Document:

Exhibit 4.1

 

 

 

INDENTURE

 

Dated
as of October 31, 2006

 

Among

 

MICHAELS
STORES, INC.,

 

THE
GUARANTORS NAMED ON THE SIGNATURE PAGES HERETO

 

and

 

WELLS
FARGO BANK, NATIONAL ASSOCIATION,

 

as
Trustee

 

10% SENIOR NOTES DUE 2014

 

 

 

 

CROSS-REFERENCE
TABLE*

 

	
  Trust Indenture Act Section

  	
   

  	
  Indenture Section

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  310(a)

  	
  (1)

  	
   

  	
  7.10

  	
   

  
	
  (a)

  	
  (2)

  	
   

  	
  7.10

  	
   

  
	
  (a)

  	
  (3)

  	
   

  	
  N.A.

  	
   

  
	
  (a)

  	
  (4)

  	
   

  	
  N.A.

  	
   

  
	
  (a)

  	
  (5)

  	
   

  	
  7.10

  	
   

  
	
  (b)

  	
   

  	
   

  	
  7.03, 7.10

  	
   

  
	
  (c)

  	
   

  	
   

  	
  N.A.

  	
   

  
	
  311(a)

  	
   

  	
   

  	
  7.11

  	
   

  
	
  (b)

  	
   

  	
   

  	
  7.11

  	
   

  
	
  (c)

  	
   

  	
   

  	
  N.A.

  	
   

  
	
  312(a)

  	
   

  	
   

  	
  2.05

  	
   

  
	
  (b)

  	
   

  	
   

  	
  7.06, 12.03

  	
   

  
	
  (c)

  	
   

  	
   

  	
  12.03

  	
   

  
	
  313(a)

  	
   

  	
   

  	
  2.05, 7.06

  	
   

  
	
  (b)

  	
  (1)

  	
   

  	
  N.A.

  	
   

  
	
  (b)

  	
  (2)

  	
   

  	
  7.06;7.07

  	
   

  
	
  (c)

  	
   

  	
   

  	
  7.06;12.02

  	
   

  
	
  (d)

  	
   

  	
   

  	
  7.06

  	
   

  
	
  314(a)

  	
   

  	
   

  	
  4.03;12.02;12.05

  	
   

  
	
  (b)

  	
   

  	
   

  	
  N.A.

  	
   

  
	
  (c)

  	
  (1)

  	
   

  	
  12.04

  	
   

  
	
  (c)

  	
  (2)

  	
   

  	
  12.04

  	
   

  
	
  (c)

  	
  (3)

  	
   

  	
  N.A.

  	
   

  
	
  (d)

  	
   

  	
   

  	
  N.A.

  	
   

  
	
  (e)

  	
   

  	
   

  	
  12.05

  	
   

  
	
  (f)

  	
   

  	
   

  	
  N.A.

  	
   

  
	
  315(a)

  	
   

  	
   

  	
  7.01

  	
   

  
	
  (b)

  	
   

  	
   

  	
  7.05;12.02

  	
   

  
	
  (c)

  	
   

  	
   

  	
  7.01

  	
   

  
	
  (d)

  	
   

  	
   

  	
  7.01

  	
   

  
	
  (e)

  	
   

  	
   

  	
  6.14

  	
   

  
	
  316(a)

  	
  (last
  sentence)

  	
   

  	
  2.09

  	
   

  
	
  (a)

  	
  (1)(A)

  	
   

  	
  6.05

  	
   

  
	
  (a)

  	
  (1)(B)

  	
   

  	
  6.04

  	
   

  
	
  (a)

  	
  (2)

  	
   

  	
  N.A

  	
   

  
	
  (b)

  	
   

  	
   

  	
  6.07

  	
   

  
	
  (c)

  	
   

  	
   

  	
  2.12;9.04

  	
   

  
	
  317(a)

  	
  (1)

  	
   

  	
  6.08

  	
   

  
	
  (a)

  	
  (2)

  	
   

  	
  6.12

  	
   

  
	
  (b)

  	
   

  	
   

  	
  2.04

  	
   

  
	
  318(a)

  	
   

  	
   

  	
  12.01

  	
   

  
	
  (b)

  	
   

  	
   

  	
  N.A.

  	
   

  
	
  (c)

  	
   

  	
   

  	
  12.01

  	
   

  

 

N.A. means not applicable.

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

 

 

TABLE
OF CONTENTS

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  ARTICLE 1

  	
   

  
	
   

  	
   

  
	
  DEFINITIONS AND INCORPORATION BY REFERENCE

  	
   

  
	
   

  	
   

  
	
  Section 1.01

  	
  Definitions

  	
  1

  
	
  Section 1.02

  	
  Other
  Definitions

  	
  32

  
	
  Section 1.03

  	
  Incorporation
  by Reference of Trust Indenture Act

  	
  32

  
	
  Section 1.04

  	
  Rules of
  Construction

  	
  33

  
	
  Section 1.05

  	
  Acts of
  Holders

  	
  34

  
	
   

  	
   

  	
   

  
	
  ARTICLE 2

  	
   

  
	
   

  	
   

  
	
  THE NOTES

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 2.01

  	
  Form and
  Dating; Terms

  	
  35

  
	
  Section 2.02

  	
  Execution
  and Authentication

  	
  37

  
	
  Section 2.03

  	
  Registrar
  and Paying Agent

  	
  37

  
	
  Section 2.04

  	
  Paying Agent
  To Hold Money in Trust

  	
  37

  
	
  Section 2.05

  	
  Holder Lists

  	
  38

  
	
  Section 2.06

  	
  Transfer and
  Exchange

  	
  38

  
	
  Section 2.07

  	
  Replacement
  Notes

  	
  49

  
	
  Section 2.08

  	
  Outstanding
  Notes

  	
  50

  
	
  Section 2.09

  	
  Treasury
  Notes

  	
  50

  
	
  Section 2.10

  	
  Temporary
  Notes

  	
  50

  
	
  Section 2.11

  	
  Cancellation

  	
  50

  
	
  Section 2.12

  	
  Defaulted
  Interest

  	
  51

  
	
  Section 2.13

  	
  CUSIP
  Numbers

  	
  51

  
	
   

  	
   

  	
   

  
	
  ARTICLE 3

  	
   

  
	
   

  	
   

  
	
  REDEMPTION

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 3.01

  	
  Notices to
  Trustee

  	
  51

  
	
  Section 3.02

  	
  Selection of
  Notes To Be Redeemed or Purchased

  	
  52

  
	
  Section 3.03

  	
  Notice of
  Redemption

  	
  52

  
	
  Section 3.04

  	
  Effect of
  Notice of Redemption

  	
  53

  
	
  Section 3.05

  	
  Deposit of
  Redemption or Purchase Price

  	
  53

  
	
  Section 3.06

  	
  Notes
  Redeemed or Purchased in Part

  	
  54

  
	
  Section 3.07

  	
  Optional
  Redemption

  	
  54

  
	
  Section 3.08

  	
  Mandatory
  Redemption

  	
  55

  
	
  Section 3.09

  	
  Offers To
  Repurchase by Application of Excess Proceeds

  	
  55

  

 

i

 

	
   

  	
  Page

  
	
   

  	
   

  
	
  ARTICLE 4

  	
   

  
	
   

  	
   

  
	
  COVENANTS

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 4.01

  	
  Payment of
  Notes

  	
  57

  
	
  Section 4.02

  	
  Maintenance
  of Office or Agency

  	
  57

  
	
  Section 4.03

  	
  Reports and
  Other Information

  	
  57

  
	
  Section 4.04

  	
  Compliance
  Certificate

  	
  59

  
	
  Section 4.05

  	
  Taxes

  	
  59

  
	
  Section 4.06

  	
  Stay,
  Extension and Usury Laws

  	
  59

  
	
  Section 4.07

  	
  Limitation
  on Restricted Payments

  	
  59

  
	
  Section 4.08

  	
  Dividend and
  Other Payment Restrictions Affecting Restricted Subsidiaries

  	
  67

  
	
  Section 4.09

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

  	
  68

  
	
  Section 4.10

  	
  Asset Sales

  	
  74

  
	
  Section 4.11

  	
  Transactions
  with Affiliates

  	
  76

  
	
  Section 4.12

  	
  Liens

  	
  78

  
	
  Section 4.13

  	
  Corporate
  Existence

  	
  79

  
	
  Section 4.14

  	
  Offer to
  Repurchase Upon Change of Control

  	
  79

  
	
  Section 4.15

  	
  Limitation
  on Guarantees of Indebtedness by Restricted Subsidiaries

  	
  81

  
	
  Section 4.16

  	
  Discharge
  and Suspension of Covenants

  	
  81

  
	
   

  	
   

  	
   

  
	
  ARTICLE 5

  	
   

  
	
   

  	
   

  
	
  SUCCESSORS

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 5.01

  	
  Merger,
  Consolidation or Sale of All or Substantially All Assets

  	
  82

  
	
  Section 5.02

  	
  Successor
  Corporation Substituted

  	
  84

  
	
   

  	
   

  	
   

  
	
  ARTICLE 6

  	
   

  
	
   

  	
   

  
	
  DEFAULTS AND REMEDIES

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 6.01

  	
  Events of
  Default

  	
  84

  
	
  Section 6.02

  	
  Acceleration

  	
  86

  
	
  Section 6.03

  	
  Other
  Remedies

  	
  87

  
	
  Section 6.04

  	
  Waiver of
  Past Defaults

  	
  87

  
	
  Section 6.05

  	
  Control by
  Majority

  	
  88

  
	
  Section 6.06

  	
  Limitation
  on Suits

  	
  88

  
	
  Section 6.07

  	
  Rights of
  Holders of Notes To Receive Payment

  	
  88

  
	
  Section 6.08

  	
  Collection
  Suit by Trustee

  	
  88

  
	
  Section 6.09

  	
  Restoration
  of Rights and Remedies

  	
  89

  
	
  Section 6.10

  	
  Rights and
  Remedies Cumulative

  	
  89

  
	
  Section 6.11

  	
  Delay or
  Omission Not Waiver

  	
  89

  
	
  Section 6.12

  	
  Trustee May
  File Proofs of Claim

  	
  89

  
	
  Section 6.13

  	
  Priorities

  	
  90

  
	
  Section 6.14

  	
  Undertaking
  for Costs

  	
  90

  

 

ii

 

	
   

  	
  Page

  
	
   

  	
   

  
	
  ARTICLE 7

  	
   

  
	
   

  	
   

  
	
  TRUSTEE

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 7.01

  	
  Duties of
  Trustee

  	
  90

  
	
  Section 7.02

  	
  Rights of
  Trustee

  	
  91

  
	
  Section 7.03

  	
  Individual
  Rights of Trustee

  	
  92

  
	
  Section 7.04

  	
  Trustee’s
  Disclaimer

  	
  92

  
	
  Section 7.05

  	
  Notice of
  Defaults

  	
  93

  
	
  Section 7.06

  	
  Reports by
  Trustee to Holders of the Notes

  	
  93

  
	
  Section 7.07

  	
  Compensation
  and Indemnity

  	
  93

  
	
  Section 7.08

  	
  Replacement
  of Trustee

  	
  94

  
	
  Section 7.09

  	
  Successor
  Trustee by Merger, etc

  	
  95

  
	
  Section 7.10

  	
  Eligibility;
  Disqualification

  	
  95

  
	
  Section 7.11

  	
  Preferential
  Collection of Claims Against Issuer

  	
  95

  
	
   

  	
   

  	
   

  
	
  ARTICLE 8

  	
   

  
	
   

  	
   

  
	
  LEGAL DEFEASANCE AND COVENANT DEFEASANCE

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 8.01

  	
  Option To
  Effect Legal Defeasance or Covenant Defeasance

  	
  95

  
	
  Section 8.02

  	
  Legal
  Defeasance and Discharge

  	
  95

  
	
  Section 8.03

  	
  Covenant
  Defeasance

  	
  96

  
	
  Section 8.04

  	
  Conditions
  to Legal or Covenant Defeasance

  	
  96

  
	
  Section 8.05

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

  	
  98

  
	
  Section 8.06

  	
  Repayment to
  Issuer

  	
  98

  
	
  Section 8.07

  	
  Reinstatement

  	
  98

  
	
   

  	
   

  	
   

  
	
  ARTICLE 9

  	
   

  
	
   

  	
   

  
	
  AMENDMENT, SUPPLEMENT AND WAIVER

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 9.01

  	
  Without
  Consent of Holders of Notes

  	
  99

  
	
  Section 9.02

  	
  With Consent
  of Holders of Notes

  	
  100

  
	
  Section 9.03

  	
  Compliance
  with Trust Indenture Act

  	
  101

  
	
  Section 9.04

  	
  Revocation
  and Effect of Consents

  	
  101

  
	
  Section 9.05

  	
  Notation on
  or Exchange of Notes

  	
  102

  
	
  Section 9.06

  	
  Trustee To
  Sign Amendments, etc

  	
  102

  
	
  Section 9.07

  	
  Payment for
  Consent

  	
  102

  
	
   

  	
   

  	
   

  
	
  ARTICLE 10

  	
   

  
	
   

  	
   

  
	
  GUARANTEES

  	
   

  
	
   

  	
   

  
	
  Section
  10.01

  	
  Guarantee

  	
  102

  
	
  Section
  10.02

  	
  Limitation
  on Guarantor Liability

  	
  104

  
	
  Section
  10.03

  	
  Execution
  and Delivery

  	
  104

  
	
  Section
  10.04

  	
  Subrogation

  	
  105

  
	
  Section
  10.05

  	
  Benefits
  Acknowledged

  	
  105

  

 

iii

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  Section
  10.06

  	
  Release of
  Guarantees

  	
  105

  
	
   

  	
   

  	
   

  
	
  ARTICLE 11

  	
   

  
	
   

  	
   

  
	
  SATISFACTION AND DISCHARGE

  	
   

  
	
   

  	
   

  	
   

  
	
  Section
  11.01

  	
  Satisfaction
  and Discharge

  	
  105

  
	
  Section
  11.02

  	
  Application
  of Trust Money

  	
  106

  
	
   

  	
   

  	
   

  
	
  ARTICLE 12

  	
   

  
	
   

  	
   

  
	
  MISCELLANEOUS

  	
   

  
	
   

  	
   

  	
   

  
	
  Section
  12.01

  	
  Trust
  Indenture Act Controls

  	
  107

  
	
  Section
  12.02

  	
  Notices

  	
  107

  
	
  Section
  12.03

  	
  Communication
  by Holders of Notes with Other Holders of Notes

  	
  108

  
	
  Section
  12.04

  	
  Certificate
  and Opinion as to Conditions Precedent

  	
  108

  
	
  Section
  12.05

  	
  Statements
  Required in Certificate or Opinion

  	
  109

  
	
  Section
  12.06

  	
  Rules by
  Trustee and Agents

  	
  109

  
	
  Section
  12.07

  	
  No Personal
  Liability of Directors, Officers, Employees and Stockholders

  	
  109

  
	
  Section
  12.08

  	
  Governing
  Law

  	
  109

  
	
  Section
  12.09

  	
  Waiver of
  Jury Trial

  	
  109

  
	
  Section
  12.10

  	
  Force
  Majeure

  	
  110

  
	
  Section
  12.11

  	
  No Adverse
  Interpretation of Other Agreements

  	
  110

  
	
  Section
  12.12

  	
  Successors

  	
  110

  
	
  Section
  12.13

  	
  Severability

  	
  110

  
	
  Section
  12.14

  	
  Counterpart
  Originals

  	
  110

  
	
  Section
  12.15

  	
  Table of
  Contents, Headings, etc

  	
  110

  
	
  Section
  12.16

  	
  Qualification
  of Indenture

  	
  110

  
	
   

  	
   

  	
   

  
	
  EXHIBITS

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Exhibit A

  	
  Form of
  Senior Note

  	
   

  
	
  Exhibit B

  	
  Form of
  Certificate of Transfer

  	
   

  
	
  Exhibit C

  	
  Form of
  Certificate of Exchange

  	
   

  
	
  Exhibit D

  	
  Form of
  Supplemental Indenture to Be Delivered by Subsequent Guarantors

  	
   

  

 

iv

 

INDENTURE, dated as of
October 31, 2006, among Michaels Stores, Inc., a Delaware corporation (“Michaels”),
the Guarantors (as defined herein) listed on the signature pages hereto and
Wells Fargo Bank, National Association, as Trustee.

 

W I  T  N  E  S
S  E  T  H

 

WHEREAS, Michaels has duly
authorized the creation of an issue of $750,000,000 aggregate principal amount
of 10% Senior Notes due 2014 (the “Initial Notes”);

 

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

 

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

 

ARTICLE
1

 

DEFINITIONS
AND INCORPORATION BY REFERENCE

 

Section 1.01           Definitions.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

 

“Agent” means any
Registrar or Paying Agent.

 

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

 

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

 

(2)           the excess, if any, of (a) the present value at such Redemption Date of
(i) the redemption price of such Note at November 1, 2010 (such redemption
price being set forth in Section 3.07 hereof), plus (ii) all required interest
payments due on such Note through November 1, 2010 (excluding accrued but
unpaid interest to the Redemption Date), computed using a discount rate equal
to the Treasury Rate as of such Redemption Date plus 50 basis points; over (b)
the then outstanding principal amount of such Note.

 

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

 

“Asset Sale” means:

 

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

 

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

 

in each case, other than:

 

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

 

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

 

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

 

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

 

2

 

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

 

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

 

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

 

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

 

(i)            foreclosures on or expropriations of assets;

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“Capital Stock”
means:

 

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

 

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

 

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

 

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

 

“Capitalized Lease
Obligation” means, at the time any determination thereof is to be made, the
amount of the liability in respect of a capital lease that would at such time
be required to be

 

3

 

capitalized and reflected as a liability on a
balance sheet (excluding the footnotes thereto) prepared in accordance with
GAAP.

 

“Cash Equivalents”
means:

 

(1)           United States dollars and Canadian dollars;

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(10)         Investments with average maturities of 12 months or less from the date
of acquisition in money market funds rated AAA- (or the equivalent thereof) or
better by S&P or Aaa3

 

4

 

(or the equivalent thereof)
or better by Moody’s and in each case in a currency permitted under clause (1)
or (2) above;

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“Clearstream” means
Clearstream Banking, Société Anonyme.

 

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

 

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

 

(1)           consolidated interest expense of such Person and its Restricted
Subsidiaries for such period, to the extent such expense was deducted (and not
added back) in computing Consolidated Net Income (including (a) amortization of
original issue discount resulting from the 

 

5

 

issuance of Indebtedness at
less than par, (b) all commissions, discounts and other fees and charges owed
with respect to letters of credit or bankers acceptances, (c) non-cash interest
payments (but excluding any non-cash interest expense attributable to the
movement in the mark to market valuation of Hedging Obligations or other
derivative instruments pursuant to GAAP), (d) the interest component of Capitalized
Lease Obligations, and (e) net payments, if any, made (less net payments, if
any, received) pursuant to interest rate Hedging Obligations with respect to
Indebtedness, and excluding (v) penalties and interest related to taxes, (w)
any Additional Interest with respect to the Initial Notes and any “additional
interest” with respect to the Senior Subordinated Notes or the Subordinated
Discount Notes, (x) amortization of deferred financing fees, debt issuance
costs, discounted liabilities, commissions, fees and expenses, (y) any
expensing of bridge, commitment and other financing fees and (z) commissions,
discounts, yield and other fees and charges (including any interest expense)
related to any Receivables Facility); plus (2) consolidated capitalized interest
of such Person and its Restricted Subsidiaries for such period, whether paid or
accrued; less

 

(3)           interest income for such period.

 

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

 

For purposes of determining
Consolidated Interest Expense for any period ending prior to the first
anniversary of the Issue Date, after giving pro forma effect to the
Transactions, Consolidated Interest Expense shall be $92.5 million for the
fiscal quarter ended January 28, 2006, $91.4 million for the fiscal quarter
ended April 29, 2006, and $92.5 million for the fiscal quarter ended July 29,
2006.

 

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

 

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

 

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

 

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

 

6

 

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

 

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

 

(5)           the Net Income for such period of any Person that is not a Subsidiary,
or is an Unrestricted Subsidiary, or that is accounted for by the equity method
of accounting, shall be excluded; provided that Consolidated Net Income
of the Issuer shall be increased by the amount of dividends or distributions or
other payments that are actually paid in cash (or to the extent converted into
cash) to the referent Person or a Restricted Subsidiary thereof in respect of
such period, by such Person,

 

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

 

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

 

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

 

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

 

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

 

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

 

7

 

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

 

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

 

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

 

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

 

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

 

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

 

“Consolidated Total
Indebtedness” means, as at any date of determination, an amount equal to
(x) the sum of (1) the aggregate amount of all outstanding Indebtedness of the
Issuer and its Restricted Subsidiaries on a consolidated basis consisting of
Indebtedness for borrowed money, Obligations in respect of Capitalized Lease
Obligations and debt obligations evidenced by promissory notes and similar
instruments (and excluding, for the avoidance of doubt, all obligations
relating to Receivables Facilities) and (2) the aggregate amount of all
outstanding Disqualified Stock of the Issuer and all Preferred Stock of its
Restricted Subsidiaries on a consolidated basis, with the amount of such
Disqualified Stock and Preferred Stock equal to the greater of their respective
voluntary or involuntary liquidation preferences and maximum fixed repurchase
prices, in each case determined on a consolidated basis in accordance with
GAAP, less (y) the aggregate amount of unrestricted cash and Cash Equivalents
included on the consolidated balance sheet of the Issuer and any Restricted
Subsidiaries as of such date; provided that Indebtedness of the Issuer and its
Restricted Subsidiaries under any revolving credit facility as at any date of
determination shall be determined using the Average Monthly Balance of such
Indebtedness for the 

 

8

 

most recently ended four fiscal quarters for
which internal financial statements are available as of such date of determination
(the “Reference Period”). For purposes hereof, (a) the “maximum fixed
repurchase price” of any Disqualified Stock or Preferred Stock that does not
have a fixed repurchase price shall be calculated in accordance with the terms
of such Disqualified Stock or Preferred Stock as if such Disqualified Stock or
Preferred Stock were purchased on any date on which Consolidated Total
Indebtedness shall be required to be determined pursuant to this Indenture, and
if such price is based upon, or measured by, the fair market value of such
Disqualified Stock or Preferred Stock, such fair market value shall be
determined reasonably and in good faith by the Issuer, (b) “Average Monthly
Balance” means, with respect to any Indebtedness incurred by the Issuer or its
Restricted Subsidiaries under a revolving credit facility, the quotient of (x)
the sum of each Individual Monthly Balance for each fiscal month ended on or
prior to such date of determination and included in the Reference Period
divided by (y) 12, and (c) “Individual Monthly Balance” means, with respect to
any Indebtedness incurred by the Issuer or its Restricted Subsidiaries under a
revolving credit facility during any fiscal month of the Issuer, the quotient
of (x) the sum of the aggregate outstanding principal amount of all such
Indebtedness at the end of each day of such fiscal month divided by (y) the
number of days in such fiscal month.

 

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

 

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

 

(2)           to advance or supply funds

 

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

 

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

 

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

 

“Corporate Trust Office
of the Trustee” shall be at the address of the Trustee specified in Section
12.02 hereof or such other address as to which the Trustee may give notice to
the Holders and the Issuer.

 

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

 

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

 

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

 

9

 

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

 

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

 

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

 

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

 

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

 

(1)           increased (without duplication) by:

 

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

 

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

 

10

 

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

 

(d)           any expenses or charges (other than depreciation or amortization
expense) related to any Equity Offering, Permitted Investment, acquisition,
disposition, recapitalization or the incurrence of Indebtedness permitted to be
incurred by this Indenture (including a refinancing thereof) (whether or not
successful), including (i) such fees, expenses or charges related to the
offering of the Initial Notes, the Senior Subordinated Notes, the Subordinated
Discount Notes and the Senior Credit Facilities and (ii) any amendment or other
modification of the Initial Notes, the Senior Subordinated Notes, the
Subordinated Discount Notes and the Senior Credit Facilities, in each case,
deducted (and not added back) in computing Consolidated Net Income; plus

 

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

 

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

 

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

 

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

 

(i)            the amount of net cost savings projected by
the Issuer in good faith to be realized as a result of specified actions taken
during such period (calculated on a pro
forma basis as though such cost savings had been realized on the
first day of such period), net of the amount of actual benefits realized during
such period from such actions; provided that
(x) such cost savings are reasonably identifiable and factually supportable,
(y) such actions are taken within 36 months after the Issue Date and (z) the
aggregate amount of cost savings added pursuant to this clause (i) shall not
exceed $25.0 million for any four consecutive quarter period (which adjustments
may be incremental to pro forma adjustments
made pursuant to the definition of “Fixed Charge Coverage Ratio”); plus

 

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

 

11

 

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

 

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

 

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

 

(2)           decreased (without duplication) by:

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

12

 

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

 

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

 

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

 

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

 

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

 

(1)           contributions to its common equity capital, and

 

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

 

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

 

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

 

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

 

13

 

for such period as if such Investment, acquisition,
disposition, merger or consolidation had occurred at the beginning of the
applicable four-quarter period.

 

For purposes of this
definition, whenever pro forma
effect is to be given to an Investment, acquisition, disposition, amalgamation,
merger or consolidation (including the Transactions) and the amount of income
or earnings relating thereto, the pro forma
calculations shall be made in good faith by a responsible financial or
accounting officer of the Issuer (and may include, for the avoidance of doubt,
cost savings and operating expense reductions resulting from such Investment,
acquisition, amalgamation, merger or consolidation (including the Transactions)
which is being given pro forma effect that have been or are expected to be
realized).  If any Indebtedness bears a
floating rate of interest and is being given pro
forma effect, the interest on such Indebtedness shall be calculated
as if the rate in effect on the Fixed Charge Coverage Ratio Calculation Date
had been the applicable rate for the entire period (taking into account any
Hedging Obligations applicable to such Indebtedness).  Interest on a Capitalized Lease Obligation
shall be deemed to accrue at an interest rate reasonably determined by a responsible
financial or accounting officer of the Issuer to be the rate of interest
implicit in such Capitalized Lease Obligation in accordance with GAAP.  Interest on Indebtedness that may optionally
be determined at an interest rate based upon a factor of a prime or similar
rate, a eurocurrency interbank offered rate, or other rate, shall be deemed to
have been based upon the rate actually chosen, or, if none, then based upon
such optional rate chosen as the Issuer may designate.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“Government Securities”
means securities that are:

 

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

 

14

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(a)           in respect of borrowed money;

 

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

 

15

 

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

 

(d)           representing any Hedging Obligations;

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“Initial Notes” is
defined in the recitals hereto.

 

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

 

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

 

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

 

16

 

“Investment Grade
Securities” means:

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“Issue Date” means
October 31, 2006.

 

17

 

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

 

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

 

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

 

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

 

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

 

“Michaels” is defined
in the preamble hereto.

 

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

 

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

 

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

 

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

 

18

 

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

 

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

 

“Offering Memorandum”
means the offering memorandum, dated October 25, 2006, relating to the sale of
the Initial Notes.

 

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

 

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

 

“Opinion of Counsel”
means a written opinion from legal counsel. 
The counsel may be an employee of or counsel to the Issuer.

 

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

 

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

 

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

 

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

 

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

 

19

 

which a Change of Control Offer is made in
accordance with the requirements of Section 4.14 (or would result in a Change
of Control Offer in the absence of the waiver of such requirement by Holders in
accordance with Section 4.14 will thereafter, together with its Affiliates,
constitute an additional Permitted Holder.

 

“Permitted Investments”
means:

 

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

 

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

 

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

 

(a)           such Person becomes a Restricted Subsidiary; or

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(8)           any Investment in a Similar Business having an aggregate fair market
value, taken together with all other Investments made pursuant to this clause
(8) that are at that time 

 

20

 

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

 

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

 

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

 

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

 

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

 

(13)         if the Consolidated Leverage Ratio of the Issuer is less than 6.00 to
1.00 on a pro forma basis after
giving effect to such transaction, additional Investments having an aggregate
fair market value, taken together with all other Investments made pursuant to
this clause (13) that are at that time outstanding (without giving effect to
the sale of an Unrestricted Subsidiary to the extent the proceeds of such sale
do not consist of, or have not been subsequently sold or transferred for, cash
or marketable securities), not to exceed $100.0 million (with the fair market
value of each Investment being measured at the time made and without giving
effect to subsequent changes in value);

 

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

 

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

 

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

 

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

 

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

 

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

 

21

 

or import duties or for the
payment of rent, in each case incurred in the ordinary course of business;

 

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

 

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

 

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

 

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

 

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

 

(7)           Liens existing on the Issue Date;

 

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

 

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

 

22

 

merger, amalgamation or
consolidation; provided, further, however, that the Liens
may not extend to any other property owned by the Issuer or any of its
Restricted Subsidiaries;

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

23

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

24

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

25

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“Related Business Assets”
means assets (other than cash or Cash Equivalents) used or useful in a Similar
Business, provided that any assets received by the Issuer or a
Restricted Subsidiary in exchange for assets transferred by the Issuer or a
Restricted Subsidiary shall not be deemed to be Related 

 

26

 

Business Assets if they consist of securities
of a Person, unless upon receipt of the securities of such Person, such Person
would become a Restricted Subsidiary.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“Sale and Lease-Back
Transaction” means any arrangement providing for the leasing by the Issuer
or any of its Restricted Subsidiaries of any real or tangible personal
property, which property 

 

27

 

has been or is to be sold or transferred by
the Issuer or such Restricted Subsidiary to a third Person in contemplation of
such leasing.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“Sponsor Management Agreement”
means the management agreements between certain of the management companies
associated with the Investors and Highfields Capital, and the Issuer, as in
effect on the Issue Date and as amended, supplemented, amended and restated,
replaced or otherwise 

 

28

 

modified from time to time; provided,
however, that the terms of any such amendment, supplement, amendment and
restatement or replacement agreement are not, taken as a whole, less favorable
to the holders of the Notes in any material respect than the original agreement
in effect on the Issue Date.

 

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

 

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

 

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

 

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

 

“Subsidiary” means,
with respect to any Person:

 

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

 

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

 

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

 

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

 

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

 

29

 

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

 

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

 

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

 

“Transactions” means
the transactions contemplated by the Transaction Agreement, the issuance of the
Initial Notes, the Senior Subordinated Notes and the Subordinated Discount
Notes and borrowings under the Senior Credit Facilities as in effect on the
Issue Date.

 

“Treasury Rate”
means, as of any Redemption Date, the yield to maturity as of such Redemption
Date of United States Treasury securities with a constant maturity (as compiled
and published in the most recent Federal Reserve Statistical Release H.15 (519)
that has become publicly available at least two Business Days prior to the
Redemption Date (or, if such Statistical Release is no longer published, any
publicly available source of similar market data)) most nearly equal to the
period from the Redemption Date to November 1, 2010; provided, however,
that if the period from the Redemption Date to November 1, 2010 is less than
one year, the weekly average yield on actually traded United States Treasury
securities adjusted to a constant maturity of one year will be used.

 

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

 

“Trustee” means Wells
Fargo Bank, National Association as trustee, until a successor replaces it in
accordance with the applicable provisions of this Indenture and thereafter
means the successor serving hereunder.

 

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

 

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

 

“Unrestricted Subsidiary”
means:

 

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

 

(2)           any Subsidiary of an Unrestricted Subsidiary.

 

The Issuer may designate any
Subsidiary of the Issuer (including any existing Subsidiary and any newly
acquired or newly formed Subsidiary) to be an Unrestricted Subsidiary unless
such Subsidiary or any of its Subsidiaries owns any Equity Interests or
Indebtedness of, or owns or holds any Lien 

 

30

 

on, any property of, the Issuer or any
Subsidiary of the Issuer (other than solely any Subsidiary of the Subsidiary to
be so designated); provided that

 

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

 

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

 

(3)           each of:

 

(a)           the Subsidiary to be so designated; and

 

(b)           its Subsidiaries

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

31

 

(2)           the sum of all such payments.

 

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

 

Section 1.02           Other
Definitions.

 

	
  Term

  	
   

  	
  Defined in

  Section

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  “Acceptable
  Commitment”

  	
   

  	
  4.10(b)

  	
   

  
	
  “Affiliate
  Transaction”

  	
   

  	
  4.11(a)

  	
   

  
	
  “Asset Sale
  Offer”

  	
   

  	
  4.10(c)

  	
   

  
	
  “Authentication
  Order”

  	
   

  	
  2.02

  	
   

  
	
  “Change of
  Control Offer”

  	
   

  	
  4.14(a)

  	
   

  
	
  “Change of
  Control Payment”

  	
   

  	
  4.14(a)

  	
   

  
	
  “Change of
  Control Payment Date”

  	
   

  	
  4.14(a)

  	
   

  
	
  “Covenant
  Defeasance”

  	
   

  	
  8.03

  	
   

  
	
  “Covenant
  Suspension Event”

  	
   

  	
  4.16(a)

  	
   

  
	
  “DTC”

  	
   

  	
  2.03

  	
   

  
	
  “Event of
  Default”

  	
   

  	
  6.01(a)

  	
   

  
	
  “Excess
  Proceeds”

  	
   

  	
  4.10(c)

  	
   

  
	
  “incur”or
  “incurrence”

  	
   

  	
  4.09(a)

  	
   

  
	
  “Legal
  Defeasance”

  	
   

  	
  8.02

  	
   

  
	
  “Note
  Register”

  	
   

  	
  2.03

  	
   

  
	
  “Offer
  Amount”

  	
   

  	
  3.09(b)

  	
   

  
	
  “Offer
  Period”

  	
   

  	
  3.09(b)

  	
   

  
	
  “Pari Passu
  Indebtedness”

  	
   

  	
  4.10(c)

  	
   

  
	
  “Paying
  Agent”

  	
   

  	
  2.03

  	
   

  
	
  “Purchase
  Date”

  	
   

  	
  3.09(b)

  	
   

  
	
  “Redemption
  Date”

  	
   

  	
  3.07(a)

  	
   

  
	
  “Refinancing
  Indebtedness”

  	
   

  	
  4.09(b)

  	
   

  
	
  “Refunding
  Capital Stock”

  	
   

  	
  4.07(b)

  	
   

  
	
  “Registrar”

  	
   

  	
  2.03

  	
   

  
	
  “Restricted
  Payments”

  	
   

  	
  4.07(a)

  	
   

  
	
  “Reversion
  Date”

  	
   

  	
  4.16(b)

  	
   

  
	
  “Second
  Commitment”

  	
   

  	
  4.10(b)

  	
   

  
	
  “Successor
  Company”

  	
   

  	
  5.01(a)

  	
   

  
	
  “Successor
  Person”

  	
   

  	
  5.01(c)

  	
   

  
	
  “Suspended
  Covenants”

  	
   

  	
  4.16(a)

  	
   

  
	
  “Suspension
  Period”

  	
   

  	
  4.16(b)

  	
   

  
	
  “Treasury
  Capital Stock”

  	
   

  	
  4.07(b)

  	
   

  

 

 

Section
1.03           Incorporation by Reference of Trust Indenture
Act.

 

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

 

32

 

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

 

“indenture securities” means
the Notes;

 

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

 

“indenture to be qualified”
means this Indenture;

 

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

 

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

 

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

 

Section
1.04           Rules of Construction.

 

Unless the context otherwise
requires:

 

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

 

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

 

(c)           “or” is not exclusive;

 

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

 

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

 

(f)            provisions apply to successive events and
transactions;

 

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

 

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

 

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

 

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

 

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

 

33

 

(l)            the principal amount of any Preferred Stock
shall be (i) the maximum liquidation value of such Preferred Stock or (ii) the
maximum mandatory redemption or mandatory repurchase price with respect to such
Preferred Stock, whichever is greater; and

 

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

 

Section
1.05           Acts of Holders.

 

(a)           Any request, demand, authorization, direction, notice, consent, waiver
or other action provided by this Indenture to be given or taken by Holders may
be embodied in and evidenced by one or more instruments of substantially
similar tenor signed by such Holders in person or by an agent duly appointed in
writing.  Except as herein otherwise
expressly provided, such action shall become effective when such instrument or
instruments are delivered to the Trustee and, where it is hereby expressly
required, to the Issuer.  Proof of
execution of any such instrument or of a writing appointing any such agent, or
the holding by any Person of a Note, shall be sufficient for any purpose of
this Indenture and (subject to Section 7.01) conclusive in favor of the Trustee
and the Issuer, if made in the manner provided in this Section 1.05.

 

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

 

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

 

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

 

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

 

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

 

34

 

its agents with regard to different parts of
such principal amount pursuant to this paragraph shall have the same effect as
if given or taken by separate Holders of each such different part.

 

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

 

(h)           The Issuer may fix a record date for the purpose of determining the
Persons who are beneficial owners of interests in any Global Note held by DTC
entitled under the procedures of such depositary to make, give or take, by a
proxy or proxies duly appointed in writing, any request, demand, authorization,
direction, notice, consent, waiver or other action provided in this Indenture
to be made, given or taken by Holders.  If
such a record date is fixed, the Holders on such record date or their duly
appointed proxy or proxies, and only such Persons, shall be entitled to make,
give or take such request, demand, authorization, direction, notice, consent,
waiver or other action, whether or not such Holders remain Holders after such
record date.  No such request, demand,
authorization, direction, notice, consent, waiver or other action shall be
valid or effective if made, given or taken more than 90 days after such record
date.

 

ARTICLE
2

 

THE
NOTES

 

Section
2.01           Form and Dating; Terms.

 

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

 

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

 

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

 

35

 

by the Trustee as hereinafter provided.  The Restricted Period shall be terminated
upon the receipt by the Trustee of:

 

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

 

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

 

Following the termination of
the Restricted Period, beneficial interests in the Regulation S Temporary
Global Note shall be exchanged for beneficial interests in the Regulation S
Permanent Global Note pursuant to the Applicable Procedures.  Simultaneously with the authentication of the
Regulation S Permanent Global Note, the Trustee shall cancel the Regulation S
Temporary Global Note.  The aggregate
principal amount of the Regulation S Temporary Global Note and the Regulation S
Permanent Global Note may from time to time be increased or decreased by
adjustments made on the records of the Trustee and the Depositary or its
nominee, as the case may be, in connection with transfers of interest as
hereinafter provided.

 

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

 

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

 

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

 

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

 

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

 

36

 

Section
2.02           Execution and Authentication.

 

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

 

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

 

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

 

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

 

The Trustee may appoint an
authenticating agent acceptable to the Issuer to authenticate Notes.  An authenticating agent may authenticate
Notes whenever the Trustee may do so. 
Each reference in this Indenture to authentication by the Trustee includes
authentication by such agent.  An
authenticating agent has the same rights as an Agent to deal with Holders or an
Affiliate of the Issuer.

 

Section
2.03           Registrar and Paying Agent.

 

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

 

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

 

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

 

Section
2.04           Paying Agent To Hold Money in Trust.

 

The Issuer shall require
each Paying Agent other than the Trustee to agree in writing that the Paying
Agent shall hold in trust for the benefit of Holders or the Trustee all money
held by the Paying Agent for the payment of principal, premium, if any, or
Additional Interest, if any, or interest on the Notes, and will notify the
Trustee of any default by the Issuer in making any such payment. While any such
default continues, the Trustee may require a Paying Agent to pay all money held
by it to the Trustee.  The Issuer at any
time may require a Paying Agent to pay all money held by it to the
Trustee.  Upon 

 

37

 

payment over to the Trustee, the Paying Agent
(if other than the Issuer or a Subsidiary) shall have no further liability for
the money.  If the Issuer or a Subsidiary
acts as Paying Agent, it shall segregate and hold in a separate trust fund for
the benefit of the Holders all money held by it as Paying Agent.  Upon any bankruptcy or reorganization
proceedings relating to the Issuer, the Trustee shall serve as Paying Agent for
the Notes.

 

Section
2.05           Holder Lists.

 

The Trustee shall preserve
in as current a form as is reasonably practicable the most recent list
available to it of the names and addresses of all Holders and shall otherwise
comply with Trust Indenture Act Section 312(a). 
If the Trustee is not the Registrar, the Issuer shall furnish to the
Trustee at least two Business Days before each Interest Payment Date and at
such other times as the Trustee may request in writing, a list in such form and
as of such date as the Trustee may reasonably require of the names and
addresses of the Holders of Notes and the Issuer shall otherwise comply with
Trust Indenture Act Section 312(a).

 

Section
2.06           Transfer and Exchange.

 

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

 

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

 

(i)            Transfer of Beneficial Interests in the Same
Global Note.  Beneficial interests in any Restricted Global
Note may be transferred to Persons who take delivery thereof in the form of a
beneficial interest in the same Restricted Global Note in accordance with the
transfer restrictions set forth in the Private Placement Legend; provided,
however, that prior to the expiration of the Restricted Period,
transfers of beneficial interests in the Regulation S Temporary Global Note may
not be made to a U.S. Person or for the account or benefit of a U.S. Person
(other than an 

 

38

 

Initial Purchaser).  Beneficial interests in any Unrestricted
Global Note may be transferred to Persons who take delivery thereof in the form
of a beneficial interest in an Unrestricted Global Note.  No written orders or instructions shall be
required to be delivered to the Registrar to effect the transfers described in
this Section 2.06(b)(i).

 

(ii)           All Other Transfers and Exchanges of
Beneficial Interests in Global Notes.  In connection with all
transfers and exchanges of beneficial interests that are not subject to Section
2.06(b)(i) hereof, the transferor of such beneficial interest must deliver to
the Registrar either (A) (1) a written order from a Participant or an
Indirect Participant given to the Depositary in accordance with the Applicable
Procedures directing the Depositary to credit or cause to be credited a
beneficial interest in another Global Note in an amount equal to the beneficial
interest to be transferred or exchanged and (2) instructions given in
accordance with the Applicable Procedures containing information regarding the
Participant account to be credited with such increase or (B) (1) a
written order from a Participant or an Indirect Participant given to the
Depositary in accordance with the Applicable Procedures directing the Depositary
to cause to be issued a Definitive Note in an amount equal to the beneficial
interest to be transferred or exchanged and (2) instructions given by the
Depositary to the Registrar containing information regarding the Person in
whose name such Definitive Note shall be registered to effect the transfer or
exchange referred to in (1) above; provided that in no event shall
Definitive Notes be issued upon the transfer or exchange of beneficial
interests in the Regulation S Temporary Global Note prior to (A) the expiration
of the Restricted Period and (B) the receipt by the Registrar of any
certificates required pursuant to Rule 903. 
Upon consummation of an Exchange Offer by the Issuer in accordance with
Section 2.06(f) hereof, the requirements of this Section 2.06(b)(ii) shall be
deemed to have been satisfied upon receipt by the Registrar of the instructions
contained in the Letter of Transmittal delivered by the Holder of such
beneficial interests in the Restricted Global Notes.  Upon satisfaction of all of the requirements
for transfer or exchange of beneficial interests in Global Notes contained in
this Indenture and the Notes or otherwise applicable under the Securities Act,
the Trustee shall adjust the principal amount of the relevant Global Note(s)
pursuant to Section 2.06(h) hereof.

 

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

 

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

 

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

 

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

 

39

 

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

 

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

 

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

 

(D)          the Registrar receives the following:

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

40

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(A)          such exchange or transfer is effected pursuant to the Exchange Offer in
accordance with the Registration Rights Agreement and the holder of such
beneficial interest, in the 

 

41

 

case of an exchange, or the
transferee, in the case of a transfer, certifies in the applicable Letter of Transmittal
that it is not (1) a Participating Broker-Dealer, (2) a Person participating in
the distribution of the Exchange Notes or (3) a Person who is an affiliate (as
defined in Rule 144) of the Issuer;

 

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

 

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

 

(D)          the Registrar receives the following:

 

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

 

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

 

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

 

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

 

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

 

(i)            Restricted Definitive Notes to Beneficial
Interests in Restricted Global Notes.  If any Holder of a Restricted
Definitive Note proposes to exchange such Note for a beneficial interest in a
Restricted Global Note or to transfer such Restricted Definitive Note to a
Person who takes delivery 

 

42

 

thereof in the form of a beneficial interest in a
Restricted Global Note, then, upon receipt by the Registrar of the following
documentation:

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

43

 

(D)          the Registrar receives the following:

 

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

 

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

 

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

 

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

 

(iii)          Unrestricted Definitive Notes to Beneficial
Interests in Unrestricted Global Notes.  A Holder of an Unrestricted
Definitive Note may exchange such Note for a beneficial interest in an
Unrestricted Global Note or transfer such Definitive Notes to a Person who
takes delivery thereof in the form of a beneficial interest in an Unrestricted
Global Note at any time.  Upon receipt of
a request for such an exchange or transfer, the Trustee shall cancel the applicable
Unrestricted Definitive Note and increase or cause to be increased the
aggregate principal amount of one of the Unrestricted Global Notes.

 

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

 

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

 

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

 

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

 

44

 

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

 

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

 

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

 

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

 

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

 

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

 

(D)          the Registrar receives the following:

 

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

 

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

 

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

 

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

 

(f)            Exchange Offer.  Upon
the occurrence of the Exchange Offer in accordance with the Registration Rights
Agreement, the Issuer shall issue and, upon receipt of an Authentication Order
in accordance with Section 2.02 hereof, the Trustee shall authenticate (i) one
or more Unrestricted Global Notes in an aggregate principal amount equal to the
principal amount of the beneficial interests in the Restricted Global Notes
tendered for acceptance by Persons that certify in the applicable Letters of
Transmittal 

 

45

 

that (x) they are not Participating
Broker-Dealers, (y) they are not participating in a distribution of the
Exchange Notes and (z) they are not affiliates (as defined in Rule 144) of the
Issuer, and accepted for exchange in the Exchange Offer and
(ii) Unrestricted Definitive Notes in an aggregate principal amount equal
to the principal amount of the Restricted Definitive Notes tendered for
acceptance by Persons that certify in the applicable Letters of Transmittal
that (x) they are not Participating Broker-Dealers, (y) they are not
participating in a distribution of the Exchange Notes and (z) they are not
affiliates (as defined in Rule 144) of the Issuer, and accepted for exchange in
the Exchange Offer.  Concurrently with
the issuance of such Notes, the Trustee shall cause the aggregate principal
amount of the applicable Restricted Global Notes to be reduced accordingly, and
the Issuer shall execute and the Trustee shall authenticate and mail to the
Persons designated by the Holders of Definitive Notes so accepted Unrestricted
Definitive Notes in the applicable principal amount.  Any Notes that remain outstanding after the
consummation of the Exchange Offer, and Exchange Notes issued in connection
with the Exchange Offer, shall be treated as a single class of securities under
this Indenture.

 

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

 

(i)            Private Placement Legend.

 

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

 

“THIS SECURITY HAS NOT BEEN
REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR
TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH BELOW.
BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A “QUALIFIED
INSTITUTIONAL BUYER” (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT), (B) IT
IS NOT A U.S. PERSON AND IS ACQUIRING THIS SECURITY IN AN OFFSHORE TRANSACTION
IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT OR (C) IT IS AN ACCREDITED
INVESTOR (AS DEFINED IN RULE 501(a)(1), (2), (3), OR (7) UNDER THE SECURITIES
ACT (AN “ACCREDITED INVESTOR”), (2) AGREES THAT IT WILL NOT WITHIN TWO YEARS
AFTER THE ORIGINAL ISSUANCE OF THIS SECURITY RESELL OR OTHERWISE TRANSFER THIS
SECURITY EXCEPT (A) TO THE ISSUER OR ANY SUBSIDIARY THEREOF, (B) INSIDE THE
UNITED STATES TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A
UNDER THE SECURITIES ACT, (C) INSIDE THE UNITED STATES TO AN ACCREDITED
INVESTOR THAT, PRIOR TO SUCH TRANSFER, FURNISHES (OR HAS FURNISHED ON ITS
BEHALF BY A U.S. BROKER-DEALER) TO THE TRUSTEE A SIGNED LETTER CONTAINING
CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER
OF THIS SECURITY (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM THE TRUSTEE FOR
THIS SECURITY), (D)OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN
COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT (IF AVAILABLE), (E) PURSUANT 

 

46

 

TO THE EXEMPTION FROM
REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE), (F)
IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL IF THE ISSUER SO
REQUESTS), OR (G) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT AND (3) AGREES THAT IT WILL GIVE TO EACH PERSON TO WHOM THIS
SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS
LEGEND.  IN CONNECTION WITH ANY TRANSFER
OF THIS SECURITY WITHIN TWO YEARS AFTER THE ORIGINAL ISSUANCE OF THIS SECURITY,
IF THE PROPOSED TRANSFEREE IS AN ACCREDITED INVESTOR, THE HOLDER MUST, PRIOR TO
SUCH TRANSFER, FURNISH TO THE TRUSTEE AND THE ISSUER SUCH CERTIFICATIONS, LEGAL
OPINIONS OR OTHER INFORMATION AS EITHER OF THEM MAY REASONABLY REQUIRE TO
CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT.  AS USED HEREIN, THE TERMS “OFFSHORE
TRANSACTION,” “UNITED STATES” AND “U.S. PERSON” HAVE THE MEANING GIVEN TO THEM
BY REGULATION S UNDER THE SECURITIES ACT.”

 

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

 

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

 

“THIS GLOBAL NOTE IS HELD BY
THE DEPOSITARY (AS DEFINED IN THE INDENTURE GOVERNING THIS NOTE) OR ITS NOMINEE
IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT
TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE
MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO SECTION 2.06(h)
OF THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE EXCHANGED IN WHOLE BUT NOT IN
PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE, (III) THIS GLOBAL NOTE MAY
BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO SECTION 2.11 OF THE
INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO A SUCCESSOR
DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE ISSUER.  UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR
IN PART FOR NOTES IN DEFINITIVE FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT
AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF
THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE
DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH
SUCCESSOR DEPOSITARY.  UNLESS THIS
CERTIFICATE IS 

 

47

 

PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW
YORK) (“DTC”) TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE
OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE &
CO. OR SUCH OTHER NAME AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR SUCH OTHER ENTITY AS MAY BE
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.”

 

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

 

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

 

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

 

(i)            General Provisions Relating to Transfers and
Exchanges.

 

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

 

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

 

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

 

48

 

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

 

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

 

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

 

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

 

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

 

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

 

Section
2.07           Replacement Notes.

 

If any mutilated Note is
surrendered to the Trustee, the Registrar or the Issuer and the Trustee
receives evidence to their satisfaction of the ownership and destruction, loss
or theft of any Note, the Issuer shall issue and the Trustee, upon receipt of
an Authentication Order, shall authenticate a replacement Note if the Trustee’s
requirements are met.  If required by the
Trustee or the Issuer, an indemnity bond must be supplied by the Holder that is
sufficient in the judgment of the Trustee and the Issuer to protect the Issuer,
the Trustee, any Agent and any authenticating agent from any loss that any of
them may suffer if a Note is replaced. 
The Issuer may charge for its expenses in replacing a Note.

 

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

 

49

 

Section
2.08           Outstanding Notes.

 

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

 

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

 

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

 

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

 

Section
2.09           Treasury Notes.

 

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

 

Section
2.10           Temporary Notes.

 

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

 

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

 

Section
2.11           Cancellation.

 

The Issuer at any time may
deliver Notes to the Trustee for cancellation. The Registrar and Paying Agent
shall forward to the Trustee any Notes surrendered to them for registration of
transfer, exchange or payment.  The
Trustee or, at the direction of the Trustee, the Registrar or the Paying Agent
and no one else shall cancel all Notes surrendered for registration of
transfer, exchange, payment, replacement or cancellation and shall dispose of
cancelled Notes (subject to the record retention requirement 

 

50

 

of the Exchange Act) in its customary
manner.  Certification of the disposal of
all cancelled Notes shall be delivered to the Issuer upon its request therefor.  The Issuer may not issue new Notes to replace
Notes that it has paid or that have been delivered to the Trustee for
cancellation.

 

Section
2.12           Defaulted Interest.

 

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

 

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

 

Section
2.13           CUSIP Numbers

 

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

 

ARTICLE
3

 

REDEMPTION

 

Section
3.01           Notices to Trustee.

 

If the Issuer elects to
redeem Notes pursuant to Section 3.07 hereof, it shall furnish to the Trustee,
at least 2 Business Days before notice of redemption is required to be mailed
or caused to be mailed to Holders pursuant to Section 3.03 hereof but not more
than 60 days before a redemption date, an Officer’s Certificate setting forth
(i) the paragraph or subparagraph of such Notes and/or Section of this
Indenture pursuant to which the redemption shall occur, (ii) the redemption
date, (iii) the principal amount of the Notes to be redeemed and (iv) the
redemption price.

 

51

 

Section
3.02           Selection of Notes To Be Redeemed or
Purchased.

 

If less than all of the
Notes are to be redeemed or purchased in an offer to purchase at any time, the
Trustee shall select the Notes to be redeemed or purchased (a) if the
Notes are listed on any national securities exchange, in compliance with the
requirements of the principal national securities exchange on which the Notes
are listed or (b) on a pro rata
basis or, to the extent that selection on a pro
rata basis is not practicable, by lot or by such other method the
Trustee considers fair and appropriate. 
In the event of partial redemption or purchase by lot, the particular
Notes to be redeemed or purchased shall be selected, unless otherwise provided
herein, not less than 30 nor more than 60 days prior to the redemption date by
the Trustee from the outstanding Notes not previously called for redemption or
purchase.

 

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

 

Section
3.03           Notice of Redemption.

 

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

 

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

 

(a)           the redemption date;

 

(b)           the redemption price;

 

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

 

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

 

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

 

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

 

52

 

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

 

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

 

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

 

At the Issuer’s request, the
Trustee shall give the notice of redemption in the Issuer’s name and at its
expense; provided that the Issuer shall have delivered to the Trustee,
at least 2 Business Days before notice of redemption is required to be mailed
or caused to be mailed to Holders pursuant to this Section 3.03 (unless a
shorter notice shall be agreed to by the Trustee), an Officer’s Certificate
requesting that the Trustee give such notice and setting forth the information
to be stated in such notice as provided in the preceding paragraph.

 

Section
3.04           Effect of Notice of Redemption.

 

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

 

Section
3.05           Deposit of Redemption or Purchase Price.

 

Prior to 10:00 a.m. (New
York City time) on the redemption or purchase date, the Issuer shall deposit
with the Trustee or with the Paying Agent money sufficient to pay the
redemption or purchase price of and accrued and unpaid interest (including
Additional Interest, if any) on all Notes to be redeemed or purchased on that
date.  The Trustee or the Paying Agent
shall promptly return to the Issuer any money deposited with the Trustee or the
Paying Agent by the Issuer in excess of the amounts necessary to pay the
redemption price of, and accrued and unpaid interest on, all Notes to be
redeemed or purchased.

 

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

 

53

 

Section
3.06           Notes Redeemed or Purchased in Part.

 

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

 

Section
3.07           Optional Redemption.

 

(a)           At any time prior to November 1, 2010, the Issuer may redeem all or a
part of the Notes, upon not less than 30 nor more than 60 days’ prior notice
mailed by first-class mail to the registered address of each Holder of Notes or
otherwise delivered in accordance with the procedures of DTC, at a redemption
price equal to 100% of the principal amount of the Notes redeemed plus the
Applicable Premium as of, and accrued and unpaid interest and Additional Interest,
if any, to the date of redemption (the “Redemption Date”), subject to
the rights of Holders of record on the relevant Record Date to receive interest
due on the relevant Interest Payment Date.

 

(b)           Until November 1, 2009, the Issuer may, at its option, on one or more
occasions redeem up to 35% of the aggregate principal amount of Notes
(including the aggregate principal amount of Notes issued after the Issue
Date), upon notice provided as described in Section 3.03 hereof, at a
redemption price equal to 110.000% of the aggregate principal amount thereof,
plus accrued and unpaid interest thereon and Additional Interest, if any, to
the applicable Redemption Date, subject to the right of Holders of record on
the relevant Record Date to receive interest due on the relevant Interest
Payment Date, with the net cash proceeds of one or more Equity Offerings; provided
that at least 50% of the sum of the aggregate principal amount of Notes
originally issued under this Indenture and any Additional Notes that are issued
under this Indenture after the Issue Date remains outstanding immediately after
the occurrence of each such redemption; provided  further that
each such redemption occurs within 90 days of the date of closing of each such
Equity Offering.  Notice of any
redemption upon any Equity Offering may be given prior to such redemption, and
any such redemption or notice may, at the Issuer’s discretion, be subject to
one or more conditions precedent, including, but not limited to, completion of
the related Equity Offering.

 

(c)           Except pursuant to Sections 3.07(a) and (b), the Notes will not be
redeemable at the Issuer’s option before November 1, 2010.

 

(d)           On and after November 1, 2010, the Issuer may redeem the Notes, in
whole or in part, at the redemption prices (expressed as percentages of
principal amount of the Notes to be redeemed) set forth below, plus accrued and
unpaid interest thereon and Additional Interest, if any, to the applicable
Redemption Date, subject to the right of Holders of record on the relevant
Record Date to receive interest due on the relevant Interest Payment Date, if
redeemed during the twelve-month period beginning on November 1 of each of the
years indicated below:

 

	
  Year

  	
   

  	
  Percentage

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  2010

  	
   

  	
  105.000

  	
  %

  
	
  2011

  	
   

  	
  102.500

  	
  %

  
	
  2012 and thereafter

  	
   

  	
  100.000

  	
  %

  

 

54

 

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

 

Section
3.08           Mandatory Redemption.

 

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

 

Section
3.09           Offers To Repurchase by Application of Excess
Proceeds.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(v)           that Holders electing to have a Note purchased pursuant to an Asset
Sale Offer may elect to have Notes purchased in integral multiples of $1,000
only;

 

(vi)          that Holders electing to have a Note purchased pursuant to any Asset
Sale Offer shall be required to surrender the Note, with the form entitled “Option
of Holder to Elect Purchase” attached to the Note completed, or transfer such
Note by book-entry transfer, to the Issuer, 

 

55

 

the Depositary, if appointed
by the Issuer, or a Paying Agent at the address specified in the notice at
least three days before the Purchase Date;

 

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

 

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

 

(ix)           that Holders whose Notes were purchased only in part shall be issued
new Notes equal in principal amount to the unpurchased portion of the Notes
surrendered (or transferred by book-entry transfer) representing the same
indebtedness to the extent not repurchased.

 

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

 

(f)            The Issuer, the Depositary or the Paying
Agent, as the case may be, shall promptly mail or deliver to each tendering
Holder an amount equal to the purchase price of the Notes properly tendered by
such Holder and accepted by the Issuer for purchase, and the Issuer shall
promptly issue a new Note, and the Trustee, upon receipt of an Authentication
Order, shall authenticate and mail or deliver (or cause to be transferred by
book-entry) such new Note to such Holder (it being understood that,
notwithstanding anything in this Indenture to the contrary, no Opinion of
Counsel or Officer’s Certificate is required for the Trustee to authenticate
and mail or deliver such new Note) in a principal amount equal to any
unpurchased portion of the Note surrendered representing the same indebtedness
to the extent not repurchased; provided that each such new Note shall be
in a principal amount of $1,000 or an integral multiple thereof.  Any Note not so accepted shall be promptly
mailed or delivered by the Issuer to the Holder thereof.  The Issuer shall publicly announce the
results of the Asset Sale Offer on or as soon as practicable after the Purchase
Date.

 

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

 

56

 

ARTICLE
4

 

COVENANTS

 

Section
4.01           Payment of Notes.

 

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

 

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

 

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

 

Section
4.02           Maintenance of Office or Agency.

 

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

 

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

 

The Issuer hereby initially
designates the office of the Trustee located at 45 Broadway, 12th Floor, New
York, New York 10006, Attention:  Worldwide Securities Services, as one
such office or agency of the Issuer in accordance with Section 2.03
hereof.

 

Section
4.03           Reports and Other Information.

 

(a)           Notwithstanding that the Issuer may not be subject to the reporting
requirements of Section 13 or 15(d) of the Exchange Act or otherwise report on
an annual and quarterly basis on forms provided for such annual and quarterly
reporting pursuant to rules and regulations promulgated by the SEC, the Issuer
shall file with the SEC (and make available to the Trustee and Holders of the
Notes 

 

57

 

(without exhibits), without cost to any
Holder, within 15 days after the Issuer files them with the SEC) from and
after the Issue Date,

 

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

 

(2)           within 45 days after the end of each of the first three fiscal quarters
of each fiscal year, commencing with the first fiscal quarter of the fiscal
year commencing February 4, 2007, reports on Form 10-Q containing all
quarterly information that would be required to be contained in Form 10-Q, or
any successor or comparable form;

 

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

 

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

 

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

 

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

 

(c)           Notwithstanding the foregoing, the requirements of this Section 4.03
shall be deemed satisfied prior to the commencement of the Exchange Offer or
the effectiveness of the Shelf Registration Statement by the filing with the
SEC of the Exchange Offer Registration Statement or Shelf Registration
Statement or any other filing, and any amendments thereto, with such financial
information that satisfies Regulation S-X of the Securities Act.

 

58

 

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

 

Section
4.04           Compliance Certificate.

 

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

 

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

 

Section
4.05           Taxes.

 

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

 

Section
4.06           Stay, Extension and Usury Laws.

 

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

 

Section
4.07           Limitation on Restricted Payments.

 

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

 

59

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(IV)         make any Restricted Investment

 

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

 

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

 

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

 

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

 

(a)           if the Consolidated Leverage Ratio of the Issuer is less than 6.00 to
1.00 on a pro forma basis after
giving effect to such transaction, 50% of the Consolidated Net Income of the
Issuer for the period (taken as one accounting period) beginning July 30, 2006
to the end of the Issuer’s most recently ended fiscal quarter for which
internal 

 

60

 

financial statements are
available at the time of such Restricted Payment, or, in the case such
Consolidated Net Income for such period is a deficit, minus 100% of such
deficit; plus

 

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

 

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

 

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

 

(y)           Designated Preferred Stock; and

 

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

 

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

 

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

 

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

 

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

 

61

 

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

 

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

 

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

 

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

 

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

 

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

 

62

 

amount of dividends per
annum that were declarable and payable on such Treasury Capital Stock
immediately prior to such retirement;

 

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

 

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

 

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

 

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

 

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

 

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

 

(a)           the cash proceeds from the sale of Equity Interests (other than
Disqualified Stock) of the Issuer and, to the extent contributed to the Issuer,
Equity Interests of any of the Issuer’s direct or indirect parent companies, in
each case to members of management, directors or consultants of the Issuer, any
of its Subsidiaries or any of its direct 

 

63

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(7)           if the Consolidated Leverage Ratio of the Issuer is less than 6.00 to
1.00 on a pro forma basis after
giving effect to such transaction, Investments in Unrestricted Subsidiaries
having an aggregate fair market value, taken together with all other
Investments made pursuant to 

 

64

 

this clause (7) that are at
the time outstanding, without giving effect to the sale of an Unrestricted
Subsidiary to the extent the proceeds of such sale do not consist of, or have
not been subsequently sold or transferred for, cash or marketable securities,
not to exceed $75.0 million (with the fair market value of each Investment
being measured at the time made and without giving effect to subsequent changes
in value);

 

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

 

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

 

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

 

(11)         if the Consolidated Leverage Ratio of the Issuer is less than 6.00 to
1.00 on a pro forma basis after
giving effect to such transaction, other Restricted Payments in an aggregate
amount taken together with all other Restricted Payments made pursuant to this
clause (11) that are at the time outstanding (without giving effect to the sale
of an Investment to the extent the proceeds of such sale do not consist of, or
have not been subsequently sold or transferred for, cash or marketable
securities) not to exceed $75.0 million;

 

(12)         distributions or payments of Receivables Fees;

 

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

 

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

 

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

 

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

 

(b)           federal, state and local income taxes, to the extent such income taxes
are attributable to the income of the Issuer and its Restricted Subsidiaries
and, to the extent of the amount actually received from its Unrestricted
Subsidiaries, in amounts required to pay such taxes to the extent attributable
to the income of such Unrestricted Subsidiaries; provided that in each case the amount of such payments in
any fiscal year does not 

 

65

 

exceed the excess (if any)
of (A) the amount that the Issuer and its Restricted Subsidiaries would be
required to pay in respect of federal, state and local income taxes for such
fiscal year were the Issuer, its Restricted Subsidiaries and its Unrestricted
Subsidiaries (to the extent described above) to pay such taxes separately from
any such parent company over (B) the aggregate federal, state and local income
taxes paid by the Issuer and its Restricted Subsidiaries;

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

66

 

(10), (11) or (16) of Section 4.07(b) hereof,
or pursuant to the definition of “Permitted Investments,” and if such
Subsidiary otherwise meets the definition of an Unrestricted Subsidiary.

 

Section 4.08           Dividend and Other Payment Restrictions Affecting
Restricted Subsidiaries.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(2)           this Indenture and the Notes;

 

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

 

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

 

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

 

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

 

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

 

67

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

Section 4.09           Limitation on Incurrence of Indebtedness and
Issuance of Disqualified Stock and Preferred Stock.

 

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

 

68

 

may be incurred or issued, as applicable,
pursuant to the foregoing by Restricted Subsidiaries that are not Guarantors
shall not exceed $150.0 million at any one time outstanding.

 

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

 

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

 

(2)           the incurrence by the Issuer and any Guarantor of Indebtedness
represented by (a) the Notes (including any Guarantee and including the
Exchange Notes) (other than any Additional Notes), (b) the Senior Subordinated
Notes (including any guarantee thereof) and exchange notes issued in respect of
the Senior Subordinated Notes and any guarantee thereof and (c) the
Subordinated Discount Notes (including any guarantee thereof) and exchange
notes issued in respect of the Subordinated Discount Notes and any guarantee
thereof;

 

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

 

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

 

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

 

69

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

70

 

lender or an affiliate of a
lender at the time the applicable agreement pursuant to which such Cash
Management Services are provided was entered into);

 

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

 

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

 

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

 

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

 

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

 

71

 

Preferred Stock, such
Refinancing Indebtedness must be Disqualified Stock or Preferred Stock,
respectively, and

 

(C)           shall not include:

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

72

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

73

 

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

 

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

 

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

 

Section
4.10           Asset Sales.

 

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

 

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

 

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

 

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

 

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

 

74

 

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

 

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

 

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

 

(1)           to permanently reduce:

 

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

 

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

 

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

 

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

 

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

 

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

 

provided that, in the case of clauses (2) and (3)
above, a binding commitment shall be treated as a permitted application of the
Net Proceeds from the date of such commitment so long as the Issuer or such
other 

 

75

 

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

 

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

 

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

 

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

 

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

 

Section
4.11           Transactions with Affiliates.

 

(a)           The Issuer shall not, and shall not permit any of its Restricted
Subsidiaries to, make any payment to, or sell, lease, transfer or otherwise
dispose of any of its properties or assets to, or purchase any property or
assets from, or enter into or make or amend any transaction, contract,
agreement, understanding, loan, advance or guarantee with, or for the benefit
of, any Affiliate of the Issuer 

 

76

 

(each of the foregoing, an “Affiliate
Transaction”) involving aggregate payments or consideration in excess of
$10.0 million, unless:

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

77

 

(8)           the Transactions and the payment of all fees and expenses related to
the Transactions, including Transaction Expenses, in each case as disclosed in
the Offering Memorandum;

 

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

 

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

 

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

 

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

 

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

 

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

 

Section
4.12           Liens.

 

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

 

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

 

(2)            in all other cases, the Notes or the
Guarantees are equally and ratably secured, except that the foregoing shall not
apply to or restrict (a) Liens securing the Notes and the related Guarantees,
(b) Liens securing (x) Indebtedness permitted to be incurred under Senior
Credit Facilities, including any letter of credit facility relating thereto,
that was permitted by the terms of this Indenture to be incurred pursuant to
clause (1) of Section 4.09(b) hereof and (y) both (i) Indebtedness described in
clause (x) or in respect of a Senior Credit Facility secured by Liens pursuant
to subclause (c) below or pursuant to clause (6) of the definition of Permitted
Liens and (ii)  

 

78

 

obligations of the Issuer or
any Guarantor in respect of any Bank Products or Cash Management Services
provided by any lender party to any Senior Credit Facility or any affiliate of
such lender (or any Person that was a lender or an affiliate of a lender at the
time the applicable agreements pursuant to which such Bank Products or Cash
Management Services are provided were entered into) and (C) Liens incurred
to secure Obligations in respect of any Indebtedness permitted to be incurred
pursuant to Section 4.09 hereof; provided that, with respect to Liens
securing Obligations permitted under this subclause (C), at the time of
incurrence and after giving pro forma
effect thereto, the Consolidated Secured Debt Ratio would be no greater than
4.0 to 1.0.

 

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

 

Section
4.13           Corporate Existence.

 

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

 

Section
4.14           Offer to Repurchase Upon Change of Control.

 

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

 

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

 

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

 

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

 

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

 

(5)           that Holders electing to have any Notes purchased pursuant to a Change
of Control Offer will be required to surrender such Notes, with the form
entitled “Option of Holder to Elect Purchase” on the reverse of such Notes
completed, to the paying agent specified in the 

 

79

 

notice at the address
specified in the notice prior to the close of business on the third Business
Day preceding the Change of Control Payment Date;

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(c)           The Issuer shall not be required to make a Change of Control Offer
following a Change of Control if a third party makes the Change of Control
Offer in the manner, at the times and otherwise in compliance with the requirements
set forth in this Section 4.14 applicable to a Change of Control Offer made by
the Issuer and purchases all Notes validly tendered and not withdrawn under
such Change of Control Offer. 
Notwithstanding anything to the contrary herein, a Change of Control
Offer may be made in advance of a Change of Control, conditional upon such
Change of Control, if a definitive agreement is in place for the Change of
Control at the time of making of the Change of Control Offer.

 

80

 

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

 

Section
4.15           Limitation on Guarantees of Indebtedness by
Restricted Subsidiaries.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

Section
4.16           Discharge and Suspension of Covenants.

 

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

 

81

 

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

 

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

 

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

 

ARTICLE
5

 

SUCCESSORS

 

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

 

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

 

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

 

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

 

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

 

82

 

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

 

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

 

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

 

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

 

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

 

(b)           The Successor Company shall succeed to, and be substituted for the
Issuer, as the case may be, under this Indenture, the Guarantees and the Notes,
as applicable.  Clauses (3), (4), (5) and
(6) of Section 5.01(a) hereof shall not apply to the merger contemplated by the
Transaction Agreement.  Notwithstanding
clauses (3) and (4) of Section 5.01(a) hereof,

 

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

 

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

 

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

 

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

 

(B)           the Successor Person, if other than such Guarantor, expressly assumes
all the obligations of such Guarantor under this Indenture and such Guarantor’s
related Guarantee pursuant 

 

83

 

to supplemental indentures
or other documents or instruments in form reasonably satisfactory to the
Trustee;

 

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

 

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

 

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

 

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

 

Section
5.02           Successor Corporation Substituted.

 

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

 

ARTICLE
6

 

DEFAULTS
AND REMEDIES

 

Section
6.01           Events of Default.

 

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

 

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

 

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

 

(3)           failure by the Issuer or any Guarantor for 60 days after receipt of
written notice given by the Trustee or the Holders of not less than 25% in
principal amount of the Notes to 

 

84

 

comply with any of its
obligations, covenants or agreements (other than a default referred to in
clauses (1) and (2) above) contained in this Indenture or the Notes;

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

85

 

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

 

(ii)           appoints a receiver, liquidator, assignee, trustee, sequestrator or
other similar official of the Issuer or any of its Restricted Subsidiaries that
is a Significant Subsidiary or any group of Restricted Subsidiaries that, taken
together (as of the latest audited consolidated financial statements for the
Issuer), would constitute a Significant Subsidiary, or for all or substantially
all of the property of the Issuer or any of its Restricted Subsidiaries that is
a Significant Subsidiary or any group of Restricted Subsidiaries that, taken
together (as of the latest audited consolidated financial statements for the
Issuer), would constitute a Significant Subsidiary; or

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

Section
6.02           Acceleration.

 

If any Event of Default
(other than an Event of Default specified in clause (6) or (7) of
Section 6.01(a) hereof with respect to the Issuer) occurs and is
continuing under this Indenture, the Trustee 

 

86

 

or the Holders of at least 25% in principal
amount of the then total outstanding Notes may declare the principal, premium,
if any, interest and any other monetary obligations on all the then outstanding
Notes to be due and payable immediately. 
Upon the effectiveness of such declaration, such principal and interest
shall be due and payable immediately. 
The Trustee shall have no obligation to accelerate the Notes if and so
long as a committee of its Responsible Officers in good faith determines
acceleration is not in the best interest of the Holders of the Notes.

 

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

 

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

 

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

 

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

 

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

 

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

 

Section
6.03           Other Remedies.

 

If an Event of Default
occurs and is continuing, the Trustee may pursue any available remedy to
collect the payment of principal, premium, if any, and interest on the Notes or
to enforce the performance of any provision of the Notes or this Indenture.

 

The Trustee may maintain a
proceeding even if it does not possess any of the Notes or does not produce any
of them in the proceeding.  A delay or
omission by the Trustee or any Holder of a Note in exercising any right or remedy
accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default.  All remedies are cumulative to the extent
permitted by law.

 

Section
6.04           Waiver of Past Defaults.

 

Holders of not less than a
majority in aggregate principal amount of the then outstanding Notes by notice
to the Trustee may on behalf of the Holders of all of the Notes waive any
existing Default and its consequences hereunder, except a continuing Default in
the payment of the principal of, premium, if any, Additional Interest, if any,
or interest on, any Note held by a non-consenting Holder (including in
connection with an Asset Sale Offer or a Change of Control Offer); provided,
subject to Section 6.02 hereof, that the Holders of a majority in aggregate
principal amount of the then outstanding Notes may rescind an acceleration and
its consequences, including any related payment default that resulted from such
acceleration.  Upon any such waiver, such
Default shall cease to exist, and any Event of Default arising 

 

87

 

therefrom shall be deemed to have been cured
for every purpose of this Indenture; but no such waiver shall extend to any
subsequent or other Default or impair any right consequent thereto.

 

Section
6.05           Control by Majority.

 

Holders of a majority in
principal amount of the then total outstanding Notes may direct the time,
method and place of conducting any proceeding for any remedy available to the
Trustee or of exercising any trust or power conferred on the Trustee.  The Trustee, however, may refuse to follow
any direction that conflicts with law or this Indenture or that the Trustee
determines is unduly prejudicial to the rights of any other Holder of a Note or
that would involve the Trustee in personal liability.

 

Section
6.06           Limitation on Suits.

 

Subject to Section 6.07
hereof, no Holder of a Note may pursue any remedy with respect to this
Indenture or the Notes unless:

 

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

 

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

 

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

 

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

 

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

 

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

 

Section
6.07           Rights of Holders of Notes To Receive Payment.

 

Notwithstanding any other
provision of this Indenture, the right of any Holder of a Note to receive
payment of principal, premium, if any, and Additional Interest, if any, and
interest on the Note, on or after the respective due dates expressed in the
Note (including in connection with an Asset Sale Offer or a Change of Control
Offer), or to bring suit for the enforcement of any such payment on or after
such respective dates, shall not be impaired or affected without the consent of
such Holder.

 

Section
6.08           Collection Suit by Trustee.

 

If an Event of Default
specified in Section 6.01(a)(1) or (2) hereof occurs and is continuing, the
Trustee is authorized to recover judgment in its own name and as trustee of an
express trust against the Issuer for the whole amount of principal of, premium,
if any, and Additional Interest, if any, and interest remaining unpaid on the
Notes and interest on overdue principal and, to the extent lawful, interest and
such further amount as shall be sufficient to cover the costs and expenses of
collection, including the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel.

 

88

 

Section
6.09           Restoration of Rights and Remedies.

 

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

 

Section
6.10           Rights and Remedies Cumulative.

 

Except as otherwise provided
with respect to the replacement or payment of mutilated, destroyed, lost or
stolen Notes in Section 2.07 hereof, no right or remedy herein conferred upon
or reserved to the Trustee or to the Holders is intended to be exclusive of any
other right or remedy, and every right and remedy shall, to the extent
permitted by law, be cumulative and in addition to every other right and remedy
given hereunder or now or hereafter existing at law or in equity or
otherwise.  The assertion or employment
of any right or remedy hereunder, or otherwise, shall not prevent the
concurrent assertion or employment of any other appropriate right or remedy.

 

Section
6.11           Delay or Omission Not Waiver.

 

No delay or omission of the
Trustee or of any Holder of any Note to exercise any right or remedy accruing
upon any Event of Default shall impair any such right or remedy or constitute a
waiver of any such Event of Default or an acquiescence therein.  Every right and remedy given by this Article
or by law to the Trustee or to the Holders may be exercised from time to time,
and as often as may be deemed expedient, by the Trustee or by the Holders, as
the case may be.

 

Section
6.12           Trustee May File Proofs of Claim.

 

The Trustee is authorized to
file such proofs of claim and other papers or documents as may be necessary or
advisable in order to have the claims of the Trustee (including any claim for
the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel) and the Holders of the Notes allowed in any
judicial proceedings relative to the Issuer (or any other obligor upon the
Notes including the Guarantors), its creditors or its property and shall be
entitled and empowered to participate as a member in any official committee of
creditors appointed in such matter and to collect, receive and distribute any
money or other property payable or deliverable on any such claims and any
custodian in any such judicial proceeding is hereby authorized by each Holder
to make such payments to the Trustee, and in the event that the Trustee shall
consent to the making of such payments directly to the Holders, to pay to the
Trustee any amount due to it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any
other amounts due the Trustee under Section 7.07 hereof.  To the extent that the payment of any such
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, and any other amounts due the Trustee under Section 7.07 hereof
out of the estate in any such proceeding, shall be denied for any reason,
payment of the same shall be secured by a Lien on, and shall be paid out of,
any and all distributions, dividends, money, securities and other properties
that the Holders may be entitled to receive in such proceeding whether in
liquidation or under any plan of reorganization or arrangement or
otherwise.  Nothing herein contained
shall be deemed to authorize the Trustee to authorize or consent to or accept
or adopt on behalf of any Holder any plan of reorganization, arrangement,
adjustment or composition affecting the Notes or the rights of any Holder, or
to authorize the Trustee to vote in respect of the claim of any Holder in any
such proceeding.

 

89

 

Section
6.13           Priorities.

 

If the Trustee collects any
money pursuant to this Article 6, it shall pay out the money in the following
order:

 

(i)            to the Trustee, its agents and attorneys for
amounts due under Section 7.07 hereof, including payment of all compensation,
expenses and liabilities incurred, and all advances made, by the Trustee and
the costs and expenses of collection;

 

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

 

(iii)          to the Issuer or to such party as a court of competent jurisdiction
shall direct including a Guarantor, if applicable.

 

The Trustee may fix a record
date and payment date for any payment to Holders of Notes pursuant to this
Section 6.13.

 

Section
6.14           Undertaking for Costs.

 

In any suit for the
enforcement of any right or remedy under this Indenture or in any suit against
the Trustee for any action taken or omitted by it as a Trustee, a court in its
discretion may require the filing by any party litigant in the suit of an
undertaking to pay the costs of the suit, and the court in its discretion may
assess reasonable costs, including reasonable attorneys’ fees and expenses,
against any party litigant in the suit, having due regard to the merits and
good faith of the claims or defenses made by the party litigant.  This Section 6.14 does not apply to a suit by
the Trustee, a suit by a Holder of a Note pursuant to Section 6.07 hereof, or a
suit by Holders of more than 10% in principal amount of the then outstanding
Notes.

 

ARTICLE
7

 

TRUSTEE

 

Section
7.01           Duties of Trustee.

 

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

 

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

 

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

 

(ii)           in the absence of bad faith on its part, the Trustee may conclusively
rely, as to the truth of the statements and the correctness of the opinions
expressed therein, upon certificates or 

 

90

 

opinions furnished to the
Trustee and conforming to the requirements of this Indenture.  However, in the case of any such certificates
or opinions which by any provision hereof are specifically required to be
furnished to the Trustee, the Trustee shall examine the certificates and
opinions to determine whether or not they conform to the requirements of this
Indenture (but need not confirm or investigate the accuracy of mathematical
calculations or other facts stated therein).

 

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

 

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

 

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

 

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

 

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

 

(e)           The Trustee shall be under no obligation to exercise any of its rights
or powers under this Indenture at the request or direction of any of the
Holders of the Notes unless the Holders have offered to the Trustee indemnity
or security reasonably satisfactory to it against any loss, liability or
expense.

 

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

 

Section
7.02           Rights of Trustee.

 

(a)           The Trustee may conclusively rely upon any document believed by it to
be genuine and to have been signed or presented by the proper Person.  The Trustee need not investigate any fact or
matter stated in the document, but the Trustee, in its discretion, may make
such further inquiry or investigation into such facts or matters as it may see
fit, and, if the Trustee shall determine to make such further inquiry or
investigation, it shall be entitled to examine the books, records and premises
of the Issuer, personally or by agent or attorney at the sole cost of the
Issuer and shall incur no liability or additional liability of any kind by
reason of such inquiry or investigation.

 

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

 

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

 

91

 

(d)           The Trustee shall not be liable for any action it takes or omits to
take in good faith that it believes to be authorized or within the rights or
powers conferred upon it by this Indenture.

 

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

 

(f)            None of the provisions of this Indenture
shall require the Trustee to expend or risk its own funds or otherwise to incur
any liability, financial or otherwise, in the performance of any of its duties
hereunder, or in the exercise of any of its rights or powers if it shall have
reasonable grounds for believing that repayment of such funds or indemnity
satisfactory to it against such risk or liability is not assured to it.

 

(g)           The Trustee shall not be deemed to have knowledge or notice of any
Default or Event of Default unless a Responsible Officer of the Trustee has
actual knowledge thereof or unless written notice of any event which is in fact
such a Default or Event of Default is received by the Trustee at the Corporate
Trust Office of the Trustee, and such notice references the Notes and this
Indenture.

 

(h)           In no event shall the Trustee be responsible or liable for special,
indirect, or consequential loss or damage of any kind whatsoever (including,
but not limited to, loss of profit) irrespective of whether the Trustee has
been advised of the likelihood of such loss or damage and regardless of the
form of action.

 

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

 

(j)            In the event the Issuer is required to pay
Additional Interest, the Issuer will provide written notice to the Trustee of
the Issuer’s obligation to pay Additional Interest no later than 15 days prior
to the next Interest Payment Date, which notice shall set forth the amount of
the Additional Interest to be paid by the Issuer.  The Trustee shall not at any time be under
any duty or responsibility to any Holders to determine whether the Additional
Interest is payable and the amount thereof.

 

Section
7.03           Individual Rights of Trustee.

 

The Trustee in its
individual or any other capacity may become the owner or pledgee of Notes and
may otherwise deal with the Issuer or any Affiliate of the Issuer with the same
rights it would have if it were not Trustee. 
However, in the event that the Trustee acquires any conflicting interest
it must eliminate such conflict within 90 days, apply to the SEC for permission
to continue as trustee or resign.  Any
Agent may do the same with like rights and duties.  The Trustee is also subject to Sections 7.10
and 7.11 hereof.

 

Section
7.04           Trustee’s Disclaimer.

 

The Trustee shall not be
responsible for and makes no representation as to the validity or adequacy of
this Indenture or the Notes, it shall not be accountable for the Issuer’s use
of the proceeds from the Notes or any money paid to the Issuer or upon the
Issuer’s direction under any provision of this Indenture, it shall not be
responsible for the use or application of any money received by any Paying
Agent other than the Trustee, and it shall not be responsible for any statement
or recital herein or any statement in the Notes or any other document in
connection with the sale of the Notes or pursuant to this Indenture other than
its certificate of authentication.

 

92

 

Section
7.05           Notice of Defaults.

 

If a Default occurs and is
continuing and if it is known to the Trustee, the Trustee shall mail to Holders
of Notes a notice of the Default within 90 days after it occurs.  Except in the case of a Default relating to
the payment of principal, premium, if any, or interest on any Note, the Trustee
may withhold from the Holders notice of any continuing Default if and so long
as a committee of its Responsible Officers in good faith determines that
withholding the notice is in the interests of the Holders of the Notes.

 

Section
7.06           Reports by Trustee to Holders of the Notes.

 

Within 60 days after each
May 15, beginning with the May 15 following the date of this
Indenture, and for so long as Notes remain outstanding, the Trustee shall mail
to the Holders of the Notes a brief report dated as of such reporting date that
complies with Trust Indenture Act Section 313(a) (but if no event described in
Trust Indenture Act Section 313(a) has occurred within the twelve months
preceding the reporting date, no report need be transmitted).  The Trustee also shall comply with Trust
Indenture Act Section 313(b)(2). 
The Trustee shall also transmit by mail all reports as required by Trust
Indenture Act Section 313(c).

 

A copy of each report at the
time of its mailing to the Holders of Notes shall be mailed to the Issuer and
filed with the SEC and each stock exchange on which the Notes are listed in
accordance with Trust Indenture Act Section 313(d).  The Issuer shall promptly notify the Trustee
when the Notes are listed on any stock exchange or delisted therefrom.

 

Section
7.07           Compensation and Indemnity.

 

The Issuer shall pay to the
Trustee from time to time such compensation for its acceptance of this
Indenture and services hereunder as the parties shall agree in writing from
time to time.  The Trustee’s compensation
shall not be limited by any law on compensation of a trustee of an express
trust.  The Issuer shall reimburse the
Trustee promptly upon request for all reasonable disbursements, advances and
expenses incurred or made by it in addition to the compensation for its
services.  Such expenses shall include
the reasonable compensation, disbursements and expenses of the Trustee’s agents
and counsel.

 

The Issuer and the
Guarantors, jointly and severally, shall indemnify the Trustee for, and hold
the Trustee harmless against, any and all loss, damage, claims, liability or
expense (including attorneys’ fees) incurred by it in connection with the
acceptance or administration of this trust and the performance of its duties
hereunder (including the costs and expenses of enforcing this Indenture against
the Issuer or any of the Guarantors (including this Section 7.07) or defending
itself against any claim whether asserted by any Holder, the Issuer or any
Guarantor, or liability in connective with the acceptance, exercise or
performance of any of its powers or duties hereunder).  The Trustee shall notify the Issuer promptly
of any claim for which it may seek indemnity. 
Failure by the Trustee to so notify the Issuer shall not relieve the
Issuer of its obligations hereunder.  The
Issuer shall defend the claim and the Trustee may have separate counsel and the
Issuer shall pay the fees and expenses of such counsel.  The Issuer need not reimburse any expense or
indemnify against any loss, liability or expense incurred by the Trustee
through the Trustee’s own willful misconduct, negligence or bad faith.

 

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

 

To secure the payment
obligations of the Issuer and the Guarantors in this Section 7.07, the Trustee
shall have a Lien prior to the Notes on all money or property held or collected
by the Trustee, 

 

93

 

except that held in trust to pay principal
and interest on particular Notes.  Such
Lien shall survive the satisfaction and discharge of this Indenture.

 

When the Trustee incurs
expenses or renders services after an Event of Default specified in Section
6.01(a)(6) or (7) hereof occurs, the expenses and the compensation for the
services (including the fees and expenses of its agents and counsel) are
intended to constitute expenses of administration under any Bankruptcy Law.

 

The Trustee shall comply
with the provisions of Trust Indenture Act Section 313(b)(2) to the extent
applicable.

 

Section
7.08           Replacement of Trustee.

 

A resignation or removal of
the Trustee and appointment of a successor Trustee shall become effective only
upon the successor Trustee’s acceptance of appointment as provided in this
Section 7.08.  The Trustee may resign in
writing at any time and be discharged from the trust hereby created by so
notifying the Issuer.  The Holders of a
majority in principal amount of the then outstanding Notes may remove the
Trustee by so notifying the Trustee and the Issuer in writing.  The Issuer may remove the Trustee if:

 

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

 

(b)           the Trustee is adjudged a bankrupt or an insolvent or an order for
relief is entered with respect to the Trustee under any Bankruptcy Law;

 

(c)           a custodian or public officer takes charge of the Trustee or its
property; or

 

(d)           the Trustee becomes incapable of acting.

 

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

 

If a successor Trustee does
not take office within 60 days after the retiring Trustee resigns or is
removed, the retiring Trustee (at the Issuer’s expense), the Issuer or the
Holders of at least 10% in principal amount of the then outstanding Notes may
petition any court of competent jurisdiction for the appointment of a successor
Trustee.

 

If the Trustee, after
written request by any Holder who has been a Holder for at least six months,
fails to comply with Section 7.10 hereof, such Holder may petition any court of
competent jurisdiction for the removal of the Trustee and the appointment of a
successor Trustee.

 

A successor Trustee shall
deliver a written acceptance of its appointment to the retiring Trustee and to
the Issuer.  Thereupon, the resignation
or removal of the retiring Trustee shall become effective, and the successor
Trustee shall have all the rights, powers and duties of the Trustee under this
Indenture.  The successor Trustee shall
mail a notice of its succession to Holders. 
The retiring Trustee shall promptly transfer all property held by it as
Trustee to the successor Trustee; provided all sums owing to the Trustee
hereunder have been paid and subject to the Lien provided for in Section 7.07
hereof.  Notwithstanding replacement of
the Trustee pursuant to this Section 7.08, the Issuer’s obligations under
Section 7.07 hereof shall continue for the benefit of the retiring Trustee.

 

94

 

Section
7.09           Successor Trustee by Merger, etc.

 

If the Trustee consolidates,
merges or converts into, or transfers all or substantially all of its corporate
trust business to, another corporation, the successor corporation without any
further act shall be the successor Trustee.

 

Section
7.10           Eligibility; Disqualification.

 

There shall at all times be
a Trustee hereunder that is a corporation organized and doing business under
the laws of the United States of America or of any state thereof that is
authorized under such laws to exercise corporate trustee power, that is subject
to supervision or examination by federal or state authorities and that has a
combined capital and surplus of at least $50,000,000 as set forth in its most
recent published annual report of condition.

 

This Indenture shall always
have a Trustee who satisfies the requirements of Trust Indenture Act Sections
310(a)(1), (2) and (5).  The Trustee is
subject to Trust Indenture Act Section 310(b).

 

Section
7.11           Preferential Collection of Claims Against
Issuer.

 

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

 

ARTICLE
8

 

LEGAL
DEFEASANCE AND COVENANT DEFEASANCE

 

Section
8.01           Option To Effect Legal Defeasance or Covenant
Defeasance.

 

The Issuer may, at its
option and at any time, elect to have either Section 8.02 or 8.03 hereof
applied to all outstanding Notes upon compliance with the conditions set forth
below in this Article 8.

 

Section
8.02           Legal Defeasance and Discharge.

 

Upon the Issuer’s exercise
under Section 8.01 hereof of the option applicable to this Section 8.02, the
Issuer and the Guarantors shall, subject to the satisfaction of the conditions
set forth in Section 8.04 hereof, be deemed to have been discharged from their
obligations with respect to all outstanding Notes and Guarantees on the date
the conditions set forth below are satisfied (“Legal Defeasance”).  For this purpose, Legal Defeasance means that
the Issuer shall be deemed to have paid and discharged the entire Indebtedness
represented by the outstanding Notes, which shall thereafter be deemed to be “outstanding”
only for the purposes of Section 8.05 hereof and the other Sections of this
Indenture referred to in (a) and (b) below, and to have satisfied all its other
obligations under such Notes and this Indenture including that of the
Guarantors (and the Trustee, on demand of and at the expense of the Issuer,
shall execute proper instruments acknowledging the same), except for the
following provisions which shall survive until otherwise terminated or
discharged hereunder:

 

(a)           the rights of Holders of Notes to receive payments in respect of the
principal of, premium, if any, and interest on the Notes when such payments are
due solely out of the trust created pursuant to this Indenture referred to in
Section 8.04 hereof;

 

95

 

(b)           the Issuer’s obligations with respect to Notes concerning issuing
temporary Notes, registration of such Notes, mutilated, destroyed, lost or
stolen Notes and the maintenance of an office or agency for payment and money
for security payments held in trust;

 

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

 

(d)           this Section 8.02.

 

Subject to compliance with
this Article 8, the Issuer may exercise its option under this Section 8.02
notwithstanding the prior exercise of its option under Section 8.03 hereof.

 

Section
8.03           Covenant Defeasance.

 

Upon the Issuer’s exercise
under Section 8.01 hereof of the option applicable to this Section 8.03, the
Issuer and the Guarantors shall, subject to the satisfaction of the conditions
set forth in Section 8.04 hereof, be released from their obligations under the
covenants contained in Sections 4.03, 4.04, 4.05, 4.07, 4.08, 4.09, 4.10, 4.11,
4.12, 4.13, 4.14 and 4.15 hereof and clauses (4) and (5) of Section 5.01(a),
Sections 5.01(c) and 5.01(d) hereof with respect to the outstanding Notes on
and after the date the conditions set forth in Section 8.04 hereof are
satisfied (“Covenant Defeasance”), and the Notes shall thereafter be
deemed not “outstanding” for the purposes of any direction, waiver, consent or
declaration or act of Holders (and the consequences of any thereof) in
connection with such covenants, but shall continue to be deemed “outstanding”
for all other purposes hereunder (it being understood that such Notes shall not
be deemed outstanding for accounting purposes). 
For this purpose, Covenant Defeasance means that, with respect to the
outstanding Notes, the Issuer may omit to comply with and shall have no
liability in respect of any term, condition or limitation set forth in any such
covenant, whether directly or indirectly, by reason of any reference elsewhere
herein to any such covenant or by reason of any reference in any such covenant
to any other provision herein or in any other document and such omission to
comply shall not constitute a Default or an Event of Default under Section 6.01
hereof, but, except as specified above, the remainder of this Indenture and
such Notes shall be unaffected thereby. 
In addition, upon the Issuer’s exercise under Section 8.01 hereof of the
option applicable to this Section 8.03 hereof, subject to the satisfaction of
the conditions set forth in Section 8.04 hereof, Sections 6.01(a)(3),
6.01(a)(4), 6.01(a)(5), 6.01(a)(6) (solely with respect to Restricted
Subsidiaries subject thereto), 6.01(a)(7) (solely with respect to Restricted
Subsidiaries subject thereto) and 6.01(a)(8) hereof shall not constitute Events
of Default.

 

Section
8.04           Conditions to Legal or Covenant Defeasance.

 

In order to exercise either
Legal Defeasance or Covenant Defeasance with respect to the Notes:

 

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

 

96

 

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

 

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

 

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

 

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

 

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

 

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

 

(5)           such Legal Defeasance or Covenant Defeasance shall not result in a
breach or violation of, or constitute a default under the Senior Credit
Facilities, the Senior Subordinated Notes or the indenture pursuant to which
the Senior Subordinated Notes are issued, the Subordinated Discount Notes or
the indenture pursuant to which the Subordinated Discount Notes are issued or
any other material agreement or instrument (other than this Indenture) to which
the Issuer or any Guarantor is a party or by which the Issuer or any Guarantor
is bound  (other than that resulting from
any borrowing of funds to be applied to make the deposit required to effect
such Legal Defeasance or Covenant Defeasance and any similar and simultaneous
deposit relating to other Indebtedness, including the Senior Subordinated Notes
and the Subordinated Discount Notes, and the granting of Liens in connection
therewith);

 

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

 

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

 

97

 

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

 

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

 

Subject to Section 8.06
hereof, all money and Government Securities (including the proceeds thereof)
deposited with the Trustee (or other qualifying trustee, collectively for
purposes of this Section 8.05, the “Trustee”) pursuant to Section 8.04
hereof in respect of the outstanding Notes shall be held in trust and applied
by the Trustee, in accordance with the provisions of such Notes and this
Indenture, to the payment, either directly or through any Paying Agent
(including the Issuer or a Guarantor acting as Paying Agent) as the Trustee may
determine, to the Holders of such Notes of all sums due and to become due
thereon in respect of principal, premium and Additional Interest, if any, and
interest, but such money need not be segregated from other funds except to the
extent required by law.

 

The Issuer shall pay and
indemnify the Trustee against any tax, fee or other charge imposed on or
assessed against the cash or Government Securities deposited pursuant to
Section 8.04 hereof or the principal and interest received in respect thereof
other than any such tax, fee or other charge which by law is for the account of
the Holders of the outstanding Notes.

 

Anything in this Article 8
to the contrary notwithstanding, the Trustee shall deliver or pay to the Issuer
from time to time upon the request of the Issuer any money or Government
Securities held by it as provided in Section 8.04 hereof which, in the opinion
of a nationally recognized firm of independent public accountants expressed in
a written certification thereof delivered to the Trustee (which may be the
opinion delivered under Section 8.04(1) hereof), are in excess of the
amount thereof that would then be required to be deposited to effect an
equivalent Legal Defeasance or Covenant Defeasance.

 

Section
8.06           Repayment to Issuer.

 

Any money deposited with the
Trustee or any Paying Agent, or then held by the Issuer, in trust for the
payment of the principal of, premium and Additional Interest, if any, or
interest on any Note and remaining unclaimed for two years after such
principal, and premium and Additional Interest, if any, or interest has become
due and payable shall be paid to the Issuer on its request or (if then held by
the Issuer) shall be discharged from such trust; and the Holder of such Note
shall thereafter look only to the Issuer for payment thereof, and all liability
of the Trustee or such Paying Agent with respect to such trust money, and all
liability of the Issuer as trustee thereof, shall thereupon cease.

 

Section
8.07           Reinstatement.

 

If the Trustee or Paying
Agent is unable to apply any United States dollars or Government Securities in
accordance with Section 8.02 or 8.03 hereof, as the case may be, by reason of
any order or judgment of any court or governmental authority enjoining,
restraining or otherwise prohibiting such application, then the Issuer’s
obligations under this Indenture and the Notes shall be revived and reinstated
as though no deposit had occurred pursuant to Section 8.02 or 8.03 hereof until
such time as the Trustee or Paying Agent is permitted to apply all such money
in accordance with Section 8.02 or 8.03 hereof, as the case may be; provided
that, if the Issuer makes any payment of principal of, premium and Additional
Interest, if any, or interest on any Note following the reinstatement of its
obligations, the Issuer shall be subrogated to the rights of the Holders of
such Notes to receive such payment from the money held by the Trustee or Paying
Agent.

 

98

 

ARTICLE
9

 

AMENDMENT,
SUPPLEMENT AND WAIVER

 

Section
9.01           Without Consent of Holders of Notes.

 

Notwithstanding Section 9.02
hereof, the Issuer, any Guarantor (with respect to a Guarantee to which it is a
party or this Indenture) and the Trustee may amend or supplement this Indenture
and any Guarantee or Notes without the consent of any Holder:

 

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

 

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

 

(3)           to comply with Section 5.01 hereof;

 

(4)           to provide for the assumption of the Issuer’s or any Guarantor’s
obligations to the Holders in a transaction that complies with this Indenture;

 

(5)           to make any change that would provide any additional rights or benefits
to the Holders or that does not adversely affect the legal rights under this
Indenture of any such Holder;

 

(6)           to add covenants for the benefit of the Holders or to surrender any
right or power conferred upon the Issuer or any Guarantor;

 

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

 

(8)           to evidence and provide for the acceptance and appointment under this
Indenture of a successor Trustee thereunder pursuant to the requirements
thereof;

 

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

 

(10)         to add a Guarantor under this Indenture;

 

(11)         to conform the text of this Indenture, Guarantees or the Notes to any
provision of the “Description of Senior Notes” section of the Offering
Memorandum to the extent that such provision in such “Description of Senior
Notes” section was intended to be a verbatim recitation of a provision of this
Indenture, Guarantee or Notes; or

 

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

 

Upon the request of the
Issuer accompanied by a resolution of its board of directors authorizing the
execution of any such amended or supplemental indenture, and upon receipt by
the Trustee 

 

99

 

of the documents described in Section 7.02
hereof, the Trustee shall join with the Issuer and the Guarantors in the
execution of any amended or supplemental indenture authorized or permitted by
the terms of this Indenture and to make any further appropriate agreements and
stipulations that may be therein contained, but the Trustee shall not be obligated
to enter into such amended or supplemental indenture that affects its own
rights, duties or immunities under this Indenture or otherwise.  Notwithstanding the foregoing, no Opinion of
Counsel shall be required in connection with the addition of a Guarantor under
this Indenture upon execution and delivery by such Guarantor and the Trustee of
a supplemental indenture to this Indenture, the form of which is attached as Exhibit
D hereto, and delivery of an Officer’s Certificate.

 

Section
9.02           With Consent of Holders of Notes.

 

Except as provided below in
this Section 9.02, the Issuer and the Trustee may amend or supplement this
Indenture, the Notes and the Guarantees with the consent of the Holders of at
least a majority in principal amount of the Notes (including Additional Notes,
if any) then outstanding voting as a single class (including, without
limitation, consents obtained in connection with a tender offer or exchange
offer for, or purchase of, the Notes), and, subject to Sections 6.04 and 6.07
hereof, any existing Default or Event of Default (other than a Default or Event
of Default in the payment of the principal of, premium and Additional Interest,
if any, or interest on the Notes, except a payment default resulting from an
acceleration that has been rescinded) or compliance with any provision of this
Indenture, the Guarantees or the Notes may be waived with the consent of the
Holders of a majority in principal amount of the then outstanding Notes
(including Additional Notes, if any) voting as a single class (including
consents obtained in connection with a tender offer or exchange offer for, or
purchase of, the Notes).  Section 2.08
hereof and Section 2.09 hereof shall determine which Notes are considered to be
“outstanding” for the purposes of this Section 9.02.

 

Upon the request of the
Issuer accompanied by a resolution of its board of directors authorizing the
execution of any such amended or supplemental indenture, and upon the filing
with the Trustee of evidence satisfactory to the Trustee of the consent of the
Holders of Notes as aforesaid, and upon receipt by the Trustee of the documents
described in Section 7.02 hereof, the Trustee shall join with the Issuer
in the execution of such amended or supplemental indenture unless such amended
or supplemental indenture directly affects the Trustee’s own rights, duties or
immunities under this Indenture or otherwise, in which case the Trustee may in
its discretion, but shall not be obligated to, enter into such amended or
supplemental indenture.

 

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

 

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

 

Without the consent of each
affected Holder of Notes, an amendment or waiver under this Section 9.02
may not (with respect to any Notes held by a non-consenting Holder):

 

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

 

(2)           reduce the principal of or change the fixed final maturity of any such
Note or alter or waive the provisions with respect to the redemption of such
Notes (other than provisions 

 

100

 

relating to Section 3.09,
Section 4.10 and Section 4.14 hereof to the extent that any such amendment or
waiver does not have the effect of reducing the principal of or changing the
fixed final maturity of any such Note or altering or waiving the provisions
with respect to the redemption of such Notes);

 

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

 

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

 

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

 

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

 

(7)           make any change to this paragraph of this Section 9.02;

 

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

 

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

 

(10)         except as expressly permitted by this Indenture, modify the Guarantees
of any Significant Subsidiary, or any group of Restricted Subsidiaries that,
taken together (as of the latest audited consolidated financial statements for
the Issuer), would constitute a Significant Subsidiary, in any manner adverse
to the Holders of the Notes.

 

Section
9.03           Compliance with Trust Indenture Act.

 

Every amendment or
supplement to this Indenture or the Notes shall be set forth in an amended or
supplemental indenture that complies with the Trust Indenture Act as then in
effect.

 

Section
9.04           Revocation and Effect of Consents.

 

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

 

The Issuer may, but shall
not be obligated to, fix a record date for the purpose of determining the
Holders entitled to consent to any amendment, supplement, or waiver.  If a record date is fixed, then,
notwithstanding the preceding paragraph, those Persons who were Holders at such
record date 

 

101

 

(or their duly designated proxies), and only
such Persons, shall be entitled to consent to such amendment, supplement, or
waiver or to revoke any consent previously given, whether or not such Persons
continue to be Holders after such record date. 
No such consent shall be valid or effective for more than 120 days after
such record date unless the consent of the requisite number of Holders has been
obtained.

 

Section
9.05           Notation on or Exchange of Notes.

 

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

 

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

 

Section
9.06           Trustee To Sign Amendments, etc.

 

The Trustee shall sign any
amendment, supplement or waiver authorized pursuant to this Article 9 if the
amendment or supplement does not adversely affect the rights, duties,
liabilities or immunities of the Trustee. 
The Issuer may not sign an amendment, supplement or waiver until the
board of directors approves it.  In
executing any amendment, supplement or waiver, the Trustee shall be provided
with and (subject to Section 7.01 hereof) shall be fully protected in relying
upon, in addition to the documents required by Section 12.04 hereof, an Officer’s
Certificate and an Opinion of Counsel stating that the execution of such
amended or supplemental indenture is authorized or permitted by this Indenture
and that such amendment, supplement or waiver is the legal, valid and binding
obligation of the Issuer and any Guarantors party thereto, enforceable against
them in accordance with its terms, subject to customary exceptions, and
complies with the provisions hereof (including Section 9.03).  Notwithstanding the foregoing, no Opinion of
Counsel will be required for the Trustee to execute any amendment or supplement
adding a new Guarantor under this Indenture.

 

Section
9.07           Payment for Consent.

 

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

 

ARTICLE
10

 

GUARANTEES

 

Section
10.01         Guarantee.

 

Subject to this Article 10,
each of the Guarantors hereby, jointly and severally, unconditionally
guarantees to each Holder of a Note authenticated and delivered by the Trustee
and to the Trustee and its successors and assigns, irrespective of the validity
and enforceability of this Indenture, the Notes or the obligations of the
Issuer hereunder or thereunder, that: (a) the principal of, and interest,
premium and Additional Interest, if any, on the Notes shall be promptly paid in
full when due, whether at maturity, by acceleration, redemption or otherwise, and
interest on the overdue principal of and interest on the 

 

102

 

Notes, if any, if lawful, and all other
Obligations of the Issuer to the Holders or the Trustee hereunder or thereunder
shall be promptly paid in full or performed, all in accordance with the terms
hereof and thereof; and (b) in case of any extension of time of payment or
renewal of any Notes or any of such other obligations, that same shall be
promptly paid in full when due or performed in accordance with the terms of the
extension or renewal, whether at stated maturity, by acceleration or
otherwise.  Failing payment when due of
any amount so guaranteed or any performance so guaranteed for whatever reason,
the Guarantors shall be jointly and severally obligated to pay the same
immediately.  Each Guarantor agrees that
this is a guarantee of payment and not a guarantee of collection.

 

The Guarantors hereby agree
that their obligations hereunder shall be unconditional, irrespective of the
validity, regularity or enforceability of the Notes or this Indenture, the
absence of any action to enforce the same, any waiver or consent by any Holder
of the Notes with respect to any provisions hereof or thereof, the recovery of
any judgment against the Issuer, any action to enforce the same or any other
circumstance which might otherwise constitute a legal or equitable discharge or
defense of a guarantor.  Each Guarantor
hereby waives diligence, presentment, demand of payment, filing of claims with
a court in the event of insolvency or bankruptcy of the Issuer, any right to
require a proceeding first against the Issuer, protest, notice and all demands
whatsoever and covenants that this Guarantee shall not be discharged except by
complete performance of the obligations contained in the Notes and this
Indenture.

 

Each Guarantor also agrees
to pay any and all costs and expenses (including reasonable attorneys’ fees)
incurred by the Trustee or any Holder in enforcing any rights under this
Section 10.01.

 

If any Holder or the Trustee
is required by any court or otherwise to return to the Issuer, the Guarantors
or any custodian, trustee, liquidator or other similar official acting in
relation to either the Issuer or the Guarantors, any amount paid either to the
Trustee or such Holder, this Guarantee, to the extent theretofore discharged,
shall be reinstated in full force and effect.

 

Each Guarantor agrees that
it shall not be entitled to any right of subrogation in relation to the Holders
in respect of any obligations guaranteed hereby until payment in full of all
obligations guaranteed hereby.  Each
Guarantor further agrees that, as between the Guarantors, on the one hand, and
the Holders and the Trustee, on the other hand, (x) the maturity of the
obligations guaranteed hereby may be accelerated as provided in Article 6
hereof for the purposes of this Guarantee, notwithstanding any stay, injunction
or other prohibition preventing such acceleration in respect of the obligations
guaranteed hereby, and (y) in the event of any declaration of acceleration of
such obligations as provided in Article 6 hereof, such obligations (whether or
not due and payable) shall forthwith become due and payable by the Guarantors
for the purpose of this Guarantee.  The
Guarantors shall have the right to seek contribution from any non-paying
Guarantor so long as the exercise of such right does not impair the rights of
the Holders under the Guarantees.

 

Each Guarantee shall remain
in full force and effect and continue to be effective should any petition be
filed by or against the Issuer for liquidation, reorganization, should the
Issuer become insolvent or make an assignment for the benefit of creditors or
should a receiver or trustee be appointed for all or any significant part of
the Issuer’s assets, and shall, to the fullest extent permitted by law,
continue to be effective or be reinstated, as the case may be, if at any time
payment and performance of the Notes are, pursuant to applicable law, rescinded
or reduced in amount, or must otherwise be restored or returned by any obligee
on the Notes or Guarantees, whether as a “voidable preference,” “fraudulent
transfer” or otherwise, all as though such payment or performance had not been
made.  In the event that any payment or
any part thereof, is rescinded, reduced, restored or returned, the Notes shall,
to the fullest extent permitted by law, be reinstated and deemed reduced only
by such amount paid and not so rescinded, reduced, restored or returned.

 

103

 

In case any provision of any
Guarantee shall be invalid, illegal or unenforceable, the validity, legality,
and enforceability of the remaining provisions shall not in any way be affected
or impaired thereby.

 

The Guarantee issued by any
Guarantor shall be a general unsecured senior obligation of such Guarantor and
shall be pari passu in right of
payment with all existing and future senior Indebtedness of such Guarantor, if
any.

 

Each payment to be made by a
Guarantor in respect of its Guarantee shall be made without set-off,
counterclaim, reduction or diminution of any kind or nature.

 

Section
10.02         Limitation on Guarantor Liability.

 

Each Guarantor, and by its
acceptance of Notes, each Holder, hereby confirms that it is the intention of
all such parties that the Guarantee of such Guarantor not constitute a
fraudulent transfer or conveyance for purposes of Bankruptcy Law, the Uniform
Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any similar
federal or state law to the extent applicable to any Guarantee.  To effectuate the foregoing intention, the
Trustee, the Holders and the Guarantors hereby irrevocably agree that the
obligations of each Guarantor shall be limited to the maximum amount as will, after
giving effect to such maximum amount and all other contingent and fixed
liabilities of such Guarantor that are relevant under such laws and after
giving effect to any collections from, rights to receive contribution from or
payments made by or on behalf of any other Guarantor in respect of the
obligations of such other Guarantor under this Article 10, result in the
obligations of such Guarantor under its Guarantee not constituting a fraudulent
conveyance or fraudulent transfer under applicable law.  Each Guarantor that makes a payment under its
Guarantee shall be entitled upon payment in full of all guaranteed obligations
under this Indenture to a contribution from each other Guarantor in an amount
equal to such other Guarantor’s pro rata
portion of such payment based on the respective net assets of all the
Guarantors at the time of such payment determined in accordance with GAAP.

 

Section
10.03         Execution and Delivery.

 

To evidence its Guarantee
set forth in Section 10.01 hereof, each Guarantor hereby agrees that this
Indenture shall be executed on behalf of such Guarantor by its President, one
of its Vice Presidents or one of its Assistant Vice Presidents.

 

Each Guarantor hereby agrees
that its Guarantee set forth in Section 10.01 hereof shall remain in full force
and effect notwithstanding the absence of the endorsement of any notation of
such Guarantee on the Notes.

 

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

 

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

 

If required by Section 4.15
hereof, the Issuer shall cause any newly created or acquired Restricted
Subsidiary to comply with the provisions of Section 4.15 hereof and this
Article 10, to the extent applicable.

 

104

 

Section
10.04         Subrogation.

 

Each Guarantor shall be
subrogated to all rights of Holders of Notes against the Issuer in respect of
any amounts paid by any Guarantor pursuant to the provisions of Section 10.01
hereof; provided that, if an Event of Default has occurred and is
continuing, no Guarantor shall be entitled to enforce or receive any payments
arising out of, or based upon, such right of subrogation until all amounts then
due and payable by the Issuer under this Indenture or the Notes shall have been
paid in full.

 

Section
10.05         Benefits Acknowledged.

 

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

 

Section
10.06         Release of Guarantees.

 

A Guarantee by a Guarantor
shall be automatically and unconditionally released and discharged, and no
further action by such Guarantor, the Issuer or the Trustee is required for the
release of such Guarantor’s Guarantee, upon:

 

(1)           (A)  any sale, exchange,
disposition or transfer (by merger or otherwise) of (x) the Capital Stock
of such Guarantor, after which the applicable Guarantor is no longer a
Restricted Subsidiary, or (y) all or substantially all the assets of such
Guarantor which sale, exchange, disposition or transfer in each case is made in
compliance with Sections 4.10(a)(1) and (2);

 

(B)           the release or discharge of the guarantee by such Guarantor of the
Senior Credit Facilities or the guarantee which resulted in the creation of
such Guarantee, except a discharge or release by or as a result of payment
under such guarantee;

 

(C)           the proper designation of any Restricted Subsidiary that is a Guarantor
as an Unrestricted Subsidiary; or

 

(D)          the Issuer exercising Legal Defeasance or Covenant Defeasance in
accordance with Article 8 hereof or the Issuer’s obligations under this
Indenture being discharged in accordance with the terms of this Indenture; and

 

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

 

ARTICLE
11

 

SATISFACTION
AND DISCHARGE

 

Section
11.01         Satisfaction and Discharge.

 

This Indenture shall be
discharged and shall cease to be of further effect as to all Notes, when
either:

 

105

 

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

 

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

 

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

 

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

 

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

 

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

 

Notwithstanding the
satisfaction and discharge of this Indenture, if money shall have been
deposited with the Trustee pursuant to subclause (A) of clause (2) of this
Section 11.01, the provisions of Section 11.02 and Section 8.06 hereof shall survive
such satisfaction and discharge.

 

Section
11.02         Application of Trust Money.

 

Subject to the provisions of
Section 8.06 hereof, all money deposited with the Trustee pursuant to Section
11.01 hereof shall be held in trust and applied by it, in accordance with the
provisions of the Notes and this Indenture, to the payment, either directly or
through any Paying Agent (including the Issuer acting as its own Paying Agent)
as the Trustee may determine, to the Persons entitled thereto, 

 

106

 

of the principal (and premium and Additional
Interest, if any) and interest for whose payment such money has been deposited
with the Trustee; but such money need not be segregated from other funds except
to the extent required by law.

 

If the Trustee or Paying
Agent is unable to apply any money or Government Securities in accordance with
Section 11.01 hereof by reason of any legal proceeding or by reason of any
order or judgment of any court or governmental authority enjoining, restraining
or otherwise prohibiting such application, the Issuer’s and any Guarantor’s
obligations under this Indenture and the Notes shall be revived and reinstated
as though no deposit had occurred pursuant to Section 11.01 hereof; provided
that if the Issuer has made any payment of principal of, premium and Additional
Interest, if any, or interest on any Notes because of the reinstatement of its
obligations, the Issuer shall be subrogated to the rights of the Holders of
such Notes to receive such payment from the money or Government Securities held
by the Trustee or Paying Agent.

 

ARTICLE
12

 

MISCELLANEOUS

 

Section
12.01         Trust Indenture Act Controls.

 

If any provision of this
Indenture limits, qualifies or conflicts with the duties imposed by Trust Indenture
Act Section 318(c), the imposed duties shall control.

 

Section
12.02         Notices.

 

Any notice or communication
by the Issuer, any Guarantor or the Trustee to the others is duly given if in
writing and delivered in person or mailed by first-class mail (registered or
certified, return receipt requested), fax or overnight air courier guaranteeing
next day delivery, to the others’ address:

 

If to the Issuer and/or any
Guarantor:

 

c/o Michaels Stores, Inc. 

8000 Bent Branch Drive

Irving, TX 75063

Attention: General Counsel

 

with a copy to:

 

Ropes & Gray LLP

One International Place

Boston, MA 02110

Attention: Byung W. Choi, Esq.

 

	
  Telephone:

  	
  (617) 951-7000

  
	
  Facsimile:

  	
  (617) 951-7050

  

 

If to the Trustee:

 

Wells Fargo Bank, National
Association

1445 Ross Avenue - 2nd Floor

 

107

 

Dallas, Texas 75202-2812

Fax No.: 214-777-4086

Attention:   Patrick
Giordano

Corporate
Trust Services

 

The Issuer, any Guarantor or
the Trustee, by notice to the others, may designate additional or different
addresses for subsequent notices or communications.

 

All notices and
communications (other than those sent to Holders) shall be deemed to have been
duly given: at the time delivered by hand, if personally delivered; five
calendar days after being deposited in the mail, postage prepaid, if mailed by
first-class mail; when receipt acknowledged, if faxed; and the next Business
Day after timely delivery to the courier, if sent by overnight air courier
guaranteeing next day delivery; and, subject to compliance with the Trust
Indenture Act, on the first date on which publication is made, if given by
publication; provided that any notice or communication delivered to the
Trustee shall be deemed effective upon actual receipt thereof.

 

Any notice or communication
to a Holder shall be mailed by first-class mail, certified or registered,
return receipt requested, or by overnight air courier guaranteeing next day
delivery to its address shown on the register kept by the Registrar.  Any notice or communication shall also be so
mailed to any Person described in Trust Indenture Act Section 313(c), to the
extent required by the Trust Indenture Act. 
Failure to mail a notice or communication to a Holder or any defect in it
shall not affect its sufficiency with respect to other Holders.

 

If a notice or communication
is mailed or otherwise delivered in the manner provided above within  the time prescribed, it is duly given,
whether or not the addressee receives it.

 

If the Issuer mails a notice
or communication to Holders, it shall mail a copy to the Trustee and each Agent
at the same time.

 

Section
12.03         Communication by Holders of Notes with Other
Holders of Notes.

 

Holders may communicate
pursuant to Trust Indenture Act Section 312(b) with other Holders with respect
to their rights under this Indenture or the Notes.  The Issuer, the Trustee, the Registrar and
anyone else shall have the protection of Trust Indenture Act Section 312(c).

 

Section
12.04         Certificate and Opinion as to Conditions
Precedent.

 

Upon any request or
application by the Issuer or any of the Guarantors to the Trustee to take any
action under this Indenture, the Issuer or such Guarantor, as the case may be,
shall furnish to the Trustee:

 

(a)           An Officer’s Certificate in form and substance reasonably satisfactory
to the Trustee (which shall include the statements set forth in Section 12.05
hereof) stating that, in the opinion of the signers, all conditions precedent
and covenants, if any, provided for in this Indenture relating to the proposed
action have been satisfied; and

 

(b)           An Opinion of Counsel in form and substance reasonably satisfactory to
the Trustee (which shall include the statements set forth in Section 12.05
hereof) stating that, in the opinion of such counsel, all such conditions precedent
and covenants have been satisfied.

 

108

 

Section
12.05         Statements Required in Certificate or Opinion.

 

Each certificate or opinion
with respect to compliance with a condition or covenant provided for in this
Indenture (other than a certificate provided pursuant to Section 4.04 hereof or
Trust Indenture Act Section 314(a)(4)) shall comply with the provisions of
Trust Indenture Act Section 314(e) and shall include:

 

(a)           a statement that the Person making such certificate or opinion has read
such covenant or condition;

 

(b)           a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;

 

(c)           a statement that, in the opinion of such Person, he or she has made
such examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or condition has been
complied with (and, in the case of an Opinion of Counsel, may be limited to
reliance on an Officer’s Certificate as to matters of fact); and

 

(d)           a statement as to whether or not, in the opinion of such Person, such
condition or covenant has been complied with; provided,
however, that with respect to matters of fact an Opinion of Counsel
may rely on an Officer’s Certificate or certificates of public officials.

 

Section
12.06         Rules by Trustee and Agents.

 

The Trustee may make
reasonable rules for action by or at a meeting of Holders.  The Registrar or Paying Agent may make
reasonable rules and set reasonable requirements for its functions.

 

Section
12.07         No Personal Liability of Directors, Officers,
Employees and Stockholders.

 

No past, present or future
director, officer, employee, incorporator, member, partner or stockholder of
the Issuer or any Guarantor or any of their direct or indirect parent companies
shall have any liability for any obligations of the Issuer or the Guarantors
under the Notes, the Guarantees or this Indenture or for any claim based on, in
respect of, or by reason of such obligations or their creation.  Each Holder by accepting Notes waives and
releases all such liability.  The waiver
and release are part of the consideration for issuance of the Notes.

 

Section
12.08         Governing Law.

 

THIS INDENTURE, THE NOTES
AND ANY GUARANTEE WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF NEW YORK.

 

Section
12.09         Waiver of Jury Trial.

 

EACH OF THE ISSUER, THE
GUARANTORS AND THE TRUSTEE HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL
PROCEEDING ARISING OUT OF OR RELATING TO THIS INDENTURE, THE NOTES OR THE
TRANSACTIONS CONTEMPLATED HEREBY.

 

109

 

Section
12.10         Force Majeure.

 

In no event shall the
Trustee be responsible or liable for any failure or delay in the performance of
its obligations under this Indenture arising out of or caused by, directly or
indirectly, forces beyond its reasonable control, including without limitation
strikes, work stoppages, accidents, acts of war or terrorism, civil or military
disturbances, nuclear or natural catastrophes or acts of God, and
interruptions, loss or malfunctions of utilities, communications or computer (software
or hardware) services.

 

Section
12.11         No Adverse Interpretation of Other Agreements.

 

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

 

Section
12.12         Successors.

 

All agreements of the Issuer
in this Indenture and the Notes shall bind its successors.  All agreements of the Trustee in this
Indenture shall bind its successors.  All
agreements of each Guarantor in this Indenture shall bind its successors,
except as otherwise provided in Section 10.06 hereof.

 

Section
12.13         Severability.

 

In case any provision in
this Indenture or in the Notes shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.

 

Section
12.14         Counterpart Originals.

 

The parties may sign any
number of copies of this Indenture.  Each
signed copy shall be an original, but all of them together represent the same
agreement.  This Indenture may be
executed in multiple counterparts which, when taken together, shall constitute
one instrument.

 

Section
12.15         Table of Contents, Headings, etc.

 

The Table of Contents,
Cross-Reference Table and headings of the Articles and Sections of this
Indenture have been inserted for convenience of reference only, are not to be
considered a part of this Indenture and shall in no way modify or restrict any
of the terms or provisions hereof.

 

Section
12.16         Qualification of Indenture.

 

The Issuer and the
Guarantors shall qualify this Indenture under the Trust Indenture Act in
accordance with the terms and conditions of the Registration Rights Agreement
and shall pay all reasonable costs and expenses (including attorneys’ fees and
expenses for the Issuer, the Guarantors and the Trustee) incurred in connection
therewith, including, but not limited to, costs and expenses of qualification
of this Indenture and the Notes and printing this Indenture and the Notes.  The Trustee shall be entitled to receive from
the Issuer and the Guarantors any such Officer’s Certificates, Opinions of
Counsel or other documentation as it may reasonably request in connection with
any such qualification of this Indenture under the Trust Indenture Act.

 

[Signatures
on following page]

 

110

 

	
   

  	
  MICHAELS STORES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ Lisa
  K. Klinger

  
	
   

  	
   

  	
  Name:

  	
  Lisa K.
  Klinger

  
	
   

  	
   

  	
  Title:

  	
  Vice
  President – Treasurer and &

  Investor Relations

  

 

 

Signature Page to Senior Indenture

 

 

	
   

  	
  AARON BROTHERS, INC.

  
	
   

  	
  MICHAELS FINANCE COMPANY,
  INC.

  
	
   

  	
  MICHAELS STORES
  PROCUREMENT

  
	
   

  	
  COMPANY, INC.

  
	
   

  	
  MICHAELS OF CANADA, ULC

  
	
   

  	
  MICHAELS STORES CARD
  SERVICES, LLC

  
	
   

  	
  ARTISTREE, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ Lisa
  K. Klinger

  
	
   

  	
   

  	
  Name:

  	
  Lisa K.
  Klinger

  
	
   

  	
   

  	
  Title:

  	
  Vice
  President and Treasurer

  

 

 

Signature Page to Senior Indenture

 

 

	
   

  	
  WELLS FARGO BANK, NATIONAL
  ASSOCIATION,

  
	
   

  	
  as Trustee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ Frank
  McDonald

  
	
   

  	
   

  	
  Name:

  	
  Frank
  McDonald

  
	
   

  	
   

  	
  Title:

  	
  Vice
  President

  

 

 

Signature Page to Senior Indenture

 

EXHIBIT
A

 

[Face of Note]

 

[Insert the Global Note
Legend, if applicable pursuant to the provisions of the Indenture]

 

[Insert the Private
Placement Legend, if applicable pursuant to the provisions of the Indenture]

 

[Insert the Regulation S
Temporary Global Note Legend, if applicable pursuant to the provisions of the
Indenture]

 

A-1

 

CUSIP 
[                    ]

ISIN 
[                    ](1)

 

[[RULE 144A][REGULATION S] GLOBAL NOTE

representing up to

$                   ]

10% Senior Notes due 2014

 

	
  No.           

  	
  [$                 ]

  

 

MICHAELS STORES, INC.

 

promises to pay to CEDE & CO. or
registered assigns, the principal sum [set forth on the Schedule of Exchanges
of Interests in the Global Note attached hereto] [of                                     United
States Dollars] on November 1, 2014.

 

Interest Payment Dates:  May 1 and November 1

 

Record Dates: 
April 15 and October 15

 

	
  (1)

  	
  Rule 144A
  Note CUSIP: 594087 AG 3

  
	
   

  	
  Rule 144A
  Note ISIN: US594087AG34

  
	
   

  	
  Regulation S
  Note CUSIP: U59329 AA 7

  
	
   

  	
  Regulation S
  Note ISIN: USU59329AA76

  
	
   

  	
  Exchange
  Note CUSIP: 594087 AJ 7

  
	
   

  	
  Exchange
  Note ISIN: US594087AJ72

  

 

A-2

 

IN WITNESS HEREOF, the
Issuer has caused this instrument to be duly executed.

 

	
  Dated: [      ],
  2006

  	
   

  
	
   

  	
   

  
	
   

  	
  MICHAELS STORES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

A-3

 

This is one of the Notes referred to in the
within-mentioned Indenture:

 

	
   

  	
  WELLS FARGO BANK, NATIONAL
  ASSOCIATION,

  
	
   

  	
  as Trustee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Authorized Signatory

  

 

A-4

 

[Back of Senior Note]

 

10% Senior Notes due 2014

 

Capitalized terms used
herein shall have the meanings assigned to them in the Indenture referred to
below unless otherwise indicated.

 

1.             INTEREST. 
Michaels Stores, Inc., a Delaware corporation, promises to pay interest
on the principal amount of this Note at 10% per annum from October 31, 2006(2)
until maturity and shall pay the Additional Interest, if any, payable pursuant
to the Registration Rights Agreement referred to below.  The Issuer will pay interest and Additional
Interest, if any, semi-annually in arrears on May 1 and November 1 of each
year, or if any such day is not a Business Day, on the next succeeding Business
Day (each, an “Interest Payment Date”). 
Interest on the Notes will accrue from the most recent date to which
interest has been paid or, if no interest has been paid, from the date of
issuance; provided that the first Interest Payment Date shall be May 1,
2007.  The Issuer will pay interest
(including post-petition interest in any proceeding under any Bankruptcy Law)
on overdue principal and premium, if any, from time to time on demand at the
interest rate on the Notes; it shall pay interest (including post-petition
interest in any proceeding under any Bankruptcy Law) on overdue installments of
interest and Additional Interest, if any, (without regard to any applicable
grace periods) from time to time on demand at the interest rate on the
Notes.  Interest will be computed on the
basis of a 360-day year comprised of twelve 30-day months.

 

2.             METHOD OF PAYMENT.  The Issuer will pay interest on the Notes and
Additional Interest, if any, to the Persons who are registered Holders of Notes
at the close of business on the April 15 or October 15 (whether or not a
Business Day), as the case may be, next preceding the Interest Payment Date,
even if such Notes are canceled after such record date and on or before such
Interest Payment Date, except as provided in Section 2.12 of the Indenture with
respect to defaulted interest.  Payment
of interest and Additional Interest, if any, may be made by check mailed to the
Holders at their addresses set forth in the register of Holders, provided
that payment by wire transfer of immediately available funds will be required
with respect to principal of and interest, premium and Additional Interest, if
any, on, all Global Notes and all other Notes the Holders of which shall have
provided wire transfer instructions to the Issuer or the Paying Agent.  Such payment shall be in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts.

 

3.             PAYING AGENT AND REGISTRAR.  Initially, Wells Fargo Bank, National
Association, the Trustee under the Indenture, will act as Paying Agent and
Registrar.  The Issuer may change any
Paying Agent or Registrar without notice to the Holders.  The Issuer or any of its Subsidiaries may act
in any such capacity.

 

4.             INDENTURE. 
The Issuer issued the Notes under an Indenture, dated as of October 31,
2006 (the “Indenture”), among Michaels Stores, Inc., the Guarantors
named therein and the Trustee.  This Note
is one of a duly authorized issue of notes of the Issuer designated as its 10%
Senior Notes due 2014.  The Issuer shall
be entitled to issue Additional Notes pursuant to Section 2.01 and 4.09 of
the Indenture.  The terms of the Notes
include those stated in the Indenture and those made part of the 

 

(2)           With respect to the
Initial Notes.

 

A-5

 

Indenture by reference to the Trust Indenture
Act of 1939, as amended (the “Trust Indenture Act”).  The Notes are subject to all such terms, and
Holders are referred to the Indenture and such Act for a statement of such
terms.  To the extent any provision of
this Note conflicts with the express provisions of the Indenture, the
provisions of the Indenture shall govern and be controlling.

 

5.             OPTIONAL REDEMPTION.

 

(a)           Except as described below under clauses 5(b) and 5(c) hereof, the Notes
will not be redeemable at the Issuer’s option before November 1, 2010.

 

(b)           At any time prior to November 1, 2010, the Issuer may redeem all or a
part of the Notes, upon not less than 30 nor more than 60 days’ prior notice
mailed by first-class mail to the registered address of each Holder of Notes or
otherwise delivered in accordance with the procedures of DTC, at a redemption
price equal to 100% of the principal amount of the Notes redeemed plus the
Applicable Premium as of, and accrued and unpaid interest and Additional
Interest, if any, to the date of redemption (the “Redemption Date”),
subject to the rights of Holders of record on the relevant Record Date to
receive interest due on the relevant Interest Payment Date.

 

(c)           Until November 1, 2009, the Issuer may, at its option, on one or more
occasions redeem up to 35% of the aggregate principal amount of Notes
(including the aggregate principal amount of Notes issued after the Issue Date)
at a redemption price equal to 110.000% of the aggregate principal amount
thereof, plus accrued and unpaid interest thereon and Additional Interest, if
any, to the applicable Redemption Date, subject to the right of Holders of
record on the relevant Record Date to receive interest due on the relevant
Interest Payment Date, with the net cash proceeds of one or more Equity
Offerings; provided that at least 50% of the sum of the aggregate
principal amount of Notes originally issued under the Indenture and any
Additional Notes that are issued under the Indenture after the Issue Date
remains outstanding immediately after the occurrence of each such redemption; provided
further that each such redemption occurs within 90 days of the date of
closing of each such Equity Offering. 
Notice of any redemption upon any Equity Offering may be given prior to
such redemption, and any such redemption or notice may, at the Issuer’s
discretion, be subject to one or more conditions precedent, including, but not
limited to, completion of the related Equity Offering.

 

(d)           On and after November 1, 2010, the Issuer may redeem the Notes, in
whole or in part, at the redemption prices (expressed as percentages of
principal amount of the Notes to be redeemed) set forth below, plus accrued and
unpaid interest thereon and Additional Interest, if any, to the applicable
Redemption Date, subject to the right of Holders of record on the relevant
Record Date to receive interest due on the relevant Interest Payment Date, if
redeemed during the twelve-month period beginning on November 1 of each of the
years indicated below:

 

	
  Year

  	
   

  	
  Percentage

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  2010

  	
   

  	
  105.000

  	
  %

  
	
  2011

  	
   

  	
  102.500

  	
  %

  
	
  2012 and thereafter

  	
   

  	
  100.000

  	
  %

  

 

(e)           Any redemption pursuant to this paragraph 5 shall be made pursuant
to the provisions of Sections 3.01 through 3.06 of the Indenture.

 

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

 

A-6

 

7.             NOTICE OF REDEMPTION.  Subject to Section 3.03 of the Indenture,
notice of redemption will be mailed by first-class mail at least 30 days but
not more than 60 days before the redemption date (except that redemption notices
may be mailed more than 60 days prior to a redemption date if the notice is
issued in connection with Article 8 or Article 11 of the Indenture) to each
Holder whose Notes are to be redeemed at its registered address.  Notes in denominations larger than $1,000 may
be redeemed in part but only in whole multiples of $1,000, unless all of the
Notes held by a Holder are to be redeemed. 
On and after the redemption date interest ceases to accrue on Notes or
portions thereof called for redemption.

 

8.             OFFERS TO REPURCHASE.

 

(a)           Upon the occurrence of a Change of Control, the Issuer shall make an
offer (a “Change of Control Offer”) to each Holder to repurchase all or
any part (equal to $1,000 or an integral multiple thereof) of each Holder’s
Notes at a purchase price equal to 101% of the aggregate principal amount
thereof plus accrued and unpaid interest and Additional Interest thereon, if
any, to the date of purchase (the “Change of Control Payment”).  The Change of Control Offer shall be made in
accordance with Section 4.14 of the Indenture.

 

(b)           If the Issuer or any of its Restricted Subsidiaries consummates an
Asset Sale, within 10 Business Days of each date that Excess Proceeds exceed
$50.0 million, the Issuer shall commence, an offer to all Holders of the Notes
and, if required by the terms of any Indebtedness that is pari passu with the Notes (“Pari Passu
Indebtedness”), to the holders of such Pari Passu Indebtedness (an “Asset
Sale Offer”), to purchase the maximum principal amount of Notes (including
any Additional Notes) and such other Pari Passu Indebtedness that may be
purchased out of the Excess Proceeds at an offer price in cash in an amount
equal to 100% of the principal amount thereof plus accrued and unpaid interest
and Additional Interest thereon, if any, to the date fixed for the closing of
such offer, in accordance with the procedures set forth in the Indenture.  To the extent that the aggregate amount of
Notes (including any Additional Notes) and such Pari Passu Indebtedness
tendered pursuant to an Asset Sale Offer is less than the Excess Proceeds, the
Issuer may use any remaining Excess Proceeds for general corporate purposes,
subject to other covenants contained in the Indenture.  If the aggregate principal amount of Notes
and the Pari Passu Indebtedness surrendered by such holders thereof exceeds the
amount of Excess Proceeds, the Trustee shall select the Notes and such Pari
Passu Indebtedness to be purchased on a pro
rata basis based on the accreted value or principal amount of the
Notes or such Pari Passu Indebtedness tendered. 
Upon completion of any such Asset Sale Offer, the amount of Excess
Proceeds shall be reset at zero.  Holders
of Notes that are the subject of an offer to purchase will receive an Asset
Sale Offer from the Issuer prior to any related purchase date and may elect to
have such Notes purchased by completing the form entitled “Option of Holder to
Elect Purchase” attached to the Notes.

 

9.             DENOMINATIONS, TRANSFER, EXCHANGE.  The Notes are in registered form without
coupons in denominations of $1,000 and integral multiples of $1,000.  The transfer of Notes may be registered and
Notes may be exchanged as provided in the Indenture.  The Registrar and the Trustee may require a
Holder, among other things, to furnish appropriate endorsements and transfer
documents and the Issuer may require a Holder to pay any taxes and fees
required by law or permitted by the Indenture. 
The Issuer need not exchange or register the transfer of any Note or
portion of a Note selected for redemption, except for the unredeemed portion of
any Note being redeemed in part.  Also,
the Issuer need not exchange or register the transfer of any Notes for a period
of 15 days before a selection of Notes to be redeemed.

 

10.           PERSONS DEEMED OWNERS.  The
registered Holder of a Note may be treated as its owner for all purposes.

 

A-7

 

11.           AMENDMENT, SUPPLEMENT AND WAIVER. 
The Indenture, the Guarantees or the Notes may be amended or
supplemented as provided in the Indenture.

 

12.           DEFAULTS AND REMEDIES.  The
Events of Default relating to the Notes are defined in Section 6.01 of the
Indenture.  If any Event of Default
occurs and is continuing, the Trustee or the Holders of at least 25% in
principal amount of the then outstanding Notes may declare the principal,
premium, if any, interest and any other monetary obligations on all the then
outstanding Notes to be due and payable immediately.  Notwithstanding the foregoing, in the case of
an Event of Default arising from certain events of bankruptcy or insolvency,
all outstanding Notes will become due and payable immediately without further
action or notice.  Holders may not
enforce the Indenture, the Notes or the Guarantees except as provided in the
Indenture.  Subject to certain
limitations, Holders of a majority in aggregate principal amount of the then
outstanding Notes may direct the Trustee in its exercise of any trust or
power.  The Trustee may withhold from
Holders of the Notes notice of any continuing Default (except a Default
relating to the payment of principal, premium, if any, Additional Interest, if
any, or interest) if it determines that withholding notice is in their
interest.  The Holders of a majority in
aggregate principal amount of the Notes then outstanding by notice to the
Trustee may on behalf of the Holders of all of the Notes waive any existing
Default or and its consequences under the Indenture except a continuing Default
in payment of the principal of, premium, if any, Additional Interest, if any,
or interest on, any of the Notes held by a non-consenting Holder.  The Issuer and each Guarantor (to the extent
that such Guarantor is so required under the Trust Indenture Act) is required
to deliver to the Trustee annually a statement regarding compliance with the
Indenture, and the Issuer is required within five (5) Business Days after
becoming aware of any Default, to deliver to the Trustee a statement specifying
such Default and what action the Issuer proposes to take with respect thereto.

 

13.           AUTHENTICATION.  This Note shall
not be entitled to any benefit under the Indenture or be valid or obligatory
for any purpose until authenticated by the manual signature of the Trustee.

 

14.           ADDITIONAL RIGHTS OF HOLDERS OF RESTRICTED GLOBAL NOTES AND RESTRICTED
DEFINITIVE NOTES.  In addition to the
rights provided to Holders of Notes under the Indenture, Holders of Restricted
Global Notes and Restricted Definitive Notes shall have all the rights set
forth in the Registration Rights Agreement, dated as of October 31, 2006, among
Michaels Stores, Inc., the Guarantors named therein and the other parties named
on the signature pages thereof (the “Registration Rights Agreement”),
including the right to receive Additional Interest (as defined in the
Registration Rights Agreement).

 

15.           GOVERNING LAW.  THE LAWS OF THE
STATE OF NEW YORK SHALL GOVERN AND BE USED TO CONSTRUE THE INDENTURE, THE NOTES
AND THE GUARANTEES.

 

16.           CUSIP NUMBERS.  Pursuant to a
recommendation promulgated by the Committee on Uniform Security Identification
Procedures, the Issuer has caused CUSIP numbers to be printed on the Notes and
the Trustee may use CUSIP numbers in notices of redemption as a convenience to
Holders.  No representation is made as to
the accuracy of such numbers either as printed on the Notes or as contained in
any notice of redemption and reliance may be placed only on the other
identification numbers placed thereon.

 

A-8

 

The Issuer will furnish to
any Holder upon written request and without charge a copy of the Indenture and/or
the Registration Rights Agreement. 
Requests may be made to the Issuer at the following address:

 

8000 Bent Branch Drive

Irving, TX 75063

Attention: General Counsel

 

A-9

 

ASSIGNMENT FORM

 

	
  To
  assign this Note, fill in the form below:

  
	
   

  
	
  (I) or (we) assign and
  transfer this Note to:

  	
   

  
	
   

  	
   

  	
  (Insert assignee’ legal
  name)

  
	
   

  
	
   

  
	
  (Insert
  assignee’s soc. sec. or tax I.D. no.)

  
	
   

  
	
   

  
	
   

  
	
   

  
	
   

  
	
  (Print
  or type assignee’s name, address and zip code)

  
	
   

  
	
  and irrevocably appoint

  	
   

  
	
  to transfer this Note on
  the books of the Issuer. The agent may substitute another to act for him.

  
	
   

  
	
  Date:

  	
   

  	
   

  
	
   

  
	
   

  	
  Your Signature:

  	
   

  
	
   

  	
  (Sign exactly as your name
  appears on

  
	
   

  	
  the face of this Note)

  
	
   

  
	
   

  
	
  Signature Guarantee*:

  	
   

  	
   

  
										

 

* Participant in a recognized Signature
Guarantee Medallion Program (or other signature guarantor acceptable to the
Trustee).

 

A-10

 

OPTION OF HOLDER TO ELECT PURCHASE

 

If you want to elect to have
this Note purchased by the Issuer pursuant to Section 4.10 or 4.14 of the
Indenture, check the appropriate box below:

 

o Section 4.10      o Section 4.14

 

If you want to elect to have
only part of this Note purchased by the Issuer pursuant to Section 4.10 or
Section 4.14 of the Indenture, state the amount you elect to have purchased:

 

$                    

 

	
  Date:

  	
   

  	
   

  
	
   

  
	
   

  	
  Your Signature:

  	
   

  
	
   

  	
  (Sign exactly as your name
  appears on

  
	
   

  	
  the face of this Note)

  
	
   

  	
  Tax Identification No.:

  	
   

  
	
   

  
	
  Signature Guarantee*:

  	
   

  	
   

  
								

 

* Participant in a recognized Signature Guarantee
Medallion Program (or other signature guarantor acceptable to the Trustee).

 

A-11

 

SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE*

 

The initial outstanding
principal amount of this Global Note is $                 .  The following exchanges of a part of this
Global Note for an interest in another Global Note or for a Definitive Note, or
exchanges of a part of another Global or Definitive Note for an interest in
this Global Note, have been made:

 

	
  Date of

  Exchange

  	
   

  	
  Amount of

  decrease

  in Principal

  Amount

  	
   

  	
  Amount of increase

  in Principal

  Amount of this

  Global Note

  	
   

  	
  Principal Amount

  of

  this Global Note

  following such

  decrease or

  increase

  	
   

  	
  Signature of

  authorized officer

  of Trustee or

  Note Custodian

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

*This schedule should be included only if the
Note is issued in global form.

 

A-12

 

EXHIBIT
B

 

FORM OF CERTIFICATE OF TRANSFER

 

Michaels Stores, Inc. 

8000 Bent Branch Drive

Irving, TX 75063

Attention: General Counsel

 

Wells Fargo Bank, National
Association

1445 Ross Avenue - 2nd Floor

Dallas, Texas 75202-2812

Fax No.: 214-777-4086 

Attention:   Patrick Giordano

Corporate Trust Services

 

Re:  10% Senior Notes due 2014

 

Reference is hereby made to
the Indenture, dated as of October 31, 2006 (the “Indenture”), among
Michaels Stores, Inc., the Guarantors named therein and the Trustee.  Capitalized terms used but not defined herein
shall have the meanings given to them in the Indenture.

 

                             (the
“Transferor”) owns and proposes to transfer the Note[s] or interest in
such Note[s] specified in Annex A hereto, in the principal amount of $                  in
such Note[s] or interests (the “Transfer”), to              (the
“Transferee”), as further specified in Annex A hereto.  In connection with the Transfer, the
Transferor hereby certifies that:

 

[CHECK ALL THAT APPLY]

 

1.             o  CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A
BENEFICIAL INTEREST IN THE 144A GLOBAL NOTE OR A DEFINITIVE NOTE PURSUANT TO
RULE 144A.  The Transfer is being
effected pursuant to and in accordance with Rule 144A under the United States
Securities Act of 1933, as amended (the “Securities Act”), and,
accordingly, the Transferor hereby further certifies that the beneficial
interest or Definitive Note is being transferred to a Person that the
Transferor reasonably believes is purchasing the beneficial interest or
Definitive Note for its own account, or for one or more accounts with respect to
which such Person exercises sole investment discretion, and such Person and
each such account is a “qualified institutional buyer” within the meaning of
Rule 144A in a transaction meeting the requirements of Rule 144A and such
Transfer is in compliance with any applicable blue sky securities laws of any
state of the United States.

 

2.             o  CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A
BENEFICIAL INTEREST IN THE REGULATION S GLOBAL NOTE OR A DEFINITIVE NOTE
PURSUANT TO REGULATION S.  The Transfer
is being effected pursuant to and in accordance with Rule 903 or Rule 904 under
the Securities Act and, accordingly, the Transferor hereby further certifies
that (i) the Transfer is not being made to a person in the United States and
(x) at the time the buy order was originated, the Transferee was outside the
United States or such Transferor and any Person acting on its behalf reasonably
believed and believes that the Transferee was outside the United States or (y)
the transaction was executed in, on or through the facilities of a designated
offshore securities market and neither such Transferor nor any Person acting on
its behalf knows that the transaction was prearranged with a buyer in the
United States, (ii) no directed selling efforts have been made in contravention
of the requirements of Rule 903(b) 

 

B-1

 

or Rule 904(b) of Regulation S under the
Securities Act (iii) the transaction is not part of a plan or scheme to evade
the registration requirements of the Securities Act and (iv) if the proposed
transfer is being made prior to the expiration of the Restricted Period, the
transfer is not being made to a U.S. Person or for the account or benefit of a
U.S. Person (other than an Initial Purchaser). 
Upon consummation of the proposed transfer in accordance with the terms
of the Indenture, the transferred beneficial interest or Definitive Note will
be subject to the restrictions on Transfer enumerated in the Indenture and the
Securities Act.

 

3.             o  CHECK AND COMPLETE IF TRANSFEREE WILL TAKE
DELIVERY OF A BENEFICIAL INTEREST IN THE DEFINITIVE NOTE PURSUANT TO ANY
PROVISION OF THE SECURITIES ACT OTHER THAN RULE 144A OR REGULATION S.  The Transfer is being effected in compliance
with the transfer restrictions applicable to beneficial interests in Restricted
Global Notes and Restricted Definitive Notes and pursuant to and in accordance
with the Securities Act and any applicable blue sky securities laws of any
state of the United States, and accordingly the Transferor hereby further
certifies that (check one):

 

(a)           o  such Transfer is being effected pursuant to
and in accordance with Rule 144 under the Securities Act;

 

or

 

(b)           o  such Transfer is being effected to the Issuer
or a subsidiary thereof;

 

or

 

(c)           o  such Transfer is being effected pursuant to
an effective registration statement under the Securities Act and in compliance
with the prospectus delivery requirements of the Securities Act.

 

4.             o  CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A
BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL NOTE OR OF AN UNRESTRICTED
DEFINITIVE NOTE.

 

(a)           o  CHECK IF TRANSFER IS PURSUANT TO RULE 144.
(i) The Transfer is being effected pursuant to and in accordance with Rule 144
under the Securities Act and in compliance with the transfer restrictions
contained in the Indenture and any applicable blue sky securities laws of any
state of the United States and (ii) the restrictions on transfer contained in
the Indenture and the Private Placement Legend are not required in order to
maintain compliance with the Securities Act. 
Upon consummation of the proposed Transfer in accordance with the terms
of the Indenture, the transferred beneficial interest or Definitive Note will
no longer be subject to the restrictions on transfer enumerated in the Private
Placement Legend printed on the Restricted Global Notes, on Restricted
Definitive Notes and in the Indenture.

 

(b)           o  CHECK IF TRANSFER IS PURSUANT TO REGULATION
S. (i) The Transfer is being effected pursuant to and in accordance with Rule
903 or Rule 904 under the Securities Act and in compliance with the transfer
restrictions contained in the Indenture and any applicable blue sky securities
laws of any state of the United States and (ii) the restrictions on transfer
contained in the Indenture and the Private Placement Legend are not required in
order to maintain compliance with the Securities Act.  Upon consummation of the proposed Transfer in
accordance with the terms of the Indenture, the transferred beneficial interest
or Definitive Note will no longer be subject to the restrictions on transfer
enumerated in the Private Placement Legend printed on the Restricted Global
Notes, on Restricted Definitive Notes and in the Indenture.

 

B-2

 

(c)           o  CHECK IF TRANSFER IS PURSUANT TO OTHER
EXEMPTION.  (i) The Transfer is
being effected pursuant to and in compliance with an exemption from the
registration requirements of the Securities Act other than Rule 144, Rule 903
or Rule 904 and in compliance with the transfer restrictions contained in the
Indenture and any applicable blue sky securities laws of any State of the
United States and (ii) the restrictions on transfer contained in the Indenture
and the Private Placement Legend are not required in order to maintain compliance
with the Securities Act.  Upon
consummation of the proposed Transfer in accordance with the terms of the
Indenture, the transferred beneficial interest or Definitive Note will not be
subject to the restrictions on transfer enumerated in the Private Placement
Legend printed on the Restricted Global Notes or Restricted Definitive Notes
and in the Indenture.

 

B-3

 

This certificate and the
statements contained herein are made for your benefit and the benefit of the
Issuer.

 

	
   

  	
  [Insert Name of
  Transferor]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
  Dated: 

  	
   

  	
   

  	
   

  
					

 

B-4

 

ANNEX A TO CERTIFICATE OF TRANSFER

 

1.             The Transferor owns and proposes to transfer
the following:

 

[CHECK ONE OF (a) OR (b)]

 

(a)           o a
beneficial interest in the:

 

(i)    o 144A
Global Note (CUSIP 594087 AG 3, or

 

(ii)   o
Regulation S Global Note (CUSIP U59329 AA 7, or

 

(b)           o a
Restricted Definitive Note.

 

2.             After the Transfer the Transferee will hold:

 

[CHECK ONE]

 

(a)           o a
beneficial interest in the:

 

(i)    o 144A
Global Note (CUSIP 594087 AG 3, or

 

(ii)   o
Regulation S Global Note (CUSIP U59329 AA 7, or

 

(iii)  o
Unrestricted Global Note (CUSIP 594087 AJ 7; or

 

(b)           o a
Restricted Definitive Note; or

 

(c)           o an
Unrestricted Definitive Note, in accordance with the terms of the Indenture.

 

B-5

 

EXHIBIT
C

 

FORM OF CERTIFICATE OF EXCHANGE

 

Michaels Stores, Inc. 

8000 Bent Branch Drive

Irving, TX 75063

Attention: General Counsel

 

Wells Fargo Bank, National Association

1445 Ross Avenue - 2nd Floor

Dallas, Texas 75202-2812

Fax No.: 214-777-4086 

Attention:   Patrick Giordano

Corporate Trust Services

 

Re:  10% Senior Notes due 2014

 

Reference is hereby made to
the Indenture, dated as of October 31, 2006 (the “Indenture”), among
Michaels Stores, Inc., the Guarantors named therein and the Trustee.  Capitalized terms used but not defined herein
shall have the meanings given to them in the Indenture.

 

                     (the
“Owner”) owns and proposes to exchange the Note[s] or interest in such
Note[s] specified herein, in the principal amount of $                 in
such Note[s] or interests (the “Exchange”).  In connection with the Exchange, the Owner
hereby certifies that:

 

1)             EXCHANGE OF RESTRICTED DEFINITIVE NOTES OR
BENEFICIAL INTERESTS IN A RESTRICTED GLOBAL NOTE FOR UNRESTRICTED DEFINITIVE
NOTES OR BENEFICIAL INTERESTS IN AN UNRESTRICTED GLOBAL NOTE

 

a)             o  CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST
IN A RESTRICTED GLOBAL NOTE TO BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL
NOTE.  In connection with the Exchange of
the Owner’s beneficial interest in a Restricted Global Note for a beneficial
interest in an Unrestricted Global Note in an equal principal amount, the Owner
hereby certifies (i) the beneficial interest is being acquired for the Owner’s
own account without transfer, (ii) such Exchange has been effected in
compliance with the transfer restrictions applicable to the Global Notes and
pursuant to and in accordance with the United States Securities Act of 1933, as
amended (the “Securities Act”), (iii) the restrictions on transfer
contained in the Indenture and the Private Placement Legend are not required in
order to maintain compliance with the Securities Act and (iv) the beneficial
interest in an Unrestricted Global Note is being acquired in compliance with
any applicable blue sky securities laws of any state of the United States.

 

b)            o  CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST
IN A RESTRICTED GLOBAL NOTE TO UNRESTRICTED DEFINITIVE NOTE.  In connection with the Exchange of the Owner’s
beneficial interest in a Restricted Global Note for an Unrestricted Definitive
Note, the Owner hereby certifies (i) the Definitive Note is being acquired for
the Owner’s own account without transfer, (ii) such Exchange has been
effected in compliance with the transfer restrictions applicable to the
Restricted Global Notes and pursuant to and in accordance with the Securities
Act, (iii) the restrictions on transfer contained in the Indenture and the 

 

C-1

 

Private Placement Legend are
not required in order to maintain compliance with the Securities Act and (iv)
the Definitive Note is being acquired in compliance with any applicable blue
sky securities laws of any state of the United States.

 

c)             o  CHECK IF EXCHANGE IS FROM RESTRICTED
DEFINITIVE NOTE TO BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL NOTE.  In connection with the Owner’s Exchange of a
Restricted Definitive Note for a beneficial interest in an Unrestricted Global
Note, the Owner hereby certifies (i) the beneficial interest is being acquired
for the Owner’s own account without transfer, (ii) such Exchange has been
effected in compliance with the transfer restrictions applicable to Restricted
Definitive Notes and pursuant to and in accordance with the Securities Act,
(iii) the restrictions on transfer contained in the Indenture and the Private
Placement Legend are not required in order to maintain compliance with the
Securities Act and (iv) the beneficial interest is being acquired in compliance
with any applicable blue sky securities laws of any state of the United States.

 

d)            o  CHECK IF EXCHANGE IS FROM RESTRICTED
DEFINITIVE NOTE TO UNRESTRICTED DEFINITIVE NOTE.  In connection with the Owner’s Exchange of a
Restricted Definitive Note for an Unrestricted Definitive Note, the Owner
hereby certifies (i) the Unrestricted Definitive Note is being acquired for the
Owner’s own account without transfer, (ii) such Exchange has been effected in
compliance with the transfer restrictions applicable to Restricted Definitive
Notes and pursuant to and in accordance with the Securities Act, (iii) the
restrictions on transfer contained in the Indenture and the Private Placement
Legend are not required in order to maintain compliance with the Securities Act
and (iv) the Unrestricted Definitive Note is being acquired in compliance with
any applicable blue sky securities laws of any state of the United States.

 

2)             EXCHANGE OF RESTRICTED DEFINITIVE NOTES OR
BENEFICIAL INTERESTS IN RESTRICTED GLOBAL NOTES FOR RESTRICTED DEFINITIVE NOTES
OR BENEFICIAL INTERESTS IN RESTRICTED GLOBAL NOTES

 

a)             o  CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST
IN A RESTRICTED GLOBAL NOTE TO RESTRICTED DEFINITIVE NOTE.  In connection with the Exchange of the Owner’s
beneficial interest in a Restricted Global Note for a Restricted Definitive
Note with an equal principal amount, the Owner hereby certifies that the
Restricted Definitive Note is being acquired for the Owner’s own account
without transfer.  Upon consummation of
the proposed Exchange in accordance with the terms of the Indenture, the
Restricted Definitive Note issued will continue to be subject to the
restrictions on transfer enumerated in the Private Placement Legend printed on
the Restricted Definitive Note and in the Indenture and the Securities Act.

 

b)            o  CHECK IF EXCHANGE IS FROM RESTRICTED
DEFINITIVE NOTE TO BENEFICIAL INTEREST IN A RESTRICTED GLOBAL NOTE.  In connection with the Exchange of the Owner’s
Restricted Definitive Note for a beneficial interest in the [CHECK ONE]  o 144A
Global Note  o
Regulation S Global Note, with an equal principal amount, the Owner hereby
certifies (i) the beneficial interest is being acquired for the Owner’s own
account without transfer and (ii) such Exchange has been effected in compliance
with the transfer restrictions applicable to the Restricted Global Notes and
pursuant to and in accordance with the Securities Act, and in compliance with
any applicable blue sky securities laws of any state of the United States.  Upon consummation of the proposed Exchange in
accordance with the terms of the Indenture, the beneficial interest issued will
be subject to the restrictions on transfer enumerated in 

 

C-2

 

the Private Placement Legend
printed on the relevant Restricted Global Note and in the Indenture and the
Securities Act.

 

This certificate and the
statements contained herein are made for your benefit and the benefit of the
Issuer and are dated                                  .

 

	
   

  	
  [Insert Name of
  Transferor]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
  Dated: 

  	
   

  	
   

  	
   

  
					

 

C-3

 

EXHIBIT
D

 

[FORM OF SUPPLEMENTAL INDENTURE

TO BE DELIVERED BY SUBSEQUENT GUARANTORS]

 

Supplemental Indenture (this
“Supplemental Indenture”), dated as of                 ,
among                              (the
“Guaranteeing Subsidiary”), a subsidiary of Michaels Stores, Inc., a
Delaware Corporation (the “Issuer”), and Wells Fargo Bank, National
Association, as trustee (the “Trustee”).

 

W I T N E S S E T H

 

WHEREAS, each of Michaels
Stores, Inc. and the Guarantors (as defined in the Indenture referred to below)
has heretofore executed and delivered to the Trustee an indenture (the “Indenture”),
dated as of October 31, 2006, providing for the issuance of an unlimited
aggregate principal amount of 10% Senior Notes due 2014 (the “Notes”);

 

WHEREAS, the Indenture
provides that under certain circumstances the Guaranteeing Subsidiary shall execute
and deliver to the Trustee a supplemental indenture pursuant to which the
Guaranteeing Subsidiary shall unconditionally guarantee all of the Issuer’s
Obligations under the Notes and the Indenture on the terms and conditions set
forth herein and under the Indenture (the “Guarantee”); and

 

WHEREAS, pursuant to Section
9.01 of the Indenture, the Trustee is authorized to execute and deliver this
Supplemental Indenture.

 

NOW THEREFORE, in
consideration of the foregoing and for other good and valuable consideration,
the receipt of which is hereby acknowledged, the parties mutually covenant and
agree for the equal and ratable benefit of the Holders of the Notes as follows:

 

(1)           Capitalized Terms. 
Capitalized terms used herein without definition shall have the meanings
assigned to them in the Indenture.

 

(2)           Agreement to Guarantee.  The
Guaranteeing Subsidiary hereby agrees as follows:

 

(a)           Along with all Guarantors named in the Indenture, to jointly and
severally unconditionally guarantee to each Holder of a Note authenticated and
delivered by the Trustee and to the Trustee and its successors and assigns,
irrespective of the validity and enforceability of the Indenture, the Notes or
the obligations of the Issuer hereunder or thereunder, that:

 

(i)            the principal of and interest, premium and
Additional Interest, if any, on the Notes will be promptly paid in full when
due, whether at maturity, by acceleration, redemption or otherwise, and
interest on the overdue principal of and interest on the Notes, if any, if lawful,
and all other obligations of the Issuer to the Holders or the Trustee hereunder
or thereunder will be promptly paid in full or performed, all in accordance
with the terms hereof and thereof; and

 

(ii)           in case of any extension of time of payment or renewal of any Notes or
any of such other obligations, that same will be promptly paid in full when due
or performed in accordance with the terms of the extension or renewal, whether
at stated maturity, by acceleration or otherwise.  Failing payment when due of any amount so
guaranteed or any performance so guaranteed for whatever reason, the Guarantors
and the 

 

D-1

 

Guaranteeing Subsidiary
shall be jointly and severally obligated to pay the same immediately.  This is a guarantee of payment and not a
guarantee of collection.

 

(b)           The obligations hereunder shall be unconditional, irrespective of the
validity, regularity or enforceability of the Notes or the Indenture, the
absence of any action to enforce the same, any waiver or consent by any Holder
of the Notes with respect to any provisions hereof or thereof, the recovery of
any judgment against the Issuer, any action to enforce the same or any other
circumstance which might otherwise constitute a legal or equitable discharge or
defense of a guarantor.

 

(c)           The following is hereby waived: 
diligence, presentment, demand of payment, filing of claims with a court
in the event of insolvency or bankruptcy of the Issuer, any right to require a
proceeding first against the Issuer, protest, notice and all demands
whatsoever.

 

(d)           This Guarantee shall not be discharged except by complete performance
of the obligations contained in the Notes, the Indenture and this Supplemental
Indenture, and the Guaranteeing Subsidiary accepts all obligations of a
Guarantor under the Indenture.

 

(e)           If any Holder or the Trustee is required by any court or otherwise to
return to the Issuer, the Guarantors (including the Guaranteeing Subsidiary),
or any custodian, trustee, liquidator or other similar official acting in
relation to either the Issuer or the Guarantors, any amount paid either to the
Trustee or such Holder, this Guarantee, to the extent theretofore discharged,
shall be reinstated in full force and effect.

 

(f)            The Guaranteeing Subsidiary shall not be
entitled to any right of subrogation in relation to the Holders in respect of
any obligations guaranteed hereby until payment in full of all obligations
guaranteed hereby.

 

(g)           As between the Guaranteeing Subsidiary, on the one hand, and the
Holders and the Trustee, on the other hand, (x) the maturity of the obligations
guaranteed hereby may be accelerated as provided in Article 6 of the Indenture
for the purposes of this Guarantee, notwithstanding any stay, injunction or
other prohibition preventing such acceleration in respect of the obligations
guaranteed hereby, and (y) in the event of any declaration of acceleration of
such obligations as provided in Article 6 of the Indenture, such obligations
(whether or not due and payable) shall forthwith become due and payable by the
Guaranteeing Subsidiary for the purpose of this Guarantee.

 

(h)           The Guaranteeing Subsidiary shall have the right to seek contribution
from any non-paying Guarantor so long as the exercise of such right does not
impair the rights of the Holders under this Guarantee.

 

(i)            Pursuant to Section 10.02 of the Indenture,
after giving effect to all other contingent and fixed liabilities that are
relevant under any applicable Bankruptcy or fraudulent conveyance laws, and after
giving effect to any collections from, rights to receive contribution from or
payments made by or on behalf of any other Guarantor in respect of the
obligations of such other Guarantor under Article 10 of the Indenture, this new
Guarantee shall be limited to the maximum amount permissible such that the
obligations of such Guaranteeing Subsidiary under this Guarantee will not
constitute a fraudulent transfer or conveyance.

 

(j)            This Guarantee shall remain in full force and
effect and continue to be effective should any petition be filed by or against
the Issuer for liquidation, reorganization, should the 

 

D-2

 

Issuer become insolvent or
make an assignment for the benefit of creditors or should a receiver or trustee
be appointed for all or any significant part of the Issuer’s assets, and shall,
to the fullest extent permitted by law, continue to be effective or be
reinstated, as the case may be, if at any time payment and performance of the
Notes are, pursuant to applicable law, rescinded or reduced in amount, or must
otherwise be restored or returned by any obligee on the Notes and Guarantee,
whether as a “voidable preference”, “fraudulent transfer” or otherwise, all as
though such payment or performance had not been made.  In the event that any payment or any part
thereof, is rescinded, reduced, restored or returned, the Note shall, to the
fullest extent permitted by law, be reinstated and deemed reduced only by such amount
paid and not so rescinded, reduced, restored or returned.

 

(k)           In case any provision of this Guarantee shall be invalid, illegal or
unenforceable, the validity, legality, and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.

 

(l)            This Guarantee shall be a general unsecured
senior obligation of such Guaranteeing Subsidiary, ranking pari passu with any other future senior
Indebtedness of such Guaranteeing Subsidiary, if any.

 

(m)          Each payment to be made by the Guaranteeing Subsidiary in respect of
this Guarantee shall be made without set-off, counterclaim, reduction or
diminution of any kind or nature.

 

(3)           Execution and Delivery.  The
Guaranteeing Subsidiary agrees that the Guarantee shall remain in full force
and effect notwithstanding the absence of the endorsement of any notation of
such Guarantee on the Notes.

 

(4)           Merger, Consolidation or Sale of All or
Substantially All Assets.

 

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

 

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

 

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

 

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

 

D-3

 

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

 

(ii)           the transaction is made in compliance with Sections 4.10(a)(1) and (2)
of the Indenture;

 

(b)           Subject to certain limitations described in the Indenture, the
Successor Person will succeed to, and be substituted for, the Guaranteeing
Subsidiary under the Indenture and the Guaranteeing Subsidiary’s
Guarantee.  Notwithstanding the
foregoing, the Guaranteeing Subsidiary may merge into or transfer all or part
of its properties and assets to another Guarantor or the Issuer.

 

(5)           Releases.

 

The Guarantee of the
Guaranteeing Subsidiary shall be automatically and unconditionally released and
discharged, and no further action by the Guaranteeing Subsidiary, the Issuer or
the Trustee is required for the release of the Guaranteeing Subsidiary’s
Guarantee, upon:

 

(1)           (A)  any sale, exchange,
disposition or transfer (by merger or otherwise) of (x) the Capital Stock of
the Guaranteeing Subsidiary, after which the Guaranteeing Subsidiary is no
longer a Restricted Subsidiary, or (y) all or substantially all the assets of
the Guaranteeing Subsidiary which sale, exchange, disposition or transfer in
each case is made in compliance with Sections 4.10(a)(1) and (2) of the
Indenture;

 

(B)           the release or discharge of the guarantee by the Guaranteeing Subsidiary
of the Senior Credit Facilities or the guarantee which resulted in the creation
of the Guarantee, except a discharge or release by or as a result of payment
under such guarantee;

 

(C)           the proper designation of the Guaranteeing Subsidiary as an Unrestricted
Subsidiary; or

 

(D)          the Issuer exercising Legal Defeasance or Covenant Defeasance in
accordance with Article 8 of the Indenture or the Issuer’s obligations under
the Indenture being discharged in accordance with the terms of the Indenture;
and

 

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

 

(6)           No Recourse Against Others.  No
past, present or future director, officer, employee, incorporator, member,
partner or stockholder of the Guaranteeing Subsidiary or any of its direct or
indirect parent companies shall have any liability for any obligations of the
Issuer or the Guarantors (including the Guaranteeing Subsidiary) under the
Notes, any Guarantees, the Indenture or this Supplemental Indenture or for any
claim based on, in respect of, or by reason of, such obligations or their
creation.  Each Holder by accepting Notes
waives and releases all such liability. 
The waiver and release are part of the consideration for issuance of the
Notes.

 

(7)           Governing Law.  THIS
SUPPLEMENTAL INDENTURE WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK.

 

D-4

 

(8)           Counterparts.  The
parties may sign any number of copies of this Supplemental Indenture.  Each signed copy shall be an original, but
all of them together represent the same agreement.

 

(9)           Effect of Headings.  The
Section headings herein are for convenience only and shall not affect the
construction hereof.

 

(10)         The Trustee.  The Trustee shall not be
responsible in any manner whatsoever for or in respect of the validity or
sufficiency of this Supplemental Indenture or for or in respect of the recitals
contained herein, all of which recitals are made solely by the Guaranteeing
Subsidiary.

 

(11)         Subrogation.  The Guaranteeing Subsidiary
shall be subrogated to all rights of Holders of Notes against the Issuer in respect
of any amounts paid by the Guaranteeing Subsidiary pursuant to the provisions
of Section 2 hereof and Section 10.01 of the Indenture; provided that,
if an Event of Default has occurred and is continuing, the Guaranteeing
Subsidiary shall not be entitled to enforce or receive any payments arising out
of, or based upon, such right of subrogation until all amounts then due and
payable by the Issuer under the Indenture or the Notes shall have been paid in
full.

 

(12)         Benefits Acknowledged.  The
Guaranteeing Subsidiary’s Guarantee is subject to the terms and conditions set
forth in the Indenture.  The Guaranteeing
Subsidiary acknowledges that it will receive direct and indirect benefits from
the financing arrangements contemplated by the Indenture and this Supplemental
Indenture and that the guarantee and waivers made by it pursuant to this
Guarantee are knowingly made in contemplation of such benefits.

 

(13)         Successors.  All agreements of the
Guaranteeing Subsidiary in this Supplemental Indenture shall bind its
Successors, except as otherwise provided in Section 2(k) hereof or elsewhere in
this Supplemental Indenture.  All
agreements of the Trustee in this Supplemental Indenture shall bind its
successors.

 

D-5

 

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

 

	
   

  	
  [GUARANTEEING SUBSIDIARY]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  WELLS FARGO BANK, NATIONAL
  ASSOCIATION,

  
	
   

  	
  as Trustee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

D-6Exhibit 4.2

 

 

 

INDENTURE

 

Dated as of October 31,
2006

 

Among

 

MICHAELS STORES, INC.,

 

THE GUARANTORS NAMED ON THE
SIGNATURE PAGES HERETO

 

and

 

WELLS FARGO BANK, NATIONAL
ASSOCIATION,

 

as Trustee

 

11 3/8% SENIOR SUBORDINATED NOTES DUE 2016

 

 

 

 

CROSS-REFERENCE TABLE*

 

	
  Trust
  Indenture Act Section

  	
   

  	
  Indenture Section

  	
   

  
	
  310(a)(1)

  	
   

  	
  7.10

  	
   

  
	
  (a)(2)

  	
   

  	
  7.10

  	
   

  
	
  (a)(3)

  	
   

  	
  N.A.

  	
   

  
	
  (a)(4)

  	
   

  	
  N.A.

  	
   

  
	
  (a)(5)

  	
   

  	
  7.10

  	
   

  
	
  (b)

  	
   

  	
  7.03, 7.10

  	
   

  
	
  (c)

  	
   

  	
  N.A.

  	
   

  
	
  311(a)

  	
   

  	
  7.11

  	
   

  
	
  (b)

  	
   

  	
  7.11

  	
   

  
	
  (c)

  	
   

  	
  N.A.

  	
   

  
	
  312(a)

  	
   

  	
  2.05

  	
   

  
	
  (b)

  	
   

  	
  7.06, 14.03

  	
   

  
	
  (c)

  	
   

  	
  14.03

  	
   

  
	
  313(a)

  	
   

  	
  2.05, 7.06

  	
   

  
	
  (b)(1)

  	
   

  	
  N.A.

  	
   

  
	
  (b)(2)

  	
   

  	
  7.06;7.07

  	
   

  
	
  (c)

  	
   

  	
  7.06;14.02

  	
   

  
	
  (d)

  	
   

  	
  7.06

  	
   

  
	
  314(a)

  	
   

  	
  4.03;14.02;14.05

  	
   

  
	
  (b)

  	
   

  	
  N.A.

  	
   

  
	
  (c)(1)

  	
   

  	
  14.04

  	
   

  
	
  (c)(2)

  	
   

  	
  14.04

  	
   

  
	
  (c)(3)

  	
   

  	
  N.A.

  	
   

  
	
  (d)

  	
   

  	
  N.A.

  	
   

  
	
  (e)

  	
   

  	
  14.05

  	
   

  
	
  (f)

  	
   

  	
  N.A.

  	
   

  
	
  315(a)

  	
   

  	
  7.01

  	
   

  
	
  (b)

  	
   

  	
  7.05;14.02

  	
   

  
	
  (c)

  	
   

  	
  7.01

  	
   

  
	
  (d)

  	
   

  	
  7.01

  	
   

  
	
  (e)

  	
   

  	
  6.14

  	
   

  
	
  316(a)(last sentence)

  	
   

  	
  2.09

  	
   

  
	
  (a)(1)(A)

  	
   

  	
  6.05

  	
   

  
	
  (a)(1)(B)

  	
   

  	
  6.04

  	
   

  
	
  (a)(2)

  	
   

  	
  N.A

  	
   

  
	
  (b)

  	
   

  	
  6.07

  	
   

  
	
  (c)

  	
   

  	
  2.12;9.04

  	
   

  
	
  317(a)(1)

  	
   

  	
  6.08

  	
   

  
	
  (a)(2)

  	
   

  	
  6.12

  	
   

  
	
  (b)

  	
   

  	
  2.04

  	
   

  
	
  318(a)

  	
   

  	
  14.01

  	
   

  
	
  (b)

  	
   

  	
  N.A.

  	
   

  
	
  (c)

  	
   

  	
  14.01

  	
   

  

 

N.A. means not applicable.

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

 

 

TABLE OF CONTENTS

 

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  ARTICLE 1

  
	
   

  	
   

  	
   

  
	
  DEFINITIONS AND INCORPORATION BY
  REFERENCE

  
	
   

  	
   

  	
   

  
	
  Section 1.01

  	
  Definitions

  	
  1

  
	
  Section 1.02

  	
  Other
  Definitions

  	
  33

  
	
  Section 1.03

  	
  Incorporation
  by Reference of Trust Indenture Act

  	
  34

  
	
  Section 1.04

  	
  Rules of
  Construction

  	
  34

  
	
  Section 1.05

  	
  Acts
  of Holders

  	
  35

  
	
   

  	
   

  	
   

  
	
  ARTICLE 2

  
	
   

  	
   

  	
   

  
	
  THE NOTES

  
	
   

  	
   

  	
   

  
	
  Section 2.01

  	
  Form and
  Dating; Terms

  	
  36

  
	
  Section 2.02

  	
  Execution
  and Authentication

  	
  38

  
	
  Section 2.03

  	
  Registrar
  and Paying Agent

  	
  38

  
	
  Section 2.04

  	
  Paying
  Agent To Hold Money in Trust

  	
  38

  
	
  Section 2.05

  	
  Holder
  Lists

  	
  39

  
	
  Section 2.06

  	
  Transfer
  and Exchange

  	
  39

  
	
  Section 2.07

  	
  Replacement
  Notes

  	
  50

  
	
  Section 2.08

  	
  Outstanding
  Notes

  	
  51

  
	
  Section 2.09

  	
  Treasury
  Notes

  	
  51

  
	
  Section 2.10

  	
  Temporary
  Notes

  	
  51

  
	
  Section 2.11

  	
  Cancellation

  	
  51

  
	
  Section 2.12

  	
  Defaulted
  Interest

  	
  52

  
	
  Section 2.13

  	
  CUSIP
  Numbers

  	
  52

  
	
   

  	
   

  	
   

  
	
  ARTICLE 3

  
	
   

  	
   

  	
   

  
	
  REDEMPTION

  
	
   

  	
   

  	
   

  
	
  Section 3.01

  	
  Notices
  to Trustee

  	
  52

  
	
  Section 3.02

  	
  Selection
  of Notes To Be Redeemed or Purchased

  	
  53

  
	
  Section 3.03

  	
  Notice
  of Redemption

  	
  53

  
	
  Section 3.04

  	
  Effect
  of Notice of Redemption

  	
  54

  
	
  Section 3.05

  	
  Deposit
  of Redemption or Purchase Price

  	
  54

  
	
  Section 3.06

  	
  Notes
  Redeemed or Purchased in Part

  	
  55

  
	
  Section 3.07

  	
  Optional
  Redemption

  	
  55

  
	
  Section 3.08

  	
  Mandatory
  Redemption

  	
  56

  
	
  Section 3.09

  	
  Offers
  To Repurchase by Application of Excess Proceeds

  	
  56

  

 

i

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  ARTICLE 4

  
	
   

  	
   

  	
   

  
	
  COVENANTS

  
	
   

  	
   

  	
   

  
	
  Section 4.01

  	
  Payment
  of Notes

  	
  58

  
	
  Section 4.02

  	
  Maintenance
  of Office or Agency

  	
  58

  
	
  Section 4.03

  	
  Reports
  and Other Information

  	
  58

  
	
  Section 4.04

  	
  Compliance
  Certificate

  	
  60

  
	
  Section 4.05

  	
  Taxes

  	
  60

  
	
  Section 4.06

  	
  Stay,
  Extension and Usury Laws

  	
  60

  
	
  Section 4.07

  	
  Limitation
  on Restricted Payments

  	
  60

  
	
  Section 4.08

  	
  Dividend
  and Other Payment Restrictions

  	
   

  
	
   

  	
  Affecting Restricted Subsidiaries

  	
  68

  
	
  Section 4.09

  	
  Limitation
  on Incurrence of Indebtedness and

  	
   

  
	
   

  	
  Issuance of Disqualified Stock
  and Preferred Stock

  	
  69

  
	
  Section 4.10

  	
  Asset
  Sales

  	
  75

  
	
  Section 4.11

  	
  Transactions
  with Affiliates

  	
  77

  
	
  Section 4.12

  	
  Liens

  	
  79

  
	
  Section 4.13

  	
  Corporate
  Existence

  	
  79

  
	
  Section 4.14

  	
  Offer
  to Repurchase Upon Change of Control

  	
  80

  
	
  Section 4.15

  	
  Limitation
  on Guarantees of Indebtedness by Restricted Subsidiaries

  	
  82

  
	
  Section 4.16

  	
  Discharge
  and Suspension of Covenants

  	
  82

  
	
  Section 4.17

  	
  Limitation
  on Layering

  	
  83

  
	
   

  	
   

  	
   

  
	
  ARTICLE 5

  
	
   

  	
   

  	
   

  
	
  SUCCESSORS

  
	
   

  	
   

  	
   

  
	
  Section 5.01

  	
  Merger,
  Consolidation or Sale of All or Substantially All Assets

  	
  84

  
	
  Section 5.02

  	
  Successor
  Corporation Substituted

  	
  85

  
	
   

  	
   

  	
   

  
	
  ARTICLE 6

  
	
   

  	
   

  	
   

  
	
  DEFAULTS AND REMEDIES

  
	
   

  	
   

  	
   

  
	
  Section 6.01

  	
  Events
  of Default

  	
  86

  
	
  Section 6.02

  	
  Acceleration

  	
  88

  
	
  Section 6.03

  	
  Other
  Remedies

  	
  89

  
	
  Section 6.04

  	
  Waiver
  of Past Defaults

  	
  89

  
	
  Section 6.05

  	
  Control
  by Majority

  	
  89

  
	
  Section 6.06

  	
  Limitation
  on Suits

  	
  89

  
	
  Section 6.07

  	
  Rights
  of Holders of Notes To Receive Payment

  	
  90

  
	
  Section 6.08

  	
  Collection
  Suit by Trustee

  	
  90

  
	
  Section 6.09

  	
  Restoration
  of Rights and Remedies

  	
  90

  
	
  Section 6.10

  	
  Rights
  and Remedies Cumulative

  	
  90

  
	
  Section 6.11

  	
  Delay
  or Omission Not Waiver

  	
  91

  
	
  Section 6.12

  	
  Trustee
  May File Proofs of Claim

  	
  91

  
	
  Section 6.13

  	
  Priorities

  	
  91

  
	
  Section 6.14

  	
  Undertaking
  for Costs

  	
  92

  

 

ii

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  ARTICLE 7

  
	
   

  	
   

  	
   

  
	
  TRUSTEE

  
	
   

  	
   

  	
   

  
	
  Section 7.01

  	
  Duties
  of Trustee

  	
  92

  
	
  Section 7.02

  	
  Rights
  of Trustee

  	
  93

  
	
  Section 7.03

  	
  Individual
  Rights of Trustee

  	
  94

  
	
  Section 7.04

  	
  Trustee’s
  Disclaimer

  	
  94

  
	
  Section 7.05

  	
  Notice
  of Defaults

  	
  94

  
	
  Section 7.06

  	
  Reports
  by Trustee to Holders of the Notes

  	
  94

  
	
  Section 7.07

  	
  Compensation
  and Indemnity

  	
  95

  
	
  Section 7.08

  	
  Replacement
  of Trustee

  	
  95

  
	
  Section 7.09

  	
  Successor
  Trustee by Merger, etc

  	
  96

  
	
  Section 7.10

  	
  Eligibility;
  Disqualification

  	
  96

  
	
  Section 7.11

  	
  Preferential
  Collection of Claims Against Issuer

  	
  97

  
	
   

  	
   

  	
   

  
	
  ARTICLE 8

  
	
   

  	
   

  	
   

  
	
  LEGAL DEFEASANCE AND COVENANT
  DEFEASANCE

  
	
   

  	
   

  	
   

  
	
  Section 8.01

  	
  Option
  To Effect Legal Defeasance or Covenant Defeasance

  	
  97

  
	
  Section 8.02

  	
  Legal
  Defeasance and Discharge

  	
  97

  
	
  Section 8.03

  	
  Covenant
  Defeasance

  	
  98

  
	
  Section 8.04

  	
  Conditions
  to Legal or Covenant Defeasance

  	
  98

  
	
  Section 8.05

  	
  Deposited
  Money and Government Securities

  	
   

  
	
   

  	
  To Be Held in Trust; Other
  Miscellaneous Provisions

  	
  99

  
	
  Section 8.06

  	
  Repayment
  to Issuer

  	
  100

  
	
  Section 8.07

  	
  Reinstatement

  	
  100

  
	
   

  	
   

  	
   

  
	
  ARTICLE 9

  
	
   

  	
   

  	
   

  
	
  AMENDMENT, SUPPLEMENT AND WAIVER

  
	
   

  	
   

  	
   

  
	
  Section 9.01

  	
  Without
  Consent of Holders of Notes

  	
  100

  
	
  Section 9.02

  	
  With
  Consent of Holders of Notes

  	
  102

  
	
  Section 9.03

  	
  Compliance
  with Trust Indenture Act

  	
  103

  
	
  Section 9.04

  	
  Revocation
  and Effect of Consents

  	
  103

  
	
  Section 9.05

  	
  Notation
  on or Exchange of Notes

  	
  104

  
	
  Section 9.06

  	
  Trustee
  To Sign Amendments, etc

  	
  104

  
	
  Section 9.07

  	
  Payment
  for Consent

  	
  104

  
	
   

  	
   

  	
   

  
	
  ARTICLE 10

  
	
   

  	
   

  	
   

  
	
  SUBORDINATION

  
	
   

  	
   

  	
   

  
	
  Section 10.01

  	
  Agreement
  To Subordinate

  	
  104

  
	
  Section 10.02

  	
  Liquidation,
  Dissolution, Bankruptcy

  	
  105

  
	
  Section 10.03

  	
  Default
  on Senior Indebtedness of the Issuer

  	
  105

  
	
  Section 10.04

  	
  Acceleration
  of Payment of Notes

  	
  106

  
	
  Section 10.05

  	
  When
  Distribution Must Be Paid Over

  	
  107

  

 

iii

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  Section 10.06

  	
  Subrogation

  	
  107

  
	
  Section 10.07

  	
  Relative
  Rights

  	
  107

  
	
  Section 10.08

  	
  Subordination
  May Not Be Impaired by Issuer

  	
  107

  
	
  Section 10.09

  	
  Rights
  of Trustee and Paying Agent

  	
  107

  
	
  Section 10.10

  	
  Distribution
  or Notice to Representative

  	
  108

  
	
  Section 10.11

  	
  Article 10
  Not To Prevent Events of Default or Limit Right To Accelerate

  	
  108

  
	
  Section 10.12

  	
  Trust
  Moneys Not Subordinated

  	
  108

  
	
  Section 10.13

  	
  Trustee
  Entitled To Rely

  	
  108

  
	
  Section 10.14

  	
  Trustee
  To Effectuate Subordination

  	
  109

  
	
  Section 10.15

  	
  Trustee
  Not Fiduciary for Holders of Senior Indebtedness of the Issuer

  	
  109

  
	
  Section 10.16

  	
  Reliance
  by Holders of Senior Indebtedness of the Issuer on Subordination Provisions

  	
  109

  
	
   

  	
   

  	
   

  
	
  ARTICLE 11

  
	
   

  	
   

  	
   

  
	
  GUARANTEES

  
	
   

  	
   

  	
   

  
	
  Section 11.01

  	
  Guarantee

  	
  110

  
	
  Section 11.02

  	
  Limitation
  on Guarantor Liability

  	
  111

  
	
  Section 11.03

  	
  Execution
  and Delivery

  	
  112

  
	
  Section 11.04

  	
  Subrogation

  	
  112

  
	
  Section 11.05

  	
  Benefits
  Acknowledged

  	
  112

  
	
  Section 11.06

  	
  Release
  of Guarantees

  	
  113

  
	
   

  	
   

  	
   

  
	
  ARTICLE 12

  
	
   

  	
   

  	
   

  
	
  SUBORDINATION OF GUARANTEES

  
	
   

  	
   

  	
   

  
	
  Section 12.01

  	
  Agreement
  To Subordinate

  	
  113

  
	
  Section 12.02

  	
  Liquidation,
  Dissolution, Bankruptcy

  	
  113

  
	
  Section 12.03

  	
  Default
  on Senior Indebtedness of a Guarantor

  	
  114

  
	
  Section 12.04

  	
  Demand
  for Payment

  	
  115

  
	
  Section 12.05

  	
  When
  Distribution Must Be Paid Over

  	
  116

  
	
  Section 12.06

  	
  Subrogation

  	
  116

  
	
  Section 12.07

  	
  Relative
  Rights

  	
  116

  
	
  Section 12.08

  	
  Subordination
  May Not Be Impaired by a Guarantor

  	
  116

  
	
  Section 12.09

  	
  Rights
  of Trustee and Paying Agent

  	
  116

  
	
  Section 12.10

  	
  Distribution
  or Notice to Representative

  	
  117

  
	
  Section 12.11

  	
  Article 12
  Not To Prevent Events of Default or Limit Right To Demand Payment

  	
  117

  
	
  Section 12.12

  	
  Trust
  Moneys Not Subordinated

  	
  117

  
	
  Section 12.13

  	
  Trustee
  Entitled To Rely

  	
  117

  
	
  Section 12.14

  	
  Trustee
  To Effectuate Subordination

  	
  118

  
	
  Section 12.15

  	
  Trustee
  Not Fiduciary for Holders of Senior Indebtedness of Guarantors

  	
  118

  
	
  Section 12.16

  	
  Reliance
  by Holders of Senior Indebtedness of a Guarantor on Subordination Provisions

  	
  118

  

 

iv

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  ARTICLE 13

  
	
   

  	
   

  	
   

  
	
  SATISFACTION AND DISCHARGE

  
	
   

  	
   

  	
   

  
	
  Section 13.01

  	
  Satisfaction
  and Discharge

  	
  119

  
	
  Section 13.02

  	
  Application
  of Trust Money

  	
  120

  
	
   

  	
   

  	
   

  
	
  ARTICLE 14

  
	
   

  	
   

  	
   

  
	
  MISCELLANEOUS

  
	
   

  	
   

  	
   

  
	
  Section 14.01

  	
  Trust
  Indenture Act Controls

  	
  120

  
	
  Section 14.02

  	
  Notices

  	
  121

  
	
  Section 14.03

  	
  Communication
  by Holders of Notes with Other Holders of Notes

  	
  122

  
	
  Section 14.04

  	
  Certificate
  and Opinion as to Conditions Precedent

  	
  122

  
	
  Section 14.05

  	
  Statements
  Required in Certificate or Opinion

  	
  122

  
	
  Section 14.06

  	
  Rules by
  Trustee and Agents

  	
  123

  
	
  Section 14.07

  	
  No
  Personal Liability of Directors,

  	
   

  
	
   

  	
  Officers, Employees and
  Stockholders

  	
  123

  
	
  Section 14.08

  	
  Governing
  Law

  	
  123

  
	
  Section 14.09

  	
  Waiver
  of Jury Trial

  	
  123

  
	
  Section 14.10

  	
  Force
  Majeure

  	
  123

  
	
  Section 14.11

  	
  No
  Adverse Interpretation of Other Agreements

  	
  123

  
	
  Section 14.12

  	
  Successors

  	
  123

  
	
  Section 14.13

  	
  Severability

  	
  124

  
	
  Section 14.14

  	
  Counterpart Originals

  	
  124

  
	
  Section 14.15

  	
  Table
  of Contents, Headings, etc

  	
  124

  
	
  Section 14.16

  	
  Qualification
  of Indenture

  	
  124

  

 

EXHIBITS

 

	
  Exhibit A

  	
  Form of Senior Subordinated Note

  
	
  Exhibit B

  	
  Form of Certificate of Transfer

  
	
  Exhibit C

  	
  Form of Certificate of Exchange

  
	
  Exhibit D

  	
  Form of Supplemental Indenture to Be
  Delivered by Subsequent Guarantors

  

 

v

 

INDENTURE,
dated as of October 31, 2006, among Michaels Stores, Inc., a Delaware
corporation (“Michaels”), the Guarantors (as defined herein) listed on
the signature pages hereto and Wells Fargo Bank, National Association, as
Trustee.

 

W  I  T  N
E  S  S  E  T  H

 

WHEREAS, Michaels
has duly authorized the creation of an issue of $400,000,000 aggregate principal
amount of 11 3/8% Senior Subordinated Notes due 2016 (the “Initial Notes”);

 

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

 

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

 

ARTICLE 1

 

DEFINITIONS AND INCORPORATION BY
REFERENCE

 

Section 1.01                                Definitions.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

 

“Agent”
means any Registrar or Paying Agent.

 

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

 

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

 

(2)                                  the
excess, if any, of (a) the present value at such Redemption Date of (i) the
redemption price of such Note at November 1, 2011 (such redemption price
being set forth in Section 3.07 hereof), plus (ii) all required
interest payments due on such Note through November 1, 2011 (excluding
accrued but unpaid interest to the Redemption Date), computed using a discount
rate equal to the Treasury Rate as of such Redemption Date plus 50 basis
points; over (b) the then outstanding principal amount of such Note.

 

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

 

“Asset Sale”
means:

 

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

 

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

 

in each case,
other than:

 

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

 

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

 

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

 

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

 

2

 

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

 

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

 

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

 

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

 

(i)                                     foreclosures
on or expropriations of assets;

 

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

 

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

 

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

 

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

 

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

 

“Bankruptcy
Law” means Title 11, U.S. Code or any similar federal or state law for the
relief of debtors.

 

“Business
Day” means each day which is not a Legal Holiday.

 

“Capital
Stock” means:

 

(1)                                  in
the case of a corporation, shares in the capital of such corporation;

 

(2)                                  in
the case of an association or business entity, any and all shares, interests,
participations, rights or other equivalents (however designated) of capital
stock;

 

(3)                                  in
the case of a partnership or limited liability company, partnership or
membership interests (whether general or limited); and

 

(4)                                  any
other interest or participation that confers on a Person the right to receive a
share of the profits and losses of, or distributions of assets of, the issuing
Person.

 

“Capitalized Lease Obligation”
means, at the time any determination thereof is to be made, the amount of the
liability in respect of a capital lease that would at such time be required to
be

 

3

 

capitalized
and reflected as a liability on a balance sheet (excluding the footnotes
thereto) prepared in accordance with GAAP.

 

“Cash
Equivalents” means:

 

(1)                                  United
States dollars and Canadian dollars;

 

(2)                                  (a)                                  euro,
or any national currency of any participating member state of the EMU; or

 

(b)                                 in the case of any
Foreign Subsidiary that is a Restricted Subsidiary, such local currencies held
by them from time to time in the ordinary course of business;

 

(3)                                  securities
issued or directly and fully and unconditionally guaranteed or insured by the
U.S. government or any agency or instrumentality thereof the securities of
which are unconditionally guaranteed as a full faith and credit obligation of
such government with maturities of 24 months or less from the date of
acquisition;

 

(4)                                  certificates
of deposit, time deposits and eurodollar time deposits with maturities of one
year or less from the date of acquisition, bankers’ acceptances with maturities
not exceeding one year and overnight bank deposits, in each case with any
commercial bank having capital and surplus of not less than $250.0 million
in the case of U.S. banks and, in the case of any Foreign Subsidiary that is a
Restricted Subsidiary, $100.0 million (or the U.S. dollar equivalent as of the
date of determination) in the case of non U.S. banks, and in each case in a
currency permitted under clause (1) or (2) above;

 

(5)                                  repurchase
obligations for underlying securities of the types described in clauses (3) and
(4) entered into with any financial institution meeting the qualifications
specified in clause (4) above, and in each case in a currency permitted
under clause (1) or (2) above;

 

(6)                                  commercial
paper rated at least P-2 by Moody’s or at least A-2 by S&P and in each case
maturing within 24 months after the date of creation thereof, and in each case
in a currency permitted under clause (1) or (2) above;

 

(7)                                  marketable
short-term money market and similar securities having a rating of at least P-2
or A-2 from either Moody’s or S&P, respectively (or, if at any time neither
Moody’s nor S&P shall be rating such obligations, an equivalent rating from
another Rating Agency) and in each case maturing within 24 months after the
date of creation thereof and in a currency permitted under clause (1) or (2) above;

 

(8)                                  readily
marketable direct obligations issued by any state, commonwealth or territory of
the United States or any political subdivision or taxing authority thereof
having an Investment Grade Rating from either Moody’s or S&P with maturities
of 24 months or less from the date of acquisition;

 

(9)                                  Indebtedness
or Preferred Stock issued by Persons with a rating of A or higher from S&P
or A2 or higher from Moody’s with maturities of 24 months or less from the
date of acquisition and in each case in a currency permitted under clause (1) or
(2) above;

 

(10)                            Investments
with average maturities of 12 months or less from the date of acquisition in
money market funds rated AAA- (or the equivalent thereof) or better by S&P
or Aaa3

 

4

 

(or the equivalent thereof) or better by Moody’s and in each case in a
currency permitted under clause (1) or (2) above;

 

(11)                            investment
funds investing substantially all of their assets in securities of the types
described in clauses (1) through (10) above; and

 

(12)                            credit
card receivables and debit card receivables so long as such are considered cash
equivalents under GAAP and are so reflected on the Issuer’s balance sheet.

 

Notwithstanding
the foregoing, Cash Equivalents shall include amounts denominated in currencies
other than those set forth in clauses (1) and (2) above, provided that such amounts are
converted into any currency listed in clauses (1) and (2) as
promptly as practicable and in any event within ten Business Days following the
receipt of such amounts.

 

“Cash
Management Services” means any of the following to the extent not
constituting a line of credit: ACH transactions, treasury and/or cash
management services, including, without limitation, controlled disbursement
services, foreign exchange facilities, deposit and other accounts and merchant
services.

 

“Change of
Control” means the occurrence of any of the following after the Issue Date:

 

(1)                                  the
sale, lease or transfer, in one or a series of related transactions (other
than by way of merger or consolidation), of all or substantially all of the
assets of the Issuer and its Subsidiaries, taken as a whole, to any Person
other than one or more Permitted Holders; or

 

(2)                                  the Issuer becomes aware of (by way of a
report or any other filing pursuant to Section 13(d) of the Exchange
Act, proxy, vote, written notice or otherwise) the acquisition by (A) any
Person (other than one or more Permitted Holders) or (B) Persons (other
than one or more Permitted Holders) that are together (1) a group (within
the meaning of Section 13(d)(3) or Section 14(d)(2) of the
Exchange Act, or any successor provision), or (2) are acting, for the
purpose of acquiring, holding or disposing of securities (within the meaning of
Rule 13d-5(b)(1) under the Exchange Act), as a group, in a single
transaction or in a related series of transactions, by way of merger,
consolidation or other business combination or purchase of beneficial ownership
(within the meaning of Rule 13d-3 under the Exchange Act, or any successor
provision) of 50% or more of the total voting power of the Voting Stock of the
Issuer or any of its direct or indirect parent companies holding directly or
indirectly 100% of the total voting power of the Voting Stock of the Issuer.

 

“Clearstream”
means Clearstream Banking, Société Anonyme.

 

“Consolidated Depreciation and Amortization
Expense” means with respect to any Person for any period, the total
amount of depreciation and amortization expense, including the amortization of
deferred financing fees of such Person and its Restricted Subsidiaries for such
period on a consolidated basis and otherwise determined in accordance with
GAAP.

 

“Consolidated Interest Expense”
means, with respect to any Person for any period, without duplication, the sum
of:

 

(1)                                  consolidated interest expense of such
Person and its Restricted Subsidiaries for such period, to the extent such
expense was deducted (and not added back) in computing Consolidated Net Income
(including (a) amortization of original issue discount resulting from the
issuance

 

5

 

of Indebtedness at less than
par, (b) all commissions, discounts and other fees and charges owed with
respect to letters of credit or bankers acceptances, (c) non-cash interest
payments (but excluding any non-cash interest expense attributable to the
movement in the mark to market valuation of Hedging Obligations or other
derivative instruments pursuant to GAAP), (d) the interest component of
Capitalized Lease Obligations, and (e) net payments, if any, made (less
net payments, if any, received) pursuant to interest rate Hedging Obligations
with respect to Indebtedness, and excluding (v) penalties and interest
related to taxes, (w) any Additional Interest with respect to the Initial
Notes and any “additional
interest” with respect to the Senior Notes or the Subordinated Discount Notes,
(x) amortization of deferred financing fees, debt issuance costs, discounted
liabilities, commissions, fees and expenses, (y) any expensing of bridge,
commitment and other financing fees and (z) commissions, discounts, yield and
other fees and charges (including any interest expense) related to any
Receivables Facility); plus (2) consolidated capitalized interest
of such Person and its Restricted Subsidiaries for such period, whether paid or
accrued; less

 

(3)                                  interest
income for such period.

 

For purposes
of this definition, interest on a Capitalized Lease Obligation shall be deemed
to accrue at an interest rate reasonably determined by such Person to be the
rate of interest implicit in such Capitalized Lease Obligation in accordance
with GAAP.

 

For purposes of determining Consolidated Interest Expense for any
period ending prior to the first anniversary of the Issue Date, after giving pro
forma effect to the Transactions, Consolidated Interest Expense shall be $92.5
million for the fiscal quarter ended January 28, 2006, $91.4 million for
the fiscal quarter ended April 29, 2006, and $92.5 million for the fiscal
quarter ended July 29, 2006.

 

“Consolidated
Net Income” means, with respect to any Person for any period, the aggregate
of the Net Income, of such Person and its Restricted Subsidiaries for such
period, on a consolidated basis, and otherwise determined in accordance with
GAAP; provided, however, that, without
duplication,

 

(1)                                  any after-tax effect of extraordinary,
non-recurring or unusual gains or losses (less all fees and expenses relating
thereto) or expenses, Transaction Expenses to the extent incurred on or prior
to December 31, 2007, severance, relocation costs, costs related to the
Perfect Store Initiative, Hybrid Distribution Network Costs, Public Company
Costs, integration costs, pre-opening, opening, consolidation and closing costs
for facilities (including stores), signing, retention or completion bonuses,
transition costs, costs incurred in connection with acquisitions after the
Issue Date, restructuring costs, Specified Legal Expenses, and curtailments or
modifications to pension and post-retirement employee benefit plans shall be
excluded,

 

(2)                                  the
Net Income for such period shall not include the cumulative effect of a change
in accounting principles during such period,

 

(3)                                  any
net after-tax gains or losses on disposal of disposed, abandoned or
discontinued operations shall be excluded,

 

(4)                                  any
after-tax effect of gains or losses (less all fees and expenses relating
thereto) attributable to asset dispositions other than in the ordinary course
of business, as determined in good faith by the Issuer, shall be excluded,

 

(5)                                  the
Net Income for such period of any Person that is not a Subsidiary, or is an
Unrestricted Subsidiary, or that is accounted for by the equity method of
accounting, shall be excluded; provided
that Consolidated Net Income of the Issuer shall be increased by the amount of

 

6

 

dividends or distributions or other payments that are actually paid in
cash (or to the extent converted into cash) to the referent Person or a
Restricted Subsidiary thereof in respect of such period, by such Person,

 

(6)                                  solely
for the purpose of determining the amount available for Restricted Payments
under clause (3)(a) of Section 4.07(a) hereof, the Net
Income for such period of any Restricted Subsidiary (other than any Guarantor)
shall be excluded to the extent that the declaration or payment of dividends or
similar distributions by that Restricted Subsidiary of its Net Income is not at
the date of determination permitted without any prior governmental approval
(which has not been obtained) or, directly or indirectly, by the operation of
the terms of its charter or any agreement, instrument, judgment, decree, order,
statute, rule, or governmental regulation applicable to that Restricted
Subsidiary or its stockholders, unless such restriction with respect to the
payment of dividends or similar distributions has been legally waived, provided that Consolidated Net
Income of the Issuer will be increased by the amount of dividends or other
distributions or other payments actually paid in cash (or to the extent
converted into cash) to the Issuer or a Restricted Subsidiary thereof in
respect of such period, to the extent not already included therein,

 

(7)                                  effects
of adjustments (including the effects of such adjustments pushed down to the
Issuer and its Restricted Subsidiaries) in the merchandise inventory, property
and equipment, goodwill, intangible assets, deferred revenue and debt line
items in such Person’s consolidated financial statements pursuant to GAAP
resulting from the application of purchase accounting in relation to the
Transactions or any consummated acquisition or the amortization or write-off of
any amounts thereof, net of taxes, shall be excluded,

 

(8)                                  any
after-tax effect of income (loss) from the early extinguishment or conversion of
Indebtedness or Hedging Obligations or other derivative instruments shall be
excluded,

 

(9)                                  any
impairment charge or asset write-off or write-down, in each case, pursuant to
GAAP and the amortization of intangibles arising pursuant to GAAP shall be excluded,

 

(10)                            any
non-cash compensation charge or expense, including any such charge or expense
arising from the grant of stock appreciation or similar rights, stock options,
restricted stock or other equity-incentive programs shall be excluded,

 

(11)                            any
fees and expenses incurred during such period, or any amortization thereof for
such period, in connection with any acquisition, Investment, Asset Sale,
issuance or repayment of Indebtedness, issuance of Equity Interests,
refinancing transaction or amendment or modification of any debt instrument (in
each case, including any such transaction consummated prior to the Issue Date
and any such transaction undertaken but not completed) and any charges or
non-recurring merger costs incurred during such period as a result of any such
transaction shall be excluded,

 

(12)                            accruals
and reserves that are established within twelve months after the Issue Date
that are so required to be established as a result of the Transactions in accordance
with GAAP shall be excluded,

 

(13)                            any net gain or loss resulting from
currency translation gains or losses related to currency remeasurements of
Indebtedness (including any net loss or gain resulting from hedge agreements
for currency exchange risk) and any foreign currency translation gains or
losses shall be excluded, and

 

7

 

(14)                            any unrealized net gains and losses
resulting from Hedging Obligations and the application of Statement of
Financial Accounting Standards No. 133 shall be excluded.

 

In addition, to the extent not already included in the Net Income of
such Person and its Restricted Subsidiaries, notwithstanding anything to the
contrary in the foregoing, Consolidated Net Income shall include the amount of
proceeds received from business interruption insurance and reimbursements of
any expenses and charges that are covered by indemnification or other
reimbursement provisions in connection with any Permitted Investment or any
sale, conveyance, transfer or other disposition of assets permitted under this
Indenture.

 

Notwithstanding
the foregoing, for the purpose of Section 4.07 hereof only (other than
clause (3)(d) of Section 4.07(a) hereof), there shall be
excluded from Consolidated Net Income any income arising from any sale or other
disposition of Restricted Investments made by the Issuer and its Restricted
Subsidiaries, any repurchases and redemptions of Restricted Investments from
the Issuer and its Restricted Subsidiaries, any repayments of loans and
advances which constitute Restricted Investments by the Issuer or any of its
Restricted Subsidiaries, any sale of the stock of an Unrestricted Subsidiary or
any distribution or dividend from an Unrestricted Subsidiary, in each case only
to the extent such amounts increase the amount of Restricted Payments permitted
under clause (3)(d) of Section 4.07(a) hereof.

 

“Contingent Obligations” means,
with respect to any Person, any obligation of such Person guaranteeing any
leases, dividends or other obligations that do not constitute Indebtedness (“primary obligations”) of any
other Person (the “primary obligor”)
in any manner, whether directly or indirectly, including, without limitation,
any obligation of such Person, whether or not contingent,

 

(1)                                  to
purchase any such primary obligation or any property constituting direct or
indirect security therefor,

 

(2)                                  to
advance or supply funds

 

(a)                                  for
the purchase or payment of any such primary obligation, or

 

(b)                                 to
maintain working capital or equity capital of the primary obligor or otherwise to
maintain the net worth or solvency of the primary obligor, or

 

(3)                                  to
purchase property, securities or services primarily for the purpose of assuring
the owner of any such primary obligation of the ability of the primary obligor
to make payment of such primary obligation against loss in respect thereof.

 

“Corporate
Trust Office of the Trustee” shall be at the address of the Trustee specified
in Section 14.02 hereof or such other address as to which the Trustee may give
notice to the Holders and the Issuer.

 

“Custodian”
means the Trustee, as custodian with respect to the Notes in global form, or
any successor entity thereto.

 

“Default”
means any event that is, or with the passage of time or the giving of notice or
both would be, an Event of Default.

 

“Definitive
Note” means a certificated Note registered in the name of the Holder thereof
and issued in accordance with Section 2.06(c) hereof, substantially
in the form of Exhibit A hereto, as the

 

8

 

case may be,
except that such Note shall not bear the Global Note Legend and shall not have
the “Schedule of Exchanges of Interests in the Global Note” attached thereto.

 

“Depositary”
means, with respect to the Notes issuable or issued in whole or in part in
global form, the Person specified in Section 2.03 hereof as the Depositary
with respect to the Notes, and any and all successors thereto appointed as
Depositary hereunder and having become such pursuant to the applicable
provision of this Indenture.

 

“Designated Non-cash Consideration”
means the fair market value of non-cash consideration received by the Issuer or
a Restricted Subsidiary in connection with an Asset Sale that is so designated
as Designated Non-cash Consideration pursuant to an Officer’s Certificate, setting
forth the basis of such valuation, executed by the principal financial officer
of the Issuer, less the amount of Cash Equivalents received in connection with
a subsequent sale, redemption, repurchase of or collection or payment on, such
Designated Non-cash Consideration.

 

“Designated Preferred Stock” means
Preferred Stock of the Issuer or any parent company thereof (in each case other
than Disqualified Stock) that is issued for cash (other than to a Restricted Subsidiary
or an employee stock ownership plan or trust established by the Issuer or any
of its Subsidiaries) and is so designated as Designated Preferred Stock,
pursuant to an Officer’s Certificate executed by the principal financial
officer of the Issuer or the applicable parent company thereof, as the case may be,
on the issuance date thereof, the cash proceeds of which are excluded from the
calculation set forth in clause (3) of Section 4.07(a) hereof.

 

“Designated
Senior Indebtedness” means:

 

(1)                                  any
Indebtedness outstanding under the Senior Credit Facilities; and

 

(2)                                  any
other Senior Indebtedness permitted under this Indenture, the principal amount
of which is $50.0 million or more and that has been specifically designated
by the Issuer as “Designated Senior Indebtedness” for purposes of this
Indenture in the instrument evidencing or governing such Senior Indebtedness.

 

 “Disqualified Stock” means, with
respect to any Person, any Capital Stock of such Person which, by its terms, or
by the terms of any security into which it is convertible or for which it is putable
or exchangeable, or upon the happening of any event, matures or is mandatorily
redeemable (other than solely as a result of a change of control or asset sale)
pursuant to a sinking fund obligation or otherwise, or is redeemable at the
option of the holder thereof (other than solely as a result of a change of control
or asset sale), in whole or in part, in each case prior to the date 91 days
after the earlier of the maturity date of the Notes or the date the Notes are
no longer outstanding; provided, however, that if such Capital
Stock is issued to any plan for the benefit of employees of the Issuer or its
Subsidiaries or by any such plan to such employees, such Capital Stock shall
not constitute Disqualified Stock solely because it may be required to be
repurchased by the Issuer or its Subsidiaries in order to satisfy applicable
statutory or regulatory obligations.

 

“EBITDA” means, with respect to
any Person for any period, the Consolidated Net Income of such Person for such
period

 

(1)                                  increased
(without duplication) by:

 

(a)                                  provision
for taxes based on income or profits or capital, including, without limitation,
state, franchise and similar taxes (such as the Pennsylvania capital tax

 

9

 

and Texas
margin tax) and foreign withholding taxes of such Person paid or accrued during
such period deducted (and not added back) in computing Consolidated Net Income;
plus

 

(b)                                 Fixed Charges of such Person for such
period plus bank fees and costs of surety bonds in connection with financing
activities plus amounts excluded from Consolidated Interest Expense as set
forth in clauses (v), (w), (x), (y) and (z) in the definition thereof, to the
extent the same were deducted (and not added back) in calculating such
Consolidated Net Income; plus

 

(c)                                  Consolidated
Depreciation and Amortization Expense of such Person for such period to the
extent the same was deducted (and not added back) in computing Consolidated Net
Income; plus

 

(d)                                 any expenses or
charges (other than depreciation or amortization expense) related to any Equity
Offering, Permitted Investment, acquisition, disposition, recapitalization or
the incurrence of Indebtedness permitted to be incurred by this Indenture
(including a refinancing thereof) (whether or not successful), including (i) such
fees, expenses or charges related to the offering of the Initial Notes, the Senior Notes, the
Subordinated Discount Notes and the Senior Credit Facilities and (ii) any
amendment or other modification of the Initial Notes, the Senior Notes, the
Subordinated Discount Notes and the Senior Credit Facilities, in each case,
deducted (and not added back) in computing Consolidated Net Income; plus

 

(e)                                  the amount of any
restructuring charge or reserve deducted (and not added back) in such period in
computing Consolidated Net Income; plus

 

(f)                                    any other non cash
charges, including (i) any write offs or write downs, (ii) equity-based
awards compensation expense, (iii) losses on sales, disposals or
abandonment of, or any impairment charges or asset write off related to,
intangible assets, long-lived assets and investments in debt and equity
securities, (iv) all losses from investments recorded using the equity
method, and (v) other non-cash charges, non-cash expenses or non-cash
losses reducing Consolidated Net Income for such period (provided that if any
such non-cash charges represent an accrual or reserve for potential cash items
in any future period, the cash payment in respect thereof in such future period
shall be subtracted from EBITDA to such extent, and excluding amortization of a
prepaid cash item that was paid in a prior period); plus

 

(g)                                 the amount of any
minority interest expense consisting of Subsidiary income attributable to
minority equity interests of third parties in any non-Wholly Owned Subsidiary
deducted (and not added back) in such period in calculating Consolidated Net
Income; plus

 

(h)                                 the amount of
management, monitoring, consulting and advisory fees (including termination
fees) and related indemnities and expenses paid or accrued in such period to
the Investors or Highfields Capital to the extent otherwise permitted under Section 4.11
hereof and deducted (and not added back) in such period in computing Consolidated
Net Income; plus

 

(i)                                     the
amount of net cost savings projected by the Issuer in good faith to be realized
as a result of specified actions taken during such period (calculated on a pro

 

10

 

forma
basis as though such cost savings had been realized on the first day of such
period), net of the amount of actual benefits realized during such period from
such actions; provided that (x) such cost savings are reasonably
identifiable and factually supportable, (y) such actions are taken within
36 months after the Issue Date and (z) the aggregate amount of cost
savings added pursuant to this clause (i) shall not exceed $25.0
million for any four consecutive quarter period (which adjustments may be
incremental to pro forma adjustments made
pursuant to the definition of “Fixed Charge Coverage Ratio”); plus

 

(j)                                     the
amount of loss on sale of receivables and related assets to the Receivables
Subsidiary in connection with a Receivables Facility; plus

 

(k)                                  any costs or expense incurred by the Issuer
or a Restricted Subsidiary pursuant to any management equity plan or stock
option plan or any other management or employee benefit plan or agreement or
any stock subscription or shareholder agreement, to the extent that such cost
or expenses are funded with cash proceeds contributed to the capital of the
Issuer or net cash proceeds of an issuance of Equity Interest of the Issuer
(other than Disqualified Stock) solely to the extent that such net cash
proceeds are excluded from the calculation set forth in clause (3) of Section 4.07(a) hereof;
plus

 

(l)                                     any
net loss from disposed or discontinued operations; plus

 

(m)                               cash
receipts (or any netting arrangements resulting in reduced cash expenditures)
not representing EBITDA or Net Income in any period to the extent non-cash
gains relating to such income were deducted in the calculation of EBITDA
pursuant to clause (2) below for any previous period and not added back,

 

(2)                                  decreased
(without duplication) by:

 

(a)                                  non-cash
gains increasing Consolidated Net Income of such Person for such period,
excluding any non-cash gains to the extent they represent the reversal of an
accrual or reserve for a potential cash item that reduced EBITDA in any prior
period and any non-cash gains with respect to cash actually received in a prior
period so long as such cash did not increase EBITDA in such prior period, plus

 

(b)                                 any net income from disposed or
discontinued operations; and

 

(3)                                  increased
or decreased by (without duplication), as applicable, any adjustments resulting
from the application of FASB Interpretation No. 45 (Guarantees).

 

For purposes
of calculating EBITDA for any period, the impact of changes in estimate for
inventory cost capitalization and the initial adoption of an accounting policy
for gift card breakage made in the fourth quarter of fiscal 2005 shall be
excluded.

 

“EMU” means economic and monetary
union as contemplated in the Treaty on European Union.

 

“Equity
Interests” means Capital Stock and all warrants, options or other rights to
acquire Capital Stock, but excluding any debt security that is convertible
into, or exchangeable for, Capital Stock.

 

“Equity
Offering” means any public or private sale of common stock or Preferred
Stock of the Issuer or any of its direct or indirect parent companies
(excluding Disqualified Stock), other than:

 

11

 

(1)                                  public
offerings with respect to the Issuer’s or any direct or indirect parent company’s
common stock registered on Form S-8;

 

(2)                                  issuances
to any Subsidiary of the Issuer; and

 

(3)                                  any
such public or private sale that constitutes an Excluded Contribution.

 

“euro”
means the single currency of participating member states of the EMU.

 

“Euroclear”
means Euroclear S.A./N.V., as operator of the Euroclear system.

 

“Exchange
Act” means the Securities Exchange Act of 1934, as amended, and the rules and
regulations of the SEC promulgated thereunder.

 

“Exchange
Notes” means the Notes issued in the Exchange Offer pursuant to Section 2.06(f) hereof.

 

“Exchange
Offer” has the meaning set forth in the Registration Rights Agreement.

 

“Exchange
Offer Registration Statement” has the meaning set forth in the Registration
Rights Agreement.

 

“Excluded Contribution” means net
cash proceeds, marketable securities or Qualified Proceeds received by the Issuer
from

 

(1)                                  contributions
to its common equity capital, and

 

(2)                                  the
sale (other than to a Subsidiary of the Issuer or to any management equity plan
or stock option plan or any other management or employee benefit plan or
agreement of the Issuer) of Capital Stock (other than Disqualified Stock and
Designated Preferred Stock) of the Issuer,

 

in each case
designated as Excluded Contributions pursuant to an Officer’s Certificate executed
by the principal financial officer of the Issuer on the date such capital
contributions are made or the date such Equity Interests are sold, as the case may be,
which are excluded from the calculation set forth in clause (3) of Section 4.07(a) hereof.

 

“Fixed
Charge Coverage Ratio” means, with respect to any Person for any period,
the ratio of EBITDA of such Person for such period to the Fixed Charges of such
Person for such period. In the event that the Issuer or any Restricted
Subsidiary incurs, assumes, guarantees, redeems, retires or extinguishes any
Indebtedness (other than Indebtedness incurred or repaid under any revolving
credit facility in the ordinary course of business for working capital purposes)
or issues or redeems Disqualified Stock or Preferred Stock subsequent to the
commencement of the period for which the Fixed Charge Coverage Ratio is being
calculated but prior to or simultaneously with the event for which the
calculation of the Fixed Charge Coverage Ratio is made (the “Fixed Charge Coverage Ratio Calculation Date”),
then the Fixed Charge Coverage Ratio shall be calculated giving pro forma effect to such incurrence,
assumption, guarantee, redemption, retirement or extinguishment of
Indebtedness, or such issuance or redemption of Disqualified Stock or Preferred
Stock, as if the same had occurred at the beginning of the applicable four-quarter
period.

 

12

 

For purposes
of making the computation referred to above, Investments, acquisitions,
dispositions, amalgamations, mergers and consolidations (as determined in
accordance with GAAP) that have been made by the Issuer or any of its
Restricted Subsidiaries during the four-quarter reference period or subsequent
to such reference period and on or prior to or simultaneously with the Fixed
Charge Coverage Ratio Calculation Date shall be calculated on a pro forma basis assuming that all such
Investments, acquisitions, dispositions, amalgamations, mergers and
consolidations (and the change in any associated fixed charge obligations and
the change in EBITDA resulting therefrom) had occurred on the first day of the
four-quarter reference period. If since the beginning of such period any Person
that subsequently became a Restricted Subsidiary or was merged, amalgamated or
consolidated with or into the Issuer or any of its Restricted Subsidiaries
since the beginning of such period shall have made any Investment, acquisition,
disposition, amalgamation, merger or consolidation that would have required
adjustment pursuant to this definition, then the Fixed Charge Coverage Ratio shall
be calculated giving pro forma
effect thereto for such period as if such Investment, acquisition, disposition,
merger or consolidation had occurred at the beginning of the applicable four-quarter
period.

 

For purposes of this definition, whenever pro forma effect is to be given to an Investment,
acquisition, disposition, amalgamation, merger or consolidation (including the
Transactions) and the amount of income or earnings relating thereto, the pro forma calculations shall be made in
good faith by a responsible financial or accounting officer of the Issuer (and may include,
for the avoidance of doubt, cost savings and operating expense reductions
resulting from such Investment, acquisition, amalgamation, merger or
consolidation (including the Transactions) which is being given pro forma
effect that have been or are expected to be realized). If any Indebtedness
bears a floating rate of interest and is being given pro forma effect, the interest on such Indebtedness shall be
calculated as if the rate in effect on the Fixed Charge Coverage Ratio
Calculation Date had been the applicable rate for the entire period (taking
into account any Hedging Obligations applicable to such Indebtedness). Interest
on a Capitalized Lease Obligation shall be deemed to accrue at an interest rate
reasonably determined by a responsible financial or accounting officer of the
Issuer to be the rate of interest implicit in such Capitalized Lease Obligation
in accordance with GAAP. Interest on Indebtedness that may optionally be
determined at an interest rate based upon a factor of a prime or similar rate,
a eurocurrency interbank offered rate, or other rate, shall be deemed to have
been based upon the rate actually chosen, or, if none, then based upon such optional
rate chosen as the Issuer may designate.

 

“Fixed
Charges” means, with respect to any Person for any period, the sum, without
duplication, of:

 

(1)                                  Consolidated
Interest Expense of such Person for such period;

 

(2)                                  all
cash dividends or other distributions paid (excluding items eliminated in consolidation)
on any series of Preferred Stock during such period; and

 

(3)                                  all
cash dividends or other distributions paid (excluding items eliminated in consolidation)
on any series of Disqualified Stock during such period.

 

“Foreign Subsidiary” means, with
respect to any Person, any Restricted Subsidiary of such Person that is not
organized or existing under the laws of the United States, any state thereof,
the District of Columbia, or any territory thereof and any Restricted
Subsidiary of such Foreign Subsidiary.

 

“GAAP” means
generally accepted accounting principles in the United States which are in
effect on the Issue Date. For purposes of this Indenture, the term “consolidated” with respect to
any Person means such Person consolidated with its Restricted Subsidiaries and
does not include any Unrestricted Subsidiary.

 

13

 

“Global
Note Legend” means the legend set forth in Section 2.06(g)(ii) hereof, which is required to be
placed on all Global Notes issued under this Indenture.

 

“Global
Notes” means, individually and collectively, each of the Restricted Global
Notes and the Unrestricted Global Notes, substantially in the form of Exhibit A
hereto, issued in accordance with Section 2.01, 2.06(b), 2.06(d) or 2.06(f) hereof.

 

“Government
Securities” means securities that are:

 

(1)                                  direct
obligations of the United States of America for the timely payment of which its
full faith and credit is pledged; or

 

(2)                                  obligations
of a Person controlled or supervised by and acting as an agency or instrumentality
of the United States of America the timely payment of which is unconditionally
guaranteed as a full faith and credit obligation by the United States of
America,

 

which, in
either case, are not callable or redeemable at the option of the issuers
thereof, and shall also include a depository receipt issued by a bank (as
defined in Section 3(a)(2) of the Securities Act), as custodian with
respect to any such Government Securities or a specific payment of principal of
or interest on any such Government Securities held by such custodian for the
account of the holder of such depository receipt; provided that (except as required by law) such custodian is
not authorized to make any deduction from the amount payable to the holder of
such depository receipt from any amount received by the custodian in respect of
the Government Securities or the specific payment of principal of or interest
on the Government Securities evidenced by such depository receipt.

 

“guarantee” means a guarantee
(other than by endorsement of negotiable instruments for collection in the
ordinary course of business), direct or indirect, in any manner (including
letters of credit and reimbursement agreements in respect thereof), of all or
any part of any Indebtedness or other obligations.

 

“Guarantee”
means the guarantee by any Guarantor of the Issuer’s Obligations under this
Indenture and the Notes.

 

“Guarantor”
means each Restricted Subsidiary that Guarantees the Notes in accordance with
the terms of this Indenture.

 

“Hedging
Obligations” means, with respect to any Person, the obligations of such
Person under any interest rate swap agreement, interest rate cap agreement,
interest rate collar agreement, commodity swap agreement, commodity cap agreement,
commodity collar agreement, foreign exchange contract, currency swap agreement
or similar agreement providing for the transfer or mitigation of interest rate,
commodity price or currency risks either generally or under specific
contingencies.

 

“Highfields Capital” means Highfields Capital I LP, Highfields
Capital II LP and Highfields Capital III LP and each Affiliate thereof
(excluding portfolio companies of any of the foregoing).

 

“Holder”
means the Person in whose name a Note is registered on the Registrar’s books.

 

“Hybrid Distribution Network Costs” shall mean costs associated
with the implementation of enhancements to the Issuer’s and its Restricted
Subsidiaries’ distribution network intended to increase the Issuer’s and its
Restricted Subsidiaries’ basic merchandise inventories that are shipped through
distribution centers.

 

14

 

“Indebtedness”
means, with respect to any Person, without duplication:

 

(1)                                  any
indebtedness (including principal and premium) of such Person, whether or not
contingent:

 

(a)                                  in
respect of borrowed money;

 

(b)                                 evidenced
by bonds, notes, debentures or similar instruments or letters of credit or
bankers’ acceptances (or, without duplication, reimbursement agreements in respect
thereof);

 

(c)                                  representing
the balance deferred and unpaid of the purchase price of any property
(including Capitalized Lease Obligations), except (i) any such balance
that constitutes an obligation in respect of a commercial letter of credit, a
trade payable or similar obligation to a trade creditor, in each case accrued
in the ordinary course of business and (ii) any earn-out obligations until
such obligation becomes a liability on the balance sheet of such Person in
accordance with GAAP and is not
paid after becoming due and payable; or

 

(d)                                 representing
any Hedging Obligations;

 

if and to the extent that any of the
foregoing Indebtedness (other than letters of credit (other than commercial
letters of credit) and Hedging Obligations) would appear as a liability upon a
balance sheet (excluding the footnotes thereto) of such Person prepared in accordance
with GAAP;

 

(2)                                  to
the extent not otherwise included, any obligation by such Person to be liable
for, or to pay, as obligor, guarantor or otherwise, on the obligations of the
type referred to in clause (1) of a third Person (whether or not such
items would appear upon the balance sheet of the such obligor or guarantor),
other than by endorsement of negotiable instruments for collection in the
ordinary course of business; and

 

(3)                                  to
the extent not otherwise included, the obligations of the type referred to in
clause (1) of a third Person secured by a Lien on any asset owned by such
first Person, whether or not such Indebtedness is assumed by such first Person;

 

provided, however, that
notwithstanding the foregoing, Indebtedness shall be deemed not to include (a) Contingent
Obligations incurred in the ordinary course of business or (b) obligations
under or in respect of Receivables Facilities.

 

“Indenture”
means this Indenture, as amended or supplemented from time to time.

 

“Independent Financial Advisor”
means an accounting, appraisal, investment banking firm or consultant to
Persons engaged in Similar Businesses of nationally recognized standing that
is, in the good faith judgment of the Issuer, qualified to perform the
task for which it has been engaged.

 

“Indirect
Participant” means a Person who holds a beneficial interest in a Global
Note through a Participant.

 

“Initial
Notes” is defined in the recitals hereto.

 

15

 

“Initial Purchasers” means
Deutsche Bank Securities Inc., J.P. Morgan Securities Inc., Banc of America
Securities LLC and Credit Suisse Securities (USA) LLC.

 

“Interest
Payment Date” means May 1 and November 1 of each year to stated maturity.

 

“Investment
Grade Rating” means a rating equal to or higher than Baa3 (or the
equivalent) by Moody’s and BBB- (or the equivalent) by S&P, or, in either
case, an equivalent rating by any other Rating Agency.

 

“Investment
Grade Securities” means:

 

(1)                                  securities
issued or directly and fully guaranteed or insured by the United States
government or any agency or instrumentality thereof (other than Cash Equivalents);

 

(2)                                  debt
securities or debt instruments with an Investment Grade Rating, but excluding
any debt securities or instruments constituting loans or advances among the
Issuer and its Subsidiaries;

 

(3)                                  investments
in any fund that invests exclusively in investments of the type described in
clauses (1) and (2) which fund may also hold immaterial amounts
of cash pending investment or distribution; and

 

(4)                                   corresponding
instruments in countries other than the United States customarily utilized for
high quality investments.

 

“Investments”
means, with respect to any Person, all investments by such Person in other
Persons (including Affiliates) in the form of loans (including
guarantees), advances or capital contributions (excluding accounts receivable,
credit card and debit card receivables, trade credit, advances to customers,
commission, travel and similar advances to officers and employees, in each case
made in the ordinary course of business), purchases or other acquisitions for
consideration of Indebtedness, Equity Interests or other securities issued by
any other Person and investments that are required by GAAP to be classified on
the balance sheet (excluding the footnotes) of the Issuer in the same manner as
the other investments included in this definition to the extent such
transactions involve the transfer of cash or other property. For purposes of
the definition of “Unrestricted Subsidiary” and Section 4.07 hereof:

 

(1)                                  “Investments”
shall include the portion (proportionate to the Issuer’s equity interest in
such Subsidiary) of the fair market value of the net assets of a Subsidiary of
the Issuer at the time that such Subsidiary is designated an Unrestricted
Subsidiary; provided, however, that upon a
redesignation of such Subsidiary as a Restricted Subsidiary, the Issuer shall
be deemed to continue to have a permanent “Investment” in an Unrestricted
Subsidiary in an amount (if positive) equal to:

 

(a)                                  the
Issuer’s “Investment” in such Subsidiary at the time of such redesignation;
less

 

(b)                                 the
portion (proportionate to the Issuer’s Equity Interest in such Subsidiary) of
the fair market value of the net assets of such Subsidiary at the time of such
redesignation; and

 

16

 

(2)                                   any
property transferred to or from an Unrestricted Subsidiary shall be valued at
its fair market value at the time of such transfer, in each case as determined
in good faith by the Issuer.

 

“Investors” means Bain Capital, LLC and Blackstone
Group Holdings L.L.C., each of their respective Affiliates and any investment
funds advised or managed by any of the foregoing, but not including, however,
any portfolio companies of any of the foregoing.

 

“Issue Date”
means October 31, 2006.

 

“Issuer”
means Michaels; provided that when used in the context of determining
the fair market value of an asset or liability under this Indenture, “Issuer”
shall be deemed to mean the board of directors of the Issuer when the fair
market value is equal to or in excess of $100.0 million (unless otherwise expressly
stated).

 

“Issuer
Order” means a written request or order signed on behalf of the Issuer by
an Officer of the Issuer, who must be the principal executive officer, the
principal financial officer, the treasurer or the principal accounting officer
of the Issuer, and delivered to the Trustee.

 

“Legal
Holiday” means a Saturday, a Sunday or a day on which commercial banking
institutions are not required to be open in the State of New York.

 

“Letter of
Transmittal” means the letter of transmittal to be prepared by the Issuer
and sent to all Holders of the Notes for use by such Holders in connection with
the Exchange Offer.

 

“Lien” means,
with respect to any asset, any mortgage, lien (statutory or otherwise), pledge,
hypothecation, charge, security interest, preference, priority or encumbrance
of any kind in respect of such asset, whether or not filed, recorded or
otherwise perfected under applicable law, including any conditional sale or
other title retention agreement, any lease in the nature thereof, any option or
other agreement to sell or give a security interest in and any filing of or
agreement to give any financing statement under the Uniform Commercial
Code (or equivalent statutes) of any jurisdiction; provided that in no event shall an operating lease be deemed
to constitute a Lien.

 

“Michaels”
is defined in the preamble hereto.

 

“Moody’s”
means Moody’s Investors Service, Inc. and any successor to its rating
agency business.

 

“Net Income”
means, with respect to any Person, the net income (loss) of such Person,
determined in accordance with GAAP and before any reduction in respect of
Preferred Stock dividends.

 

“Net
Proceeds” means the aggregate cash proceeds received by the Issuer or any
of its Restricted Subsidiaries in respect of any Asset Sale, including any cash
received upon the sale or other disposition of any Designated Non-cash
Consideration received in any Asset Sale, net of the direct costs relating to
such Asset Sale and the sale or disposition of such Designated Non-cash
Consideration, including legal, accounting and investment banking fees, and
brokerage and sales commissions, any relocation expenses incurred as a result
thereof, taxes paid or payable as a result thereof (after taking into account
any available tax credits or deductions and any tax sharing arrangements),
amounts required to be applied to the repayment of principal, premium, if any,
and interest on Senior Indebtedness required (other than required by clause (1) of
Section 4.10(b) hereof) to be paid as a result of such transaction
and any deduction of appropriate amounts to be provided by the Issuer or any of
its Restricted Subsidiaries as a reserve

 

17

 

in accordance
with GAAP against any liabilities associated with the asset disposed of in such
transaction and retained by the Issuer or any of its Restricted Subsidiaries
after such sale or other disposition thereof, including pension and other post-employment
benefit liabilities and liabilities related to environmental matters or against
any indemnification obligations associated with such transaction.

 

“Non-U.S.
Person” means a Person who is not a U.S. Person.

 

“Notes”
means the Initial Notes and more particularly means any Note authenticated and
delivered under this Indenture. For all purposes of this Indenture, the term “Notes”
shall also include any Additional Notes that may be issued under a supplemental
indenture.

 

“Obligations”
means any principal, interest (including any interest accruing subsequent to
the filing of a petition in bankruptcy, reorganization or similar proceeding at
the rate provided for in the documentation with respect thereto, whether or not
such interest is an allowed claim under applicable state, federal or foreign
law), penalties, fees, indemnifications, reimbursements (including
reimbursement obligations with respect to letters of credit and banker’s
acceptances), damages and other liabilities, and guarantees of payment of such
principal, interest, penalties, fees, indemnifications, reimbursements, damages
and other liabilities, payable under the documentation governing any
Indebtedness.

 

“Offering
Memorandum” means the offering memorandum, dated October 25, 2006, relating
to the sale of the Initial Notes.

 

“Officer”
means the Chairman of the Board, the Chief Executive Officer, the President,
any Executive Vice President, Senior Vice President or Vice President, the
Treasurer or the Secretary of the Issuer.

 

“Officer’s
Certificate” means a certificate signed on behalf of the Issuer by an
Officer of the Issuer, who must be the principal executive officer, the
principal financial officer, the treasurer or the principal accounting officer
of the Issuer, that meets the requirements set forth in this Indenture.

 

“Opinion of
Counsel” means a written opinion from legal counsel. The counsel may be
an employee of or counsel to the Issuer.

 

“Participant”
means, with respect to the Depositary, Euroclear or Clearstream, a Person who
has an account with the Depositary, Euroclear or Clearstream, respectively
(and, with respect to DTC, shall include Euroclear and Clearstream).

 

“Participating
Broker-Dealer” has the meaning set forth in the Registration Rights Agreement.

 

“Perfect Store Initiative” shall mean the initiative related to
the Issuer’s and its Restricted Subsidiaries’ store standardization and
remodeling program, pursuant to which retail store layouts will be modified
into a configuration intended to enhance the customer in-store experience.

 

“Permitted Asset Swap” means the concurrent purchase and sale or
exchange of Related Business Assets or a combination of Related Business Assets
and Cash Equivalents between the Issuer or any of its Restricted Subsidiaries
and another Person; provided that any Net Proceeds received must be
applied in accordance with Section 4.10 hereof.

 

“Permitted
Holders” means each of the Investors and members of management of the
Issuer (or its direct parent) who are holders of Equity Interests of the Issuer
(or any of its direct or indirect

 

18

 

parent
companies) on the Issue Date and any group (within the meaning of Section 13(d)(3) or
Section 14(d)(2) of the Exchange Act or any successor provision) of
which any of the foregoing are members; provided that, in the case of such group and without giving
effect to the existence of such group or any other group, such Investors and
members of management, collectively, have beneficial ownership of more than 50%
of the total voting power of the Voting Stock of the Issuer or any of its
direct or indirect parent companies. Any person or group whose acquisition of
beneficial ownership (within the meaning of Rule 13d-3 under the Exchange
Act, or any successor provision) constitutes a Change of Control in respect of
which a Change of Control Offer is made in accordance with the requirements of Section 4.14
(or would result in a Change of Control Offer in the absence of the waiver of
such requirement by Holders in accordance with Section 4.14 will
thereafter, together with its Affiliates, constitute an additional Permitted
Holder.

 

“Permitted
Investments” means:

 

(1)                                  any
Investment in the Issuer or any of its Restricted Subsidiaries;

 

(2)                                  any
Investment in cash and Cash Equivalents or Investment Grade Securities;

 

(3)                                  any
Investment by the Issuer or any of its Restricted Subsidiaries in a Person that
is engaged in a Similar Business if as a result of such Investment:

 

(a)                                  such
Person becomes a Restricted Subsidiary; or

 

(b)                                 such
Person, in one transaction or a series of related transactions, is merged,
amalgamated or consolidated with or into, or transfers or conveys substantially
all of its assets to, or is liquidated into, the Issuer or a Restricted
Subsidiary,

 

and, in each case, any
Investment held by such Person; provided that such Investment was not
acquired by such Person in contemplation of such acquisition, merger, consolidation
or transfer;

 

(4)                                  any
Investment in securities or other assets not constituting cash, Cash
Equivalents or Investment Grade Securities and received in connection with an
Asset Sale made pursuant to the provisions of Section 4.10(a) hereof
or any other disposition of assets not constituting an Asset Sale;

 

(5)                                  any
Investment existing on the Issue Date and any extension, modification,
replacement or renewal of any such Investments existing on the Issue Date, but
only to the extent not involving additional advances, contributions or other
Investments of cash or other assets or other increases thereof other than as a
result of the accrual or accretion of interest or original issue discount or
the issuance of pay-in-kind securities, in each case, pursuant to the terms of
such Investment as in effect on the Issue Date (or as subsequently amended or
otherwise modified in a manner not disadvantageous to the Holders of the Notes
in any material respect);

 

(6)                                  any
Investment acquired by the Issuer or any of its Restricted Subsidiaries:

 

(a)                                  in
exchange for any other Investment or accounts receivable held by the Issuer or
any such Restricted Subsidiary in connection with or as a result of a
bankruptcy, workout, reorganization or recapitalization of the issuer of such
other Investment or accounts receivable; or

 

19

 

(b)                                 as
a result of a foreclosure by the Issuer or any of its Restricted Subsidiaries
with respect to any secured Investment or other transfer of title with respect
to any secured Investment in default;

 

(7)                                  Hedging
Obligations permitted under clause (10) of Section 4.09(b) hereof;

 

(8)                                  any
Investment in a Similar Business having an aggregate fair market value, taken
together with all other Investments made pursuant to this clause (8) that
are at that time outstanding, not to exceed $75.0 million (with the fair market
value of each Investment being measured at the time made and without giving
effect to subsequent changes in value);

 

(9)                                  Investments
the payment for which consists of Equity Interests (exclusive of Disqualified
Stock) of the Issuer, or any of its direct or indirect parent companies; provided, however, that such Equity Interests will not increase
the amount available for Restricted Payments under clause (3) of Section 4.07(a) hereof;

 

(10)                            guarantees (including Guarantees) of
Indebtedness of the Issuer or any Restricted Subsidiary permitted under Section 4.09
hereof, performance guarantees and Contingent Obligations in the ordinary
course of business and the creation of liens on the assets of the Issuer or any
of its Restricted Subsidiaries in compliance with Section 4.12 hereof;

 

(11)                            any
transaction to the extent it constitutes an Investment that is permitted and
made in accordance with the provisions of Section 4.11(b) hereof
(except transactions described in clauses (2), (5) and (9) of Section 4.11(b) hereof);

 

(12)                            Investments
consisting of purchases and acquisitions of inventory, supplies, material or
equipment;

 

(13)                            additional
Investments having an aggregate fair market value, taken together with all
other Investments made pursuant to this clause (13) that are at that time
outstanding (without giving effect to the sale of an Unrestricted Subsidiary to
the extent the proceeds of such sale do not consist of, or have not been
subsequently sold or transferred for, cash or marketable securities), not to
exceed $100.0 million (with the fair market value of each Investment being
measured at the time made and without giving effect to subsequent changes in
value);

 

(14)                            Investments
relating to a Receivables Subsidiary that, in the good faith determination of
the Issuer are necessary or advisable to effect any Receivables Facility;

 

(15)                            advances
to, or guarantees of Indebtedness of, employees not in excess of
$15.0 million outstanding at any one time, in the aggregate;

 

(16)                            loans
and advances to officers, directors and employees for business-related travel
expenses, moving expenses and other similar expenses, in each case incurred in
the ordinary course of business or consistent with past practices or to fund
such Person’s purchase of Equity Interests of the Issuer or any direct or
indirect parent company thereof; and

 

(17)                            Investments consisting of licensing of
intellectual property pursuant to joint marketing arrangements with other
Persons.

 

20

 

“Permitted
Junior Securities” means:

 

(1)                                  Equity
Interests in any direct or indirect parent of the Issuer; or

 

(2)                                  unsecured
debt securities that are subordinated to all Senior Indebtedness (and any debt
securities issued in exchange for Senior Indebtedness) to substantially the
same extent as, or to a greater extent than, the Notes and the related
Guarantees are subordinated to Senior Indebtedness under this Indenture and
which do not mature or become subject to a mandatory redemption obligation
prior to the final maturity of the Notes;

 

provided that the term “Permitted Junior
Securities” shall not include any securities distributed pursuant to a plan of
reorganization if the Indebtedness under the Senior Credit Facilities is
treated as part of the same class as the Notes for purposes of such
plan of reorganization; provided further that to the extent that any Senior Indebtedness of the
Issuer or the Guarantors outstanding on the date of consummation of any such
plan of reorganization is not paid in full in cash on such date, the holders of
any such Senior Indebtedness not so paid in full in cash have consented to the
terms of such plan of reorganization.

 

 “Permitted Liens” means, with respect
to any Person:

 

(1)                                  pledges,
deposits or security by such Person under workmen’s compensation laws,
unemployment insurance , employers’ health tax and other social security laws
or similar legislation, or good faith deposits in connection with bids,
tenders, contracts (other than for the payment of Indebtedness) or leases to
which such Person is a party, or deposits to secure public or statutory
obligations of such Person or deposits of cash or U.S. government bonds to
secure surety or appeal bonds to which such Person is a party, or deposits as
security for contested taxes or import duties or for the payment of rent, in
each case incurred in the ordinary course of business;

 

(2)                                  Liens
imposed by law, such as carriers’, warehousemen’s, materialmen’s, repairmen’s and
mechanics’ Liens, in each case for sums not yet overdue for a period of more
than 30 days or being contested in good faith by appropriate actions or other
Liens arising out of judgments or awards against such Person with respect to
which such Person shall then be proceeding with an appeal or other proceedings
for review if adequate reserves with respect thereto are maintained on the
books of such Person in accordance with GAAP;

 

(3)                                  Liens
for taxes, assessments or other governmental charges not yet overdue for a
period of more than 30 days or which are being contested in good faith by
appropriate actions diligently conducted, if adequate reserves with respect
thereto are maintained on the books of such Person in accordance with GAAP, or for property taxes on property that
the Issuer or one of its Subsidiaries has determined to abandon if the sole
recourse for such tax, assessment, charge, levy or claim is to such property;

 

(4)                                  Liens in favor of issuers of
performance, surety, bid, indemnity, warranty, release, appeal or similar bonds
or with respect to other regulatory requirements or letters of credit or
bankers’ acceptances issued, and completion guarantees provided for, in each
case pursuant to the request of and for the account of such Person in the
ordinary course of its business or consistent with past practice prior to the
Issue Date;

 

(5)                                  minor survey exceptions, minor
encumbrances, ground leases, easements or reservations of, or rights of others
for, licenses, rights-of-way, servitudes, sewers, electric lines, drains,
telegraph and telephone and cable television lines, gas and oil pipelines and
other similar

 

21

 

purposes, or zoning, building
codes or other restrictions (including, without limitation, minor defects or
irregularities in title and similar encumbrances) as to the use of real
properties or Liens incidental, to the conduct of the business of such Person
or to the ownership of its properties which were not incurred in connection
with Indebtedness and which do not in the aggregate materially impair their use
in the operation of the business of such Person;

 

(6)                                  Liens
securing Indebtedness permitted to be incurred pursuant to clause (4), (12)(b),
(18) or (19) of Section 4.09(b) hereof; provided that Liens
securing Indebtedness permitted to be incurred pursuant to clause (18) of Section 4.09(b) hereof
extend only to the assets of Foreign Subsidiaries and Liens securing
Indebtedness permitted to be incurred pursuant to clause (19) of Section 4.09(b) hereof
are solely on acquired property or the assets of the acquired entity, as the
case may be;

 

(7)                                  Liens
existing on the Issue Date;

 

(8)                                  Liens
existing on property or shares of stock of a Person at the time such Person
becomes a Subsidiary; provided, however, such Liens are not
created or incurred in connection with, or in contemplation of, such other
Person becoming such a Subsidiary; provided, further, however,
that such Liens may not extend to any other property owned by the Issuer
or any of its Restricted Subsidiaries;

 

(9)                                  Liens
existing on property at the time the Issuer or a Restricted Subsidiary acquired
the property, including any acquisition by means of a merger, amalgamation or
consolidation with or into the Issuer or any of its Restricted Subsidiaries; provided, however, that such Liens are not created or incurred in
connection with, or in contemplation of, such acquisition, merger, amalgamation
or consolidation; provided, further, however,
that the Liens may not extend to any other property owned by the Issuer or
any of its Restricted Subsidiaries;

 

(10)                            Liens
securing Indebtedness or other obligations of a Restricted Subsidiary owing to
the Issuer or another Restricted Subsidiary permitted to be incurred in
accordance with Section 4.09 hereof;

 

(11)                            Liens
securing Hedging Obligations so long as the related Indebtedness is permitted
to be incurred under this Indenture;

 

(12)                            Liens
on specific items of inventory or other goods and proceeds of any Person
securing such Person’s obligations in respect of bankers’ acceptances or
letters of credit issued or created for the account of such Person to
facilitate the purchase, shipment or storage of such inventory or other goods;

 

(13)                            leases,
subleases, licenses or sublicenses granted to others in the ordinary course of
business which do not materially interfere with the ordinary conduct of the
business of the Issuer or any of its Restricted Subsidiaries and do not secure
any Indebtedness;

 

(14)                            Liens
arising from Uniform Commercial Code (or equivalent statutes) financing
statement filings regarding operating leases, consignments or accounts entered
into by the Issuer and its Restricted Subsidiaries in the ordinary course of
business;

 

(15)                            Liens
in favor of the Issuer or any Guarantor;

 

22

 

(16)                            Liens
on equipment of the Issuer or any of its Restricted Subsidiaries granted in the
ordinary course of business to the Issuer’s clients;

 

(17)                            Liens
on accounts receivable and related assets incurred in connection with a Receivables
Facility;

 

(18)                            Liens
to secure any refinancing, refunding, extension, renewal or replacement (or
successive refinancing, refunding, extensions, renewals or replacements) as a
whole, or in part, of any Indebtedness secured by any Lien referred to in the
foregoing clauses (6), (7), (8) and (9); provided, however,
that (a) such new Lien shall be limited to all or part of the same
property that secured the original Lien (plus improvements on such property),
and (b) the Indebtedness secured by such Lien at such time is not
increased to any amount greater than the sum of (i) the outstanding
principal amount or, if greater, committed amount of the Indebtedness described
under clauses (6), (7), (8) and (9) at the time the original Lien
became a Permitted Lien under this Indenture, and (ii) an amount necessary
to pay any fees and expenses, including premiums, related to such refinancing,
refunding, extension, renewal or replacement;

 

(19)                            deposits
made or other security provided to secure liabilities to insurance carriers
under insurance or self-insurance arrangements in the ordinary course of
business;

 

(20)                            Liens
securing judgments for the payment of money not constituting an Event of
Default under clause (5) of Section 6.01(a) hereof so long as such Liens are
adequately bonded and any appropriate legal proceedings that may have been
duly initiated for the review of such judgment have not been finally terminated
or the period within which such proceedings may be initiated has not expired;

 

(21)                            Liens
in favor of customs and revenue authorities arising as a matter of law to
secure payment of customs duties in connection with the importation of goods in
the ordinary course of business;

 

(22)                            Liens (i) of
a collection bank arising under Section 4-210 of the Uniform Commercial
Code on items in the course of collection, (ii) attaching to commodity
trading accounts or other commodity brokerage accounts incurred in the ordinary
course of business, and (iii) in favor of banking institutions arising as
a matter of law encumbering deposits (including the right of set-off) and which
are within the general parameters customary in the banking industry;

 

(23)                            Liens
deemed to exist in connection with Investments in repurchase agreements or
other Cash Equivalents permitted under Section 4.09 hereof; provided that such Liens do not extend to any
assets other than those that are the subject of such repurchase agreement or
other Cash Equivalent;

 

(24)                            Liens
encumbering reasonable customary initial deposits and margin deposits and
similar Liens attaching to commodity trading accounts or other brokerage
accounts incurred in the ordinary course of business and not for speculative
purposes;

 

(25)                            Liens
that are contractual rights of set-off (i) relating to the establishment
of depository relations with banks not given in connection with the issuance of
Indebtedness, (ii) relating to pooled deposit or sweep accounts of the
Issuer or any of its Restricted Subsidiaries to permit satisfaction of
overdraft or similar obligations incurred in the ordinary course of business of
the Issuer and its Restricted Subsidiaries or (iii) relating to purchase
orders and other agreements

 

23

 

entered into with customers of the Issuer or any of its Restricted
Subsidiaries in the ordinary course of business;

 

(26)                            Liens solely on any cash earnest money
deposits made by the Issuer or any of its Restricted Subsidiaries in connection
with any letter of intent or purchase agreement permitted under this Indenture;

 

(27)                            the rights reserved or vested in any
Person by the terms of any lease, license, franchise, grant or permit held by
the Issuer or any of its Restricted Subsidiaries or by a statutory provision,
to terminate any such lease, license, franchise, grant or permit, or to require
annual or periodic payments as a condition to the continuance thereof;

 

(28)                            restrictive covenants affecting the use
to which real property may be put; provided, however, that the covenants
are complied with;

 

(29)                            security given to a public utility or
any municipality or governmental authority when required by such utility or
authority in connection with the operations of that Person in the ordinary
course of business;

 

(30)                            zoning by-laws and other land use
restrictions, including, without limitation, site plan agreements, development
agreements and contract zoning agreements;

 

(31)                            Liens arising out of conditional sale,
title retention, consignment or similar arrangements for sale of goods entered
into by the Issuer or any Restricted Subsidiary in the ordinary course of
business;

 

(32)                            Liens arising from Personal Property
Security Act financing statement filings regarding leases entered into by the
Issuer or any of its Restricted Subsidiaries in the ordinary course of
business;

 

(33)                            rights of a supplier of unpaid goods to
have access to and repossess such goods under the Bankruptcy and Insolvency Act
(Canada) and under the provisions in the legislation of Canadian provinces;

 

(34)                            the reservations, limitations, provisos
and conditions, if any, expressed in any original grants from the crown under
Canadian law and any statutory exceptions to title under Canadian law; and

 

(35)                            customary transfer restrictions and
purchase options in joint venture and similar agreements.

 

For purposes
of this definition, the term “Indebtedness” shall be deemed to include interest
on such Indebtedness.

 

“Person”
means any individual, corporation, limited liability company, partnership,
joint venture, association, joint stock company, trust, unincorporated
organization, government or any agency or political subdivision thereof or any
other entity.

 

“Preferred Stock” means any Equity
Interest with preferential rights of payment of dividends or upon liquidation,
dissolution, or winding up.

 

24

 

“Proof of
Claim” shall mean a proof of claim or debt filed in accordance with and
pursuant to any applicable provisions of the Bankruptcy Law, the Federal Rules of
Bankruptcy Procedure and/or a final order of the U.S. bankruptcy court.

 

“Proper
Proof of Claim” shall mean, at any time, a Proof of Claim in an amount not
less than the sum of the aggregate outstanding principal amount of the Notes at
such time plus accrued but unpaid interest on the Notes at such time.

 

 “Public Company Costs”
shall mean costs relating to compliance with the Sarbanes-Oxley Act of 2002, as
amended, and other expenses arising out of or incidental to the Issuer’s status
as a public company, including costs, fees and expenses (including legal,
accounting and other professional fees) relating to compliance with provisions
of the Securities Act and the Exchange Act, as applicable to companies with
equity securities held by the public, the rules of national securities
exchange companies with listed equity securities, directors’ compensation, fees
and expense reimbursement, shareholder meetings and reports to shareholders,
directors and officers’ insurance and other executive costs, legal and other
professional fees, and listing fees, in each case incurred or accrued prior to
the Issue Date and that will not continue to be incurred immediately after the
Issue Date.

 

“Private
Placement Legend” means the legend set forth in Section 2.06(g)(i) hereof
to be placed on all Notes issued under this Indenture, except where otherwise permitted
by the provisions of this Indenture.

 

“QIB”
means a “qualified institutional buyer” as defined in Rule 144A.

 

“Qualified Proceeds” means assets
that are used or useful in, or Capital Stock of any Person engaged in, a
Similar Business; provided
that the fair market value of any such assets or Capital Stock shall be determined
by the Issuer in good faith.

 

“Rating
Agencies” means Moody’s and S&P or if Moody’s or S&P or both shall
not make a rating on the Notes publicly available, a nationally recognized
statistical rating agency or agencies, as the case may be, selected by the
Issuer which shall be substituted for Moody’s or S&P or both, as the case may be.

 

“Receivables Facility” means any
of one or more receivables financing facilities as amended, supplemented,
modified, extended, renewed, restated or refunded from time to time, the
Obligations of which are non-recourse (except for customary representations,
warranties, covenants and indemnities made in connection with such facilities)
to the Issuer or any of its Restricted Subsidiaries (other than a Receivables
Subsidiary) pursuant to which the Issuer or any of its Restricted Subsidiaries
sells its accounts receivable to either (a) a Person that is not a
Restricted Subsidiary or (b) a Receivables Subsidiary that in turn sells
its accounts receivable to a Person that is not a Restricted Subsidiary.

 

“Receivables Fees” means distributions or payments
made directly or by means of discounts with respect to any accounts receivable
or participation interest therein issued or sold in connection with, and other
fees paid to a Person that is not a Restricted Subsidiary in connection with,
any Receivables Facility.

 

“Receivables
Subsidiary” means any Subsidiary formed for the purpose of, and that solely
engages only in one or more Receivables Facilities and other activities
reasonably related thereto.

 

25

 

“Record
Date” for the interest or Additional Interest, if any, payable on any applicable
Interest Payment Date means the April 15 or October 15 (whether or
not a Business Day) next preceding such Interest Payment Date.

 

“Registration
Rights Agreement” means the Registration Rights Agreement related to the
Notes dated as of the Issue Date, among the Issuer, the Guarantors and the
Initial Purchasers, as such agreement may be amended, modified or
supplemented from time to time and, with respect to any Additional Notes, one
or more registration rights agreements between the Issuer and the other parties
thereto, as such agreement(s) may be amended, modified or supplemented
from time to time, relating to rights given by the Issuer to the purchasers of Additional
Notes to register such Additional Notes under the Securities Act.

 

“Regulation
S” means Regulation S promulgated under the Securities Act.

 

“Regulation
S Global Note” means a Regulation S Temporary Global Note or Regulation S
Permanent Global Note, as applicable.

 

“Regulation
S Permanent Global Note” means a permanent Global Note in the form of Exhibit A
bearing the Global Note Legend and the Private Placement Legend and deposited
with or on behalf of and registered in the name of the Depositary or its
nominee, issued in a denomination equal to the outstanding principal amount of
the Regulation S Temporary Global Note upon expiration of the Restricted Period.

 

“Regulation
S Temporary Global Note” means a temporary Global Note in the form of Exhibit A
bearing the Global Note Legend, the Private Placement Legend and the Regulation
S Temporary Global Note Legend and deposited with or on behalf of and registered
in the name of the Depositary or its nominee, issued in a denomination equal to
the outstanding principal amount of the Notes initially sold in reliance on Rule 903.

 

“Regulation
S Temporary Global Note Legend” means the legend set forth in Section 2.06(g)(iii) hereof.

 

“Related Business Assets” means
assets (other than cash or Cash Equivalents) used or useful in a Similar
Business, provided that
any assets received by the Issuer or a Restricted Subsidiary in exchange for
assets transferred by the Issuer or a Restricted Subsidiary shall not be deemed
to be Related Business Assets if they consist of securities of a Person, unless
upon receipt of the securities of such Person, such Person would become a Restricted
Subsidiary.

 

“Representative” means any
trustee, agent or representative (if any) for an issue of Senior Indebtedness
of the Issuer or any Guarantor.

 

“Responsible
Officer” means, when used with respect to the Trustee, any officer within
the corporate trust department of the Trustee, including any vice president,
assistant vice president, assistant treasurer, trust officer or any other
officer of the Trustee who customarily performs functions similar to those
performed by the Persons who at the time shall be such officers, respectively,
or to whom any corporate trust matter is referred because of such Person’s
knowledge of and familiarity with the particular subject and who shall have
direct responsibility for the administration of this Indenture.

 

“Restricted
Definitive Note” means a Definitive Note bearing the Private Placement Legend.

 

26

 

“Restricted
Global Note” means a Global Note bearing the Private Placement Legend.

 

“Restricted
Investment” means an Investment other than a Permitted Investment.

 

“Restricted
Period” means the 40-day distribution compliance period as defined in Regulation
S.

 

“Restricted
Subsidiary” means, at any time, any direct or indirect Subsidiary of the
Issuer (including any Foreign Subsidiary) that is not then an Unrestricted
Subsidiary; provided, however, that upon the
occurrence of an Unrestricted Subsidiary ceasing to be an Unrestricted
Subsidiary, such Subsidiary shall be included in the definition of “Restricted
Subsidiary.”

 

“Revolving
Credit Facility” means the credit facility provided under the Senior
Secured Asset-Based Revolving Credit Agreement, to be entered into as of the
Issue Date by and among the Issuer, the lenders party thereto in their
capacities as lenders thereunder and Bank of America, N.A., as Administrative
Agent, including any notes, mortgages, guarantees, collateral documents,
instruments and agreements executed in connection therewith, and any
amendments, supplements, modifications, extensions, replacements, renewals,
restatements, refundings or refinancings thereof and any one or more indentures
or credit facilities or commercial paper facilities with banks or other
institutional lenders or investors that extend, replace, refund, refinance,
renew or defease any part of the loans, notes, other credit facilities or
commitments thereunder, including any such replacement, refunding or
refinancing facility or indenture that increases the amount borrowable
thereunder or alters the maturity thereof or adds Restricted Subsidiaries as
additional borrowers or guarantors thereunder and whether by the same or any
other agent, lender or group of lenders.

 

“Rule 144”
means Rule 144 promulgated under the Securities Act.

 

“Rule 144A”
means Rule 144A promulgated under the Securities Act.

 

“Rule 903”
means Rule 903 promulgated under the Securities Act.

 

“Rule 904”
means Rule 904 promulgated under the Securities Act.

 

“S&P”
means Standard & Poor’s, a division of The McGraw-Hill Companies, Inc.,
and any successor to its rating agency business.

 

“Sale and Lease-Back Transaction”
means any arrangement providing for the leasing by the Issuer or any of its
Restricted Subsidiaries of any real or tangible personal property, which
property has been or is to be sold or transferred by the Issuer or such
Restricted Subsidiary to a third Person in contemplation of such leasing.

 

“SEC” means the U.S. Securities
and Exchange Commission.

 

“Secured Indebtedness” means any Indebtedness
of the Issuer or any of its Restricted Subsidiaries secured by a Lien.

 

“Securities
Act” means the Securities Act of 1933, as amended, and the rules and
regulations of the SEC promulgated thereunder.

 

“Senior
Credit Facilities” means the Revolving Credit Facility and the Term Loan
Facility.

 

27

 

“Senior
Indebtedness” means:

 

(1)                                  all
Indebtedness of the Issuer or any Guarantor outstanding under the Senior Credit
Facilities or Senior Notes and related guarantees (including interest accruing
on or after the filing of any petition in bankruptcy or any similar proceeding
or for reorganization of the Issuer or any Guarantor (at the rate provided for
in the documentation with respect thereto, regardless of whether or not a claim
for post-filing interest is allowed in such proceedings)), and any and all
other fees, expense reimbursement obligations, indemnification amounts,
penalties, and other amounts (whether existing on the Issue Date or thereafter
created or incurred) and all obligations of the Issuer or any Guarantor to
reimburse any bank or other Person in respect of amounts paid under letters of
credit, acceptances or other similar instruments;

 

(2)                                  all
Hedging Obligations (and guarantees thereof) owing to a lender or any affiliate
of a lender under any Senior Credit Facility (or a Person who was such a lender
or an affiliate at the time such Hedging Obligations were entered into);

 

(3)                                  any
other Indebtedness of the Issuer or any Guarantor permitted to be incurred
under the terms of this Indenture, unless the instrument under which such
Indebtedness is incurred expressly provides that it is on a parity with or
subordinated in right of payment to the Notes or any Guarantee; and

 

(4)                                  all
Obligations with respect to the items listed in the preceding clauses (1), (2) and
(3);

 

provided,
however, that Senior Indebtedness shall not include:

 

(a)                                  any
obligation of such Person to the Issuer or any of its Subsidiaries;

 

(b)                                 any
liability for federal, state, local or other taxes owed or owing by such
Person;

 

(c)                                  any
accounts payable or other liability to trade creditors arising in the ordinary
course of business; provided that obligations incurred pursuant to the
Senior Credit Facilities shall not be excluded pursuant to this clause (c);

 

(d)                                 any
Indebtedness or other Obligation of such Person which is subordinate or junior
in any respect to any other Indebtedness or other Obligation of such Person; or

 

(e)                                  that
portion of any Indebtedness which at the time of incurrence is incurred in
violation of this Indenture; provided, however that such
Indebtedness shall be deemed not to have been incurred in violation of this
Indenture for purposes of this clause if such Indebtedness consists of
Designated Senior Indebtedness, and the holder(s) of such Indebtedness and
their Representative shall have received a certificate from an officer of the
Issuer to the effect that the incurrence of such Indebtedness does not (or, in
the case of a revolving credit facility thereunder, the incurrence of the
entire committed amount thereof at the date on which the initial borrowing
thereunder is made would not) violate the provisions of this Indenture.

 

“Senior
Notes” means the $750,000,000 aggregate principal amount of the Issuer’s 10%
senior notes due 2014 issued on the Issue Date.

 

28

 

“Senior
Subordinated Indebtedness” means:

 

(1)                                  with
respect to the Issuer, Indebtedness which ranks equal in right of payment to
the Notes issued by the Issuer; and

 

(2)                                  with
respect to any Guarantor, Indebtedness which ranks equal in right of payment to
the Guarantee of such entity of the Notes.

 

 “Shelf Registration Statement” means
the Shelf Registration Statement as defined in the Registration Rights
Agreement.

 

“Significant
Subsidiary” means any Restricted Subsidiary that would be a “significant
subsidiary” as defined in Article 1, Rule 1-02 of Regulation S-X,
promulgated pursuant to the Securities Act, as such regulation is in effect on
the Issue Date.

 

“Similar Business” means any
business conducted or proposed to be conducted by the Issuer and its Restricted
Subsidiaries on the Issue Date or any business that is a reasonable extension,
development or expansion of any of the foregoing or is similar, reasonably
related, incidental or ancillary thereto (including, for
the avoidance of doubt, any sourcing companies created in connection with any
of the foregoing).

 

“Specified
Legal Expenses” means all attorneys’ and experts’ fees and expenses and all
other costs and expenses paid or payable in connection with investigating or
defending or preparing to investigate or defend any threatened, pending,
completed or future claim, demand, action, suit, proceeding, inquiry or
investigation (whether civil, criminal, administrative or investigative)
arising out of or related to (i) the Issuer’s compensation practices
(including option grants) prior to the Issue Date, (ii) any disclosure or
alleged lack of disclosure on the part of the Issuer or any of its
directors or officers regarding the beneficial ownership of any securities of
the Issuer prior to the Issue Date by any such director or officer (or any
trust established for the benefit of any such director or officer or any family
member thereof), (iii) any transaction prior to the Issue Date involving
any securities of the Issuer alleged to have been engaged in by any such
Person, (iv) any alleged deficiencies in the Issuer’s financial reporting,
internal control over financial reporting or disclosure controls prior to the
Issue Date and procedures relating to any of the foregoing, and (v) any
alleged bad faith, breach of fiduciary duty or other act or omission on the part of
any director or officer of the Issuer relating to any of the foregoing,
together in each case with all damages, losses, liabilities, judgments, fines,
penalties and amounts paid in settlement arising out of or incurred in
connection with any of the foregoing (including all amounts paid to or on
behalf of other Persons in connection with any of the foregoing pursuant to any
indemnification agreements, arrangements or obligations).

 

“Sponsor
Management Agreement” means the management agreements between certain of
the management companies associated with the Investors and Highfields Capital,
and the Issuer, as in effect on the Issue Date and as amended, supplemented,
amended and restated, replaced or otherwise modified from time to time;
provided, however, that the terms of any such amendment, supplement, amendment
and restatement or replacement agreement are not, taken as a whole, less
favorable to the holders of the Notes in any material respect than the original
agreement in effect on the Issue Date.

 

“Subordinated
Discount Notes” means the $469,449,000 aggregate principal amount at
maturity of the Issuer’s 13% subordinated discount notes due 2016 issued on the
Issue Date.

 

29

 

“Subordinated Indebtedness” means,
with respect to the Notes,

 

(1)                                  any
Indebtedness of the Issuer which is by its terms subordinated in right of
payment to the Notes, and

 

(2)                                  any
Indebtedness of any Guarantor which is by its terms subordinated in right of
payment to the Guarantee of such entity of the Notes.

 

“Subsidiary”
means, with respect to any Person:

 

(1)                                  any
corporation, association, or other business entity (other than a partnership,
joint venture, limited liability company or similar entity) of which more than
50% of the total voting power of shares of Capital Stock entitled (without
regard to the occurrence of any contingency) to vote in the election of
directors, managers or trustees thereof is at the time of determination owned
or controlled, directly or indirectly, by such Person or one or more of the
other Subsidiaries of that Person or a combination thereof or is consolidated
under GAAP with such Person at such time; and

 

(2)                                  any
partnership, joint venture, limited liability company or similar entity of
which

 

(x)                                   more
than 50% of the capital accounts, distribution rights, total equity and voting
interests or general or limited partnership interests, as applicable, are owned
or controlled, directly or indirectly, by such Person or one or more of the
other Subsidiaries of that Person or a combination thereof whether in the form of
membership, general, special or limited partnership or otherwise, and

 

(y)                                  such Person or any
Restricted Subsidiary of such Person is a controlling general partner or
otherwise controls such entity.

 

“Term Loan Facility” means the credit facility provided under
the Senior Secured Term Loan Agreement, to be entered into as of the Issue Date
by and among the Issuer, the lenders party thereto in their capacities as
lenders thereunder and Deutsche Bank AG New York Branch, as Administrative
Agent, including any notes, mortgages, guarantees, collateral documents,
instruments and agreements executed in connection therewith, and any
amendments, supplements, modifications, extensions, replacements, renewals,
restatements, refundings or refinancings thereof and any one or more indentures
or credit facilities or commercial paper facilities with banks or other
institutional lenders or investors that extend, replace, refund, refinance,
renew or defease any part of the loans, notes, other credit facilities or
commitments thereunder, including any such replacement, refunding or
refinancing facility or indenture that increases the amount borrowable
thereunder or alters the maturity thereof or adds Restricted Subsidiaries as
additional borrowers or guarantors thereunder and whether by the same or any
other agent, lender or group of lenders.

 

“Total Assets” means the total
assets of the Issuer and its Restricted Subsidiaries on a consolidated basis,
as shown on the most recent balance sheet of the Issuer or such other Person as
may be expressly stated.

 

“Transaction Agreement” means the Agreement and Plan of Merger,
dated as of June 30, 2006 among Bain Paste Mergerco, Inc., Blackstone
Paste Mergerco, Inc., Bain Paste Finco, LLC, Blackstone Paste Finco, LLC
and the Issuer, as the same may be amended prior to the Issue Date.

 

30

 

“Transaction Expenses” means any fees or expenses incurred or
paid by the Issuer or any Restricted Subsidiary in connection with the
Transactions, including payments to officers, employees and directors as change
of control payments, severance payments, special or retention bonuses and
charges for repurchase or rollover of, or modifications to, stock options.

 

“Transactions” means the transactions contemplated by the
Transaction Agreement, the issuance of the Initial Notes, the Senior Notes and
the Subordinated Discount Notes and borrowings under the Senior Credit Facilities
as in effect on the Issue Date.

 

“Treasury Rate” means, as of any
Redemption Date, the yield to maturity as of such Redemption Date of United
States Treasury securities with a constant maturity (as compiled and published
in the most recent Federal Reserve Statistical Release H.15 (519) that has
become publicly available at least two Business Days prior to the Redemption
Date (or, if such Statistical Release is no longer published, any publicly
available source of similar market data)) most nearly equal to the period from
the Redemption Date to November 1, 2011; provided, however,
that if the period from the Redemption Date to November 1, 2011 is less
than one year, the weekly average yield on actually traded United States
Treasury securities adjusted to a constant maturity of one year will be used.

 

“Trust Indenture Act” means the Trust Indenture
Act of 1939, as amended (15 U.S.C. §§ 77aaa-77bbbb).

 

“Trustee”
means Wells Fargo Bank, National Association, as trustee, until a successor
replaces it in accordance with the applicable provisions of this Indenture and
thereafter means the successor serving hereunder.

 

“Unrestricted
Definitive Note” means one or more Definitive Notes that do not bear and
are not required to bear the Private Placement Legend.

 

“Unrestricted
Global Note” means a permanent Global Note, substantially in the form of
Exhibit A, that bears the Global Note Legend and that has the “Schedule of
Exchanges of Interests in the Global Note” attached thereto, and that is
deposited with or on behalf of and registered in the name of the Depositary,
representing Notes that do not bear the Private Placement Legend.

 

“Unrestricted
Subsidiary” means:

 

(1)                                  any
Subsidiary of the Issuer which at the time of determination is an Unrestricted
Subsidiary (as designated by the Issuer, as provided below); and

 

(2)                                  any
Subsidiary of an Unrestricted Subsidiary.

 

The Issuer may designate
any Subsidiary of the Issuer (including any existing Subsidiary and any newly
acquired or newly formed Subsidiary) to be an Unrestricted Subsidiary unless
such Subsidiary or any of its Subsidiaries owns any Equity Interests or Indebtedness
of, or owns or holds any Lien on, any property of, the Issuer or any Subsidiary
of the Issuer (other than solely any Subsidiary of the Subsidiary to be so designated);
provided that

 

(1)                                  any
Unrestricted Subsidiary must be an entity of which the Equity Interests
entitled to cast at least a majority of the votes that may be cast by all
Equity Interests having ordinary voting power for the election of directors or
Persons performing a similar function are owned, directly or indirectly, by the
Issuer;

 

31

 

(2)                                  such
designation complies with Section 4.07 hereof; and

 

(3)                                  each
of:

 

(a)                                  the
Subsidiary to be so designated; and

 

(b)                                 its
Subsidiaries

 

has not at the time of designation, and does not thereafter, create,
incur, issue, assume, guarantee or otherwise become directly or indirectly
liable with respect to any Indebtedness pursuant to which the lender has
recourse to any of the assets of the Issuer or any Restricted Subsidiary.

 

The Issuer may designate
any Unrestricted Subsidiary to be a Restricted Subsidiary; provided that, immediately after
giving effect to such designation, no Default shall have occurred and be continuing
and either:

 

(1)                                  the
Issuer could incur at least $1.00 of additional Indebtedness pursuant to the
Fixed Charge Coverage Ratio test described in Section 4.09(a) hereof;
or

 

(2)                                  the
Fixed Charge Coverage Ratio for the Issuer and its Restricted Subsidiaries
would be greater than such ratio for the Issuer and its Restricted Subsidiaries
immediately prior to such designation,

 

in each case
on a pro forma basis taking into
account such designation.

 

Any such
designation by the Issuer shall be notified by the Issuer to the Trustee by
promptly filing with the Trustee a copy of the resolution of the board of
directors of the Issuer or any committee thereof giving effect to such
designation and an Officer’s Certificate certifying that such designation
complied with the foregoing provisions.

 

“U.S.
Person” means a U.S. person as defined in Rule 902(k) under the
Securities Act.

 

“Voting
Stock” of any Person as of any date means the Capital Stock of such Person
that is at the time entitled to vote in the election of the board of directors
of such Person.

 

“Weighted
Average Life to Maturity” means, when applied to any Indebtedness,
Disqualified Stock or Preferred Stock, as the case may be, at any date,
the quotient obtained by dividing:

 

(1)                                  the
sum of the products of the number of years from the date of determination to
the date of each successive scheduled principal payment of such Indebtedness or
redemption or similar payment with respect to such Disqualified Stock or
Preferred Stock multiplied by the amount of such payment; by

 

(2)                                  the
sum of all such payments.

 

“Wholly-Owned
Subsidiary” of any Person means a Subsidiary of such Person, 100% of the
outstanding Equity Interests of which (other than directors’ qualifying shares
and shares issued to foreign nationals as required under applicable law) shall
at the time be owned by such Person or by one or more Wholly Owned Subsidiaries
of such Person or by such Person and one or more Wholly-Owned Subsidiaries of
such Person.

 

32

 

Section 1.02                                Other Definitions.

 

	
  Term

  	
   

  	
  Defined in

  Section

  	
   

  
	
  “Acceptable Commitment”

  	
   

  	
  4.10(b)

  	
   

  
	
  “Affiliate Transaction”

  	
   

  	
  4.11(a)

  	
   

  
	
  “Asset Sale Offer”

  	
   

  	
  4.10(c)

  	
   

  
	
  “Authentication Order”

  	
   

  	
  2.02

  	
   

  
	
  “Blockage Notice”

  	
   

  	
  10.03

  	
   

  
	
  “Change of Control Offer”

  	
   

  	
  4.14(a)

  	
   

  
	
  “Change of Control Payment”

  	
   

  	
  4.14(a)

  	
   

  
	
  “Change of Control Payment Date”

  	
   

  	
  4.14(a)

  	
   

  
	
  “Covenant Defeasance”

  	
   

  	
  8.03

  	
   

  
	
  “Covenant Suspension Event”

  	
   

  	
  4.16(a)

  	
   

  
	
  “DTC”

  	
   

  	
  2.03

  	
   

  
	
  “Event of Default”

  	
   

  	
  6.01(a)

  	
   

  
	
  “Excess Proceeds”

  	
   

  	
  4.10(c)

  	
   

  
	
  “Guarantee Blockage Notice”

  	
   

  	
  12.03

  	
   

  
	
  “Guarantee Payment Blockage Period”

  	
   

  	
  12.03

  	
   

  
	
  “Guarantor Non-Payment Default”

  	
   

  	
  12.03

  	
   

  
	
  “Guarantor Payment Default”

  	
   

  	
  12.03

  	
   

  
	
  “incur” or “incurrence”

  	
   

  	
  4.09(a)

  	
   

  
	
  “Legal Defeasance”

  	
   

  	
  8.02

  	
   

  
	
  “Non-Payment Default”

  	
   

  	
  10.03

  	
   

  
	
  “Note Register”

  	
   

  	
  2.03

  	
   

  
	
  “Offer Amount”

  	
   

  	
  3.09(b)

  	
   

  
	
  “Offer Period”

  	
   

  	
  3.09(b)

  	
   

  
	
  “Pari Passu Indebtedness”

  	
   

  	
  4.10(c)

  	
   

  
	
  “pay its Guarantee”

  	
   

  	
  12.03

  	
   

  
	
  “pay the Notes”

  	
   

  	
  10.03

  	
   

  
	
  “Paying Agent”

  	
   

  	
  2.03

  	
   

  
	
  “Payment Blockage Period”

  	
   

  	
  10.03

  	
   

  
	
  “Payment Default”

  	
   

  	
  10.03

  	
   

  
	
  “Purchase Date”

  	
   

  	
  3.09(b)

  	
   

  
	
  “Redemption Date”

  	
   

  	
  3.07(a)

  	
   

  
	
  “Refinancing Indebtedness”

  	
   

  	
  4.09(b)

  	
   

  
	
  “Refunding Capital Stock”

  	
   

  	
  4.07(b)

  	
   

  
	
  “Registrar”

  	
   

  	
  2.03

  	
   

  
	
  “Restricted Payments”

  	
   

  	
  4.07(a)

  	
   

  
	
  “Reversion Date”

  	
   

  	
  4.16(b)

  	
   

  
	
  “Second Commitment”

  	
   

  	
  4.10(b)

  	
   

  
	
  “Successor Company”

  	
   

  	
  5.01(a)

  	
   

  
	
  “Successor Person”

  	
   

  	
  5.01(c)

  	
   

  
	
  “Suspended Covenants”

  	
   

  	
  4.16(a)

  	
   

  
	
  “Suspension Period”

  	
   

  	
  4.16(b)

  	
   

  
	
  “Treasury Capital Stock”

  	
   

  	
  4.07(b)

  	
   

  

 

33

 

Section 1.03                                Incorporation by
Reference of Trust Indenture Act.

 

Whenever this
Indenture refers to a provision of the Trust Indenture Act, the provision is incorporated
by reference in and made a part of this Indenture.

 

The following Trust
Indenture Act terms used in this Indenture have the following meanings:

 

“indenture
securities” means the Notes;

 

“indenture
security Holder” means a Holder of a Note;

 

“indenture to
be qualified” means this Indenture;

 

“indenture
trustee” or “institutional trustee” means the Trustee; and

 

“obligor” on the Notes and the Guarantees
means the Issuer and the Guarantors, respectively, and any successor obligor
upon the Notes and the Guarantees, respectively.

 

All other
terms used in this Indenture that are defined by the Trust Indenture Act,
defined by Trust Indenture Act reference to another statute or defined by SEC rule under
the Trust Indenture Act have the meanings so assigned to them.

 

Section 1.04                                Rules of
Construction.

 

Unless the
context otherwise requires:

 

(a)                                  a term has the
meaning assigned to it;

 

(b)                                 an accounting term not
otherwise defined has the meaning assigned to it in accordance with GAAP;

 

(c)                                  “or” is not
exclusive;

 

(d)                                 words in the singular
include the plural, and in the plural include the singular;

 

(e)                                  “will” shall be
interpreted to express a command;

 

(f)                                    provisions apply to
successive events and transactions;

 

(g)                                 references to sections
of, or rules under, the Securities Act shall be deemed to include
substitute, replacement or successor sections or rules adopted by the SEC
from time to time;

 

(h)                                 unless the context otherwise
requires, any reference to an “Article,” “Section” or “clause” refers to an
Article, Section or clause, as the case may be, of this Indenture;

 

(i)                                     words used herein implying any gender
shall apply to both genders;

 

(j)                                     the words “including,” “includes” and
similar words shall be deemed to be followed by “without limitation”;

 

34

 

(k)                                  the principal amount of any non-interest
bearing or other discount security at any date shall be the principal amount thereof
that would be shown on a balance sheet of the Issuer dated such date prepared
in accordance with GAAP;

 

(l)                                     the principal amount of any Preferred
Stock shall be (i) the maximum liquidation value of such Preferred Stock
or (ii) the maximum mandatory redemption or mandatory repurchase price
with respect to such Preferred Stock, whichever is greater; and

 

(m)                               the words “herein,” “hereof”
and “hereunder” and other words of similar import refer to this Indenture as a
whole and not any particular Article, Section, clause or other subdivision.

 

Section 1.05                                Acts of Holders.

 

(a)                                  Any
request, demand, authorization, direction, notice, consent, waiver or other
action provided by this Indenture to be given or taken by Holders may be
embodied in and evidenced by one or more instruments of substantially similar
tenor signed by such Holders in person or by an agent duly appointed in writing.
Except as herein otherwise expressly provided, such action shall become
effective when such instrument or instruments are delivered to the Trustee and,
where it is hereby expressly required, to the Issuer. Proof of execution of any
such instrument or of a writing appointing any such agent, or the holding by
any Person of a Note, shall be sufficient for any purpose of this Indenture and
(subject to Section 7.01) conclusive in favor of the Trustee and the Issuer,
if made in the manner provided in this Section 1.05.

 

(b)                                 The
fact and date of the execution by any Person of any such instrument or writing may be
proved by the affidavit of a witness of such execution or by the certificate of
any notary public or other officer authorized by law to take acknowledgments of
deeds, certifying that the individual signing such instrument or writing
acknowledged to him the execution thereof. Where such execution is by or on
behalf of any legal entity other than an individual, such certificate or
affidavit shall also constitute proof of the authority of the Person executing
the same. The fact and date of the execution of any such instrument or writing,
or the authority of the Person executing the same, may also be proved in
any other manner that the Trustee deems sufficient.

 

(c)                                  The
ownership of Notes shall be proved by the Note Register.

 

(d)                                 Any
request, demand, authorization, direction, notice, consent, waiver or other
action by the Holder of any Note shall bind every future Holder of the same Note
and the Holder of every Note issued upon the registration of transfer thereof
or in exchange therefor or in lieu thereof, in respect of any action taken,
suffered or omitted by the Trustee or the Issuer in reliance thereon, whether
or not notation of such action is made upon such Note.

 

(e)                                  The
Issuer may, in the circumstances permitted by the Trust Indenture Act, set a
record date for purposes of determining the identity of Holders entitled to
give any request, demand, authorization, direction, notice, consent, waiver or
take any other act, or to vote or consent to any action by vote or consent
authorized or permitted to be given or taken by Holders. Unless otherwise
specified, if not set by the Issuer prior to the first solicitation of a Holder
made by any Person in respect of any such action, or in the case of any such
vote, prior to such vote, any such record date shall be the later of 30 days
prior to the first solicitation of such consent or the date of the most recent
list of Holders furnished to the Trustee prior to such solicitation.

 

35

 

(f)                                    Without
limiting the foregoing, a Holder entitled to take any action hereunder with
regard to any particular Note may do so with regard to all or any part of
the principal amount of such Note or by one or more duly appointed agents, each
of which may do so pursuant to such appointment with regard to all or any part of
such principal amount. Any notice given or action taken by a Holder or its
agents with regard to different parts of such principal amount pursuant to this
paragraph shall have the same effect as if given or taken by separate Holders
of each such different part.

 

(g)                                 Without
limiting the generality of the foregoing, a Holder, including DTC, that is the
Holder of a Global Note, may make, give or take, by a proxy or proxies
duly appointed in writing, any request, demand, authorization, direction,
notice, consent, waiver or other action provided in this Indenture to be made,
given or taken by Holders, and any Person that is the Holder of a Global Note,
including DTC, may provide its proxy or proxies to the beneficial owners
of interests in any such Global Note through such depositary’s standing
instructions and customary practices.

 

(h)                                 The
Issuer may fix a record date for the purpose of determining the Persons
who are beneficial owners of interests in any Global Note held by DTC entitled
under the procedures of such depositary to make, give or take, by a proxy or
proxies duly appointed in writing, any request, demand, authorization,
direction, notice, consent, waiver or other action provided in this Indenture
to be made, given or taken by Holders. If such a record date is fixed, the
Holders on such record date or their duly appointed proxy or proxies, and only
such Persons, shall be entitled to make, give or take such request, demand,
authorization, direction, notice, consent, waiver or other action, whether or
not such Holders remain Holders after such record date. No such request,
demand, authorization, direction, notice, consent, waiver or other action shall
be valid or effective if made, given or taken more than 90 days after such record
date.

 

ARTICLE 2

 

THE NOTES

 

Section 2.01                                Form and
Dating; Terms.

 

(a)                                  General.
The Notes and the Trustee’s certificate of authentication shall be
substantially in the form of Exhibit A hereto. The Notes may have
notations, legends or endorsements required by law, stock exchange rules or
usage. Each Note shall be dated the date of its authentication. The Notes shall
be in denominations of $1,000 and integral multiples of $1,000 in excess of
$1,000.

 

(b)                                 Global
Notes. Notes issued in global form shall be substantially in the form of
Exhibit A attached hereto (including the Global Note Legend thereon
and the “Schedule of Exchanges of Interests in the Global Note” attached
thereto). Notes issued in definitive form shall be substantially in the form of
Exhibit A attached hereto (but without the Global Note Legend
thereon and without the “Schedule of Exchanges of Interests in the Global
Note” attached thereto). Each Global Note shall represent such of the
outstanding Notes as shall be specified in the “Schedule of Exchanges of
Interests in the Global Note” attached thereto and each shall provide that it
shall represent up to the aggregate principal amount of Notes from time to time
endorsed thereon and that the aggregate principal amount of outstanding Notes
represented thereby may from time to time be reduced or increased, as applicable,
to reflect exchanges and redemptions. Any endorsement of a Global Note to
reflect the amount of any increase or decrease in the aggregate principal
amount of outstanding Notes represented thereby shall be made by the Trustee or
the Custodian, at the direction of the Trustee, in accordance with instructions
given by the Holder thereof as required by Section 2.06 hereof.

 

36

 

(c)                                  Temporary
Global Notes. Notes offered and sold in reliance on Regulation S shall be
issued initially in the form of the Regulation S Temporary Global Note,
which shall be deposited on behalf of the purchasers of the Notes represented
thereby with the Trustee, as custodian for the Depositary, and registered in
the name of the Depositary or the nominee of the Depositary for the accounts of
designated agents holding on behalf of Euroclear or Clearstream, duly executed
by the Issuer and authenticated by the Trustee as hereinafter provided. The
Restricted Period shall be terminated upon the receipt by the Trustee of:

 

(i)                                     a written
certificate from the Depositary, together with copies of certificates from
Euroclear and Clearstream certifying that they have received certification of
non-United States beneficial ownership of 100% of the aggregate principal
amount of the Regulation S Temporary Global Note (except to the extent of any
beneficial owners thereof who acquired an interest therein during the
Restricted Period pursuant to another exemption from registration under the
Securities Act and who shall take delivery of a beneficial ownership interest
in a 144A Global Note bearing a Private Placement Legend, all as contemplated
by Section 2.06(b) hereof); and

 

(ii)                                  an Officer’s
Certificate from the Issuer.

 

Following the
termination of the Restricted Period, beneficial interests in the
Regulation S Temporary Global Note shall be exchanged for beneficial
interests in the Regulation S Permanent Global Note pursuant to the Applicable
Procedures. Simultaneously with the authentication of the Regulation S
Permanent Global Note, the Trustee shall cancel the Regulation S Temporary
Global Note. The aggregate principal amount of the Regulation S Temporary
Global Note and the Regulation S Permanent Global Note may from time to
time be increased or decreased by adjustments made on the records of the
Trustee and the Depositary or its nominee, as the case may be, in
connection with transfers of interest as hereinafter provided.

 

(d)                                 Terms.
The aggregate principal amount of Notes that may be authenticated and
delivered under this Indenture is unlimited.

 

The terms and
provisions contained in the Notes shall constitute, and are hereby expressly
made, a part of this Indenture and the Issuer, the Guarantors and the
Trustee, by their execution and delivery of this Indenture, expressly agree to
such terms and provisions and to be bound thereby. However, to the extent any
provision of any Note conflicts with the express provisions of this Indenture,
the provisions of this Indenture shall govern and be controlling.

 

The Notes
shall be subject to repurchase by the Issuer pursuant to an Asset Sale Offer as
provided in Section 4.10 hereof or a Change of Control Offer as provided
in Section 4.14 hereof. The Notes shall not be redeemable, other than as
provided in Article 3.

 

Additional
Notes ranking pari  passu
with the Initial Notes may be created and issued from time to time by the
Issuer without notice to or consent of the Holders and shall be consolidated
with and form a single class with the Initial Notes and shall have
the same terms as to status, redemption or otherwise as the Initial Notes; provided
that the Issuer’s ability to issue Additional Notes shall be subject to the
Issuer’s compliance with Section 4.09 hereof. Any Additional Notes shall
be issued with the benefit of an indenture supplemental to this Indenture.

 

(e)                                  Euroclear
and Clearstream Procedures Applicable. The provisions of the “Operating
Procedures of the Euroclear System” and “Terms and Conditions Governing Use of
Euroclear” and the “General Terms and Conditions of Clearstream Banking” and “Customer
Handbook” of Clearstream

 

37

 

shall be applicable to transfers
of beneficial interests in the Regulation S Temporary Global Note and the
Regulation S Permanent Global Notes that are held by Participants through
Euroclear or Clearstream.

 

Section 2.02                                Execution and
Authentication.

 

At least one
Officer shall execute the Notes on behalf of the Issuer by manual or facsimile
signature.

 

If an Officer
whose signature is on a Note no longer holds that office at the time a Note is
authenticated, the Note shall nevertheless be valid.

 

A Note shall
not be entitled to any benefit under this Indenture or be valid or obligatory
for any purpose until authenticated substantially in the form of Exhibit A
attached hereto by the manual or facsimile signature of the Trustee. The
signature shall be conclusive evidence that the Note has been duly authenticated
and delivered under this Indenture.

 

On the Issue
Date, the Trustee shall, upon receipt of an Issuer Order (an “Authentication
Order”), authenticate and deliver the Initial Notes. In addition, at any
time, from time to time, the Trustee shall upon an Authentication Order authenticate
and deliver any Additional Notes and Exchange Notes for an aggregate principal amount
specified in such Authentication Order for such Additional Notes or Exchange
Notes issued hereunder.

 

The Trustee may appoint
an authenticating agent acceptable to the Issuer to authenticate Notes. An
authenticating agent may authenticate Notes whenever the Trustee may do
so. Each reference in this Indenture to authentication by the Trustee includes
authentication by such agent. An authenticating agent has the same rights as an
Agent to deal with Holders or an Affiliate of the Issuer.

 

Section 2.03                                Registrar and Paying
Agent.

 

The Issuer
shall maintain an office or agency in the Borough of Manhattan, City of New
York, where Notes may be presented for registration of transfer or for
exchange (“Registrar”) and an office or agency in the Borough of
Manhattan, City of New York,  where Notes
may be presented for payment (“Paying Agent”). The Registrar shall
keep a register of the Notes (“Note Register”) and of their transfer and
exchange. The Issuer may appoint one or more co-registrars and one or more
additional paying agents. The term “Registrar” includes any co-registrar and
the term “Paying Agent” includes any additional paying agent. The Issuer may change
any Paying Agent or Registrar without prior notice to any Holder. The Issuer shall
notify the Trustee in writing of the name and address of any Agent not a party
to this Indenture. If the Issuer fails to appoint or maintain another entity as
Registrar or Paying Agent, the Trustee shall act as such. The Issuer or any of
its Subsidiaries may act as Paying Agent or Registrar.

 

The Issuer
initially appoints The Depository Trust Company (“DTC”) to act as Depositary
with respect to the Global Notes.

 

The Issuer
initially appoints the Trustee to act as the Paying Agent and Registrar for the
Notes and to act as Custodian with respect to the Global Notes.

 

Section 2.04                                Paying Agent To Hold
Money in Trust.

 

The Issuer
shall require each Paying Agent other than the Trustee to agree in writing that
the Paying Agent shall hold in trust for the benefit of Holders or the Trustee
all money held by the Paying Agent for the payment of principal, premium, if
any, or Additional Interest, if any, or interest on the

 

38

 

Notes, and
will notify the Trustee of any default by the Issuer in making any such
payment. While any such default continues, the Trustee may require a
Paying Agent to pay all money held by it to the Trustee. The Issuer at any time
may require a Paying Agent to pay all money held by it to the Trustee. Upon
payment over to the Trustee, the Paying Agent (if other than the Issuer or a
Subsidiary) shall have no further liability for the money. If the Issuer or a
Subsidiary acts as Paying Agent, it shall segregate and hold in a separate
trust fund for the benefit of the Holders all money held by it as Paying Agent.
Upon any bankruptcy or reorganization proceedings relating to the Issuer, the
Trustee shall serve as Paying Agent for the Notes.

 

Section 2.05                                Holder Lists.

 

The Trustee
shall preserve in as current a form as is reasonably practicable the most
recent list available to it of the names and addresses of all Holders and shall
otherwise comply with Trust Indenture Act Section 312(a). If the Trustee is
not the Registrar, the Issuer shall furnish to the Trustee at least two Business
Days before each Interest Payment Date and at such other times as the Trustee may request
in writing, a list in such form and as of such date as the Trustee may reasonably
require of the names and addresses of the Holders of Notes and the Issuer shall
otherwise comply with Trust Indenture Act Section 312(a).

 

Section 2.06                                Transfer and
Exchange.

 

(a)                                  Transfer
and Exchange of Global Notes. Except as otherwise set forth in this Section 2.06,
a Global Note may be transferred, in whole and not in part, only to another
nominee of the Depositary or to a successor Depositary or a nominee of such
successor Depositary. A beneficial interest in a Global Note may not be exchanged
for a Definitive Note unless (i) the Depositary (x) notifies the Issuer
that it is unwilling or unable to continue as Depositary for such Global Note
or (y) has ceased to be a clearing agency registered under the Exchange Act and,
in either case, a successor Depositary is not appointed by the Issuer within
120 days or (ii) there shall have occurred and be continuing a Default
with respect to the Notes. Upon the occurrence of any of the preceding events
in (i) or (ii) above, Definitive Notes delivered in exchange for any
Global Note or beneficial interests therein will be registered in the names, and
issued in any approved denominations, requested by or on behalf of the
Depositary (in accordance with its customary procedures). Global Notes also may be
exchanged or replaced, in whole or in part, as provided in Sections 2.07 and 2.10
hereof. Every Note authenticated and delivered in exchange for, or in lieu of,
a Global Note or any portion thereof, pursuant to this Section 2.06 or Section 2.07
or 2.10 hereof, shall be authenticated and delivered in the form of, and
shall be, a Global Note, except for Definitive Notes issued subsequent to any
of the preceding events in (i) or (ii) above and pursuant to Section 2.06(c) hereof.
A Global Note may not be exchanged for another Note other than as provided
in this Section 2.06(a); provided, however, beneficial
interests in a Global Note may be transferred and exchanged as provided in
Section 2.06(b), (c) or (f) hereof.

 

(b)                                 Transfer
and Exchange of Beneficial Interests in the Global Notes. The transfer and
exchange of beneficial interests in the Global Notes shall be effected through
the Depositary, in accordance with the provisions of this Indenture and the
Applicable Procedures. Beneficial interests in the Restricted Global Notes
shall be subject to restrictions on transfer comparable to those set forth
herein to the extent required by the Securities Act. Transfers of beneficial
interests in the Global Notes also shall require compliance with either
subparagraph (i) or (ii) below, as applicable, as well as one or more
of the other following subparagraphs, as applicable:

 

(i)                                     Transfer of
Beneficial Interests in the Same Global Note. Beneficial interests in any
Restricted Global Note may be transferred to Persons who take delivery
thereof in the form of a beneficial interest in the same Restricted Global
Note in accordance with the transfer restrictions

 

39

 

set forth in the Private Placement Legend; provided, however,
that prior to the expiration of the Restricted Period, transfers of beneficial interests
in the Regulation S Temporary Global Note may not be made to a U.S. Person
or for the account or benefit of a U.S. Person (other than an Initial
Purchaser). Beneficial interests in any Unrestricted Global Note may be
transferred to Persons who take delivery thereof in the form of a
beneficial interest in an Unrestricted Global Note. No written orders or
instructions shall be required to be delivered to the Registrar to effect the
transfers described in this Section 2.06(b)(i).

 

(ii)               All Other Transfers and Exchanges of
Beneficial Interests in Global Notes. In connection with all transfers and
exchanges of beneficial interests that are not subject to Section 2.06(b)(i) hereof, the transferor of such
beneficial interest must deliver to the Registrar either (A) (1) a written
order from a Participant or an Indirect Participant given to the Depositary in
accordance with the Applicable Procedures directing the Depositary to credit or
cause to be credited a beneficial interest in another Global Note in an amount
equal to the beneficial interest to be transferred or exchanged and (2) instructions
given in accordance with the Applicable Procedures containing information
regarding the Participant account to be credited with such increase or (B) (1) a
written order from a Participant or an Indirect Participant given to the
Depositary in accordance with the Applicable Procedures directing the
Depositary to cause to be issued a Definitive Note in an amount equal to the
beneficial interest to be transferred or exchanged and (2) instructions
given by the Depositary to the Registrar containing information regarding the
Person in whose name such Definitive Note shall be registered to effect the
transfer or exchange referred to in (1) above; provided that in no
event shall Definitive Notes be issued upon the transfer or exchange of
beneficial interests in the Regulation S Temporary Global Note prior to (A) the
expiration of the Restricted Period and (B) the receipt by the Registrar
of any certificates required pursuant to Rule 903. Upon consummation of an
Exchange Offer by the Issuer in accordance with Section 2.06(f) hereof,
the requirements of this Section 2.06(b)(ii) shall be deemed to have
been satisfied upon receipt by the Registrar of the instructions contained in the
Letter of Transmittal delivered by the Holder of such beneficial interests in
the Restricted Global Notes. Upon satisfaction of all of the requirements for
transfer or exchange of beneficial interests in Global Notes contained in this
Indenture and the Notes or otherwise applicable under the Securities Act, the
Trustee shall adjust the principal amount of the relevant Global Note(s)
pursuant to Section 2.06(h) hereof.

 

(iii)            Transfer of Beneficial Interests to
Another Restricted Global Note. A beneficial interest in any Restricted
Global Note may be transferred to a Person who takes delivery thereof in
the form of a beneficial interest in another Restricted Global Note if the
transfer complies with the requirements of Section 2.06(b)(ii) hereof and the Registrar receives the
following:

 

(A)                              if the transferee will
take delivery in the form of a beneficial interest in the 144A Global
Note, then the transferor must deliver a certificate in the form of Exhibit B
hereto, including the certifications in item (1) thereof; or

 

(B)                                if the transferee will
take delivery in the form of a beneficial interest in the Regulation S
Global Note, then the transferor must deliver a certificate in the form of
Exhibit B hereto, including the certifications in item (2) thereof.

 

(iv)           Transfer and Exchange of Beneficial
Interests in a Restricted Global Note for Beneficial Interests in an
Unrestricted Global Note. A beneficial interest in any Restricted Global
Note may be exchanged by any holder thereof for a beneficial interest in
an Unrestricted Global Note or transferred to a Person who takes delivery
thereof in the form of a beneficial interest in an

 

40

 

Unrestricted Global Note if the exchange or transfer complies with the
requirements of Section 2.06(b)(ii) hereof and:

 

(A)                              such exchange or transfer
is effected pursuant to the Exchange Offer in accordance with the Registration
Rights Agreement and the holder of the beneficial interest to be transferred,
in the case of an exchange, or the transferee, in the case of a transfer, certifies
in the applicable Letter of Transmittal that it is not (1) a Participating
Broker-Dealer, (2) a Person participating in the distribution of the Exchange
Notes or (3) a Person who is an affiliate (as defined in Rule 144) of
the Issuer;

 

(B)                                such transfer is
effected pursuant to the Shelf Registration Statement in accordance with the
Registration Rights Agreement;

 

(C)                                such transfer is
effected by a Participating Broker-Dealer pursuant to the Exchange Offer
Registration Statement in accordance with the Registration Rights Agreement; or

 

(D)                               the Registrar receives
the following:

 

(1)                                  if the holder of such
beneficial interest in a Restricted Global Note proposes to exchange such
beneficial interest for a beneficial interest in an Unrestricted Global Note, a
certificate from such Holder substantially in the form of Exhibit C
hereto, including the certifications in item (1)(a) thereof; or

 

(2)                                  if the holder of such
beneficial interest in a Restricted Global Note proposes to transfer such
beneficial interest to a Person who shall take delivery thereof in the form of
a beneficial interest in an Unrestricted Global Note, a certificate from such
holder in the form of Exhibit B hereto, including the
certifications in item (4) thereof;

 

and, in each
such case set forth in this subparagraph (D), if the Registrar so requests or
if the Applicable Procedures so require, an Opinion of Counsel in form reasonably
acceptable to the Registrar to the effect that such exchange or transfer is in compliance
with the Securities Act and that the restrictions on transfer contained herein
and in the Private Placement Legend are no longer required in order to maintain
compliance with the Securities Act.

 

If any such transfer is
effected pursuant to subparagraph (B) or (D) above at a time when an
Unrestricted Global Note has not yet been issued, the Issuer shall issue and,
upon receipt of an Authentication Order in accordance with Section 2.02
hereof, the Trustee shall authenticate one or more Unrestricted Global Notes in
an aggregate principal amount equal to the aggregate principal amount of beneficial
interests transferred pursuant to subparagraph (B) or (D) above.

 

Beneficial interests in an
Unrestricted Global Note cannot be exchanged for, or transferred to Persons who
take delivery thereof in the form of, a beneficial interest in a Restricted
Global Note.

 

(c)                                  Transfer
or Exchange of Beneficial Interests for Definitive Notes.

 

(i)                                     Beneficial
Interests in Restricted Global Notes to Restricted Definitive Notes. If any
holder of a beneficial interest in a Restricted Global Note proposes to
exchange such beneficial interest

 

41

 

for a Restricted Definitive Note or to
transfer such beneficial interest to a Person who takes delivery thereof in the
form of a Restricted Definitive Note, then, upon the occurrence of any of
the events in paragraph (i) or (ii) of Section 2.06(a) hereof and receipt by the Registrar
of the following documentation:

 

(A)                              if the holder of such
beneficial interest in a Restricted Global Note proposes to exchange such
beneficial interest for a Restricted Definitive Note, a certificate from such
holder substantially in the form of Exhibit C hereto,
including the certifications in item (2)(a) thereof;

 

(B)                                if such beneficial
interest is being transferred to a QIB in accordance with Rule 144A, a
certificate substantially in the form of Exhibit B hereto,
including the certifications in item (1) thereof;

 

(C)                                if such beneficial
interest is being transferred to a Non-U.S. Person in an offshore transaction
in accordance with Rule 903 or Rule 904, a certificate substantially
in the form of Exhibit B hereto, including the certifications
in item (2) thereof;

 

(D)                               if such beneficial
interest is being transferred pursuant to an exemption from the registration
requirements of the Securities Act in accordance with Rule 144, a
certificate substantially in the form of Exhibit B hereto,
including the certifications in item (3)(a) thereof;

 

(E)                                 if such beneficial
interest is being transferred to the Issuer or any of its Restricted
Subsidiaries, a certificate substantially in the form of Exhibit B
hereto, including the certifications in item (3)(b) thereof; or

 

(F)                                 if such beneficial
interest is being transferred pursuant to an effective registration statement
under the Securities Act, a certificate substantially in the form of Exhibit B
hereto, including the certifications in item (3)(c) thereof,

 

the Trustee
shall cause the aggregate principal amount of the applicable Global Note to be
reduced accordingly pursuant to Section 2.06(h) hereof, and the
Issuer shall execute and the Trustee shall authenticate and mail to the Person
designated in the instructions a Definitive Note in the applicable principal
amount. Any Definitive Note issued in exchange for a beneficial interest in a
Restricted Global Note pursuant to this Section 2.06(c) shall be registered
in such name or names and in such authorized denomination or denominations as
the holder of such beneficial interest shall instruct the Registrar through
instructions from the Depositary and the Participant or Indirect Participant. The
Trustee shall mail such Definitive Notes to the Persons in whose names such
Notes are so registered. Any Definitive Note issued in exchange for a
beneficial interest in a Restricted Global Note pursuant to this Section 2.06(c)(i) shall
bear the Private Placement Legend and shall be subject to all restrictions on
transfer contained therein.

 

(ii)                                  Beneficial
Interests in Regulation S Temporary Global Note to Definitive Notes.  Notwithstanding Sections 2.06(c)(i)(A) and
(C) hereof, a beneficial interest in the Regulation S Temporary Global Note
may not be exchanged for a Definitive Note or transferred to a Person who
takes delivery thereof in the form of a Definitive Note prior to (A) the
expiration of the Restricted Period and (B) the receipt by the Registrar
of any certificates required pursuant to Rule 903(b)(3)(ii)(B) of the
Securities Act, except in the case of a transfer pursuant to an exemption from
the registration requirements of the Securities Act other than Rule 903 or
Rule 904.

 

(iii)                               Beneficial Interests
in Restricted Global Notes to Unrestricted Definitive Notes. A holder of a
beneficial interest in a Restricted Global Note may exchange such
beneficial interest for an Unrestricted Definitive Note or may transfer
such beneficial interest to a Person who takes delivery

 

42

 

thereof in the form of an Unrestricted
Definitive Note only upon the occurrence of any of the events in subsection (i) or
(ii) of Section 2.06(a) hereof
and if:

 

(A)                              such exchange or transfer
is effected pursuant to the Exchange Offer in accordance with the Registration
Rights Agreement and the holder of such beneficial interest, in the case of an exchange,
or the transferee, in the case of a transfer, certifies in the applicable
Letter of Transmittal that it is not (1) a Participating Broker-Dealer, (2) a
Person participating in the distribution of the Exchange Notes or (3) a
Person who is an affiliate (as defined in Rule 144) of the Issuer;

 

(B)                                such transfer is
effected pursuant to the Shelf Registration Statement in accordance with the
Registration Rights Agreement;

 

(C)                                such transfer is
effected by a Participating Broker-Dealer pursuant to the Exchange Offer
Registration Statement in accordance with the Registration Rights Agreement; or

 

(D)                               the Registrar receives the
following:

 

(1)                                  if the holder of such
beneficial interest in a Restricted Global Note proposes to exchange such
beneficial interest for an Unrestricted Definitive Note, a certificate from
such holder substantially in the form of Exhibit C hereto,
including the certifications in item (1)(b) thereof; or

 

(2)                                  if the holder of such
beneficial interest in a Restricted Global Note proposes to transfer such
beneficial interest to a Person who shall take delivery thereof in the form of
an Unrestricted Definitive Note, a certificate from such holder substantially
in the form of Exhibit B hereto, including the certifications
in item (4) thereof;

 

and, in each such case set forth in this subparagraph (D), if the Registrar
so requests or if the Applicable Procedures so require, an Opinion of Counsel
in form reasonably acceptable to the Registrar to the effect that such
exchange or transfer is in compliance with the Securities Act and that the
restrictions on transfer contained herein and in the Private Placement Legend
are no longer required in order to maintain compliance with the Securities Act.

 

(iv)                              Beneficial Interests
in Unrestricted Global Notes to Unrestricted Definitive Notes. If any
holder of a beneficial interest in an Unrestricted Global Note proposes to exchange
such beneficial interest for a Definitive Note or to transfer such beneficial
interest to a Person who takes delivery thereof in the form of a
Definitive Note, then, upon the occurrence of any of the events in subsection (i) or
(ii) of Section 2.06(a) hereof
and satisfaction of the conditions set forth in Section 2.06(b)(ii) hereof,
the Trustee shall cause the aggregate principal amount of the applicable Global
Note to be reduced accordingly pursuant to Section 2.06(h) hereof,
and the Issuer shall execute and the Trustee shall authenticate and mail to the
Person designated in the instructions a Definitive Note in the applicable principal
amount. Any Definitive Note issued in exchange for a beneficial interest pursuant
to this Section 2.06(c)(iv) shall be registered in such name or names
and in such authorized denomination or denominations as the holder of such
beneficial interest shall instruct the Registrar through instructions from or
through the Depositary and the Participant or Indirect Participant. The Trustee
shall mail such Definitive Notes to the Persons in whose names such Notes are
so registered. Any Definitive Note issued in exchange for a beneficial interest
pursuant to this Section 2.06(c)(iv) shall not bear the Private
Placement Legend.

 

43

 

(d)                                 Transfer
and Exchange of Definitive Notes for Beneficial Interests.

 

(i)                                     Restricted
Definitive Notes to Beneficial Interests in Restricted Global Notes. If any
Holder of a Restricted Definitive Note proposes to exchange such Note for a
beneficial interest in a Restricted Global Note or to transfer such Restricted
Definitive Note to a Person who takes delivery thereof in the form of a
beneficial interest in a Restricted Global Note, then, upon receipt by the
Registrar of the following documentation:

 

(A)                              if the Holder of such
Restricted Definitive Note proposes to exchange such Note for a beneficial
interest in a Restricted Global Note, a certificate from such Holder
substantially in the form of Exhibit C hereto, including the
certifications in item (2)(b) thereof;

 

(B)                                if such Restricted
Definitive Note is being transferred to a QIB in accordance with Rule 144A,
a certificate substantially in the form of Exhibit B hereto,
including the certifications in item (1) thereof;

 

(C)                                if such Restricted
Definitive Note is being transferred to a Non-U.S. Person in an offshore
transaction in accordance with Rule 903 or Rule 904, a certificate
substantially in the form of Exhibit B hereto, including the
certifications in item (2) thereof;

 

(D)                               if such Restricted
Definitive Note is being transferred pursuant to an exemption from the
registration requirements of the Securities Act in accordance with Rule 144,
a certificate substantially in the form of Exhibit B hereto, including
the certifications in item (3)(a) thereof;

 

(E)                                 if such Restricted
Definitive Note is being transferred to the Issuer or any of its Restricted
Subsidiaries, a certificate substantially in the form of Exhibit B
hereto, including the certifications in item (3)(b) thereof; or

 

(F)                                 if such Restricted
Definitive Note is being transferred pursuant to an effective registration
statement under the Securities Act, a certificate substantially in the form of
Exhibit B hereto, including the certifications in item (3)(c) thereof,

 

the Trustee
shall cancel the Restricted Definitive Note, increase or cause to be increased
the aggregate principal amount of, in the case of clause (A) above, the applicable
Restricted Global Note, in the case of clause (B) above, the applicable
144A Global Note, and in the case of clause (C) above, the applicable
Regulation S Global Note.

 

(ii)                                  Restricted
Definitive Notes to Beneficial Interests in Unrestricted Global Notes. A
Holder of a Restricted Definitive Note may exchange such Note for a
beneficial interest in an Unrestricted Global Note or transfer such Restricted
Definitive Note to a Person who takes delivery thereof in the form of a
beneficial interest in an Unrestricted Global Note only if:

 

(A)                              such exchange or transfer
is effected pursuant to the Exchange Offer in accordance with the Registration
Rights Agreement and the Holder, in the case of an exchange, or the transferee,
in the case of a transfer, certifies in the applicable Letter of Transmittal that
it is not (1) a Participating Broker-Dealer, (2) a Person
participating in the distribution of the Exchange Notes or (3) a Person
who is an affiliate (as defined in Rule 144) of the Issuer;

 

(B)                                such transfer is
effected pursuant to the Shelf Registration Statement in accordance with the
Registration Rights Agreement;

 

44

 

(C)                                such transfer is
effected by a Participating Broker-Dealer pursuant to the Exchange Offer
Registration Statement in accordance with the Registration Rights Agreement; or

 

(D)                               the Registrar receives
the following:

 

(1)                                  if the Holder of such
Definitive Notes proposes to exchange such Notes for a beneficial interest in
the Unrestricted Global Note, a certificate from such Holder substantially in
the form of Exhibit C hereto, including the certifications in
item (1)(c) thereof; or

 

(2)                                  if the Holder of such
Definitive Notes proposes to transfer such Notes to a Person who shall take
delivery thereof in the form of a beneficial interest in the Unrestricted
Global Note, a certificate from such Holder substantially in the form of Exhibit B
hereto, including the certifications in item (4) thereof;

 

and, in each such case set forth in this subparagraph (D), if the Registrar
so requests or if the Applicable Procedures so require, an Opinion of Counsel
in form reasonably acceptable to the Registrar to the effect that such
exchange or transfer is in compliance with the Securities Act and that the
restrictions on transfer contained herein and in the Private Placement Legend
are no longer required in order to maintain compliance with the Securities Act.

 

Upon
satisfaction of the conditions of any of the subparagraphs in this Section 2.06(d)(ii),
the Trustee shall cancel the Definitive Notes and increase or cause to be
increased the aggregate principal amount of the Unrestricted Global Note.

 

(iii)                               Unrestricted
Definitive Notes to Beneficial Interests in Unrestricted Global Notes. A
Holder of an Unrestricted Definitive Note may exchange such Note for a
beneficial interest in an Unrestricted Global Note or transfer such Definitive
Notes to a Person who takes delivery thereof in the form of a beneficial
interest in an Unrestricted Global Note at any time. Upon receipt of a request
for such an exchange or transfer, the Trustee shall cancel the applicable
Unrestricted Definitive Note and increase or cause to be increased the
aggregate principal amount of one of the Unrestricted Global Notes.

 

If any such
exchange or transfer from a Definitive Note to a beneficial interest is
effected pursuant to subparagraph (ii)(B), (ii)(D) or (iii) above at
a time when an Unrestricted Global Note has not yet been issued, the Issuer
shall issue and, upon receipt of an Authentication Order in accordance with Section 2.02
hereof, the Trustee shall authenticate one or more Unrestricted Global Notes in
an aggregate principal amount equal to the principal amount of Definitive Notes
so transferred.

 

(e)                                  Transfer
and Exchange of Definitive Notes for Definitive Notes. Upon request by a
Holder of Definitive Notes and such Holder’s compliance with the provisions of
this Section 2.06(e), the Registrar shall register the transfer or exchange
of Definitive Notes. Prior to such registration of transfer or exchange, the
requesting Holder shall present or surrender to the Registrar the Definitive
Notes duly endorsed or accompanied by a written instruction of transfer in form satisfactory
to the Registrar duly executed by such Holder or by its attorney, duly
authorized in writing. In addition, the requesting Holder shall provide any
additional certifications, documents and information, as applicable, required
pursuant to the following provisions of this Section 2.06(e):

 

(i)                                     Restricted
Definitive Notes to Restricted Definitive Notes. Any Restricted Definitive
Note may be transferred to and registered in the name of Persons who take
delivery thereof in the form of a Restricted Definitive Note if the
Registrar receives the following:

 

45

 

(A)                              if the transfer will be
made pursuant to a QIB in accordance with Rule 144A, then the transferor
must deliver a certificate substantially in the form of Exhibit B
hereto, including the certifications in item (1) thereof;

 

(B)                                if the transfer will be
made pursuant to Rule 903 or Rule 904 then the transferor must
deliver a certificate in the form of Exhibit B hereto,
including the certifications in item (2) thereof; or

 

(C)                                if the transfer will be
made pursuant to any other exemption from the registration requirements of the
Securities Act, then the transferor must deliver a certificate in the form of
Exhibit B hereto, including the certifications required by item (3) thereof,
if applicable.

 

(ii)                                  Restricted
Definitive Notes to Unrestricted Definitive Notes. Any Restricted
Definitive Note may be exchanged by the Holder thereof for an Unrestricted
Definitive Note or transferred to a Person or Persons who take delivery thereof
in the form of an Unrestricted Definitive Note if:

 

(A)                              such exchange or transfer
is effected pursuant to the Exchange Offer in accordance with the Registration
Rights Agreement and the Holder, in the case of an exchange, or the transferee,
in the case of a transfer, certifies in the applicable Letter of Transmittal that
it is not (1) a Participating Broker-Dealer, (2) a Person
participating in the distribution of the Exchange Notes or (3) a Person
who is an affiliate (as defined in Rule 144) of the Issuer;

 

(B)                                any such transfer is
effected pursuant to the Shelf Registration Statement in accordance with the
Registration Rights Agreement;

 

(C)                                any such transfer is
effected by a Participating Broker-Dealer pursuant to the Exchange Offer
Registration Statement in accordance with the Registration Rights Agreement; or

 

(D)                               the Registrar receives
the following:

 

(1)                                  if the Holder of such
Restricted Definitive Notes proposes to exchange such Notes for an Unrestricted
Definitive Note, a certificate from such Holder substantially in the form of
Exhibit C hereto, including the certifications in item (1)(d) thereof;
or

 

(2)                                  if the Holder of such
Restricted Definitive Notes proposes to transfer such Notes to a Person who
shall take delivery thereof in the form of an Unrestricted Definitive
Note, a certificate from such Holder substantially in the form of Exhibit B
hereto, including the certifications in item (4) thereof;

 

and, in each such case set forth in this subparagraph (D), if the Registrar
so requests, an Opinion of Counsel in form reasonably acceptable to the Registrar
to the effect that such exchange or transfer is in compliance with the
Securities Act and that the restrictions on transfer contained herein and in
the Private Placement Legend are no longer required in order to maintain compliance
with the Securities Act.

 

(iii)                               Unrestricted Definitive
Notes to Unrestricted Definitive Notes. A Holder of Unrestricted Definitive
Notes may transfer such Notes to a Person who takes delivery thereof in
the form of an Unrestricted Definitive Note. Upon receipt of a request to
register such a transfer, the Registrar shall register the Unrestricted
Definitive Notes pursuant to the instructions from the Holder thereof.

 

46

 

(f)                                    Exchange
Offer. Upon the occurrence of the Exchange Offer in accordance with the
Registration Rights Agreement, the Issuer shall issue and, upon receipt of an
Authentication Order in accordance with Section 2.02 hereof, the Trustee
shall authenticate (i) one or more Unrestricted Global Notes in an aggregate
principal amount equal to the principal amount of the beneficial interests in
the Restricted Global Notes tendered for acceptance by Persons that certify in the
applicable Letters of Transmittal that (x) they are not Participating Broker-Dealers,
(y) they are not participating in a distribution of the Exchange Notes and (z)
they are not affiliates (as defined in Rule 144) of the Issuer, and
accepted for exchange in the Exchange Offer and (ii) Unrestricted Definitive
Notes in an aggregate principal amount equal to the principal amount of the Restricted
Definitive Notes tendered for acceptance by Persons that certify in the
applicable Letters of Transmittal that (x) they are not Participating Broker-Dealers,
(y) they are not participating in a distribution of the Exchange Notes and (z)
they are not affiliates (as defined in Rule 144) of the Issuer, and
accepted for exchange in the Exchange Offer. Concurrently with the issuance of
such Notes, the Trustee shall cause the aggregate principal amount of the
applicable Restricted Global Notes to be reduced accordingly, and the Issuer
shall execute and the Trustee shall authenticate and mail to the Persons
designated by the Holders of Definitive Notes so accepted Unrestricted Definitive
Notes in the applicable principal amount. Any Notes that remain outstanding
after the consummation of the Exchange Offer, and Exchange Notes issued in
connection with the Exchange Offer, shall be treated as a single class of
securities under this Indenture.

 

(g)                                 Legends.
The following legends shall appear on the face of all Global Notes and
Definitive Notes issued under this Indenture unless specifically stated
otherwise in the applicable provisions of this Indenture:

 

(i)                                     Private
Placement Legend.

 

(A)                              Except as permitted by
subparagraph (B) below, each Global Note and each Definitive Note (and all
Notes issued in exchange therefor or substitution thereof) shall bear the legend
in substantially the following form:

 

“THIS SECURITY HAS NOT BEEN REGISTERED UNDER
THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND,
ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR
FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH BELOW. BY ITS
ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A “QUALIFIED
INSTITUTIONAL BUYER” (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT), (B) IT
IS NOT A U.S. PERSON AND IS ACQUIRING THIS SECURITY IN AN OFFSHORE TRANSACTION
IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT OR (C) IT IS AN
ACCREDITED INVESTOR (AS DEFINED IN RULE 501(a)(1), (2), (3), OR (7) UNDER
THE SECURITIES ACT (AN “ACCREDITED INVESTOR”), (2) AGREES THAT IT WILL NOT
WITHIN TWO YEARS AFTER THE ORIGINAL ISSUANCE OF THIS SECURITY RESELL OR
OTHERWISE TRANSFER THIS SECURITY EXCEPT (A) TO THE ISSUER OR ANY SUBSIDIARY
THEREOF, (B) INSIDE THE UNITED STATES TO A QUALIFIED INSTITUTIONAL BUYER
IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, (C) INSIDE THE
UNITED STATES TO AN ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER, FURNISHES
(OR HAS FURNISHED ON ITS BEHALF BY A U.S. BROKER-DEALER) TO THE TRUSTEE A
SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND

 

47

 

AGREEMENTS RELATING TO THE RESTRICTIONS ON
TRANSFER OF THIS SECURITY (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM
THE TRUSTEE FOR THIS SECURITY), (D)OUTSIDE THE UNITED STATES IN AN OFFSHORE
TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT (IF
AVAILABLE), (E) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144
UNDER THE SECURITIES ACT (IF AVAILABLE), (F) IN ACCORDANCE WITH ANOTHER
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED
UPON AN OPINION OF COUNSEL IF THE ISSUER SO REQUESTS), OR (G) PURSUANT TO
AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND (3) AGREES
THAT IT WILL GIVE TO EACH PERSON TO WHOM THIS SECURITY IS TRANSFERRED A NOTICE
SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF
THIS SECURITY WITHIN TWO YEARS AFTER THE ORIGINAL ISSUANCE OF THIS SECURITY, IF
THE PROPOSED TRANSFEREE IS AN ACCREDITED INVESTOR, THE HOLDER MUST, PRIOR TO
SUCH TRANSFER, FURNISH TO THE TRUSTEE AND THE ISSUER SUCH CERTIFICATIONS, LEGAL
OPINIONS OR OTHER INFORMATION AS EITHER OF THEM MAY REASONABLY REQUIRE TO
CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.
AS USED HEREIN, THE TERMS “OFFSHORE TRANSACTION,” “UNITED STATES” AND “U.S.
PERSON” HAVE THE MEANING GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES
ACT.”

 

(B)                                Notwithstanding the
foregoing, any Global Note or Definitive Note issued pursuant to subparagraph
(b)(iv), (c)(iii), (c)(iv), (d)(ii), (d)(iii), (e)(ii), (e)(iii) or (f) of
this Section 2.06 (and all Notes issued in exchange therefor or
substitution thereof) shall not bear the Private Placement Legend.

 

(ii)                                  Global Note Legend.
Each Global Note shall bear a legend in substantially the following form:

 

“THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY
(AS DEFINED IN THE INDENTURE GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR
THE BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY
PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH
NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO SECTION 2.06(h) OF
THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT
TO SECTION 2.06(a) OF THE INDENTURE, (III) THIS GLOBAL NOTE MAY BE
DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO SECTION 2.11 OF THE
INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO A SUCCESSOR
DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE ISSUER. UNLESS AND UNTIL IT IS
EXCHANGED IN WHOLE OR IN PART FOR NOTES IN DEFINITIVE FORM, THIS NOTE MAY NOT
BE TRANSFERRED EXCEPT AS A WHOLE BY

 

48

 

THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY
OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE
DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY
OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. UNLESS THIS CERTIFICATE IS PRESENTED
BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER
STREET, NEW YORK, NEW YORK) (“DTC”) TO THE ISSUER OR ITS AGENT FOR REGISTRATION
OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN
THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS MAY BE REQUESTED BY
AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE &
CO. OR SUCH OTHER ENTITY AS MAY BE REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.”

 

(iii)                               Regulation S
Temporary Global Note Legend. The Regulation S Temporary Global Note shall
bear a legend in substantially the following form:

 

“THE RIGHTS ATTACHING TO THIS REGULATION S
TEMPORARY GLOBAL NOTE, AND THE CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE
FOR CERTIFICATED NOTES, ARE AS SPECIFIED IN THE INDENTURE (AS DEFINED HEREIN).”

 

(h)                                 Cancellation
and/or Adjustment of Global Notes. At such time as all beneficial interests
in a particular Global Note have been exchanged for Definitive Notes or a
particular Global Note has been redeemed, repurchased or canceled in whole and
not in part, each such Global Note shall be returned to or retained and
canceled by the Trustee in accordance with Section 2.11 hereof. At any
time prior to such cancellation, if any beneficial interest in a Global Note is
exchanged for or transferred to a Person who will take delivery thereof in the form of
a beneficial interest in another Global Note or for Definitive Notes, the
principal amount of Notes represented by such Global Note shall be reduced
accordingly and an endorsement shall be made on such Global Note by the Trustee
or by the Depositary at the direction of the Trustee to reflect such reduction;
and if the beneficial interest is being exchanged for or transferred to a
Person who will take delivery thereof in the form of a beneficial interest
in another Global Note, such other Global Note shall be increased accordingly
and an endorsement shall be made on such Global Note by the Trustee or by the Depositary
at the direction of the Trustee to reflect such increase.

 

(i)                                     General
Provisions Relating to Transfers and Exchanges.

 

(i)                                     To permit
registrations of transfers and exchanges, the Issuer shall execute and the
Trustee shall authenticate Global Notes and Definitive Notes upon receipt of an
Authentication Order in accordance with Section 2.02 hereof or at the Registrar’s
request.

 

(ii)                                  No service charge
shall be made to a holder of a beneficial interest in a Global Note or to a
Holder of a Definitive Note for any registration of transfer or exchange, but the
Issuer may require payment of a sum sufficient to cover any transfer tax
or similar governmental charge payable in connection therewith (other than any
such transfer taxes or similar governmental charge payable upon exchange or
transfer pursuant to Sections 2.07, 2.10, 3.06, 3.09, 4.10, 4.14 and 9.05
hereof).

 

49

 

(iii)                               Neither the Registrar
nor the Issuer shall be required to register the transfer of or exchange any
Note selected for redemption in whole or in part, except the unredeemed portion
of any Note being redeemed in part.

 

(iv)                              All Global Notes and
Definitive Notes issued upon any registration of transfer or exchange of Global
Notes or Definitive Notes shall be the valid obligations of the Issuer, evidencing
the same debt, and entitled to the same benefits under this Indenture, as the
Global Notes or Definitive Notes surrendered upon such registration of transfer
or exchange.

 

(v)                                 The Issuer shall not
be required (A) to issue, to register the transfer of or to exchange any
Notes during a period beginning at the opening of business 15 days before the
day of any selection of Notes for redemption under Section 3.02 hereof and
ending at the close of business on the day of selection, (B) to register
the transfer of or to exchange any Note so selected for redemption in whole or
in part, except the unredeemed portion of any Note being redeemed in part or
(C) to register the transfer of or to exchange a Note between a Record
Date and the next succeeding Interest Payment Date.

 

(vi)                              Prior to due presentment
for the registration of a transfer of any Note, the Trustee, any Agent and the
Issuer may deem and treat the Person in whose name any Note is registered
as the absolute owner of such Note for the purpose of receiving payment of
principal of (and premium, if any) and interest (including Additional Interest,
if any) on such Notes and for all other purposes, and none of the Trustee, any
Agent or the Issuer shall be affected by notice to the contrary.

 

(vii)                           Upon surrender for
registration of transfer of any Note at the office or agency of the Issuer
designated pursuant to Section 4.02
hereof, the Issuer shall execute, and the Trustee shall authenticate and
mail, in the name of the designated transferee or transferees, one or more replacement
Notes of any authorized denomination or denominations of a like aggregate
principal amount.

 

(viii)                        At the option of the Holder,
Notes may be exchanged for other Notes of any authorized denomination or
denominations of a like aggregate principal amount upon surrender of the Notes
to be exchanged at such office or agency. Whenever any Global Notes or
Definitive Notes are so surrendered for exchange, the Issuer shall execute, and
the Trustee shall authenticate and mail, the replacement Global Notes and
Definitive Notes which the Holder making the exchange is entitled to in accordance
with the provisions of Section 2.02 hereof.

 

(ix)                                All certifications,
certificates and Opinions of Counsel required to be submitted to the Registrar
pursuant to this Section 2.06 to effect a registration of transfer or
exchange may be submitted by facsimile.

 

Section 2.07                                Replacement
Notes.

 

If any
mutilated Note is surrendered to the Trustee, the Registrar or the Issuer and
the Trustee receives evidence to their satisfaction of the ownership and destruction,
loss or theft of any Note, the Issuer shall issue and the Trustee, upon receipt
of an Authentication Order, shall authenticate a replacement Note if the
Trustee’s requirements are met. If required by the Trustee or the Issuer, an
indemnity bond must be supplied by the Holder that is sufficient in the
judgment of the Trustee and the Issuer to protect the Issuer, the Trustee, any
Agent and any authenticating agent from any loss that any of them may suffer
if a Note is replaced. The Issuer may charge for its expenses in replacing
a Note.

 

Every
replacement Note is a contractual obligation of the Issuer and shall be
entitled to all of the benefits of this Indenture equally and proportionately with
all other Notes duly issued hereunder.

 

50

 

Section 2.08                                Outstanding
Notes.

 

The Notes
outstanding at any time are all the Notes authenticated by the Trustee except
for those canceled by it, those delivered to it for cancellation, those
reductions in the interest in a Global Note effected by the Trustee in accordance
with the provisions hereof, and those described in this Section 2.08 as not
outstanding. Except as set forth in Section 2.09 hereof, a Note does not
cease to be outstanding because the Issuer or an Affiliate of the Issuer holds
the Note.

 

If a Note is
replaced pursuant to Section 2.07 hereof, it ceases to be outstanding
unless the Trustee receives proof satisfactory to it that the replaced Note is
held by a bona fide purchaser.

 

If the
principal amount of any Note is considered paid under Section 4.01 hereof,
it ceases to be outstanding and interest on it ceases to accrue.

 

If the Paying
Agent (other than the Issuer, a Subsidiary or an Affiliate of any thereof)
holds, on a redemption date or maturity date, money sufficient to pay Notes
payable on that date, then on and after that date such Notes shall be deemed to
be no longer outstanding and shall cease to accrue interest.

 

Section 2.09                                Treasury
Notes.

 

In determining
whether the Holders of the required principal amount of Notes have concurred in
any direction, waiver or consent, Notes owned by the Issuer, or by any
Affiliate of the Issuer, shall be considered as though not outstanding, except
that for the purposes of determining whether the Trustee shall be protected in
relying on any such direction, waiver or consent, only Notes that a Responsible
Officer of the Trustee knows are so owned shall be so disregarded. Notes so
owned which have been pledged in good faith shall not be disregarded if the
pledgee establishes to the satisfaction of the Trustee the pledgee’s right to
deliver any such direction, waiver or consent with respect to the Notes and
that the pledgee is not the Issuer or any obligor upon the Notes or any Affiliate
of the Issuer or of such other obligor.

 

Section 2.10                                Temporary
Notes.

 

Until
certificates representing Notes are ready for delivery, the Issuer may prepare
and the Trustee, upon receipt of an Authentication Order, shall authenticate
temporary Notes. Temporary Notes shall be substantially in the form of
certificated Notes but may have variations that the Issuer considers appropriate
for temporary Notes and as shall be reasonably acceptable to the Trustee. Without
unreasonable delay, the Issuer shall prepare and the Trustee shall authenticate
definitive Notes in exchange for temporary Notes.

 

Holders and
beneficial holders, as the case may be, of temporary Notes shall be
entitled to all of the benefits accorded to Holders, or beneficial holders, respectively,
of Notes under this Indenture.

 

Section 2.11                                Cancellation.

 

The Issuer at
any time may deliver Notes to the Trustee for cancellation. The Registrar
and Paying Agent shall forward to the Trustee any Notes surrendered to them for
registration of transfer, exchange or payment. The Trustee or, at the direction
of the Trustee, the Registrar or the Paying Agent and no one else shall cancel
all Notes surrendered for registration of transfer, exchange, payment,
replacement or cancellation and shall dispose of cancelled Notes (subject to
the record retention requirement

 

51

 

of the
Exchange Act) in its customary manner. Certification of the disposal of all cancelled
Notes shall be delivered to the Issuer upon its request therefor. The Issuer may not
issue new Notes to replace Notes that it has paid or that have been delivered
to the Trustee for cancellation.

 

Section 2.12                                Defaulted
Interest.

 

If the Issuer
defaults in a payment of interest on the Notes, it shall pay the defaulted
interest in any lawful manner plus, to the extent lawful, interest payable on
the defaulted interest to the Persons who are Holders on a subsequent special
record date, in each case at the rate provided in the Notes and in Section 4.01
hereof. The Issuer shall notify the Trustee in writing of the amount of
defaulted interest proposed to be paid on each Note and the date of the
proposed payment, and at the same time the Issuer shall deposit with the Trustee
an amount of money equal to the aggregate amount proposed to be paid in respect
of such defaulted interest or shall make arrangements satisfactory to the
Trustee for such deposit prior to the date of the proposed payment, such money
when deposited to be held in trust for the benefit of the Persons entitled to
such defaulted interest as provided in this Section 2.12. The Trustee
shall fix or cause to be fixed each such special record date and payment date; provided
that no such special record date shall be less than 10 days prior to the related
payment date for such defaulted interest. The Trustee shall promptly notify the
Issuer of such special record date. At least 15 days before the special record
date, the Issuer (or, upon the written request of the Issuer, the Trustee in
the name and at the expense of the Issuer) shall mail or cause to be mailed,
first-class postage prepaid, to each Holder a notice at his or her address
as it appears in the Note Register that states the special record date, the
related payment date and the amount of such interest to be paid.

 

Subject to the
foregoing provisions of this Section 2.12 and for greater certainty, each
Note delivered under this Indenture upon registration of transfer of or in
exchange for or in lieu of any other Note shall carry the rights to interest
accrued and unpaid, and to accrue, which were carried by such other Note.

 

Section 2.13                                CUSIP
Numbers

 

The Issuer in issuing
the Notes may use CUSIP numbers (if then generally in use) and, if so, the
Trustee shall use CUSIP numbers in notices of redemption as a convenience to
Holders; provided, that any such notice may state
that no representation is made as to the correctness of such numbers either as
printed on the Notes or as contained in any notice of redemption and that
reliance may be placed only on the other identification numbers printed on
the Notes, and any such redemption shall not be affected by any defect in or
omission of such numbers. The Issuer will as promptly as practicable notify the
Trustee of any change in the CUSIP numbers.

 

ARTICLE 3

 

REDEMPTION

 

Section 3.01                                Notices
to Trustee.

 

If the Issuer
elects to redeem Notes pursuant to Section 3.07 hereof, it shall furnish
to the Trustee, at least 2 Business Days before notice of redemption is
required to be mailed or caused to be mailed to Holders pursuant to Section 3.03
hereof but not more than 60 days before a redemption date, an Officer’s Certificate
setting forth (i) the paragraph or subparagraph of such Notes and/or Section of
this Indenture pursuant to which the redemption shall occur, (ii) the redemption
date, (iii) the principal amount of the Notes to be redeemed and (iv) the
redemption price.

 

52

 

Section 3.02                                Selection
of Notes To Be Redeemed or Purchased.

 

If less than
all of the Notes are to be redeemed or purchased in an offer to purchase at any
time, the Trustee shall select the Notes to be redeemed or purchased (a) if
the Notes are listed on any national securities exchange, in compliance with
the requirements of the principal national securities exchange on which the
Notes are listed or (b) on a pro rata basis or,
to the extent that selection on a pro rata basis
is not practicable, by lot or by such other method the Trustee considers fair
and appropriate. In the event of partial redemption or purchase by lot, the
particular Notes to be redeemed or purchased shall be selected, unless
otherwise provided herein, not less than 30 nor more than 60 days prior to the
redemption date by the Trustee from the outstanding Notes not previously called
for redemption or purchase.

 

The Trustee
shall promptly notify the Issuer in writing of the Notes selected for
redemption or purchase and, in the case of any Note selected for partial redemption
or purchase, the principal amount thereof to be redeemed or purchased. Notes
and portions of Notes selected shall be in amounts of $1,000 or whole multiples
of $1,000; no Notes of $1,000 or less can be redeemed in part, except that if
all of the Notes of a Holder are to be redeemed or purchased, the entire
outstanding amount of Notes held by such Holder, even if not a multiple of $1,000,
shall be redeemed or purchased. Except as provided in the preceding sentence,
provisions of this Indenture that apply to Notes called for redemption or
purchase also apply to portions of Notes called for redemption or purchase.

 

Section 3.03                                Notice
of Redemption.

 

Subject to Section 3.09
hereof, the Issuer shall mail or cause to be mailed by first-class mail,
postage prepaid, notices of redemption at least 30 days but not more than 60
days before the redemption date to each Holder of Notes to be redeemed at such
Holder’s registered address or shall otherwise deliver on such timeframe such
notice in accordance with the procedures of DTC, except that redemption notices
may be mailed more than 60 days prior to a redemption date if the notice
is issued in connection with Article 8 or Article 13 hereof. Except
as set forth in Section 3.07(b) hereof, notices of redemption may not
be conditional.

 

The notice
shall identify the Notes to be redeemed and shall state:

 

(a)                                  the redemption date;

 

(b)                                 the redemption price;

 

(c)                                  if any Note is to be
redeemed in part only, the portion of the principal amount of that Note
that is to be redeemed and that, after the redemption date upon surrender of
such Note, a new Note or Notes in principal amount equal to the unredeemed
portion of the original Note representing the same indebtedness to the extent
not redeemed will be issued in the name of the Holder of the Notes upon
cancellation of the original Note;

 

(d)                                 the name and address
of the Paying Agent;

 

(e)                                  that Notes called for
redemption must be surrendered to the Paying Agent to collect the redemption
price;

 

(f)                                    that, unless the
Issuer defaults in making such redemption payment, interest on Notes called for
redemption ceases to accrue on and after the redemption date;

 

53

 

(g)                                 the paragraph or
subparagraph of the Notes and/or Section of this Indenture pursuant to which
the Notes called for redemption are being redeemed;

 

(h)                                 that no representation
is made as to the correctness or accuracy of the CUSIP number, if any, listed
in such notice or printed on the Notes; and

 

(i)                                     if in connection
with a redemption pursuant to Section 3.07(b) hereof, any condition
to such redemption.

 

At the Issuer’s
request, the Trustee shall give the notice of redemption in the Issuer’s name
and at its expense; provided that the Issuer shall have delivered to the
Trustee, at least 2 Business Days before notice of redemption is required to be
mailed or caused to be mailed to Holders pursuant to this Section 3.03 (unless
a shorter notice shall be agreed to by the Trustee), an Officer’s Certificate
requesting that the Trustee give such notice and setting forth the information
to be stated in such notice as provided in the preceding paragraph.

 

Section 3.04                                Effect
of Notice of Redemption.

 

Once notice of
redemption is mailed in accordance with Section 3.03 hereof, Notes called
for redemption become irrevocably due and payable on the redemption date at the
redemption price (except as provided for in Section 3.07(b) hereof). The
notice, if mailed in a manner herein provided, shall be conclusively presumed
to have been given, whether or not the Holder receives such notice. In any
case, failure to give such notice by mail or any defect in the notice to the
Holder of any Note designated for redemption in whole or in part shall not
affect the validity of the proceedings for the redemption of any other Note. Subject
to Section 3.05 hereof, on and after the redemption date, interest ceases
to accrue on Notes or portions of Notes called for redemption.

 

Section 3.05                                Deposit
of Redemption or Purchase Price.

 

Prior to 10:00 a.m.
(New York City time) on the redemption or purchase date, the Issuer shall
deposit with the Trustee or with the Paying Agent money sufficient to pay the
redemption or purchase price of and accrued and unpaid interest (including Additional
Interest, if any) on all Notes to be redeemed or purchased on that date. The Trustee
or the Paying Agent shall promptly return to the Issuer any money deposited
with the Trustee or the Paying Agent by the Issuer in excess of the amounts
necessary to pay the redemption price of, and accrued and unpaid interest on,
all Notes to be redeemed or purchased.

 

If the Issuer
complies with the provisions of the preceding paragraph, on and after the
redemption or purchase date, interest shall cease to accrue on the Notes or the
portions of Notes called for redemption or purchase. If a Note is redeemed or
purchased on or after a Record Date but on or prior to the related Interest
Payment Date, then any accrued and unpaid interest to the redemption or
purchase date shall be paid to the Person in whose name such Note was
registered at the close of business on such Record Date. If any Note called for
redemption or purchase shall not be so paid upon surrender for redemption or
purchase because of the failure of the Issuer to comply with the preceding
paragraph, interest shall be paid on the unpaid principal, from the redemption or
purchase date until such principal is paid, and to the extent lawful on any
interest accrued to the redemption or purchase date not paid on such unpaid
principal, in each case at the rate provided in the Notes and in Section 4.01
hereof.

 

54

 

Section 3.06                                Notes
Redeemed or Purchased in Part.

 

Upon surrender
of a Note that is redeemed or purchased in part, the Issuer shall issue and the
Trustee shall authenticate for the Holder at the expense of the Issuer a new
Note equal in principal amount to the unredeemed or unpurchased portion of the
Note surrendered representing the same indebtedness to the extent not redeemed
or purchased; provided that each new Note will be in a principal amount
of $1,000 or an integral multiple of $1,000. It is understood that,
notwithstanding anything in this Indenture to the contrary, only an
Authentication Order and not an Opinion of Counsel or Officer’s Certificate is
required for the Trustee to authenticate such new Note.

 

Section 3.07                                Optional
Redemption.

 

(a)                                  At
any time prior to November 1, 2011, the Issuer may redeem all or a part of
the Notes, upon not less than 30 nor more than 60 days’ prior notice mailed by
first-class mail to the registered address of each Holder of Notes or
otherwise delivered in accordance with the procedures of DTC, at a redemption
price equal to 100% of the principal amount of the Notes redeemed plus the
Applicable Premium as of, and accrued and unpaid interest and Additional
Interest, if any, to the date of redemption (the “Redemption Date”), subject to the rights of Holders of record
on the relevant Record Date to receive interest due on the relevant Interest Payment
Date.

 

(b)                                 Until
November 1, 2009, the Issuer may, at its option, on one or more occasions
redeem up to 35% of the aggregate principal amount of Notes (including the
aggregate principal amount of Notes issued after the Issue Date), upon notice
provided as described in Section 3.03 hereof, at a redemption price equal
to 111.375% of the aggregate principal amount thereof, plus accrued and unpaid
interest thereon and Additional Interest, if any, to the applicable Redemption
Date, subject to the right of Holders of record on the relevant Record Date to
receive interest due on the relevant Interest Payment Date, with the net cash
proceeds of one or more Equity Offerings; provided that at least 50% of the sum of the aggregate principal
amount of Notes originally issued under this Indenture and any Additional Notes
that are issued under this Indenture after the Issue Date remains outstanding
immediately after the occurrence of each such redemption; provided further that each such redemption occurs within 90 days
of the date of closing of each such Equity Offering. Notice of any redemption
upon any Equity Offering may be given prior to such redemption, and any
such redemption or notice may, at the Issuer’s discretion, be subject to one or
more conditions precedent, including, but not limited to, completion of the
related Equity Offering.

 

(c)                                  Except
pursuant to Sections 3.07(a) and (b), the Notes will not be redeemable at
the Issuer’s option before November 1, 2011.

 

(d)                                 On
and after November 1, 2011, the Issuer may redeem the Notes, in whole
or in part, at the redemption prices (expressed as percentages of principal
amount of the Notes to be redeemed) set forth below, plus accrued and unpaid
interest thereon and Additional Interest, if any, to the applicable Redemption
Date, subject to the right of Holders of record on the relevant Record Date to
receive interest due on the relevant Interest Payment Date, if redeemed during
the twelve-month period beginning on November 1 of each of the years indicated
below:

 

	
  Year

  	
   

  	
  Percentage

  	
   

  
	
  2011

  	
   

  	
  105.688

  	
  %

  
	
  2012

  	
   

  	
  103.792

  	
  %

  
	
  2013

  	
   

  	
  101.896

  	
  %

  
	
  2014 and thereafter

  	
   

  	
  100.000

  	
  %

  

 

55

 

(e)                                  Any
redemption pursuant to this Section 3.07 shall be made pursuant to the
provisions of Sections 3.01 through 3.06 hereof.

 

Section 3.08                                Mandatory
Redemption.

 

The Issuer
shall not be required to make mandatory redemption or sinking fund payments
with respect to the Notes.

 

Section 3.09                                Offers
To Repurchase by Application of Excess Proceeds.

 

(a)                                  In
the event that, pursuant to Section 4.10 hereof, the Issuer shall be
required to commence an Asset Sale Offer, it shall follow the procedures specified
below.

 

(b)                                 The
Asset Sale Offer shall remain open for a period of 20 Business Days following
its commencement and no longer, except to the extent that a longer period is required
by applicable law (the “Offer Period”). No later than five Business Days
after the termination of the Offer Period (the “Purchase Date”), the
Issuer shall apply all Excess Proceeds (the “Offer Amount”) to the
purchase of Notes and, if required, Pari Passu Indebtedness (on a pro rata basis, if applicable), or, if less than the Offer
Amount has been tendered, all Notes and Pari Passu Indebtedness tendered in response
to the Asset Sale Offer. Payment for any Notes so purchased shall be made in
the same manner as interest payments are made.

 

(c)                                  If
the Purchase Date is on or after a Record Date and on or before the related
Interest Payment Date, any accrued and unpaid interest and Additional Interest,
if any, up to but excluding the Purchase Date, shall be paid to the Person in
whose name a Note is registered at the close of business on such Record Date,
and no additional interest shall be payable to Holders who tender Notes
pursuant to the Asset Sale Offer.

 

(d)                                 Upon
the commencement of an Asset Sale Offer, the Issuer shall send, by first-class mail,
a notice to each of the Holders, with a copy to the Trustee. The notice shall
contain all instructions and materials necessary to enable such Holders to
tender Notes pursuant to the Asset Sale Offer. The Asset Sale Offer shall be
made to all Holders and holders of Pari Passu Indebtedness. The notice, which
shall govern the terms of the Asset Sale Offer, shall state:

 

(i)                                     that the Asset
Sale Offer is being made pursuant to this Section 3.09 and Section 4.10
hereof and the length of time the Asset Sale Offer shall remain open;

 

(ii)                                  the Offer Amount, the
purchase price and the Purchase Date;

 

(iii)                               that any Note not
tendered or accepted for payment shall continue to accrue interest;

 

(iv)                              that, unless the Issuer
defaults in making such payment, any Note accepted for payment pursuant to the Asset
Sale Offer shall cease to accrue interest after the Purchase Date;

 

(v)                                 that Holders electing
to have a Note purchased pursuant to an Asset Sale Offer may elect to have
Notes purchased in integral multiples of $1,000 only;

 

(vi)                              that Holders electing to
have a Note purchased pursuant to any Asset Sale Offer shall be required to
surrender the Note, with the form entitled “Option of Holder to Elect
Purchase”

 

56

 

attached to the Note completed, or transfer such Note by book-entry
transfer, to the Issuer, the Depositary, if appointed by the Issuer, or a
Paying Agent at the address specified in the notice at least three days before
the Purchase Date;

 

(vii)                           that Holders shall be
entitled to withdraw their election if the Issuer, the Depositary or the Paying
Agent, as the case may be, receives, not later than the expiration of the
Offer Period, a telegram, facsimile transmission or letter setting forth the
name of the Holder, the principal amount of the Note the Holder delivered for
purchase and a statement that such Holder is withdrawing his election to have
such Note purchased;

 

(viii)                        that, if the aggregate
principal amount of Notes and Pari Passu Indebtedness surrendered by the holders
thereof exceeds the Offer Amount, the Trustee shall select the Notes and such
Pari Passu Indebtedness to be purchased on a pro rata
basis based on the accreted value or principal amount of the Notes or such Pari
Passu Indebtedness tendered (with such adjustments as may be deemed
appropriate by the Trustee so that only Notes in denominations of $1,000, or
integral multiples thereof, shall be purchased); and

 

(ix)                                that Holders whose
Notes were purchased only in part shall be issued new Notes equal in
principal amount to the unpurchased portion of the Notes surrendered (or
transferred by book-entry transfer) representing the same indebtedness to the
extent not repurchased.

 

(e)                                  On
or before the Purchase Date, the Issuer shall, to the extent lawful, (1) accept
for payment, on a pro rata basis to the extent
necessary, the Offer Amount of Notes or portions thereof validly tendered
pursuant to the Asset Sale Offer, or if less than the Offer Amount has been tendered,
all Notes tendered and (2) deliver or cause to be delivered to the Trustee
the Notes properly accepted together with an Officer’s Certificate stating the
aggregate principal amount of Notes or portions thereof so tendered.

 

(f)                                    The
Issuer, the Depositary or the Paying Agent, as the case may be, shall
promptly mail or deliver to each tendering Holder an amount equal to the
purchase price of the Notes properly tendered by such Holder and accepted by the
Issuer for purchase, and the Issuer shall promptly issue a new Note, and the
Trustee, upon receipt of an Authentication Order, shall authenticate and mail
or deliver (or cause to be transferred by book-entry) such new Note to such
Holder (it being understood that, notwithstanding anything in this Indenture to
the contrary, no Opinion of Counsel or Officer’s Certificate is required for
the Trustee to authenticate and mail or deliver such new Note) in a principal
amount equal to any unpurchased portion of the Note surrendered representing
the same indebtedness to the extent not repurchased; provided that each
such new Note shall be in a principal amount of $1,000 or an integral multiple
thereof. Any Note not so accepted shall be promptly mailed or delivered by the
Issuer to the Holder thereof. The Issuer shall publicly announce the results of
the Asset Sale Offer on or as soon as practicable after the Purchase Date.

 

Other than as
specifically provided in this Section 3.09 or Section 4.10 hereof,
any purchase pursuant to this Section 3.09 shall be made pursuant to the applicable
provisions of Sections 3.01 through 3.06 hereof.

 

57

 

ARTICLE 4

 

COVENANTS

 

Section 4.01                                Payment
of Notes.

 

The Issuer
shall pay or cause to be paid the principal of, premium, if any, Additional
Interest, if any, and interest on the Notes on the dates and in the manner
provided in the Notes. Principal, premium, if any, Additional Interest, if any,
and interest shall be considered paid on the date due if the Paying Agent, if
other than the Issuer or a Subsidiary, holds as of noon Eastern Time on the due
date money deposited by the Issuer in immediately available funds and designated
for and sufficient to pay all principal, premium, if any, and interest then due.
If a payment date is not a Business Day, payment may be made on the next
succeeding day that is a Business Day.

 

The Issuer shall
pay all Additional Interest, if any, in the same manner on the dates and in the
amounts set forth in the Registration Rights Agreement.

 

The Issuer
shall pay interest (including post-petition interest in any proceeding under
any Bankruptcy Law) on overdue principal at the rate equal to the then applicable
interest rate on the Notes to the extent lawful; it shall pay interest
(including post-petition interest in any proceeding under any Bankruptcy Law)
on overdue installments of interest and Additional Interest (without regard to
any applicable grace period) at the same rate to the extent lawful.

 

Section 4.02                                Maintenance
of Office or Agency.

 

The Issuer
shall maintain in the Borough of Manhattan in the City of New York an office or
agency (which may be an office of the Trustee or an affiliate of the
Trustee, Registrar or co-registrar) where Notes may be surrendered for registration
of transfer or for exchange or presented for payment and where notices and demands
to or upon the Issuer in respect of the Notes and this Indenture may be
served. The Issuer shall give prompt written notice to the Trustee of the
location, and any change in the location, of such office or agency. If at any
time the Issuer shall fail to maintain any such required office or agency or
shall fail to furnish the Trustee with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the Corporate
Trust Office of the Trustee.

 

The Issuer may also
from time to time designate one or more other offices or agencies where the
Notes may be presented or surrendered for any or all such purposes and may from
time to time rescind such designations; provided that no such
designation or rescission shall in any manner relieve the Issuer of its obligation
to maintain an office or agency in the Borough of Manhattan in the City of New
York for such purposes. The Issuer shall give prompt written notice to the
Trustee of any such designation or rescission and of any change in the location
of any such other office or agency.

 

The Issuer
hereby initially designates the office of the Trustee located at 45 Broadway,
12th Floor, New York, New York 10006, Attention:  Worldwide Securities Services, as one such
office or agency of the Issuer in accordance with Section 2.03 hereof.

 

Section 4.03                                Reports
and Other Information.

 

(a)                                  Notwithstanding
that the Issuer may not be subject to the reporting requirements of Section 13
or 15(d) of the Exchange Act or otherwise report on an annual and
quarterly basis on forms provided for such annual and quarterly reporting
pursuant to rules and regulations promulgated by the SEC, the Issuer shall
file with the SEC (and make available to the Trustee and Holders of the Notes

 

58

 

(without exhibits), without
cost to any Holder, within 15 days after the Issuer files them with the
SEC) from and after the Issue Date,

 

(1)                                  within 90 days
after the end of each fiscal year, annual reports on Form 10-K, or any
successor or comparable form, containing the information required to be
contained therein, or required in such successor or comparable form;

 

(2)                                  within 45 days after
the end of each of the first three fiscal quarters of each fiscal year,
commencing with the first fiscal quarter of the fiscal year commencing February 4,
2007, reports on Form 10-Q containing all quarterly information that would
be required to be contained in Form 10-Q, or any successor or comparable
form;

 

(3)                                  promptly from time to
time after the occurrence of an event required to be therein reported, such
other reports on Form 8-K, or any successor or comparable form; and

 

(4)                                  any other
information, documents and other reports which the Issuer would be required to
file with the SEC if it were subject to Section 13 or 15(d) of the
Exchange Act beginning on and after the Issue Date;

 

in each case,
in a manner that complies in all material respects with the requirements
specified in such form; provided
that the Issuer shall not be so obligated to file such reports with the SEC (i) if
the SEC does not permit such filing or (ii) prior to the consummation of
an exchange offer or the effectiveness of a shelf registration statement as
required by the Registration Rights Agreement, so long as if clause (i) or
(ii) is applicable the Issuer makes available such information to
prospective purchasers of Notes, in addition to providing such information to
the Trustee and the Holders of the Notes, in each case within 15 days after the
time the Issuer would be required to file such information with the SEC, if it
were subject to Sections 13 or 15(d) of the Exchange Act. To the extent any such information is
not so filed or furnished, as applicable, within the time periods specified
above and such information is subsequently filed or furnished, as applicable,
the Issuer shall be deemed to have satisfied its obligations with respect
thereto at such time and any Default with respect thereto shall be deemed to
have been cured; provided that such cure shall not otherwise affect the
rights of the Holders under Article 6 hereto if Holders of at least 25% in
principal amount of the then total outstanding Notes have declared the
principal, premium, if any, interest and any other monetary obligations on all
the then outstanding Notes to be due and payable immediately and such
declaration shall not have been rescinded or cancelled prior to such cure. In
addition, to the extent not satisfied by the foregoing, for so long as any
Notes are outstanding, the Issuer shall furnish to Holders and to securities
analysts and prospective investors, upon their request, the information
required to be delivered pursuant to Rule 144A(d)(4) under the
Securities Act.

 

(b)                                 In
the event that any direct or indirect parent company of the Issuer becomes a
guarantor of the Notes, the Issuer may satisfy its obligations under this Section 4.03
with respect to financial information relating to the Issuer by furnishing
financial information relating to such parent; provided that the same is accompanied by consolidating
information that explains in reasonable detail the differences between the
information relating to such parent, on the one hand, and the information
relating to the Issuer and its Restricted Subsidiaries on a standalone basis,
on the other hand.

 

(c)                                  Notwithstanding
the foregoing, the requirements of this Section 4.03 shall be deemed
satisfied prior to the commencement of the Exchange Offer or the effectiveness
of the Shelf Registration Statement by the filing with the SEC of the Exchange
Offer Registration Statement or Shelf Registration Statement or any other
filing, and any amendments thereto, with such financial information that
satisfies Regulation S-X of the Securities Act.

 

59

 

(d)                                 Delivery
of such reports, information and documents to the Trustee is for informational
purposes only and the Trustee’s receipt of such shall not constitute
constructive notice of any information contained therein or determinable from
information contained therein, including the Issuer’s compliance with any of
its covenants hereunder (as to which the Trustee is entitled to rely exclusively
on Officer’s Certificates).

 

Section 4.04                                Compliance
Certificate.

 

(a)                                  The
Issuer and each Guarantor (to the extent that such Guarantor is so required
under the Trust Indenture Act) shall deliver to the Trustee, within 120 days
after the end of each fiscal year ending after the Issue Date, a certificate
from the principal executive officer, principal financial officer or principal
accounting officer stating that a review of the activities of the Issuer and
its Restricted Subsidiaries during the preceding fiscal year has been made
under the supervision of the signing Officer with a view to determining whether
the Issuer has kept, observed, performed and fulfilled its obligations under
this Indenture, and further stating, as to such Officer signing such certificate,
that to the best of his or her knowledge the Issuer has kept, observed,
performed and fulfilled each and every condition and covenant contained in this
Indenture during such fiscal year and is not in default in the performance or observance
of any of the terms, provisions, covenants and conditions of this Indenture (or,
if a Default shall have occurred, describing all such Defaults of which he or
she may have knowledge and what action the Issuer is taking or proposes to
take with respect thereto).

 

(b)                                 When
any Default has occurred and is continuing under this Indenture, or if the
Trustee or the holder of any other evidence of Indebtedness of the Issuer or
any Subsidiary gives any notice or takes any other action with respect to a
claimed Default, the Issuer shall promptly (which shall be no more than five (5) Business
Days) deliver to the Trustee by registered or certified mail or by facsimile
transmission an Officer’s Certificate specifying such event and what action the
Issuer proposes to take with respect thereto.

 

Section 4.05                                Taxes.

 

The Issuer
shall pay or discharge, and shall cause each of its Restricted Subsidiaries to
pay or discharge, prior to delinquency, all material taxes, lawful assessments,
and governmental levies except such as are contested in good faith and by
appropriate actions or where the failure to effect such payment or discharge is
not adverse in any material respect to the Holders of the Notes.

 

Section 4.06                                Stay,
Extension and Usury Laws.

 

The Issuer and
each of the Guarantors covenant (to the extent that they may lawfully do
so) that they shall not at any time insist upon, plead, or in any manner
whatsoever claim or take the benefit or advantage of, any stay, extension or
usury law wherever enacted, now or at any time hereafter in force, that may affect
the covenants or the performance of this Indenture; and the Issuer and each of
the Guarantors (to the extent that they may lawfully do so) hereby
expressly waive all benefit or advantage of any such law, and covenant (to the
extent that they may lawfully do so) that they shall not, by resort to any
such law, hinder, delay or impede the execution of any power herein granted to
the Trustee, but shall suffer and permit the execution of every such power as
though no such law has been enacted.

 

Section 4.07                                Limitation
on Restricted Payments.

 

(a)                                  The
Issuer shall not, and shall not permit any of its Restricted Subsidiaries to,
directly or indirectly:

 

60

 

(I)                                    declare
or pay any dividend or make any payment having the effect thereof or any
distribution on account of the Issuer’s, or any of its Restricted Subsidiaries’
Equity Interests, including any dividend or distribution payable in connection
with any merger or consolidation other than:

 

(A)                              dividends
or distributions by the Issuer payable solely in Equity Interests (other than
Disqualified Stock) of the Issuer; or

 

(B)                                dividends
or distributions by a Restricted Subsidiary so long as, in the case of any
dividend or distribution payable on or in respect of any class or series of
securities issued by a Restricted Subsidiary other than a Wholly-Owned
Subsidiary, the Issuer or a Restricted Subsidiary receives at least its pro rata share of such dividend or distribution in
accordance with its Equity Interests in such class or series of
securities;

 

(II)                                purchase,
redeem, defease or otherwise acquire or retire for value any Equity Interests
of the Issuer or any direct or indirect parent of the Issuer, including in
connection with any merger or consolidation;

 

(III)                            make
any principal payment on, or redeem, repurchase, defease or otherwise acquire
or retire for value, in each case prior to any scheduled repayment, sinking
fund payment or maturity, any Subordinated Indebtedness, other than:

 

(A)                              Indebtedness
permitted under clauses (7) and (8) of Section 4.09(b) hereof;
or

 

(B)                                the
purchase, repurchase or other acquisition of Subordinated Indebtedness
purchased in anticipation of satisfying a sinking fund obligation, principal
installment or final maturity, in each case due within one year of the date of
purchase, repurchase or acquisition; or

 

(IV)                            make
any Restricted Investment

 

(all such
payments and other actions set forth in clauses (I) through (IV) above being
collectively referred to as “Restricted
Payments”), unless, at the time of such Restricted Payment:

 

(1)                                  no
Default shall have occurred and be continuing or would occur as a consequence
thereof;

 

(2)                                  immediately
after giving effect to such transaction on a pro forma
basis, the Issuer could incur $1.00 of additional Indebtedness under Section 4.09(a) hereof;
and

 

(3)                                  such
Restricted Payment, together with the aggregate amount of all other Restricted
Payments made by the Issuer and its Restricted Subsidiaries after the Issue
Date (including Restricted Payments permitted by clauses (1), (6)(c), (9) and
(14) of Section 4.07(b) hereof, but excluding all other Restricted
Payments permitted by Section 4.07(b) hereof), is less than the sum
of (without duplication):

 

(a)                                  50%
of the Consolidated Net Income of the Issuer for the period (taken as one
accounting period) beginning July 30, 2006 to the end of the Issuer’s most
recently ended fiscal quarter for which internal financial statements are
available at the time of

 

61

 

such
Restricted Payment, or, in the case such Consolidated Net Income for such
period is a deficit, minus 100% of such deficit; plus

 

(b)                                 100% of the aggregate
net cash proceeds and the fair market value, as determined in good faith by the
Issuer, of marketable securities or other property received by the Issuer since
immediately after the Issue Date (other than net cash proceeds to the extent
such net cash proceeds have been used to incur Indebtedness, Disqualified Stock
or Preferred Stock pursuant to clause (12)(a) of Section 4.09(b) hereof)
from the issue or sale of:

 

(i)                                     (A) Equity
Interests of the Issuer, including Treasury Capital Stock, but excluding cash
proceeds and the fair market value, as determined in good faith by the Issuer,
of marketable securities or other property received from the sale of:

 

(x)                                   Equity
Interests to members of management, directors or consultants of the Issuer, any
direct or indirect parent company of the Issuer and the Issuer’s Subsidiaries
after the Issue Date to the extent such amounts have been applied to Restricted
Payments made in accordance with clause (4) of Section 4.07(b) hereof;
and

 

(y)                                 Designated
Preferred Stock; and

 

(B) to the extent such net
cash proceeds are actually contributed to the Issuer, Equity Interests of the
Issuer’s direct or indirect parent companies (excluding contributions of the
proceeds from the sale of Designated Preferred Stock of such companies or
contributions to the extent such amounts have been applied to Restricted
Payments made in accordance with clause (4) of Section 4.07(b) hereof);
or

 

(ii)                                  debt
securities of the Issuer that have been converted into or exchanged for Equity
Interests of the Issuer;

 

provided, however, that this clause (b) shall
not include the proceeds from (W) Refunding Capital Stock, (X) Equity Interests
or convertible debt securities of the Issuer sold to a Restricted Subsidiary,
(Y) Disqualified Stock or debt securities that have been converted into
Disqualified Stock or (Z) Excluded Contributions; plus

 

(c)                                  100%
of the aggregate amount of cash and the fair market value, as determined in
good faith by the Issuer, of marketable securities or other property contributed
to the capital of the Issuer following the Issue Date other than (X) net cash
proceeds to the extent such net cash proceeds have been used to incur Indebtedness
or issue Disqualified Stock or Preferred Stock pursuant to clause (12)(a) of
Section 4.09(b) hereof), (Y) by a Restricted Subsidiary and (Z) from
any Excluded Contributions; plus

 

(d)                                 100% of the aggregate
amount received in cash and the fair market value, as determined in good faith
by the Issuer, of marketable securities or other property received by means of:

 

(i)                                     the
sale or other disposition (other than to the Issuer or a Restricted Subsidiary)
of Restricted Investments made by the Issuer or its Restricted

 

62

 

Subsidiaries
and repurchases and redemptions of such Restricted Investments from the Issuer
or its Restricted Subsidiaries and repayments of loans or advances, and
releases of guarantees, which constitute Restricted Investments by the Issuer
or its Restricted Subsidiaries, in each case after the Issue Date; or

 

(ii)                                  the
sale (other than to the Issuer or a Restricted Subsidiary) of the stock of an
Unrestricted Subsidiary or a distribution from an Unrestricted Subsidiary
(other than in each case to the extent the Investment in such Unrestricted
Subsidiary was made by the Issuer or a Restricted Subsidiary pursuant to
clause (7) of Section 4.07(b) hereof or to the extent such
Investment constituted a Permitted Investment) or a dividend from an
Unrestricted Subsidiary after the Issue Date; plus

 

(e)                                  in
the case of the redesignation of an Unrestricted Subsidiary as a Restricted
Subsidiary or the merger, amalgamation or consolidation of an Unrestricted Subsidiary
into the Issuer or a Restricted Subsidiary or the transfer of all or
substantially all of the assets of an Unrestricted Subsidiary to the Issuer or
a Restricted Subsidiary after the Issue Date, the fair market value of the
Investment in such Unrestricted Subsidiary (or the assets transferred), as
determined by the Issuer in good faith or, if such fair market value may exceed
$125.0 million, in writing by an Independent Financial Advisor, at the time of
the redesignation of such Unrestricted Subsidiary as a Restricted Subsidiary or
at the time of such merger, amalgamation, consolidation or transfer of assets
to the extent the Investment in such Unrestricted Subsidiary was made by the
Issuer or a Restricted Subsidiary pursuant to clause (7) of Section 4.07(b) hereof
or to the extent such Investment constituted a Permitted Investment.

 

(b)                                 Section 4.07(a) hereof
shall not prohibit:

 

(1)                                  the
payment of any dividend within 60 days after the date of declaration thereof,
if at the date of declaration such payment would have complied with the
provisions of this Indenture;

 

(2)                                  (a) the
redemption, repurchase, retirement or other acquisition of any Equity Interests
(“Treasury Capital Stock”)
of the Issuer or any Equity Interests of any direct or indirect parent company
of the Issuer or any Subordinated Indebtedness of the Issuer or a Restricted
Subsidiary, in exchange for, or out of the proceeds of, the substantially
concurrent sale or issuance (other than to a Restricted Subsidiary) of, Equity
Interests of the Issuer or any direct or indirect parent company of the Issuer
to the extent contributed to the Issuer (in each case, other than any
Disqualified Stock) (“Refunding Capital Stock”), (b) the
declaration and payment of dividends on Treasury Capital Stock out of the
proceeds of the substantially concurrent sale or issuance (other than to a
Subsidiary of the Issuer or to an employee stock ownership plan or any trust
established by the Issuer or any of its Subsidiaries) of Refunding Capital
Stock, and (c) if immediately prior to the retirement of Treasury Capital
Stock, the declaration and payment of dividends thereon was permitted under
clause (6) of this Section 4.07(b), the declaration and payment of
dividends on the Refunding Capital Stock (other than Refunding Capital Stock
the proceeds of which were used to redeem, repurchase, retire or otherwise
acquire any Equity Interests of any direct or indirect parent company of the
Issuer) in an aggregate amount per year no greater than the aggregate amount of
dividends per annum that were declarable and payable on such Treasury Capital
Stock immediately prior to such retirement;

 

63

 

(3)                                  the
redemption, repurchase or other acquisition or retirement of Subordinated Indebtedness
of the Issuer or a Guarantor made by exchange for, or out of the proceeds of,
the substantially concurrent sale of, new Indebtedness of the Issuer or a
Guarantor, as the case may be, which is incurred in compliance with Section 4.09
hereof so long as:

 

(a)                                  the
principal amount (or accreted value, if applicable) of such new Indebtedness
does not exceed the principal amount of (or accreted value, if applicable),
plus any accrued and unpaid interest on, the Subordinated Indebtedness being so
redeemed, repurchased, exchanged, acquired or retired for value, plus the
amount of any premium required to be paid under the terms of the instrument
governing the Subordinated Indebtedness being so redeemed, repurchased,
exchanged, acquired or retired and any reasonable fees and expenses incurred in
connection with such redemption, repurchase, exchange, acquisition or
retirement and the issuance of such new Indebtedness;

 

(b)                                 such
new Indebtedness is subordinated to the Notes or the applicable Guarantee at
least to the same extent as such Subordinated Indebtedness so repurchased,
exchanged, redeemed, acquired or retired for value;

 

(c)                                  such
new Indebtedness has a final scheduled maturity date equal to or later than the
final scheduled maturity date of the Subordinated Indebtedness being so
redeemed, repurchased, exchanged, acquired or retired; and

 

(d)                                 such
new Indebtedness has a Weighted Average Life to Maturity equal to or greater
than the remaining Weighted Average Life to Maturity of the Subordinated
Indebtedness being so redeemed, repurchased, exchanged, acquired or retired;

 

(4)                                  a
Restricted Payment to pay for the repurchase, retirement or other acquisition
or retirement for value of Equity Interests (other than Disqualified Stock) of
the Issuer or any of its direct or indirect parent companies held by any
future, present or former employee, director or consultant of the Issuer, any
of its Subsidiaries or any of its direct or indirect parent companies, or any
of their respective estates, spouses or former spouses pursuant to any
management equity plan or stock option plan or any other management or employee
benefit plan or agreement (including, for the avoidance of doubt, any principal
and interest payable on any notes issued by the Issuer or any direct or
indirect parent company in connection with any such repurchase, retirement or
other acquisition or retirement); provided, however, that the aggregate
Restricted Payments made under this clause (4) do not exceed in any
calendar year $15.0 million (which shall increase to $30.0 million subsequent
to the consummation of an underwritten public Equity Offering by the Issuer or
any direct or indirect parent company of the Issuer) with unused amounts in any
calendar year being carried over to succeeding calendar years subject to a
maximum (without giving effect to the following proviso) of $30.0 million in
any calendar year (which shall increase to $60.0 million subsequent to the
consummation of an underwritten public Equity Offering by the Issuer or any
direct or indirect parent company of the Issuer); provided further that such
amount in any calendar year may be increased by an amount not to exceed:

 

(a)                                  the
cash proceeds from the sale of Equity Interests (other than Disqualified Stock)
of the Issuer and, to the extent contributed to the Issuer, Equity Interests of
any of the Issuer’s direct or indirect parent companies, in each case to
members of management, directors or consultants of the Issuer, any of its
Subsidiaries or any of its direct or indirect parent companies that occurs
after the Issue Date, to the extent the cash proceeds from the sale of such
Equity Interests have not otherwise been applied to the payment of Restricted
Payments by virtue of clause (3) of Section 4.07(a) hereof,
plus, in respect

 

64

 

of any sale of
Equity Interests in connection with an exercise of stock options, an amount
equal to the amount required to be withheld by the Issuer or any of its direct
or indirect parent companies in connection with such exercise under applicable
law to the extent such amount is repaid to the Issuer or its direct or indirect
parent company, as applicable, constituted a Restricted Payment and has not
otherwise been applied to the payment of Restricted Payments by virtue of
clause (3) of Section 4.07(a) hereof; plus

 

(b)                                 the
cash proceeds of key man life insurance policies received by the Issuer or its
Restricted Subsidiaries after the Issue Date; less

 

(c)                                  the
amount of any Restricted Payments previously made with the cash proceeds
described in clauses (a) and (b) of this clause (4);

 

and provided further
that cancellation of Indebtedness owing to the Issuer from employees, directors
or consultants of the Issuer, any of the Issuer’s direct or indirect parent
companies or any of the Issuer’s Restricted Subsidiaries in connection with a
repurchase of Equity Interests of the Issuer or any of its direct or indirect
parent companies will not be deemed to constitute a Restricted Payment for
purposes of this Section 4.07 or any other provision of this Indenture;

 

(5)                                  the
declaration and payment of dividends to holders of any class or series of
Disqualified Stock of the Issuer or any of its Restricted Subsidiaries issued
in accordance with Section 4.09 hereof to the extent such dividends are
included in the definition of “Fixed Charges”;

 

(6)                                  (a) the
declaration and payment of dividends to holders of any class or series of
Designated Preferred Stock (other than Disqualified Stock) issued by the Issuer
after the Issue Date;

 

(b)                                 the
declaration and payment of dividends to a direct or indirect parent company of
the Issuer, the proceeds of which will be used to fund the payment of dividends
to holders of any class or series of Designated Preferred Stock
(other than Disqualified Stock) of such parent company issued after the Issue
Date, provided that the amount of dividends paid pursuant to this clause
(b) shall not exceed the aggregate amount of cash actually contributed to
the Issuer from the sale of such Designated Preferred Stock; or

 

(c)                                  the
declaration and payment of dividends on Refunding Capital Stock that is
Preferred Stock in excess of the dividends declarable and payable thereon
pursuant to clause (2) of this Section 4.07(b);

 

provided, however, in the case of each
of (a), (b) and (c) of this clause (6), that for the most recently
ended four full fiscal quarters for which internal financial statements are
available immediately preceding the date of issuance of such Designated
Preferred Stock or the declaration of such dividends on Refunding Capital Stock
that is Preferred Stock, after giving effect to such issuance or declaration on
a pro forma basis, the Issuer and its
Restricted Subsidiaries on a consolidated basis would have had a Fixed Charge
Coverage Ratio of at least 2.00 to 1.00;

 

(7)                                  Investments
in Unrestricted Subsidiaries having an aggregate fair market value, taken
together with all other Investments made pursuant to this clause (7) that
are at the time outstanding, without giving effect to the sale of an
Unrestricted Subsidiary to the extent the proceeds of such sale do not consist
of, or have not been subsequently sold or transferred for, cash or marketable
securities, not to exceed $75.0 million (with the fair market value of each
Investment being measured at the time made and without giving effect to subsequent
changes in value);

 

65

 

(8)                                  repurchases
of Equity Interests deemed to occur upon exercise of stock options or warrants
if such Equity Interests represent a portion of the exercise price of such
options or warrants;

 

(9)                                  the
declaration and payment of dividends on the Issuer’s common stock (or the
payment of dividends to any direct or indirect parent entity to fund a payment
of dividends on such entity’s common stock), following the first public
offering of the Issuer’s common stock or the common stock of any of its direct
or indirect parent companies after the Issue Date, of up to 6% per annum of the
net cash proceeds received by or contributed to the Issuer in or from any
public offering, other than public offerings with respect to the Issuer’s
common stock registered on Form S-8 and other than any public sale
constituting an Excluded Contribution;

 

(10)                            Restricted
Payments that are made with Excluded Contributions;

 

(11)                            other
Restricted Payments in an aggregate amount taken together with all other
Restricted Payments made pursuant to this clause (11) that are at the time
outstanding (without giving effect to the sale of an Investment to the extent
the proceeds of such sale do not consist of, or have not been subsequently sold
or transferred for, cash or marketable securities) not to exceed $75.0 million;

 

(12)                            distributions
or payments of Receivables Fees;

 

(13)                            any
Restricted Payment used to fund the Transactions and the fees and expenses
related thereto or owed to Affiliates, in each case with respect to any
Restricted Payment to or owed to an Affiliate, to the extent permitted by Section 4.11
hereof;

 

(14)                            the
repurchase, redemption or other acquisition or retirement for value of any
Subordinated Indebtedness pursuant to the provisions similar to those described
under Sections 4.10 and Section 4.14 hereof; provided that all Notes tendered by Holders in connection
with a Change of Control Offer or Asset Sale Offer, as applicable, have been
repurchased, redeemed or acquired for value;

 

(15)                            the
declaration and payment of dividends or distributions by the Issuer to, or the
making of loans to, any direct or indirect parent company in amounts required
for any direct or indirect parent companies to pay, in each case without
duplication,

 

(a)                                  franchise
taxes and other fees, taxes and expenses required to maintain their corporate
existence;

 

(b)                                 federal,
state and local income taxes, to the extent such income taxes are attributable
to the income of the Issuer and its Restricted Subsidiaries and, to the extent
of the amount actually received from its Unrestricted Subsidiaries, in amounts
required to pay such taxes to the extent attributable to the income of such
Unrestricted Subsidiaries; provided
that in each case the amount of such payments in any fiscal year does not
exceed the excess (if any) of (A) the amount that the Issuer and its
Restricted Subsidiaries would be required to pay in respect of federal, state
and local income taxes for such fiscal year were the Issuer, its Restricted
Subsidiaries and its Unrestricted Subsidiaries (to the extent described above)
to pay such taxes separately from any such parent company over (B) the
aggregate federal, state and local income taxes paid by the Issuer and its Restricted
Subsidiaries;

 

66

 

(c)                                  customary
salary, bonus and other benefits payable to officers and employees of any
direct or indirect parent company of the Issuer to the extent such salaries,
bonuses and other benefits are attributable to the ownership or operation of
the Issuer and its Restricted Subsidiaries;

 

(d)                                 general
corporate operating and overhead costs and expenses of any direct or indirect
parent company of the Issuer to the extent such costs and expenses are
attributable to the ownership or operation of the Issuer and its Restricted
Subsidiaries; and

 

(e)                                  fees
and expenses other than to Affiliates of the Issuer related to any unsuccessful
equity or debt offering of such parent company;

 

(16)                            the
distribution, by dividend or otherwise, of shares of Capital Stock of, or Indebtedness
owed to the Issuer or a Restricted Subsidiary by, Unrestricted Subsidiaries
(other than Unrestricted Subsidiaries, the primary assets of which are Cash
Equivalents);

 

(17)                            cash
payments in lieu of the issuance of fractional shares in connection with the
exercise of warrants, options or other securities convertible into exchangeable
for Capital Stock of the Issuer or any direct or indirect parent company of the
Issuer; provided, that any such cash payment shall not be for the purpose of
evading the limitation of this Section 4.07;

 

(18)                            the
payment of dividends and other distributions in an amount equal to any
reduction in taxes actually realized by the Issuer and its Restricted
Subsidiaries in the form of refunds or credits or from deductions when
applied to offset income or gain as a direct result of (i) transaction
fees and expenses, (ii) commitment and other financing fees or (iii) severance,
change in control and other compensation expense incurred in connection with
the exercise, repurchase, rollover or payout of stock options or bonuses, in
each case in connection with the Transactions; and

 

(19)                            mandatory
redemptions of Subordinated Discount Notes (and exchange notes issued in
respect thereof) pursuant to the indenture governing the Subordinated Discount
Notes due to the existence of an AHYDO Amount (as defined in such indenture);

 

provided,
however, that at the time of, and after giving effect to, any
Restricted Payment permitted under clauses (11), (16) and (18) of this Section 4.07(b),
no Default shall have occurred and be continuing or would occur as a consequence
thereof.

 

(c)                                  The
Issuer shall not permit any Unrestricted Subsidiary to become a Restricted
Subsidiary except pursuant to the second to last sentence of the definition of “Unrestricted
Subsidiary.”  For purposes of designating
any Restricted Subsidiary as an Unrestricted Subsidiary, all outstanding Investments
by the Issuer and its Restricted Subsidiaries (except to the extent repaid) in
the Subsidiary so designated shall be deemed to be Investments in an amount
determined as set forth in the last sentence of the definition of “Investments.”  Such designation shall be permitted only if a
Restricted Payment in such amount would be permitted at such time, whether
pursuant to Section 4.07(a) hereof or under clause (7), (10), (11) or
(16) of Section 4.07(b) hereof, or pursuant to the definition of “Permitted
Investments,” and if such Subsidiary otherwise meets the definition of an
Unrestricted Subsidiary.

 

67

 

Section 4.08                                Dividend
and Other Payment Restrictions Affecting Restricted Subsidiaries.

 

(a)                                  The
Issuer shall not, and shall not permit any of its Restricted Subsidiaries that
are not Guarantors to, directly or indirectly, create or otherwise cause or
suffer to exist or become effective any consensual encumbrance or consensual
restriction on the ability of any such Restricted Subsidiary to:

 

(1)                                  (A)                              pay dividends or make any
other distributions to the Issuer or any of its Restricted Subsidiaries on its
Capital Stock or with respect to any other interest or participation in, or
measured by, its profits, or

 

(B)                                pay
any Indebtedness owed to the Issuer or any of its Restricted Subsidiaries;

 

(2)                                  make loans or
advances to the Issuer or any of its Restricted Subsidiaries; or

 

(3)                                  sell, lease or
transfer any of its properties or assets to the Issuer or any of its Restricted
Subsidiaries.

 

(b)                                 The
restrictions in Section 4.08(a) hereof shall not apply to
encumbrances or restrictions existing under or by reason of:

 

(1)                                  contractual
encumbrances or restrictions in effect on the Issue Date, including pursuant to
the Senior Credit Facilities and the related documentation and the indenture
governing the Senior Notes and the related documentation and the indenture
governing the Subordinated Discount Notes and the related documentation;

 

(2)                                  this Indenture and
the Notes;

 

(3)                                  purchase money obligations
for property acquired in the ordinary course of business that impose
restrictions of the nature discussed in clause (3) of Section 4.08(a) hereof
on the property so acquired;

 

(4)                                  applicable law or any
applicable rule, regulation or order;

 

(5)                                  any agreement or
other instrument of a Person acquired by the Issuer or any of its Restricted
Subsidiaries in existence at the time of such acquisition (but not created in
contemplation thereof), which encumbrance or restriction is not applicable to
any Person, or the properties or assets of any Person, other than the Person so
acquired and its Subsidiaries, or the property or assets of the Person so
acquired and its Subsidiaries;

 

(6)                                  contracts for the
sale of assets, including customary restrictions with respect to a Subsidiary
of the Issuer pursuant to an agreement that has been entered into for the sale
or disposition of all or substantially all of the Capital Stock or assets of
such Subsidiary;

 

(7)                                  Secured Indebtedness
otherwise permitted to be incurred pursuant to Section 4.09 hereof and Section 4.12
hereof that limit the right of the debtor to dispose of the assets securing
such Indebtedness;

 

(8)                                  restrictions on cash
or other deposits or net worth imposed by customers under contracts entered
into in the ordinary course of business;

 

68

 

(9)                                  other Indebtedness,
Disqualified Stock or Preferred Stock of Foreign Subsidiaries permitted to be
incurred or issued subsequent to the Issue Date pursuant to the provisions of Section 4.09
hereof;

 

(10)                            customary provisions in any
joint venture agreement and other similar agreement relating solely to such
joint venture;

 

(11)                            customary provisions
contained in leases, subleases, licenses or sublicenses and other agreements,
in each case, entered into in the ordinary course of business;

 

(12)                            any encumbrances or
restrictions of the type referred to in clauses (1), (2) and (3) of Section 4.08(a) hereof
imposed by any amendments, modifications, restatements, renewals, increases,
supplements, refundings, replacements or refinancings of the contracts,
instruments or obligations referred to in clauses (1) through (11) of this
Section 4.08(b); provided that such amendments, modifications,
restatements, renewals, increases, supplements, refundings, replacements or
refinancings are, in the good faith judgment of the Issuer, no more restrictive
in any material respect with respect to such encumbrances and other
restrictions taken as a whole than those prior to such amendment, modification,
restatement, renewal, increase, supplement, refunding, replacement or
refinancing;

 

(13)                            any other agreement
governing Indebtedness entered into after the Issue Date that contains
encumbrances and other restrictions that are, in the good faith judgment of the
Issuer, no more restrictive in any material respect taken as a whole with
respect to any Restricted Subsidiary than those encumbrances and other
restrictions that are in effect on the Issue Date with respect to that
Restricted Subsidiary pursuant to agreements in effect on the Issue Date; and

 

(14)                            restrictions created in
connection with any Receivables Facility that, in the good faith determination
of the Issuer are necessary or advisable to effect such Receivables Facility.

 

Section 4.09                                Limitation
on Incurrence of Indebtedness and Issuance of Disqualified Stock and Preferred
Stock.

 

(a)                                  The
Issuer shall not, and shall not permit any of its Restricted Subsidiaries to,
directly or indirectly, create, incur, issue, assume, guarantee or otherwise
become directly or indirectly liable, contingently or otherwise (collectively, “incur” and collectively, an “incurrence”) with respect to any
Indebtedness (including Acquired Indebtedness) and the Issuer shall not issue
any shares of Disqualified Stock and shall not permit any Restricted Subsidiary
to issue any shares of Disqualified Stock or Preferred Stock; provided, however, that the Issuer may incur Indebtedness
(including Acquired Indebtedness) or issue shares of Disqualified Stock, and
any of its Restricted Subsidiaries may incur Indebtedness (including
Acquired Indebtedness), issue shares of Disqualified Stock and issue shares of
Preferred Stock, if the Fixed Charge Coverage Ratio on a consolidated basis for
the Issuer and its Restricted Subsidiaries’ most recently ended four fiscal
quarters for which internal financial statements are available immediately
preceding the date on which such additional Indebtedness is incurred or such
Disqualified Stock or Preferred Stock is issued would have been at least 2.00
to 1.00, determined on a pro forma
basis (including a pro forma
application of the net proceeds therefrom), as if the additional Indebtedness
had been incurred, or the Disqualified Stock or Preferred Stock had been
issued, as the case may be, and the application of the proceeds therefrom
had occurred at the beginning of such four-quarter period; provided that the
amount of Indebtedness (including Acquired Indebtedness), Disqualified Stock
and Preferred Stock that may be incurred or issued, as applicable,
pursuant to the foregoing by Restricted Subsidiaries that are not Guarantors
shall not exceed $150.0 million at any one time outstanding.

 

69

 

(b)                                 Section 4.09(a) hereof
shall not apply to:

 

(1)                                  (x) Indebtedness
incurred pursuant to the Revolving Credit Facility by the Issuer or any
Restricted Subsidiary; provided that immediately after giving effect to
any such incurrence, the aggregate principal amount of all Indebtedness
incurred under this clause (x) and then outstanding does not exceed the greater
of (A) $1,200.0 million less up to
$150.0 million in the aggregate of all principal payments with respect to such
Indebtedness made following the Issue Date pursuant to clause (1) of Section 4.10(b) less the aggregate principal amount of outstanding
obligations under or in respect of Receivables Facilities and (B) (i) 90.0%
of the eligible credit card and debit card receivables of the Issuer and its
Restricted Subsidiaries plus (ii) 90.0% of the net appraised orderly
liquidation value of the eligible inventory of the Issuer and its Restricted
Subsidiaries and (y) Indebtedness incurred pursuant to the Term Loan Facility
by the Issuer or any Restricted Subsidiary; provided that after giving
effect to any such incurrence, the aggregate principal amount of all
Indebtedness incurred under this clause (y) and then outstanding does not
exceed $2,400.0 million less up to
$250.0 million in the aggregate of all principal payments with respect to such
Indebtedness made following the Issue Date pursuant to clause (1) of Section 4.10(b);

 

(2)                                  the incurrence by the
Issuer and any Guarantor of Indebtedness represented by (a) the Notes
(including any Guarantee and including the Exchange Notes) (other than any Additional
Notes), (b) the Senior Notes (including any guarantee thereof) and
exchange notes issued in respect of the Senior Notes and any guarantee thereof
and (c) the Subordinated Discount Notes (including any guarantee thereof)
and exchange notes issued in respect of the Subordinated Discount Notes and any
guarantee thereof;

 

(3)                                  Indebtedness of the
Issuer and its Restricted Subsidiaries in existence on the Issue Date (other
than Indebtedness described in clauses (1) and (2) of this Section 4.09(b));

 

(4)                                  (i) Indebtedness
(including Capitalized Lease Obligations) incurred or Disqualified Stock and
Preferred Stock issued by the Issuer or any of its Restricted Subsidiaries, to
finance the purchase, lease or improvement of property (real or personal) or
equipment that is used or useful in a Similar Business, whether through the
direct purchase of assets or the Capital Stock of any Person owning such assets
and (ii) any Indebtedness incurred or Disqualified Stock or Preferred
Stock issued to refund, refinance or replace any other Indebtedness incurred or
Disqualified Stock or Preferred Stock issued pursuant to this clause (4);
provided that the aggregate amount of Indebtedness incurred and Disqualified
Stock and Preferred Stock issued pursuant to clauses (i) and (ii) of
this clause (4) does not exceed $125.0 million at any one time outstanding;

 

(5)                                  Indebtedness incurred
by the Issuer or any of its Restricted Subsidiaries constituting reimbursement
obligations with respect to letters of credit issued in the ordinary course of
business, including letters of credit in respect of workers’ compensation
claims, health, disability or other employee benefits or property, casualty or
liability insurance or self-insurance, or other Indebtedness with respect to
reimbursement type obligations regarding workers’ compensation claims; provided, however, that upon the drawing of such letters of
credit or the incurrence of such Indebtedness, such obligations are reimbursed
within 30 days following such drawing or incurrence;

 

(6)                                  Indebtedness arising from
agreements of the Issuer or its Restricted Subsidiaries providing for
indemnification, adjustment of purchase price or similar obligations, in each
case, incurred or assumed in connection with the disposition of any business,
assets or a Subsidiary, other than guarantees of Indebtedness incurred by any
Person acquiring all or any portion of such

 

70

 

business, assets or a Subsidiary for the purpose of financing such
acquisition; provided, however, that

 

(A)                              such
Indebtedness is not reflected on the balance sheet of the Issuer, or any of its
Restricted Subsidiaries prepared in accordance with GAAP (contingent
obligations referred to in a footnote to financial statements and not otherwise
reflected on the balance sheet will not be deemed to be reflected on such
balance sheet for purposes of this clause (6)(A)); and

 

(B)                                the
maximum assumable liability in respect of all such Indebtedness shall at no
time exceed the gross proceeds including non-cash proceeds (the fair market
value of such non-cash proceeds being measured at the time received and without
giving effect to any subsequent changes in value) actually received by the
Issuer and its Restricted Subsidiaries in connection with such disposition;

 

(7)                                  Indebtedness of the
Issuer to a Restricted Subsidiary; provided
that any such Indebtedness owing to a Restricted Subsidiary that is not a
Guarantor is expressly subordinated in right of payment to the Notes; provided further that any subsequent
issuance or transfer of any Capital Stock or any other event which results in
any Restricted Subsidiary ceasing to be a Restricted Subsidiary or any other
subsequent transfer of any such Indebtedness (except to the Issuer or another
Restricted Subsidiary or any pledge of such Indebtedness constituting a
Permitted Lien) shall be deemed, in each case, to be an incurrence of such
Indebtedness not permitted by this clause (7);

 

(8)                                  Indebtedness of a
Restricted Subsidiary to the Issuer or another Restricted Subsidiary; provided that if a Guarantor
incurs such Indebtedness to a Restricted Subsidiary that is not a Guarantor,
such Indebtedness is expressly subordinated in right of payment to the
Guarantee of the Notes of such Guarantor; provided further
that any subsequent issuance or transfer of any Capital Stock or any other
event which results in any such Restricted Subsidiary ceasing to be a
Restricted Subsidiary or any subsequent transfer of any such Indebtedness
(except to the Issuer or another Restricted Subsidiary or any pledge of such
Indebtedness constituting a Permitted Lien) shall be deemed, in each case, to
be an incurrence of such Indebtedness not permitted by this clause (8);

 

(9)                                  shares of Preferred
Stock of a Restricted Subsidiary issued to the Issuer or another Restricted
Subsidiary, provided
that any subsequent issuance or transfer of any Capital Stock or any other
event which results in any such Restricted Subsidiary ceasing to be a
Restricted Subsidiary or any other subsequent transfer of any such shares of
Preferred Stock (except to the Issuer or another of its Restricted Subsidiaries
or any pledge of such Capital Stock constituting a Permitted Lien) shall be
deemed in each case to be an issuance of such shares of Preferred Stock not
permitted by this clause (9);

 

(10)                            (x) Hedging Obligations
(excluding Hedging Obligations entered into for speculative purposes) for the
purpose of limiting interest rate risk, exchange rate risk or commodity pricing
risk, and (y) Indebtedness in respect of Cash Management Services provided by
any lender party to a Senior Credit Facility or any affiliate of such lender
(or any Person that was a lender or an affiliate of a lender at the time the
applicable agreement pursuant to which such Cash Management Services are
provided was entered into);

 

71

 

(11)                            obligations in respect of
performance, bid, appeal and surety bonds and performance and completion
guarantees or obligations in respect of letters of credit related thereto
provided by the Issuer or any of its Restricted Subsidiaries in the ordinary course
of business;

 

(12)                            (a) Indebtedness or Disqualified
Stock of the Issuer and Indebtedness, Disqualified Stock or Preferred Stock of
the Issuer or any Restricted Subsidiary equal to 100.0% of the net cash
proceeds received by the Issuer since immediately after the Issue Date from the
issue or sale of Equity Interests of the Issuer or cash contributed to the
capital of the Issuer (in each case, other than proceeds of Disqualified Stock
or sales of Equity Interests to the Issuer or any of its Subsidiaries) as
determined in accordance with clauses (3)(b) and (3)(c) of Section 4.07(a) hereof
to the extent such net cash proceeds or cash have not been applied pursuant to
such clauses to make Restricted Payments or to make other Investments, payments
or exchanges pursuant to Section 4.07(b) hereof or to make Permitted
Investments (other than Permitted Investments specified in clauses (1) and
(3) of the definition thereof) and (b) Indebtedness or Disqualified
Stock of the Issuer and Indebtedness, Disqualified Stock or Preferred Stock of
the Issuer or any Restricted Subsidiary not otherwise permitted hereunder in an
aggregate principal amount or liquidation preference, which when aggregated
with the principal amount and liquidation preference of all other Indebtedness,
Disqualified Stock and Preferred Stock then outstanding and incurred pursuant
to this clause (12)(b), does not at any one time outstanding exceed $125.0
million (it being understood that any Indebtedness incurred or Disqualified
Stock or Preferred Stock issued pursuant to this clause (12)(b) shall
cease to be deemed incurred or outstanding for purposes of this clause (12)(b) but
shall be deemed incurred for the purposes of Section 4.09(a) hereof from
and after the first date on which the Issuer or such Restricted Subsidiary
could have incurred such Indebtedness, Disqualified Stock or Preferred Stock
under Section 4.09(a) hereof without reliance on this clause
(12)(b));

 

(13)                            the incurrence by the
Issuer or any Restricted Subsidiary of Indebtedness or issuance by the Issuer
or any Restricted Subsidiary of Disqualified Stock or Preferred Stock which
serves to refund or refinance any Indebtedness incurred or Disqualified Stock
or Preferred Stock issued as permitted under Section 4.09(a) hereof and
clauses (2), (3) and (12)(a) of this Section 4.09(b), this
clause (13) and clause (14) of this Section 4.09(b) or any
Indebtedness incurred or Disqualified Stock or Preferred Stock issued to so
refund or refinance such Indebtedness, Disqualified Stock or Preferred Stock
including additional Indebtedness incurred or Disqualified Stock or Preferred
Stock issued to pay premiums (including tender premiums), defeasance costs and
fees in connection therewith (the “Refinancing
Indebtedness”) prior to its respective maturity; provided, however, that such Refinancing
Indebtedness:

 

(A)                              has
a Weighted Average Life to Maturity at the time such Refinancing Indebtedness
is incurred which is not less than the remaining Weighted Average Life to
Maturity of the Indebtedness, Disqualified Stock or Preferred Stock being
refunded or refinanced,

 

(B)                                to
the extent such Refinancing Indebtedness refinances (i) Indebtedness
subordinated or pari passu to the
Notes or any Guarantee thereof, such Refinancing Indebtedness is subordinated
or pari passu to the Notes or the
Guarantee at least to the same extent as the Indebtedness being refinanced or
refunded or (ii) Disqualified Stock or Preferred Stock, such Refinancing
Indebtedness must be Disqualified Stock or Preferred Stock, respectively, and

 

72

 

(C)                                shall
not include:

 

(i)                                     Indebtedness,
Disqualified Stock or Preferred Stock of a Subsidiary of the Issuer that is not
a Guarantor that refinances Indebtedness, Disqualified Stock or Preferred Stock
of the Issuer;

 

(ii)                                  Indebtedness,
Disqualified Stock or Preferred Stock of a Subsidiary of the Issuer that is not
a Guarantor that refinances Indebtedness, Disqualified Stock or Preferred Stock
of a Guarantor; or

 

(iii)                               Indebtedness,
Disqualified Stock or Preferred Stock of the Issuer or a Restricted Subsidiary
that refinances Indebtedness, Disqualified Stock or Preferred Stock of an
Unrestricted Subsidiary;

 

and provided further that subclause (A) of
this clause (13) will not apply to any refunding or refinancing of any
Indebtedness outstanding under any Senior Indebtedness;

 

(14)                            Indebtedness, Disqualified
Stock or Preferred Stock of (x) the Issuer or a Restricted Subsidiary incurred
or issued to finance
an acquisition or (y) Persons that are acquired by the Issuer or any Restricted
Subsidiary or merged into or amalgamated or consolidated with the Issuer or a
Restricted Subsidiary in accordance with the terms of this Indenture; provided that after giving effect
to such acquisition, merger, amalgamation or consolidation, either

 

(a)                                     the Issuer would
be permitted to incur at least $1.00 of additional Indebtedness pursuant to the
Fixed Charge Coverage Ratio test set forth in Section 4.09(a) hereof,
or

 

(b)                                    the Fixed Charge
Coverage Ratio of the Issuer and the Restricted Subsidiaries is greater than
immediately prior to such acquisition, merger, amalgamation or consolidation;

 

(15)                            Indebtedness arising from
the honoring by a bank or other financial institution of a check, draft or
similar instrument drawn against insufficient funds in the ordinary course of
business, provided that
such Indebtedness is extinguished within five Business Days of its incurrence;

 

(16)                            Indebtedness of the Issuer
or any of its Restricted Subsidiaries supported by a letter of credit issued
pursuant to a Senior Credit Facility, in a principal amount not in excess of
the stated amount of such letter of credit;

 

(17)                            (a) any guarantee by
the Issuer or a Restricted Subsidiary of Indebtedness or other obligations of
any Restricted Subsidiary so long as the incurrence of such Indebtedness
incurred by such Restricted Subsidiary is permitted under the terms of this
Indenture, or

 

(b)                                 any
guarantee by a Restricted Subsidiary of Indebtedness of the Issuer provided
that such guarantee is incurred in accordance with Section 4.15 hereof;

 

(18)                            Indebtedness of Foreign
Subsidiaries of the Issuer incurred not to exceed together with any other
Indebtedness incurred under this clause (18) at any one time outstanding, the
greater of (x) $100.0 million and (y) 10.0% of the Total Assets of the Foreign
Subsidiaries (it being understood that any Indebtedness incurred pursuant to
this clause (18) shall cease to be

 

73

 

deemed incurred or outstanding for purposes of this clause (18) but
shall be deemed incurred for the purposes of Section 4.09(a) hereof from
and after the first date on which the applicable Foreign Subsidiary could have
incurred such Indebtedness under Section 4.09(a) hereof without reliance
on this clause (18));

 

(19)                            (i)  Indebtedness,
Disqualified Stock or Preferred Stock of a Restricted Subsidiary incurred or
issued to finance or assumed in connection with an acquisition and (ii) Indebtedness
incurred to refund, refinance or replace any other Indebtedness, Disqualified
Stock and Preferred Stock permitted under this clause (19), in each case, in a
principal amount not to exceed, together with all other Indebtedness,
Disqualified Stock and/or Preferred Stock issued under this clause (19), $100.0
million in the aggregate at any one time outstanding (it being understood that
any Indebtedness, Disqualified Stock or Preferred Stock incurred pursuant to
this clause (19) shall cease to be deemed incurred or outstanding for purposes
of this clause (19) but shall be deemed incurred for the purposes of Section 4.09(a) hereof
from and after the first date on which such Restricted Subsidiary could have
incurred such Indebtedness or issued such Disqualified Stock or Preferred Stock
under Section 4.09(a) hereof without reliance on this clause (19));

 

(20)                            Indebtedness of the Issuer
or any of its Restricted Subsidiaries consisting of (i) the financing of
insurance premiums or (ii) take-or-pay obligations contained in supply
arrangements, in each case incurred in the ordinary course of business; and

 

(21)                            Indebtedness consisting of
Indebtedness issued by the Issuer or any of its Restricted Subsidiaries to
current or former officers, directors, employees and consultants thereof, their
respective estates, spouses or former spouses, in each case to finance the
purchase or redemption of Equity Interests of the Issuer or any direct or
indirect parent company of the Issuer to the extent described in clause (4) of
Section 4.07(b) hereof.

 

(c)                                  For
purposes of determining compliance with this Section 4.09:

 

(1)                                  in the event that an
item of Indebtedness, Disqualified Stock or Preferred Stock (or any portion
thereof) meets the criteria of more than one of the categories of permitted
Indebtedness, Disqualified Stock or Preferred Stock described in clauses (1) through
(21) of Section 4.09(b) hereof or is entitled to be incurred pursuant
to Section 4.09(a) hereof, the Issuer, in its sole discretion, shall
classify or reclassify such item of Indebtedness, Disqualified Stock or Preferred
Stock (or any portion thereof) and shall only be required to include the amount
and type of such Indebtedness, Disqualified Stock or Preferred Stock in one of
the above clauses; provided that all Indebtedness outstanding under the
Senior Credit Facilities on the Issue Date shall at all times be deemed to be
outstanding in reliance on clause (1) of Section 4.09(b) hereof;
and

 

(2)                                  at the time of
incurrence, the Issuer shall be entitled to divide and classify an item of
Indebtedness in more than one of the types of Indebtedness described in Sections
4.09(a) and 4.09(b) hereof.

 

Accrual of
interest, the accretion of accreted value and the payment of interest in the form of
additional Indebtedness, Disqualified Stock or Preferred Stock shall not be
deemed to be an incurrence of Indebtedness, Disqualified Stock or Preferred
Stock for purposes of this Section 4.09.

 

For purposes
of determining compliance with any U.S. dollar-denominated restriction on the
incurrence of Indebtedness, the U.S. dollar-equivalent principal amount of
Indebtedness denominated in a foreign currency shall be calculated based on the
relevant currency exchange rate in effect on the date such Indebtedness was
incurred, in the case of term debt, or first committed, in the case of
revolving

 

74

 

credit debt; provided that if such Indebtedness
is incurred to refinance other Indebtedness denominated in a foreign currency,
and such refinancing would cause the applicable U.S. dollar denominated restriction
to be exceeded if calculated at the relevant currency exchange rate in effect
on the date of such refinancing, such U.S. dollar-denominated restriction shall
be deemed not to have been exceeded so long as the principal amount of such
refinancing Indebtedness does not exceed the principal amount of such
Indebtedness being refinanced.

 

The principal
amount of any Indebtedness incurred to refinance other Indebtedness, if
incurred in a different currency from the Indebtedness being refinanced, shall
be calculated based on the currency exchange rate applicable to the currencies
in which such respective Indebtedness is denominated that is in effect on the
date of such refinancing.

 

Section 4.10                                          Asset
Sales.

 

(a)                                  The
Issuer shall not, and shall not permit any of its Restricted Subsidiaries to, consummate
an Asset Sale, unless:

 

(1)                                  the
Issuer or such Restricted Subsidiary, as the case may be, receives
consideration at the time of such Asset Sale at least equal to the fair market
value (as determined in good faith by the Issuer) of the assets sold or
otherwise disposed of; and

 

(2)                                  except
in the case of a Permitted Asset Swap, at least 75% of the consideration
therefor received by the Issuer or such Restricted Subsidiary, as the case may be,
is in the form of Cash Equivalents; provided that the amount of:

 

(A)                              any
liabilities (as shown on the Issuer’s or such Restricted Subsidiary’s most recent
balance sheet or in the footnotes thereto) of the Issuer or such Restricted
Subsidiary, other than liabilities that are by their terms subordinated to the
Notes, that are assumed by the transferee of any such assets and for which the
Issuer and all of its Restricted Subsidiaries have been validly released by all
creditors in writing,

 

(B)                                any
securities received by the Issuer or such Restricted Subsidiary from such
transferee that are converted by the Issuer or such Restricted Subsidiary into Cash
Equivalents (to the extent of the Cash Equivalents received) within 180 days
following the closing of such Asset Sale, and

 

(C)                                any
Designated Non-cash Consideration received by the Issuer or such Restricted
Subsidiary in such Asset Sale having an aggregate fair market value, taken
together with all other Designated Non-cash Consideration received pursuant to
this clause (C) that is at that time outstanding, not to exceed 7.5%
of Total Assets at the time of the receipt of such Designated Non-cash
Consideration, with the fair market value of each item of Designated Non-cash
Consideration being measured at the time received and without giving effect to
subsequent changes in value,

 

shall be
deemed to be Cash Equivalents for purposes of this provision and for no other
purpose.

 

(b)                                 Within
450 days after the receipt of any Net Proceeds of any Asset Sale, the Issuer or
such Restricted Subsidiary, at its option, may apply the Net Proceeds from
such Asset Sale,

 

75

 

(1)                                  to
permanently reduce:

 

(A)                              Obligations
under Senior Indebtedness, and to correspondingly reduce commitments with
respect thereto;

 

(B)                                Obligations
under Senior Subordinated Indebtedness (and to correspondingly reduce
commitments with respect thereto), provided that the Issuer shall
equally and ratably reduce Obligations under the Notes as provided under Section 3.07
hereof through open-market purchases (to the extent such purchases are at or
above 100% of the principal amount thereof) or by making an offer (in
accordance with the procedures set forth under Section 4.10(c) hereof)
to all Holders to purchase their Notes at 100% of the principal amount thereof,
plus the amount of accrued but unpaid interest, if any, and Additional
Interest, if any, on the amount of Notes that would otherwise be prepaid; or

 

(C)                                Indebtedness
of a Restricted Subsidiary that is not a Guarantor, other than Indebtedness
owed to the Issuer or another Restricted Subsidiary;

 

(2)                                  to
make (A) an Investment in any one or more businesses, provided that such Investment in
any business is in the form of the acquisition of Capital Stock and
results in the Issuer or another of its Restricted Subsidiaries, as the case may be,
owning an amount of the Capital Stock of such business such that it constitutes
a Restricted Subsidiary, (B) capital expenditures or (C) acquisitions
of other assets, in the case of each of (A), (B) and (C), used or useful
in a Similar Business; or

 

(3)                                  to
make an Investment in (A) any one or more businesses, provided that such Investment in
any business is in the form of the acquisition of Capital Stock and
results in the Issuer or another of its Restricted Subsidiaries, as the case may be,
owning an amount of the Capital Stock of such business such that it constitutes
a Restricted Subsidiary, (B) properties or (C) other assets that, in the
case of each of (A), (B) and (C), replace the businesses, properties
and/or assets that are the subject of such Asset Sale;

 

provided that, in the case of clauses (2) and (3) above, a binding
commitment shall be treated as a permitted application of the Net Proceeds from
the date of such commitment so long as the Issuer or such other Restricted
Subsidiary enters into such commitment with the good faith expectation that
such Net Proceeds shall be applied to satisfy such commitment within 180 days
of such commitment (an “Acceptable
Commitment”) and, in the event any Acceptable Commitment is later
cancelled or terminated for any reason before the Net Proceeds are applied in
connection therewith, the Issuer or such Restricted Subsidiary enters into
another Acceptable Commitment (a “Second Commitment”) within
180 days of such cancellation or termination; provided  further
that if any Second Commitment is later cancelled or terminated for any reason
before such Net Proceeds are applied, then such Net Proceeds shall constitute
Excess Proceeds.

 

(c)                                  Any
Net Proceeds from the Asset Sale that are not invested or applied as provided
and within the time period set forth in Section 4.10(b) shall be
deemed to constitute “Excess Proceeds.”
 When the aggregate amount of Excess
Proceeds exceeds $50.0 million, the Issuer shall make an offer to all
Holders of the Notes and, if required by the terms of any Indebtedness that is pari passu with the Notes (“Pari Passu Indebtedness”), to the
holders of such Pari Passu Indebtedness (an “Asset Sale Offer”), to purchase the maximum aggregate principal
amount of the Notes and such Pari Passu Indebtedness that is an integral
multiple of $1,000 that may be purchased out of the Excess Proceeds at an
offer price in cash in an amount equal to 100% of the principal amount thereof,
plus accrued and unpaid interest and Additional Interest, if any, to the date
fixed for the closing of such offer, in accordance with the

 

76

 

procedures set forth in this
Indenture. The Issuer shall commence an Asset Sale Offer with respect to Excess
Proceeds within ten Business Days after the date that Excess Proceeds exceed $50.0 million
by mailing the notice required pursuant to the terms of this Indenture, with a
copy to the Trustee or otherwise in accordance with the procedures of DTC.

 

To the extent
that the aggregate amount of Notes and such Pari Passu Indebtedness tendered
pursuant to an Asset Sale Offer is less than the Excess Proceeds, the Issuer may use
any remaining Excess Proceeds for general corporate purposes, subject to compliance
with this Indenture. If the aggregate principal amount of Notes and the Pari
Passu Indebtedness surrendered in an Asset Sale Offer exceeds the amount of
Excess Proceeds, the Trustee shall select the Notes and such Pari Passu
Indebtedness to be purchased on a pro rata basis
based on the accreted value or principal amount of the Notes or such Pari Passu
Indebtedness tendered in accordance with Section 3.09. Upon completion of
any such Asset Sale Offer, the amount of Excess Proceeds shall be reset to zero
(regardless of whether there are any remaining Excess Proceeds upon such
completion).

 

(d)                                 Pending
the final application of any Net Proceeds pursuant to this Section 4.10,
the holder of such Net Proceeds may apply such Net Proceeds temporarily to
reduce Indebtedness outstanding under a revolving credit facility or otherwise
invest such Net Proceeds in any manner not prohibited by this Indenture.

 

(e)                                  The
Issuer shall comply with the requirements of Rule 14e-1 under the Exchange
Act and any other securities laws and regulations thereunder to the extent such
laws or regulations are applicable in connection with the repurchase of the
Notes pursuant to an Asset Sale Offer. To the extent that the provisions of any
securities laws or regulations conflict with the provisions of this Indenture,
the Issuer shall comply with the applicable securities laws and regulations and
shall not be deemed to have breached its obligations described in this
Indenture by virtue thereof.

 

Section 4.11                                          Transactions
with Affiliates.

 

(a)                                  The
Issuer shall not, and shall not permit any of its Restricted Subsidiaries to,
make any payment to, or sell, lease, transfer or otherwise dispose of any of
its properties or assets to, or purchase any property or assets from, or enter
into or make or amend any transaction, contract, agreement, understanding,
loan, advance or guarantee with, or for the benefit of, any Affiliate of the
Issuer (each of the foregoing, an “Affiliate
Transaction”) involving aggregate payments or consideration in
excess of $10.0 million, unless:

 

(1)                                  such Affiliate
Transaction is on terms that are not materially less favorable to the Issuer or
its relevant Restricted Subsidiary than those that would have been obtained in
a comparable transaction by the Issuer or such Restricted Subsidiary with an
unrelated Person on an arm’s-length basis; and

 

(2)                                  the Issuer delivers
to the Trustee with respect to any Affiliate Transaction or series of
related Affiliate Transactions involving aggregate payments or consideration in
excess of $30.0 million, a resolution adopted by the majority of the board
of directors of the Issuer approving such Affiliate Transaction and set forth
in an Officer’s Certificate certifying that such Affiliate Transaction complies
with clause (1) of this Section 4.11(a).

 

(b)                                 Section 4.11(a) hereof
shall not apply to the following:

 

(1)                                  transactions between
or among the Issuer or any of its Restricted Subsidiaries;

 

77

 

(2)                                  Restricted Payments
permitted by Section 4.07 hereof and Investments constituting Permitted
Investments;

 

(3)                                  the payment of
management, consulting, monitoring and advisory fees and termination fees and
related indemnities and expenses pursuant to the Sponsor Management Agreement
as in effect on the Issue Date;

 

(4)                                  the payment of
reasonable and customary fees and compensation paid to, and indemnities and
reimbursements provided on behalf of, officers, directors, employees or
consultants of the Issuer, any of its direct or indirect parent companies or
any of its Restricted Subsidiaries;

 

(5)                                  transactions in which
the Issuer or any of its Restricted Subsidiaries, as the case may be,
delivers to the Trustee a letter from an Independent Financial Advisor stating
that such transaction is fair to the Issuer or such Restricted Subsidiary from
a financial point of view or stating that the terms are not materially less
favorable to the Issuer or its relevant Restricted Subsidiary than those that
would have been obtained in a comparable transaction by the Issuer or such
Restricted Subsidiary with an unrelated Person on an arm’s-length basis;

 

(6)                                  any agreement as in
effect as of the Issue Date, or any amendment thereto (so long as any such
amendment is not disadvantageous in any material respect to the Holders when
taken as a whole as compared to the applicable agreement as in effect on the
Issue Date);

 

(7)                                  the existence of, or
the performance by the Issuer or any of its Restricted Subsidiaries of its
obligations under the terms of, any stockholders agreement (including any
registration rights agreement or purchase agreement related thereto) to which
it is a party as of the Issue Date and any similar agreements which it may enter
into thereafter; provided, however, that the existence
of, or the performance by the Issuer or any of its Restricted Subsidiaries of
obligations under, any future amendment to any such existing agreement or any
similar agreement entered into after the Issue Date shall only be permitted by
this clause (7) to the extent that the terms of any such amendment or new
agreement are not otherwise disadvantageous in any material respect to the
Holders when taken as a whole as compared to the original agreement in effect
on the Issue Date;

 

(8)                                  the Transactions and
the payment of all fees and expenses related to the Transactions, including
Transaction Expenses, in each case as disclosed in the Offering Memorandum;

 

(9)                                  transactions with
customers, clients, suppliers, or purchasers or sellers of goods or services,
in each case in the ordinary course of business and otherwise in compliance
with the terms of this Indenture which are fair to the Issuer and its
Restricted Subsidiaries, in the reasonable determination of the board of
directors of the Issuer or the senior management thereof, or are on terms at
least as favorable as would reasonably have been obtained at such time from an
unaffiliated party;

 

(10)                            the issuance of Equity
Interests (other than Disqualified Stock) of the Issuer to any direct or
indirect parent of the Issuer or to any Permitted Holder or to any director,
officer, employee or consultant of the Issuer, any Subsidiary or any direct or
indirect parent of the Issuer;

 

(11)                            sales of accounts
receivable, or participations therein, in connection with any Receivables
Facility;

 

78

 

(12)                            payments by the Issuer or
any of its Restricted Subsidiaries to any of the Investors made for any
financial advisory, financing, underwriting or placement services or in respect
of other investment banking activities, including, without limitation, in
connection with acquisitions or divestitures which payments are approved by a
majority of the board of directors of the Issuer in good faith or are otherwise
permitted by this Indenture;

 

(13)                            payments or loans (or
cancellation of loans) to employees or consultants of the Issuer, any of its
direct or indirect parent companies or any of its Restricted Subsidiaries and
employment agreements, stock option plans and other similar arrangements with
such employees or consultants which, in each case, are approved by the Issuer
in good faith; and

 

(14)                            investments by the
Investors in securities of the Issuer or any of its Restricted Subsidiaries so
long as (i) the investment is being offered generally to other investors
on the same or more favorable terms and (ii) the investment constitutes
less than 5% of the proposed or outstanding issue amount of such class of
securities.

 

Section 4.12                                          Liens.

 

The Issuer shall
not, and shall not permit any Guarantor to, directly or indirectly, create,
incur, assume or suffer to exist any Lien (except Permitted Liens) that secures
obligations under any Indebtedness (or any related guarantee) ranking pari passu with or subordinated to the Notes or any Guarantee,
on any asset or property of the Issuer or any Guarantor, or any income or
profits therefrom, or assign or convey any right to receive income therefrom,
unless:

 

(1)                                  in
the case of Liens securing Subordinated Indebtedness, the Notes and related
Guarantees are secured by a Lien on such property, assets or proceeds that is
senior in priority to such Liens; or

 

(2)                                   in
all other cases, the Notes or the Guarantees are equally and ratably secured,
except that the foregoing shall not apply to or restrict (a) Liens
securing the Notes and the related Guarantees, (b) Liens securing Senior
Indebtedness of the Issuer or any Guarantor and (c) Liens securing both Indebtedness
permitted to be incurred under Senior Credit Facilities, including any letter
of credit facility relating thereto, that was permitted by the terms of this
Indenture to be incurred and obligations of the Issuer or any Guarantor in
respect of any Bank Products or Cash Management Services provided by any lender
party to any Senior Credit Facility or any affiliate of such lender (or any
Person that was a lender or an affiliate of a lender at the time the applicable
agreements pursuant to which such Bank Products or Cash Management Services are
provided were entered into).

 

Any Lien
created for the benefit of the Holders of the Notes pursuant to this Section 4.12
shall be deemed automatically and unconditionally released and discharged upon
the release and discharge of each of the Liens described in clauses (1) and
(2) of this Section 4.12.

 

Section 4.13                                          Corporate
Existence.

 

Subject to Article 5
hereof, the Issuer shall do or cause to be done all things necessary to
preserve and keep in full force and effect its corporate existence, and the
corporate, partnership or other existence of each of its Restricted
Subsidiaries, in accordance with the respective organizational documents (as
the same may be amended from time to time) of the Issuer or any such
Restricted Subsidiary.

 

79

 

Section 4.14                                          Offer
to Repurchase Upon Change of Control.

 

(a)                                  If
a Change of Control occurs, unless the Issuer has previously or concurrently
mailed a redemption notice with respect to all the outstanding Notes as
described under Section 3.07 hereof, the Issuer shall make an offer to
purchase all of the Notes pursuant to the offer described below (the “Change of Control Offer”) at a
price in cash (the “Change of
Control Payment”) equal to 101% of the aggregate principal amount
thereof plus accrued and unpaid interest and Additional Interest, if any, to
the date of purchase, subject to the right of Holders of record of the Notes on
the relevant Record Date to receive interest due on the relevant Interest
Payment Date. Within 30 days following any Change of Control, the Issuer shall
send notice of such Change of Control Offer by first-class mail, with a
copy to the Trustee, to each Holder of Notes to the address of such Holder
appearing in the security register or otherwise in accordance with the procedures
of DTC, with the following information:

 

(1)                                  that a Change of
Control Offer is being made pursuant to this Section 4.14 and that all
Notes properly tendered pursuant to such Change of Control Offer will be
accepted for payment by the Issuer;

 

(2)                                  the purchase price
and the purchase date, which will be no earlier than 30 days nor later than 60
days from the date such notice is mailed (the “Change of Control Payment Date”);

 

(3)                                  that any Note not
properly tendered will remain outstanding and continue to accrue interest;

 

(4)                                  that unless the
Issuer defaults in the payment of the Change of Control Payment, all Notes
accepted for payment pursuant to the Change of Control Offer will cease to
accrue interest on the Change of Control Payment Date;

 

(5)                                  that Holders electing
to have any Notes purchased pursuant to a Change of Control Offer will be
required to surrender such Notes, with the form entitled “Option of Holder
to Elect Purchase” on the reverse of such Notes completed, to the paying agent
specified in the notice at the address specified in the notice prior to the close
of business on the third Business Day preceding the Change of Control Payment
Date;

 

(6)                                  that Holders shall be
entitled to withdraw their tendered Notes and their election to require the
Issuer to purchase such Notes, provided
that the paying agent receives, not later than the close of business on the
second Business Day prior to the Change of Control Payment Date, a telegram,
telex, facsimile transmission or letter setting forth the name of the Holder of
the Notes, the principal amount of Notes tendered for purchase, and a statement
that such Holder is withdrawing its tendered Notes and its election to have
such Notes purchased;

 

(7)                                  that if the Issuer is
redeeming less than all of the Notes, the Holders of the remaining Notes will
be issued new Notes and such new Notes will be equal in principal amount to the
unpurchased portion of the Notes surrendered. The unpurchased portion of the
Notes must be equal to $1,000 or an integral multiple thereof; and

 

(8)                                  the other
instructions, as determined by the Issuer, consistent with this Section 4.14,
that a Holder must follow.

 

The notice, if
mailed in a manner herein provided, shall be conclusively presumed to have been
given, whether or not the Holder receives such notice. If (a) the notice
is mailed in a manner

 

80

 

herein provided
and (b) any Holder fails to receive such notice or a Holder receives such
notice but it is defective, such Holder’s failure to receive such notice or
such defect shall not affect the validity of the proceedings for the purchase
of the Notes as to all other Holders that properly received such notice without
defect. The Issuer shall comply with the requirements of Rule 14e-1 under
the Exchange Act and any other securities laws and regulations thereunder to
the extent such laws or regulations are applicable in connection with the
repurchase by the Issuer of Notes pursuant to a Change of Control Offer. To the
extent that the provisions of any securities laws or regulations conflict with
the provisions of this Section 4.14, the Issuer shall comply with the
applicable securities laws and regulations and shall not be deemed to have
breached its obligations under this Section 4.14 by virtue thereof.

 

(b)                                 On
the Change of Control Payment Date, the Issuer shall, to the extent permitted
by law,

 

(1)                                  accept for payment
all Notes issued by it or portions thereof properly tendered pursuant to the Change
of Control Offer;

 

(2)                                  deposit with the
Paying Agent an amount equal to the aggregate Change of Control Payment in
respect of all Notes or portions thereof so tendered; and

 

(3)                                  deliver, or cause to
be delivered, to the Trustee for cancellation the Notes so accepted together
with an Officer’s Certificate to the Trustee stating that such Notes or
portions thereof have been tendered to and purchased by the Issuer.

 

(c)                                  In
the event a Change of Control occurs at a time when the Issuer is prohibited by
the terms of any Senior Indebtedness from purchasing Notes, then notwithstanding
anything to the contrary in this Indenture, the Issuer (x) shall have 90 days
following such Change of Control to mail the notice of a Change of Control
Offer to Holders and (y) shall undertake, within 90 days following such Change
of Control, to (1) repay in full all Obligations, and terminate all
commitments, under the Senior Credit Facilities and all other Senior
Indebtedness, the terms of which require repayment and/or termination of
commitments upon a Change of Control or offer to repay in full all Obligations,
and terminate all commitments, under the Senior Credit Facilities and all other
such Senior Indebtedness and to repay the Obligations owed to (and terminate
all commitments of) each lender which has accepted such offer or (2) obtain
the requisite consents under the agreements governing such Senior Indebtedness
to permit the repurchase of the Notes.

 

(d)                                 The
Issuer shall first comply with Section 4.14(c) hereof before it shall
be required to repurchase Notes pursuant to the provisions of this Section 4.14.
The Issuer’s failure to comply with Section 4.14(c) hereof may (with
notice and lapse of time) constitute an Event of Default described in clause (3) of
Section 6.01(a) hereof, but shall not constitute an Event of Default
described in clause (1), of Section 6.01(a) hereof.

 

(e)                                  The
Issuer shall not be required to make a Change of Control Offer following a
Change of Control if a third party makes the Change of Control Offer in the
manner, at the times and otherwise in compliance with the requirements set
forth in this Section 4.14 applicable to a Change of Control Offer made by
the Issuer and purchases all Notes validly tendered and not withdrawn under
such Change of Control Offer. Notwithstanding anything to the contrary herein,
a Change of Control Offer may be made in advance of a Change of Control,
conditional upon such Change of Control, if a definitive agreement is in place
for the Change of Control at the time of making of the Change of Control Offer.

 

(f)                                    Other
than as specifically provided in this Section 4.14, any purchase pursuant
to this Section 4.14 shall be made pursuant to the provisions of Sections
3.02, 3.05 and 3.06 hereof.

 

81

 

Section 4.15                                          Limitation
on Guarantees of Indebtedness by Restricted Subsidiaries.

 

The Issuer shall
not permit any of its Wholly-Owned Subsidiaries that are Restricted
Subsidiaries (and non-Wholly-Owned Subsidiaries if such non-Wholly-Owned
Subsidiaries guarantee other capital markets debt securities), other than a
Guarantor or a Foreign Subsidiary, to guarantee the payment of any Indebtedness
of the Issuer or any other Guarantor unless:

 

(1)                                  such
Restricted Subsidiary within 30 days executes and delivers a supplemental
indenture to this Indenture, the form of which is attached as Exhibit D
hereto, providing for a Guarantee by such Restricted Subsidiary, except that
with respect to a guarantee of Indebtedness of the Issuer or any Guarantor:

 

(a)                                  if
the Notes or such Guarantor’s Guarantee are subordinated in right of payment to
such Indebtedness, the Guarantee under the supplemental indenture shall be
subordinated to such Restricted Subsidiary’s guarantee with respect to such
Indebtedness substantially to the same extent as the Notes are subordinated to
such Indebtedness; and

 

(b)                                 if
such Indebtedness is by its express terms subordinated in right of payment to
the Notes or such Guarantor’s Guarantee, any such guarantee by such Restricted
Subsidiary with respect to such Indebtedness shall be subordinated in right of
payment to such Guarantee substantially to the same extent as such Indebtedness
is subordinated to the Notes;

 

 (2)                               such Restricted
Subsidiary waives and shall not in any manner whatsoever claim or take the
benefit or advantage of, any rights of reimbursement, indemnity or subrogation
or any other rights against the Issuer or any other Restricted Subsidiary as a
result of any payment by such Restricted Subsidiary under its Guarantee; and

 

(3)                                  such
Restricted Subsidiary shall deliver to the Trustee an Opinion of Counsel to the
effect that:

 

(a)                                  such
Guarantee has been duly executed and authorized; and

 

(b)                                 such
Guarantee constitutes a valid, binding and enforceable obligation of such
Restricted Subsidiary, except insofar as enforcement thereof may be
limited by bankruptcy, insolvency or similar laws (including, without
limitation, all laws relating to fraudulent transfers) and except insofar as
enforcement thereof is subject to general principles of equity;

 

provided that this Section 4.15 shall not
be applicable to any guarantee of any Restricted Subsidiary that existed at the
time such Person became a Restricted Subsidiary and was not incurred in
connection with, or in contemplation of, such Person becoming a Restricted
Subsidiary.

 

The Issuer may elect,
in its sole discretion, to cause any Subsidiary that is not otherwise required
to be a Guarantor to become a Guarantor, in which case, such Subsidiary shall
only be required to comply with clauses (1) (other than with respect to
any time period) and (2) of this Section 4.15.

 

Section 4.16                                          Discharge
and Suspension of Covenants.

 

(a)                                  During
any period of time that (i) the Notes have Investment Grade Ratings from
both Rating Agencies and (ii) no Default has occurred and is continuing
under this Indenture (the occurrence

 

82

 

of the events described in the
foregoing clauses (i) and (ii) being collectively referred to as a “Covenant Suspension Event”), the
Issuer and the Restricted Subsidiaries shall not be subject to Section 4.07
hereof, Section 4.08 hereof, Section 4.09 hereof, Section 4.10
hereof, Section 4.11 hereof, Section 4.14 hereof, Section 4.15
hereof, Section 4.17 hereof and clause (4) of Section 5.01(a) hereof
(the “Suspended Covenants”).

 

(b)                                 In
the event that the Issuer and the Restricted Subsidiaries are not subject to
the Suspended Covenants under this Indenture for any period of time as a result
of the foregoing, and on any subsequent date (the “Reversion Date”) (a) one
or both of the Rating Agencies withdraw their Investment Grade Rating or
downgrade the rating assigned to the Notes below an Investment Grade Rating or (b) the
Issuer or any of its Affiliates enters into an agreement to effect a
transaction that would result in a Change of Control and one or more of the
Rating Agencies indicate that if consummated, such transaction (alone or
together with any related recapitalization or refinancing transactions) would
cause such Rating Agency to withdraw its Investment Grade Rating or downgrade
the ratings assigned to the Notes below an Investment Grade Rating, then the
Issuer and the Restricted Subsidiaries shall thereafter again be subject to the
Suspended Covenants under this Indenture with respect to future events. The
period beginning on the day of a Covenant Suspension Event and ending on a
Reversion Date is called a “Suspension Period”.

 

(c)                                  On
each Reversion Date, all Indebtedness incurred, or Disqualified Stock or Preferred
Stock issued, during the Suspension Period will be deemed to have been
outstanding on the Issue Date, so that it is classified as permitted under Section 4.09(b)(3) hereof.
Calculations made after the Reversion Date of the amount available to be made
as Restricted Payments under Section 4.07 hereof will be made as though Section 4.07
hereof had been in effect since the Issue Date and throughout the Suspension
Period. Accordingly, Restricted Payments made during the Suspension Period will
reduce the amount available to be made as Restricted Payments under Section 4.07(a) hereof
(but will not reduce any amounts available to be made as Restricted Payments
under Section 4.07(b) hereof). However, no Default or Event of
Default will be deemed to have occurred on the Reversion Date (or thereafter)
under any Suspended Covenant solely as a result of any actions taken by the Issuer
or its Restricted Subsidiaries, or events occurring, during the Suspension
Period. For purposes of Section 4.10 hereof, on the Reversion Date, the
unutilized Excess Proceeds amount will be reset to zero.

 

(d)                                 The
Issuer shall deliver promptly to the Trustee an Officer’s Certificate notifying
it of any such occurrence under this Section 4.16.

 

Section 4.17                                          Limitation
on Layering.

 

The Issuer
shall not, and shall not permit any Guarantor to, directly or indirectly, incur
any Indebtedness (including Acquired Indebtedness) that is subordinate in right
of payment to any Senior Indebtedness of the Issuer or such Guarantor, as the
case may be, unless such Indebtedness is either:

 

(a)                                  equal
in right of payment with the Notes or such Guarantor’s Guarantee of the Notes,
as the case may be; or

 

(b)                                 expressly
subordinated in right of payment to the Notes or such Guarantor’s Guarantee of
the Notes, as the case may be.

 

For the
purposes of this Indenture, Indebtedness that is unsecured is not deemed to be
subordinated or junior to Secured Indebtedness merely because it is unsecured,
and Senior Indebtedness is not deemed to be subordinated or junior to any other
Senior Indebtedness merely because it has a junior priority with respect to the
same collateral.

 

83

 

ARTICLE 5

 

SUCCESSORS

 

Section 5.01                                          Merger,
Consolidation or Sale of All or Substantially All Assets.

 

(a)                                  The
Issuer shall not consolidate
or merge with or into or wind up into (whether or not the Issuer is the surviving
corporation), or sell, assign, transfer, lease, convey or otherwise dispose of
all or substantially all of its properties or assets, in one or more related
transactions, to any Person unless:

 

(1)                                  either:  (x) the Issuer is the surviving corporation;
or (y) the Person formed by or surviving any such consolidation or merger (if
other than the Issuer) or to which such sale, assignment, transfer, lease,
conveyance or other disposition will have been made is a corporation organized
or existing under the laws of the jurisdiction of organization of the Issuer or
the laws of the United States, any state thereof, the District of Columbia or
any territory thereof (the Issuer or such Person, as the case may be,
being herein called the “Successor Company”);

 

(2)                                  the Successor
Company, if other than the Issuer, expressly assumes all the obligations of the
Issuer under the Notes pursuant to supplemental indentures or other documents
or instruments in form reasonably satisfactory to the Trustee;

 

(3)                                  immediately after
such transaction, no Default exists;

 

(4)                                  immediately after
giving pro forma effect to such transaction and
any related financing transactions, as if such transactions had occurred at the
beginning of the applicable four-quarter period,

 

(A)                              the
Successor Company would be permitted to incur at least $1.00 of additional
Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in Section 4.09(a) hereof,
or

 

(B)                                the
Fixed Charge Coverage Ratio for the Successor Company and its Restricted Subsidiaries
would be greater than the Fixed Charge Coverage Ratio for the Issuer and its
Restricted Subsidiaries immediately prior to such transaction;

 

(5)                                  each Guarantor,
unless it is the other party to the transactions described above, in which case
Section 5.01(c)(1)(B) hereof shall apply, shall have by supplemental
indenture confirmed that its Guarantee shall apply to such Person’s obligations
under this Indenture, the Notes and the Registration Rights Agreement; and

 

(6)                                  the Issuer shall have
delivered to the Trustee an Officer’s Certificate and an Opinion of Counsel,
each stating that such consolidation, merger or transfer and such supplemental
indentures, if any, comply with this Indenture.

 

(b)                                 The
Successor Company shall succeed to, and be substituted for the Issuer, as the
case may be, under this Indenture, the Guarantees and the Notes, as
applicable. Clauses (3), (4), (5) and (6) of Section 5.01(a) hereof
shall not apply to the merger contemplated by the Transaction Agreement. Notwithstanding
clauses (3) and (4) of Section 5.01(a) hereof,

 

(x)                                   any
Restricted Subsidiary may consolidate with or merge into or transfer all
or part of its properties and assets to the Issuer, and

 

84

 

(y)                                 the
Issuer may merge with an Affiliate of the Issuer, as the case may be,
solely for the purpose of reincorporating the Issuer in a State of the United
States so long as the amount of Indebtedness of the Issuer and its Restricted
Subsidiaries is not increased thereby.

 

(c)                                  No
Guarantor shall, and the Issuer shall not permit any Guarantor to, consolidate
or merge with or into or wind up into (whether or not the Issuer or Guarantor
is the surviving corporation), or sell, assign, transfer, lease, convey or
otherwise dispose of all or substantially all of its properties or assets, in
one or more related transactions, to any Person unless:

 

(1)                                  (A) such
Guarantor is the surviving corporation or the Person formed by or surviving any
such consolidation or merger (if other than such Guarantor) or to which such
sale, assignment, transfer, lease, conveyance or other disposition will have
been made is a corporation organized or existing under the laws of the
jurisdiction of organization of such Guarantor (including, for the avoidance of
doubt, with respect to any Guarantor organized under the laws of Canada or a
province or territory thereof, any other province or territory of Canada), as
the case may be, or the laws of the United States, any state thereof, the
District of Columbia or any territory thereof (such Guarantor or such Person,
as the case may be, being herein called the “Successor Person”);

 

(B)                                the
Successor Person, if other than such Guarantor, expressly assumes all the obligations
of such Guarantor under this Indenture and such Guarantor’s related Guarantee
pursuant to supplemental indentures or other documents or instruments in form reasonably
satisfactory to the Trustee;

 

(C)                                immediately
after such transaction, no Default exists; and

 

(D)                               the
Issuer shall have delivered to the Trustee an Officer’s Certificate and an
Opinion of Counsel, each stating that such consolidation, merger or transfer
and such supplemental indentures, if any, comply with this Indenture; or

 

(2)                                  the
transaction is made in compliance with clauses (1) and (2) of Section 4.10(a) hereof.

 

(d)                                 Subject
to certain limitations described in this Indenture, the Successor Person shall
succeed to, and be substituted for, such Guarantor under this Indenture and
such Guarantor’s Guarantee. Notwithstanding the foregoing, any Guarantor may merge
into or with or wind up into or transfer all or part of its properties and
assets to another Guarantor or the Issuer.

 

Section 5.02                                          Successor
Corporation Substituted.

 

Upon any
consolidation or merger, or any sale, assignment, transfer, lease, conveyance
or other disposition of all or substantially all of the assets of the Issuer in
accordance with Section 5.01 hereof, the successor corporation formed by
such consolidation or into or with which the Issuer is merged or to which such
sale, assignment, transfer, lease, conveyance or other disposition is made shall
succeed to, and be substituted for (so that from and after the date of such
consolidation, merger, sale, lease, conveyance or other disposition, the provisions
of this Indenture referring to the Issuer shall refer instead to the successor
corporation and not to the Issuer), and may exercise every right and power
of the Issuer under this Indenture with the same effect as if such successor
Person had been named as the Issuer herein; provided that the predecessor
Issuer shall not be relieved from the obligation to pay the principal of and
interest and Additional Interest, if any, on the Notes except in the case of a
sale, assignment, transfer,

 

85

 

lease, conveyance
or other disposition of all of the Issuer’s assets that meets the requirements
of Section 5.01 hereof.

 

ARTICLE 6

 

DEFAULTS AND REMEDIES

 

Section 6.01                                          Events
of Default.

 

(a)                                  An
“Event of Default” wherever used herein, means any one of the following
events (whatever the reason for such Event of Default and whether it shall be
voluntary or involuntary or be effected by operation of law or pursuant to any
judgment, decree or order of any court or any order, rule or regulation of
any administrative or governmental body):

 

(1)                                  default in payment
when due and payable, upon redemption, acceleration or otherwise, of principal
of, or premium, if any, on the Notes (whether or not prohibited by the subordination
provisions of this Indenture);

 

(2)                                  default for 30 days
or more in the payment when due of interest or Additional Interest on or with
respect to the Notes (whether or not prohibited by the subordination provisions
of this Indenture);

 

(3)                                  failure by the Issuer
or any Guarantor for 60 days after receipt of written notice given by the
Trustee or the Holders of not less than 25% in principal amount of the Notes to
comply with any of its obligations, covenants or agreements (other than a
default referred to in clauses (1) and (2) above) contained in this
Indenture or the Notes (whether or not prohibited by the subordination
provisions of this Indenture);

 

(4)                                  default under any
mortgage, indenture or instrument under which there is issued or by which there
is secured or evidenced any Indebtedness for money borrowed by the Issuer or
any of its Restricted Subsidiaries or the payment of which is guaranteed by the
Issuer or any of its Restricted Subsidiaries, other than Indebtedness owed to
the Issuer or a Restricted Subsidiary, whether such Indebtedness or guarantee
now exists or is created after the issuance of the Notes, if both:

 

(a)                                  such
default either results from the failure to pay any principal of such
Indebtedness at its stated final maturity (after giving effect to any
applicable grace periods) or relates to an obligation other than the obligation
to pay principal of any such Indebtedness at its stated final maturity and
results in the holder or holders of such Indebtedness causing such Indebtedness
to become due prior to its stated maturity; and

 

(b)                                 the
principal amount of such Indebtedness, together with the principal amount of
any other such Indebtedness in default for failure to pay any principal at its stated
final maturity (after giving effect to any applicable grace periods), or the
maturity of which has been so accelerated, aggregate $50.0 million or more at
any one time outstanding;

 

(5)                                  failure by the Issuer or any Significant
Subsidiary, or any group of Restricted Subsidiaries that, taken together (as of
the latest audited consolidated financial statements for the Issuer), would
constitute a Significant Subsidiary, to pay final judgments aggregating in
excess of $50.0 million, which final judgments remain unpaid,
undischarged and unstayed for a period of

 

86

 

more than 60 days after such judgment becomes final, and in the event
such judgment is covered by insurance, an enforcement proceeding has been
commenced by any creditor upon such judgment or decree which is not promptly stayed;

 

(6)                                  the Issuer or any of
its Restricted Subsidiaries that is a Significant Subsidiary or any group of
Restricted Subsidiaries that, taken together (as of the latest audited
consolidated  financial statements for
the Issuer), would constitute a Significant Subsidiary, pursuant to or within the
meaning of any Bankruptcy Law:

 

(i)                                     commences
proceedings to be adjudicated bankrupt or insolvent;

 

(ii)                                  consents
to the institution of bankruptcy or insolvency proceedings against it, or the
filing by it of a petition or answer or consent seeking reorganization or
relief under applicable Bankruptcy Law;

 

(iii)                               consents
to the appointment of a receiver, liquidator, assignee, trustee, sequestrator
or other similar official of it or for all or substantially all of its
property;

 

(iv)                              makes
a general assignment for the benefit of its creditors; or

 

(v)                                 generally
is not paying its debts as they become due;

 

(7)                                  a court of competent
jurisdiction enters an order or decree under any Bankruptcy Law that:

 

(i)                                     is
for relief against the Issuer or any of its Restricted Subsidiaries that is a
Significant Subsidiary or any group of Restricted Subsidiaries that, taken
together, would constitute a Significant Subsidiary, in a proceeding in which the
Issuer or any such Restricted Subsidiaries, that is a Significant Subsidiary or
any group of Restricted Subsidiaries that, taken together (as of the latest
audited consolidated financial statements for the Issuer), would constitute a
Significant Subsidiary, is to be adjudicated bankrupt or insolvent;

 

(ii)                                  appoints
a receiver, liquidator, assignee, trustee, sequestrator or other similar
official of the Issuer or any of its Restricted Subsidiaries that is a
Significant Subsidiary or any group of Restricted Subsidiaries that, taken together
(as of the latest audited consolidated  financial
statements for the Issuer), would constitute a Significant Subsidiary, or for
all or substantially all of the property of the Issuer or any of its Restricted
Subsidiaries that is a Significant Subsidiary or any group of Restricted
Subsidiaries that, taken together (as of the latest audited consolidated financial
statements for the Issuer), would constitute a Significant Subsidiary; or

 

(iii)                               orders
the liquidation of the Issuer or any of its Restricted Subsidiaries that is a
Significant Subsidiary or any group of Restricted Subsidiaries that, taken
together (as of the latest audited consolidated 
financial statements for the Issuer), would constitute a Significant Subsidiary;

 

and the order or decree remains unstayed and
in effect for 60 consecutive days; or

 

(8)                                  the Guarantee of any Significant
Subsidiary, or any group of Restricted Subsidiaries that, taken together (as of
the latest audited consolidated financial statements for the Issuer),

 

87

 

would constitute a Significant
Subsidiary, shall for any reason cease to be in full force and effect or any
responsible officer of any Guarantor that is a Significant Subsidiary, or any
group of Restricted Subsidiaries that, taken together (as of the latest audited
consolidated financial statements for the Issuer), would constitute a
Significant Subsidiary, as the case may be, denies that it has any further
liability under its or their Guarantee(s) or gives notice to such effect, other
than by reason of the termination of this Indenture or the release of any such
Guarantee in accordance with this Indenture.

 

(b)                                 In
the event of any Event of Default specified in clause (4) of Section 6.01(a) hereof,
such Event of Default and all consequences thereof (excluding any resulting
payment default, other than as a result of acceleration of the Notes) shall be
annulled, waived and rescinded, automatically and without any action by the
Trustee or the Holders, if within 20 days after such Event of Default arose:

 

(1)                                  the Indebtedness or
guarantee that is the basis for such Event of Default has been discharged; or

 

(2)                                  holders thereof have
rescinded or waived the acceleration, notice or action (as the case may be)
giving rise to such Event of Default; or

 

(3)                                  the default that is
the basis for such Event of Default has been cured.

 

Section 6.02                                          Acceleration.

 

If any Event of Default (other than an Event of Default specified in
clause (6) or (7) of Section 6.01(a) hereof with respect to
the Issuer) occurs and is continuing under this Indenture, the Trustee or the
Holders of at least 25% in principal amount of the then total outstanding Notes
may declare the principal, premium, if any, interest and any other
monetary obligations on all the then outstanding Notes to be due and payable
immediately; provided, however, that so long as any Indebtedness
permitted to be incurred under this Indenture as part of the Senior Credit
Facilities shall be outstanding, no such acceleration shall be effective until
the earlier of:

 

(1) acceleration
of any such Indebtedness under the Senior Credit Facilities; or

 

(2) five Business Days after the giving
of written notice of such acceleration to the Issuer and the Representative under
each of the Senior Credit Facilities.

 

Upon the
effectiveness of such declaration, such principal and interest shall be due and
payable immediately. The Trustee shall have no obligation to accelerate the
Notes if and so long as a committee of its Responsible Officers in good faith
determines acceleration is not in the best interest of the Holders of the Notes.

 

Notwithstanding
the foregoing, in the case of an Event of Default arising under clause (6) or
(7) of Section 6.01(a) hereof with respect to the Issuer, all
outstanding Notes shall be due and payable immediately without further action
or notice.

 

The Holders of
a majority in aggregate principal amount of the then outstanding Notes by written
notice to the Trustee may on behalf of all of the Holders rescind an acceleration
and its consequences:

 

(1)                                  if
the rescission would not conflict with any judgment or decree;

 

88

 

(2)                                  if
all existing Events of Default have been cured, waived, annulled or rescinded
except nonpayment of principal interest, Additional Interest, if any, or
premium that has become due solely because of the acceleration;

 

(3)                                  to
the extent the payment of such interest is lawful, interest on overdue installments
of interest and overdue principal, which has become due otherwise than by such
declaration of acceleration, has been paid; and

 

(4)                                  if the Issuer has
paid the Trustee its reasonable compensation and reimbursed the Trustee for its
expenses, disbursements and advances.

 

Section 6.03                                          Other
Remedies.

 

If an Event of
Default occurs and is continuing, the Trustee may pursue any available
remedy to collect the payment of principal, premium, if any, and interest on
the Notes or to enforce the performance of any provision of the Notes or this
Indenture.

 

The Trustee may maintain
a proceeding even if it does not possess any of the Notes or does not produce
any of them in the proceeding. A delay or omission by the Trustee or any Holder
of a Note in exercising any right or remedy accruing upon an Event of Default
shall not impair the right or remedy or constitute a waiver of or acquiescence
in the Event of Default. All remedies are cumulative to the extent permitted by
law.

 

Section 6.04                                          Waiver
of Past Defaults.

 

Holders of not
less than a majority in aggregate principal amount of the then outstanding
Notes by notice to the Trustee may on behalf of the Holders of all of the
Notes waive any existing Default and its consequences hereunder, except a
continuing Default in the payment of the principal of, premium, if any, Additional
Interest, if any, or interest on, any Note held by a non-consenting Holder (including
in connection with an Asset Sale Offer or a Change of Control Offer); provided,
subject to Section 6.02 hereof, that the Holders of a majority in
aggregate principal amount of the then outstanding Notes may rescind an
acceleration and its consequences, including any related payment default that
resulted from such acceleration. Upon any such waiver, such Default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured for every purpose
of this Indenture; but no such waiver shall extend to any subsequent or other
Default or impair any right consequent thereto.

 

Section 6.05                                          Control
by Majority.

 

Holders of a
majority in principal amount of the then total outstanding Notes may direct
the time, method and place of conducting any proceeding for any remedy
available to the Trustee or of exercising any trust or power conferred on the
Trustee. The Trustee, however, may refuse to follow any direction that conflicts
with law or this Indenture or that the Trustee determines is unduly prejudicial
to the rights of any other Holder of a Note or that would involve the Trustee
in personal liability.

 

Section 6.06                                          Limitation
on Suits.

 

Subject to Section 6.07 hereof, no Holder of a Note may pursue
any remedy with respect to this Indenture or the Notes unless:

 

(1)                                  such Holder has
previously given the Trustee notice that an Event of Default is continuing;

 

89

 

(2)                                  Holders of at least 25%
in principal amount of the total outstanding Notes have requested the Trustee
to pursue the remedy;

 

(3)                                  Holders of the Notes
have offered the Trustee security or indemnity reasonably satisfactory to it against
any loss, liability or expense;

 

(4)                                  the Trustee has not
complied with such request within 60 days after the receipt thereof and the
offer of security or indemnity; and

 

(5)                                  Holders of a majority
in principal amount of the total outstanding Notes have not given the Trustee a
direction inconsistent with such request within such 60-day period.

 

A Holder of a
Note may not use this Indenture to prejudice the rights of another Holder
of a Note or to obtain a preference or priority over another Holder of a Note.

 

Section 6.07                                          Rights
of Holders of Notes To Receive Payment.

 

Notwithstanding
any other provision of this Indenture, the right of any Holder of a Note to
receive payment of principal, premium, if any, and Additional Interest, if any,
and interest on the Note, on or after the respective due dates expressed in the
Note (including in connection with an Asset Sale Offer or a Change of Control
Offer), or to bring suit for the enforcement of any such payment on or after
such respective dates, shall not be impaired or affected without the consent of
such Holder.

 

Section 6.08                                          Collection
Suit by Trustee.

 

If an Event of
Default specified in Section 6.01(a)(1) or (2) hereof occurs and is continuing, the
Trustee is authorized to recover judgment in its own name and as trustee of an
express trust against the Issuer for the whole amount of principal of, premium,
if any, and Additional Interest, if any, and interest remaining unpaid on the
Notes and interest on overdue principal and, to the extent lawful, interest and
such further amount as shall be sufficient to cover the costs and expenses of
collection, including the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel.

 

Section 6.09                                          Restoration
of Rights and Remedies.

 

If the Trustee
or any Holder has instituted any proceeding to enforce any right or remedy
under this Indenture and such proceeding has been discontinued or abandoned for
any reason, or has been determined adversely to the Trustee or to such Holder,
then and in every such case, subject to any determination in such proceedings, the
Issuer, the Trustee and the Holders shall be restored severally and respectively
to their former positions hereunder and thereafter all rights and remedies of
the Trustee and the Holders shall continue as though no such proceeding has
been instituted.

 

Section 6.10                                          Rights
and Remedies Cumulative.

 

Except as
otherwise provided with respect to the replacement or payment of mutilated,
destroyed, lost or stolen Notes in Section 2.07 hereof, no right or remedy
herein conferred upon or reserved to the Trustee or to the Holders is intended to
be exclusive of any other right or remedy, and every right and remedy shall, to
the extent permitted by law, be cumulative and in addition to every other right
and remedy given hereunder or now or hereafter existing at law or in equity or
otherwise. The assertion or employment of any right or remedy hereunder, or
otherwise, shall not prevent the concurrent assertion or employment of any
other appropriate right or remedy.

 

90

 

Section 6.11                                          Delay
or Omission Not Waiver.

 

No delay or
omission of the Trustee or of any Holder of any Note to exercise any right or
remedy accruing upon any Event of Default shall impair any such right or remedy
or constitute a waiver of any such Event of Default or an acquiescence therein.
Every right and remedy given by this Article or by law to the Trustee or
to the Holders may be exercised from time to time, and as often as may be
deemed expedient, by the Trustee or by the Holders, as the case may be.

 

Section 6.12                                          Trustee
May File Proofs of Claim.

 

The Trustee is
authorized to file such proofs of claim and other papers or documents as may be
necessary or advisable in order to have the claims of the Trustee (including
any claim for the reasonable compensation, expenses, disbursements and advances
of the Trustee, its agents and counsel) and the Holders of the Notes allowed in
any judicial proceedings relative to the Issuer (or any other obligor upon the
Notes including the Guarantors), its creditors or its property and shall be
entitled and empowered to participate as a member in any official committee of
creditors appointed in such matter and to collect, receive and distribute any
money or other property payable or deliverable on any such claims and any
custodian in any such judicial proceeding is hereby authorized by each Holder
to make such payments to the Trustee, and in the event that the Trustee shall
consent to the making of such payments directly to the Holders, to pay to the
Trustee any amount due to it for the reasonable compensation, expenses, disbursements
and advances of the Trustee, its agents and counsel, and any other amounts due
the Trustee under Section 7.07 hereof. To the extent that the payment of
any such compensation, expenses, disbursements and advances of the Trustee, its
agents and counsel, and any other amounts due the Trustee under Section 7.07
hereof out of the estate in any such proceeding, shall be denied for any reason,
payment of the same shall be secured by a Lien on, and shall be paid out of,
any and all distributions, dividends, money, securities and other properties
that the Holders may be entitled to receive in such proceeding whether in
liquidation or under any plan of reorganization or arrangement or otherwise. Nothing
herein contained shall be deemed to authorize the Trustee to authorize or
consent to or accept or adopt on behalf of any Holder any plan of reorganization,
arrangement, adjustment or composition affecting the Notes or the rights of any
Holder, or to authorize the Trustee to vote in respect of the claim of any
Holder in any such proceeding.

 

Section 6.13                                          Priorities.

 

If the Trustee
collects any money pursuant to this Article 6, it shall pay out the money
in the following order:

 

(i)                                     to the Trustee,
its agents and attorneys for amounts due under Section 7.07 hereof,
including payment of all compensation, expenses and liabilities incurred, and
all advances made, by the Trustee and the costs and expenses of collection;

 

(ii)                                  to holders of Senior
Indebtedness of the Issuer and, if such money or property has been collected
from a Guarantor, to holders of Senior Indebtedness of such Guarantor, in each
case to the extent required by Article 10 and/or Article 12 hereof,
as applicable;

 

(iii)                               to Holders of Notes for
amounts due and unpaid on the Notes for principal, premium, if any, and Additional
Interest, if any, and interest, ratably, without preference or priority of any
kind, according to the amounts due and payable on the Notes for principal,
premium, if any, and Additional Interest, if any, and interest, respectively;
and

 

91

 

(iv)                              to the Issuer or to such
party as a court of competent jurisdiction shall direct including a Guarantor,
if applicable.

 

The Trustee may fix
a record date and payment date for any payment to Holders of Notes pursuant to
this Section 6.13.

 

Section 6.14                                          Undertaking
for Costs.

 

In any suit
for the enforcement of any right or remedy under this Indenture or in any suit
against the Trustee for any action taken or omitted by it as a Trustee, a court
in its discretion may require the filing by any party litigant in the suit
of an undertaking to pay the costs of the suit, and the court in its discretion
may assess reasonable costs, including reasonable attorneys’ fees and
expenses, against any party litigant in the suit, having due regard to the
merits and good faith of the claims or defenses made by the party litigant. This
Section 6.14 does not apply to a suit by the Trustee, a suit by a Holder
of a Note pursuant to Section 6.07 hereof, or a suit by Holders of more
than 10% in principal amount of the then outstanding Notes.

 

ARTICLE 7

 

TRUSTEE

 

Section 7.01                                          Duties
of Trustee.

 

(a)                                  If
an Event of Default has occurred and is continuing, the Trustee shall exercise
such of the rights and powers vested in it by this Indenture, and use the same
degree of care and skill in its exercise, as a prudent person would exercise or
use under the circumstances in the conduct of such person’s own affairs.

 

(b)                                 Except
during the continuance of an Event of Default:

 

(i)                                     the duties of the
Trustee shall be determined solely by the express provisions of this Indenture
and the Trustee need perform only those duties that are specifically set
forth in this Indenture and no others, and no implied covenants or obligations
shall be read into this Indenture against the Trustee; and

 

(ii)                                  in the absence of bad
faith on its part, the Trustee may conclusively rely, as to the truth of
the statements and the correctness of the opinions expressed therein, upon
certificates or opinions furnished to the Trustee and conforming to the
requirements of this Indenture. However, in the case of any such certificates
or opinions which by any provision hereof are specifically required to be
furnished to the Trustee, the Trustee shall examine the certificates and
opinions to determine whether or not they conform to the requirements of
this Indenture (but need not confirm or investigate the accuracy of
mathematical calculations or other facts stated therein).

 

(c)                                  The
Trustee may not be relieved from liabilities for its own negligent action,
its own negligent failure to act, or its own willful misconduct, except that:

 

(i)                                     this paragraph (c) does
not limit the effect of paragraph (b) of this Section 7.01;

 

(ii)                                  the Trustee shall not
be liable for any error of judgment made in good faith by a Responsible
Officer, unless it is proved in a court of competent jurisdiction that the
Trustee was negligent in ascertaining the pertinent facts; and

 

92

 

(iii)                               the Trustee shall not be
liable with respect to any action it takes or omits to take in good faith in
accordance with a direction received by it pursuant to Section 6.05
hereof.

 

(d)                                 Whether
or not therein expressly so provided, every provision of this Indenture that in
any way relates to the Trustee is subject to this Section 7.01.

 

(e)                                  The
Trustee shall be under no obligation to exercise any of its rights or powers
under this Indenture at the request or direction of any of the Holders of the
Notes unless the Holders have offered to the Trustee indemnity or security reasonably
satisfactory to it against any loss, liability or expense.

 

(f)                                    The
Trustee shall not be liable for interest on any money received by it except as
the Trustee may agree in writing with the Issuer. Money held in trust by
the Trustee need not be segregated from other funds except to the extent
required by law.

 

Section 7.02                                          Rights
of Trustee.

 

(a)                                  The
Trustee may conclusively rely upon any document believed by it to be
genuine and to have been signed or presented by the proper Person. The Trustee
need not investigate any fact or matter stated in the document, but the Trustee,
in its discretion, may make such further inquiry or investigation into such
facts or matters as it may see fit, and, if the Trustee shall determine to
make such further inquiry or investigation, it shall be entitled to examine the
books, records and premises of the Issuer, personally or by agent or attorney at
the sole cost of the Issuer and shall incur no liability or additional liability
of any kind by reason of such inquiry or investigation.

 

(b)                                 Before
the Trustee acts or refrains from acting, it may require an Officer’s
Certificate or an Opinion of Counsel or both. The Trustee shall not be liable
for any action it takes or omits to take in good faith in reliance on such Officer’s
Certificate or Opinion of Counsel. The Trustee may consult with counsel of
its selection and the advice of such counsel or any Opinion of Counsel shall be
full and complete authorization and protection from liability in respect of any
action taken, suffered or omitted by it hereunder in good faith and in reliance
thereon.

 

(c)                                  The
Trustee may act through its attorneys and agents and shall not be responsible
for the misconduct or negligence of any agent or attorney appointed with due
care.

 

(d)                                 The
Trustee shall not be liable for any action it takes or omits to take in good
faith that it believes to be authorized or within the rights or powers
conferred upon it by this Indenture.

 

(e)                                  Unless
otherwise specifically provided in this Indenture, any demand, request,
direction or notice from the Issuer shall be sufficient if signed by an Officer
of the Issuer.

 

(f)                                    None
of the provisions of this Indenture shall require the Trustee to expend or risk
its own funds or otherwise to incur any liability, financial or otherwise, in
the performance of any of its duties hereunder, or in the exercise of any of
its rights or powers if it shall have reasonable grounds for believing that
repayment of such funds or indemnity satisfactory to it against such risk or
liability is not assured to it.

 

(g)                                 The
Trustee shall not be deemed to have knowledge or notice of any Default or Event
of Default unless a Responsible Officer of the Trustee has actual knowledge thereof
or unless written notice of any event which is in fact such a Default or Event
of Default is received by the Trustee at the Corporate Trust Office of the
Trustee, and such notice references the Notes and this Indenture.

 

93

 

(h)                                 In
no event shall the Trustee be responsible or liable for special, indirect, or
consequential loss or damage of any kind whatsoever (including, but not limited
to, loss of profit) irrespective of whether the Trustee has been advised of the
likelihood of such loss or damage and regardless of the form of action.

 

(i)                                     The
rights, privileges, protections, immunities and benefits given to the Trustee,
including, without limitation, its right to be indemnified, are extended to,
and shall be enforceable by, the Trustee in each of its capacities hereunder,
and each agent, custodian and other Person employed to act hereunder.

 

(j)                                     In
the event the Issuer is required to pay Additional Interest, the Issuer will
provide written notice to the Trustee of the Issuer’s obligation to pay
Additional Interest no later than 15 days prior to the next Interest Payment Date,
which notice shall set forth the amount of the Additional Interest to be paid
by the Issuer. The Trustee shall not at any time be under any duty or
responsibility to any Holders to determine whether the Additional Interest is
payable and the amount thereof.

 

Section 7.03                                          Individual
Rights of Trustee.

 

The Trustee in
its individual or any other capacity may become the owner or pledgee of
Notes and may otherwise deal with the Issuer or any Affiliate of the
Issuer with the same rights it would have if it were not Trustee. However, in the
event that the Trustee acquires any conflicting interest it must eliminate such
conflict within 90 days, apply to the SEC for permission to continue as trustee
or resign. Any Agent may do the same with like rights and duties. The Trustee
is also subject to Sections 7.10 and 7.11 hereof.

 

Section 7.04                                          Trustee’s
Disclaimer.

 

The Trustee
shall not be responsible for and makes no representation as to the validity or
adequacy of this Indenture or the Notes, it shall not be accountable for the
Issuer’s use of the proceeds from the Notes or any money paid to the Issuer or
upon the Issuer’s direction under any provision of this Indenture, it shall not
be responsible for the use or application of any money received by any Paying
Agent other than the Trustee, and it shall not be responsible for any statement
or recital herein or any statement in the Notes or any other document in
connection with the sale of the Notes or pursuant to this Indenture other than
its certificate of authentication.

 

Section 7.05                                          Notice
of Defaults.

 

If a Default
occurs and is continuing and if it is known to the Trustee, the Trustee shall
mail to Holders of Notes a notice of the Default within 90 days after it occurs.
Except in the case of a Default relating to the payment of principal, premium,
if any, or interest on any Note, the Trustee may withhold from the Holders
notice of any continuing Default if and so long as a committee of its
Responsible Officers in good faith determines that withholding the notice is in
the interests of the Holders of the Notes.

 

Section 7.06                                          Reports
by Trustee to Holders of the Notes.

 

Within 60 days
after each May 15, beginning with the May 15 following the date of
this Indenture, and for so long as Notes remain outstanding, the Trustee shall
mail to the Holders of the Notes a brief report dated as of such reporting date
that complies with Trust Indenture Act Section 313(a) (but if no
event described in Trust Indenture Act Section 313(a) has occurred
within the twelve months preceding the reporting date, no report need be
transmitted). The Trustee also shall comply with Trust Indenture

 

94

 

Act Section 313(b)(2).
The Trustee shall also transmit by mail all reports as required by Trust
Indenture Act Section 313(c).

 

A copy of each
report at the time of its mailing to the Holders of Notes shall be mailed to the
Issuer and filed with the SEC and each stock exchange on which the Notes are
listed in accordance with Trust Indenture Act Section 313(d). The Issuer
shall promptly notify the Trustee when the Notes are listed on any stock
exchange or delisted therefrom.

 

Section 7.07                                          Compensation
and Indemnity.

 

The Issuer
shall pay to the Trustee from time to time such compensation for its acceptance
of this Indenture and services hereunder as the parties shall agree in writing
from time to time. The Trustee’s compensation shall not be limited by any law
on compensation of a trustee of an express trust. The Issuer shall reimburse
the Trustee promptly upon request for all reasonable disbursements, advances
and expenses incurred or made by it in addition to the compensation for its
services. Such expenses shall include the reasonable compensation,
disbursements and expenses of the Trustee’s agents and counsel.

 

The Issuer and
the Guarantors, jointly and severally, shall indemnify the Trustee for, and
hold the Trustee harmless against, any and all loss, damage, claims, liability
or expense (including attorneys’ fees) incurred by it in connection with the
acceptance or administration of this trust and the performance of its duties
hereunder (including the costs and expenses of enforcing this Indenture against
the Issuer or any of the Guarantors (including this Section 7.07) or
defending itself against any claim whether asserted by any Holder, the Issuer
or any Guarantor, or liability in connective with the acceptance, exercise or
performance of any of its powers or duties hereunder). The Trustee shall notify
the Issuer promptly of any claim for which it may seek indemnity. Failure
by the Trustee to so notify the Issuer shall not relieve the Issuer of its
obligations hereunder. The Issuer shall defend the claim and the Trustee may have
separate counsel and the Issuer shall pay the fees and expenses of such counsel.
The Issuer need not reimburse any expense or indemnify against any loss,
liability or expense incurred by the Trustee through the Trustee’s own willful
misconduct, negligence or bad faith.

 

The
obligations of the Issuer under this Section 7.07 shall survive the satisfaction
and discharge of this Indenture or the earlier resignation or removal of the
Trustee.

 

To secure the payment
obligations of the Issuer and the Guarantors in this Section 7.07, the
Trustee shall have a Lien prior to the Notes on all money or property held or
collected by the Trustee, except that held in trust to pay principal and
interest on particular Notes. Such Lien shall survive the satisfaction and discharge
of this Indenture.

 

When the
Trustee incurs expenses or renders services after an Event of Default specified
in Section 6.01(a)(6) or (7) hereof occurs, the expenses and the
compensation for the services (including the fees and expenses of its agents
and counsel) are intended to constitute expenses of administration under any Bankruptcy
Law.

 

The Trustee
shall comply with the provisions of Trust Indenture Act Section 313(b)(2) to
the extent applicable.

 

Section 7.08                                          Replacement
of Trustee.

 

A resignation
or removal of the Trustee and appointment of a successor Trustee shall become
effective only upon the successor Trustee’s acceptance of appointment as
provided in this Section 7.08. The Trustee may resign in writing at
any time and be discharged from the trust hereby created by so

 

95

 

notifying the
Issuer. The Holders of a majority in principal amount of the then outstanding
Notes may remove the Trustee by so notifying the Trustee and the Issuer in
writing. The Issuer may remove the Trustee if:

 

(a)                                  the Trustee fails to
comply with Section 7.10 hereof;

 

(b)                                 the Trustee is
adjudged a bankrupt or an insolvent or an order for relief is entered with
respect to the Trustee under any Bankruptcy Law;

 

(c)                                  a custodian or public
officer takes charge of the Trustee or its property; or

 

(d)                                 the Trustee becomes
incapable of acting.

 

If the Trustee
resigns or is removed or if a vacancy exists in the office of Trustee for any
reason, the Issuer shall promptly appoint a successor Trustee. Within one year
after the successor Trustee takes office, the Holders of a majority in principal
amount of the then outstanding Notes may appoint a successor Trustee to replace
the successor Trustee appointed by the Issuer.

 

If a successor
Trustee does not take office within 60 days after the retiring Trustee resigns
or is removed, the retiring Trustee (at the Issuer’s expense), the Issuer or
the Holders of at least 10% in principal amount of the then outstanding Notes may petition
any court of competent jurisdiction for the appointment of a successor Trustee.

 

If the
Trustee, after written request by any Holder who has been a Holder for at least
six months, fails to comply with Section 7.10 hereof, such Holder may petition
any court of competent jurisdiction for the removal of the Trustee and the
appointment of a successor Trustee.

 

A successor Trustee
shall deliver a written acceptance of its appointment to the retiring Trustee
and to the Issuer. Thereupon, the resignation or removal of the retiring
Trustee shall become effective, and the successor Trustee shall have all the
rights, powers and duties of the Trustee under this Indenture. The successor
Trustee shall mail a notice of its succession to Holders. The retiring Trustee
shall promptly transfer all property held by it as Trustee to the successor
Trustee; provided all sums owing to the Trustee hereunder have been paid
and subject to the Lien provided for in Section 7.07 hereof. Notwithstanding
replacement of the Trustee pursuant to this Section 7.08, the Issuer’s
obligations under Section 7.07 hereof shall continue for the benefit of
the retiring Trustee.

 

Section 7.09                                          Successor
Trustee by Merger, etc.

 

If the Trustee
consolidates, merges or converts into, or transfers all or substantially all of
its corporate trust business to, another corporation, the successor corporation
without any further act shall be the successor Trustee.

 

Section 7.10                                          Eligibility;
Disqualification.

 

There shall at
all times be a Trustee hereunder that is a corporation organized and doing
business under the laws of the United States of America or of any state thereof
that is authorized under such laws to exercise corporate trustee power, that is
subject to supervision or examination by federal or state authorities and that
has a combined capital and surplus of at least $50,000,000 as set forth in its
most recent published annual report of condition.

 

96

 

This Indenture
shall always have a Trustee who satisfies the requirements of Trust Indenture
Act Sections 310(a)(1), (2) and (5). The Trustee is subject to Trust
Indenture Act Section 310(b).

 

Section 7.11                                          Preferential
Collection of Claims Against Issuer.

 

The Trustee is
subject to Trust Indenture Act Section 311(a), excluding any creditor relationship
listed in Trust Indenture Act Section 311(b). A Trustee who has resigned
or been removed shall be subject to Trust Indenture Act Section 311(a) to
the extent indicated therein.

 

ARTICLE 8

 

LEGAL DEFEASANCE AND COVENANT
DEFEASANCE

 

Section 8.01                                          Option
To Effect Legal Defeasance or Covenant Defeasance.

 

The Issuer
may, at its option and at any time, elect to have either Section 8.02 or
8.03 hereof applied to all outstanding Notes upon compliance with the
conditions set forth below in this Article 8.

 

Section 8.02                                          Legal
Defeasance and Discharge.

 

Upon the
Issuer’s exercise under Section 8.01 hereof of the option applicable to
this Section 8.02, the Issuer and the Guarantors shall, subject to the
satisfaction of the conditions set forth in Section 8.04 hereof, be deemed
to have been discharged from their obligations with respect to all outstanding
Notes and Guarantees on the date the conditions set forth below are satisfied (“Legal
Defeasance”). For this purpose, Legal Defeasance means that the Issuer
shall be deemed to have paid and discharged the entire Indebtedness represented
by the outstanding Notes, which shall thereafter be deemed to be “outstanding”
only for the purposes of Section 8.05 hereof and the other Sections of
this Indenture referred to in (a) and (b) below, and to have satisfied
all its other obligations under such Notes and this Indenture including that of
the Guarantors (and the Trustee, on demand of and at the expense of the Issuer,
shall execute proper instruments acknowledging the same), except for the
following provisions which shall survive until otherwise terminated or
discharged hereunder:

 

(a)                                  the rights of Holders
of Notes to receive payments in respect of the principal of, premium, if any,
and interest on the Notes when such payments are due solely out of the trust
created pursuant to this Indenture referred to in Section 8.04 hereof;

 

(b)                                 the Issuer’s
obligations with respect to Notes concerning issuing temporary Notes,
registration of such Notes, mutilated, destroyed, lost or stolen Notes and the
maintenance of an office or agency for payment and money for security payments
held in trust;

 

(c)                                  the rights, powers,
trusts, duties and immunities of the Trustee, and the Issuer’s obligations in
connection therewith; and

 

(d)                                 this Section 8.02.

 

Subject to
compliance with this Article 8, the Issuer may exercise its option
under this Section 8.02 notwithstanding the prior exercise of its option under
Section 8.03 hereof.

 

97

 

Section 8.03                                          Covenant
Defeasance.

 

Upon the
Issuer’s exercise under Section 8.01 hereof of the option applicable to
this Section 8.03, the Issuer and the Guarantors shall, subject to the
satisfaction of the conditions set forth in Section 8.04 hereof, be released
from their obligations under the covenants contained in Sections 4.03, 4.04, 4.05,
4.07, 4.08, 4.09, 4.10, 4.11, 4.12, 4.13, 4.14, 4.15 and 4.17 hereof and clauses
(4) and (5) of Section 5.01(a), Sections 5.01(c) and 5.01(d) hereof
with respect to the outstanding Notes on and after the date the conditions set
forth in Section 8.04 hereof are satisfied (“Covenant Defeasance”),
and the Notes shall thereafter be deemed not “outstanding” for the purposes of
any direction, waiver, consent or declaration or act of Holders (and the
consequences of any thereof) in connection with such covenants, but shall
continue to be deemed “outstanding” for all other purposes hereunder (it being
understood that such Notes shall not be deemed outstanding for accounting purposes).
For this purpose, Covenant Defeasance means that, with respect to the
outstanding Notes, the Issuer may omit to comply with and shall have no
liability in respect of any term, condition or limitation set forth in any such
covenant, whether directly or indirectly, by reason of any reference elsewhere
herein to any such covenant or by reason of any reference in any such covenant
to any other provision herein or in any other document and such omission to
comply shall not constitute a Default or an Event of Default under Section 6.01
hereof, but, except as specified above, the remainder of this Indenture and
such Notes shall be unaffected thereby. In addition, upon the Issuer’s exercise
under Section 8.01 hereof of the option applicable to this Section 8.03
hereof, subject to the satisfaction of the conditions set forth in Section 8.04
hereof, Sections 6.01(a)(3), 6.01(a)(4), 6.01(a)(5), 6.01(a)(6) (solely with respect to
Restricted Subsidiaries subject thereto), 6.01(a)(7) (solely with respect
to Restricted Subsidiaries subject thereto) and 6.01(a)(8) hereof shall
not constitute Events of Default.

 

Section 8.04                                          Conditions
to Legal or Covenant Defeasance.

 

In order to
exercise either Legal Defeasance or Covenant Defeasance with respect to the
Notes:

 

(1)                                  the Issuer must
irrevocably deposit with the Trustee, in trust, for the benefit of the Holders
of the Notes, cash in U.S. dollars, Government Securities, or a combination
thereof, in such amounts as will be sufficient, in the opinion of a nationally
recognized firm of independent public accountants, to pay the principal of,
premium, if any, and interest due on the Notes on the stated maturity date or
on the redemption date, as the case may be, of such principal, premium, if
any, or interest on such Notes and the Issuer must specify whether such Notes
are being defeased to maturity or to a particular redemption date;

 

(2)                                  in the case of Legal
Defeasance, the Issuer shall have delivered to the Trustee an Opinion of
Counsel reasonably acceptable to the Trustee confirming that, subject to
customary assumptions and exclusions,

 

(a)                                  the
Issuer has received from, or there has been published by, the United States
Internal Revenue Service a ruling, or

 

(b)                                 since
the issuance of the Notes, there has been a change in the applicable U.S.
federal income tax law,

 

in either case to the effect that, and based thereon such Opinion of
Counsel shall confirm that, subject to customary assumptions and exclusions,
the Holders of the Notes will not recognize income, gain or loss for U.S.
federal income tax purposes, as applicable, as a result of such Legal
Defeasance and will be subject to U.S. federal income tax on the same amounts,
in the same

 

98

 

manner and at the same times as would have been the case if such Legal
Defeasance had not occurred;

 

(3)                                  in the case of
Covenant Defeasance, the Issuer shall have delivered to the Trustee an Opinion
of Counsel reasonably acceptable to the Trustee confirming that, subject to
customary assumptions and exclusions, the Holders of the Notes will not
recognize income, gain or loss for U.S. federal income tax purposes as a result
of such Covenant Defeasance and will be subject to such tax on the same
amounts, in the same manner and at the same times as would have been the case
if such Covenant Defeasance had not occurred;

 

(4)                                  no Default (other than that resulting
from borrowing funds to be applied to make such deposit and any similar and
simultaneous deposit relating to other Indebtedness including the Senior Notes
and the Subordinated Discount Notes, and in each case the granting of Liens in
connection therewith) shall have occurred and be continuing on the date of such
deposit;

 

(5)                                  such Legal Defeasance or Covenant
Defeasance shall not result in a breach or violation of, or constitute a
default under the Senior Credit Facilities, the Senior Notes or the indenture
pursuant to which the Senior Notes are issued, the Subordinated Discount Notes
or the indenture pursuant to which the Subordinated Discount Notes are issued
or any other material agreement or instrument (other than this Indenture) to
which the Issuer or any Guarantor is a party or by which the Issuer or any
Guarantor is bound  (other than that resulting
from any borrowing of funds to be applied to make the deposit required to
effect such Legal Defeasance or Covenant Defeasance and any similar and
simultaneous deposit relating to other Indebtedness, including the Senior Notes
and the Subordinated Discount Notes, and the granting of Liens in connection
therewith);

 

(6)                                  the Issuer shall have
delivered to the Trustee an Opinion of Counsel to the effect that, as of the
date of such opinion and subject to customary assumptions and exclusions following
the deposit, the trust funds will not be subject to the effect of Section 547
of Title 11 of the United States Code;

 

(7)                                  the Issuer shall have
delivered to the Trustee an Officer’s Certificate stating that the deposit was
not made by the Issuer with the intent of defeating, hindering, delaying or
defrauding any creditors of the Issuer or any Guarantor or others; and

 

(8)                                  the Issuer shall have
delivered to the Trustee an Officer’s Certificate and an Opinion of Counsel
(which Opinion of Counsel may be subject to customary assumptions and
exclusions) each stating that all conditions precedent provided for or relating
to the Legal Defeasance or the Covenant Defeasance, as the case may be,
have been complied with.

 

Section 8.05                                          Deposited
Money and Government Securities To Be Held in Trust; Other Miscellaneous
Provisions.

 

Subject to Section 8.06
hereof, all money and Government Securities (including the proceeds thereof)
deposited with the Trustee (or other qualifying trustee, collectively for purposes
of this Section 8.05, the “Trustee”) pursuant to Section 8.04
hereof in respect of the outstanding Notes shall be held in trust and applied
by the Trustee, in accordance with the provisions of such Notes and this
Indenture, to the payment, either directly or through any Paying Agent
(including the Issuer or a Guarantor acting as Paying Agent) as the Trustee may determine,
to the Holders of such Notes of all sums due and to become due thereon in
respect of principal, premium and Additional Interest, if any, and interest,
but such money need not be segregated from other funds except to the extent
required by law. Money and Government

 

99

 

Securities so
held in trust are not subject to Article 10 or Article 12 hereof,
except as contemplated by Section 10.12 or Section 12.12, as the case
may be.

 

The Issuer
shall pay and indemnify the Trustee against any tax, fee or other charge
imposed on or assessed against the cash or Government Securities deposited
pursuant to Section 8.04 hereof or the principal and interest received in
respect thereof other than any such tax, fee or other charge which by law is
for the account of the Holders of the outstanding Notes.

 

Anything in
this Article 8 to the contrary notwithstanding, the Trustee shall deliver
or pay to the Issuer from time to time upon the request of the Issuer any money
or Government Securities held by it as provided in Section 8.04 hereof
which, in the opinion of a nationally recognized firm of independent public
accountants expressed in a written certification thereof delivered to the
Trustee (which may be the opinion delivered under Section 8.04(1) hereof),
are in excess of the amount thereof that would then be required to be deposited
to effect an equivalent Legal Defeasance or Covenant Defeasance.

 

Section 8.06                                          Repayment
to Issuer.

 

Any money
deposited with the Trustee or any Paying Agent, or then held by the Issuer, in
trust for the payment of the principal of, premium and Additional Interest, if
any, or interest on any Note and remaining unclaimed for two years after such
principal, and premium and Additional Interest, if any, or interest has become
due and payable shall be paid to the Issuer on its request or (if then held by the
Issuer) shall be discharged from such trust; and the Holder of such Note shall
thereafter look only to the Issuer for payment thereof, and all liability of
the Trustee or such Paying Agent with respect to such trust money, and all
liability of the Issuer as trustee thereof, shall thereupon cease.

 

Section 8.07                                          Reinstatement.

 

If the Trustee
or Paying Agent is unable to apply any United States dollars or Government
Securities in accordance with Section 8.02 or 8.03 hereof, as the case may be,
by reason of any order or judgment of any court or governmental authority
enjoining, restraining or otherwise prohibiting such application, then the
Issuer’s obligations under this Indenture and the Notes shall be revived and
reinstated as though no deposit had occurred pursuant to Section 8.02 or
8.03 hereof until such time as the Trustee or Paying Agent is permitted to
apply all such money in accordance with Section 8.02 or 8.03 hereof, as
the case may be; provided that, if the Issuer makes any payment of principal
of, premium and Additional Interest, if any, or interest on any Note following
the reinstatement of its obligations, the Issuer shall be subrogated to the
rights of the Holders of such Notes to receive such payment from the money held
by the Trustee or Paying Agent.

 

ARTICLE 9

 

AMENDMENT, SUPPLEMENT AND
WAIVER

 

Section 9.01                                          Without
Consent of Holders of Notes.

 

Notwithstanding
Section 9.02 hereof, the Issuer, any Guarantor (with respect to a
Guarantee to which it is party or this Indenture) and the Trustee may amend
or supplement this Indenture and any Guarantee or Notes without the consent of
any Holder:

 

(1)                                  to cure any
ambiguity, omission, mistake, defect or inconsistency;

 

100

 

(2)                                  to provide for
uncertificated Notes of such series in addition to or in place of certificated
Notes;

 

(3)                                  to comply with Section 5.01
hereof;

 

(4)                                  to provide for the
assumption of the Issuer’s or any Guarantor’s obligations to the Holders in a
transaction that complies with this Indenture;

 

(5)                                  to make any change
that would provide any additional rights or benefits to the Holders or that
does not adversely affect the legal rights under this Indenture of any such
Holder;

 

(6)                                  to add covenants for
the benefit of the Holders or to surrender any right or power conferred upon
the Issuer or any Guarantor;

 

(7)                                  to comply with
requirements of the SEC in order to effect or maintain the qualification of this
Indenture under the Trust Indenture Act;

 

(8)                                  to evidence and
provide for the acceptance and appointment under this Indenture of a successor
Trustee thereunder pursuant to the requirements thereof;

 

(9)                                  to provide for the
issuance of exchange notes or private exchange notes, which are identical to exchange
notes except that they are not freely transferable;

 

(10)                            to add a Guarantor under this
Indenture;

 

(11)                            to conform the text of
this Indenture, Guarantees or the Notes to any provision of the “Description of
Senior Subordinated Notes” section of the Offering Memorandum to the
extent that such provision in such “Description of Senior Subordinated Notes” section was
intended to be a verbatim recitation of a provision of this Indenture,
Guarantee or Notes; or

 

(12)                            to make any amendment to
the provisions of this Indenture relating to the transfer and legending of
Notes as permitted by this Indenture, including, without limitation to
facilitate the issuance and administration of the Notes; provided, however, that (i) compliance
with this Indenture as so amended would not result in Notes being transferred
in violation of the Securities Act or any applicable securities law and (ii) such
amendment does not materially and adversely affect the rights of Holders to
transfer Notes.

 

Upon the
request of the Issuer accompanied by a resolution of its board of directors authorizing
the execution of any such amended or supplemental indenture, and upon receipt
by the Trustee of the documents described in Section 7.02 hereof, the
Trustee shall join with the Issuer and the Guarantors in the execution of any
amended or supplemental indenture authorized or permitted by the terms of this
Indenture and to make any further appropriate agreements and stipulations that may be
therein contained, but the Trustee shall not be obligated to enter into such
amended or supplemental indenture that affects its own rights, duties or
immunities under this Indenture or otherwise. Notwithstanding the foregoing, no
Opinion of Counsel shall be required in connection with the addition of a Guarantor
under this Indenture upon execution and delivery by such Guarantor and the
Trustee of a supplemental indenture to this Indenture, the form of which
is attached as Exhibit D hereto, and delivery of an Officer’s
Certificate.

 

101

 

Section 9.02                                          With
Consent of Holders of Notes.

 

Except as
provided below in this Section 9.02, the Issuer and the Trustee may amend
or supplement this Indenture, the Notes and the Guarantees with the consent of
the Holders of at least a majority in principal amount of the Notes (including Additional
Notes, if any) then outstanding voting as a single class (including,
without limitation, consents obtained in connection with a tender offer or
exchange offer for, or purchase of, the Notes), and, subject to Sections 6.04
and 6.07 hereof, any existing Default or Event of Default (other than a Default
or Event of Default in the payment of the principal of, premium and Additional
Interest, if any, or interest on the Notes, except a payment default resulting
from an acceleration that has been rescinded) or compliance with any provision
of this Indenture, the Guarantees or the Notes may be waived with the
consent of the Holders of a majority in principal amount of the then
outstanding Notes (including Additional Notes, if any) voting as a single class (including
consents obtained in connection with a tender offer or exchange offer for, or
purchase of, the Notes). Section 2.08 hereof and Section 2.09 hereof
shall determine which Notes are considered to be “outstanding” for the purposes
of this Section 9.02.

 

Upon the
request of the Issuer accompanied by a resolution of its board of directors authorizing
the execution of any such amended or supplemental indenture, and upon the
filing with the Trustee of evidence satisfactory to the Trustee of the consent
of the Holders of Notes as aforesaid, and upon receipt by the Trustee of the
documents described in Section 7.02 hereof, the Trustee shall join with the
Issuer in the execution of such amended or supplemental indenture unless such
amended or supplemental indenture directly affects the Trustee’s own rights, duties
or immunities under this Indenture or otherwise, in which case the Trustee may in
its discretion, but shall not be obligated to, enter into such amended or
supplemental indenture.

 

It shall not
be necessary for the consent of the Holders of Notes under this Section 9.02
to approve the particular form of any proposed amendment or waiver, but it
shall be sufficient if such consent approves the substance thereof.

 

After an
amendment, supplement or waiver under this Section 9.02 becomes effective,
the Issuer shall mail to the Holders of Notes affected thereby a notice briefly
describing the amendment, supplement or waiver. Any failure of the Issuer to
mail such notice, or any defect therein, shall not, however, in any way impair
or affect the validity of any such amended or supplemental indenture or waiver.

 

Without the
consent of each affected Holder of Notes, an amendment or waiver under this Section 9.02
may not (with respect to any Notes held by a non-consenting Holder):

 

(1)                                  reduce the principal
amount of such Notes whose Holders must consent to an amendment, supplement or
waiver;

 

(2)                                  reduce the principal
of or change the fixed final maturity of any such Note or alter or waive the
provisions with respect to the redemption of such Notes (other than provisions
relating to Section 3.09, Section 4.10 and Section 4.14 hereof
to the extent that any such amendment or waiver does not have the effect of
reducing the principal of or changing the fixed final maturity of any such Note
or altering or waiving the provisions with respect to the redemption of such
Notes);

 

(3)                                  reduce the rate of or
change the time for payment of interest on any Note;

 

(4)                                  waive a Default in
the payment of principal of or premium, if any, or interest on the Notes,
except a rescission of acceleration of the Notes by the Holders of at least a
majority in

 

102

 

aggregate principal amount of the Notes and a waiver of the payment
default that resulted from such acceleration, or in respect of a covenant or
provision contained in this Indenture or any Guarantee which cannot be amended
or modified without the consent of all affected Holders;

 

(5)                                  make any Note payable
in money other than that stated therein;

 

(6)                                  make any change in
the provisions of this Indenture relating to waivers of past Defaults or the
rights of Holders to receive payments of principal of or premium, if any, or
interest on the Notes;

 

(7)                                  make any change to
this paragraph of this Section 9.02;

 

(8)                                  impair the right of
any Holder to receive payment of principal of, or interest on, such Holder’s
Notes on or after the due dates therefor or to institute suit for the
enforcement of any payment on or with respect to such Holder’s Notes;

 

(9)                                  make any change to Article 10,
Article 12 or any other of the subordination provisions of this Indenture
(or the component definitions used therein) that would adversely affect the
Holders; or

 

(10)                            except as expressly
permitted by this Indenture, modify the Guarantees of any Significant
Subsidiary, or any group of Restricted Subsidiaries that, taken together (as of
the latest audited consolidated financial statements for the Issuer), would
constitute a Significant Subsidiary, in any manner adverse to the Holders of
the Notes.

 

Notwithstanding
anything in this Indenture to the contrary, no amendment to or waiver of the
subordination provisions of this Indenture (or the component definitions used therein)
may be made without the consent of the holders of a majority of the
Indebtedness in respect of the Senior Credit Facilities of the Issuer and the
Guarantors (or their Representative(s)).

 

Section 9.03                                          Compliance
with Trust Indenture Act.

 

Every
amendment or supplement to this Indenture or the Notes shall be set forth in an
amended or supplemental indenture that complies with the Trust Indenture Act as
then in effect.

 

Section 9.04                                          Revocation
and Effect of Consents.

 

Until an
amendment, supplement or waiver becomes effective, a consent to it by a Holder
of a Note is a continuing consent by the Holder of a Note and every subsequent
Holder of a Note or portion of a Note that evidences the same debt as the
consenting Holder’s Note, even if notation of the consent is not made on any Note.
However, any such Holder of a Note or subsequent Holder of a Note may revoke
the consent as to its Note if the Trustee receives written notice of revocation
before the date the waiver, supplement or amendment becomes effective. An
amendment, supplement or waiver becomes effective in accordance with its terms
and thereafter binds every Holder.

 

The Issuer
may, but shall not be obligated to, fix a record date for the purpose of determining
the Holders entitled to consent to any amendment, supplement, or waiver. If a
record date is fixed, then, notwithstanding the preceding paragraph, those
Persons who were Holders at such record date (or their duly designated
proxies), and only such Persons, shall be entitled to consent to such
amendment, supplement, or waiver or to revoke any consent previously given,
whether or not such Persons continue to

 

103

 

be Holders
after such record date. No such consent shall be valid or effective for more
than 120 days after such record date unless the consent of the requisite number
of Holders has been obtained.

 

Section 9.05                                          Notation
on or Exchange of Notes.

 

The Trustee may place
an appropriate notation about an amendment, supplement or waiver on any Note
thereafter authenticated. The Issuer in exchange for all Notes may issue
and the Trustee shall, upon receipt of an Authentication Order, authenticate
new Notes that reflect the amendment, supplement or waiver.

 

Failure to
make the appropriate notation or issue a new Note shall not affect the validity
and effect of such amendment, supplement or waiver.

 

Section 9.06                                          Trustee
To Sign Amendments, etc.

 

The Trustee
shall sign any amendment, supplement or waiver authorized pursuant to this Article 9
if the amendment or supplement does not adversely affect the rights, duties,
liabilities or immunities of the Trustee. The Issuer may not sign an
amendment, supplement or waiver until the board of directors approves it. In
executing any amendment, supplement or waiver, the Trustee shall be provided
with and (subject to Section 7.01 hereof) shall be fully protected in
relying upon, in addition to the documents required by Section 14.04
hereof, an Officer’s Certificate and an Opinion of Counsel stating that the
execution of such amended or supplemental indenture is authorized or permitted
by this Indenture and that such amendment, supplement or waiver is the legal,
valid and binding obligation of the Issuer and any Guarantors party thereto,
enforceable against them in accordance with its terms, subject to customary
exceptions, and complies with the provisions hereof (including Section 9.03).
Notwithstanding the foregoing, no Opinion of Counsel will be required for the
Trustee to execute any amendment or supplement adding a new Guarantor under
this Indenture.

 

Section 9.07                                          Payment
for Consent.

 

The Issuer
shall not, and shall not permit any of its Subsidiaries to, directly or
indirectly, pay or cause to be paid any consideration, whether by way of
interest, fee or otherwise, to or for the benefit of any Holder for or as an
inducement to any consent, waiver or amendment of any of the terms or
provisions of this Indenture or the Notes unless such consideration is offered
to all Holders and is paid to all Holders that so consent, waive or agree to
amend in the time frame set forth in the solicitation documents relating to
such consent, waiver or agreement.

 

ARTICLE 10

 

SUBORDINATION

 

Section 10.01                          Agreement To Subordinate.

 

The Issuer
agrees, and each Holder by accepting a Note agrees, that the payment of all
Obligations owing in respect of the Notes is subordinated in right of payment,
to the extent and in the manner provided in this Article 10, to the prior
payment in full in cash of all existing and future Senior Indebtedness of the
Issuer and that the subordination is for the benefit of and enforceable by the
holders of such Senior Indebtedness. The Notes shall in all respects rank pari passu in right of payment with all existing and future
Senior Subordinated Indebtedness of the Issuer, and will be senior in right of
payment to all existing and future Subordinated Indebtedness of the Issuer; and
only Indebtedness of the Issuer that

 

104

 

is Senior
Indebtedness shall rank senior to the Notes in accordance with the provisions
set forth herein. All provisions of this Article 10 shall be subject to Section 10.12.

 

Section 10.02                          Liquidation, Dissolution,
Bankruptcy.

 

Upon any
payment or distribution of the assets of the Issuer to creditors upon a total
or partial liquidation or a total or partial dissolution of the Issuer or in a
reorganization, insolvency or bankruptcy of or similar proceeding relating to
the Issuer or its property:

 

(i)                                     the
holders of Senior Indebtedness of the Issuer shall be entitled to receive
payment in full in cash of such Senior Indebtedness before Holders shall be
entitled to receive any payment or distribution of any kind or character with
respect to any Obligations on, or relating to, the Notes; and

 

(ii)                                  until
the Senior Indebtedness of the Issuer is paid in full in cash, any payment or
distribution to which Holders would be entitled but for the subordination
provisions of this Article 10 shall be made to holders of such Senior
Indebtedness as their interests may appear, except that Holders may receive
Permitted Junior Securities.

 

                                                                                                To
the extent any payment of Senior Indebtedness of the Issuer (whether by or on
behalf of the Issuer, as proceeds of security or enforcement of any right of
setoff or otherwise) is declared to be fraudulent or preferential, set aside or
required to be paid to any receiver, trustee in bankruptcy, liquidating
trustee, agent or other similar Person under any bankruptcy, insolvency,
receivership, fraudulent conveyance or similar law, then, if such payment is
recovered by, or paid over to, such receiver, trustee in bankruptcy,
liquidating trustee, agent or similar Person, the Senior Indebtedness of the
Issuer or part thereof originally intended to be satisfied shall be deemed
to be reinstated and outstanding as if such payment had not occurred. It is
further agreed that any diminution (whether pursuant to court decree or
otherwise, including without limitation for any of the reasons described in the
preceding sentence) of the Issuer’s obligation to make any distribution or
payment pursuant to any Senior Indebtedness of the Issuer, except to the extent
such diminution occurs by reason of the repayment (which has not been disgorged
or returned) of such Senior Indebtedness of the Issuer in cash, shall have no
force or effect for purposes of the subordination provisions contained in Article 10,
with any turnover of payments as otherwise calculated pursuant to this Article 10
to be made as if no such diminution had occurred. The Issuer shall promptly
give written notice to the Trustee of any such dissolution, winding-up,
liquidation, or reorganization of the Issuer; provided that any delay or
failure to give such notice shall have no effect on the subordination
provisions contained in this Article 10.

 

Section 10.03                          Default on Senior
Indebtedness of the Issuer.

 

The Issuer
shall not pay principal of, premium, if any, or interest on the Notes (or pay
any other Obligations relating to the Notes, including Additional Interest,
fees, costs, expenses, indemnities and rescission or damage claims) or make any
deposit pursuant to Article 8 or Article 13 hereof and may not
purchase, redeem or otherwise retire or acquire for cash or property any Notes
(collectively, “pay the Notes”) (except in the form of Permitted
Junior Securities (other than Disqualified Stock)) if either of the following
occurs (a “Payment Default”):

 

(i)                                     any
Obligation on any Designated Senior Indebtedness of the Issuer is not paid in
full in cash when due; or

 

(ii)                                  any
other default on Designated Senior Indebtedness of the Issuer occurs and the
maturity of such Designated Senior Indebtedness is accelerated in accordance
with its terms;

 

105

 

unless, in
either case, the Payment Default has been cured or waived and any such
acceleration has been rescinded or such Designated Senior Indebtedness has been
paid in full in cash; provided, however, that the Issuer shall be
entitled to pay the Notes without regard to the foregoing if the Issuer and the
Trustee receive written notice approving such payment from the Representatives
of all Designated Senior Indebtedness with respect to which the Payment Default
has occurred and is continuing.

 

During the
continuance of any default (other than a Payment Default) (a “Non-Payment
Default”) with respect to any Designated Senior Indebtedness of the Issuer
pursuant to which the maturity thereof may be accelerated without further
notice (except such notice as may be required to effect such acceleration)
or the expiration of any applicable grace periods, the Issuer shall not pay the
Notes (except in the form of Permitted Junior Securities (other than
Disqualified Stock)) for a period (a “Payment Blockage Period”)
commencing upon the receipt by the Trustee (with a copy to the Issuer) of
written notice (a “Blockage Notice”) of such Non-Payment Default from
the Representative of such Designated Senior Indebtedness specifying an
election to effect a Payment Blockage Period and ending 179 days
thereafter. The Payment Blockage Period shall end earlier if such Payment
Blockage Period is terminated (i) by written notice to the Trustee and the
Issuer from the Person or Persons who gave such Blockage Notice; (ii) because
the default giving rise to such Blockage Notice is cured, waived or otherwise
no longer continuing; or (iii) because such Designated Senior Indebtedness
has been discharged or repaid in full in cash.

 

Notwithstanding
the provisions described in the immediately preceding paragraph (but subject to
the provisions contained in the first paragraph of this Section 10.03 and Section 10.02
hereof), unless the holders of such Designated Senior Indebtedness or the
Representative of such Designated Senior Indebtedness shall have accelerated
the maturity of such Designated Senior Indebtedness or a Payment Default has
occurred and is continuing, the Issuer shall be permitted  to resume paying the Notes after the end of
such Payment Blockage Period. The Notes shall not be subject to more than one
Payment Blockage Period in any consecutive 360-day period irrespective of the
number of Non-Payment Defaults with respect to Designated Senior Indebtedness
during such period; provided
that if any Blockage Notice is delivered to the Trustee by or on behalf of the
holders of Designated Senior Indebtedness of the Issuer (other than the holders
of Indebtedness under the Senior Credit Facilities), a Representative of
holders of Indebtedness under the Senior Credit Facilities may in the
aggregate give one other Blockage Notice within such period. However, in no
event shall the total number of days during which any Payment Blockage Period
or Periods on the Notes is in effect exceed 179 days in the aggregate during
any consecutive 360-day period, and there must be at least 181 days during any
consecutive 360-day period during which no Payment Blockage Period is in effect.
Notwithstanding the foregoing, however, no Non-Payment Default that existed or
was continuing on the date of commencement of any Payment Blockage Period with
respect to any Designated Senior Indebtedness and that was the basis for the
initiation of such Payment Blockage Period shall be, or be made, the basis for
a subsequent Payment Blockage Period by the Representative of such Designated
Senior Indebtedness unless such default shall have been waived for a period of
not less than 90 consecutive days (it being acknowledged that any subsequent action,
or any breach of any financial covenants during the period after the date of
delivery of such initial Blockage Notice, that, in either case, would give rise
to a Non-Payment Default pursuant to any provisions under which a Non-Payment
Default previously existed or was continuing shall constitute a new Non-Payment
Default for this purpose).

 

Section 10.04                          Acceleration of Payment of
Notes.

 

If payment of
the Notes is accelerated because of an Event of Default, the Issuer shall
promptly notify the holders of the Designated Senior Indebtedness of the Issuer
or the Representative of such Designated Senior Indebtedness of the
acceleration; provided that any failure to give such notice

 

106

 

shall have no
effect whatsoever on the provisions of this Article 10. So long as there
shall remain outstanding any Senior Indebtedness under the Senior Credit
Facilities, a Blockage Notice may be given only by the respective
Representatives thereunder unless otherwise agreed to in writing by the
requisite lenders named therein. If any Designated Senior Indebtedness of the
Issuer is outstanding, the Issuer may not pay the Notes until five
Business Days after the Representatives of all such Designated Senior
Indebtedness receive notice of such acceleration and, thereafter, may pay
the Notes only if this Indenture otherwise permits payment at that time.

 

Section 10.05                          When Distribution Must Be
Paid Over.

 

If a
distribution is made to Holders that, due to this Article 10, should not
have been made to them, such Holders are required to hold it in trust for the
holders of Senior Indebtedness of the Issuer and pay it over to them as their
interests may appear.

 

Section 10.06                          Subrogation.

 

After all
Senior Indebtedness of the Issuer is paid in full in cash and until the Notes
are paid in full, Holders shall be subrogated to the rights of holders of such
Senior Indebtedness to receive distributions applicable to such Senior
Indebtedness. A distribution made under this Article 10 to holders of such
Senior Indebtedness which otherwise would have been made to Holders is not, as
between the Issuer and Holders, a payment by the Issuer on such Senior Indebtedness.

 

Section 10.07                          Relative Rights.

 

This Article 10
defines the relative rights of Holders and holders of Senior Indebtedness of
the Issuer. Nothing in this Indenture shall:

 

(i)                                     impair,
as between the Issuer and Holders, the obligation of the Issuer, which is
absolute and unconditional, to pay principal of and interest on the Notes in accordance
with their terms;

 

(ii)                                  prevent
the Trustee or any Holder from exercising its available remedies upon a
Default, subject to the rights of holders of Senior Indebtedness of the Issuer
to receive payments or distributions otherwise payable to Holders and such
other rights of such holders of Senior Indebtedness as set forth herein; or

 

(iii)                               affect
the relative rights of Holders and creditors of the Issuer other than their
rights in relation to holders of Senior Indebtedness.

 

Section 10.08                          Subordination May Not
Be Impaired by Issuer.

 

No right of
any holder of Senior Indebtedness of the Issuer to enforce the subordination of
the Indebtedness evidenced by the Notes shall be impaired by any act or failure
to act by the Issuer or by its failure to comply with this Indenture.

 

Section 10.09                          Rights of Trustee and
Paying Agent.

 

Notwithstanding
Section 10.03 hereof, the Trustee or any Paying Agent may continue to
make payments on the Notes and shall not be charged with knowledge of the
existence of facts that would prohibit the making of any payments unless a
Responsible Officer of the Trustee receives notice satisfactory to him that
payments may not be made under this Article 10; provided that
notwithstanding the foregoing,

 

107

 

the
subordination of the Obligations under the Notes to Senior Indebtedness of the
Issuer shall not be affected and the Holders receiving any payments in
contravention of Section 10.02 and/or 10.03 (and such respective payments)
shall otherwise be subject to the provisions of this Article 10. The
Issuer, the Registrar, the Paying Agent, a Representative or a holder of Senior
Indebtedness of the Issuer shall be entitled to give the notice; provided,
however, that, if an issue of Senior Indebtedness of the Issuer has a
Representative, only the Representative shall be entitled to give the notice.

 

The Trustee in
its individual or any other capacity shall be entitled to hold Senior Indebtedness
of the Issuer with the same rights it would have if it were not Trustee. The
Registrar and the Paying Agent shall be entitled to do the same with like
rights. The Trustee shall be entitled to all the rights set forth in this Article 10
with respect to any Senior Indebtedness of the Issuer which may at any
time be held by it, to the same extent as any other holder of such Senior
Indebtedness; and nothing in Article 7 shall deprive the Trustee of any of
its rights as such holder. Nothing in this Article 10 shall apply to
claims of, or payments to, the Trustee under or pursuant to Section 7.07
hereof or any other Section of this Indenture.

 

Section 10.10                          Distribution or Notice to
Representative.

 

Whenever a
distribution is to be made or a notice given to holders of Senior Indebtedness
of the Issuer, the distribution may be made and the notice given to their
Representative (if any).

 

Section 10.11                          Article 10 Not To
Prevent Events of Default or Limit Right To Accelerate.

 

The failure to
make a payment pursuant to the Notes by reason of any provision in this Article 10
shall not be construed as preventing the occurrence of a Default. Nothing in
this Article 10 shall have any effect on the right of the Holders or the
Trustee to accelerate the maturity of the Notes.

 

Section 10.12                          Trust Moneys Not
Subordinated.

 

Notwithstanding
anything contained herein to the contrary, payments from money or the proceeds
of Government Securities held in trust by the Trustee for the payment of
principal of and interest on the Notes pursuant to Article 8 or Article 13
hereof shall not be subordinated to the prior payment of any Senior
Indebtedness of the Issuer or subject to the restrictions set forth in this Article 10,
and none of the Holders shall be obligated to pay over any such amount to the
Issuer or any holder of Senior Indebtedness of the Issuer or any other creditor
of the Issuer, provided that the subordination provisions of this Article 10
were not violated at the time the applicable amounts were deposited in trust
pursuant to Article 8 or Article 13 hereof, as the case may be,
and such deposit was otherwise made in accordance with Article 8 or Article 13
hereof.

 

Section 10.13                          Trustee
Entitled To Rely.

 

Upon any
payment or distribution pursuant to this Article 10, the Trustee and the
Holders shall be entitled to rely (a) upon any order or decree of a court
of competent jurisdiction in which any proceedings of the nature referred to in
Section 10.02 hereof are pending, (b) upon a certificate of the liquidating
trustee or agent or other Person making such payment or distribution to the
Trustee or to the Holders or (c) upon the Representatives of Senior
Indebtedness of the Issuer for the purpose of ascertaining the Persons entitled
to participate in such payment or distribution, the holders of such Senior
Indebtedness and other Indebtedness of the Issuer, the amount thereof or payable
thereon, the amount or amounts paid or distributed thereon and all other facts
pertinent thereto or to this Article 10. In the event that the Trustee
determines, in good faith, that evidence is required with respect to the right
of any Person as a holder of Senior Indebtedness of the Issuer to participate
in any payment or distribution pursuant to

 

108

 

this Article 10,
the Trustee shall be entitled to request such Person to furnish evidence to the
reasonable satisfaction of the Trustee as to the amount of such Senior
Indebtedness held by such Person, the extent to which such Person is entitled
to participate in such payment or distribution and other facts pertinent to the
rights of such Person under this Article 10, and, if such evidence is not
furnished, the Trustee shall be entitled to defer any payment to such Person
pending judicial determination as to the right of such Person to receive such
payment. The provisions of Sections 7.01 and 7.02 hereof shall be applicable to
all actions or omissions of actions by the Trustee pursuant to this Article 10.

 

Section 10.14                          Trustee
To Effectuate Subordination.

 

A Holder by
its acceptance of a Note agrees to be bound by this Article 10 and
authorizes and expressly directs the Trustee, on its behalf, to take such
action as may be necessary or appropriate to effectuate the subordination
between the Holders and the holders of Senior Indebtedness of the Issuer as provided
in this Article 10 and appoints the Trustee as its attorney-in-fact for
such purpose.

 

If the Trustee
does not file a Proper Proof of Claim in any proceeding prior to 15 days before
the expiration of the time to file a Proof of Claim in such proceeding, then
the holders of Designated Senior Indebtedness of the Issuer (or their
Representative) are hereby authorized to have the right to file and are (or is)
hereby authorized to file, in the name of the Trustee, a Proof of Claim for and
on behalf of the Holders; provided that (i) if the holders of the
Designated Senior Indebtedness of the Issuer (or their Representative) file any
Proof of Claim as contemplated above and the Trustee shall subsequently file a
Proper Proof of Claim in such proceeding before the expiration of the time to
file a Proof of Claim in such proceeding, such subsequent Proper Proof of Claim
filed by the Trustee shall supersede any such Proof of Claim theretofore filed
by the holders of the Designated Senior Indebtedness of the Issuer (or their
Representative), and such Proof of Claim theretofore filed by the holders of
the Designated Senior Indebtedness of the Issuer (or their Representative)
shall thereupon deemed to be withdrawn, and (ii) the foregoing provisions
of this paragraph shall not be construed to authorize the holders of the
Designated Senior Indebtedness (or their Representative) 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
to authorize the holders of the Designated Senior Indebtedness (or their
Representative) to vote in respect of the claim of any Holder in any such
proceeding. This paragraph is intended solely to permit the holders of
Designated Senior Indebtedness of the Issuer to preserve their “turnover right”
pursuant to the applicable subordination provisions in this Article 10 in
circumstances where a Proper Proof of Claim has not been filed by the Trustee
before the expiration of the time to file a Proof of Claim in a bankruptcy
proceeding, and nothing herein shall impair the rights of the Trustee under Section 6.13
and 7.07.

 

Section 10.15                          Trustee
Not Fiduciary for Holders of Senior Indebtedness of the Issuer.

 

The Trustee
shall not be deemed to owe any fiduciary duty to the holders of Senior
Indebtedness of the Issuer and shall not be liable to any such holders if it
shall mistakenly pay over or distribute to Holders or the Issuer or any other
Person, money or assets to which any holders of Senior Indebtedness of the
Issuer shall be entitled by virtue of this Article 10 or otherwise.

 

Section 10.16                          Reliance
by Holders of Senior Indebtedness of the Issuer on Subordination Provisions.

 

Each Holder by
accepting a Note acknowledges and agrees that the subordination provisions of
this Article 10 are, and are intended to be, an inducement and a
consideration to each holder of any Senior Indebtedness of the Issuer, whether
such Senior Indebtedness was created or acquired before or after the issuance
of the Notes, to acquire and continue to hold, or to continue to hold, such
Senior Indebtedness and such holder of such Senior Indebtedness shall be deemed
conclusively to have relied on

 

109

 

such
subordination provisions in acquiring and continuing to hold, or in continuing
to hold, such Senior Indebtedness.

 

Without in any
way limiting the generality of the foregoing paragraph, the holders of Senior
Indebtedness of the Issuer may, at any time and from time to time, without the
consent of or notice to the Trustee or the Holders, without incurring
responsibility to the Trustee or the Holders and without impairing or releasing
the subordination provided in this Article 10 or the obligations hereunder
of the Holders to the holders of the Senior Indebtedness of the Issuer, do any
one or more of the following:  (i) change the manner, place or
terms of payment or extend the time of payment of, or renew or alter, Senior
Indebtedness of the Issuer, or otherwise amend or supplement in any manner
Senior Indebtedness of the Issuer, or any instrument evidencing the same or any
agreement under which Senior Indebtedness of the Issuer is outstanding; (ii) sell,
exchange, release or otherwise deal with any property pledged, mortgaged or
otherwise securing Senior Indebtedness of the Issuer; (iii) release any
Person liable in any manner for the payment or collection of Senior
Indebtedness of the Issuer; and (iv) exercise or refrain from exercising
any rights against the Issuer and any other Person.

 

ARTICLE 11

 

GUARANTEES

 

Section 11.01                                    Guarantee.

 

Subject to
this Article 11, each of the Guarantors hereby, jointly and severally,
unconditionally guarantees, subject to Article 12, to each Holder of a
Note authenticated and delivered by the Trustee and to the Trustee and its
successors and assigns, irrespective of the validity and enforceability of this
Indenture, the Notes or the obligations of the Issuer hereunder or thereunder,
that: (a) the principal of, and interest, premium and Additional Interest,
if any, on the Notes shall be promptly paid in full when due, whether at
maturity, by acceleration, redemption or otherwise, and interest on the overdue
principal of and interest on the Notes, if any, if lawful, and all other Obligations
of the Issuer to the Holders or the Trustee hereunder or thereunder shall be
promptly paid in full or performed, all in accordance with the terms hereof and
thereof; and (b) in case of any extension of time of payment or renewal of
any Notes or any of such other obligations, that same shall be promptly paid in
full when due or performed in accordance with the terms of the extension or
renewal, whether at stated maturity, by acceleration or otherwise. Failing payment
when due of any amount so guaranteed or any performance so guaranteed for
whatever reason, the Guarantors shall be jointly and severally obligated to pay
the same immediately. Each Guarantor agrees that this is a guarantee of payment
and not a guarantee of collection.

 

The Guarantors
hereby agree that their obligations hereunder shall be unconditional,
irrespective of the validity, regularity or enforceability of the Notes or this
Indenture, the absence of any action to enforce the same, any waiver or consent
by any Holder of the Notes with respect to any provisions hereof or thereof,
the recovery of any judgment against the Issuer, any action to enforce the same
or any other circumstance which might otherwise constitute a legal or equitable
discharge or defense of a guarantor. Each Guarantor hereby waives diligence,
presentment, demand of payment, filing of claims with a court in the event of
insolvency or bankruptcy of the Issuer, any right to require a proceeding first
against the Issuer, protest, notice and all demands whatsoever and covenants
that this Guarantee shall not be discharged except by complete performance of
the obligations contained in the Notes and this Indenture.

 

Each Guarantor
also agrees to pay any and all costs and expenses (including reasonable
attorneys’ fees) incurred by the Trustee or any Holder in enforcing any rights
under this Section 11.01.

 

110

 

If any Holder
or the Trustee is required by any court or otherwise to return to the Issuer,
the Guarantors or any custodian, trustee, liquidator or other similar official
acting in relation to either the Issuer or the Guarantors, any amount paid
either to the Trustee or such Holder, this Guarantee, to the extent theretofore
discharged, shall be reinstated in full force and effect.

 

Each Guarantor
agrees that it shall not be entitled to any right of subrogation in relation to
the Holders in respect of any obligations guaranteed hereby until payment in
full of all obligations guaranteed hereby. Each Guarantor further agrees that,
as between the Guarantors, on the one hand, and the Holders and the Trustee, on
the other hand, (x) the maturity of the obligations guaranteed hereby may be
accelerated as provided in Article 6 hereof for the purposes of this Guarantee,
notwithstanding any stay, injunction or other prohibition preventing such acceleration
in respect of the obligations guaranteed hereby, and (y) in the event of any declaration
of acceleration of such obligations as provided in Article 6 hereof, such
obligations (whether or not due and payable) shall forthwith become due and
payable by the Guarantors for the purpose of this Guarantee. The Guarantors
shall have the right to seek contribution from any non-paying Guarantor so long
as the exercise of such right does not impair the rights of the Holders under
the Guarantees.

 

Each Guarantee
shall remain in full force and effect and continue to be effective should any
petition be filed by or against the Issuer for liquidation, reorganization,
should the Issuer become insolvent or make an assignment for the benefit of
creditors or should a receiver or trustee be appointed for all or any
significant part of the Issuer’s assets, and shall, to the fullest extent
permitted by law, continue to be effective or be reinstated, as the case may be,
if at any time payment and performance of the Notes are, pursuant to applicable
law, rescinded or reduced in amount, or must otherwise be restored or returned
by any obligee on the Notes or Guarantees, whether as a “voidable preference,” “fraudulent
transfer” or otherwise, all as though such payment or performance had not been
made. In the event that any payment or any part thereof, is rescinded,
reduced, restored or returned, the Notes shall, to the fullest extent permitted
by law, be reinstated and deemed reduced only by such amount paid and not so
rescinded, reduced, restored or returned.

 

In case any
provision of any Guarantee shall be invalid, illegal or unenforceable, the
validity, legality, and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.

 

The Guarantee
issued by any Guarantor shall be a general unsecured senior subordinated obligation
of such Guarantor and shall be subordinated in right of payment to all existing
and future Senior Indebtedness of such Guarantor, if any.

 

Each payment
to be made by a Guarantor in respect of its Guarantee shall be made without
set-off, counterclaim, reduction or diminution of any kind or nature.

 

The
obligations of each Guarantor to the Holders and to the Trustee pursuant to the
Guarantee of such Guarantor and this Indenture are expressly subordinate and
subject in right of payment to the prior payment in full of all Senior
Indebtedness of such Guarantor, to the extent and in the manner provided in Article 12.

 

Section 11.02                                    Limitation
on Guarantor Liability.

 

Each
Guarantor, and by its acceptance of Notes, each Holder, hereby confirms that it
is the intention of all such parties that the Guarantee of such Guarantor not
constitute a fraudulent transfer or conveyance for purposes of Bankruptcy Law,
the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent
Transfer Act or any similar federal or state law to the extent applicable to
any Guarantee. To

 

111

 

effectuate the
foregoing intention, the Trustee, the Holders and the Guarantors hereby
irrevocably agree that the obligations of each Guarantor shall be limited to
the maximum amount as will, after giving effect to such maximum amount and all
other contingent and fixed liabilities of such Guarantor (including, without
limitation, all Senior Indebtedness of such Guarantor) that are relevant under
such laws and after giving effect to any collections from, rights to receive
contribution from or payments made by or on behalf of any other Guarantor in
respect of the obligations of such other Guarantor under this Article 11,
result in the obligations of such Guarantor under its Guarantee not
constituting a fraudulent conveyance or fraudulent transfer under applicable law.
Each Guarantor that makes a payment under its Guarantee shall be entitled upon
payment in full of all guaranteed obligations under this Indenture to a
contribution from each other Guarantor in an amount equal to such other
Guarantor’s pro rata portion of such payment based
on the respective net assets of all the Guarantors at the time of such payment
determined in accordance with GAAP.

 

Section 11.03                                    Execution
and Delivery.

 

To evidence
its Guarantee set forth in Section 11.01 hereof, each Guarantor hereby agrees that this Indenture shall
be executed on behalf of such Guarantor by its President, one of its Vice Presidents
or one of its Assistant Vice Presidents.

 

Each Guarantor
hereby agrees that its Guarantee set forth in Section 11.01 hereof shall remain in full force and
effect notwithstanding the absence of the endorsement of any notation of such
Guarantee on the Notes.

 

If an Officer
whose signature is on this Indenture no longer holds that office at the time
the Trustee authenticates the Note, the Guarantee shall be valid nevertheless.

 

The delivery
of any Note by the Trustee, after the authentication thereof hereunder, shall
constitute due delivery of the Guarantee set forth in this Indenture on behalf
of the Guarantors.

 

If required by
Section 4.15 hereof, the Issuer shall cause any newly created or acquired
Restricted Subsidiary to comply with the provisions of Section 4.15 hereof and this Article 11, to
the extent applicable.

 

Section 11.04                                    Subrogation.

 

Each Guarantor
shall be subrogated to all rights of Holders of Notes against the Issuer in
respect of any amounts paid by any Guarantor pursuant to the provisions of Section 11.01 hereof; provided that, if an
Event of Default has occurred and is continuing, no Guarantor shall be entitled
to enforce or receive any payments arising out of, or based upon, such right of
subrogation until all amounts then due and payable by the Issuer under this
Indenture or the Notes shall have been paid in full.

 

Section 11.05                                    Benefits
Acknowledged.

 

Each Guarantor
acknowledges that it will receive direct and indirect benefits from the
financing arrangements contemplated by this Indenture and that the guarantee
and waivers made by it pursuant to its Guarantee are knowingly made in
contemplation of such benefits.

 

112

 

Section 11.06                                    Release
of Guarantees.

 

A Guarantee by
a Guarantor shall be automatically and unconditionally released and discharged,
and no further action by such Guarantor, the Issuer or the Trustee is required
for the release of such Guarantor’s Guarantee, upon:

 

(1)                                  (A) 
any sale, exchange, disposition or transfer (by merger or otherwise) of (x) the
Capital Stock of such Guarantor, after which the applicable Guarantor is no
longer a Restricted Subsidiary, or (y) all or substantially all the assets of
such Guarantor which sale, exchange, disposition or transfer in each case is
made in compliance with Sections 4.10(a)(1) and (2);

 

(B)                                the
release or discharge of the guarantee by such Guarantor of the Senior Credit
Facilities or the guarantee which resulted in the creation of such Guarantee,
except a discharge or release by or as a result of payment under such
guarantee;

 

(C)                                the
proper designation of any Restricted Subsidiary that is a Guarantor as an Unrestricted
Subsidiary; or

 

(D)                               the
Issuer exercising Legal Defeasance or Covenant Defeasance in accordance with Article 8
hereof or the Issuer’s obligations under this Indenture being discharged in
accordance with the terms of this Indenture; and

 

(2)                                   the Issuer
delivering to the Trustee an Officer’s Certificate and an Opinion of Counsel,
each stating that all conditions precedent provided for in this Indenture
relating to such transaction have been complied with.

 

ARTICLE 12

 

SUBORDINATION OF GUARANTEES

 

Section 12.01                                    Agreement
To Subordinate.

 

Each Guarantor
agrees, and each Holder by accepting a Note agrees, that the Obligations of
such Guarantor under its Guarantee are subordinated in right of payment, to the
extent and in the manner provided in this Article 12, to the prior payment
in full in cash of all existing and future Senior Indebtedness of such
Guarantor and that the subordination is for the benefit of and enforceable by
the holders of such Senior Indebtedness. A Guarantor’s Obligations under its
Guarantee shall in all respects rank pari passu in
right of payment with all existing and future Senior Subordinated Indebtedness
of such Guarantor, and will be senior in right of payment to all existing and
future Subordinated Indebtedness of such Guarantor; and only Indebtedness of such
Guarantor that is Senior Indebtedness shall rank senior to the Obligations of
such Guarantor under its Guarantee in accordance with the provisions set forth
herein. All provisions of this Article 12 shall be subject to Section 12.12.

 

Section 12.02                                    Liquidation,
Dissolution, Bankruptcy.

 

Upon any
payment or distribution of the assets of a Guarantor to creditors upon a total
or partial liquidation or a total or partial dissolution of such Guarantor or
in a reorganization, insolvency or bankruptcy of or similar proceeding relating
to such Guarantor or its property:

 

113

 

(i)                                     the
holders of Senior Indebtedness of such Guarantor shall be entitled to receive
payment in full in cash of such Senior Indebtedness before Holders shall be
entitled to receive any payment or distribution of any kind or character with
respect to any Obligations on, or relating to, such Guarantor’s Guarantee; and

 

(ii)                                  until
the Senior Indebtedness of such Guarantor is paid in full in cash, any payment
or distribution to which Holders would be entitled but for the subordination
provisions of this Article 12 shall be made to holders of such Senior
Indebtedness as their interests may appear, except that Holders may receive
Permitted Junior Securities.

 

To the extent any payment of
Senior Indebtedness of any Guarantor (whether by or on behalf of such Guarantor,
as proceeds of security or enforcement of any right of setoff or otherwise) is
declared to be fraudulent or preferential, set aside or required to be paid to
any receiver, trustee in bankruptcy, liquidating trustee, agent or other
similar Person under any bankruptcy, insolvency, receivership, fraudulent
conveyance or similar law, then, if such payment is recovered by, or paid over
to, such receiver, trustee in bankruptcy, liquidating trustee, agent or similar
Person, the Senior Indebtedness of such Guarantor or part thereof
originally intended to be satisfied shall be deemed to be reinstated and
outstanding as if such payment had not occurred. It is further agreed that any
diminution (whether pursuant to court decree or otherwise, including without
limitation for any of the reasons described in the preceding sentence) of any
Guarantor’s obligation to make any distribution or payment pursuant to any
Senior Indebtedness of such Guarantor, except to the extent such diminution
occurs by reason of the repayment (which has not been disgorged or returned) of
such Senior Indebtedness of such Guarantor in cash, shall have no force or
effect for purposes of the subordination provisions contained in Article 12,
with any turnover of payments as otherwise calculated pursuant to this Article 12
to be made as if no such diminution had occurred. The Issuer shall promptly
give written notice to the Trustee of any such dissolution, winding-up,
liquidation, or reorganization of any Guarantor, provided that any delay or
failure to give such notice shall have no effect on the subordination
provisions contained in this Article 12.

 

Section 12.03                                    Default
on Senior Indebtedness of a Guarantor.

 

A Guarantor
shall not make any payment pursuant to its Guarantee (or pay any other
Obligations relating to its Guarantee, including Additional Interest, fees,
costs, expenses, indemnities and rescission or damage claims) and may not
purchase, redeem or otherwise retire or acquire for cash or property any Notes
(collectively, “pay its Guarantee”) (except in the form of
Permitted Junior Securities (other than Disqualified Stock)) if either of the
following occurs (a “Guarantor Payment Default”):

 

(i)                                     any
Obligation on any Designated Senior Indebtedness of such Guarantor is not paid
in full in cash when due; or

 

(ii)                                  any
other default on Designated Senior Indebtedness of such Guarantor occurs and
the maturity of such Designated Senior Indebtedness is accelerated in
accordance with its terms;

 

unless, in
either case, the Guarantor Payment Default has been cured or waived and any
such acceleration has been rescinded or such Designated Senior Indebtedness has
been paid in full in cash; provided, however, that such Guarantor
shall be entitled to pay its Guarantee without regard to the foregoing if such
Guarantor and the Trustee receive written notice approving such payment from
the Representatives of all Designated Senior Indebtedness with respect to which
the Guarantor Payment Default has occurred and is continuing.

 

114

 

During the
continuance of any default (other than a Guarantor Payment Default) (a “Guarantor
Non-Payment Default”) with respect to any Designated Senior Indebtedness of
a Guarantor pursuant to which the maturity thereof may be accelerated
without further notice (except such notice as may be required to effect
such acceleration) or the expiration of any applicable grace periods, such
Guarantor shall not pay its Guarantee (except in the form of Permitted
Junior Securities (other than Disqualified Stock)) for a period (a “Guarantee
Payment Blockage Period”) commencing upon the receipt by the Trustee (with
a copy to such Guarantor and the Issuer) of written notice (a “Guarantee
Blockage Notice”) of such Guarantor Non-Payment Default from the
Representative of such Designated Senior Indebtedness specifying an election to
effect a Guarantee Payment Blockage Period and ending 179 days thereafter.
The Guarantee Payment Blockage Period shall end earlier if such Guarantee
Payment Blockage Period is terminated (i) by written notice to the
Trustee, the relevant Guarantor and the Issuer from the Person or Persons who
gave such Guarantee Blockage Notice; (ii) because the default giving rise
to such Guarantee Blockage Notice is cured, waived or otherwise no longer
continuing; or (iii) because such Designated Senior Indebtedness has been
discharged or repaid in full in cash.

 

Notwithstanding
the provisions described in the immediately preceding paragraph (but subject to
the provisions contained in the first paragraph of this Section 12.03 and Section 12.02
hereof), unless the holders of such Designated Senior Indebtedness or the
Representative of such Designated Senior Indebtedness shall have accelerated
the maturity of such Designated Senior Indebtedness or a Guarantor Payment
Default has occurred and is continuing, the relevant Guarantor shall be
permitted to resume paying its Guarantee after the end of such Guarantee
Payment Blockage Period. Each Guarantee shall not be subject to more than one
Guarantee Payment Blockage Period in any consecutive 360-day period irrespective
of the number of Non-Payment Defaults with respect to Designated Senior Indebtedness
during such period; provided
that if any Guarantee Blockage Notice is delivered to the Trustee by or on
behalf of the holders of Designated Senior Indebtedness of such Guarantor
(other than the holders of Indebtedness under the Senior Credit Facilities), a
Representative of holders of Indebtedness under the Senior Credit Facilities may in
the aggregate give one other Guarantee Blockage Notice within such period. However,
in no event shall the total number of days during which any Guarantee Payment
Blockage Period or Periods on a Guarantee is in effect exceed 179 days in the
aggregate during any consecutive 360-day period, and there must be at least 181
days during any consecutive 360-day period during which no Guarantee Payment
Blockage Period is in effect. Notwithstanding the foregoing, however, no Guarantor
Non-Payment Default that existed or was continuing on the date of commencement
of any Guarantee Payment Blockage Period with respect to any Designated Senior
Indebtedness and that was the basis for the initiation of such Guarantee Payment
Blockage Period shall be, or be made, the basis for a subsequent Guarantee Payment
Blockage Period by the Representative of such Designated Senior Indebtedness
unless such default shall have been waived for a period of not less than 90 consecutive
days (it being acknowledged that any subsequent action, or any breach of any
financial covenants during the period after the date of delivery of such
initial Guarantee Blockage Notice, that, in either case, would give rise to a Guarantor
Non-Payment Default pursuant to any provisions under which a Guarantor
Non-Payment Default previously existed or was continuing shall constitute a new
Guarantor Non-Payment Default for this purpose).

 

Section 12.04                                    Demand
for Payment.

 

If payment of
the Notes is accelerated because of an Event of Default and a demand for
payment is made on a Guarantor pursuant to Article 11 hereof, the Issuer
or such Guarantor shall promptly notify the holders of the Designated Senior
Indebtedness of such Guarantor or the Representative of such Designated Senior
Indebtedness of such demand; provided that any failure to give such
notice shall have no effect whatsoever on the provisions of this Article 12.
So long as there shall remain outstanding any Senior Indebtedness under the
Senior Credit Facilities and the relevant Guarantor is a guarantor thereof, a Guarantee
Blockage Notice may be given only by the respective Representatives thereunder

 

115

 

unless otherwise
agreed to in writing by the requisite lenders named therein. If any Designated
Senior Indebtedness of a Guarantor is outstanding, such Guarantor may not
pay its Guarantee until five Business Days after the Representatives of all
such Designated Senior Indebtedness receive notice of such acceleration and,
thereafter, may pay its Guarantee only if this Indenture otherwise permits
payment at that time.

 

Section 12.05                                    When
Distribution Must Be Paid Over.

 

If a
distribution is made to Holders that, due to this Article 12, should not
have been made to them, such Holders are required to hold it in trust for the
holders of Senior Indebtedness of the relevant Guarantor and pay it over to
them as their interests may appear.

 

Section 12.06                                    Subrogation.

 

After all
Senior Indebtedness of a Guarantor is paid in full in cash and until the Notes
are paid in full, Holders shall be subrogated to the rights of holders of such
Senior Indebtedness to receive distributions applicable to such Senior
Indebtedness. A distribution made under this Article 12 to holders of such
Senior Indebtedness which otherwise would have been made to Holders is not, as
between the relevant Guarantor and Holders, a payment by such Guarantor on such
Senior Indebtedness.

 

Section 12.07                                    Relative
Rights.

 

This Article 12
defines the relative rights of Holders and holders of Senior Indebtedness of a
Guarantor. Nothing in this Indenture shall:

 

(i)                                     impair,
as between such Guarantor and Holders, the obligation of such Guarantor, which
is absolute and unconditional, to make payments under its Guarantee in
accordance with its terms;

 

(ii)                                  prevent
the Trustee or any Holder from exercising its available remedies upon a default
by such Guarantor under its obligations with respect to its Guarantee, subject to
the rights of holders of Senior Indebtedness of such Guarantor to receive
payments or distributions otherwise payable to Holders and such other rights of
such holders of Senior Indebtedness as set forth herein; or

 

(iii)                               affect
the relative rights of Holders and creditors of such Guarantor other than their
rights in relation to holders of Senior Indebtedness.

 

Section 12.08                                    Subordination
May Not Be Impaired by a Guarantor.

 

No right of
any holder of Senior Indebtedness of a Guarantor to enforce the subordination
of the Obligations of such Guarantor under its Guarantee shall be impaired by
any act or failure to act by such Guarantor or by its failure to comply with
this Indenture.

 

Section 12.09                                    Rights
of Trustee and Paying Agent.

 

Notwithstanding
Section 12.03 hereof, the Trustee or any Paying Agent may continue to
make payments on the Notes and shall not be charged with knowledge of the
existence of facts that would prohibit the making of any payments unless a
Responsible Officer of the Trustee receives notice satisfactory to him that
payments may not be made under this Article 12; provided  however
that notwithstanding the foregoing, the subordination of the Guarantees to
Senior Indebtedness of the Guarantors shall not be 

 

116

 

affected and
the Holders receiving any payments in contravention of Section 12.02
and/or 12.03 (and such respective payments) shall otherwise be subject to the
provisions of this Article 12. A Guarantor, the Registrar, the Paying
Agent, a Representative or a holder of Senior Indebtedness of such Guarantor
shall be entitled to give the notice; provided, however, that, if
an issue of Senior Indebtedness of such Guarantor has a Representative, only
the Representative shall be entitled to give the notice.

 

The Trustee in
its individual or any other capacity shall be entitled to hold Senior
Indebtedness of a Guarantor with the same rights it would have if it were not
Trustee. The Registrar and the Paying Agent shall be entitled to do the same
with like rights. The Trustee shall be entitled to all the rights set forth in
this Article 12 with respect to any Senior Indebtedness of a Guarantor
which may at any time be held by it, to the same extent as any other
holder of such Senior Indebtedness; and nothing in Article 7 shall deprive
the Trustee of any of its rights as such holder. Nothing in this Article 12
shall apply to claims of, or payments to, the Trustee under or pursuant to Section 7.07
hereof or any other Section of this Indenture.

 

Section 12.10                                    Distribution
or Notice to Representative.

 

Whenever a
distribution is to be made or a notice given to holders of Senior Indebtedness
of a Guarantor, the distribution may be made and the notice given to their
Representative (if any).

 

Section 12.11                                    Article 12
Not To Prevent Events of Default or Limit Right To Demand Payment.

 

The failure of
a Guarantor to make a payment pursuant its Guarantee by reason of any provision
in this Article 12 shall not be construed as preventing the occurrence of
a default by such Guarantor under its Guarantee. Nothing in this Article 12
shall have any effect on the right of the Holders or the Trustee to make a
demand for payment on a Guarantor pursuant to Article 11 hereof.

 

Section 12.12                          Trust Moneys Not
Subordinated.

 

Notwithstanding
anything contained herein to the contrary, payments from money or the proceeds
of  Government Securities held in trust by the Trustee for the payment of
principal of and interest on the Notes pursuant to Article 8 or Article 13
hereof shall not be subordinated to the prior payment of any Senior
Indebtedness of any Guarantor or subject to the restrictions set forth in this Article 12,
and none of the Holders shall be obligated to pay over any such amount to such
Guarantor or any holder of Senior Indebtedness of such Guarantor or any other
creditor of such Guarantor, provided that the subordination provisions
of this Article 12 were not violated at the time the applicable amounts
were deposited in trust pursuant to Article 8 or Article 13 hereof,
as the case may be, and such deposit was otherwise made in accordance with
Article 8 or Article 13 hereof.

 

Section 12.13                                    Trustee
Entitled To Rely.

 

Upon any
payment or distribution pursuant to this Article 12, the Trustee and the
Holders shall be entitled to rely (a) upon any order or decree of a court
of competent jurisdiction in which any proceedings of the nature referred to in
Section 12.02 hereof are pending, (b) upon a certificate of the liquidating
trustee or agent or other Person making such payment or distribution to the
Trustee or to the Holders or (c) upon the Representatives of Senior
Indebtedness of a Guarantor for the purpose of ascertaining the Persons
entitled to participate in such payment or distribution, the holders of such
Senior Indebtedness and other Indebtedness of such Guarantor, the amount
thereof or payable thereon, the amount or amounts paid or distributed thereon
and all other facts pertinent thereto or to this Article 12. In the event
that the Trustee determines, in good faith, that evidence is required with
respect to the right of any

 

117

 

Person as a
holder of Senior Indebtedness of a Guarantor to participate in any payment or
distribution pursuant to this Article 12, the Trustee shall be entitled to
request such Person to furnish evidence to the reasonable satisfaction of the
Trustee as to the amount of such Senior Indebtedness held by such Person, the
extent to which such Person is entitled to participate in such payment or distribution
and other facts pertinent to the rights of such Person under this Article 12,
and, if such evidence is not furnished, the Trustee shall be entitled to defer
any payment to such Person pending judicial determination as to the right of
such Person to receive such payment. The provisions of Sections 7.01 and 7.02
hereof shall be applicable to all actions or omissions of actions by the
Trustee pursuant to this Article 12.

 

Section 12.14                                    Trustee
To Effectuate Subordination.

 

A Holder by
its acceptance of a Note agrees to be bound by this Article 12 and
authorizes and expressly directs the Trustee, on its behalf, to take such
action as may be necessary or appropriate to effectuate the subordination
between the Holders and the holders of Senior Indebtedness of a Guarantor as
provided in this Article 12 and appoints the Trustee as its attorney-in-fact
for such purpose.

 

If the Trustee
does not file a Proper Proof of Claim in any proceeding prior to 15 days before
the expiration of the time to file a Proof of Claim in such proceeding, then
the holders of Designated Senior Indebtedness of any Guarantor (or their
Representative) are hereby authorized to have the right to file and are (or is)
hereby authorized to file, in the name of the Trustee, a Proof of Claim for and
on behalf of the Holders; provided that (i) if the holders of the
Designated Senior Indebtedness of such Guarantor (or their Representative) file
any Proof of Claim as contemplated above and the Trustee shall subsequently
file a Proper Proof of Claim in such proceeding before the expiration of the
time to file a Proof of Claim in such proceeding, such subsequent Proper Proof
of Claim filed by the Trustee shall supersede any such Proof of Claim
theretofore filed by the holders of the Designated Senior Indebtedness of such
Guarantor (or their Representative), and such Proof of Claim theretofore filed
by the holders of the Designated Senior Indebtedness of such Guarantor (or
their Representative) shall thereupon deemed to be withdrawn, and (ii) the
foregoing provisions of this paragraph shall not be construed to authorize the
holders of the Designated Senior Indebtedness (or their Representative) 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
to authorize the holders of the Designated Senior Indebtedness (or their
Representative) to vote in respect of the claim of any Holder in any such
proceeding. This paragraph is intended solely to permit the holders of
Designated Senior Indebtedness of any Guarantor to preserve their “turnover
right” pursuant to the applicable subordination provisions in this Article 12
in circumstances where a Proper Proof of Claim has not been filed by the
Trustee before the expiration of the time to file a Proof of Claim in a
bankruptcy proceeding, and nothing herein shall impair the rights of the
Trustee under Section 6.13 and 7.07.

 

Section 12.15                                    Trustee
Not Fiduciary for Holders of Senior Indebtedness of Guarantors.

 

The Trustee
shall not be deemed to owe any fiduciary duty to the holders of Senior Indebtedness
of a Guarantor and shall not be liable to any such holders if it shall
mistakenly pay over or distribute to Holders or such Guarantor or any other
Person, money or assets to which any holders of Senior Indebtedness of such
Guarantor shall be entitled by virtue of this Article 12 or otherwise.

 

Section 12.16                          Reliance
by Holders of Senior Indebtedness of a Guarantor on Subordination Provisions.

 

Each Holder by
accepting a Note acknowledges and agrees that the subordination provisions in
this Article 12 are, and are intended to be, an inducement and a
consideration to each holder of any Senior Indebtedness of a Guarantor, whether
such Senior Indebtedness was created or acquired before

 

118

 

or after the
issuance of the Notes, to acquire and continue to hold, or to continue to hold,
such Senior Indebtedness and such holder of such Senior Indebtedness shall be
deemed conclusively to have relied on such subordination provisions in
acquiring and continuing to hold, or in continuing to hold, such Senior Indebtedness.

 

Without in any
way limiting the generality of the foregoing paragraph, the holders of Senior
Indebtedness of a Guarantor may, at any time and from time to time, without the
consent of or notice to the Trustee or the Holders, without incurring
responsibility to the Trustee or the Holders and without impairing or releasing
the subordination provided in this Article 12 or the obligations hereunder
of the Holders to the holders of the Senior Indebtedness of such Guarantor, do
any one or more of the following:  (i) change the manner, place
or terms of payment or extend the time of payment of, or renew or alter, Senior
Indebtedness of such Guarantor, or otherwise amend or supplement in any manner
Senior Indebtedness of such Guarantor, or any instrument evidencing the same or
any agreement under which Senior Indebtedness of such Guarantor is outstanding;
(ii) sell, exchange, release or otherwise deal with any property pledged,
mortgaged or otherwise securing Senior Indebtedness of such Guarantor; (iii) release
any Person liable in any manner for the payment or collection of Senior
Indebtedness of such Guarantor; and (iv) exercise or refrain from
exercising any rights against such Guarantor and any other Person.

 

ARTICLE 13

 

SATISFACTION AND DISCHARGE

 

Section 13.01                                    Satisfaction
and Discharge.

 

This Indenture
shall be discharged and shall cease to be of further effect as to all Notes,
when either:

 

(1)                                  all
Notes theretofore authenticated and delivered, except lost, stolen or destroyed
Notes which have been replaced or paid and Notes for whose payment money has
theretofore been deposited in trust, have been delivered to the Trustee for cancellation;
or

 

(2)                                  (A) 
all Notes not theretofore delivered to the Trustee for cancellation have become
due and payable by reason of the making of a notice of redemption or otherwise,
shall become due and payable within one year or are to be called for redemption
within one year under arrangements satisfactory to the Trustee for the giving
of notice of redemption by the Trustee in the name, and at the expense, of the
Issuer and the Issuer or any Guarantor have irrevocably deposited or caused to
be deposited with the Trustee as trust funds in trust solely for the benefit of
the Holders of the Notes, cash in U.S. dollars, Government Securities, or a
combination thereof, in such amounts as will be sufficient without
consideration of any reinvestment of interest to pay and discharge the entire indebtedness
on the Notes not theretofore delivered to the Trustee for cancellation for
principal, premium, if any, and accrued interest to the date of maturity or
redemption;

 

(B)                                no
Default (other than that resulting from borrowing funds to be applied to make
such deposit and any similar and simultaneous deposit relating to other
Indebtedness, including the Senior Notes and the Subordinated Discount Notes,
and the granting of Liens in connection therewith) with respect to this
Indenture or the Notes shall have occurred and be continuing on the date of
such deposit or shall occur as a result of such deposit and such deposit will
not result in a breach or violation of, or constitute a default under the
Senior Credit Facilities, Senior Notes (or the indenture under which the Senior
Notes are issued), Subordinated Discount Notes (or the indenture under which
the Subordinated Discount Notes are issued) or any other material agreement

 

119

 

or instrument (other than this Indenture) to which the Issuer or any
Guarantor is a party or by which the Issuer or any Guarantor is bound (other
than that resulting from any borrowing of funds to be applied to make such
deposit and any similar and simultaneous deposit relating to other
Indebtedness, including the Senior Notes and the Subordinated Discount Notes,
and the granting of Liens in connection therewith);

 

(C)                                the
Issuer has paid or caused to be paid all sums payable by it under this Indenture;
and

 

(D)                               the
Issuer has delivered irrevocable instructions to the Trustee to apply the
deposited money toward the payment of the Notes at maturity or the redemption
date, as the case may be.

 

In addition,
the Issuer must deliver an Officer’s Certificate and an Opinion of Counsel to
the Trustee stating that all conditions precedent to satisfaction and discharge
have been satisfied.

 

Notwithstanding
the satisfaction and discharge of this Indenture, if money shall have been
deposited with the Trustee pursuant to subclause (A) of clause (2) of
this Section 13.01, the provisions of Section 13.02 and Section 8.06
hereof shall survive such satisfaction and discharge.

 

Section 13.02                                    Application
of Trust Money.

 

Subject to the
provisions of Section 8.06 hereof, all money deposited with the Trustee
pursuant to Section 13.01 hereof shall be held in trust and applied by it,
in accordance with the provisions of the Notes and this Indenture, to the payment,
either directly or through any Paying Agent (including the Issuer acting as its
own Paying Agent) as the Trustee may determine, to the Persons entitled
thereto, of the principal (and premium and Additional Interest, if any) and
interest for whose payment such money has been deposited with the Trustee; but
such money need not be segregated from other funds except to the extent required
by law.

 

If the Trustee
or Paying Agent is unable to apply any money or Government Securities in
accordance with Section 13.01 hereof by reason of any legal proceeding or by
reason of any order or judgment of any court or governmental authority
enjoining, restraining or otherwise prohibiting such application, the Issuer’s
and any Guarantor’s obligations under this Indenture and the Notes shall be
revived and reinstated as though no deposit had occurred pursuant to Section 13.01
hereof; provided that if the Issuer has made any payment of principal
of, premium and Additional Interest, if any, or interest on any Notes because
of the reinstatement of its obligations, the Issuer shall be subrogated to the
rights of the Holders of such Notes to receive such payment from the money or
Government Securities held by the Trustee or Paying Agent.

 

ARTICLE 14

 

MISCELLANEOUS

 

Section 14.01                                    Trust
Indenture Act Controls.

 

If any
provision of this Indenture limits, qualifies or conflicts with the duties
imposed by Trust Indenture Act Section 318(c), the imposed duties shall
control.

 

120

 

Section 14.02                                    Notices.

 

Any notice or
communication by the Issuer, any Guarantor or the Trustee to the others is duly
given if in writing and delivered in person or mailed by first-class mail
(registered or certified, return receipt requested), fax or overnight air
courier guaranteeing next day delivery, to the others’ address:

 

If to the
Issuer and/or any Guarantor:

 

c/o Michaels
Stores, Inc. 

8000 Bent Branch Drive

Irving, TX 75063

Attention: General Counsel

 

with a copy to:

 

Ropes & Gray LLP

One International Place

Boston, MA 02110

Attention: Byung W. Choi, Esq.

 

Telephone:            (617)
951-7000

Facsimile:                                            (617) 951-7050

 

If to the
Trustee:

 

Wells
Fargo Bank, National Association

1445 Ross Avenue - 2nd Floor

Dallas, Texas 75202-2812                          

Fax No.: 214-777-4086 

Attention:                 Patrick Giordano

Corporate Trust Services

 

The Issuer,
any Guarantor or the Trustee, by notice to the others, may designate additional
or different addresses for subsequent notices or communications.

 

All notices
and communications (other than those sent to Holders) shall be deemed to have
been duly given: at the time delivered by hand, if personally delivered; five calendar
days after being deposited in the mail, postage prepaid, if mailed by first-class mail;
when receipt acknowledged, if faxed; and the next Business Day after timely
delivery to the courier, if sent by overnight air courier guaranteeing next day
delivery; and,
subject to compliance with the Trust Indenture Act, on the first date on which
publication is made, if given by publication; provided that any
notice or communication delivered to the Trustee shall be deemed effective upon
actual receipt thereof.

 

Any notice or
communication to a Holder shall be mailed by first-class mail, certified
or registered, return receipt requested, or by overnight air courier guaranteeing
next day delivery to its address shown on the register kept by the Registrar. Any
notice or communication shall also be so mailed to any Person described in Trust
Indenture Act Section 313(c), to the extent required by the Trust
Indenture Act. Failure to mail a notice or communication to a Holder or any
defect in it shall not affect its sufficiency with respect to other Holders.

 

121

 

If a notice or
communication is mailed or otherwise delivered in the manner provided above
within  the time prescribed, it is duly
given, whether or not the addressee receives it.

 

If the Issuer
mails a notice or communication to Holders, it shall mail a copy to the Trustee
and each Agent at the same time.

 

Section 14.03                                    Communication
by Holders of Notes with Other Holders of Notes.

 

Holders may communicate
pursuant to Trust Indenture Act Section 312(b) with other Holders with
respect to their rights under this Indenture or the Notes. The Issuer, the Trustee,
the Registrar and anyone else shall have the protection of Trust Indenture Act Section 312(c).

 

Section 14.04                                    Certificate
and Opinion as to Conditions Precedent.

 

Upon any
request or application by the Issuer or any of the Guarantors to the Trustee to
take any action under this Indenture, the Issuer or such Guarantor, as the case
may be, shall furnish to the Trustee:

 

(a)                                  An Officer’s Certificate
in form and substance reasonably satisfactory to the Trustee (which shall
include the statements set forth in Section 14.05 hereof) stating that, in
the opinion of the signers, all conditions precedent and covenants, if any, provided
for in this Indenture relating to the proposed action have been satisfied; and

 

(b)                                 An Opinion of Counsel
in form and substance reasonably satisfactory to the Trustee (which shall
include the statements set forth in Section 14.05 hereof) stating that, in the opinion of such counsel, all such
conditions precedent and covenants have been satisfied.

 

Section 14.05                                    Statements
Required in Certificate or Opinion.

 

Each
certificate or opinion with respect to compliance with a condition or covenant
provided for in this Indenture (other than a certificate provided pursuant to Section 4.04
hereof or Trust Indenture Act Section 314(a)(4)) shall comply with the provisions
of Trust Indenture Act Section 314(e) and shall include:

 

(a)                                  a statement that the
Person making such certificate or opinion has read such covenant or condition;

 

(b)                                 a brief statement as
to the nature and scope of the examination or investigation upon which the
statements or opinions contained in such certificate or opinion are based;

 

(c)                                  a statement that, in
the opinion of such Person, he or she has made such examination or investigation
as is necessary to enable him to express an informed opinion as to whether or
not such covenant or condition has been complied with (and, in the case of an
Opinion of Counsel, may be limited to reliance on an Officer’s Certificate
as to matters of fact); and

 

(d)                                 a statement as to
whether or not, in the opinion of such Person, such condition or covenant has
been complied with; provided, however, that with respect to matters of fact an
Opinion of Counsel may rely on an Officer’s Certificate or certificates of
public officials.

 

122

 

Section 14.06                                    Rules by
Trustee and Agents.

 

The Trustee may make
reasonable rules for action by or at a meeting of Holders. The Registrar
or Paying Agent may make reasonable rules and set reasonable requirements
for its functions.

 

Section 14.07                                    No
Personal Liability of Directors, Officers, Employees and Stockholders.

 

No past,
present or future director, officer, employee, incorporator, member, partner or
stockholder of the Issuer or any Guarantor or any of their direct or indirect parent
companies shall have any liability for any obligations of the Issuer or the
Guarantors under the Notes, the Guarantees or this Indenture or for any claim
based on, in respect of, or by reason of such obligations or their creation. Each
Holder by accepting Notes waives and releases all such liability. The waiver
and release are part of the consideration for issuance of the Notes.

 

Section 14.08                                    Governing
Law.

 

THIS
INDENTURE, THE NOTES AND ANY GUARANTEE WILL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

 

Section 14.09                                    Waiver
of Jury Trial.

 

EACH OF THE ISSUER,
THE GUARANTORS AND THE TRUSTEE HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL
PROCEEDING ARISING OUT OF OR RELATING TO THIS INDENTURE, THE NOTES OR THE
TRANSACTIONS CONTEMPLATED HEREBY.

 

Section 14.10                                    Force
Majeure.

 

In no event
shall the Trustee be responsible or liable for any failure or delay in the
performance of its obligations under this Indenture arising out of or caused
by, directly or indirectly, forces beyond its reasonable control, including
without limitation strikes, work stoppages, accidents, acts of war or terrorism,
civil or military disturbances, nuclear or natural catastrophes or acts of God,
and interruptions, loss or malfunctions of utilities, communications or
computer (software or hardware) services.

 

Section 14.11                                    No
Adverse Interpretation of Other Agreements.

 

This Indenture
may not be used to interpret any other indenture, loan or debt agreement
of the Issuer or its Restricted Subsidiaries or of any other Person. Any such
indenture, loan or debt agreement may not be used to interpret this
Indenture.

 

Section 14.12                                    Successors.

 

All agreements
of the Issuer in this Indenture and the Notes shall bind its successors. All
agreements of the Trustee in this Indenture shall bind its successors. All
agreements of each Guarantor in this Indenture shall bind its successors,
except as otherwise provided in Section 11.06 hereof.

 

123

 

Section 14.13                                    Severability.

 

In case any
provision in this Indenture or in the Notes shall be invalid, illegal or unenforceable,
the validity, legality and enforceability of the remaining provisions shall not
in any way be affected or impaired thereby.

 

Section 14.14                                    Counterpart Originals.

 

The parties may sign
any number of copies of this Indenture. Each signed copy shall be an original,
but all of them together represent the same agreement. This Indenture may be
executed in multiple counterparts which, when taken together, shall constitute
one instrument.

 

Section 14.15                                    Table
of Contents, Headings, etc.

 

The Table of
Contents, Cross-Reference Table and headings of the Articles and Sections of
this Indenture have been inserted for convenience of reference only, are not to
be considered a part of this Indenture and shall in no way modify or
restrict any of the terms or provisions hereof.

 

Section 14.16                                    Qualification
of Indenture.

 

The Issuer and
the Guarantors shall qualify this Indenture under the Trust Indenture Act in
accordance with the terms and conditions of the Registration Rights Agreement
and shall pay all reasonable costs and expenses (including attorneys’ fees and
expenses for the Issuer, the Guarantors and the Trustee) incurred in connection
therewith, including, but not limited to, costs and expenses of qualification
of this Indenture and the Notes and printing this Indenture and the Notes. The
Trustee shall be entitled to receive from the Issuer and the Guarantors any
such Officer’s Certificates, Opinions of Counsel or other documentation as it may reasonably
request in connection with any such qualification of this Indenture under the Trust
Indenture Act.

 

[Signatures on following page]

 

124

 

	
   

  	
  MICHAELS STORES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ Lisa K. Klinger

  
	
   

  	
   

  	
  Name:

  	
  Lisa K. Klinger

  
	
   

  	
   

  	
  Title:

  	
  Vice President – Treasurer and

  Investor Relations

  

 

Signature Page to Senior
Subordinated Indenture

 

 

	
   

  	
  AARON BROTHERS, INC.

  MICHAELS FINANCE COMPANY, INC.

  MICHAELS STORES PROCUREMENT

     
  COMPANY, INC.

  MICHAELS OF CANADA, ULC

  MICHAELS STORES CARD SERVICES, LLC

  ARTISTREE, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ Lisa K. Klinger

  
	
   

  	
   

  	
  Name:

  	
  Lisa K. Klinger

  
	
   

  	
   

  	
  Title:

  	
  Vice President and Treasurer

  

 

Signature Page to Senior
Subordinated Indenture

 

 

	
   

  	
  WELLS
  FARGO BANK, NATIONAL ASSOCIATION,

  as Trustee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ Frank McDonald

  
	
   

  	
   

  	
  Name:

  	
  Frank McDonald

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  

 

Signature Page to Senior
Subordinated Indenture

 

 

EXHIBIT A

 

[Face of Note]

 

[Insert the
Global Note Legend, if applicable pursuant to the provisions of the Indenture]

 

[Insert the
Private Placement Legend, if applicable pursuant to the provisions of the Indenture]

 

[Insert the
Regulation S Temporary Global Note Legend, if applicable pursuant to the
provisions of the Indenture]

 

A-1

 

CUSIP  [                    ]

ISIN  [                    ](1)

 

[[RULE 144A][REGULATION S] GLOBAL NOTE

representing up to

$                 ]

11 3/8% Senior Subordinated Notes due 2016

 

	
  No.

  	
   

  	
  [$                     ]

  

 

MICHAELS STORES, INC.

 

promises to
pay to CEDE & CO. or registered assigns, the principal sum [set forth
on the Schedule of Exchanges of Interests in the Global Note attached
hereto] [of                                                 
United States Dollars] on November 1, 2016.

 

Interest Payment
Dates:  May 1 and November 1

 

Record Dates:  April 15 and October 15

 

 

(1)                                  Rule 144A
Note CUSIP:  594087AK4

Rule 144A Note ISIN:  US594087AK46

Regulation S Note CUSIP:  U59329AB5

Regulation S Note ISIN:  USU59329AB59

Exchange Note CUSIP:  594087AM0

Exchange Note ISIN:  US594087AM02

 

A-2

 

IN WITNESS
HEREOF, the Issuer has caused this instrument to be duly executed.

 

Dated: [      ], 2006

 

	
   

  	
  MICHAELS STORES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

A-3

 

This is one of
the Notes referred to in the within-mentioned Indenture:

 

	
   

  	
  WELLS FARGO BANK, NATIONAL
  ASSOCIATION,

  as Trustee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Authorized
  Signatory

  	
   

  
	
   

  	
   

  	
   

  

 

A-4

 

[Back of Senior Subordinated Note]

 

11 3/8% Senior Subordinated Notes due 2016

 

Capitalized
terms used herein shall have the meanings assigned to them in the Indenture
referred to below unless otherwise indicated.

 

1.                                       INTEREST.
Michaels Stores, Inc., a Delaware corporation, promises to pay interest on
the principal amount of this Note at 11 3/8% per annum from October 31,
2006(2) until maturity and shall pay the Additional Interest, if any,
payable pursuant to the Registration Rights Agreement referred to below. The
Issuer will pay interest and Additional Interest, if any, semi-annually in arrears
on May 1 and November 1 of each year, or if any such day is not a
Business Day, on the next succeeding Business Day (each, an “Interest
Payment Date”). Interest on the Notes will accrue from the most recent date
to which interest has been paid or, if no interest has been paid, from the date
of issuance; provided that the first Interest Payment Date shall be May 1,
2007. The Issuer will pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue principal and premium, if any,
from time to time on demand at the interest rate on the Notes; it shall pay
interest (including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue installments of interest and Additional Interest, if
any, (without regard to any applicable grace periods) from time to time on
demand at the interest rate on the Notes. Interest will be computed on the
basis of a 360-day year comprised of twelve 30-day months.

 

2.                                       METHOD
OF PAYMENT. The Issuer will pay interest on the Notes and Additional Interest,
if any, to the Persons who are registered Holders of Notes at the close of business
on the April 15 or October 15 (whether or not a Business Day), as the
case may be, next preceding the Interest Payment Date, even if such Notes
are canceled after such record date and on or before such Interest Payment Date,
except as provided in Section 2.12 of the Indenture with respect to defaulted
interest. Payment of interest and Additional Interest, if any, may be made
by check mailed to the Holders at their addresses set forth in the register of
Holders, provided that payment by wire transfer of immediately available
funds will be required with respect to principal of and interest, premium and Additional
Interest, if any, on, all Global Notes and all other Notes the Holders of which
shall have provided wire transfer instructions to the Issuer or the Paying
Agent. Such payment shall be in such coin or currency of the United States of
America as at the time of payment is legal tender for payment of public and
private debts.

 

3.                                       PAYING
AGENT AND REGISTRAR. Initially, Wells Fargo Bank, National Association, the
Trustee under the Indenture, will act as Paying Agent and Registrar. The Issuer
may change any Paying Agent or Registrar without notice to the Holders. The
Issuer or any of its Subsidiaries may act in any such capacity.

 

4.                                       INDENTURE.
The Issuer issued the Notes under an Indenture, dated as of 

October 31, 2006 (the “Indenture”), among Michaels Stores, Inc.,
the Guarantors named therein and the Trustee. This Note is one of a duly
authorized issue of notes of the Issuer designated as its 11 3/8% Senior
Subordinated Notes due 2016. The Issuer shall be entitled to issue Additional Notes
pursuant to Section 2.01 and 4.09 of the Indenture. The terms of the Notes
include those stated in the Indenture and

 

(2)                                  With
respect to the Initial Notes.

 

A-5

 

those made part of
the Indenture by reference to the Trust Indenture Act of 1939, as amended (the “Trust
Indenture Act”). The Notes are subject to all such terms, and Holders are
referred to the Indenture and such Act for a statement of such terms. To the
extent any provision of this Note conflicts with the express provisions of the
Indenture, the provisions of the Indenture shall govern and be controlling.

 

5.                                       OPTIONAL
REDEMPTION.

 

(a)                                  Except
as described below under clauses 5(b) and 5(c) hereof, the Notes will
not be redeemable at the Issuer’s option before November 1, 2011.

 

(b)                                 At
any time prior to November 1, 2011, the Issuer may redeem all or a part of
the Notes, upon not less than 30 nor more than 60 days’ prior notice mailed by
first-class mail to the registered address of each Holder of Notes or
otherwise delivered in accordance with the procedures of DTC, at a redemption
price equal to 100% of the principal amount of the Notes redeemed plus the
Applicable Premium as of, and accrued and unpaid interest and Additional
Interest, if any, to the date of redemption (the “Redemption Date”), subject to the rights of Holders of record
on the relevant Record Date to receive interest due on the relevant Interest Payment
Date.

 

(c)                                  Until
November 1, 2009, the Issuer may, at its option, on one or more occasions
redeem up to 35% of the aggregate principal amount of Notes (including the
aggregate principal amount of Notes issued after the Issue Date) at a
redemption price equal to 111.375% of the aggregate principal amount thereof,
plus accrued and unpaid interest thereon and Additional Interest, if any, to
the applicable Redemption Date, subject to the right of Holders of record on
the relevant Record Date to receive interest due on the relevant Interest
Payment Date, with the net cash proceeds of one or more Equity Offerings; provided that at least 50% of the
sum of the aggregate principal amount of Notes originally issued under the
Indenture and any Additional Notes that are issued under the Indenture after
the Issue Date remains outstanding immediately after the occurrence of each such
redemption; provided further that each such
redemption occurs within 90 days of the date of closing of each such Equity
Offering. Notice of any redemption upon any Equity Offering may be given
prior to such redemption, and any such redemption or notice may, at the Issuer’s
discretion, be subject to one or more conditions precedent, including, but not
limited to, completion of the related Equity Offering.

 

(d)                                 On
and after November 1, 2011, the Issuer may redeem the Notes, in whole
or in part, at the redemption prices (expressed as percentages of principal
amount of the Notes to be redeemed) set forth below, plus accrued and unpaid
interest thereon and Additional Interest, if any, to the applicable Redemption
Date, subject to the right of Holders of record on the relevant Record Date to
receive interest due on the relevant Interest Payment Date, if redeemed during
the twelve-month period beginning on November 1 of each of the years
indicated below:

 

	
  Year

  	
   

  	
  Percentage

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  2011

  	
   

  	
  105.688

  	
  %

  
	
  2012

  	
   

  	
  103.792

  	
  %

  
	
  2013

  	
   

  	
  101.896

  	
  %

  
	
  2014 and thereafter

  	
   

  	
  100.000

  	
  %

  

 

(e)                                  Any
redemption pursuant to this paragraph 5 shall be made pursuant to the
provisions of Sections 3.01 through 3.06 of the Indenture.

 

A-6

 

6.                                       MANDATORY
REDEMPTION. The Issuer shall not be required to make mandatory redemption or
sinking fund payments with respect to the Notes.

 

7.                                       NOTICE
OF REDEMPTION. Subject to Section 3.03 of the Indenture, notice of redemption
will be mailed by first-class mail at least 30 days but not more than 60
days before the redemption date (except that redemption notices may be mailed
more than 60 days prior to a redemption date if the notice is issued in connection
with Article 8 or Article 13 of the Indenture) to each Holder whose Notes
are to be redeemed at its registered address. Notes in denominations larger
than $1,000 may be redeemed in part but only in whole multiples of $1,000,
unless all of the Notes held by a Holder are to be redeemed. On and after the
redemption date interest ceases to accrue on Notes or portions thereof called
for redemption.

 

8.                                       OFFERS
TO REPURCHASE.

 

(a)                                  Upon
the occurrence of a Change of Control, the Issuer shall make an offer (a “Change
of Control Offer”) to each Holder to repurchase all or any part (equal
to $1,000 or an integral multiple thereof) of each Holder’s Notes at a purchase
price equal to 101% of the aggregate principal amount thereof plus accrued and
unpaid interest and Additional Interest thereon, if any, to the date of purchase
(the “Change of Control Payment”). The Change of Control Offer shall be made
in accordance with Section 4.14 of the Indenture.

 

(b)                                 If
the Issuer or any of its Restricted Subsidiaries consummates an Asset Sale, within
10 Business Days of each date that Excess Proceeds exceed $50.0 million, the
Issuer shall commence, an offer to all Holders of the Notes and, if required by
the terms of any Indebtedness that is pari
passu with the Notes (“Pari
Passu Indebtedness”), to the holders of such Pari Passu Indebtedness
(an “Asset Sale Offer”),
to purchase the maximum principal amount of Notes (including any Additional
Notes) and such other Pari Passu Indebtedness that may be purchased out of
the Excess Proceeds at an offer price in cash in an amount equal to 100% of the
principal amount thereof plus accrued and unpaid interest and Additional
Interest thereon, if any, to the date fixed for the closing of such offer, in
accordance with the procedures set forth in the Indenture. To the extent that
the aggregate amount of Notes (including any Additional Notes) and such Pari
Passu Indebtedness tendered pursuant to an Asset Sale Offer is less than the
Excess Proceeds, the Issuer may use any remaining Excess Proceeds for
general corporate purposes, subject to other covenants contained in the
Indenture. If the aggregate principal amount of Notes and the Pari Passu
Indebtedness surrendered by such holders thereof exceeds the amount of Excess
Proceeds, the Trustee shall select the Notes and such Pari Passu Indebtedness
to be purchased on a pro rata basis
based on the accreted value or principal amount of the Notes or such Pari Passu
Indebtedness tendered. Upon completion of any such Asset Sale Offer, the amount
of Excess Proceeds shall be reset at zero. Holders of Notes that are the subject
of an offer to purchase will receive an Asset Sale Offer from the Issuer prior
to any related purchase date and may elect to have such Notes purchased by
completing the form entitled “Option of Holder to Elect Purchase” attached
to the Notes.

 

9.                                       DENOMINATIONS,
TRANSFER, EXCHANGE. The Notes are in registered form without coupons in
denominations of $1,000 and integral multiples of $1,000. The transfer of Notes
may be registered and Notes may be exchanged as provided in the
Indenture. The Registrar and the Trustee may require a Holder, among other
things, to furnish appropriate endorsements and transfer documents and the
Issuer may require a Holder to pay any taxes and fees required by law or permitted
by the Indenture. The Issuer need not exchange or register the transfer of any
Note or portion of a Note selected for redemption, except for the unredeemed
portion of any Note being redeemed in part. Also, the Issuer need not exchange
or register the transfer of any Notes for a period of 15 days before a selection
of Notes to be redeemed.

 

A-7

 

10.                                 SUBORDINATION.
The Notes and the Guarantees are subordinated to Senior Indebtedness of the
Issuer and the Guarantors on the terms and subject to the conditions set forth
in the Indenture. To the extent provided in the Indenture, Senior Indebtedness
must be paid before the Notes and Guarantees may be paid. The Issuer
agrees, and each Holder by accepting a Note agrees, to the subordination
provisions contained in the Indenture and authorizes the Trustee to give them
effect and appoints the Trustee as attorney-in-fact for such purpose.

 

11.                                 PERSONS
DEEMED OWNERS. The registered Holder of a Note may be treated as its owner
for all purposes.

 

12.                                 AMENDMENT,
SUPPLEMENT AND WAIVER. The Indenture, the Guarantees or the Notes may be
amended or supplemented as provided in the Indenture.

 

13.                                 DEFAULTS
AND REMEDIES. The Events of Default relating to the Notes are defined in Section 6.01
of the Indenture. If any Event of Default occurs and is continuing, the Trustee
or the Holders of at least 25% in principal amount of the then outstanding Notes
may declare the principal, premium, if any, interest and any other
monetary obligations on all the then outstanding Notes to be due and payable
immediately; provided, however, that so long as any Indebtedness
permitted to be incurred under the Indenture as part of the Senior Credit
Facilities shall be outstanding, no such acceleration shall be effective until
the earlier of: (1) acceleration of any such Indebtedness under the Senior
Credit Facilities; or (2) five Business Days after the giving of written
notice of such acceleration to the Issuer and the Representative under each of the
Senior Credit Facilities. Notwithstanding the foregoing, in the case of an
Event of Default arising from certain events of bankruptcy or insolvency, all
outstanding Notes will become due and payable immediately without further
action or notice. Holders may not enforce the Indenture, the Notes or the Guarantees
except as provided in the Indenture. Subject to certain limitations, Holders of
a majority in aggregate principal amount of the then outstanding Notes may direct
the Trustee in its exercise of any trust or power. The Trustee may withhold
from Holders of the Notes notice of any continuing Default (except a Default
relating to the payment of principal, premium, if any, Additional Interest, if
any, or interest) if it determines that withholding notice is in their interest.
The Holders of a majority in aggregate principal amount of the Notes then
outstanding by notice to the Trustee may on behalf of the Holders of all
of the Notes waive any existing Default or and its consequences under the
Indenture except a continuing Default in payment of the principal of, premium,
if any, Additional Interest, if any, or interest on, any of the Notes held by a
non-consenting Holder. The Issuer and each Guarantor (to the extent that such
Guarantor is so required under the Trust Indenture Act) is required to deliver
to the Trustee annually a statement regarding compliance with the Indenture,
and the Issuer is required within five (5) Business Days after becoming
aware of any Default, to deliver to the Trustee a statement specifying such Default
and what action the Issuer proposes to take with respect thereto.

 

14.                                 AUTHENTICATION.
This Note shall not be entitled to any benefit under the Indenture or be valid
or obligatory for any purpose until authenticated by the manual signature of
the Trustee.

 

15.                                 ADDITIONAL
RIGHTS OF HOLDERS OF RESTRICTED GLOBAL NOTES AND RESTRICTED DEFINITIVE NOTES. In
addition to the rights provided to Holders of Notes under the Indenture,
Holders of Restricted Global Notes and Restricted Definitive Notes shall have
all the rights set forth in the Registration Rights Agreement, dated as of October 31,
2006, among Michaels Stores, Inc., the Guarantors named therein and the other
parties named on the signature pages thereof (the “Registration Rights
Agreement”), including the right to receive Additional Interest (as defined
in the Registration Rights Agreement).

 

A-8

 

16.                                 GOVERNING
LAW. THE LAWS OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO CONSTRUE THE
INDENTURE, THE NOTES AND THE GUARANTEES.

 

17.                                 CUSIP
NUMBERS. Pursuant to a recommendation promulgated by the Committee on Uniform Security
Identification Procedures, the Issuer has caused CUSIP numbers to be printed on
the Notes and the Trustee may use CUSIP numbers in notices of redemption
as a convenience to Holders. No representation is made as to the accuracy of
such numbers either as printed on the Notes or as contained in any notice of
redemption and reliance may be placed only on the other identification numbers
placed thereon.

 

The Issuer
will furnish to any Holder upon written request and without charge a copy of
the Indenture and/or the Registration Rights Agreement. Requests may be
made to the Issuer at the following address:

 

8000 Bent
Branch Drive

Irving, TX 75063

Attention: General Counsel

 

A-9

 

ASSIGNMENT FORM

 

To assign this
Note, fill in the form below:

 

(I) or (we)
assign and transfer this Note to:  _______________________________________________________________________

(Insert assignee’ legal name)

 

 

 

(Insert assignee’s soc. sec. or
tax I.D. no.)

 

 

 

 

(Print or type assignee’s name, address and zip code)

 

and irrevocably appoint ________________________________________________________________________________________

to transfer this Note on the books of the Issuer. The agent may substitute
another to act for him.

 

	
  Date:

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Your Signature:

  	
   

  
	
   

  	
   

  	
  (Sign exactly as your name appears on 

  
	
   

  	
   

  	
  the face of this Note)

  
	
   

  	
   

  
	
   

  	
   

  
	
  Signature Guarantee*:

  	
   

  	
   

  
						

 

* Participant in a recognized Signature Guarantee Medallion Program (or
other signature guarantor acceptable to the Trustee).

 

A-10

 

OPTION OF HOLDER TO ELECT
PURCHASE

 

If you want to
elect to have this Note purchased by the Issuer pursuant to Section 4.10
or 4.14 of the Indenture, check the appropriate box below:

 

[   ] Section 4.10            [   ]
Section 4.14

 

If you want to
elect to have only part of this Note purchased by the Issuer pursuant to Section 4.10
or Section 4.14 of the Indenture, state the amount you elect to have purchased:

 

$                    

 

 

	
  Date:

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Your Signature:

  	
   

  	
   

  
	
   

  	
   

  	
  (Sign exactly as your name appears on 

  
	
   

  	
   

  	
  the face of this Note)

  
	
   

  	
  Tax Identification No.:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Signature Guarantee*:

  	
   

  	
   

  
								

 

* Participant in a recognized Signature Guarantee Medallion Program (or
other signature guarantor acceptable to the Trustee).

 

A-11

 

SCHEDULE OF EXCHANGES OF
INTERESTS IN THE GLOBAL NOTE*

 

The initial
outstanding principal amount of this Global Note is $                 .
The following exchanges of a part of this Global Note for an interest in
another Global Note or for a Definitive Note, or exchanges of a part of
another Global or Definitive Note for an interest in this Global Note, have
been made:

 

	
  Date of

  Exchange

  	
   

  	
  Amount of

  decrease

  in Principal

  Amount

  	
   

  	
  Amount of increase

  in Principal

  Amount of this

  Global Note

  	
   

  	
  Principal Amount

  of

  this Global Note

  following such

  decrease or

  increase

  	
   

  	
  Signature of

  authorized officer

  of Trustee or 

  Note Custodian

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

*This schedule should be included only if the Note is issued in
global form.

 

A-12

EXHIBIT B

 

FORM OF CERTIFICATE OF
TRANSFER

 

Michaels
Stores, Inc. 

8000 Bent Branch Drive

Irving, TX 75063

Attention: General Counsel

 

Wells Fargo Bank, National
Association

1445 Ross Avenue - 2nd Floor

Dallas, Texas 75202-2812                          

Fax No.: 214-777-4086 

Attention:       Patrick Giordano

Corporate Trust Services

 

Re:  11 3/8% Senior Subordinated Notes due 2016

 

Reference is
hereby made to the Indenture, dated as of October 31, 2006 (the “Indenture”),
among Michaels Stores, Inc., the Guarantors named therein and the Trustee.
Capitalized terms used but not defined herein shall have the meanings given to
them in the Indenture.

 

                        
(the “Transferor”) owns and proposes to transfer the Note[s] or interest
in such Note[s] specified in Annex A hereto, in the principal amount of $                
in such Note[s] or interests (the “Transfer”), to                            
(the “Transferee”), as further specified in Annex A hereto. In
connection with the Transfer, the Transferor hereby certifies that:

 

[CHECK ALL THAT APPLY]

 

1.                                       [  ]
 CHECK IF TRANSFEREE WILL TAKE DELIVERY
OF A BENEFICIAL INTEREST IN THE 144A GLOBAL NOTE OR A DEFINITIVE NOTE PURSUANT
TO RULE 144A. The Transfer is being effected pursuant to and in accordance
with Rule 144A under the United States Securities Act of 1933, as amended
(the “Securities Act”), and, accordingly, the Transferor hereby further
certifies that the beneficial interest or Definitive Note is being transferred
to a Person that the Transferor reasonably believes is purchasing the
beneficial interest or Definitive Note for its own account, or for one or more
accounts with respect to which such Person exercises sole investment
discretion, and such Person and each such account is a “qualified institutional
buyer” within the meaning of Rule 144A in a transaction meeting the
requirements of Rule 144A and such Transfer is in compliance with any
applicable blue sky securities laws of any state of the United States.

 

2.                                       [  ]
 CHECK IF TRANSFEREE WILL TAKE DELIVERY
OF A BENEFICIAL INTEREST IN THE REGULATION S GLOBAL NOTE OR A DEFINITIVE NOTE PURSUANT
TO REGULATION S. The Transfer is being effected pursuant to and in accordance
with Rule 903 or Rule 904 under the Securities Act and, accordingly,
the Transferor hereby further certifies that (i) the Transfer is not being
made to a person in the United States and (x) at the time the buy order was
originated, the Transferee was outside the United States or such Transferor and
any Person acting on its behalf reasonably believed and believes that the
Transferee was outside the United States or (y) the transaction was executed
in, on or through the facilities of a designated offshore securities market and
neither such Transferor nor any Person acting on its behalf knows that the
transaction was prearranged with a buyer in the United States, (ii) no
directed selling efforts have been made in contravention of the requirements of
Rule 903(b)

 

B-1

 

or Rule 904(b) of
Regulation S under the Securities Act (iii) the transaction is not part of
a plan or scheme to evade the registration requirements of the Securities Act
and (iv) if the proposed transfer is being made prior to the expiration of
the Restricted Period, the transfer is not being made to a U.S. Person or for
the account or benefit of a U.S. Person (other than an Initial Purchaser). Upon
consummation of the proposed transfer in accordance with the terms of the Indenture,
the transferred beneficial interest or Definitive Note will be subject to the restrictions
on Transfer enumerated in the Indenture and the Securities Act.

 

3.                                       [  ]
 CHECK AND COMPLETE IF TRANSFEREE WILL
TAKE DELIVERY OF A BENEFICIAL INTEREST IN THE DEFINITIVE NOTE PURSUANT TO ANY
PROVISION OF THE SECURITIES ACT OTHER THAN RULE 144A OR REGULATION S. The
Transfer is being effected in compliance with the transfer restrictions
applicable to beneficial interests in Restricted Global Notes and Restricted
Definitive Notes and pursuant to and in accordance with the Securities Act and
any applicable blue sky securities laws of any state of the United States, and
accordingly the Transferor hereby further certifies that (check one):

 

(a)                                  [  ]
 such Transfer is being effected pursuant
to and in accordance with Rule 144 under the Securities Act;

 

or

 

(b)                                 [  ]
 such Transfer is being effected to the
Issuer or a subsidiary thereof;

 

or

 

(c)                                  [  ]
 such Transfer is being effected pursuant
to an effective registration statement under the Securities Act and in
compliance with the prospectus delivery requirements of the Securities Act.

 

4.                                       [  ]
 CHECK IF TRANSFEREE WILL TAKE DELIVERY
OF A BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL NOTE OR OF AN UNRESTRICTED DEFINITIVE
NOTE.

 

(a)                                  [  ]
 CHECK IF TRANSFER IS PURSUANT TO RULE 144.
(i) The Transfer is being effected pursuant to and in accordance with Rule 144
under the Securities Act and in compliance with the transfer restrictions
contained in the Indenture and any applicable blue sky securities laws of any
state of the United States and (ii) the restrictions on transfer contained
in the Indenture and the Private Placement Legend are not required in order to
maintain compliance with the Securities Act. Upon consummation of the proposed
Transfer in accordance with the terms of the Indenture, the transferred beneficial
interest or Definitive Note will no longer be subject to the restrictions on
transfer enumerated in the Private Placement Legend printed on the Restricted
Global Notes, on Restricted Definitive Notes and in the Indenture.

 

(b)                                 [  ]
 CHECK IF TRANSFER IS PURSUANT TO
REGULATION S. (i) The Transfer is being effected pursuant to and in
accordance with Rule 903 or Rule 904 under the Securities Act and in
compliance with the transfer restrictions contained in the Indenture and any
applicable blue sky securities laws of any state of the United States and (ii) the
restrictions on transfer contained in the Indenture and the Private Placement
Legend are not required in order to maintain compliance with the Securities Act.
Upon consummation of the proposed Transfer in accordance with the terms of the
Indenture, the transferred beneficial interest or Definitive Note will no
longer be subject to the restrictions on transfer enumerated in the Private
Placement Legend printed on the Restricted Global Notes, on Restricted
Definitive Notes and in the Indenture.

 

B-2

 

(c)                                  [  ]
 CHECK IF TRANSFER IS PURSUANT TO OTHER
EXEMPTION. (i) The Transfer is being effected pursuant to and in
compliance with an exemption from the registration requirements of the
Securities Act other than Rule 144, Rule 903 or Rule 904 and in
compliance with the transfer restrictions contained in the Indenture and any
applicable blue sky securities laws of any State of the United States and (ii) the
restrictions on transfer contained in the Indenture and the Private Placement
Legend are not required in order to maintain compliance with the Securities Act.
Upon consummation of the proposed Transfer in accordance with the terms of the
Indenture, the transferred beneficial interest or Definitive Note will not be
subject to the restrictions on transfer enumerated in the Private Placement
Legend printed on the Restricted Global Notes or Restricted Definitive Notes
and in the Indenture.

 

B-3

 

This
certificate and the statements contained herein are made for your benefit and
the benefit of the Issuer.

 

	
   

  	
  [Insert Name of Transferor]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
  Dated:

  	
   

  	
   

  	
   

  	
   

  
					

 

B-4

 

ANNEX A TO CERTIFICATE OF TRANSFER

 

1.                                       The
Transferor owns and proposes to transfer the following:

 

[CHECK ONE OF (a) OR (b)]

 

(a)                                  [  ]
a beneficial interest in the:

 

(i)                                     [  ]
144A Global Note (CUSIP 594087AK4, or

 

(ii)                                  [  ]
Regulation S Global Note (CUSIP U59329AB5, or

 

(b)                                 [  ]
a Restricted Definitive Note.

 

2.                                       After
the Transfer the Transferee will hold:

 

[CHECK ONE]

 

(a)                                  [  ]
a beneficial interest in the:

 

(i)                                     [  ]
144A Global Note (CUSIP 594087AK4, or

 

(ii)                                  [  ]
Regulation S Global Note (CUSIP U59329AB5, or

 

(iii)                               [  ]
Unrestricted Global Note (CUSIP 594087AM0; or

 

(b)                                 [  ]
a Restricted Definitive Note; or

 

(c)                                  [  ]
an Unrestricted Definitive Note, in accordance with the terms of the Indenture.

 

B-5

 

EXHIBIT C

 

FORM OF CERTIFICATE OF EXCHANGE

 

Michaels
Stores, Inc. 

8000 Bent Branch Drive

Irving, TX 75063

Attention: General Counsel

 

Wells Fargo Bank, National
Association

1445 Ross Avenue - 2nd Floor

Dallas, Texas 75202-2812

Fax No.: 214-777-4086 

Attention:   Patrick Giordano

                                                               Corporate Trust Services

 

Re:  11 3/8% Senior Subordinated Notes due 2016

 

Reference is
hereby made to the Indenture, dated as of October 31, 2006 (the “Indenture”),
among Michaels Stores, Inc., the Guarantors named therein and the Trustee.
Capitalized terms used but not defined herein shall have the meanings given to
them in the Indenture.

 

           
(the “Owner”) owns and proposes to exchange the Note[s] or interest in
such Note[s] specified herein, in the principal amount of $                 
in such Note[s] or interests (the “Exchange”). In connection with the
Exchange, the Owner hereby certifies that:

 

1)                                      EXCHANGE
OF RESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS IN A RESTRICTED GLOBAL
NOTE FOR UNRESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS IN AN UNRESTRICTED
GLOBAL NOTE

 

a)                                      [  ]
 CHECK IF EXCHANGE IS FROM BENEFICIAL
INTEREST IN A RESTRICTED GLOBAL NOTE TO BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL
NOTE. In connection with the Exchange of the Owner’s beneficial interest in a
Restricted Global Note for a beneficial interest in an Unrestricted Global Note
in an equal principal amount, the Owner hereby certifies (i) the
beneficial interest is being acquired for the Owner’s own account without
transfer, (ii) such Exchange has been effected in compliance with the
transfer restrictions applicable to the Global Notes and pursuant to and in
accordance with the United States Securities Act of 1933, as amended (the “Securities
Act”), (iii) the restrictions on transfer contained in the Indenture
and the Private Placement Legend are not required in order to maintain compliance
with the Securities Act and (iv) the beneficial interest in an
Unrestricted Global Note is being acquired in compliance with any applicable
blue sky securities laws of any state of the United States.

 

b)                                     [  ]
 CHECK IF EXCHANGE IS FROM BENEFICIAL
INTEREST IN A RESTRICTED GLOBAL NOTE TO UNRESTRICTED DEFINITIVE NOTE. In
connection with the Exchange of the Owner’s beneficial interest in a Restricted
Global Note for an Unrestricted Definitive Note, the Owner hereby certifies (i) the
Definitive Note is being acquired for the Owner’s own account without transfer,
(ii) such Exchange has been effected in compliance with the transfer
restrictions applicable to the Restricted Global Notes and pursuant to and in
accordance with the Securities Act, (iii) the restrictions on transfer
contained in the Indenture and the

 

C-1

 

Private Placement Legend are not required in order to maintain compliance
with the Securities Act and (iv) the Definitive Note is being acquired in
compliance with any applicable blue sky securities laws of any state of the
United States.

 

c)                                      [  ]
 CHECK IF EXCHANGE IS FROM RESTRICTED
DEFINITIVE NOTE TO BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL NOTE. In
connection with the Owner’s Exchange of a Restricted Definitive Note for a
beneficial interest in an Unrestricted Global Note, the Owner hereby certifies (i) the
beneficial interest is being acquired for the Owner’s own account without transfer,
(ii) such Exchange has been effected in compliance with the transfer
restrictions applicable to Restricted Definitive Notes and pursuant to and in
accordance with the Securities Act, (iii) the restrictions on transfer
contained in the Indenture and the Private Placement Legend are not required in
order to maintain compliance with the Securities Act and (iv) the
beneficial interest is being acquired in compliance with any applicable blue
sky securities laws of any state of the United States.

 

d)                                     [  ]
 CHECK IF EXCHANGE IS FROM RESTRICTED
DEFINITIVE NOTE TO UNRESTRICTED DEFINITIVE NOTE. In connection with the Owner’s
Exchange of a Restricted Definitive Note for an Unrestricted Definitive Note, the
Owner hereby certifies (i) the Unrestricted Definitive Note is being
acquired for the Owner’s own account without transfer, (ii) such Exchange
has been effected in compliance with the transfer restrictions applicable to
Restricted Definitive Notes and pursuant to and in accordance with the
Securities Act, (iii) the restrictions on transfer contained in the
Indenture and the Private Placement Legend are not required in order to
maintain compliance with the Securities Act and (iv) the Unrestricted
Definitive Note is being acquired in compliance with any applicable blue sky
securities laws of any state of the United States.

 

2)                                      EXCHANGE
OF RESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS IN RESTRICTED GLOBAL
NOTES FOR RESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS IN RESTRICTED
GLOBAL NOTES

 

a)                                      [  ]
 CHECK IF EXCHANGE IS FROM BENEFICIAL
INTEREST IN A RESTRICTED GLOBAL NOTE TO RESTRICTED DEFINITIVE NOTE. In
connection with the Exchange of the Owner’s beneficial interest in a Restricted
Global Note for a Restricted Definitive Note with an equal principal amount, the
Owner hereby certifies that the Restricted Definitive Note is being acquired
for the Owner’s own account without transfer. Upon consummation of the proposed
Exchange in accordance with the terms of the Indenture, the Restricted
Definitive Note issued will continue to be subject to the restrictions on
transfer enumerated in the Private Placement Legend printed on the Restricted
Definitive Note and in the Indenture and the Securities Act.

 

b)                                     [  ]
 CHECK IF EXCHANGE IS FROM RESTRICTED
DEFINITIVE NOTE TO BENEFICIAL INTEREST IN A RESTRICTED GLOBAL NOTE. In
connection with the Exchange of the Owner’s Restricted Definitive Note for a beneficial
interest in the [CHECK ONE]  [   ] 144A Global Note  [   ]
Regulation S Global Note, with an equal principal amount, the Owner hereby
certifies (i) the beneficial interest is being acquired for the Owner’s
own account without transfer and (ii) such Exchange has been effected in
compliance with the transfer restrictions applicable to the Restricted Global
Notes and pursuant to and in accordance with the Securities Act, and in
compliance with any applicable blue sky securities laws of any state of the
United States. Upon consummation of the proposed Exchange in accordance with
the terms of the Indenture, the beneficial interest issued will be subject to
the restrictions on transfer enumerated in

 

C-2

 

the Private Placement Legend printed on the relevant Restricted Global
Note and in the Indenture and the Securities Act.

 

This certificate
and the statements contained herein are made for your benefit and the benefit
of the Issuer and are dated                                    .

 

	
   

  	
  [Insert Name of Transferor]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
  Dated:

  	
   

  	
   

  	
   

  	
   

  
						

 

C-3

 

EXHIBIT D

 

[FORM OF SUPPLEMENTAL INDENTURE

TO BE DELIVERED BY SUBSEQUENT GUARANTORS]

 

Supplemental
Indenture (this “Supplemental Indenture”), dated as of           ,
among                   
(the “Guaranteeing Subsidiary”), a subsidiary of Michaels Stores, Inc.,
a Delaware Corporation (the “Issuer”), and Wells Fargo Bank, National
Association, as trustee (the “Trustee”).

 

W I T N E S S E T H

 

WHEREAS, each
of Michaels Stores, Inc. and the Guarantors (as defined in the Indenture
referred to below) has heretofore executed and delivered to the Trustee an
indenture (the “Indenture”), dated as of October 31, 2006,
providing for the issuance of an unlimited aggregate principal amount of 11 3/8%
Senior Subordinated Notes due 2016 (the “Notes”);

 

WHEREAS, the
Indenture provides that under certain circumstances the Guaranteeing Subsidiary
shall execute and deliver to the Trustee a supplemental indenture pursuant to
which the Guaranteeing Subsidiary shall unconditionally guarantee all of the
Issuer’s Obligations under the Notes and the Indenture on the terms and
conditions set forth herein and under the Indenture (the “Guarantee”);
and

 

WHEREAS,
pursuant to Section 9.01 of the Indenture, the Trustee is authorized to
execute and deliver this Supplemental Indenture.

 

NOW THEREFORE,
in consideration of the foregoing and for other good and valuable
consideration, the receipt of which is hereby acknowledged, the parties mutually
covenant and agree for the equal and ratable benefit of the Holders of the
Notes as follows:

 

(1)                                  Capitalized
Terms. Capitalized terms used herein without definition shall have the
meanings assigned to them in the Indenture.

 

(2)                                  Agreement
to Guarantee. The Guaranteeing Subsidiary hereby agrees as follows:

 

(a)                                  Along
with all Guarantors named in the Indenture, to jointly and severally
unconditionally guarantee to each Holder of a Note authenticated and delivered
by the Trustee and to the Trustee and its successors and assigns, irrespective
of the validity and enforceability of the Indenture, the Notes or the
obligations of the Issuer hereunder or thereunder, that:

 

                                                 (i)                                     the
principal of and interest, premium and Additional Interest, if any, on the
Notes will be promptly paid in full when due, whether at maturity, by acceleration,
redemption or otherwise, and interest on the overdue principal of and interest
on the Notes, if any, if lawful, and all other obligations of the Issuer to the
Holders or the Trustee hereunder or thereunder will be promptly paid in full or
performed, all in accordance with the terms hereof and thereof; and

 

                                                 (ii)                                  in
case of any extension of time of payment or renewal of any Notes or any of such
other obligations, that same will be promptly paid in full when due or performed
in accordance with the terms of the extension or renewal, whether at stated
maturity, by acceleration or otherwise. Failing payment when due of any amount
so guaranteed or any performance so guaranteed for whatever reason, the
Guarantors and the Guaranteeing

 

D-1

 

Subsidiary shall
be jointly and severally obligated to pay the same immediately. This is a
guarantee of payment and not a guarantee of collection.

 

(b)                                 The
obligations hereunder shall be unconditional, irrespective of the validity,
regularity or enforceability of the Notes or the Indenture, the absence of any
action to enforce the same, any waiver or consent by any Holder of the Notes
with respect to any provisions hereof or thereof, the recovery of any judgment
against the Issuer, any action to enforce the same or any other circumstance
which might otherwise constitute a legal or equitable discharge or defense of a
guarantor.

 

(c)                                  The
following is hereby waived:  diligence,
presentment, demand of payment, filing of claims with a court in the event of
insolvency or bankruptcy of the Issuer, any right to require a proceeding first
against the Issuer, protest, notice and all demands whatsoever.

 

(d)                                 This
Guarantee shall not be discharged except by complete performance of the obligations
contained in the Notes, the Indenture and this Supplemental Indenture, and the
Guaranteeing Subsidiary accepts all obligations of a Guarantor under the
Indenture.

 

(e)                                  If
any Holder or the Trustee is required by any court or otherwise to return to the
Issuer, the Guarantors (including the Guaranteeing Subsidiary), or any
custodian, trustee, liquidator or other similar official acting in relation to
either the Issuer or the Guarantors, any amount paid either to the Trustee or
such Holder, this Guarantee, to the extent theretofore discharged, shall be reinstated
in full force and effect.

 

(f)                                    The
Guaranteeing Subsidiary shall not be entitled to any right of subrogation in
relation to the Holders in respect of any obligations guaranteed hereby until payment
in full of all obligations guaranteed hereby.

 

(g)                                 As
between the Guaranteeing Subsidiary, on the one hand, and the Holders and the
Trustee, on the other hand, (x) the maturity of the obligations guaranteed
hereby may be accelerated as provided in Article 6 of the Indenture for
the purposes of this Guarantee, notwithstanding any stay, injunction or other
prohibition preventing such acceleration in respect of the obligations
guaranteed hereby, and (y) in the event of any declaration of acceleration of
such obligations as provided in Article 6 of the Indenture, such obligations
(whether or not due and payable) shall forthwith become due and payable by the
Guaranteeing Subsidiary for the purpose of this Guarantee.

 

(h)                                 The
Guaranteeing Subsidiary shall have the right to seek contribution from any
non-paying Guarantor so long as the exercise of such right does not impair the
rights of the Holders under this Guarantee.

 

(i)                                     Pursuant
to Section 11.02 of the Indenture, after giving effect to all other
contingent and fixed liabilities that are relevant under any applicable Bankruptcy
or fraudulent conveyance laws, and after giving effect to any collections from,
rights to receive contribution from or payments made by or on behalf of any
other Guarantor in respect of the obligations of such other Guarantor under Article 11
of the Indenture, this new Guarantee shall be limited to the maximum amount
permissible such that the obligations of such Guaranteeing Subsidiary under
this Guarantee will not constitute a fraudulent transfer or conveyance.

 

(j)                                     This
Guarantee shall remain in full force and effect and continue to be effective
should any petition be filed by or against the Issuer for liquidation,
reorganization, should the Issuer

 

D-2

 

become insolvent or make an assignment for the benefit of creditors or
should a receiver or trustee be appointed for all or any significant part of
the Issuer’s assets, and shall, to the fullest extent permitted by law,
continue to be effective or be reinstated, as the case may be, if at any
time payment and performance of the Notes are, pursuant to applicable law,
rescinded or reduced in amount, or must otherwise be restored or returned by
any obligee on the Notes and Guarantee, whether as a “voidable preference”, “fraudulent
transfer” or otherwise, all as though such payment or performance had not been
made. In the event that any payment or any part thereof, is rescinded,
reduced, restored or returned, the Note shall, to the fullest extent permitted
by law, be reinstated and deemed reduced only by such amount paid and not so
rescinded, reduced, restored or returned.

 

(k)                                  In
case any provision of this Guarantee shall be invalid, illegal or
unenforceable, the validity, legality, and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.

 

(l)                                     This
Guarantee shall be a general unsecured senior subordinated obligation of such
Guaranteeing Subsidiary in accordance with Article 12 of the Indenture.

 

(m)                               Each
payment to be made by the Guaranteeing Subsidiary in respect of this Guarantee
shall be made without set-off, counterclaim, reduction or diminution of any
kind or nature.

 

(3)                                  Execution
and Delivery. The Guaranteeing Subsidiary agrees that the Guarantee shall
remain in full force and effect notwithstanding the absence of the endorsement
of any notation of such Guarantee on the Notes.

 

(4)                                  Merger,
Consolidation or Sale of All or Substantially All Assets.

 

(a)                                  The
Guaranteeing Subsidiary may not consolidate or merge with or into or wind
up into (whether or not the Issuer or Guaranteeing Subsidiary is the surviving
corporation), or sell, assign, transfer, lease, convey or otherwise dispose of
all or substantially all of its properties or assets, in one or more related
transactions, to any Person unless:

 

(i)                                     (A) the
Guaranteeing Subsidiary is the surviving corporation or the Person formed by or
surviving any such consolidation or merger (if other than the Guaranteeing
Subsidiary) or to which such sale, assignment, transfer, lease, conveyance or
other disposition will have been made is a corporation organized or existing
under the laws of the jurisdiction of organization of the Guaranteeing
Subsidiary, as the case may be, or the laws of the United States, any
state thereof, the District of Columbia, or any territory thereof (the
Guaranteeing Subsidiary or such Person, as the case may be, being herein
called the “Successor Person”);

 

(B)                                the
Successor Person, if other than the Guaranteeing Subsidiary, expressly assumes
all the obligations of the Guaranteeing Subsidiary under the Indenture and the
Guaranteeing Subsidiary’s related Guarantee pursuant to supplemental indentures
or other documents or instruments in form reasonably satisfactory to the
Trustee;

 

(C)                                immediately
after such transaction, no Default exists; and

 

(D)                               the
Issuer shall have delivered to the Trustee an Officer’s Certificate and an
Opinion of Counsel, each stating that such consolidation, merger or transfer
and such supplemental indentures, if any, comply with the Indenture; or

 

D-3

 

(ii)                                  the
transaction is made in compliance with Sections 4.10(a)(1) and (2) of
the Indenture;

 

(b)                                 Subject
to certain limitations described in the Indenture, the Successor Person will
succeed to, and be substituted for, the Guaranteeing Subsidiary under the
Indenture and the Guaranteeing Subsidiary’s Guarantee. Notwithstanding the
foregoing, the Guaranteeing Subsidiary may merge into or transfer all or part of
its properties and assets to another Guarantor or the Issuer.

 

(5)                                  Releases.

 

The Guarantee
of the Guaranteeing Subsidiary shall be automatically and unconditionally
released and discharged, and no further action by the Guaranteeing Subsidiary,
the Issuer or the Trustee is required for the release of the Guaranteeing
Subsidiary’s Guarantee, upon:

 

(1)                                  (A) 
any sale, exchange, disposition or transfer (by merger or otherwise) of (x) the
Capital Stock of the Guaranteeing Subsidiary, after which the Guaranteeing
Subsidiary is no longer a Restricted Subsidiary, or (y) all or substantially
all the assets of the Guaranteeing Subsidiary which sale, exchange, disposition
or transfer in each case is made in compliance with Sections 4.10(a)(1) and
(2) of the Indenture;

 

(B)                                the
release or discharge of the guarantee by the Guaranteeing Subsidiary of the
Senior Credit Facilities or the guarantee which resulted in the creation of the
Guarantee, except a discharge or release by or as a result of payment under
such guarantee;

 

(C)                                the
proper designation of the Guaranteeing Subsidiary as an Unrestricted Subsidiary;
or

 

(D)                               the
Issuer exercising Legal Defeasance or Covenant Defeasance in accordance with Article 8
of the Indenture or the Issuer’s obligations under the Indenture being discharged
in accordance with the terms of the Indenture; and

 

(2)                                  the
Issuer delivering to the Trustee an Officer’s Certificate and an Opinion of
Counsel, each stating that all conditions precedent provided for in the
Indenture relating to such transaction have been complied with.

 

(6)                                  No
Recourse Against Others. No past, present or future director, officer, employee,
incorporator, member, partner or stockholder of the Guaranteeing Subsidiary or
any of its direct or indirect parent companies shall have any liability for any
obligations of the Issuer or the Guarantors (including the Guaranteeing
Subsidiary) under the Notes, any Guarantees, the Indenture or this Supplemental
Indenture or for any claim based on, in respect of, or by reason of, such
obligations or their creation. Each Holder by accepting Notes waives and
releases all such liability. The waiver and release are part of the
consideration for issuance of the Notes.

 

(7)                                  Governing
Law. THIS SUPPLEMENTAL INDENTURE WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK.

 

(8)                                  Counterparts.
The parties may sign any number of copies of this Supplemental Indenture. Each
signed copy shall be an original, but all of them together represent the same
agreement.

 

D-4

 

(9)                                  Effect
of Headings. The Section headings herein are for convenience only and
shall not affect the construction hereof.

 

(10)                            The
Trustee. The Trustee shall not be responsible in any manner whatsoever for
or in respect of the validity or sufficiency of this Supplemental Indenture or
for or in respect of the recitals contained herein, all of which recitals are
made solely by the Guaranteeing Subsidiary.

 

(11)                            Subrogation.
The Guaranteeing Subsidiary shall be subrogated to all rights of Holders of
Notes against the Issuer in respect of any amounts paid by the Guaranteeing
Subsidiary pursuant to the provisions of Section 2 hereof and Section 11.01
of the Indenture; provided that, if an Event of Default has occurred and
is continuing, the Guaranteeing Subsidiary shall not be entitled to enforce or
receive any payments arising out of, or based upon, such right of subrogation
until all amounts then due and payable by the Issuer under the Indenture or the
Notes shall have been paid in full.

 

(12)                            Benefits
Acknowledged. The Guaranteeing Subsidiary’s Guarantee is subject to the
terms and conditions set forth in the Indenture. The Guaranteeing Subsidiary
acknowledges that it will receive direct and indirect benefits from the
financing arrangements contemplated by the Indenture and this Supplemental
Indenture and that the guarantee and waivers made by it pursuant to this Guarantee
are knowingly made in contemplation of such benefits.

 

(13)                            Successors.
All agreements of the Guaranteeing Subsidiary in this Supplemental Indenture
shall bind its Successors, except as otherwise provided in Section 2(k)
hereof or elsewhere in this Supplemental Indenture. All agreements of the
Trustee in this Supplemental Indenture shall bind its successors.

 

D-5

 

IN WITNESS
WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly
executed, all as of the date first above written.

 

	
   

  	
  [GUARANTEEING SUBSIDIARY]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  WELLS FARGO BANK, NATIONAL
  ASSOCIATION,  

  as Trustee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

D-6

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