direction that the Trustee reasonably believes conflicts with any law
or this Indenture, that the Trustee determines may be unduly prejudicial to the
rights of another Holder, or that may involve the Trustee in personal
liability; provided  that the Trustee may take any other action
deemed proper by the Trustee which is not inconsistent with such request, order
or direction.

 

SECTION 6.07. 
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 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
security or indemnity reasonably satisfactory to the Trustee against any loss,
liability or expense to be incurred in compliance with such request, order or
direction;

 

(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 of the outstanding Notes do not give
the Trustee a direction which, in the opinion of the Trustee, is inconsistent
with the request.

 

The foregoing limitations
shall not apply to a suit instituted by a Holder for the enforcement of the
payment of principal of, premium, if any, or interest on such Note on or after
the respective due dates set forth in such Note (including upon acceleration
thereof) or the institution of any proceeding with respect to this Indenture or
any remedy hereunder, including without limitation acceleration, by the Holders
of a majority in principal amount of outstanding Notes; provided  that
upon

 

60

 

institution
of any proceeding or exercise of any remedy, such Holders provide the Trustee
with prompt notice thereof.

 

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 6.08. 
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 6.09. 
Collection Suit by Trustee or Collateral Agent.

 

If an Event of Default in
payment of principal of, premium, if any, or interest specified in Section
6.01(1) or (2) occurs and is continuing, the Trustee and 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 Company or any other obligor on the Notes for the
whole amount of principal, premium, if any, and accrued interest remaining
unpaid, together with interest on overdue principal and, to the extent that
payment of such interest 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 Security Documents and Section 7.07.

 

SECTION 6.10. 
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, taxes, disbursements and advances of the
Trustee, its agents and counsel) and the Holders allowed in any judicial
proceedings relating to the Company 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 Intercreditor Agreement, the Security
Documents and Section 7.07.  The
Company’s payment obligations under this Section 6.10 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 to vote in respect of the claim of any Holder in any such
proceeding.

 

SECTION 6.11. 
Priorities.

 

If the Trustee or the Collateral
Agent collects any money or property pursuant to this Article Six, it
shall, subject to the terms of the Intercreditor Agreement, pay out the money
in the following order:

 

61

 

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 and the costs and expenses of collection);

 

Second:  if the Holders are forced to proceed against
the Company directly without the Trustee, 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 Company 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
notice to the Company, may fix a record date and payment date for any payment
to Holders pursuant to this Section 6.11.

 

SECTION 6.12. 
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 for any action taken or
omitted by it as Trustee, a court in its discretion may require the filing by
any party litigant in the suit of an undertaking to pay the costs of the suit,
and the court in its discretion may assess reasonable costs, including
reasonable attorneys’ fees, 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 6.12 does
not apply to a suit by the Trustee, a suit by a Holder pursuant to Section
6.08, or a suit by a Holder or Holders of more than 10% in principal amount
of the outstanding Notes.

 

SECTION 6.13. 
Restoration of Rights and Remedies.

 

If the Trustee 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 or to such Holder, then
and in every such case, subject to any determination in such proceeding, the
Company, the Trustee and the Holders shall be restored severally and respectively
to their former positions hereunder and thereafter all rights and remedies of
the Trustee and the Holders shall continue as though no such proceeding has
been instituted.

 

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.

 

62

 

(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 Trustee
need perform only those duties as are specifically set forth in this Indenture
and the Security Documents 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 and the Security Documents; 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 and the Security Documents.

 

(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 6.06.

 

(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,
the Intercreditor Agreement or the Security Documents at the request of any
Holders unless such Holder has offered to the Trustee security and indemnity
satisfactory to the Trustee against such risk or liability is not reasonably
assured to it.

 

(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 Company.  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.

 

(g)           The Trustee shall not be liable for
the failure to perform its duties and obligations hereunder to the extent such
failure is directly caused by the failure of the Company to perform its
obligations hereunder.

 

SECTION 7.02. 
Rights of Trustee.

 

Subject to Section 7.01:

 

63

 

(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 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 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 Company, to examine the books, records and premises of the
Company, personally or by agent or attorney and to consult with the officers
and representatives of the Company, including the Company’s accountants and
attorneys.  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.

 

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

 

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

 

(h)           Unless otherwise specifically
provided in this Indenture, any demand, request, direction or notice from the
Company shall be sufficient if signed by an Officer of the Company 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 Company to have been duly
adopted and in full force and effect on the date hereof.

 

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

 

64

 

(j)            The Trustee shall not be liable for any
action taken, suffered or omitted to be taken by it in good faith and
reasonably believed by it to be authorized or within the discretion, rights or
powers conferred upon it by this Indenture.

 

(k)           The Trustee shall not be deemed to
have notice or be charged with knowledge of any Default or Event of Default
unless the Trustee shall have received from the Company, 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.

 

(l)            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.

 

(m)          The Trustee may request that the
Company 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.

 

(n)           The permissive right of the Trustee
to take any action under this Indenture or any Security Documents 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 Company, any Subsidiary of the Company 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, the Intercreditor Agreement or the Security Documents, and it shall
not be accountable for the Company’s use of the proceeds from the Notes, and it
shall not be responsible for any statement of the Company in this Indenture,
the Notes, the Intercreditor Agreement, the Security Documents or any other
documents in connection with the issuance of the Notes other than the Trustee’s
certificate of authentication, which shall be taken as the statement of Company,
and the Trustee assumes no responsibility for their correctness.

 

Beyond the exercise of
reasonable care in the custody thereof and the fulfillment of its obligations
under this Indenture and the Collateral Documents, 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 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

 

65

 

intended
to be afforded thereby, hereby or by any Collateral Document, 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 Security Documents, 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
Security Documents or any agreement or assignment contained in any thereof, for
the validity of the title of the Company 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.  The Trustee shall have no
duty to ascertain or inquire as to the performance or observance of any of the
terms of this Indenture or any other Security Document by the Company or any
other Person that is a party thereto or bound thereby.

 

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 Company or any Holder, the Trustee shall
mail to each Holder, with a copy to the Company, notice of the Default or Event
of Default within thirty (30) days thereof. 
Except in the case of a Default or an Event of Default in payment of
principal of, premium, if any, or interest 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, except in the case of a
failure to comply with Article Five, 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 June 1, beginning with June 1, 2004, 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 to the Company and filed by the
Company with the Commission and each stock exchange or market, if any, on which
the Notes are listed or quoted.

 

The Company shall promptly
notify the Trustee if the Notes become listed or quoted on any stock exchange
or market and the Trustee shall comply with TIA Section 313(d).

 

SECTION 7.07. 
Compensation and Indemnity.

 

The Company shall pay to the
Trustee, the 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.  The Trustee’s compensation shall not be
limited by any law on compensation of a trustee of an express trust.  The Company 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, the Security Documents or the Intercreditor Agreement.  Such expenses shall include the reasonable
fees and expenses of each of such Indemnified Party’s agents and counsel.

 

The Company and the
Guarantors hereby indemnify each Indemnified Party and its agents, employees,
stockholders and directors and officers for, and holds each of them harmless
against,

 

66

 

any
loss, cost, claim, liability or expense (including taxes) incurred by any of
them except for such actions to the extent caused by any gross negligence or
willful misconduct on the part of such Indemnified Party, arising out of or in
connection with this Indenture, the Security Documents or the Intercreditor
Agreement, or the administration of this trust, including the reasonable costs
and expenses of enforcing this Indenture against the Company (including this Section
7.07) and defending themselves against any claim or liability in connection
with the exercise or performance of any of their rights, powers or duties
hereunder or thereunder (including the reasonable fees and expenses of
counsel).  The Trustee shall notify the
Company 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 Security Documents or Intercreditor Agreement.  Failure by the Trustee to so notify the
Company shall not relieve the Company of its obligations hereunder.  At the Indemnified Party’s sole discretion,
the Company 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 Company shall pay
the reasonable fees and expenses of such counsel; provided  that
the Company 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 Company and the Indemnified Party in connection with such defense as
reasonably determined by the Indemnified Party.  The Company need not pay for any settlement made without its
written consent, which consent shall not be unreasonably withheld.

 

To secure the Company’s
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 which have been called for
redemption.

 

When an Indemnified Party
incurs expenses or renders services after an Event of Default specified in Section
6.01(6) 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
Company under this Section 7.07 shall survive the satisfaction and
discharge of this Indenture, termination of the Security Documents or the
Intercreditor Agreement 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 so
notifying the Company.  The Holders of
at least seventy five (75%) percent of the aggregate principal amount of the
outstanding Notes may remove the Trustee by so notifying the Company and the
Trustee in writing and may appoint a successor Trustee.  The Company, 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;

 

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

 

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

 

67

 

If the Trustee resigns or is
removed or if a vacancy exists in the office of Trustee for any reason, the
Company 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 of the outstanding Notes may appoint a successor
Trustee to replace the successor Trustee appointed by the Company.

 

A successor Trustee shall
deliver a written acceptance of its appointment to the retiring Trustee and to
the Company 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 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.  Upon
request of the Company or the successor Trustee, such retiring Trustee shall at
the expense of the Company 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. 
Upon request of any such successor Trustee or the Holders of a majority
in aggregate principal amount of the outstanding Notes, the Company shall
execute any and all instruments for more fully and certainly vesting in and
confirming to such successor Trustee all such rights, powers and trusts.  Immediately after that, the retiring Trustee
shall transfer all property held by it as Trustee to the successor Trustee,
subject to the lien provided in Section 7.07, the resignation or removal
of the retiring Trustee shall become effective, and the successor Trustee shall
have all the rights, powers and duties of the Trustee under this Indenture.

 

If a successor Trustee does
not take office within thirty (30) days after the retiring Trustee resigns or
is removed, the retiring Trustee, the Company or the Holders of at least 10% in
principal amount 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 Company 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 Company’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 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

 

68

 

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 $50,000,000 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 Company 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 Company, 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
Company.

 

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 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 Collateral Agent and Paying Agent.

 

SECTION 7.13. 
Co-Trustees, co-Collateral Agent and
Separate Trustees, 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 Company and the Trustee shall have
the power to appoint, and, upon the written request of the Trustee or of the
Holders of at least 25% in principal amount of the Notes outstanding, the
Company shall for such purpose join with the Trustee 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.  As of the Issue Date, the
Company and the Trustee hereby appoint The Bank of New York as the initial
Collateral Agent and The Bank of New York hereby accepts such appointment and
agrees to act and serve in such capacity. 
If the Company does not join in such appointment within fifteen (15)
days after the receipt by it of a request so to do, or in case an Event of
Default has occurred and is continuing, the Trustee alone shall have the power
to make such appointment.

 

69

 

(b)           Should any written instrument from
the Company 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 Company.

 

(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 Company
evidenced by a Board Resolution, may accept the resignation of or remove any
co-trustee or separate trustee appointed under this Section 7.13, and,
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 Company.  Upon the
written request of the Trustee, the Company 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,
separate trustee or separate collateral agent hereunder shall be personally
liable by reason of any act or omission of the Trustee or the Collateral Agent,
or 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

 

70

 

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 Company 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 Company stating that the information with respect to such
factual matters is in the possession of the Company, 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 Company may, at its option and at
any time, elect to have either paragraph (b) or paragraph (c)
below be applied to the outstanding Notes upon compliance with the applicable
conditions set forth in paragraph (d).

 

(b)           Upon the Company’s exercise under paragraph
(a) of the option applicable to this paragraph (b), the Company
and the Guarantors shall be deemed to have been released and discharged from
their obligations with respect to the outstanding Notes on the date the
applicable conditions set forth below are satisfied (hereinafter, “Legal
Defeasance”).  For this purpose,
such Legal Defeasance means that the Company shall be deemed to have paid and
discharged the entire Indebtedness represented by the outstanding Notes, which
shall thereafter be deemed to be “outstanding” only for the purposes of the
Sections and matters under this Indenture referred to in (i) and (ii)
below, and to have satisfied all their other obligations under such Notes and
this Indenture insofar as such Notes are concerned, 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, interest and Additional Interest and
Additional PIK 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 Company’s obligations in connection
therewith.  The Company 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 Company’s exercise under paragraph
(a) of the option applicable to this paragraph
(c), the Company and its Restricted Subsidiaries shall be released
and discharged from their obligations under any covenant contained in Article
Five, Sections 4.05, 4.06 and 4.08, and Sections
4.10 through 4.22 and Sections 4.24 through 4.27 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,

 

71

 

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, the Company may omit to
comply with and shall have no liability in respect of any term, condition or
limitation set forth in any such covenant, whether directly or indirectly, by
reason of any reference elsewhere herein to any such covenant or by reason of
any reference in any such covenant to any other provision herein or in any
other document and such omission to comply shall not constitute a Default or an
Event of Default under Section 6.01(3) or 6.01(4), but, except as
specified above, the remainder of this Indenture and such Notes shall be
unaffected thereby.  In addition, upon
the Company’s exercise under paragraph (a) hereof of the option
applicable to this paragraph (c), subject to the satisfaction of the
conditions set forth in Section 8.03, Sections 6.01(3), 6.01(4),
6.01(5) and 6.01(6) 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 Company shall have irrevocably
deposited in trust with the Trustee, for the benefit of the Holders and
pursuant to an irrevocable trust and security agreement in form and substance
reasonably satisfactory 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, and premium, if any,
interest and Additional Interest, if any, on the outstanding Notes, including
any Additional PIK Interest (which, for this purpose, shall be payable in
cash), 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 Company 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)           In the event the Company elects paragraph
(b) above, the Company shall deliver to the Trustee an Opinion of
Counsel in the United States of America reasonably acceptable to the Trustee to
the effect that (A) the Company 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
confirm that, the 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;

 

(3)           in the event the Company elects paragraph
(c) above, the Company shall deliver to the Trustee an Opinion of Counsel
in the United States reasonably acceptable to the Trustee confirming that the
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;

 

(4)           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 resulting from the borrowing of funds to fund the
deposit referenced in clause (1) above);

 

(5)           Such Legal Defeasance or Covenant
Defeasance shall not result in a breach or violation of, or constitute a default
under any material agreement or instrument (other than this

 

72

 

Indenture) to
which the Company or any of its Subsidiaries is a party or by which the Company
or any of its Subsidiaries is bound;

 

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

 

(7)           The Company has delivered to the
Trustee an Officers’ Certificate and an Opinion of Counsel, which Opinion of
Counsel may be subject to customary assumptions and exclusions, each stating
that all conditions precedent specified herein relating to the defeasance
contemplated by this Section 8.01 have been complied with.

 

Notwithstanding the foregoing, the Opinion of Counsel
required by Section 8.01(d)(2) 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 or are to be called for redemption
within one year under arrangements satisfactory to the Trustee for the giving
of notice of redemption by the Trustee in the name, and at the expense, of the
Company.

 

In the event all or any
portion of the Notes are to be redeemed through such irrevocable trust, the
Company 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 Company.

 

SECTION 8.02. 
Satisfaction and Discharge.

 

In addition to the Company’s
rights under Section 8.01, the Company may terminate all of its
obligations under this Indenture (subject to Section 8.03), 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 Company and thereafter repaid to the Company 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) shall
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 Company 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, and premium, if any, interest and
Additional Interest, if any, on the Notes, including any Additional PIK
Interest (which, for this purpose, shall be payable in cash), to the date of
deposit together with irrevocable instructions from the Company directing the
Trustee to apply such funds to the payment thereof at maturity or redemption,
as the case may be;

 

73

 

(2)           all other sums payable under this
Indenture by the Company have been paid by the Company; and

 

(3)           the Company 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 Company and the
Trustee under Sections 2.02, 2.03, 2.04, 2.05, 2.06,
2.07, 2.10, 2.13, 4.01, 4.02 and 6.08,
Article Seven and Sections 8.05, 
8.06 and 8.07 shall survive until the Notes are no longer
outstanding, and thereafter the obligations of the Company and the Trustee
under Sections 7.07, 8.05, 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, (ii) the Company has paid or caused to be paid all other sums
payable hereunder by the Company and (iii) the Company 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 Company’s obligations under this Indenture except for those surviving
obligations specified in Section 8.03.

 

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 on the
Notes.  Anything in this Article
Eight to the contrary notwithstanding, the Trustee shall deliver or pay to
the Company from time to time upon the Company’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 Company; Unclaimed Money.

 

Subject to Sections 7.07,
8.01 and 8.02, the Trustee and the Paying Agent shall promptly
pay to the Company upon written request from the Company 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 Company, upon receipt by the Trustee or the Paying Agent, as the case
may be, of a written request from the Company any money held by it for the
payment of principal, premium, if any, or interest 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 Company 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

 

74

 

such
publication or mailing, any unclaimed balance of such money then remaining
shall be repaid to the Company, without interest thereon.  After payment to the Company, Holders
entitled to money must look solely to the Company 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 of any legal
proceeding or by reason of any order or judgment of any court or governmental
authority enjoining, restraining or otherwise prohibiting such application, the
Company’s obligations under this Indenture and the Notes 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 Company has made any payment of premium, if any, or interest on or
principal of any Notes because of the reinstatement of its obligations, the Company
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
Company, the Guarantors, the Trustee and, if such amendment, modification,
waiver or supplement relates to any Security Document or the Intercreditor
Agreement, the Collateral Agent, without the consent of the Holders, may amend,
modify or supplement provisions of this Indenture, the Notes, the Guarantees,
the Registration Rights Agreement, the Intercreditor Agreement and the Security
Documents:

 

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

 

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

 

(3)           to provide for the assumption of the
Company’s or a Guarantor’s obligations to Holders in the case of a merger or
consolidation involving the Company or such Guarantor or sale of all or
substantially all of the assets of the Company or such Guarantor;

 

(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, the Registration Rights Agreement, the Intercreditor Agreement or
the Security Documents;

 

(5)           to comply with requirements of the
Commission 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;

 

75

 

(7)           if necessary, in connection with any
addition or release of Collateral permitted under the terms of this Indenture,
the Intercreditor Agreement or Security Documents;

 

(8)           to
confirm the text of this Indenture, the Notes, the Guarantees or the Security
Agreement to any provision of the section of the Offering Circular entitled
“Description of Notes” to the extent that such provision in this Description of
the Notes was intended to be a verbatim recitation of a provision of this
Indenture, the Notes, the Guarantees or the Security Agreement;

 

(9)           to
make, complete or confirm any grant of Collateral permitted or required by this
Indenture or any of the security documents or any release of Collateral that
becomes effective as set forth in this Indenture or any of the Security
Documents; or

 

(10)         to
make any amendment to the provisions of this Indenture relating to the form,
authentication, transfer and legending of the Notes; provided, however, that
(a) compliance wit this Indenture as so amended would not result in the Notes
being transferred in violation of the Securities Act or any other applicable
securities law and (b) such amendment does not materially affect the rights of
Holders to transfer the Notes,

 

so long as such amendment, modification or supplement
does not, in the opinion of the Trustee and, if such amendment, modification or
supplement relates to any Security Document or the Intercreditor Agreement, the
Collateral Agent, adversely affect the rights of any of the Holders in any
material respect.

 

Notwithstanding the
foregoing, in formulating its opinion in regards to Section 9.01(1) through
(9) the Trustee or the Collateral Agent, as applicable, is entitled to
rely on such evidence as it deems appropriate, including, without limitation,
solely on an Opinion of Counsel.

 

SECTION 9.02. 
With Consent of Holders.

 

Subject to Section 6.08,
the Company and the Guarantors, when authorized by a Board Resolution, 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 of the outstanding Notes (subject to Section
2.09), may amend or supplement this Indenture, the Notes, any
Security Document, the Intercreditor Agreement or the Guarantees without notice
to any other Holders.  Subject to Section
6.08 and Section 2.09, the Holder
or Holders of a majority in aggregate principal amount of the outstanding Notes
may waive compliance by the Company with any provision of this Indenture, any
Security Document or the Notes without notice to any other Holder.  However, noamendment, supplement or waiver, including a waiver pursuant to Section
6.05, shall without the consent of each Holder of each Note affected
thereby:

 

(1)           reduce the principal amount 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 and Additional PIK Interest, if any, 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
therefor (other than provisions relating to the covenants described in Section 4.16 and Section 4.21
hereof);

 

76

 

(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 and Additional PIK
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 of Notes to waive Defaults or Events of Default;

 

(6)           modify or change any provision of
this Indenture or the related definitions affecting the ranking of the Notes or
any Guarantee in a manner which adversely affects the Holders in a material
respect;

 

(7)           release any Guarantor that is a
Significant Subsidiary from any of its obligations under its Guarantee or this
Indenture otherwise than in accordance with the terms of this Indenture; or

 

(8)           release all or substantially all of
the Collateral from the Lien securing the Notes.

 

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 Company shall
mail to the Holders affected thereby a notice briefly describing the amendment,
supplement or waiver.  Any failure of
the Company to mail such notice, or any defect therein, shall not, however, in
any way impair or affect the validity of any such supplemental indenture.

 

SECTION 9.03. 
Compliance with TIA.

 

Every amendment, waiver or
supplement of this Indenture, the Notes, the Security Documents, the
Intercreditor Agreement 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 Company received before the date on
which the Trustee and if such amendment, waiver or supplement relates to any
Security Document or the Intercreditor Agreement, the Collateral Agent,
receives an Officers’ Certificate certifying that the Holders of the requisite
principal amount of Notes have consented (and not theretofore revoked such
consent) to the amendment, supplement or waiver.

 

The Company 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

 

77

 

record
date.  No such consent shall be valid or
effective for more than ninety (90) 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 (9) 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 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 Company 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
Company or the Trustee so determines, the Company 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 Company.  Failure to make
the appropriate notation or issue a new Note shall not effect the validity and
effect of such amendment, supplement or waiver.

 

SECTION 9.06. 
Trustee to Sign Amendments, Etc.

 

The Trustee 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 applicable, may, but shall not be
obligated to, execute any such amendment, supplement or waiver which affects
the rights, duties or immunities of the Trustee or the Collateral Agent, as
applicable, under this Indenture, any Security Document or the Intercreditor
Agreement.  The Trustee shall be
entitled to receive an indemnity reasonably satisfactory to it and receive, and
shall be fully protected in 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 not be an expense of the Trustee and shall
be paid for by the Company.

 

SECTION 9.07. 
Conformity with Trust Indenture Act.  Every supplemental indenture executed pursuant to this Article
Nine shall conform to the requirements of the TIA as then in effect.

 

ARTICLE TEN

 

GUARANTEE

 

SECTION 10.01. 
Guarantee.

 

Each Guarantor hereby fully,
irrevocably and unconditionally, jointly and severally, guarantees (such
guarantee to be referred to herein as the “Guarantee”), to each of the
Holders and to 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 and Additional PIK Interest, if any, on the
Notes

 

78

 

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 Company to the Holders, the Trustee and the Collateral Agent hereunder,
thereunder or under any Security Document or the Intercreditor Agreement shall
be promptly paid in full or performed, all in accordance with the terms hereof,
thereof and of the Security Documents and Intercreditor Agreement; 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, including borrowings or guarantees of borrowings under the Credit
Agreement.  Each Guarantor hereby agrees
that its obligations hereunder shall be unconditional, irrespective of the
validity, regularity or enforceability of the Notes, this Indenture, any
Security Document or the Intercreditor 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 Company, 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
Company, any right to require a proceeding first against the Company, protest,
notice and all demands whatsoever and covenants that this Guarantee shall not
be discharged except by complete performance of the obligations contained in
the Notes, 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 Company 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 Company or another Guarantor without limitation in accordance with Sections
5.01 and 4.16.  If any Holder
or the Trustee is required by any court or otherwise to return to the Company,
any Guarantor, or any custodian, trustee, liquidator or other similar official
acting in relation to the Company or any Guarantor, any amount paid by the
Company 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 released
from its Guarantee (and may subsequently dissolve) without any action required
on the part of the Trustee or any Holder:

 

(1)           if all of the Capital Stock 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

 

79

 

consolidation) to a
Person other than the Company or any of its Domestic Restricted Subsidiaries
and the Company otherwise complies, to the extent applicable, with the covenant
described below under Section 4.16 that are required to be satisfied
thereunder either prior to or concurrent with the consummation of the
applicable transaction, or

 

(2)           if the Company designates such Guarantor
as an Unrestricted Subsidiary in accordance with Section 4.10, or

 

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

 

(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 and Additional PIK Interest, if
any, on the Notes and all other Obligations under the Notes, this Indenture,
the Security Documents and the Guarantees that are then due and payable, or

 

(5)           upon:

 

(a)           the prior consent of Holders of at
least a majority in aggregate principal amount of Notes outstanding;

 

(b)           the consent of the majority of
Lenders or the Administrative Agent to the release of such Guarantor’s
Guarantee of all Obligations under the Credit Agreement; and

 

(c)           the contemporaneous release of such
Guarantor’s Guarantee of all Obligations under the Credit Agreement.

 

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

 

SECTION 10.03. 
Limitation of Guarantor’s 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 4.16) will not, and the Company will not cause or permit
any Guarantor to, consolidate with or merge with or into any Person other than
the Company or any other Guarantor unless:

 

80

 

(1)           the entity formed by or surviving any
such consolidation or merger (if other than the Guarantor) 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, the District of Columbia or the jurisdiction in which such
Guarantor is organized;

 

(2)           such entity assumes (a) by
supplemental indenture (in form and substance satisfactory to the Trustee),
executed and delivered to the Trustee, all of the obligations of the Guarantor
under the Guarantee and, to the extent applicable, the Intercreditor 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 Security Documents and, to the extent applicable, the Intercreditor
Agreement; 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 Security Documents on the Collateral owned by or transferred
to the surviving entity;

 

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

 

(4)           immediately after giving effect to
such transaction and the use of any net proceeds therefrom on a pro forma
basis, the Company could satisfy the provisions of Section 5.01(2).

 

Any merger or consolidation
of a Guarantor with and into the Company (with the Company being the surviving
entity) or another Guarantor that is a Wholly Owned Subsidiary of the Company
need only comply with Section 5.01(4).

 

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. 
Evidence of Guarantee.

 

To evidence their guarantees
to the Holders set forth in this Article Ten, each of the Guarantors
hereby agrees to execute the notation of Guarantee in substantially the form
included in the Notes attached as Exhibit A-1, Exhibit A-2, Exhibit
B-1 and Exhibit B-2.  Each
such notation of Guarantee shall be signed on behalf of each Guarantor by an
Officer or an assistant Secretary.  An
Officer (who shall, in each case, have been duly authorized by all requisite
corporate actions) of the Guarantors shall execute the Guarantees 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 such
Note, such Note shall nevertheless be valid.

 

81

 

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.

 

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

 

The delivery of any Note by
the Trustee, after the authentication thereof hereunder, shall constitute due
delivery of the Guarantee set forth in this Indenture on behalf of the
Guarantors.

 

SECTION 10.08. 
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.

 

ARTICLE ELEVEN

 

MISCELLANEOUS

 

SECTION 11.01. 
Trust Indenture Act 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 telex, by telecopier or
registered or certified mail, postage prepaid, return receipt requested,
addressed as follows:

 

if to the
Company:

 

Atlantic
Express Transportation Corp.

7 North Street

Staten Island,
NY  10451

Attention:  Chief Executive Officer

 

if to the
Trustee:

 

The Bank of
New York

Corporate
Trust Administration

101 Barclay
Street, 8th Floor West

 

82

 

New York,
NY  10286

 

if to the
Collateral Agent:

 

The Bank of
New York

Corporate
Trust Administration

101 Barclay
Street, 8th Floor West

New York,
NY  10286

 

Each of the Company 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 Company or the Trustee shall be
deemed to have been given or made as of the date so delivered if personally
delivered; when answered back, if telexed; when receipt is acknowledged, if
faxed; and five (5) calendar days after mailing if sent by registered or
certified mail, postage prepaid (except that a notice of change of address or a
notice sent by mail to the Trustee shall not be deemed to have been given until
actually received by the addressee).

 

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.

 

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 Security Document, any Guarantee or the
Notes.  The Company, 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 Company or any Guarantor to the Trustee to take any action
under this Indenture or any Security Document, the Company shall furnish to the
Trustee upon request:

 

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

 

83

 

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 Security Document, 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 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.

 

(a)           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,
WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS. 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.

 

(b)           EACH OF THE PARTIES HERETO IRREVOCABLY CONSENTS TO THE
NON-EXCLUSIVE JURISDICTION OF SUPREME COURT OF NEW YORK, NEW YORK COUNTY AND
THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, NEW
YORK COUNTY AND WAIVES TRIAL BY JURY IN ANY ACTION OR PROCEEDING WITH RESPECT
TO THIS INDENTURE.

 

84

 

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 Company or
any of its Subsidiaries.  Any such
indenture, loan or debt agreement may not be used to interpret this Indenture.

 

SECTION 11.10. 
No Recourse Against
Others.

 

An Affiliate,  past, present or future director, officer,
employee, incorporator or stockholder of the Company or any Guarantor, as such,
shall not have any liability for any obligations of the Company or the
Guarantors under the Notes, the Guarantees, or this Indenture or for any claim
based on, in respect of or by reason of such obligations or their
creation.  Each Holder, by accepting a
Note, waives and releases all such liability. 
Such waiver and release are part of the consideration for the issuance
of the Notes.  The waiver may not be
effective to waive liability under the federal securities laws.

 

SECTION 11.11. 
Successors.

 

All  agreements of the Company and the
Guarantors in this Indenture, the Notes, and the Guarantees shall bind their
successors.  All  agreements of the Trustee and the
Collateral Agent in this Indenture shall bind their 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 OF THE COMPANY AND THE
GUARANTORS 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 INTERESTS

 

SECTION 12.01. 
Security Interest.

 

(a)           To secure the
due and punctual payment of the principal of, premium, if any, and interest on
the Notes and amounts due hereunder and under the Guarantees when and as the
same shall be

 

85

 

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 Company and the Guarantors to the
Holders, the Collateral Agent or the Trustee under this Indenture, the Security
Documents, the Guarantees and the Notes, the Company and the Guarantors hereby
covenant to cause the Security Documents to be executed and delivered concurrently
with this Indenture.

 

(b)           The Trustee and
each Holder, by its acceptance of a Note, consents and agrees to the terms of
each Security Document and the Intercreditor 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
Security Documents and the Intercreditor Agreement and to perform its
obligations and exercise its rights thereunder in accordance therewith.  The Company shall, and shall cause each of
its Domestic Restricted Subsidiaries to, do or cause to be done all such
actions and things as may be necessary or proper, or as may be required by the
provisions of the Security Documents. 
The Company shall, and shall cause each of its Domestic Restricted
Subsidiaries to, take any and all actions required or as may be requested by
the Collateral Agent to cause the Security Documents to create and maintain, as
security for the Obligations contained in this Indenture, the Notes, the
Security Documents and the Guarantees valid and enforceable, perfected 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 (subject to Permitted
Prior Liens), and subject to no other Liens, in each case, except as expressly
provided herein, therein, or in the Intercreditor Agreement.  This Article 12 of this Indenture is
subject to the terms, limitations and conditions set forth in the Intercreditor
Agreement.

 

SECTION 12.02. 
Intentionally Omitted.

 

SECTION 12.03. 
Recording and Opinions.

 

(a)           The Company shall furnish to the
Trustee and the Collateral Agent (if other than the Trustee), such Opinions of
Counsel as required by, at such times as required by, TIA Section 314(b).

 

(b)           Annually, within thirty (30) days
after May 1 of each year and beginning with the year 2004, the Company shall
furnish to the Trustee and the Collateral Agent (if other than the Trustee), an
Opinion of Counsel, dated as of such date, either (i) stating that:  (A) in the opinion of such counsel, action
has been taken with respect to the registering, recording, filing,
re-recording, re-registering and refiling of this Indenture, and all
supplemental indentures, financing statements, continuation statements and
other instruments and documents, and delivery of all certificates, as are then
necessary to perfect or continue the perfection of the security interests
created by the Security Documents and reciting the details of such action or
referring to prior Opinions of Counsel in which such details are given; and (B)
based on relevant laws as in effect on the date of such Opinion of Counsel, all
financing statements, continuation statements and other documents have been
executed and filed that are necessary as of such date and during the succeeding
twenty-four (24) months fully to maintain, perfect or continue the perfection
of such security interests under the Security Documents with respect to the
Collateral and to maintain, preserve, and protect the rights of the Holders,
the Collateral Agent and the Trustee hereunder and under the Security Documents
or (ii) stating that, in the opinion of such counsel, no such action is then
necessary to perfect or continue the perfection of such security interests.

 

SECTION 12.04. 
Release of Collateral.

 

(a)           Subject to the Intercreditor
Agreement, the Collateral Agent shall not at any time release Collateral from
the security interests created by the Security Documents unless such release is
in

 

86

 

accordance with the
provisions of this Indenture, the Intercreditor Agreement and the applicable
Security Documents.

 

(b)           Subject to 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 Security Documents shall be effective as against the
Holders.

 

(c)           The release of any Collateral from
the terms of the Security Documents 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 Security
Documents or pursuant to the Intercreditor Agreement.  To the extent applicable, the Company shall cause TIA Section
314(d) relating to the release of property from the security interests created
by this Indenture and the Security Documents to be complied with.  Any certificate or opinion required by TIA
Section 314(d) may be made by an Officer of the Company, 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 Company or in any
Affiliate of the Company 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 Company.  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 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 Company, the Trustee shall instruct the Collateral
Agent to execute and deliver such documents, instruments or statements and to
take such other action as the Company may request to evidence or confirm that
the Collateral falling under this Section 12.04 has been released from
the Liens of each of the Security Documents. 
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 12.05. 
Specified Releases of Collateral.

 

(a)           The Company and the Guarantors shall
be entitled to obtain a full release of items of Collateral (the “Released
Interests”) from the security interests created by this Indenture, the
Notes and the Security Documents upon compliance with the conditions precedent
set forth in Section 4.16, 8.01 or 8.02 of this Indenture,
the applicable Security Documents and to the extent applicable, the
Intercreditor Agreement.  So long as no
Default or Event of Default exists, upon the request of the Company or any
Guarantor and the furnishing of each of the items required by Section
12.05(b), the Collateral Agent upon the direction of the Trustee (or the
Trustee if acting as Collateral Agent) shall forthwith take such action (at the
request of and the expense of the Company or such Guarantor, without recourse
or warranty and without any representation of any kind), including the delivery
of appropriate UCC-3 termination statements, to release and reconvey to the Company
or such Guarantor all of the Released Interests, and shall deliver such
Released Interests in its possession to the Company or such Guarantor.

 

(b)           So long as no Default or Event of
Default exists, the Company and the Guarantors shall be entitled to obtain a
release of, and the Collateral Agent shall release, the Released

 

87

 

Interests upon compliance
with the condition precedent that the Company or such Guarantor shall have
satisfied all applicable conditions precedent to any such release set forth in
this Indenture, the applicable Security Documents and to the extent applicable,
the Intercreditor Agreement as set forth in an Officers’ Certificate and an
Opinion of Counsel delivered to the Trustee and the Collateral Agent and shall
have delivered to the Trustee and the Collateral Agent the following, as
applicable:

 

(i)            in connection with release of
Collateral resulting from an Asset Sale or other sale, lease, conveyance or
other disposition under Section 4.16, notice from the Company requesting
the release of Released Interests describing the proposed Released Interests;
and

 

(ii)           in connection with release of
Collateral resulting from an Asset Sale or other sale, lease, conveyance or
other disposition under Section 4.16, an Officers’ Certificate of the
Company stating that (A) such Asset Sale or other disposition complies with the
terms and conditions of this Indenture; (B) there is no Default or Event of
Default in effect or continuing on the date thereof, or the date of such Asset
Sale; (C) the release of the Collateral shall not result in a Default or Event
of Default under this Indenture; and (D) all conditions precedent in this
Indenture relating to the release in question have been or shall be complied
with.

 

SECTION 12.06.  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, the Guarantees and the Security Documents 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 below under Section 8.02
and (iii) the occurrence of a legal defeasance or covenant defeasance as
described below under Section 8.01.

 

SECTION 12.07. 
Form and Sufficiency of Release.

 

In the event that the
Company 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 Company
or such Guarantor, and the Company or such Guarantor requests the Trustee or
the Collateral Agent to furnish a written disclaimer, release or quit-claim of
any interest in such property under this Indenture and the Security Documents,
the Collateral Agent and the Trustee, as applicable, shall execute, acknowledge
and deliver to the Company or such Guarantor (in proper form) 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
Security Documents.

 

SECTION 12.08. 
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

 

88

 

disposed
of by the Company be under any obligation to ascertain or inquire into the
authority of the Company to make such sale or other disposition.

 

SECTION 12.09. 
Authorization of Actions to Be Taken by the Collateral Agent Under
the Security Documents.

 

Subject to the provisions of
the applicable Security Documents and the Intercreditor Agreement, (a) the Collateral
Agent shall execute and deliver the Security Documents and the Intercreditor
Agreement 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 Security Documents and (ii) collect and receive
any and all amounts payable in respect of the Obligations of the Company and
the Guarantors hereunder and under the Notes, the Guarantees, the Security
Documents and the Intercreditor Agreement 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 Security Documents 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 Holders, the Trustee or the Collateral Agent).  Notwithstanding the foregoing, the
Collateral Agent may, at the expense of the Company, 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 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 12.10. 
Authorization of Receipt of Funds by the Collateral Agent Under the
Security Documents.

 

The Collateral Agent is
authorized to receive any funds for the benefit of itself, the Trustee and the
Holders distributed under the Security Documents and the Intercreditor
Agreement to the extent permitted under the Intercreditor Agreement, for
turnover to the Trustee to make further distributions of such funds to itself,
the Collateral Agent and the Holders in accordance with the provisions of Section
6.11 and the other provisions of this Indenture.

 

89

 

SIGNATURES

 

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

 

	
   

  	
  ATLANTIC EXPRESS TRANSPORTATION CORP.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 
  

  	
  /s/ DOMENIC GATTO

  	
   

  
	
   

  	
   

  	
  Name: Domenic Gatto

  
	
   

  	
   

  	
  Title: 
  CEO

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  180 JAMAICA
  CORP.

  
	
   

  	
  201 WEST SOTELLO
  REALTY, INC.

  
	
   

  	
  AIRPORT
  SERVICES, INC.

  
	
   

  	
  AMBOY BUS
  CO., INC.

  
	
   

  	
  ATLANTIC
  EXPRESS COACHWAYS, INC.

  
	
   

  	
  ATLANTIC
  EXPRESS NEW ENGLAND, INC.

  
	
   

  	
  ATLANTIC
  EXPRESS OF CALIFORNIA, INC.

  
	
   

  	
  ATLANTIC
  EXPRESS OF ILLINOIS, INC.

  
	
   

  	
  ATLANTIC
  EXPRESS OF L.A. INC.

  
	
   

  	
  ATLANTIC
  EXPRESS OF MISSOURI INC.

  
	
   

  	
  ATLANTIC
  EXPRESS OF NEW JERSEY, INC.

  
	
   

  	
  ATLANTIC
  EXPRESS OF PENNSYLVANIA, INC.

  
	
   

  	
  ATLANTIC
  EXPRESS OF SOUTH CAROLINA, INC.

  
	
   

  	
  ATLANTIC
  PARATRANS OF ARIZONA, INC.

  
	
   

  	
  ATLANTIC
  PARATRANS OF NYC, INC.

  
	
   

  	
  ATLANTIC
  PARATRANS OF PENNSYLVANIA, INC.

  
	
   

  	
  ATLANTIC
  PARATRANS, INC.

  
	
   

  	
  ATLANTIC
  QUEENS BUS CORP.

  
	
   

  	
  ATLANTIC
  TRANSIT, CORP.

  
	
   

  	
  ATLANTIC-CHITTENANGO
  REAL PROPERTY CORP.

  
	
   

  	
  ATLANTIC-CONN.
  TRANSIT, INC.

  
	
   

  	
  ATLANTIC-HUDSON,
  INC.

  
	
   

  	
  BLOCK 7932,
  INC.

  
	
   

  	
  BROOKFIELD
  TRANSIT INC.

  
	
   

  	
  CENTRAL NEW
  YORK REORGANIZATION CORP.

  
	
   

  	
  COURTESY BUS
  CO., INC.

  
	
   

  	
  FIORE BUS
  SERVICE, INC.

  
	
   

  	
  GROOM
  TRANSPORTATION, INC.

  
	
   

  	
  GVD LEASING
  CO., INC.

  
	
   

  	
  JAMES
  MCCARTY LIMO SERVICE, INC.

  
	
   

  	
  JERSEY BUS
  SALES, INC.

  
	
   

  	
  JERSEY
  BUSINESS LAND CO., INC.

  
	
   

  	
  K. CORR,
  INC.

  
	
   

  	
  MCINTIRE
  TRANSPORTATION, INC.

  
	
   

  	
  MERIT
  TRANSPORTATION CORP.

  

 

Indenture

 

 

	
   

  	
  METRO
  AFFILIATES, INC.

  
	
   

  	
  METROPOLITAN
  ESCORT SERVICE, INC.

  
	
   

  	
  MIDWAY
  LEASING INC.

  
	
   

  	
  MOUNTAIN
  TRANSIT, INC.

  
	
   

  	
  R. FIORE BUS
  SERVICE, INC.

  
	
   

  	
  RAYBERN BUS
  SERVICE, INC.

  
	
   

  	
  RAYBERN
  CAPITAL CORP.

  
	
   

  	
  RAYBERN
  EQUITY CORP.

  
	
   

  	
  ROBERT L.
  MCCARTHY & SON, INC.

  
	
   

  	
  STATEN
  ISLAND BUS, INC.

  
	
   

  	
  TEMPORARY
  TRANSIT SERVICE, INC.

  
	
   

  	
  T-NT BUS
  SERVICE, INC.

  
	
   

  	
  TRANSCOMM,
  INC.

  
	
   

  	
  WINSALE,
  INC.

  
	
   

  	
  WRIGHTHOLM BUS LINE, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 
  

  	
  /s/ DOMENIC GATTO

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

90

 

	
   

  	
  THE BANK OF NEW YORK, as Trustee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 
  

  	
  /s/ JULIE SALOVITCH-MILLER

  
	
   

  	
   

  	
  Name: Julie Salovitch-Miller

  
	
   

  	
   

  	
  Title: 
  Vice President

  
	
   

  	
   

  
	
   

  	
  THE BANK OF NEW YORK, as Collateral Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 
  

  	
  /s/ JULIE SALOVITCH-MILLER

  
	
   

  	
   

  	
  Name: Julie Salovitch-Miller

  
	
   

  	
   

  	
  Title: 
  Vice President

  

 

EXHIBIT A-1

 

[FORM OF INITIAL FIXED RATE NOTE]

 

THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, 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 OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT
SUBJECT TO, REGISTRATION.

 

THIS SECURITY WAS ISSUED WITH ORIGINAL ISSUE DISCOUNT
UNDER SECTION 1272, 1273 AND 1275 OF THE INTERNAL REVENUE CODE OF 1986, AS
AMENDED.  YOU MAY CONTACT THE CHIEF
FINANCIAL OFFICER OF THE COMPANY AT ATLANTIC EXPRESS TRANSPORTATION CORP., 7
NORTH STREET, STATEN ISLAND, NY 10302-1205, WHO WILL PROVIDE YOU WITH ANY
REQUIRED INFORMATION REGARDING THE ORIGINAL ISSUE DISCOUNT.

 

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, PRIOR TO THE DATE WHICH IS TWO YEARS AFTER
THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE
COMPANY OR ANY AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY
PREDECESSOR OF SUCH SECURITY), ONLY (A) TO THE COMPANY OR ANY OF ITS
SUBSIDIARIES, (B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED
EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE NOTES ARE ELIGIBLE
FOR RESALE PURSUANT TO RULE 144A, 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 WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN
RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES TO NON-U.S. PURCHASERS
THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER
THE SECURITIES ACT, (E) TO AN INSTITUTIONAL “ACCREDITED INVESTOR” WITHIN THE MEANING
OF 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 OR (F) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS

 

A-1-1

 

OF THE SECURITIES ACT, SUBJECT TO THE COMPANY’S AND
THE TRUSTEE’S, OR TRANSFER AGENT’S, AS APPLICABLE, RIGHT PRIOR TO ANY SUCH
OFFER, SALE OR TRANSFER PURSUANT TO CLAUSES (D), (E), OR (F) TO REQUIRE THE
DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION
SATISFACTORY TO EACH OF THEM, AND IN EACH OF THE FOREGOING CASES, A CERTIFICATE
OF TRANSFER IN THE FORM APPEARING ON THE OTHER SIDE OF THIS SECURITY IS
COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE TRUSTEE OR TRANSFER AGENT.

 

THIS SECURITY WAS INITIALLY ISSUED AS PART OF AN
ISSUANCE OF UNITS (THE “UNITS”), EACH OF WHICH CONSISTS OF $1,000 PRINCIPAL
AMOUNT OF EITHER THE COMPANY’S 12% SENIOR SECURED NOTES DUE 2008 OR SENIOR
SECURED FLOATING RATE NOTES DUE 2008 (THE “NOTES”) AND ONE WARRANT TO PURCHASE
ONE SHARE OF THE COMPANY’S COMMON STOCK (THE “WARRANTS”).

 

PRIOR TO THE EARLIEST TO OCCUR OF (I) 180 DAYS AFTER
THE CLOSING OF THE OFFERING OF THE UNITS, (II) THE DATE ON WHICH A REGISTRATION
STATEMENT FOR A REGISTERED EXCHANGE OFFER WITH RESPECT TO THE NOTES IS DECLARED
EFFECTIVE UNDER THE SECURITIES ACT, (III) THE DATE ON WHICH A REGISTRATION
STATEMENT WITH RESPECT TO THE WARRANT SHARES IS DECLARED EFFECTIVE UNDER  THE SECURITIES ACT, AND (IV) SUCH DATE AS
JEFFERIES & COMPANY, INC. IN ITS SOLE DISCRETION SHALL DETERMINE, THE
SECURITY EVIDENCED BY THIS CERTIFICATE MAY NOT BE TRANSFERRED OR EXCHANGED
SEPARATELY FROM, BUT MAY BE TRANSFERRED OR EXCHANGED ONLY AS A UNIT.

 

A-1-2

 

ATLANTIC EXPRESS TRANSPORTATION CORP.

 

12% SENIOR SECURED NOTES DUE 2008

 

	
  CUSIP No.

  	
   

  	
   

  
	
  No.

  	
   

  	
  $

  

 

Atlantic Express Transportation Corp., a New York corporation (the “Company,”
which term includes any successor entity), for value received promises to pay
to
                                   
or registered assigns the principal sum of
                                   
Dollars (or such principal amount as may be set forth in the records of the
Trustee hereinafter referred to in accordance with the Indenture) on April 15,
2008, and to pay interest thereon as hereinafter set forth.

 

Interest
Rate:  12%

 

Interest
Payment Dates:  Interest will be payable
semi-annually in cash in arrears on April 15 and October 15 of each year,
beginning on October 15, 2004.

 

Record
Dates:  April 1 and October 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.

 

	
   

  	
  ATLANTIC EXPRESS
  TRANSPORTATION CORP.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
  Dated:  April 22, 2004

  	
   

  

 

A-1-3

 

TRUSTEE
CERTIFICATE OF AUTHENTICATION

 

This is one of
the 12% Senior Secured Notes due 2008 referred to in the within-mentioned
Indenture.

 

 

	
   

  	
  THE BANK OF NEW YORK,
  as Trustee

  
	
   

  	
   

  
	
   

  	
   

  
	
  Dated:  April
  22, 2004

  	
  By:

  	
   

  
	
   

  	
   

  	
  Authorized Signatory

  

 

A-1-4

 

(REVERSE OF
SECURITY)

 

12% Senior Secured Note
due 2008

 

1.             Interest.

 

(a)           Generally.  Atlantic Express Transportation Corp., a New
York corporation (the “Company”), promises to pay interest on the
principal amount of this Note at the rate per annum shown above.  Interest on the Notes 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 October 15, 2004. 
Interest will be computed on the basis of a 360-day year comprised of
twelve 30-day months.  The Company will
pay interest on overdue principal of this Note at 1% per annum in excess of the
otherwise applicable interest rate and the Company will pay interest on overdue
installments of interest at such higher rate to the extent lawful. Additional
Interest may accrue on the Notes in certain circumstances pursuant to the
Registration Rights Agreement.

 

(b)           PIK Interest.  In the event that, at any time after
September 30, 2006, the Company fails to comply with the provisions of Section
4.24 of the Indenture then, from and after the first date on which the Company
so fails to comply (the “PIK Interest Trigger Date”) and for so long as
the Notes remains outstanding, additional interest on the Note shall accrue,
from the PIK Interest Trigger Date, at a rate per annum of 2% (the “Additional
PIK Interest”), it being understood that such failure to comply with the
provisions of Section 4.24 of the Indenture shall not constitute an Event of
Default.  Accrued and unpaid Additional
PIK Interest, if any, will be due and payable semi-annually in arrears on each
Interest Payment Date to Holders of record on the Record Date immediately
preceding the Interest Payment Date, and shall be payable by the Company by
issuing additional Fixed Rate Notes with a principal amount equal to the
Additional PIK Interest then due and payable (the “PIK Fixed Rate Notes”).   PIK
Fixed Rate Notes will bear interest (including interest paid on the date of the
maturity of the Notes) and Additional Interest, if any, in a matter identical
to all other Fixed Rate Notes issued under the Indenture.

 

(c)           [FOR REGULATION S TEMPORARY GLOBAL NOTES INSERT: Until this Regulation S
Temporary Global Note is exchanged for one or more Regulation S Permanent
Global Notes, the Holder hereof shall not be entitled to receive payments of
interest hereon; until so exchanged in full, this Regulation S Temporary Global
Note shall in all other respects be entitled to the same benefits as other
Notes under the Indenture.]

 

2.             Method of Payment.  The Company shall pay interest on the Notes
(except defaulted interest) 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

 

A-1-5

 

payments.  The Company shall pay principal and interest
(other than interest payable in PIK Fixed Rate Notes) 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 (other than interest
payable in PIK Fixed Rate Notes) 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, and if a Holder has given wire transfer instructions to the
Company, the Company will make payments on the Notes in accordance with those
instructions.

 

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.  Subject to certain exceptions, the Company
or any of its Subsidiaries may act in any such capacity.

 

4.             Indenture.  The Notes and the Guarantees were issued
under an Indenture, dated as of April 22, 2004 (the “Indenture”), among
the Company, the Guarantors named therein and the Trustee.  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.  The Notes
are secured by the Collateral as more fully described in the Security
Documents.  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
on or After April 15, 2006.  The
Notes will be redeemable at the option of the Company, in whole or in part at
any time or from time to time, on and after April 15, 2006, at the following
Redemption Prices (expressed as percentages of the principal amount thereof) if
redeemed during the periods beginning on the dates indicated below, plus, in
each case, accrued and unpaid interest and Additional Interest and Additional
PIK Interest (which, for such purpose, shall be payable in cash), if any,
thereon to the Redemption Date:

 

	
  Period

  	
   

  	
  Percentage

  	
   

  
	
  On or after April 15, 2006

  	
   

  	
  106.000

  	
  %

  
	
  On or after April 15, 2007

  	
   

  	
  103.000

  	
  %

  
	
  On or after October 15, 2007

  	
   

  	
  100.000

  	
  %

  

 

(b)           Optional Redemption
upon Equity Offerings.  At any time,
or from time to time, prior to April 15, 2006, the Company may, at its option,
use an amount equal to 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
(which includes Additional Notes and PIK Notes, if any) issued

 

A-1-6

 

under the Indenture at a
Redemption Price equal to 112% of the aggregate principal amount thereof, plus
accrued and unpaid interest and Additional Interest and Additional PIK Interest
(which, for such purpose, shall be payable in cash) thereon, if any, to the
Redemption Date.  In order to effect the
foregoing redemption with the proceeds of any Equity Offering, (1) at
least 65% of the aggregate original principal amount of the Notes issued under
the Indenture must remain outstanding immediately after such Redemption Date
and (2) the Company must make such redemption not more than 120 days after
the consummation of such Equity Offering.

 

6.             Notice of
Redemption.  Notice of redemption
will be mailed by first-class mail at least 15 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.  If fewer
than all of the Notes are to be redeemed, at any time, selection of Notes for
redemption will be made by the Trustee in compliance with the requirements of
the principal national securities exchange, if any, on which the Notes are
listed, or, if the Notes are not so listed, on a pro rata basis or by such
method as the Trustee deems to be fair and appropriate; provided that no partial redemption will
reduce the principal amount of a Note not redeemed to a denomination of less
than $1,000; and provided, further, that any such partial redemption
made with the proceeds of an Equity Offering will be made only on a pro rata
basis or on as nearly a pro rata basis as practicable (subject to the
procedures of the DTC or any other depository).  Notes in denominations of $1,000 or more may be redeemed in part.

 

Except as set
forth in the Indenture, if monies for the redemption of the Notes called for
redemption shall have been deposited with the Paying Agent for redemption on
such redemption date, then, unless the Company defaults in the payment of such
redemption price plus accrued interest and Additional Interest and Additional
PIK Interest, if any, the Notes called for redemption will cease to bear
interest from and after such redemption date, and the only remaining right of
the Holders of such Notes will be to receive payment of the redemption price
plus accrued interest and Additional Interest and Additional PIK Interest
(which, for such purpose, shall be payable in cash), if any, as of the
redemption date upon surrender to the Paying Agent of the Notes redeemed.

 

7.             Offers to Purchase.  Sections 4.15, 4.16 and 4.21 of the
Indenture provide that upon the occurrence of a Change of Control, after
certain Asset Sales, and in connection with an Excess Cash Flow Offer, 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.

 

8.             Registration
Rights.  Pursuant to the
Registration Rights Agreement among the Company, the Guarantors and the Initial
Purchaser, 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 12% Senior Secured Notes due 2008, which have been
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.

 

A-1-7

 

9.             Denominations;
Transfer; Exchange.  The Notes are
in registered form, without coupons, in denominations of $1,000 and integral
multiples thereof, except that PIK Fixed
Rate Notes may be issued in smaller denominations.  A Holder shall register the transfer of or
exchange of Notes in accordance with the Indenture.  The Registrar and the Trustee 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.

 

10.           Persons Deemed
Owners.  The registered Holder of a
Note shall be treated as the owner of it for all purposes, subject to the
provisions of the Indenture.

 

11.           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.

 

12.           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 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 on the Notes).

 

13.           Amendment;
Supplement; Waiver.  Subject to
certain exceptions, the Indenture, the Notes or the Guarantees may be amended
or supplemented with the written consent of the Holders of at least 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.  Without notice to or 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
certificated Notes or Guarantees, comply with the requirements of the
Commission in order to maintain the qualification of the Indenture under the
TIA, or comply with Article Five of the Indenture or make any other change that
does not adversely affect in any material respect the rights of any Holder of a
Note.

 

14.           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 Capital Stock 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, make capital expenditures 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.

 

A-1-8

 

15.           Successors.  When a successor assumes, in accordance with
the Indenture, all the obligations of its predecessor under the Notes, the
Guarantees and the Indenture, the predecessor will be released from those
obligations.

 

16.           Defaults and
Remedies.  If an Event of Default
occurs and is continuing (other than an Event of Default specified in Sections
6.01(6) or (7) of the Indenture, in which cases such amounts would
automatically become immediately due and payable), the Trustee or the Holders
of at least 25% in aggregate principal amount of Notes then outstanding may
declare the principal of and premium, if any, accrued interest and Additional
Interest and Additional PIK Interest (which, for such purpose, shall be payable
in cash), if any, on 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 reasonably satisfactory to it. 
The Indenture permits, subject to certain limitations therein provided,
Holders of a majority in aggregate principal amount 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, premium, or interest) if it determines that withholding
notice is in their interest.

 

17.           Trustee Dealings
with Company.  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, its Subsidiaries or
their respective Affiliates as if it were not the Trustee.

 

18.           No Recourse Against
Others.  No Affiliate, past, present
or future, director, officer, employee, incorporator or stockholder, as such,
of the Company or any Guarantors shall have any liability for any obligation of
the Company under the Notes, the Guarantees or the Indenture or for any claim
based on, in respect of or by reason of such obligations or their
creation.  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.

 

19.           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.

 

20.           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.

 

21.           Authentication.  This Note shall not be valid until the
Trustee or Authenticating Agent manually signs the certificate of
authentication on this Note.

 

22.           Governing Law.  The laws of the State of New York shall
govern this Note, the Guarantees and the Indenture, without regard to
principles of conflict of laws.

 

23.           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),

 

A-1-9

 

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).

 

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:  Atlantic Express
Transportation Corp., 7 North Street, Staten Island, New York 10451,
Attention:  Chief Executive Officer.

 

A-1-10

 

FORM OF GUARANTEE

 

[Name of
Guarantor] and its successors under the Indenture fully, jointly and severally
with any other Guarantors, hereby irrevocably and unconditionally guarantees,
on a senior secured basis, (i) the due and punctual payment of the principal
of, premium, if any, and interest and Additional Interest and Additional PIK
Interest, if any, on the Notes, whether at maturity, by acceleration or
otherwise, the due and punctual payment of interest on the overdue principal of
and interest and Additional Interest and Additional PIK Interest, if any, on
the Notes, to the extent lawful, and the due and punctual performance of all
other obligations of Atlantic Express Transportation Corp. (the “Company”)
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.

 

This Guarantee
shall be binding upon [Name of Guarantor] and its successors and assigns and
shall inure to the benefit of the successors and assigns of the Trustee and the
Holders and, in the event of any transfer or assignment of rights by any Holder
or the Trustee, the rights and privileges herein conferred upon that party
shall automatically extend to and be vested in such transferee or assignee, all
subject to the terms and conditions hereof.

 

This Guarantee
shall not be valid or obligatory for any purpose until the certificate of
authentication on the Note upon which this Guarantee is noted shall have been
executed by the Trustee under the Indenture by the manual signature of one of
its authorized officers.

 

This Guarantee
is subject to release upon the terms set forth in the Indenture.

 

THE
OBLIGATIONS OF THE UNDERSIGNED TO HOLDERS OF THE NOTES AND TO THE TRUSTEE
PURSUANT TO THIS 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.

 

This Guarantee
shall be governed by and construed in accordance with the laws of the State of
New York, as applied to contracts made and performed in the State of New York,
without regard to principals of conflicts of laws.

 

	
   

  	
  [NAME OF GUARANTOR]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

A-1-11

 

ASSIGNMENT FORM

 

If you the
Holder want to assign this Note, fill in the form below and have your signature
guaranteed:

 

I or we assign and transfer this Note to:

 

	
   

  
	
   

  
	
   

  
	
  (Print or type name, address and zip code and

  
	
  social security or tax ID number of assignee)

  

 

and irrevocably
appoint                                                                                                                                                                         agent
to transfer this Note on the books of the Company.  The agent may substitute another to act for him.

 

	
  Dated:

  	
   

  	
   

  	
  Signed:

  	
   

  
	
   

  	
   

  	
  (Sign exactly as your name appears on the other side of this Note)

  
	
   

  	
   

  
	
  Signature Guarantee:

  	
   

  	
   

  
								

 

In connection
with any transfer of this Note occurring prior to the date which is the earlier
of (i) the date of the declaration by the SEC of the effectiveness of a
registration statement under the Securities Act of 1933, as amended (the “Securities
Act”), covering resales of this Note (which effectiveness shall not have
been suspended or terminated at the date of the transfer) and (ii)
[          ,          ],
the undersigned confirms that it has not utilized any general solicitation or
general advertising in connection with the transfer and that this Note is being
transferred:

 

[Check One]

 

(1)
o                      to the Company or a subsidiary
thereof; or

 

(2)
o                      pursuant to and in compliance
with Rule 144A under the Securities Act; or

 

(3)
o                      to an institutional “accredited
investor” (as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities
Act) that has furnished to the Trustee a signed letter containing certain
representations and agreements (the form of which letter can be obtained from
the Trustee); or

 

(4)
o                      outside the United States to a
person other than a “U.S. person” in compliance with Rule 904 of Regulation S
under the Securities Act; or

 

(5)
o                      pursuant to the exemption from
registration provided by Rule 144 under the Securities Act; or

 

A-1-12

 

(6)
o                      pursuant to an effective
registration statement under the Securities Act.

 

Unless one of the boxes is checked, the Trustee will
refuse to register any of the Notes evidenced by this certificate in the name
of any person other than the registered Holder thereof; provided that if
box (3), (4) or (5) is checked, the Company or the Trustee may require, prior
to registering any such transfer of the Notes, in its sole discretion, such
legal opinions, certifications (including an investment letter in the case of
box (3) or (4)) and other information as the Trustee or the Company has
reasonably requested to confirm that such transfer is being made pursuant to an
exemption from, or in a transaction not subject to, the registration
requirements of the Securities Act.

 

If none of the
foregoing boxes is checked, the Trustee or Registrar shall not be obligated to
register this Note in the name of any person other than the Holder hereof
unless and until the conditions to any such transfer of registration set forth
herein and in Section 2.15 of the Indenture shall have been satisfied.

 

	
  Dated:

  	
   

  	
   

  	
  Signed:

  	
   

  
	
   

  	
   

  	
  (Sign exactly as your name appears on

  the other side of this Note)

  
	
   

  	
   

  
	
  Signature Guarantee:

  	
   

  	
   

  
							

 

TO BE COMPLETED BY PURCHASER IF (2) ABOVE IS CHECKED

 

The
undersigned represents and warrants that it is purchasing this Note for its own
account or an account with respect to which it exercises sole investment
discretion and that it and any such account is a “qualified institutional
buyer” within the meaning of Rule 144A under the Securities Act and is aware
that the sale to it is being made in reliance on Rule 144A and acknowledges
that it has received such information regarding the Company as the undersigned
has requested pursuant to Rule 144A or has determined not to request such
information and that it is aware that the transferor is relying upon the
undersigned’s foregoing representations in order to claim the exemption from
registration provided by Rule 144A.

 

	
  Dated:  

  	
   

  	
   

  	
   

  
	
   

  	
  NOTICE:  To
  be executed by an executive officer

  

 

A-1-13

 

[OPTION OF HOLDER TO ELECT PURCHASE]

 

If you want to
elect to have this Note purchased by the Company pursuant to Section 4.15,
Section 4.16 or Section 4.21 of the Indenture, check the appropriate box:

 

Section 4.15  o

 

Section 4.16  o

 

Section 4.21  o

 

If you want to
elect to have only part of this Note purchased by the Company pursuant to
Section 4.15, Section 4.16 or Section 4.21 of the Indenture, state the amount
you elect to have purchased:

 

	
  $

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Dated:

  	
   

  	
   

  	
   

  
	
   

  	
  NOTICE:

  	
  The signature on this assignment must correspond with the name as it
  appears upon the face of the within Note in every particular without
  alteration or enlargement or any change whatsoever and be guaranteed by the
  endorser’s bank or broker.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  Signature Guarantee:

  	
   

  	
   

  
										

 

A-1-14

 

EXHIBIT A-2

 

[FORM OF INITIAL FLOATING RATE NOTE]

 

THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, 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 OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT
SUBJECT TO, REGISTRATION.

 

THIS SECURITY WAS ISSUED WITH ORIGINAL ISSUE DISCOUNT
UNDER SECTION 1272, 1273 AND 1275 OF THE INTERNAL REVENUE CODE OF 1986, AS
AMENDED.  YOU MAY CONTACT THE CHIEF
FINANCIAL OFFICER OF THE COMPANY AT ATLANTIC EXPRESS TRANSPORTATION CORP., 7
NORTH STREET, STATEN ISLAND, NY 10302-1205, WHO WILL PROVIDE YOU WITH ANY
REQUIRED INFORMATION REGARDING THE ORIGINAL ISSUE DISCOUNT.

 

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, PRIOR TO THE DATE WHICH IS TWO YEARS AFTER
THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE
COMPANY OR ANY AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY
PREDECESSOR OF SUCH SECURITY), ONLY (A) TO THE COMPANY OR ANY OF ITS
SUBSIDIARIES, (B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED
EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE NOTES ARE ELIGIBLE
FOR RESALE PURSUANT TO RULE 144A, 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 WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN
RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES TO NON-U.S. PURCHASERS
THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER
THE SECURITIES ACT, (E) TO AN INSTITUTIONAL “ACCREDITED INVESTOR” WITHIN THE
MEANING OF 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 OR (F) PURSUANT TO ANOTHER
AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS

 

A-2-1

 

OF THE SECURITIES ACT, SUBJECT TO THE COMPANY’S AND
THE TRUSTEE’S, OR TRANSFER AGENT’S, AS APPLICABLE, RIGHT PRIOR TO ANY SUCH
OFFER, SALE OR TRANSFER PURSUANT TO CLAUSES (D), (E), OR (F) TO REQUIRE THE
DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION
SATISFACTORY TO EACH OF THEM, AND IN EACH OF THE FOREGOING CASES, A CERTIFICATE
OF TRANSFER IN THE FORM APPEARING ON THE OTHER SIDE OF THIS SECURITY IS
COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE TRUSTEE OR TRANSFER AGENT.

 

THIS SECURITY WAS INITIALLY ISSUED AS PART OF AN
ISSUANCE OF UNITS (THE “UNITS”), EACH OF WHICH CONSISTS OF $1,000 PRINCIPAL
AMOUNT OF EITHER THE COMPANY’S 12% SENIOR SECURED NOTES DUE 2008 OR SENIOR
SECURED FLOATING RATE NOTES DUE 2008 (THE “NOTES”) AND ONE WARRANT TO PURCHASE
ONE SHARE OF THE COMPANY’S COMMON STOCK (THE “WARRANTS”).

 

PRIOR TO THE EARLIEST TO OCCUR OF (I) 180 DAYS AFTER
THE CLOSING OF THE OFFERING OF THE UNITS, (II) THE DATE ON WHICH A REGISTRATION
STATEMENT FOR A REGISTERED EXCHANGE OFFER WITH RESPECT TO THE NOTES IS DECLARED
EFFECTIVE UNDER THE SECURITIES ACT, (III) THE DATE ON WHICH A REGISTRATION
STATEMENT WITH RESPECT TO THE WARRANT SHARES IS DECLARED EFFECTIVE UNDER  THE SECURITIES ACT, AND (IV) SUCH DATE AS
JEFFERIES & COMPANY, INC. IN ITS SOLE DISCRETION SHALL DETERMINE, THE
SECURITY EVIDENCED BY THIS CERTIFICATE MAY NOT BE TRANSFERRED OR EXCHANGED
SEPARATELY FROM, BUT MAY BE TRANSFERRED OR EXCHANGED ONLY AS A UNIT.

 

A-2-2

 

ATLANTIC EXPRESS TRANSPORTATION CORP.

 

SENIOR SECURED FLOATING RATE NOTES DUE 2008

 

	
  CUSIP No.

  	
   

  
	
  No.

  	
  $

  

 

Atlantic Express Transportation Corp., a New York corporation (the “Company,”
which term includes any successor entity), for value received promises to pay
to
                                    
or registered assigns the principal sum of
                                    
Dollars (or such principal amount as may be set forth in the records of the
Trustee hereinafter referred to in accordance with the Indenture) on April 15,
2008, and to pay interest thereon as hereinafter set forth.

 

Interest
Rate:  Interest on this Note will accrue
on a floating rate calculated in accordance with Section 1 of this Note.

 

Interest
Payment Dates:  Interest will be payable
semi-annually in cash in arrears on April 15 and October 15 of each year,
beginning on October 15, 2004.

 

Record
Dates:  April 1 and October 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.

 

	
   

  	
  ATLANTIC EXPRESS
  TRANSPORTATION CORP.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
  Dated:  April 22, 2004

  	
   

  

 

A-2-3

 

TRUSTEE
CERTIFICATE OF AUTHENTICATION

 

This is one of
the Senior Secured Floating Rate Notes due 2008 referred to in the
within-mentioned Indenture.

 

	
   

  	
  THE BANK OF NEW YORK,
  as Trustee

  
	
   

  	
   

  
	
   

  	
   

  
	
  Dated:  April
  22, 2004

  	
  By:

  	
   

  
	
   

  	
   

  	
  Authorized Signatory

  

 

A-2-4

 

(REVERSE OF
SECURITY)

 

Senior Secured Floating
Rate Note due 2008

 

1.             Interest.

 

(a)           Generally.  Atlantic Express Transportation Corp., a New
York corporation (the “Company”), promises to pay interest on the
principal amount of this Note at the rate per annum shown above.  Interest on the Notes 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 (each such period, an “Interest
Accrual Period”).  The Company will
pay interest semi-annually in arrears on each Interest Payment Date, commencing
October 15, 2004.  Interest will be
computed on the basis of a 360-day year comprised of twelve 30-day months.  The Company will pay interest on overdue
principal of this Note at 1% per annum in excess of the otherwise applicable
interest rate and the Company will pay interest on overdue installments of
interest at such higher rate to the extent lawful. Additional Interest may
accrue on the Notes in certain circumstances pursuant to the Registration
Rights Agreement.

 

(b)           Interest Rate.  The Company will appoint the Trustee or
another financial institution (the “Calculation Agent”) to calculate the
interest rate for the Senior Secured Floating Rate Notes. “LIBOR” will
be determined by the Calculation Agent in accordance with the following
provisions:

 

(i)            LIBOR for any Interest
Accrual Period will equal to the rate, as determined by the Calculation Agent,
for six-month U.S. dollar deposits which appears on the Telerate Page 3750 as
of 11:00 a.m., London time, on the applicable LIBOR Determination Date, as
defined below, as reported by Bloomberg Financial Markets Commodities News. “LIBOR
Determination Date” means, with respect to any Interest Accrual Period, the
second London Banking Day prior to the first day of such Interest Accrual
Period. “London Banking Day” means any day on which commercial banks are
open for business, including dealings in foreign exchange and foreign currency
deposits, in London.

 

(ii)           If, on any LIBOR
Determination Date, such rate does not appear on the Telerate Page 3750, the
Calculation Agent will determine the arithmetic mean of the offered quotations
of the Reference Banks, as defined below, to prime banks in the London
interbank market for Eurodollar deposits for the relevant term by reference to
requests for quotations as of approximately 11:00 a.m., London time, on such
LIBOR Determination Date made by the Calculation Agent to the Reference Banks.
If, on the LIBOR Determination Date, at least two of the Reference Banks
provide such quotations, LIBOR will equal such arithmetic mean. If, on any
LIBOR Determination Date, only one or none of the Reference Banks provide such
quotations, LIBOR will be deemed to be the arithmetic mean of the offered
quotations that the leading banks in New York City selected by the Calculation
Agent, after consultation with the Company, are quoting on

 

A-2-5

 

the relevant LIBOR
Determination Date for U.S. dollar deposits for the relevant term, to the
principal London offices of leading banks in the London interbank market.

 

(iii)          If the Calculation Agent
is required but is unable to determine a rate in accordance with at least one
of the procedures provided above, LIBOR with respect to such Interest Accrual
Period will be LIBOR as calculated on the immediately preceding LIBOR
Determination Date.

 

For the
purpose of clause (ii) above, all percentages resulting from such
calculations will be rounded, if necessary, to the nearest one thirty-second of
a percentage point and, for purposes of clause (iii) above, all
percentages resulting from such calculations will be rounded, if necessary, to
the nearest one hundred-thousandth of a percentage point.

 

(c)           Certain Definitions.  As used in this Section 1, the
following terms shall have the following meanings:

 

(i)            “Reference Banks”
means four major banks in the London interbank market selected by the
Calculation Agent.

 

(ii)           “Telerate Page 3750”
means the display page currently so designated on the Moneyline Telerate
Service or such other page as may replace such page on such service for the
purpose of displaying comparable rates.

 

(d)                           PIK
Interest.  In the event that, at any
time after September 30, 2006, the Company fails to comply with the provisions
of Section 4.24 of the Indenture then, from and after the first date on which
the Company so fails to comply (the “PIK Interest Trigger Date”) and for
so long as the Notes remains outstanding, additional interest on the Note shall
accrue, from the PIK Interest Trigger Date, at a rate per annum of 2% (the “Additional
PIK Interest”), it being understood that such failure to comply with the
provisions of Section 4.24 of the Indenture shall not constitute an Event of
Default.  Accrued and unpaid Additional
PIK Interest, if any, will be due and payable semi-annually in arrears on each
Interest Payment Date to Holders of record on the Record Date immediately
preceding the Interest Payment Date, and shall be payable by the Company by
issuing additional Floating Rate Notes with a principal amount equal to the
Additional PIK Interest then due and payable (the “PIK Floating Rate Notes”).   PIK
Floating Rate Notes will bear interest (including interest paid on the date of
the maturity of the Notes) and Additional Interest, if any, in a matter
identical to all other Floating Rate Notes issued under the Indenture.

 

(e)           [FOR REGULATION S TEMPORARY GLOBAL NOTES INSERT: Until this Regulation S
Temporary Global Note is exchanged for one or more Regulation S Permanent
Global Notes, the Holder hereof shall not be entitled to receive payments of
interest hereon; until so exchanged in full, this Regulation S Temporary Global
Note shall in all other respects be entitled to the same benefits as other
Notes under the Indenture.]

 

2.             Method of Payment.  The Company shall pay interest on the Notes
(except defaulted interest) 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

 

A-2-6

 

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
(other than interest payable in PIK Floating Rate Notes) 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 (other than interest
payable in PIK Floating Rate Notes) 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, and if a Holder has given wire transfer instructions to the
Company, the Company will make payments on the Notes in accordance with those
instructions.

 

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.  Subject to certain exceptions, the Company
or any of its Subsidiaries may act in any such capacity.

 

4.             Indenture.  The Notes and the Guarantees were issued
under an Indenture, dated as of April 22, 2004 (the “Indenture”), among
the Company, the Guarantors named therein and the Trustee.  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.  The Notes are secured
by the Collateral as more fully described in the Security Documents.  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
on or After April 15, 2006.  The
Notes will be redeemable at the option of the Company, in whole or in part at
any time or from time to time, on and after April 15, 2006, at the following
Redemption Prices (expressed as percentages of the principal amount thereof) if
redeemed during the periods beginning on the dates indicated below, plus, in
each case, accrued and unpaid interest and Additional Interest and Additional
PIK Interest (which, for such purpose, shall be payable in cash), if any,
thereon to the Redemption Date:

 

	
  Period

  	
   

  	
  Percentage

  	
   

  
	
  On or after April 15, 2006

  	
   

  	
  106.000

  	
  %

  
	
  On or after April 15, 2007

  	
   

  	
  103.000

  	
  %

  
	
  On or after October 15, 2007

  	
   

  	
  100.000

  	
  %

  

 

(b)           Optional Redemption
upon Equity Offerings.  At any time,
or from time to time, prior to April 15, 2006, the Company may, at its option,
use an amount equal to the net

 

A-2-7

 

cash proceeds of one or
more Equity Offerings to redeem up to 35% of the aggregate principal amount at
maturity of the Notes (which includes Additional Notes and PIK Notes, if any)
issued under the Indenture at a Redemption Price equal to 112% of the aggregate
principal amount thereof, plus accrued and unpaid interest and Additional
Interest and Additional PIK Interest (which, for such purpose, shall be payable
in cash) thereon, if any, to the Redemption Date.  In order to effect the foregoing redemption with the proceeds of
any Equity Offering, (1) at least 65% of the aggregate original principal
amount of the Notes issued under the Indenture must remain outstanding
immediately after such Redemption Date and (2) the Company must make such
redemption not more than 120 days after the consummation of such Equity
Offering.

 

6.             Notice of
Redemption.  Notice of redemption
will be mailed by first-class mail at least 15 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.  If fewer
than all of the Notes are to be redeemed, at any time, selection of Notes for
redemption will be made by the Trustee in compliance with the requirements of
the principal national securities exchange, if any, on which the Notes are
listed, or, if the Notes are not so listed, on a pro rata basis or by such
method as the Trustee deems to be fair and appropriate; provided that no partial redemption will
reduce the principal amount of a Note not redeemed to a denomination of less
than $1,000; and provided, further, that any such partial redemption
made with the proceeds of an Equity Offering will be made only on a pro rata
basis or on as nearly a pro rata basis as practicable (subject to the
procedures of the DTC or any other depository).  Notes in denominations of $1,000 or more may be redeemed in part.

 

Except as set
forth in the Indenture, if monies for the redemption of the Notes called for
redemption shall have been deposited with the Paying Agent for redemption on
such redemption date, then, unless the Company defaults in the payment of such
redemption price plus accrued interest and Additional Interest and Additional
PIK Interest, if any, the Notes called for redemption will cease to bear
interest from and after such redemption date, and the only remaining right of
the Holders of such Notes will be to receive payment of the redemption price
plus accrued interest and Additional Interest and Additional PIK Interest
(which, for such purpose, shall be payable in cash), if any, as of the
redemption date upon surrender to the Paying Agent of the Notes redeemed.

 

7.             Offers to Purchase.  Sections 4.15, 4.16 and 4.21 of the
Indenture provide that upon the occurrence of a Change of Control, after
certain Asset Sales, and in connection with an Excess Cash Flow Offer, 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.

 

8.             Registration
Rights.  Pursuant to the
Registration Rights Agreement among the Company, the Guarantors and the Initial
Purchaser, 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 Senior Secured Floating Rate Notes due 2008, which have
been 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

 

A-2-8

 

conditions, all pursuant
to and in accordance with the terms of the Registration Rights Agreement.

 

9.             Denominations;
Transfer; Exchange.  The Notes are
in registered form, without coupons, in denominations of $1,000 and integral
multiples thereof, except that PIK Floating Rate Notes may be issued in smaller
denominations.  A Holder shall register
the transfer of or exchange of Notes in accordance with the Indenture.  The Registrar and the Trustee 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.

 

10.           Persons Deemed
Owners.  The registered Holder of a
Note shall be treated as the owner of it for all purposes, subject to the
provisions of the Indenture.

 

11.           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.

 

12.           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 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 on the Notes).

 

13.           Amendment;
Supplement; Waiver.  Subject to
certain exceptions, the Indenture, the Notes or the Guarantees may be amended
or supplemented with the written consent of the Holders of at least 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.  Without notice to or 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
certificated Notes or Guarantees, comply with the requirements of the
Commission in order to maintain the qualification of the Indenture under the
TIA, or comply with Article Five of the Indenture or make any other change that
does not adversely affect in any material respect the rights of any Holder of a
Note.

 

14.           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 Capital Stock 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, make capital expenditures or adopt a plan of
liquidation.  Such limitations are
subject to a number of important qualifications and

 

A-2-9

 

exceptions.  The Company must annually report to the
Trustee on compliance with such limitations.

 

15.           Successors.  When a successor assumes, in accordance with
the Indenture, all the obligations of its predecessor under the Notes, the
Guarantees and the Indenture, the predecessor will be released from those
obligations.

 

16.           Defaults and
Remedies.  If an Event of Default
occurs and is continuing (other than an Event of Default specified in Sections
6.01(6) or (7) of the Indenture, in which cases such amounts would
automatically become immediately due and payable), the Trustee or the Holders
of at least 25% in aggregate principal amount of Notes then outstanding may
declare the principal of and premium, if any, accrued interest and Additional
Interest and Additional PIK Interest (which for such purpose, shall be payable
in cash), if any, on 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
reasonably satisfactory to it.  The
Indenture permits, subject to certain limitations therein provided, Holders of
a majority in aggregate principal amount 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, premium, or interest) if it determines that withholding
notice is in their interest.

 

17.           Trustee Dealings
with Company.  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, its Subsidiaries or
their respective Affiliates as if it were not the Trustee.

 

18.           No Recourse Against
Others.  No Affiliate, past, present
or future, director, officer, employee, incorporator or stockholder, as such,
of the Company or any Guarantors shall have any liability for any obligation of
the Company under the Notes, the Guarantees or the Indenture or for any claim
based on, in respect of or by reason of such obligations or their
creation.  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.

 

19.           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.

 

20.           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.

 

21.           Authentication.  This Note shall not be valid until the
Trustee or Authenticating Agent manually signs the certificate of
authentication on this Note.

 

22.           Governing Law.  The laws of the State of New York shall
govern this Note, the Guarantees and the Indenture, without regard to
principles of conflict of laws.

 

A-2-10

 

23.           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).

 

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:  Atlantic Express
Transportation Corp., 7 North Street, Staten Island, New York 10451,
Attention:  Chief Executive Officer.

 

A-2-11

 

FORM OF GUARANTEE

 

[Name of
Guarantor] and its successors under the Indenture fully, jointly and severally
with any other Guarantors, hereby irrevocably and unconditionally guarantees,
on a senior secured basis, (i) the due and punctual payment of the principal
of, premium, if any, and interest and Additional Interest and Additional PIK
Interest, if any, on the Notes, whether at maturity, by acceleration or
otherwise, the due and punctual payment of interest on the overdue principal of
and interest and Additional Interest and Additional PIK Interest, if any, on
the Notes, to the extent lawful, and the due and punctual performance of all
other obligations of Atlantic Express Transportation Corp. (the “Company”)
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.

 

This Guarantee
shall be binding upon [Name of Guarantor] and its successors and assigns and
shall inure to the benefit of the successors and assigns of the Trustee and the
Holders and, in the event of any transfer or assignment of rights by any Holder
or the Trustee, the rights and privileges herein conferred upon that party
shall automatically extend to and be vested in such transferee or assignee, all
subject to the terms and conditions hereof.

 

This Guarantee
shall not be valid or obligatory for any purpose until the certificate of
authentication on the Note upon which this Guarantee is noted shall have been
executed by the Trustee under the Indenture by the manual signature of one of
its authorized officers.

 

This Guarantee
is subject to release upon the terms set forth in the Indenture.

 

THE
OBLIGATIONS OF THE UNDERSIGNED TO HOLDERS OF THE NOTES AND TO THE TRUSTEE
PURSUANT TO THIS 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.

 

This Guarantee
shall be governed by and construed in accordance with the laws of the State of
New York, as applied to contracts made and performed in the State of New York,
without regard to principals of conflicts of laws.

 

	
   

  	
  [NAME OF GUARANTOR]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

A-2-12

 

ASSIGNMENT FORM

 

If you the
Holder want to assign this Note, fill in the form below and have your signature
guaranteed:

 

I or we assign and transfer this Note to:

 

	
   

  
	
   

  
	
   

  
	
  (Print or type name, address and zip code and

  
	
  social security or tax ID number of assignee)

  

 

and irrevocably
appoint                                                                                                                                                                         agent
to transfer this Note on the books of the Company.  The agent may substitute another to act for him.

 

	
  Dated:

  	
   

  	
   

  	
  Signed:

  	
   

  
	
   

  	
   

  	
  (Sign exactly as your name appears on the other side of this Note)

  
	
   

  	
   

  
	
   

  	
   

  
	
  Signature Guarantee:

  	
   

  	
   

  
							

 

In connection
with any transfer of this Note occurring prior to the date which is the earlier
of (i) the date of the declaration by the SEC of the effectiveness of a
registration statement under the Securities Act of 1933, as amended (the “Securities
Act”), covering resales of this Note (which effectiveness shall not have
been suspended or terminated at the date of the transfer) and (ii)
[            ,         ],
the undersigned confirms that it has not utilized any general solicitation or
general advertising in connection with the transfer and that this Note is being
transferred:

 

[Check One]

 

(1)
o                      to the Company or a subsidiary
thereof; or

 

(2)
o                      pursuant to and in compliance
with Rule 144A under the Securities Act; or

 

(3)
o                      to an institutional “accredited
investor” (as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities
Act) that has furnished to the Trustee a signed letter containing certain
representations and agreements (the form of which letter can be obtained from
the Trustee); or

 

(4)
o                      outside the United States to a
person other than a “U.S. person” in compliance with Rule 904 of Regulation S
under the Securities Act; or

 

(5)
o                      pursuant to the exemption from
registration provided by Rule 144 under the Securities Act; or

 

A-2-13

 

(6)
o                      pursuant to an effective
registration statement under the Securities Act.

 

Unless one of the boxes is checked, the Trustee will
refuse to register any of the Notes evidenced by this certificate in the name
of any person other than the registered Holder thereof; provided that if
box (3), (4) or (5) is checked, the Company or the Trustee may require, prior
to registering any such transfer of the Notes, in its sole discretion, such
legal opinions, certifications (including an investment letter in the case of
box (3) or (4)) and other information as the Trustee or the Company has
reasonably requested to confirm that such transfer is being made pursuant to an
exemption from, or in a transaction not subject to, the registration
requirements of the Securities Act.

 

If none of the
foregoing boxes is checked, the Trustee or Registrar shall not be obligated to
register this Note in the name of any person other than the Holder hereof
unless and until the conditions to any such transfer of registration set forth
herein and in Section 2.15 of the Indenture shall have been satisfied.

 

	
  Dated:

  	
   

  	
   

  	
  Signed:

  	
   

  
	
   

  	
   

  	
  (Sign exactly as your name appears on the other side of this Note)

  
	
   

  	
   

  
	
  Signature Guarantee:

  	
   

  	
   

  
							

 

TO BE COMPLETED BY PURCHASER IF (2) ABOVE IS CHECKED

 

The
undersigned represents and warrants that it is purchasing this Note for its own
account or an account with respect to which it exercises sole investment
discretion and that it and any such account is a “qualified institutional
buyer” within the meaning of Rule 144A under the Securities Act and is aware
that the sale to it is being made in reliance on Rule 144A and acknowledges
that it has received such information regarding the Company as the undersigned
has requested pursuant to Rule 144A or has determined not to request such
information and that it is aware that the transferor is relying upon the
undersigned’s foregoing representations in order to claim the exemption from
registration provided by Rule 144A.

 

	
  Dated:

  	
   

  	
   

  	
   

  
	
   

  	
  NOTICE:  To
  be executed by an executive officer

  

 

A-2-14

 

[OPTION OF HOLDER TO ELECT PURCHASE]

 

If you want to
elect to have this Note purchased by the Company pursuant to Section 4.15,
Section 4.16 or Section 4.21 of the Indenture, check the appropriate box:

 

Section 4.15  o

 

Section 4.16  o

 

Section 4.21  o

 

If you want to
elect to have only part of this Note purchased by the Company pursuant to
Section 4.15, Section 4.16 or Section 4.21 of the Indenture, state the amount
you elect to have purchased:

 

	
  $

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Dated:

  	
   

  	
   

  	
   

  
	
   

  	
  NOTICE:

  	
  The signature on this assignment must correspond with the name as it
  appears upon the face of the within Note in every particular without
  alteration or enlargement or any change whatsoever and be guaranteed by the
  endorser’s bank or broker.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  Signature
  Guarantee:

  
								

 

A-2-15

 

EXHIBIT B-1

 

[FORM OF FIXED RATE EXCHANGE NOTE]

 

THIS SECURITY WAS ISSUED WITH
ORIGINAL ISSUE DISCOUNT UNDER SECTION 1272, 1273 AND 1275 OF THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED.  YOU
MAY CONTACT THE CHIEF FINANCIAL OFFICER OF THE COMPANY AT ATLANTIC EXPRESS
TRANSPORTATION CORP., 7 NORTH STREET, STATEN ISLAND, NY 10302-1205, WHO WILL
PROVIDE YOU WITH ANY REQUIRED INFORMATION REGARDING THE ORIGINAL ISSUE
DISCOUNT.

 

ATLANTIC EXPRESS TRANSPORTATION CORP.

 

12% SENIOR SECURED NOTES DUE 2008

 

	
  CUSIP No.

  	
   

  
	
  No.

  	
  $

  

 

Atlantic Express Transportation Corp., a New York corporation (the “Company,”
which term includes any successor entity), for value received promises to pay
to                                   
or registered assigns the principal sum of                                   
Dollars (or such principal amount as may be set forth in the records of the
Trustee hereinafter referred to in accordance with the Indenture) on April 15,
2008, and to pay interest thereon as hereinafter set forth.

 

Interest
Rate:  12%

 

Interest
Payment Dates:  Interest will be payable
semi-annually in cash in arrears on April 15 and October 15 of each year,
beginning on October 15, 2004.

 

Record Dates:  April 1 and October 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.

 

	
   

  	
  ATLANTIC EXPRESS
  TRANSPORTATION CORP.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
  Dated:  April 22, 2004

  	
   

  	
   

  

 

B-1-1

 

TRUSTEE CERTIFICATE
OF AUTHENTICATION

 

This is one of
the 12% Senior Secured Notes due 2008 referred to in the within-mentioned
Indenture.

 

 

	
   

  	
  THE BANK OF NEW YORK,
  as Trustee

  
	
   

  	
   

  
	
   

  	
   

  
	
  Dated:  April
  22, 2004

  	
  By:

  	
   

  
	
   

  	
   

  	
  Authorized Signatory

  

 

B-1-2

 

(REVERSE OF
SECURITY)

 

12% Senior Secured Note
due 2008

 

1.             Interest.

 

(a)           Generally.  Atlantic Express Transportation Corp., a New
York corporation (the “Company”), promises to pay interest on the
principal amount of this Note at the rate per annum shown above.  Interest on the Notes 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 October 15, 2004. 
Interest will be computed on the basis of a 360-day year comprised of
twelve 30-day months.  The Company will
pay interest on overdue principal of this Note at 1% per annum in excess of the
otherwise applicable interest rate and the Company will pay interest on overdue
installments of interest at such higher rate to the extent lawful. Additional
Interest may accrue on the Notes in certain circumstances pursuant to the
Registration Rights Agreement.

 

(b)           PIK Interest.  In the event that, at any time after
September 30, 2006, the Company fails to comply with the provisions of Section
4.24 of the Indenture then, from and after the first date on which the Company
so fails to comply (the “PIK Interest Trigger Date”) and for so long as
the Notes remains outstanding, additional interest on the Note shall accrue,
from the PIK Interest Trigger Date, at a rate per annum of 2% (the “Additional
PIK Interest”), it being understood that such failure to comply with the
provisions of Section 4.24 of the Indenture shall not constitute an Event of
Default.  Accrued and unpaid Additional
PIK Interest, if any, will be due and payable semi-annually in arrears on each
Interest Payment Date to Holders of record on the Record Date immediately
preceding the Interest Payment Date, and shall be payable by the Company by
issuing additional Fixed Rate Notes with a principal amount equal to the
Additional PIK Interest then due and payable (the “PIK Fixed Rate Notes”).   PIK
Fixed Rate Notes will bear interest (including interest paid on the date of the
maturity of the Notes) and Additional Interest, if any, in a matter identical
to all other Fixed Rate Notes issued under the Indenture.

 

2.             Method of Payment.  The Company shall pay interest on the Notes
(except defaulted interest) 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
(other than interest payable in PIK Fixed Rate Notes) 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 (other than interest
payable in PIK Fixed Rate Notes) 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, and if a Holder has given wire transfer

 

B-1-3

 

instructions to the
Company, the Company will make payments on the Notes in accordance with those
instructions.

 

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.  Subject to certain exceptions, the Company
or any of its Subsidiaries may act in any such capacity.

 

4.             Indenture.  The Notes and the Guarantees were issued
under an Indenture, dated as of April 22, 2004 (the “Indenture”), among
the Company, the Guarantors named therein and the Trustee.  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.  The Notes are secured by
the Collateral as more fully described in the Security Documents.  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 on or After April 15, 2006. 
The Notes will be redeemable at the option of the Company, in whole or
in part at any time or from time to time, on and after April 15, 2006, at the
following Redemption Prices (expressed as percentages of the principal amount
thereof) if redeemed during the periods beginning on the dates indicated below,
plus, in each case, accrued and unpaid interest and Additional Interest and
Additional PIK Interest (which, for such purpose, shall be payable in cash), if
any, thereon to the Redemption Date:

 

	
  Period

  	
   

  	
  Percentage

  	
   

  
	
  On or after April 15, 2006

  	
   

  	
  106.000

  	
  %

  
	
  On or after April 15, 2007

  	
   

  	
  103.000

  	
  %

  
	
  On or after October 15, 2007

  	
   

  	
  100.000

  	
  %

  

 

(b)           Optional Redemption
upon Equity Offerings.  At any time,
or from time to time, prior to April 15, 2006, the Company may, at its option,
use an amount equal to 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
(which includes Additional Notes and PIK Notes, if any) issued under the
Indenture at a Redemption Price equal to 112% of the aggregate principal amount
thereof, plus accrued and unpaid interest and Additional Interest and
Additional PIK Interest (which, for such purpose, shall be payable in cash)
thereon, if any, to the Redemption Date. 
In order to effect the foregoing redemption with the proceeds of any
Equity Offering, (1) at least 65% of the aggregate original principal
amount of the Notes issued under the Indenture must

 

B-1-4

 

remain outstanding
immediately after such Redemption Date and (2) the Company must make such
redemption not more than 120 days after the consummation of such Equity
Offering.

 

6.             Notice of
Redemption.  Notice of redemption
will be mailed by first-class mail at least 15 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.  If fewer
than all of the Notes are to be redeemed, at any time, selection of Notes for
redemption will be made by the Trustee in compliance with the requirements of
the principal national securities exchange, if any, on which the Notes are listed,
or, if the Notes are not so listed, on a pro rata basis or by such method as
the Trustee deems to be fair and appropriate; provided
that no partial redemption will reduce the principal amount of a Note not
redeemed to a denomination of less than $1,000; and provided, further,
that any such partial redemption made with the proceeds of an Equity Offering
will be made only on a pro rata basis or on as nearly a pro rata basis as
practicable (subject to the procedures of the DTC or any other depository).  Notes in denominations of $1,000 or more may
be redeemed in part.

 

Except as set
forth in the Indenture, if monies for the redemption of the Notes called for
redemption shall have been deposited with the Paying Agent for redemption on
such redemption date, then, unless the Company defaults in the payment of such
redemption price plus accrued interest and Additional Interest and Additional
PIK Interest, if any, the Notes called for redemption will cease to bear
interest from and after such redemption date, and the only remaining right of
the Holders of such Notes will be to receive payment of the redemption price
plus accrued interest and Additional Interest and Additional PIK Interest
(which, for such purpose, shall be payable in cash), if any, as of the redemption
date upon surrender to the Paying Agent of the Notes redeemed.

 

7.             Offers to Purchase.  Sections 4.15, 4.16 and 4.21 of the
Indenture provide that upon the occurrence of a Change of Control, after
certain Asset Sales, and in connection with an Excess Cash Flow Offer, 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.

 

8.             Denominations;
Transfer; Exchange.  The Notes are
in registered form, without coupons, in denominations of $1,000 and integral
multiples thereof, except that PIK Fixed Rate Notes may be issued in smaller
denominations.  A Holder shall register
the transfer of or exchange of Notes in accordance with the Indenture.  The Registrar and the Trustee 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 for all purposes, subject to the
provisions of the Indenture.

 

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

 

B-1-5

 

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 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 on the Notes).

 

12.           Amendment;
Supplement; Waiver.  Subject to
certain exceptions, the Indenture, the Notes or the Guarantees may be amended
or supplemented with the written consent of the Holders of at least 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.  Without notice to or 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
certificated Notes or Guarantees, comply with the requirements of the
Commission in order to maintain the qualification of the Indenture under the
TIA, or comply with Article Five of the Indenture or make any other change that
does not adversely affect in any material respect the rights of any Holder of 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 Capital Stock 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, make capital expenditures 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.           Successors.  When a successor assumes, in accordance with
the Indenture, all the obligations of its predecessor under the Notes, the
Guarantees and the Indenture, the predecessor will be released from those
obligations.

 

15.           Defaults and
Remedies.  If an Event of Default
occurs and is continuing (other than an Event of Default specified in Sections
6.01(6) or (7) of the Indenture, in which cases such amounts would
automatically become immediately due and payable), the Trustee or the Holders
of at least 25% in aggregate principal amount of Notes then outstanding may
declare the principal of and premium, if any, accrued interest and Additional
Interest and Additional PIK Interest (which, for such purpose, shall be payable
in cash), if any, on 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 reasonably satisfactory to it. 
The Indenture permits, subject to certain limitations therein provided,
Holders

 

B-1-6

 

of a majority in
aggregate principal amount 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, premium,
or interest) if it determines that withholding notice is in their interest.

 

16.           Trustee Dealings
with Company.  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, its Subsidiaries or
their respective Affiliates as if it were not the Trustee.

 

17.           No Recourse Against
Others.  No Affiliate, past, present
or future, director, officer, employee, incorporator or stockholder, as such,
of the Company or any Guarantors shall have any liability for any obligation of
the Company under the Notes, the Guarantees or the Indenture or for any claim
based on, in respect of or by reason of such obligations or their
creation.  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.

 

18.           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.

 

19.           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.

 

20.           Authentication.  This Note shall not be valid until the
Trustee or Authenticating Agent manually signs the certificate of authentication
on this Note.

 

21.           Governing Law.  The laws of the State of New York shall
govern this Note, the Guarantees and the Indenture, without regard to
principles of conflict of laws.

 

22.           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).

 

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:  Atlantic Express
Transportation Corp., 7 North Street, Staten Island, New York 10451, Attention:  Chief Executive Officer.

 

B-1-7

 

FORM OF GUARANTEE

 

[Name of
Guarantor] and its successors under the Indenture fully, jointly and severally
with any other Guarantors, hereby irrevocably and unconditionally guarantees,
on a senior secured basis, (i) the due and punctual payment of the principal
of, premium, if any, and interest and Additional Interest and Additional PIK
Interest, if any, on the Notes, whether at maturity, by acceleration or
otherwise, the due and punctual payment of interest on the overdue principal of
and interest and Additional Interest and Additional PIK Interest, if any, on
the Notes, to the extent lawful, and the due and punctual performance of all
other obligations of Atlantic Express Transportation Corp. (the “Company”)
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.

 

This Guarantee
shall be binding upon [Name of Guarantor] and its successors and assigns and
shall inure to the benefit of the successors and assigns of the Trustee and the
Holders and, in the event of any transfer or assignment of rights by any Holder
or the Trustee, the rights and privileges herein conferred upon that party
shall automatically extend to and be vested in such transferee or assignee, all
subject to the terms and conditions hereof.

 

This Guarantee
shall not be valid or obligatory for any purpose until the certificate of
authentication on the Note upon which this Guarantee is noted shall have been
executed by the Trustee under the Indenture by the manual signature of one of
its authorized officers.

 

This Guarantee
is subject to release upon the terms set forth in the Indenture.

 

THE
OBLIGATIONS OF THE UNDERSIGNED TO HOLDERS OF THE NOTES AND TO THE TRUSTEE
PURSUANT TO THIS 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.

 

This Guarantee
shall be governed by and construed in accordance with the laws of the State of
New York, as applied to contracts made and performed in the State of New York,
without regard to principals of conflicts of laws.

 

	
   

  	
  [NAME OF GUARANTOR]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

B-1-8

 

ASSIGNMENT FORM

 

If you the
Holder want to assign this Note, fill in the form below and have your signature
guaranteed:

 

I or we assign and transfer this Note to:

 

	
   

  
	
   

  
	
   

  
	
  (Print or type name, address and zip code and

  
	
  social security or tax ID number of assignee)

  

 

and irrevocably appoint
                                                                                                                                                                        agent
to transfer this Note on the books of the Company.  The agent may substitute another to act for him.

 

	
  Dated:

  	
   

  	
   

  	
  Signed:

  	
   

  
	
   

  	
   

  	
  (Sign exactly as your name appears on the other side of this Note)

  
	
   

  	
   

  
	
  Signature Guarantee:

  	
   

  	
   

  
							

 

B-1-9

 

[OPTION OF HOLDER TO ELECT PURCHASE]

 

If you want to
elect to have this Note purchased by the Company pursuant to Section 4.15,
Section 4.16 or Section 4.21 of the Indenture, check the appropriate box:

 

Section 4.15  o

 

Section 4.16  o

 

Section 4.21  o

 

If you want to
elect to have only part of this Note purchased by the Company pursuant to
Section 4.15, Section 4.16 or Section 4.21 of the Indenture, state the amount
you elect to have purchased:

 

	
  $

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Dated:

  	
   

  	
   

  	
   

  
	
   

  	
  NOTICE:

  	
  The signature on this assignment must correspond with the name as it
  appears upon the face of the within Note in every particular without
  alteration or enlargement or any change whatsoever and be guaranteed by the
  endorser’s bank or broker.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Signature Guarantee:

  	
   

  
									

 

B-1-10

 

EXHIBIT B-2

 

[FORM OF FLOATING RATE EXCHANGE NOTE]

 

THIS SECURITY WAS ISSUED WITH
ORIGINAL ISSUE DISCOUNT UNDER SECTION 1272, 1273 AND 1275 OF THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED.  YOU
MAY CONTACT THE CHIEF FINANCIAL OFFICER OF THE COMPANY AT ATLANTIC EXPRESS
TRANSPORTATION CORP., 7 NORTH STREET, STATEN ISLAND, NY 10302-1205, WHO WILL
PROVIDE YOU WITH ANY REQUIRED INFORMATION REGARDING THE ORIGINAL ISSUE
DISCOUNT.

 

ATLANTIC EXPRESS TRANSPORTATION CORP.

 

SENIOR SECURED FLOATING RATE NOTES DUE 2008

 

	
  CUSIP No.

  	
   

  
	
  No.

  	
  $

  

 

Atlantic Express Transportation Corp., a New York corporation (the “Company,”
which term includes any successor entity), for value received promises to pay
to
                              
or registered assigns the principal sum of
                              
Dollars (or such principal amount as may be set forth in the records of the
Trustee hereinafter referred to in accordance with the Indenture) on April 15,
2008, and to pay interest thereon as hereinafter set forth.

 

Interest
Rate:  Interest Rate:  Interest on this Note will accrue on a
floating rate calculated in accordance with Section 1 of this Note.

 

Interest
Payment Dates:  Interest will be payable
semi-annually in cash in arrears on April 15 and October 15 of each year,
beginning on October 15, 2004.

 

Record
Dates:  April 1 and October 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.

 

	
   

  	
  ATLANTIC EXPRESS
  TRANSPORTATION CORP.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
  Dated:  April 22, 2004

  	
   

  	
   

  

 

B-2-1

 

TRUSTEE
CERTIFICATE OF AUTHENTICATION

 

This is one of
the Senior Secured Floating Rate Notes due 2008 referred to in the
within-mentioned Indenture.

 

	
   

  	
  THE BANK OF NEW YORK,
  as Trustee

  
	
   

  	
   

  
	
   

  	
   

  
	
  Dated:  April
  22, 2004

  	
  By:

  	
   

  
	
   

  	
   

  	
  Authorized Signatory

  

 

B-2-2

 

(REVERSE OF
SECURITY)

 

Senior Secured Floating
Rate Note due 2008

 

1.             Interest.

 

(a)           Generally.  Atlantic Express Transportation Corp., a New
York corporation (the “Company”), promises to pay interest on the
principal amount of this Note at the rate per annum shown above.  Interest on the Notes 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 (each such period, an “Interest
Accrual Period”).  The Company will
pay interest semi-annually in arrears on each Interest Payment Date, commencing
October 15, 2004.  Interest will be
computed on the basis of a 360-day year comprised of twelve 30-day months.  The Company will pay interest on overdue
principal of the Notes at 1% per annum in excess of the otherwise applicable
interest rate and the Company will pay interest on overdue installments of
interest at such higher rate to the extent lawful.

 

(b)           Interest Rate.  The Company will appoint the Trustee or
another financial institution (the “Calculation Agent”) to calculate the
interest rate for the Senior Secured Floating Rate Notes. “LIBOR” will
be determined by the Calculation Agent in accordance with the following
provisions:

 

(i)            LIBOR for any Interest
Accrual Period will equal to the rate, as determined by the Calculation Agent,
for six-month U.S. dollar deposits which appears on the Telerate Page 3750 as
of 11:00 a.m., London time, on the applicable LIBOR Determination Date, as
defined below, as reported by Bloomberg Financial Markets Commodities News. “LIBOR
Determination Date” means, with respect to any Interest Accrual Period, the
second London Banking Day prior to the first day of such Interest Accrual Period.
“London Banking Day” means any day on which commercial banks are open
for business, including dealings in foreign exchange and foreign currency
deposits, in London.

 

(ii)           If, on any LIBOR
Determination Date, such rate does not appear on the Telerate Page 3750, the
Calculation Agent will determine the arithmetic mean of the offered quotations
of the Reference Banks, as defined below, to prime banks in the London
interbank market for Eurodollar deposits for the relevant term by reference to
requests for quotations as of approximately 11:00 a.m., London time, on such
LIBOR Determination Date made by the Calculation Agent to the Reference Banks.
If, on the LIBOR Determination Date, at least two of the Reference Banks
provide such quotations, LIBOR will equal such arithmetic mean. If, on any
LIBOR Determination Date, only one or none of the Reference Banks provide such
quotations, LIBOR will be deemed to be the arithmetic mean of the offered
quotations that the leading banks in New York City selected by the Calculation
Agent, after consultation with the Company, are quoting on

 

B-2-3

 

the relevant LIBOR
Determination Date for U.S. dollar deposits for the relevant term, to the
principal London offices of leading banks in the London interbank market.

 

(iii)          If the Calculation Agent
is required but is unable to determine a rate in accordance with at least one
of the procedures provided above, LIBOR with respect to such Interest Accrual
Period will be LIBOR as calculated on the immediately preceding LIBOR
Determination Date.

 

For the
purpose of clause (ii) above, all percentages resulting from such
calculations will be rounded, if necessary, to the nearest one thirty-second of
a percentage point and, for purposes of clause (iii) above, all
percentages resulting from such calculations will be rounded, if necessary, to
the nearest one hundred-thousandth of a percentage point.

 

(c)           Certain Definitions.  As used in this Section 1, the
following terms shall have the following meanings:

 

(i)            “Reference Banks”
means four major banks in the London interbank market selected by the
Calculation Agent.

 

(ii)           “Telerate Page 3750”
means the display page currently so designated on the Moneyline Telerate
Service or such other page as may replace such page on such service for the
purpose of displaying comparable rates.

 

(d)           PIK Interest.  In the event that, at any time after
September 30, 2006, the Company fails to comply with the provisions of Section
4.24 of the Indenture then, from and after the first date on which the Company
so fails to comply (the “PIK Interest Trigger Date”) and for so long as
the Notes remains outstanding, additional interest on the Note shall accrue,
from the PIK Interest Trigger Date, at a rate per annum of 2% (the “Additional
PIK Interest”), it being understood that such failure to comply with the
provisions of Section 4.24 of the Indenture shall not constitute an Event of
Default.  Accrued and unpaid Additional
PIK Interest, if any, will be due and payable semi-annually in arrears on each
Interest Payment Date to Holders of record on the Record Date immediately
preceding the Interest Payment Date, and shall be payable by the Company by
issuing additional Floating Rate Notes with a principal amount equal to the Additional
PIK Interest then due and payable (the “PIK Floating Rate Notes”).   PIK
Floating Rate Notes will bear interest (including interest paid on the date of
the maturity of the Notes) and Additional Interest, if any, in a matter
identical to all other Floating Rate Notes issued under the Indenture.

 

2.             Method of Payment.  The Company shall pay interest on the Notes
(except defaulted interest) 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
(other than interest payable in PIK Fixed Rate Notes) 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 (other than interest
payable in PIK Fixed Rate Notes) by check payable in

 

B-2-4

 

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, and if a Holder has given wire transfer instructions to the
Company, the Company will make payments on the Notes in accordance with those
instructions.

 

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.  Subject to certain exceptions, the Company
or any of its Subsidiaries may act in any such capacity.

 

4.             Indenture.  The Notes and the Guarantees were issued
under an Indenture, dated as of April 22, 2004 (the “Indenture”), among
the Company, the Guarantors named therein and the Trustee.  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.  The Notes
are secured by the Collateral as more fully described in the Security Documents.  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
on or After April 15, 2006.  The
Notes will be redeemable at the option of the Company, in whole or in part at
any time or from time to time, on and after April 15, 2006, at the following
Redemption Prices (expressed as percentages of the principal amount thereof) if
redeemed during the periods beginning on the dates indicated below, plus, in
each case, accrued and unpaid interest and Additional Interest and Additional
PIK Interest (which, for such purpose, shall be payable in cash), if any,
thereon to the Redemption Date:

 

	
  Period

  	
   

  	
  Percentage

  	
   

  
	
  On or after April 15, 2006

  	
   

  	
  106.000

  	
  %

  
	
  On or after April 15, 2007

  	
   

  	
  103.000

  	
  %

  
	
  On or after October 15, 2007

  	
   

  	
  100.000

  	
  %

  

 

(b)           Optional Redemption
upon Equity Offerings.  At any time,
or from time to time, prior to April 15, 2006, the Company may, at its option,
use an amount equal to 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
(which includes Additional Notes and PIK Notes, if any) issued under the
Indenture at a Redemption Price equal to 112% of the aggregate principal amount
thereof, plus accrued and unpaid interest and Additional Interest and
Additional PIK Interest (which, for such purpose, shall be payable in cash)
thereon, if any, to the Redemption Date. 
In order to effect the foregoing redemption with the proceeds of any
Equity Offering, (1) at least

 

B-2-5

 

65% of the aggregate
original principal amount of the Notes issued under the Indenture must remain
outstanding immediately after such Redemption Date and (2) the Company
must make such redemption not more than 120 days after the consummation of such
Equity Offering.

 

6.             Notice of
Redemption.  Notice of redemption
will be mailed by first-class mail at least 15 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.  If fewer
than all of the Notes are to be redeemed, at any time, selection of Notes for
redemption will be made by the Trustee in compliance with the requirements of
the principal national securities exchange, if any, on which the Notes are
listed, or, if the Notes are not so listed, on a pro rata basis or by such
method as the Trustee deems to be fair and appropriate; provided that no partial redemption will
reduce the principal amount of a Note not redeemed to a denomination of less
than $1,000; and provided, further, that any such partial redemption
made with the proceeds of an Equity Offering will be made only on a pro rata
basis or on as nearly a pro rata basis as practicable (subject to the
procedures of the DTC or any other depository).  Notes in denominations of $1,000 or more may be redeemed in part.

 

Except as set
forth in the Indenture, if monies for the redemption of the Notes called for redemption
shall have been deposited with the Paying Agent for redemption on such
redemption date, then, unless the Company defaults in the payment of such
redemption price plus accrued interest and Additional Interest and Additional
PIK Interest, if any, the Notes called for redemption will cease to bear
interest from and after such redemption date, and the only remaining right of
the Holders of such Notes will be to receive payment of the redemption price
plus accrued interest and Additional Interest and Additional PIK Interest
(which, for such purpose, shall be payable in cash), if any, as of the
redemption date upon surrender to the Paying Agent of the Notes redeemed.

 

7.             Offers to Purchase.  Sections 4.15, 4.16 and 4.21 of the
Indenture provide that upon the occurrence of a Change of Control, after
certain Asset Sales, and in connection with an Excess Cash Flow Offer, 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.

 

8.             Denominations;
Transfer; Exchange.  The Notes are
in registered form, without coupons, in denominations of $1,000 and integral
multiples thereof, except that PIK Floating Rate Notes may be issued in smaller
denominations.  A Holder shall register
the transfer of or exchange of Notes in accordance with the Indenture.  The Registrar and the Trustee 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 for all purposes, subject to the
provisions of the Indenture.

 

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

 

B-2-6

 

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 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 on the Notes).

 

12.           Amendment; Supplement;
Waiver.  Subject to certain
exceptions, the Indenture, the Notes or the Guarantees may be amended or
supplemented with the written consent of the Holders of at least 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.  Without notice to or 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
certificated Notes or Guarantees, comply with the requirements of the
Commission in order to maintain the qualification of the Indenture under the
TIA, or comply with Article Five of the Indenture or make any other change that
does not adversely affect in any material respect the rights of any Holder of 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 Capital Stock 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, make capital expenditures 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.           Successors.  When a successor assumes, in accordance with
the Indenture, all the obligations of its predecessor under the Notes, the
Guarantees and the Indenture, the predecessor will be released from those
obligations.

 

15.           Defaults and
Remedies.  If an Event of Default
occurs and is continuing (other than an Event of Default specified in Sections
6.01(6) or (7) of the Indenture, in which cases such amounts would
automatically become immediately due and payable), the Trustee or the Holders
of at least 25% in aggregate principal amount of Notes then outstanding may
declare the principal of and premium, if any, accrued interest and Additional
Interest and Additional PIK Interest (which, for such purpose, shall be payable
in cash), if any, on 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 reasonably satisfactory to it. 
The Indenture permits, subject to certain limitations therein provided,
Holders

 

B-2-7

 

of a majority in aggregate
principal amount 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, premium, or
interest) if it determines that withholding notice is in their interest.

 

16.           Trustee Dealings
with Company.  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, its Subsidiaries or
their respective Affiliates as if it were not the Trustee.

 

17.           No Recourse Against
Others.  No Affiliate, past, present
or future, director, officer, employee, incorporator or stockholder, as such,
of the Company or any Guarantors shall have any liability for any obligation of
the Company under the Notes, the Guarantees or the Indenture or for any claim
based on, in respect of or by reason of such obligations or their
creation.  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.

 

18.           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.

 

19.           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.

 

20.           Authentication.  This Note shall not be valid until the
Trustee or Authenticating Agent manually signs the certificate of
authentication on this Note.

 

21.           Governing Law.  The laws of the State of New York shall
govern this Note, the Guarantees and the Indenture, without regard to principles
of conflict of laws.

 

22.           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).

 

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:  Atlantic Express
Transportation Corp., 7 North Street, Staten Island, New York 10451,
Attention:  Chief Executive Officer.

 

B-2-8

 

FORM OF GUARANTEE

 

[Name of
Guarantor] and its successors under the Indenture fully, jointly and severally
with any other Guarantors, hereby irrevocably and unconditionally guarantees,
on a senior secured basis, (i) the due and punctual payment of the principal
of, premium, if any, and interest and Additional Interest and Additional PIK
Interest, if any, on the Notes, whether at maturity, by acceleration or
otherwise, the due and punctual payment of interest on the overdue principal of
and interest and Additional Interest and Additional PIK Interest, if any, on
the Notes, to the extent lawful, and the due and punctual performance of all
other obligations of Atlantic Express Transportation Corp. (the “Company”)
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.

 

This Guarantee
shall be binding upon [Name of Guarantor] and its successors and assigns and
shall inure to the benefit of the successors and assigns of the Trustee and the
Holders and, in the event of any transfer or assignment of rights by any Holder
or the Trustee, the rights and privileges herein conferred upon that party
shall automatically extend to and be vested in such transferee or assignee, all
subject to the terms and conditions hereof.

 

This Guarantee
shall not be valid or obligatory for any purpose until the certificate of
authentication on the Note upon which this Guarantee is noted shall have been
executed by the Trustee under the Indenture by the manual signature of one of
its authorized officers.

 

This Guarantee
is subject to release upon the terms set forth in the Indenture.

 

THE
OBLIGATIONS OF THE UNDERSIGNED TO HOLDERS OF THE NOTES AND TO THE TRUSTEE PURSUANT
TO THIS 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.

 

This Guarantee
shall be governed by and construed in accordance with the laws of the State of
New York, as applied to contracts made and performed in the State of New York,
without regard to principals of conflicts of laws.

 

	
   

  	
  [NAME OF GUARANTOR]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

B-2-9

 

ASSIGNMENT FORM

 

If you the
Holder want to assign this Note, fill in the form below and have your signature
guaranteed:

 

I or we assign and transfer this Note to:

 

	
   

  
	
   

  
	
   

  
	
  (Print or type name, address and zip code and

  
	
  social security or tax ID number of assignee)

  

 

and irrevocably
appoint                                                                                                                                                                         agent
to transfer this Note on the books of the Company.  The agent may substitute another to act for him.

 

	
  Dated:

  	
   

  	
   

  	
  Signed:

  	
   

  
	
   

  	
   

  	
  (Sign exactly as your name appears on the other side of this Note)

  
	
   

  	
   

  
	
  Signature Guarantee:

  	
   

  	
   

  
							

 

B-2-10

 

[OPTION OF HOLDER TO ELECT PURCHASE]

 

If you want to
elect to have this Note purchased by the Company pursuant to Section 4.15,
Section 4.16 or Section 4.21 of the Indenture, check the appropriate box:

 

Section 4.15  o

 

Section 4.16  o

 

Section 4.21  o

 

If you want to
elect to have only part of this Note purchased by the Company pursuant to
Section 4.15, Section 4.16 or Section 4.21 of the Indenture, state the amount
you elect to have purchased:

 

	
  $

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Dated:

  	
   

  	
   

  	
   

  
	
   

  	
  NOTICE:

  	
  The signature on this assignment must correspond with the name as it
  appears upon the face of the within Note in every particular without
  alteration or enlargement or any change whatsoever and be guaranteed by the
  endorser’s bank or broker.

  
	
   

  	
   

  
	
   

  	
   

  	
  Signature
  Guarantee:

  
								

 

B-2-11

 

EXHIBIT C-1

 

FORM OF LEGEND FOR GLOBAL NOTES

 

Any Global
Note authenticated and delivered hereunder shall bear a legend (which would be
in addition to any other legends required in the case of a Restricted Security)
in substantially the following form:

 

THIS NOTE IS A
GLOBAL NOTE WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS
REGISTERED IN THE NAME OF A DEPOSITORY OR A NOMINEE OF A DEPOSITORY OR A SUCCESSOR
DEPOSITORY.  THIS NOTE IS NOT
EXCHANGEABLE FOR NOTES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE
DEPOSITORY OR ITS NOMINEE EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE
INDENTURE, AND NO TRANSFER OF THIS NOTE (OTHER THAN A TRANSFER OF THIS NOTE AS
A WHOLE BY THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY OR BY A NOMINEE OF THE
DEPOSITORY TO THE DEPOSITORY OR ANOTHER NOMINEE OF THE DEPOSITORY) MAY BE
REGISTERED EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.

 

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

 

C-1-1

 

EXHIBIT C-2

 

FORM OF PRIVATE PLACEMENT LEGEND

 

THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, 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 OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO,
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, PRIOR TO THE DATE WHICH IS TWO YEARS AFTER THE LATER OF THE ORIGINAL
ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY AFFILIATE OF
THE COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF SUCH
SECURITY), ONLY (A) TO THE COMPANY OR ANY OF ITS SUBSIDIARIES, (B) PURSUANT TO
A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES
ACT, (C) FOR SO LONG AS THE NOTES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE
144A, 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 WHOM NOTICE IS
GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO
OFFERS AND SALES TO NON-U.S. PURCHASERS THAT OCCUR OUTSIDE THE UNITED STATES
WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT, (E) TO AN
INSTITUTIONAL “ACCREDITED INVESTOR” WITHIN THE MEANING OF 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 OR (F)

 

C-2-1

 

PURSUANT TO
ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT, SUBJECT TO THE COMPANY’S AND THE TRUSTEE’S, OR TRANSFER
AGENT’S, AS APPLICABLE, RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER
PURSUANT TO CLAUSES (D), (E), OR (F) TO REQUIRE THE DELIVERY OF AN OPINION OF
COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM,
AND IN EACH OF THE FOREGOING CASES, A CERTIFICATE OF TRANSFER IN THE FORM
APPEARING ON THE OTHER SIDE OF THIS SECURITY IS COMPLETED AND DELIVERED BY THE
TRANSFEROR TO THE TRUSTEE OR TRANSFER AGENT.

 

C-2-2

 

EXHIBIT D

 

Form of Certificate To Be

Delivered in Connection with

Transfers to Non-QIB Accredited Investors

 

                             ,
          

 

The Bank of New York

Corporate Trust Administration

101 Barclay Street, 8th Floor West

New York, NY 
10286

 

 

Re:          [12% Senior Secured
Notes due 2008] [OR] [Senior Secured Floating Rate Notes due 2008] (the
“Notes”) of Atlantic Express Transportation Corp. (the “Company”)

 

	
   

  	
  (CUSIP
                             
  )

  

 

Ladies and Gentlemen:

 

In connection
with our proposed purchase of
$                       
aggregate principal amount of the Notes, we confirm that:

 

1.             We have received a
copy of the Offering Circular (the “Offering Circular”), dated April 16,
2004, relating to the Notes and such other information as we deem necessary in
order to make our investment decision. 
We acknowledge that we have read and agreed to the matters stated in the
section entitled “Notice to Investors” of the Offering Circular.

 

2.             We understand that
any subsequent transfer of the Notes is subject to certain restrictions and
conditions set forth in the Indenture dated as of April 22, 2004 relating to
the Notes (the “Indenture”) and the undersigned agrees to be bound by,
and not to resell, pledge or otherwise transfer the Notes except in compliance
with, such restrictions and conditions and the Securities Act of 1933, as
amended (the “Securities Act”).

 

3.             We understand that
the offer and sale of the Notes have not been registered under the Securities
Act, and that the Notes may not be offered or sold except as permitted in the
following sentence.  We agree, on our
own behalf and on behalf of any accounts for which we are acting as hereinafter
stated, that if we should sell or otherwise transfer any Notes prior to the
date which is within two years after the original issuance of the Notes or the
last date on which the Note is owned by the Company or any affiliate of the
Company, we will do so only (i) to the Company or any of its subsidiaries,
(ii) inside the United States in accordance with Rule 144A under the
Securities Act to a “qualified institutional buyer” (as defined in Rule 144A
under the Securities Act), (iii) inside the United States to an
institutional “accredited investor” (as defined below) provided that, prior to
such transfer, the transferee

 

D-1

 

furnishes (or has
furnished on its behalf by a U.S. broker-dealer) to you a signed letter
containing certain representations and agreements relating to the restrictions
on transfer of the Notes, substantially in the form of this letter,
(iv) outside the United States in accordance with Rule 904 of Regulation S
under the Securities Act, (v) pursuant to the exemption from registration
provided by Rule 144 under the Securities Act (if available) or
(vi) pursuant to an effective registration statement under the Securities
Act, and we further agree to provide to any person purchasing any of the Notes
from us a notice advising such purchaser that resales of the Notes are
restricted as stated herein.

 

4.             We are not acquiring
the Notes for or on behalf of, and will not transfer the Notes to, any pension
or welfare plan (as defined in Section 3 of the Employee Retirement Income
Security Act of 1974), except as permitted in the section entitled “Notice to
Investors” of the Offering Circular.

 

5.             We understand that,
on any proposed resale of any Notes, we will be required to furnish to you and
the Company such certification, legal opinions and other information as you and
the Company may reasonably require to confirm that the proposed sale complies
with the foregoing restrictions.  We
further understand that the Notes purchased by us will bear a legend to the
foregoing effect.

 

6.             We are an
institutional “accredited investor” (as defined in Rule 501(a)(1), (2), (3) or
(7) of Regulation D under the Securities Act) and have such knowledge and
experience in financial and business matters as to be capable of evaluating the
merits and risks of our investment in the Notes, and we and any accounts for
which we are acting are each able to bear the economic risk of our or their
investment, as the case may be.

 

7.             We are acquiring the
Notes purchased by us for our own account or for one or more accounts (each of
which is an institutional “accredited investor”) as to each of which we
exercise sole investment discretion.

 

You and the
Company are entitled to rely upon this letter and are irrevocably authorized to
produce this letter or a copy hereof to any interested party in any
administrative or legal proceedings or official inquiry with respect to the
matters covered hereby, and we agree to notify you promptly if any of our
representations or warranties herein cease to be accurate and complete.

 

This letter
shall be governed by, and construed in accordance with, the laws of the State
of New York without regard to principles of conflicts of laws.

 

	
   

  	
  Very truly yours,

  
	
   

  	
  [Name of Transferee]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Authorized Signature

  

 

D-2

 

EXHIBIT E

 

Form of Certificate To Be

Delivered in Connection with

Transfers Pursuant to Regulation S

 

The Bank of New York

Corporate Trust Administration

101 Barclay Street, 8th Floor West

New York, NY 
10286

 

Re:          [12% Senior Secured
Notes due 2008] [OR] [Senior Secured Floating Rate Notes due 2008] (the
“Notes”) of Atlantic Express Transportation Corp. (the “Company”)

 

	
   

  	
  (CUSIP                          )

  

 

Ladies and Gentlemen:

 

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

 

1.             the offer of the
Notes was not made to a person in the United States;

 

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

 

3.             no directed selling
efforts have been made in the United States in contravention of the
requirements of Rule 903(b) or Rule 904(b) of Regulation S, as applicable;

 

4.             the transaction is
not part of a plan or scheme to evade the registration requirements of the
Securities Act; and

 

5.             we have advised the
transferee of the transfer restrictions applicable to the Notes.

 

E-1

 

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

 

	
   

  	
  Very truly yours,

  
	
   

  	
  [Name of Transferee]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Authorized Signature

  

 

E-2Exhibit 4.2

 

$115,000,000

 

ATLANTIC
EXPRESS TRANSPORTATION CORP.

 

$105,000,000 12% Senior Secured Notes due
2008

$10,000,000 Senior Secured Floating Rate Notes due 2008

 

REGISTRATION
RIGHTS AGREEMENT

 

April 22, 2004

 

c/o Jefferies
& Company, Inc.

11100 Santa Monica Boulevard

10th Floor

Los Angeles, California  90025

 

Ladies and
Gentlemen:

 

Atlantic Express
Transportation Corp., a New York corporation (the “Company”) is issuing
and selling to Jefferies & Company, Inc. (the “Initial Purchaser”),
upon the terms set forth in the Purchase Agreement dated April 16, 2004, by and
among the Company, the Initial Purchaser and the subsidiary guarantors named
therein (the “Purchase Agreement”), 115,000 units (the “Units”),
consisting of 105,000 senior secured units, each senior secured unit consisting
of: (i) $1,000 principal amount at maturity of 12% senior secured notes due
2008 of the Company (the “Senior Secured Notes”) and (ii) one warrant (a
“Warrant”) to purchase one share of common stock of the Company, no par
value per share (the “Common Stock”), and 10,000 senior secured floating
rate units, each senior secured floating rate unit consisting of: (i) $1,000
principal amount at maturity of senior secured floating rate notes due 2008 of
the Company (the “Senior Secured Floating Rate Notes”) (each Senior
Secured Note and Senior Secured Floating Rate Note being collectively referred
to as a “Note” and the Senior Secured Notes and Senior Secured Floating
Rate Notes being collectively referred to as the “Notes”) and (ii) one
Warrant.  As an inducement to the Initial Purchaser to
enter into the Purchase Agreement, the Company and the subsidiary guarantors
listed in the signature pages hereto agree with the Initial Purchaser, for the
benefit of the Holders (as defined below) of the Notes (including, without
limitation, the Initial Purchaser), as follows:

 

1.                                       Definitions

 

Capitalized terms
that are used herein without definition and are defined in the Purchase
Agreement shall have the respective meanings ascribed to them in the Purchase
Agreement.  As used in this Agreement,
the following terms shall have the following meanings:

 

Additional Interest: 
See Section 4(a).

 

 

Advice: 
See Section 6(w).

 

Agreement: 
This Registration Rights Agreement, dated as of the Closing Date,
between the Company and the Initial Purchaser.

 

Applicable
Period:  See Section 2(e).

 

Business
Day:  A day that is not a Saturday, a Sunday or a
day on which banking institutions in the City of New York are authorized or
required by law or executive order to be closed.

 

Closing
Date:  April 22, 2004.

 

Company: 
See the introductory paragraph to this Agreement.

 

Day:  Unless otherwise
expressly provided, a calendar day.

 

Effectiveness Date:  The  180th  day after the Issue Date, or if the Effectiveness Date
is not a Business Day, the next succeeding Business Day; provided that if delivery of the Shelf
Notice pursuant to Section 2(j) herein occurs after the 60th day
following the Closing Date, the applicable Effectiveness Date for the Initial
Shelf Registration shall be the 90th day following the applicable
Filing Date for the Initial Shelf Registration.

 

Effectiveness Period: 
See Section 3(a).

 

Event Date: 
See Section 4(b).

 

Exchange Act: 
The Securities Exchange Act of 1934, as amended, and the rules and regulations
of the SEC promulgated thereunder.

 

Exchange
Notes:  The $105,000,000 aggregate principal amount
of 12 % senior secured notes of the Company due 2008 (the “Senior Secured
Exchange Notes”) and the $10,000,000 aggregate principal amount of senior secured
floating rate notes of the Company due 2008 (the “Senior Secured Floating
Rate Exchange Notes”), identical in all material respects to the Senior
Secured Notes and the Senior Secured Floating Rate Notes, respectively,
including the guarantees endorsed thereon, except for references to series and
restrictive legends. Each Senior Secured Exchange Note and Senior Secured
Floating Rate Exchange Note is collectively referred to as an “Exchange Note”
and the Senior Secured Exchange Notes and Senior Secured Floating Rate Exchange
Notes are collectively referred to as the “Exchange Notes”).

 

Exchange Offer: 
See Section 2(a).

 

Exchange Registration Statement: 
See Section 2(a).

 

Filing Date:  The  90th  day after the Issue Date, or if such Filing Date is
not a Business Day, the next succeeding Business Day; provided that if a delivery of the Shelf
Notice pursuant to Section 2(j) herein occurs after the 60th day
following the Closing Date, the applicable Filing

 

2

 

Date for the Initial Shelf Registration shall be the 30th
day following the date of delivery of such Shelf Notice.

 

Holder:  Any registered holder of
Registrable Notes.

 

Indemnified Party: 
See Section 8(c).

 

Indemnifying Party: 
See Section 8(c).

 

Indenture: 
The Indenture, dated as of the Closing Date, among the Company, the
Subsidiary Guarantors and  The Bank
of New York, as trustee, pursuant to which the Notes are being issued, as
amended or supplemented from time to time in accordance with the terms hereof.

 

Initial Purchaser: 
See the introductory paragraph to this Agreement.

 

Initial Shelf Registration: 
See Section 3(a).

 

Inspectors: 
See Section 6(o).

 

Issue Date:  April 22, 2004.

 

Lien:
Shall have
the meaning set forth in the Indenture.

 

Losses:  See Section 8(a).

 

NASD:  National Association of
Securities Dealers, Inc.

 

Notes: 
See the introductory paragraph to this Agreement.

 

Participating Broker-Dealer: 
See Section 2(e).

 

Person:  An individual, trustee,
corporation, partnership, limited liability company, joint stock company,
trust, unincorporated association, union, business association, firm,
government or agency or political subdivision thereof, or other legal entity.

 

Private Exchange: 
See Section 2(f).

 

Private Exchange Notes: 
See Section 2(f).

 

Prospectus: 
The prospectus included in any Registration Statement (including,
without limitation, a prospectus that discloses information previously omitted
from a prospectus filed as part of an effective registration statement in
reliance upon Rule 430A promulgated under the Securities Act), as amended or
supplemented by any prospectus supplement, with respect to the terms of the
offering of any portion of the Registrable Notes covered by such Registration
Statement, and all other amendments and supplements to the Prospectus,
including post-effective amendments, and all material incorporated by reference
or deemed to be incorporated by reference in such Prospectus.

 

3

 

Purchase Agreement: 
See the introductory paragraph to this Agreement.

 

Records:  See Section 6(o).

 

Registrable Notes: 
(i) Notes, (ii) Private Exchange Notes and (iii) Exchange Notes received
in the Exchange Offer, in each case, that may not be sold without restriction
under federal or state securities laws.

 

Registration Statement: 
Any registration statement of the Company and the Subsidiary Guarantors
filed with the SEC under the Securities Act (including, but not limited to, the
Exchange Registration Statement, the Shelf Registration and any subsequent
Shelf Registration) that covers any of the Registrable Notes pursuant to the
provisions of this Agreement, including the Prospectus, amendments and
supplements to such registration statement, including post-effective amendments,
all exhibits and all material incorporated by reference or deemed to be
incorporated by reference in such registration statement.

 

Rule 144:  Rule 144 promulgated
under the Securities Act, as such Rule may be amended from time to time, or any
similar rule (other than Rule 144A) or regulation hereafter adopted by the SEC
providing for offers and sales of securities made in compliance therewith
resulting in offers and sales by subsequent holders that are not affiliates of
an issuer or such securities being free of the registration and prospectus
delivery requirements of the Securities Act.

 

Rule 144A: 
Rule 144A promulgated under the Securities Act, as such Rule may be
amended from time to time, or any similar rule (other than Rule 144) or
regulation hereafter adopted by the SEC.

 

Rule 415:  Rule 415 promulgated
under the Securities Act, as such Rule may be amended from time to time, or any
similar rule or regulation hereafter adopted by the SEC.

 

Rule 430A: 
Rule 430A promulgated under the Securities Act, as such Rule may be
amended from time to time, or any similar rule or regulation hereafter adopted
by the SEC.

 

SEC:  The Securities and
Exchange Commission.

 

Securities: 
The Notes, the Exchange Notes and the Private Exchange Notes.

 

Securities Act: 
The Securities Act of 1933, as amended, and the rules and regulations of
the SEC promulgated thereunder.

 

Security Documents: 
Shall have the meaning set forth in the Indenture.

 

Senior
Secured Exchange Notes: See definition of Exchange Notes

 

Senior
Secured Floating Rate Exchange Notes: See definition of Exchange Notes

 

Senior
Secured Floating Rate Private Exchange Notes: See Section 2(f).

 

Senior
Secured Floating Rate Notes: See the introductory paragraph to this Agreement.

 

 

4

 

Senior
Secured Notes:
See the introductory paragraph to this Agreement.

 

Senior
Secured Private Exchange Notes: See Section 2(f).

 

Shelf Notice: 
See Section 2(j).

 

Shelf Registration: 
See Section 3(b).

 

Subsequent Shelf Registration: 
See Section 3(b).

 

Subsidiary Guarantor: 
Each subsidiary of the Company that guarantees the obligations of the
Company under the Notes and Indenture.

 

TIA:  The Trust Indenture Act
of 1939, as amended.

 

Trustee:  The trustee under the
Indenture and, if existent, the trustee under any indenture governing the
Exchange Notes and Private Exchange Notes (if any).

 

Underwritten Registration or Underwritten
Offering:  A registration in which securities of the
Company are sold to an underwriter for reoffering to the public.

 

2.                                       Exchange Offer

 

(a)                                  Unless the Exchange Offer would not
be permitted by applicable laws or a policy of the SEC, the Company shall (and
shall cause each Subsidiary Guarantor to) (i) prepare and file with the SEC
promptly after the date hereof, but in no event later than the Filing Date, a
registration statement (the “Exchange Registration Statement”) on an
appropriate form under the Securities Act with respect to an offer (the “Exchange
Offer”) to the Holders of Notes to issue and deliver to such Holders, in
exchange for the Notes, a like principal amount of Exchange Notes, (ii) use
commercially reasonable efforts to cause the Exchange Registration Statement to
become effective as promptly as practicable after the filing thereof, but in no
event later than the Effectiveness Date, (iii) use commercially reasonable
efforts to keep the Exchange Registration Statement effective until the
consummation of the Exchange Offer in accordance with its terms, and (iv)
commence the Exchange Offer and use commercially reasonable efforts to issue on
or prior to 30 days after the date on which the Exchange Registration Statement
is declared effective, Exchange Notes in exchange for all Notes tendered prior
thereto in the Exchange Offer.  The
Exchange Offer shall not be subject to any conditions, other than that the
Exchange Offer does not violate applicable law or any applicable interpretation
of the staff of the SEC.

 

(b)                                 The Exchange Notes shall be issued
under, and entitled to the benefits of, (i) the Indenture or a trust
indenture that is identical to the Indenture (other than such changes as are
necessary to comply with any requirements of the SEC to effect or maintain the
qualifications thereof under the TIA) and (ii) the Security Documents.

 

5

 

(c)                                  Interest on the Exchange Notes and
Private Exchange Notes will accrue (A) from the later of (i) the last interest
payment due date on which interest was paid on the Notes surrendered in
exchange therefore or (ii) if the note is surrendered for exchange on a date in
a period which includes the record date for an interest payment date to occur
on or after the date of such exchange and as to which interest will be paid,
the date of such interest payment date; or (B) if no interest has been paid on
the Notes, from the date of original issue of the Notes.  Each Senior Secured Exchange Note, Senior
Secured Floating Rate Exchange Note, Senior Secured Private Exchange Note and
Senior Secured Floating Rate Private Exchange Note shall bear interest at the
rate set forth thereon; provided,
that interest with respect to the period prior to the issuance thereof shall
accrue at the rate or rates borne by the Senior Secured Notes and the Senior
Secured Floating Rate Notes from time to time during such period.

 

(d)                                 The Company may require each Holder
as a condition to participation in the Exchange Offer to represent (i) that any
Exchange Notes received by it will be acquired in the ordinary course of its
business, (ii) that at the time of the commencement of the Exchange Offer such
Holder has not entered into any arrangement or understanding with any Person to
participate in the distribution (within the meaning of the Securities Act) of
the Exchange Notes in violation of the provisions of the Securities Act, (iii)
that either such Holder is not an “affiliate” of the Company within the meaning
of Rule 405 of the Securities Act, or if such Holder is an “affiliate,” it will
comply with the registration and prospectus delivery requirements of the
Securities Act to the extent applicable to it, (iv) if such Holder is not a
broker-dealer, that it is not engaged in, and does not intend to engage in, the
distribution of the Notes and (v) if such Holder is a Participating
Broker-Dealer, that it will deliver a Prospectus in connection with any resale
of the Exchange Notes.

 

(e)                                  The Company shall (and shall cause
each Subsidiary Guarantor to) include within the Prospectus contained in the
Exchange Registration Statement a section entitled “Plan of Distribution”
reasonably acceptable to the Initial Purchaser which shall contain a summary
statement of the positions taken or policies made by the staff of the SEC with
respect to the potential “underwriter” status of any broker-dealer that is the
beneficial owner (as defined in Rule 13d-3 under the Exchange Act) of Exchange
Notes received by such broker-dealer in the Exchange Offer for its own account
in exchange for Notes that were acquired by it as a result of market-making or
other trading activity (a “Participating Broker-Dealer”), whether such
positions or policies have been publicly disseminated by the staff of the SEC
or such positions or policies, in the judgment of the Initial Purchaser,
represent the prevailing views of the staff of the SEC.  Such “Plan of Distribution” section shall
also allow, to the extent permitted by applicable policies and regulations of
the SEC, the use of the Prospectus by all Persons subject to the prospectus
delivery requirements of the Securities Act, including, to the extent so
permitted, all Participating Broker-Dealers, and include a statement describing
the manner in which Participating Broker-Dealers may resell the Exchange
Notes.  The Company shall use
commercially reasonable efforts to keep

 

6

 

the Exchange Registration Statement effective and to amend and
supplement the Prospectus contained therein, in order to permit such Prospectus
to be lawfully delivered by all Persons subject to the prospectus delivery
requirements of the Securities Act for such period of time as such Persons must
comply with such requirements in order to resell the Exchange Notes (the “Applicable Period”).

 

(f)                                    If, upon consummation of the
Exchange Offer, the Initial Purchaser holds any Senior Secured Notes or Senior
Secured Floating Rate Notes acquired by it and having the status of an unsold
allotment in the initial distribution, the Company (upon the written request
from the Initial Purchaser) shall, simultaneously with the delivery of the
Exchange Notes in the Exchange Offer, issue and deliver to the Initial
Purchaser, in exchange (the “Private Exchange”) for the Senior Secured
Notes or Senior Secured Floating Rate Notes, as the case may be, held by the
Initial Purchaser, a like principal amount of senior secured notes or senior
secured floating rate notes that are identical to the Senior Secured Exchange
Notes or the Senior Secured Floating Rate Exchange Notes except for the
existence of restrictions on transfer thereof under the Securities Act and securities
laws of the several states of the United States (such notes being referred to
separately as the “Senior Secured Private Exchange Notes” and the “Senior
Secured Floating Rate Private Exchange Notes”, and collectively as the “Private
Exchange Notes”) (and which are issued pursuant to the same indenture as
the Exchange Notes).  The Senior Secured
Private Exchange Notes shall bear the same CUSIP number as the Senior Secured
Exchange Notes and the Senior Secured Floating Rate Private Exchange Notes shall
bear the same CUSIP number as the Senior Secured Floating Rate Exchange Notes.

 

(g)                                 In connection with the Exchange
Offer, the Company shall (and shall cause each Subsidiary Guarantor to):

 

(i)                                     mail to each Holder a copy of the
Prospectus forming part of the Exchange Registration Statement, together with
an appropriate letter of transmittal that is an exhibit to the Exchange Offer
Registration Statement, and any related documents;

 

(ii)                                  keep the Exchange Offer open for
not less than 30 days after the date notice thereof is mailed to the Holders
(or longer if required by applicable law)

 

(iii)                               utilize the services of a
depository for the Exchange Offer with an address in the Borough of Manhattan,
the City of New York, which may be the Trustee or an affiliate thereof;

 

(iv)                              permit Holders to withdraw tendered
Registrable Notes at any time prior to the close of business, New York time, on
the last Business Day on which the Exchange Offer shall remain open; and

 

(v)                                 otherwise comply in all material
respects with all applicable laws.

 

7

 

(h)                                 As soon as practicable after the
close of the Exchange Offer or the Private Exchange, as the case may be, the
Company shall (and shall cause each Subsidiary Guarantor to):

 

(i)                                     accept for exchange all Registrable
Notes validly tendered pursuant to the Exchange Offer or the Private Exchange,
as the case may be, and not validly withdrawn;

 

(ii)                                  deliver to the Trustee for
cancellation all Registrable Notes so accepted for exchange; and

 

(iii)                               cause the Trustee to authenticate
and deliver promptly to each Holder tendering such Registrable Notes, Exchange
Notes or Private Exchange Notes, as the case may be, equal in principal amount
to the Notes of such Holder so accepted for exchange.

 

(i)                                     The Exchange Notes and the Private
Exchange Notes may be issued under (i) the Indenture or (ii) an indenture
identical to the Indenture (other than such changes as are necessary to comply
with any requirements of the SEC to effect or maintain the qualification
thereof under the TIA), which in either event will provide that the Exchange
Notes will not be subject to the transfer restrictions set forth in the
Indenture, that the Private Exchange Notes will be subject to the transfer
restrictions set forth in the Indenture, and that the Exchange Notes, the
Private Exchange Notes and the Notes, if any, will be deemed one class of
security (subject to the provisions of the Indenture) and entitled to
participate in all the security granted by the Company pursuant to the Security
Documents and in any Subsidiary Guarantee (as such terms are defined in the
Indenture) on an equal and ratable basis.

 

(j)                                     If:  (i) prior to the consummation of the
Exchange Offer, the Holders of a majority in aggregate principal amount of
Registrable Notes determines in its or their reasonable judgment that the
Exchange Notes would not, upon receipt, be tradeable by the Holders thereof
without restriction under the Securities Act and the Exchange Act and without
material restrictions under applicable Blue Sky or state securities laws; (ii)
because of any change in law or applicable interpretations of the staff of the
SEC, the Company is not permitted to effect the Exchange Offer (after the
Company and the Subsidiary Guarantors have complied with the procedures set
forth herein); (iii) subsequent to the consummation of the Private Exchange,
any Holder of Private Exchange Notes so requests; (iv) the Exchange Offer is
not consummated within 30 days from the date the Exchange Offer Registration
Statement was declared effective; or (v) in the case of (A) any Holder not
permitted to participate in the Exchange Offer, (B) any Holder participating in
the Exchange Offer that receives Exchange Notes that may not be sold without
restriction under state and federal securities laws (other than due solely to
the status of such Holder as an affiliate of the Company within the meaning of
the Securities Act) or (C) any broker-dealer that holds Notes acquired directly
from the Company or any of its affiliates and, in each such case

 

8

 

contemplated by
this clause (v), such Holder notifies the Company within six months of
consummation of the Exchange Offer, then the Company shall promptly (and in any
event within five Business Days) deliver to the Holders (or in the case of an
occurrence of any event described in clause (v) of this Section 2(j), to any
such Holder) and the Trustee notice thereof (the “Shelf Notice”) and
shall as promptly as possible thereafter (but in no event later than the
applicable Filing Date) file an Initial Shelf Registration pursuant to Section
3.

 

3.                                       Shelf Registration

 

If a Shelf Notice
is delivered pursuant to Section 2(j), then this Section 3 shall apply to all
Registrable Notes.  Otherwise, upon
consummation of the Exchange Offer in accordance with Section 2, the provisions
of Section 3 shall apply solely with respect to (i) Notes held by any Holder
thereof not permitted to participate in the Exchange Offer, (ii) Notes held by
any broker-dealer that acquired such Notes directly from the Company or any of
its affiliates and (iii) Exchange Notes that are not freely tradeable as
contemplated by Section 2(j)(v) hereof, provided in each case that the relevant
Holder has duly notified the Company within six months of the Exchange Offer as
required by Section 2(j)(v).

 

(a)                                  Initial Shelf Registration. 
The Company shall (and shall cause each Subsidiary Guarantor to), as
promptly as practicable, file with the SEC a Registration Statement for an
offering to be made on a continuous basis pursuant to Rule 415 covering all of
the Registrable Notes (the “Initial Shelf Registration”).  If the Company (and any Subsidiary
Guarantor) has not yet filed an Exchange Registration Statement, the Company
shall (and shall cause each Subsidiary Guarantor to) file with the SEC the
Initial Shelf Registration on or prior to the Filing Date and shall use
commercially reasonable efforts to cause such Initial Shelf Registration to be
declared effective under the Securities Act on or prior to the Effectiveness
Date.  Otherwise, the Company shall (and
shall cause each Subsidiary Guarantor to) use commercially reasonable efforts
to file with the SEC the Initial Shelf Registration within 30 days of the
delivery of the Shelf Notice and shall use commercially reasonable efforts to
cause such Shelf Registration to be declared effective under the Securities Act
as promptly as practicable thereafter (but in no event more than 90 days after
delivery of the Shelf Notice).  The Initial
Shelf Registration shall be on Form S-1 or another appropriate form permitting
registration of such Registrable Notes for resale by Holders in the manner or
manners reasonably designated by them (including, without limitation, one or
more underwritten offerings).  The
Company and Subsidiary Guarantors shall not permit any securities other than
the Registrable Notes to be included in any Shelf Registration.  The Company shall (and shall cause each
Subsidiary Guarantor to) use commercially reasonable efforts to keep the
Initial Shelf Registration continuously effective under the Securities Act
until the date which is 24 months from the Closing Date (subject to extension
pursuant to the last paragraph of Section 6(w) (the “Effectiveness Period”),
or such shorter period ending when (i) all Registrable Notes covered by the
Initial Shelf Registration have been sold in the manner set forth and as
contemplated in the Initial Shelf Registration (ii) a Subsequent Shelf
Registration covering all of the Registrable

 

9

 

Notes covered by and not sold under the Initial Shelf Registration
or an earlier Subsequent Shelf Registration has been declared effective under
the Securities Act or (iii) there cease to be any outstanding Registrable
Notes.

 

(b)                                 Subsequent Shelf Registrations. 
If the Initial Shelf Registration or any Subsequent Shelf Registration
(as defined below) ceases to be effective for any reason at any time during the
Effectiveness Period (other than because of the sale of all of the securities
registered thereunder or because the Securities registered thereunder cease to
be outstanding), the Company shall (and shall cause each Subsidiary Guarantor
to) use its reasonable best efforts to obtain the prompt withdrawal of any
order suspending the effectiveness thereof, and in any event shall within 30
days of such cessation of effectiveness amend such Shelf Registration in a
manner to obtain the withdrawal of the order suspending the effectiveness
thereof, or file (and cause each Subsidiary Guarantor to file) an additional
“shelf” Registration Statement pursuant to Rule 415 covering all of the
Registrable Notes (a “Subsequent Shelf Registration”).  If a Subsequent Shelf Registration is filed,
the Company shall (and shall cause each Subsidiary Guarantor to) use
commercially reasonable efforts to cause the Subsequent Shelf Registration to
be declared effective as soon as practicable after such filing and to keep such
Subsequent Shelf Registration continuously effective for a period equal to the
number of days in the Effectiveness Period less the aggregate number of days
during which the Initial Shelf Registration or any Subsequent Shelf
Registration was previously continuously effective.  As used herein the term “Shelf Registration” means the Initial
Shelf Registration and any Subsequent Shelf Registrations

 

(c)                                  Supplements and Amendments. 
The Company shall promptly supplement and amend any Shelf Registration
if required by the rules, regulations or instructions applicable to the
registration form used for such Shelf Registration, if required by the
Securities Act, or if reasonably requested in writing by the Holders of a
majority in aggregate principal amount of the Registrable Notes covered by such
Shelf Registration or by any underwriter of such Registrable Notes.

 

(d)                                 Provision of Information.   
No Holder of Registrable Notes shall be entitled to include any of its
Registrable Notes in any Shelf Registration pursuant to this Agreement unless
such Holder furnishes to the Company and the Trustee in writing, within 20 days
after receipt of a written request therefor, such information as the Company
and the Trustee after conferring with counsel with regard to information
relating to Holders that would be required by the SEC to be included in such
Shelf Registration or Prospectus included therein, may reasonably request for
inclusion in any Shelf Registration or Prospectus included therein, and no such
Holder shall be entitled to Additional Interest pursuant to Section 4 hereof
unless and until such Holder shall have provided such information.

 

10

 

4.                                       Additional
Interest

 

(a)                                  The Company and each Subsidiary
Guarantor acknowledges and agrees that the Holders of Registrable Notes will
suffer damages if the Company or any Subsidiary Guarantor fails to fulfill its
material obligations under Section 2 or Section 3 hereof and that it would not
be feasible to ascertain the extent of such damages with precision.
Accordingly, the Company and the Subsidiary Guarantors agree to pay additional
cash interest on the Notes (“Additional Interest”) under the
circumstances and to the extent set forth below (each of which shall be given
independent effect):

 

(i)                                     if neither the Exchange
Registration Statement nor the Initial Shelf Registration has been filed on or
prior to the applicable Filing Date, Additional Interest shall accrue on the
Notes over and above any stated interest at a rate of 0.25% per annum of the
principal amount of such Notes for the first 90 days immediately following the
applicable Filing Date, such Additional Interest rate increasing by an
additional 0.25% per annum at the beginning of each subsequent 90-day period;

 

(ii)                                  if neither the Exchange
Registration Statement nor the Initial Shelf Registration is declared effective
by the SEC on or prior to the applicable Effectiveness Date, Additional
Interest shall accrue on the Notes over and above any stated interest at a rate
of 0.25% per annum of the principal amount of such Notes for the first 90 days
immediately following the Effectiveness Date, such Additional Interest rate
increasing by an additional 0.25% per annum at the beginning of each subsequent
90-day period;

 

(iii)                               if (A) the Company (and any
Subsidiary Guarantor) has not exchanged Exchange Notes for all Notes validly
tendered in accordance with the terms of the Exchange Offer on or prior to the
30 Business Days after the applicable Effectiveness Date, (B) the Exchange
Registration Statement ceases to be effective at any time prior to the time
that the Exchange Offer is consummated, (C) if applicable, a Shelf Registration
has been declared effective and such Shelf Registration ceases to be effective
at any time prior to the second anniversary of its effective date (other than
such time as all Notes have been disposed of thereunder), or (D) pending the
announcement of a material corporate transaction, the Company issues a written
notice pursuant to Section 6(e)(v) or (vi) that a Shelf Registration Statement
or Exchange Registration Statement is unusable and the aggregate number of days
in any 365-day period for which all such notices issued or required to be
issued, have been, or were required to be, in effect exceeds 120 days in the
aggregate or 30 days consecutively, in the case of a Shelf Registration
statement, or 15 days in the aggregate in the case of an Exchange Registration
Statement, then Additional Interest shall accrue on the Notes, over and above
any stated interest, at a rate of 0.25% per annum of the principal amount of
such Notes commencing on (w) the 30th

 

11

 

Business Day after the Effectiveness Date, in the case of (A)
above, or (x) the date the Exchange Registration Statement ceases to be
effective without being declared effective again within 30 days, in the case of
clause (B) above, or (y) the day such Shelf Registration ceases to be effective
in the case of (C) above, or (z) the day the Exchange Registration Statement or
Shelf Registration ceases to be usable in case of clause (D) above, such
Additional Interest rate increasing by an additional 0.25% per annum at the
beginning of each such subsequent 90-day period;

 

provided, however, that the maximum Additional
Interest rate on the Notes may not exceed at any one time in the aggregate
1.00% per annum; and provided further,
that (1) upon the filing of the Exchange Registration Statement or Initial
Shelf Registration (in the case of (i) above), (2) upon the effectiveness of
the Exchange Registration Statement or Initial Shelf Registration (in the case
of (ii) above), or (3) upon the exchange of Exchange Notes for all Notes
tendered (in the case of (iii)(A) above), or upon the effectiveness of the
Exchange Registration Statement that had ceased to remain effective (in the
case of clause (iii)(B) above), or upon the effectiveness of a Shelf
Registration which had ceased to remain effective (in the case of (iii)(C)
above), Additional Interest on the Notes as a result of such clause (or the
relevant subclause thereof) or upon the effectiveness of such Registration
Statement or Exchange Registration Statement (in the case of clause (iii)(D)
above), as the case may be, shall cease to accrue.

 

(b)                                 The Company shall notify the
Trustee within 3 Business Days after each and every date on which an event
occurs in respect of which Additional Interest is required to be paid (an “Event
Date”).  Any accrued amounts of
Additional Interest due pursuant to clause (a)(i), (a)(ii) or (a)(iii) of this
Section 4 will be payable in cash,
on each Interest Payment Date (as defined in the Notes) and in the manner
provided in the Indenture.  The amount
of Additional Interest will be determined by multiplying the applicable
Additional Interest rate by the principal amount of the Notes, multiplied by a
fraction, the numerator of which is the number of days such Additional Interest
rate was applicable during such period (determined on the basis of a 360-day
year comprised of twelve 30-day months and, in the case of a partial month, the
actual number of days elapsed), and the denominator of which is 360.

 

5.                                       Hold-Back
Agreements

 

The Company agrees
that it will not effect any public or private sale or distribution (including a
sale pursuant to Regulation D under the Securities Act) of any securities of
the same class as to those covered by a Registration Statement filed pursuant
to Section 2 or 3 hereof (other than Additional Notes (as defined in the
Indenture) issued under the Indenture), or any securities convertible into or
exchangeable or exercisable for such securities, during the 10 days prior to,
and during the 90-day period beginning on, the effective date of any
Registration Statement filed pursuant to Sections 2 and 3 hereof unless the
Holders of a majority in the aggregate principal amount of the Registrable
Notes included or to be included in such

 

12

 

Registration Statement consent or, if there is one, if the
managing underwriter thereof so requests in writing.

 

6.                                       Registration
Procedures

 

In connection with
the filing of any Registration Statement pursuant to Sections 2 or 3
hereof, the Company shall (and shall cause each Subsidiary Guarantor to) effect
such registrations to permit the sale of such securities covered thereby in
accordance with the intended method or methods of disposition thereof, and
pursuant thereto and in connection with any Registration Statement filed by the
Company hereunder, the Company shall (and shall cause each Subsidiary Guarantor
to):

 

(a)                                  Prepare and file with the SEC as
soon as practicable after the date hereof but in any event on or prior to the
Filing Date, the Exchange Registration Statement or if the Exchange
Registration Statement is not filed because of the circumstances contemplated
by Section 2(j), a Shelf Registration as prescribed by Section 3, and use
commercially reasonable efforts to cause each such Registration Statement to
become effective and remain effective as provided herein; provided that, if (1) a Shelf Registration
is filed pursuant to Section 3 or (2) a Prospectus contained in an Exchange
Registration Statement filed pursuant to Section 2 is required to be delivered
under the Securities Act by any Participating Broker-Dealer who seeks to sell
Exchange Notes during the Applicable Period relating thereto, before filing any
Registration Statement or Prospectus or any amendments or supplements thereto
the Company shall (and shall cause each Subsidiary Guarantor to), if requested,
furnish to and afford the Holders of the Registrable Notes to be registered
pursuant to such Shelf Registration Statement, each Participating
Broker-Dealer, the managing underwriters, if any, and each of their respective
counsel, a reasonable opportunity to review copies of all such documents
(including copies of any documents to be incorporated by reference therein and
all exhibits thereto) proposed to be filed (in each case at least 3 Business
Days prior to such filing).  The Company
and each Subsidiary Guarantor shall not file any such Registration Statement or
Prospectus, or any amendments or supplements thereto in respect of which the
Holders must provide information for the inclusion therein, without the Holders
being afforded an opportunity to review such documentation if the holders of a
majority in aggregate principal amount of the Registrable Notes covered by such
Registration Statement, or any such Participating Broker-Dealer, as the case
may be, the managing underwriters, if any, or any of their respective counsel
shall reasonably object in writing on a timely basis. A Holder shall be deemed
to have reasonably objected to such filing if such Registration Statement,
amendment, Prospectus or supplement, as applicable, as proposed to be filed,
contains an untrue statement of a material fact or omits to state any material
fact necessary to make the statements therein not misleading or fails to comply
with the applicable requirements of the Securities Act.

 

(b)                                 Provide an indenture trustee for
the Registrable Notes, the Exchange Notes or the Private Exchange Notes, as the
case may be, and cause the Indenture (or other

 

13

 

indenture relating to the Registrable Notes) to be qualified under
the TIA not later than the effective date of the first Registration Statement;
and in connection therewith, to effect such changes to such indenture as may be
required for such indenture to be so qualified in accordance with the terms of
the TIA; and execute, and use commercially reasonable efforts to cause such
trustee to execute, all documents as may be required to effect such changes,
and all other forms and documents required to be filed with the SEC to enable
such indenture to be so qualified in a timely manner.

 

(c)                                  Prepare and file with the SEC any
amendments to each Shelf Registration or Exchange Registration Statement, as
the case may be, as may be necessary to keep such Registration Statement
continuously effective for the Effectiveness Period or the Applicable Period,
as the case may be; cause the related Prospectus to be supplemented by any
Prospectus supplement required by applicable law, and as so supplemented to be
filed pursuant to Rule 424 (or any similar provisions then in force)
promulgated under the Securities Act; and comply with the provisions of the
Securities Act and the Exchange Act applicable to them with respect to the
disposition of all securities covered by such Registration Statement as so
amended or in such Prospectus as so supplemented and with respect to the
subsequent resale of any securities being sold by a Participating Broker-Dealer
covered by any such Prospectus.  The
Company and each Subsidiary Guarantor shall not, during the Applicable Period,
voluntarily take any action that would result in selling Holders of the Registrable
Notes covered by a Registration Statement or Participating Broker-Dealers
seeking to sell Exchange Notes not being able to sell such Registrable Notes or
such Exchange Notes during that period, unless such action is required by
applicable law, rule or regulation or permitted by this Agreement.

 

(d)                                 Furnish to such selling Holders and
Participating Broker-Dealers who so request in writing (i) upon the Company’s
receipt, a copy of the order of the SEC declaring such Registration Statement
and any post effective amendment thereto effective, (ii) such reasonable number
of copies of such Registration Statement and of each amendment and supplement
thereto (in each case including any documents incorporated therein by reference
and all exhibits), (iii) such reasonable number of copies of the Prospectus
included in such Registration Statement (including each preliminary Prospectus)
and each amendment and supplement thereto, and such reasonable number of copies
of the final Prospectus as filed by the Company and each Subsidiary Guarantor
pursuant to Rule 424(b) under the Securities Act, in conformity with the
requirements of the Securities Act and each amendment and supplement thereto,
and (iv) such other documents (including any amendments required to be filed
pursuant to clause (c) of this Section), as any such Person may reasonably
request in writing. The Company and the Subsidiary Guarantors hereby consent to
the use of the Prospectus by each of the selling Holders of Registrable Notes
or each such Participating Broker-Dealer, as the case may be, and the
underwriters or agents, if any, and dealers, if any, in connection with the
offering and sale of the Registrable Notes covered by,

 

14

 

or the sale by Participating Broker-Dealers of the Exchange Notes
pursuant to, such Prospectus and any amendment or supplement thereto.

 

(e)                                  If (1) a Shelf Registration is
filed pursuant to Section 3, or (2) a Prospectus contained in an Exchange
Registration Statement filed pursuant to Section 2 is required to be delivered
under the Securities Act by any Participating Broker-Dealer who seeks to sell
Exchange Notes during the Applicable Period relating thereto, the Company shall
notify in writing the selling Holders of Registrable Notes, or each such
Participating Broker-Dealer, as the case may be, the managing underwriters, if
any, and each of their respective counsel promptly (but in any event within 2
Business Days) (i) when a Prospectus or any Prospectus supplement or
post-effective amendment has been filed, and, with respect to a Registration
Statement or any post-effective amendment, when the same has become effective
(including in such notice a written statement that any Holder may, upon
request, obtain, without charge, one conformed copy of such Registration Statement
or post-effective amendment including financial statements and schedules,
documents incorporated or deemed to be incorporated by reference and exhibits),
(ii) of the issuance by the SEC of any stop order suspending the effectiveness
of a Registration Statement or of any order preventing or suspending the use of
any Prospectus or the initiation of any proceedings for that purpose, (iii) if
at any time when a Prospectus is required by the Securities Act to be delivered
in connection with sales of the Registrable Notes the representations and
warranties of the Company and any Subsidiary Guarantor contained in any
agreement (including any underwriting agreement) contemplated by Section 6(n)
hereof cease to be true and correct, (iv) of the receipt by the Company or any
Subsidiary Guarantor of any notification with respect to the suspension of the
qualification or exemption from qualification of a Registration Statement or
any of the Registrable Notes or the Exchange Notes to be sold by any
Participating Broker-Dealer for offer or sale in any jurisdiction, or the
initiation or threatening of any proceeding for such purpose, (v) of the
happening of any event, the existence of any condition of any information
becoming known that makes any statement made in such Registration Statement or
related Prospectus or any document incorporated or deemed to be incorporated
therein by reference untrue in any material respect or that requires the making
of any changes in, or amendments or supplements to, such Registration Statement,
Prospectus or documents so that, in the case of the Registration Statement and
the Prospectus, it will not contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they
were made, not misleading, (vi) of any reasonable determination by the Company
or any Subsidiary Guarantor that a post-effective amendment to a Registration
Statement would be appropriate and (vii) of any request by the SEC for
amendments to the Registration Statement or supplements to the Prospectus or
for additional information relating thereto.

 

(f)                                    Use commercially reasonable efforts
to prevent the issuance of any order suspending the effectiveness of a
Registration Statement or of any order

 

15

 

preventing or suspending the use of a Prospectus or suspending the
qualification (or exemption from qualification) of any of the Registrable Notes
or the Exchange Notes to be sold by any Participating Broker-Dealer, for sale
in any jurisdiction, and, if any such order is issued, to use commercially
reasonable efforts to obtain the withdrawal of any such order at the earliest
possible date.

 

(g)                                 If (A) a Shelf Registration is
filed pursuant to Section 3, (B) a Prospectus contained in an Exchange
Registration Statement filed pursuant to Section 2 is required to be delivered
under the Securities Act by any Participating Broker-Dealer who seeks to sell
Exchange Notes during the Applicable Period or (C) reasonably requested in
writing by the managing underwriters, if any, or the Holders of a majority in
aggregate principal amount of the Registrable Notes being sold in connection
with an underwritten offering, (i) promptly incorporate in a Prospectus
supplement or post-effective amendment such information or revisions to
information therein relating to such underwriters or selling Holders as the
managing underwriters, if any, or such Holders or any of their respective
counsel reasonably request in writing to be included or made therein and (ii)
make all required filings of such Prospectus supplement or such post-effective
amendment as soon as practicable after the Company has received notification of
the matters to be incorporated in such Prospectus supplements or post-effective
amendment.

 

(h)                                 Prior to any public offering of
Registrable Notes or any delivery of a Prospectus contained in the Exchange
Registration Statement by any Participating Broker-Dealer who seeks to sell
Exchange Notes during the Applicable Period, use commercially reasonable
efforts to register or qualify, and to cooperate with the selling Holders of
Registrable Notes or each such Participating Broker-Dealer, as the case may be,
the underwriters, if any, and their respective counsel in connection with the
registration or qualification (or exemption from such registration or
qualification) of such Registrable Notes or Exchange Notes, as the case may be,
for offer and sale under the securities or Blue Sky laws of such jurisdictions
within the United States as any selling Holder, Participating Broker-Dealer or
any managing underwriter or underwriters, if any, reasonably request in
writing; provided that where
Exchange Notes held by Participating Broker-Dealers or Registrable Notes are
offered other than through an underwritten offering, the Company and each
Subsidiary Guarantor agree to cause its counsel to perform Blue Sky
investigations and file any registrations and qualifications required to be filed
pursuant to this Section 6(h), keep each such registration or qualification (or
exemption therefrom) effective during the period such Registration Statement is
required to be kept effective and do any and all other acts or things
reasonably necessary or advisable to enable the disposition in such
jurisdictions of the Exchange Notes held by Participating Broker-Dealers or the
Registrable Notes covered by the applicable Registration Statement; provided that neither the Company nor any
Subsidiary Guarantor shall be required to (A) qualify generally to do business
in any jurisdiction where it is not then so qualified, (B) take any action that
would subject it to general service of process in

 

16

 

any such jurisdiction where it is not then so subject or (C)
subject itself to taxation in any such jurisdiction where it is not then so
subject.

 

(i)                                     If (A) a Shelf Registration is
filed pursuant to Section 3 or (B) a Prospectus contained in an Exchange
Registration Statement filed pursuant to Section 2 is requested to be delivered
under the Securities Act by any Participating Broker-Dealer who seeks to sell
Exchange Notes during the Applicable Period, cooperate with the selling Holders
of Registrable Notes and the managing underwriter or underwriters, if any, to
facilitate the timely preparation and delivery of certificates representing
Registrable Notes to be sold, which certificates shall not bear any restrictive
legends and shall be in a form eligible for deposit with The Depository Trust
Company, and enable such Registrable Notes to be in such denominations as
permitted by the Indenture and registered in such names as the managing
underwriter or underwriters, if any, or Holders may reasonably request.

 

(j)                                     Use commercially reasonable efforts
to cause the Registrable Notes covered by any Registration Statement to be
registered with or approved by such governmental agencies or authorities as may
be necessary to enable the seller or sellers thereof or the underwriter, if
any, to consummate the disposition of such Registrable Notes, except as may be
required solely as a consequence of the nature of such selling Holder’s
business, in which case the Company shall (and shall cause each Subsidiary
Guarantor to) cooperate in all reasonable respects with the filing of such
Registration Statement and the granting of such approvals; provided that neither the Company nor any
existing Subsidiary Guarantor shall be required to (A) qualify generally
to do business in any jurisdiction where it is not then so qualified,
(B) take any action that would subject it to general service of process in
any jurisdiction where it is not then so subject or (C) subject itself to
taxation in any such jurisdiction where it is not then so subject.

 

(k)                                  If (1) a Shelf Registration is
filed pursuant to Section 3, or (2) a Prospectus contained in an Exchange
Registration Statement filed pursuant to Section 2 is required to be delivered
under the Securities Act by any Participating Broker-Dealer who seeks to sell
Exchange Notes during the Applicable Period, upon the occurrence of any event
contemplated by paragraph 6(e)(v) or 6(e)(vi) hereof, as promptly as
practicable, prepare and file with the SEC, at the expense of the Company and
the Subsidiary Guarantors , a supplement or post-effective amendment to the
Registration Statement or a supplement to the related Prospectus or any
document incorporated or deemed to be incorporated therein by reference, or
file any other required document so that, as thereafter delivered to the
purchasers of the Registrable Notes being sold thereunder or to the purchasers
of the Exchange Notes to whom such Prospectus will be delivered by a
Participating Broker-Dealer, such Prospectus will not contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, and, if SEC review is
required, use commercially reasonable efforts to cause such post-effective
amendment to be declared effective as soon as possible.

 

17

 

(l)                                     Use its best efforts to cause the
Registrable Notes covered by a Registration Statement, to the extent not already
rated, to be rated with such appropriate rating agencies, if so requested in
writing by the Holders of a majority in aggregate principal amount of the
Registrable Notes covered by such Registration Statement or the managing
underwriter or underwriters, if any.

 

(m)                               Prior to the initial issuance of
the Exchange Notes, (i) provide the Trustee with one or more certificates for
the Registrable Notes in a form eligible for deposit with The Depository Trust
Company and (ii) provide a CUSIP number for each of the Senior Secured Exchange
Notes and the Senior Secured Floating Rate Exchange Notes.

 

(n)                                 If a Shelf Registration is filed
pursuant to Section 3, enter into such agreements (including an underwriting
agreement in form, scope and substance as is customary in underwritten
offerings of debt securities similar to the Notes, as may be appropriate in the
circumstances) and take all such other actions in connection therewith
(including those reasonably requested in writing by the managing underwriters,
if any, or the Holders of a majority in aggregate principal amount of the
Registrable Notes being sold) in order to expedite or facilitate the
registration or the disposition of such Registrable Notes, and in such
connection, whether or not an underwriting agreement is entered into and
whether or not the registration is an Underwritten Registration, (i) make such
representations and warranties to the Holders and the underwriters, if any,
with respect to the business of the Company and its subsidiaries as then conducted,
and the Registration Statement, Prospectus and documents, if any, incorporated
or deemed to be incorporated by reference therein, in each case, in form,
substance and scope as are customarily made by issuers to underwriters in
underwritten offerings of debt securities similar to the Notes, as may be
appropriate in the circumstances, and confirm the same if and when reasonably
required; (ii) obtain an opinion of counsel to the Company and the Subsidiary
Guarantors and updates thereof (which counsel and opinions (in form, scope and
substance) shall be reasonably satisfactory to the managing underwriters, if
any, to counsel, if any, and to the Holders of a majority in aggregate
principal amount of the Registrable Notes being sold), addressed to each selling
Holder and each of the underwriters, if any, covering the matters customarily
covered in opinions of counsel to the Company and the Subsidiary Guarantors
requested in underwritten offerings of debt securities similar to the Notes, as
may be appropriate in the circumstances; (iii) obtain “cold comfort” letters
and updates thereof (which letters and updates (in form, scope and substance)
shall be reasonably satisfactory to the managing underwriters, if any) from the
independent certified public accountants of the Company and the Subsidiary
Guarantors (and, if necessary, any other independent certified public
accountants of any subsidiary of the Company or of any business acquired by the
Company for which financial statements and financial data are, or are required
to be, included in the Registration Statement), addressed to each of the
underwriters, if any, such letters to be in customary form and covering matters
of the type customarily covered in “cold comfort” letters in connection with
underwritten offerings of debt securities similar to the Notes, as may be
appropriate in the

 

18

 

circumstances, and such other matters as reasonably requested in
writing by the underwriters; and (iv) deliver such documents and certificates
as may be reasonably requested in writing by the Holders of a majority in
aggregate principal amount of the Registrable Notes being sold and the managing
underwriters, if any, to evidence the continued validity of the representations
and warranties of the Company and its subsidiaries made pursuant to clause (i)
above and to evidence compliance with any conditions contained in the
underwriting agreement or other similar agreement entered into by the Company
or any Subsidiary Guarantor.

 

(o)                                 If (1) a Shelf Registration is
filed pursuant to Section 3, or (2) a Prospectus contained in an Exchange
Registration Statement filed pursuant to Section 2 is required to be delivered
under the Securities Act by any Participating Broker-Dealer who seeks to sell
Exchange Notes during the Applicable Period, make available for inspection by
any selling Holder of such Registrable Notes being sold, or each such
Participating Broker-Dealer, as the case may be, any underwriter participating
in any such disposition of Registrable Notes, if any, and any attorney,
accountant or other agent retained by any such selling Holder or each such
Participating Broker-Dealer, as the case may be, or underwriter (collectively,
the “Inspectors”), at the offices where normally kept, during reasonable
business hours, all financial and other records and pertinent corporate
documents of the Company and its subsidiaries (collectively, the “Records”)
as shall be reasonably necessary to enable them to exercise any applicable due
diligence responsibilities, and cause the officers, directors and employees of
the Company and its subsidiaries to supply all information reasonably requested
in writing by any such Inspector in connection with such Registration
Statement; provided that the foregoing inspection and information gathering on
behalf of the Holders shall be coordinated by one counsel designated by and on
behalf of the Holders pursuant to Section 4(c) hereto.  Each Inspector shall agree in writing that
it will keep the Records confidential and not disclose any of the Records
unless (i) the disclosure of such Records is necessary to avoid or correct a
misstatement or omission in such Registration Statement, (ii) the release of
such Records is ordered pursuant to a subpoena or other order from a court of
competent jurisdiction, (iii) the information in such Records is public or has
been made generally available to the public other than as a result of a
disclosure or failure to safeguard by such Inspector or (iv) disclosure of such
information is, in the reasonable written opinion of counsel for any Inspector,
necessary or advisable in connection with any action, claim, suit or
proceeding, directly or indirectly, involving or potentially involving such
Inspector and arising out of, based upon, related to, or involving this
Agreement, or any transaction contemplated hereby or arising hereunder.  Each selling Holder of such Registrable
Notes and each such Participating Broker-Dealer will be required to agree that
information obtained by it as a result of such inspections shall be deemed
confidential and shall not be used by it as the basis for any market
transactions in the securities of the Company unless and until such is made
generally available to the public.  Each
Inspector, each selling Holder of such Registrable Notes and each such
Participating Broker-Dealer will be required to further agree that it will,
upon

 

19

 

learning that disclosure of such Records is sought in a court of
competent jurisdiction, give notice to the Company and, to the extent
practicable, use its best efforts to allow the Company, at its expense, to
undertake appropriate action to prevent disclosure of the Records deemed
confidential at its expense.

 

(p)                                 Use commercially reasonable efforts
to comply with all applicable rules and regulations of the SEC and make
generally available to the security holders of the Company with regard to any
Applicable Registration Statement earning statements satisfying the provisions
of section 11(a) of the Securities Act and Rule 158 thereunder (or any similar
rule promulgated under the Securities Act) no later than 45 days after the end
of any 12-month period (or 90 days after the end of any 12-month period if such
period is a fiscal year) (i) commencing at the end of any fiscal quarter in
which Registrable Notes are sold to underwriters in a firm commitment or best
efforts underwritten offering and (ii) if not sold to underwriters in such an
offering, commencing on the first day of the first fiscal quarter of the
Company after the effective date of a Registration Statement, which statements
shall cover said 12-month periods.

 

(q)                                 Upon consummation of an Exchange
Offer or Private Exchange, obtain an opinion of counsel to the Company and the
Subsidiary Guarantors (in form, scope and substance reasonably satisfactory to
the Initial Purchaser), addressed to the Trustee for the benefit of all Holders
participating in the Exchange Offer or Private Exchange, as the case may be, in
customary form and substance to the effect that, among other things, (i) the
Company and the Subsidiary Guarantors have duly authorized, executed and
delivered the Exchange Notes or the Private Exchange Notes, as the case may be,
and the Indenture and (ii) the Exchange Notes or the Private Exchange Notes, as
the case may be, and the Indenture constitute legal, valid and binding
obligations of the Company and the Subsidiary Guarantors, enforceable against
the Company and the Subsidiary Guarantors in accordance with their respective
terms, except as such enforcement may be subject to customary United States and
foreign exceptions.

 

(r)                                    If the Exchange Offer or a Private
Exchange is to be consummated, upon delivery of the Registrable Notes by the
Holders to the Company and the Subsidiary Guarantors (or to such other Person
as directed by the Company and the Subsidiary Guarantors) in exchange for the
Exchange Notes or the Private Exchange Notes, as the case may be, the Company
and the Subsidiary Guarantors shall mark, or caused to be marked, on such
Registrable Notes that the Exchange Notes or the Private Exchange Notes, as the
case may be, are being issued as substitute evidence of the indebtedness
originally evidenced by the Registrable Notes; provided
that in no event shall such Registrable Notes be marked as paid or otherwise
satisfied.

 

(s)                                  Cooperate with each seller of
Registrable Notes covered by any Registration Statement and each underwriter,
if any, participating in the disposition of such Registrable Notes and their
respective counsel in connection with any filings required to be made with the
NASD.

 

20

 

(t)                                    Use
commercially reasonable efforts to cause all Securities covered by a
Registration Statement to be listed on each securities exchange, if any, on
which similar debt securities issued by the Company are then listed.

 

(u)                                 Use commercially reasonable efforts to take all other steps
reasonably necessary to effect the registration of the Registrable Notes
covered by a Registration Statement contemplated hereby.

 

(v)                                 The Company may require each seller
of Registrable Notes or Participating Broker-Dealer as to which any
registration is being effected to furnish to the Company such information
regarding such seller or Participating Broker-Dealer and the distribution of
such Registrable Notes as the Company may, from time to time, reasonably
request in writing.  The Company may
exclude from such registration the Registrable Notes of any seller who fails to
furnish such information within a reasonable time (which time in no event shall
exceed 45 days, subject to Section 3(d)) hereof) after receiving such
request.  Each seller of Registrable
Notes or Participating Broker-Dealer as to which any registration is being
effected agrees to furnish promptly to the Company all information required to
be disclosed in order to make the information previously furnished by such
seller not materially misleading.

 

(w)                               Each Holder of Registrable Notes
and each Participating Broker-Dealer agrees by acquisition of such Registrable
Notes or Exchange Notes to be sold by such Participating Broker-Dealer, as the
case may be, that, upon receipt of any notice from the Company of the happening
of any event of the kind described in Section 6(e)(ii), 6(e)(iv), 6(e)(v), or
6(e)(vi), such Holder will forthwith discontinue disposition of such
Registrable Notes covered by a Registration Statement and such Participating
Broker-Dealer will forthwith discontinue disposition of such Exchange Notes
pursuant to any Prospectus and, in each case, forthwith discontinue
dissemination of such Prospectus until such Holder’s or Participating
Broker-Dealer’s receipt of the copies of the supplemented or amended Prospectus
contemplated by Section 6(k), or until it is advised in writing (the “Advice”)
by the Company and the Subsidiary Guarantors that the use of the applicable
Prospectus may be resumed, and has received copies of any amendments or
supplements thereto and, if so directed by the Company and the Subsidiary
Guarantors, such Holder or Participating Broker-Dealer, as the case may be,
will deliver to the Company all copies, other than permanent file copies, then
in such Holder’s or Participating Broker-Dealer’s possession, of the Prospectus
covering such Registrable Notes current at the time of the receipt of such
notice.  In the event the Company and
the Subsidiary Guarantors shall give any such notice, the Applicable Period
shall be extended by the number of days during such periods from and including
the date of the giving of such notice to and including the date when each
Participating Broker-Dealer shall have received (x) the copies of the
supplemented or amended Prospectus contemplated by Section 6(k) or (y) the
Advice.

 

21

 

7.                                       Registration
Expenses

 

(a)                                  All fees and expenses incident to
the performance of or compliance with this Agreement by the Company and the
Subsidiary Guarantors shall be borne by the Company and the Subsidiary
Guarantors, whether or not the Exchange Offer or a Shelf Registration is filed
or becomes effective, including, without limitation, (i) all registration and
filing fees, including, without limitation, (A) fees with respect to filings
required to be made with the NASD in connection with any underwritten offering
and (B) fees and expenses of compliance with state securities or Blue Sky laws
as provided in Section 6(h) hereof (including, without limitation,
reasonable fees and disbursements of counsel in connection with Blue Sky
qualifications of the Registrable Notes or Exchange Notes and determination of
the eligibility of the Registrable Notes or Exchange Notes for investment under
the laws of such jurisdictions (x) where the Holders are located, in the case
of the Exchange Notes, or (y) as provided in Section 6(h), in the case of
Registrable Notes or Exchange Notes to be sold by a Participating Broker-Dealer
during the Applicable Period)),
(ii) printing expenses, including, without limitation, expenses of printing
Prospectuses if the printing of Prospectuses is requested by the managing
underwriter or underwriters, if any, or by the Holders of a majority in
aggregate principal amount of the Registrable Notes included in any
Registration Statement or by any Participating Broker-Dealer during the Applicable
Period, as the case may be, (iii) messenger, telephone and delivery expenses
incurred in connection with the performance of their obligations hereunder,
(iv) fees and disbursements of counsel for the Company, the Subsidiary
Guarantors and, subject to 7(b), the Holders, (v) fees and disbursements of all
independent certified public accountants referred to in Section 6 (including,
without limitation, the expenses of any special audit and “cold comfort”
letters required by or incident to such performance), (vi) rating agency
fees and the fees and expenses incurred in connection with the listing of the
Securities to be registered on any securities exchange, (vii) Securities Act liability insurance, if the Company and the
Subsidiary Guarantors desire such insurance, (viii) fees and expenses of all
other Persons retained by the Company and the Subsidiary Guarantors, (ix)
fees and expenses of any “qualified independent underwriter” or other
independent appraiser participating in an offering pursuant to Section 3 of
Schedule E to the By-laws of the NASD, but only where the need for such a
“qualified independent underwriter” arises due to a relationship with the
Company and the Subsidiary Guarantors, (x) internal expenses of the Company and the Subsidiary Guarantors
(including, without limitation, all salaries and expenses of officers and
employees of the Company or the Subsidiary Guarantors performing legal or
accounting duties), (xi) the expense of any annual audit, (xii) the fees and
expenses of the Trustee and the Exchange Agent and (xiii) the expenses relating
to printing, word processing and distributing all Registration Statements,
underwriting agreements, securities sales agreements, indentures and any other
documents necessary in order to comply with this Agreement.

 

(b)                                 The Company and the Subsidiary
Guarantors shall reimburse the Holders for the reasonable fees and
disbursements of not more than one counsel chosen by the

 

22

 

Holders of a majority in aggregate principal amount of the
Registrable Notes to be included in any Registration Statement.  The Company and the Subsidiary Guarantors
shall pay all documentary, stamp, transfer or other transactional taxes
attributable to the issuance or delivery of the Exchange Notes or Private
Exchange Notes in exchange for the Notes; provided
that the Company shall not be required to pay taxes payable in respect of any
transfer involved in the issuance or delivery of any Exchange Note or Private
Exchange Note in a name other than that of the Holder of the Note in respect of
which such Exchange Note or Private Exchange Note is being issued.  The Company and the Subsidiary Guarantors
shall reimburse the Holders for fees and expenses (including reasonable fees
and expenses of counsel to the Holders) relating to any enforcement of any
rights of the Holders under this Agreement.

 

8.                                       Indemnification

 

(a)                                  Indemnification by the Company and
the Subsidiary Guarantors.  The Company and the Subsidiary Guarantors
jointly and severally agree to indemnify and hold harmless each Holder of
Registrable Notes, Exchange Notes or Private Exchange Notes and each
Participating Broker-Dealer selling Exchange Notes during the Applicable
Period, each Person, if any, who controls each such Holder (within the meaning
of Section 15 of the Securities Act or Section 20(a) of the Exchange Act) and
the officers, directors and partners of each such Holder, Participating
Broker-Dealer and controlling person, to the fullest extent lawful, from and
against any and all losses, claims, damages, liabilities, costs (including,
without limitation, reasonable costs of preparation and reasonable attorneys’
fees as provided in this Section 8) and expenses (including, without
limitation, reasonable costs and expenses incurred in connection with
investigating, preparing, pursuing or defending against any of the foregoing)
(collectively, “Losses”), as incurred, directly or indirectly caused by,
related to, based upon, arising out of or in connection with any untrue or alleged
untrue statement of a material fact contained in any Registration Statement,
Prospectus or form of prospectus, or in any amendment or supplement thereto, or
in any preliminary prospectus, or any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, except insofar as such Losses resulted primarily from
information relating to such Holder or Participating Broker-Dealer and
furnished in writing to the Company and the Subsidiary Guarantors (or reviewed
and approved in writing) by such Holder or Participating Broker-Dealer or their
counsel expressly for use therein; provided,
however, that the Company and the
Subsidiary Guarantors will not be liable to any Indemnified Party (as defined
below) under this Section 8 to the extent Losses were solely caused by an
untrue statement or omission or alleged untrue statement or omission that was
contained or made in any preliminary prospectus and corrected in the Prospectus
or any amendment or supplement thereto if (i) the Prospectus does not contain
any other untrue statement or omission or alleged untrue statement or omission
of a material fact that was the subject matter of the related proceeding, (ii)
any such Losses resulted from an action, claim or suit by any

 

23

 

Person who purchased Registrable Notes or Exchange Notes which are
the subject thereof from such Indemnified Party and (iii) it is established in
the related proceeding that such Indemnified Party failed to deliver or provide
a copy of the Prospectus (as amended or supplemented) to such Person with or
prior to the confirmation of the sale of such Registrable Notes or Exchange
Notes sold to such Person if required by applicable law, unless such failure to
deliver or provide a copy of the Prospectus (as amended or supplemented) was a
result of noncompliance by the Company with Section 6 of this Agreement.  The Company and the Subsidiary Guarantors
also agree to indemnify underwriters, selling brokers, dealer managers and
similar securities industry professionals participating in the distribution,
their officers, directors, agents and employees and each Person who controls
such Persons (within the meaning of Section 5 of the Securities Act or Section
20(a) of the Exchange Act) to the same extent as provided above with respect to
the indemnification of the Holders or the Participating Broker-Dealer.

 

(b)                                 Indemnification by Holder. 
In connection with any Registration Statement, Prospectus or form of
prospectus, any amendment or supplement thereto, or any preliminary prospectus
in which a Holder is participating, such Holder shall furnish to the Company
and the Subsidiary Guarantors in writing such information as the Company and
the Subsidiary Guarantors reasonably request for use in connection with any
Registration Statement, Prospectus or form of prospectus, any amendment or
supplement thereto, or any preliminary prospectus and shall indemnify and hold
harmless the Company, the Subsidiary Guarantors, their respective directors and
each Person, if any, who controls the Company and the Subsidiary Guarantors
(within the meaning of Section 15 of the Securities Act and Section 20(a) of
the Exchange Act), and the directors, officers and partners of such controlling
persons, to the fullest extent lawful, from and against all Losses arising out
of or based upon any untrue or alleged untrue statement of a material fact contained
in any Registration Statement, Prospectus or form of prospectus or in any
amendment or supplement thereto or in any preliminary prospectus, or any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading to the extent, but
only to the extent, that such losses are finally judicially determined by a
court of competent jurisdiction in a final, unappealable order to have resulted
primarily from an untrue statement or alleged untrue statement of a material
fact or omission or alleged omission of a material fact contained in or omitted
from any information so furnished in writing by such Holder to the Company and
the Subsidiary Guarantors expressly for use therein.  Notwithstanding the foregoing, in no event shall the liability of
any selling Holder be greater in amount than such Holder’s Maximum Contribution
Amount (as defined below).

 

(c)                                  Conduct of Indemnification
Proceedings.  If any proceeding shall be brought or
asserted against any Person entitled to indemnity hereunder (an “Indemnified
Party”), such Indemnified Party shall promptly notify the party or parties
from which such indemnity is sought (the “Indemnifying Party” or “Indemnifying

 

24

 

Parties”, as applicable) in writing; provided,
that the failure to so notify the Indemnifying Parties shall not relieve the
Indemnifying Parties from any obligation or liability except to the extent (but
only to the extent) that it shall be finally determined by a court of competent
jurisdiction (which determination is not subject to appeal) that the
Indemnifying Parties have been prejudiced materially by such failure.

 

The Indemnifying
Party shall have the right, exercisable by giving written notice to an
Indemnified Party, within 20 Business Days after receipt of written notice from
such Indemnified Party of such proceeding, to assume, at its expense, the
defense of any such proceeding, provided,
that an Indemnified Party shall have the right to employ separate counsel in
any such proceeding and to participate in the defense thereof, but the fees and
expenses of such counsel shall be at the expense of such Indemnified Party or
parties unless:  (1) the Indemnifying
Party has agreed to pay such fees and expenses; or (2) the Indemnifying Party
shall have failed promptly to assume the defense of such proceeding or shall
have failed to employ counsel reasonably satisfactory to such Indemnified
Party; or (3) the named parties to any such proceeding (including any impleaded
parties) include both such Indemnified Party and the Indemnifying Party or any
of its affiliates or controlling persons, and such Indemnified Party shall have
been advised by counsel that there may be one or more defenses available to
such Indemnified Party that are in addition to, or in conflict with, those
defenses available to the Indemnifying Party or such affiliate or controlling
person (in which case, if such Indemnified Party notifies the Indemnifying
Parties in writing that it elects to employ separate counsel at the expense of
the Indemnifying Parties, the Indemnifying Parties shall not have the right to
assume the defense and the reasonable fees and expenses of such counsel shall
be at the expense of the Indemnifying Party; it being understood, however,
that, the Indemnifying Party shall not, in connection with any one such
proceeding or separate but substantially similar or related proceedings in the
same jurisdiction, arising out of the same general allegations or
circumstances, be liable for the fees and expenses of more than one separate
firm of attorneys (together with appropriate local counsel) at any time for
such Indemnified Party).

 

No Indemnifying
Party shall be liable under this Section 8 for any settlement of any
such proceeding effected without its written consent, which shall not be
unreasonably withheld, but if settled with its written consent, or if there be
a final judgment for the plaintiff in any such proceeding, each Indemnifying
Party jointly and severally agrees, subject to the exceptions and limitations
set forth above, to indemnify and hold harmless each Indemnified Party from and
against any and all Losses by reason of such settlement or judgment.  The Indemnifying Party shall not consent to
the entry of any judgment or enter into any settlement that does not include as
an unconditional term thereof the giving by the claimant or plaintiff to each
Indemnified Party of a release, in form and substance reasonably satisfactory
to the Indemnified Party, from all liability in respect of such proceeding for
which such Indemnified Party would be entitled to indemnification hereunder
(whether or not any Indemnified Party is a party thereto).

 

(d)                                 Contribution. 
If the indemnification provided for in this Section 8 is unavailable to
an Indemnified Party or is insufficient to hold such Indemnified Party harmless
for any Losses in respect of which this Section 8 would otherwise apply by its
terms (other than by reason of exceptions provided in this Section 8), then
each applicable Indemnifying Party, in lieu of indemnifying such Indemnified
Party,

 

25

 

shall have a joint and several obligation to contribute to the
amount paid or payable by such Indemnified Party as a result of such Losses, in
such proportion as is appropriate to reflect the relative fault of the
Indemnifying Party, on the one hand, and such Indemnified Party, on the other
hand, in connection with the actions, statements or omissions that resulted in
such Losses as well as any other relevant equitable considerations. The
relative fault of such Indemnifying Party, on the one hand, and Indemnified
Party, on the other hand, shall be determined by reference to, among other
things, whether any untrue or alleged untrue statement of a material fact or
omission or alleged omission to state a material fact relates to information
supplied by such Indemnifying Party or Indemnified Party, and the parties’
relative intent, knowledge, access to information and opportunity to correct or
prevent any such statement or omission. 
The amount paid or payable by an Indemnified Party as a result of any
Losses shall be deemed to include any legal or other fees or expenses incurred
by such party in connection with any proceeding, to the extent such party would
have been indemnified for such fees or expenses if the indemnification provided
for in Section 8(a) or 8(b) was available to such party.

 

The parties hereto
agree that it would not be just and equitable if contribution pursuant to this
Section 8(d) were determined by pro rata allocation or by other method of
allocation that does not take account of the equitable considerations referred
to in the immediately preceding paragraph. 
Notwithstanding the provisions of this Section 8(d), a selling Holder
shall not be required to contribute, in the aggregate, any amount in excess of
such Holder’s Maximum Contribution Amount. 
A selling Holder’s “Maximum Contribution Amount” shall equal the
excess of (i) the aggregate proceeds received by such Holder pursuant to the
sale of such Registrable Notes or Exchange Notes over (ii) the aggregate amount
of damages that such Holder has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission.  No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation. The Holders’ obligations to contribute
pursuant to this Section 8(d) are several in proportion to the respective
principal amount of the Registrable Securities held by each Holder hereunder
and not joint.  The Company’s and
Subsidiary Guarantors’ obligations to contribute pursuant to this Section 8(d)
are joint and several.

 

The indemnity and
contribution agreements contained in this Section 8 are in addition to any
liability that the Indemnifying Parties may have to the Indemnified Parties.

 

9.                                       Rules 144 and 144A

 

The Company
covenants that it shall (a) file the reports required to be filed by it (if so
required) under the Securities Act and the Exchange Act in a timely manner and,
if at any time the Company is not required to file such reports, it will, upon
the written request of any Holder of Registrable Notes, make publicly available
other information necessary to permit sales pursuant to Rule 144 and 144A and
(b) take such further action as any Holder may reasonably request in writing,
all to the extent required from time to time to enable such Holder to sell
Registrable Notes without registration under the Securities Act pursuant to the
exemptions

 

26

 

provided by Rule 144 and Rule 144A. 
Upon the request of any Holder, the Company shall deliver to such Holder
a written statement as to whether it has complied with such information and
requirements.

 

10.                                 Underwritten
Registrations of Registrable Notes

 

If any of the
Registrable Notes covered by any Shelf Registration is to be sold in an
underwritten offering, the investment banker or investment bankers and manager
or managers that will manage the offering will be selected by the Holders of a
majority in aggregate principal amount of such Registrable Notes included in
such offering; provided, however, that such investment banker or
investment bankers and manager or managers must be reasonably acceptable to the
Company.

 

No Holder of
Registrable Notes may participate in any underwritten registration hereunder
unless such Holder (a) agrees to sell such Holder’s Registrable Notes on the
basis provided in any underwriting arrangements approved by the Persons
entitled hereunder to approve such arrangements and (b) completes and executes
all questionnaires, powers of attorney, indemnities, underwriting agreements
and other documents required under the terms of such underwriting arrangements.

 

11.                                 Miscellaneous

 

(a)                                  Remedies.
In the event of a breach by either the Company or any of the Subsidiary
Guarantors of any of their respective obligations under this Agreement, each
Holder, in addition to being entitled to exercise all rights provided herein,
in the Indenture or, in the case of the Initial Purchaser, in the Purchase Agreement,
or granted by law, including recovery of damages, will be entitled to specific
performance of its rights under this Agreement.  The Company and the Subsidiary Guarantors agree that monetary
damages would not be adequate compensation for any loss incurred by reason of a
breach by either the Company or any of the Subsidiary Guarantors of any of the
provisions of this Agreement and hereby further agree that, in the event of any
action for specific performance in respect of such breach, the Company shall (and shall cause each Subsidiary
Guarantor to) waive the defense that a remedy at law would be adequate.

 

(b)                                 No Inconsistent Agreements. 
The Company and each of the Subsidiary Guarantors have not entered, as
of the date hereof, and the Company and each of the Subsidiary Guarantors shall
not enter, after the date of this Agreement, into any agreement with respect to
any of its securities that is inconsistent with the rights granted to the
Holders of Securities in this Agreement or otherwise conflicts with the
provisions hereof.  The Company and each
of the Subsidiary Guarantors have not entered and will not enter into any
agreement with respect to any of its securities that will grant to any Person
piggy-back rights with respect to a Registration Statement.

 

27

 

(c)                                  Adjustments Affecting Registrable
Notes.  The Company shall not, directly or
indirectly, take any action with respect to the Registrable Notes as a class
that would adversely affect the ability of the Holders to include such
Registrable Notes in a registration undertaken pursuant to this Agreement.

 

(d)                                 Amendments and Waivers. 
The provisions of this Agreement may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given, otherwise than with the prior written consent of the Holders
of not less than a majority in aggregate principal amount of the then
outstanding Registrable Notes in circumstances that would adversely affect any
Holders of Registrable Notes; provided,
however, that Section 8 and this
Section 11(d) may not be amended, modified or supplemented without the prior
written consent of each Holder. 
Notwithstanding the foregoing, a waiver or consent to depart from the
provisions hereof with respect to a matter that relates exclusively to the
rights of Holders of Registrable Notes whose securities are being tendered
pursuant to the Exchange Offer or sold pursuant to a Notes Registration
Statement and that does not directly or indirectly affect, impair, limit or
compromise the rights of other Holders of Registrable Notes may be given by
Holders of at least a majority in aggregate principal amount of the Registrable
Notes being tendered or being sold by such Holders pursuant to such Notes
Registration Statement.

 

(e)                                  Notices. 
All notices and other communications provided for or permitted hereunder
shall be made in writing by hand delivery, registered first-class mail,
next-day air courier or telecopier:

 

(i)                                     if to a Holder of Securities or to
any Participating Broker-Dealer, at the most current address of such Holder or
Participating Broker-Dealer, as the case may be, set forth on the records of
the registrar of the Notes, with a copy in like manner to the Initial Purchaser
as follows:

 

Jefferies & Company, Inc.

11100 Santa Monica Boulevard

10th Floor

Los Angeles, California  90025

Attention:  Jerry M. Gluck, Esq.

 

with a copy to:

 

Mayer, Brown, Rowe & Maw LLP

1675 Broadway

New York, New York  10019

Facsimile No.:  (212) 262-1910

Attention:  Ronald S. Brody, Esq.

 

(ii)                                  if to the Initial Purchaser, at the
address specified in Section 11(e)(1);

 

(iii)                               if to the Company or any Subsidiary
Guarantor, as follows:

 

28

 

Atlantic Express Transportation Corp.

7 North Street

Staten Island, New York  10451

Attention:  Chief Executive Officer

 

with a copy to:

 

Latham & Watkins LLP

885 Third Avenue

Suite 1000

New York, New York  10022

Attention:  Robert A. Zuccaro, Esq.

 

All such notices
and communications shall be deemed to have been duly given:  when delivered by hand, if personally
delivered; five business days after being deposited in the United States mail,
postage prepaid, if mailed, one business day after being deposited in the
United States mail, postage prepaid, if mailed; one business day after being
timely delivered to a next-day air courier guaranteeing overnight delivery; and
when receipt is acknowledged by the addressee, if telecopied.

 

Copies of all such
notices, demands or other communications shall be concurrently delivered by the
Person giving the same to the Trustee under the Indenture at the address
specified in such Indenture.

 

(f)                                    Successors and Assigns. 
This Agreement shall inure to the benefit of and be binding upon the
successors and assigns of each of the parties hereto, including, without
limitation and without the need for an express assignment, subsequent Holders
of Securities.

 

(g)                                 Counterparts. 
This Agreement may be executed in any number of counterparts and by the
parties hereto in separate counterparts, each of which when so executed shall
be deemed to be an original and all of which taken together shall constitute
one and the same agreement.

 

(h)                                 Headings. 
The headings in this Agreement are for convenience of reference only and
shall not limit or otherwise affect the meaning hereof.

 

(i)                                     Governing Law. 
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF
LAW.  THE COMPANY HEREBY IRREVOCABLY
SUBMITS TO THE JURISDICTION OF ANY NEW YORK STATE COURT SITTING IN THE BOROUGH
OF MANHATTAN IN THE CITY OF NEW YORK OR ANY FEDERAL COURT SITTING IN THE
BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK IN RESPECT OF ANY SUIT, ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, AND IRREVOCABLY
ACCEPTS FOR ITS AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY,
JURISDICTION OF

 

29

 

THE AFORESAID COURTS.  THE
COMPANY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO
UNDER APPLICABLE LAW, TRIAL BY JURY AND ANY OBJECTION THAT IT MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING
BROUGHT IN ANY SUCH COURT AND ANY CLAIM THAT ANY SUCH SUIT, ACTION OR
PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT
FORUM.  THE COMPANY IRREVOCABLY
CONSENTS, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO UNDER APPLICABLE LAW,
TO THE SERVICE OF PROCESS OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH
ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR
CERTIFIED MAIL, POSTAGE PREPAID, TO THE COMPANY AT ITS SAID ADDRESS, SUCH
SERVICE TO BECOME EFFECTIVE 30 DAYS AFTER SUCH MAILING.  NOTHING HEREIN SHALL AFFECT THE RIGHT OF ANY
HOLDER TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE
LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST THE COMPANY IN ANY OTHER
JURISDICTION.

 

(j)                                     Severability. 
If any term, provision, covenant or restriction of this Agreement is
held by a court of competent jurisdiction to be invalid, illegal, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions set forth herein shall remain in full force and effect and shall
in no way be affected, impaired or invalidated, and the parties hereto shall
use reasonably best efforts to find and employ an alternative means to achieve
the same or substantially the same result as that contemplated by such term,
provision, covenant or restriction.  It
is hereby stipulated and declared to be the intention of the parties that they
would have executed the remaining terms, provisions, covenants and restrictions
without including any of such that may be hereafter declared invalid, illegal,
void or unenforceable.

 

(k)                                  Securities Held by the Company or
Its Affiliates.  Whenever the consent or approval of Holders
of a specified percentage of Securities is required hereunder, Securities held
by the Company or its affiliates (as such term is defined in Rule 405 under the
Securities Act) shall not be counted in determining whether such consent or
approval was given by the Holders of such required percentage.

 

(l)                                     Third Party Beneficiaries. 
Holders and Participating Broker-Dealers are intended third party
beneficiaries of this Agreement and this Agreement may be enforced by such
Persons.

 

(m)                               Entire Agreement. 
This Agreement, together with the Purchase Agreement, the Indenture and
the Security Documents, is intended by the parties as a final and exclusive
statement of the agreement and understanding of the parties hereto in respect
of the subject matter contained herein and therein and any and all prior oral
or written agreements, representations, or warranties, contracts,

 

30

 

understanding, correspondence, conversations and memoranda between
the Initial Purchaser on the one hand and the Company and the Subsidiary
Guarantors on the other, or between or among any agents, representatives,
parents, subsidiaries, affiliates, predecessors in interest or successors in
interest with respect to the subject matter hereof and thereof are merged
herein and replaced hereby.

 

31

 

IN WITNESS
WHEREOF, the parties have executed this Agreement as of the date first written
above.

 

 

	
   

  	
  ATLANTIC
  EXPRESS

  TRANSPORTATION CORP.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ DOMENIC
  GATTO

  	
   

  
	
   

  	
   

  	
  Name:
  Domenic Gatto

  
	
   

  	
   

  	
  Title:   President, CEO

  
	
   

  	
   

  	
   

  
	
   

  	
  Each of the
  following entities, as Subsidiary

  
	
   

  	
  Guarantors:

  
	
   

  	
   

  	
   

  
	
   

  	
  180 JAMAICA
  CORP.

  
	
   

  	
  201 WEST SOTELLO
  REALTY, INC.

  
	
   

  	
  AIRPORT
  SERVICES, INC.

  
	
   

  	
  AMBOY BUS
  CO., INC.

  
	
   

  	
  ATLANTIC
  EXPRESS COACHWAYS, INC.

  
	
   

  	
  ATLANTIC
  EXPRESS NEW ENGLAND, INC.

  
	
   

  	
  ATLANTIC
  EXPRESS OF CALIFORNIA, INC.

  
	
   

  	
  ATLANTIC
  EXPRESS OF ILLINOIS, INC.

  
	
   

  	
  ATLANTIC
  EXPRESS OF L.A. INC.

  
	
   

  	
  ATLANTIC
  EXPRESS OF MISSOURI INC.

  
	
   

  	
  ATLANTIC
  EXPRESS OF NEW JERSEY, INC.

  
	
   

  	
  ATLANTIC
  EXPRESS OF PENNSYLVANIA, INC.

  
	
   

  	
  ATLANTIC
  EXPRESS OF SOUTH CAROLINA, INC.

  
	
   

  	
  ATLANTIC
  PARATRANS OF ARIZONA, INC.

  
	
   

  	
  ATLANTIC
  PARATRANS OF NYC, INC.

  
	
   

  	
  ATLANTIC
  PARATRANS OF PENNSYLVANIA, INC.

  
	
   

  	
  ATLANTIC
  PARATRANS, INC.

  
	
   

  	
  ATLANTIC
  QUEENS BUS CORP.

  
	
   

  	
  ATLANTIC
  TRANSIT, CORP.

  

 

32

 

	
   

  	
  ATLANTIC-CHITTENANGO
  REAL PROPERTY CORP.

  
	
   

  	
  ATLANTIC-CONN.
  TRANSIT, INC.

  
	
   

  	
  ATLANTIC-HUDSON,
  INC.

  
	
   

  	
  BLOCK 7932, INC.

  
	
   

  	
  BROOKFIELD
  TRANSIT INC.

  
	
   

  	
  CENTRAL NEW
  YORK REORGANIZATION CORP.

  
	
   

  	
  COURTESY BUS
  CO., INC.

  
	
   

  	
  FIORE BUS
  SERVICE, INC.

  
	
   

  	
  GROOM
  TRANSPORTATION, INC.

  
	
   

  	
  GVD LEASING
  CO., INC.

  
	
   

  	
  JAMES
  MCCARTY LIMO SERVICE, INC.

  
	
   

  	
  JERSEY BUS
  SALES, INC.

  
	
   

  	
  JERSEY
  BUSINESS LAND CO., INC.

  
	
   

  	
  K. CORR,
  INC.

  
	
   

  	
  MCINTIRE
  TRANSPORTATION, INC.

  
	
   

  	
  MERIT
  TRANSPORTATION CORP.

  
	
   

  	
  METRO
  AFFILIATES, INC.

  
	
   

  	
  METROPOLITAN
  ESCORT SERVICE, INC.

  
	
   

  	
  MIDWAY
  LEASING INC.

  
	
   

  	
  MOUNTAIN
  TRANSIT, INC.

  
	
   

  	
  R. FIORE BUS
  SERVICE, INC.

  
	
   

  	
  RAYBERN BUS
  SERVICE, INC.

  
	
   

  	
  RAYBERN
  CAPITAL CORP.

  
	
   

  	
  RAYBERN
  EQUITY CORP.

  
	
   

  	
  ROBERT L.
  MCCARTHY & SON, INC.

  
	
   

  	
  STATEN
  ISLAND BUS, INC.

  
	
   

  	
  TEMPORARY
  TRANSIT SERVICE, INC.

  
	
   

  	
  T-NT BUS
  SERVICE, INC.

  
	
   

  	
  TRANSCOMM,
  INC.

  
	
   

  	
  WINSALE,
  INC.

  
	
   

  	
  WRIGHTHOLM
  BUS LINE, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ DOMENIC
  GATTO

  	
   

  
	
   

  	
   

  	
  Name:
  Domenic Gatto

  
	
   

  	
   

  	
  Title: Chief
  Officer of each of

  the above named Subsidiary Guarantors

  

 

33

 

	
   

  	
  ACCEPTED AND
  AGREED TO:

  
	
   

  	
   

  
	
   

  	
  JEFFERIES
  & COMPANY, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ RICHARD
  A. GOLDBERG

  	
   

  
	
   

  	
  Name:
  Richard A. Goldberg

  
	
   

  	
  Title:   Managing Director

  

 

34

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