Document:

Exhibit 4.2

 

BE AEROSPACE, INC.,

 

as Issuer

 

and

 

WILMINGTON TRUST COMPANY,

 

as Trustee

 

SUPPLEMENTAL INDENTURE

 

Dated as of July 1, 2008

 

to the Indenture dated as of July 1,
2008

 

Senior Notes due 2018

 

 

BE AEROSPACE, INC.

 

RECONCILIATION AND TIE BETWEEN TRUST

INDENTURE ACT OF 1939 AND INDENTURE

 

	
  Trust
  Indenture

  Act
  Section

  	
   

  	
  Indenture
  Section

  
	
  § 310(a)(1)

  	
   

  	
  608

  
	
  (a)(2)

  	
   

  	
  608

  
	
  (b)

  	
   

  	
  604,
  607, 609(d)(1)

  
	
  §
  311(a)

  	
   

  	
  101(2),
  604, 613

  
	
  (b)

  	
   

  	
  101(2),
  604, 613

  
	
  § 312(c)

  	
   

  	
  701

  
	
  §
  313

  	
   

  	
  702

  
	
  § 314(a)

  	
   

  	
  703

  
	
  (a)(4)

  	
   

  	
  1004

  
	
  (c)(1)

  	
   

  	
  102

  
	
  (c)(2)

  	
   

  	
  102

  
	
  (e)

  	
   

  	
  101
  (“Opinion of Counsel”), 102

  
	
  § 315(b)

  	
   

  	
  601

  
	
  § 316(a)(last
  sentence)

  	
   

  	
  101
  (“Outstanding”)

  
	
  (a)(1)(A)

  	
   

  	
  512

  
	
  (a)(1)(B)

  	
   

  	
  513

  
	
  (b)

  	
   

  	
  508

  
	
  (c)

  	
   

  	
  104(d)

  
	
  § 317(a)(1)

  	
   

  	
  503

  
	
  (a)(2)

  	
   

  	
  504

  
	
  (b)

  	
   

  	
  1003

  
	
  § 318(a)

  	
   

  	
  107

  
				

 

N.A. means not applicable.

 

Note:                   This
reconciliation and tie shall not, for any purpose, be deemed to be a part of
this Supplemental Indenture.

 

 

TABLE OF CONTENTS

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
   

  	
  SECTION ONE

  	
   

  
	
   

  	
  APPLICATION OF SUPPLEMENTAL INDENTURE

  	
   

  
	
   

  	
  AND CREATION OF THE INITIAL NOTES

  	
   

  
	
   

  	
   

  	
   

  
	
  I.

  	
  APPLICATION OF THIS SUPPLEMENTAL INDENTURE

  	
  2

  
	
   

  	
   

  	
   

  
	
  II.

  	
  EFFECT OF SUPPLEMENTAL INDENTURE

  	
  2

  
	
   

  	
   

  	
   

  
	
  III.

  	
  RULES OF CONSTRUCTION

  	
  2

  
	
   

  	
   

  	
   

  
	
   

  	
  SECTION TWO

  	
   

  
	
   

  	
  AMENDMENT OF THE BASE INDENTURE

  	
   

  
	
   

  	
   

  	
   

  
	
  I.

  	
  ARTICLE 1

  	
  3

  
	
   

  	
   

  	
   

  
	
   

  	
  (A)

  	
  Section 101: Definitions

  	
  3

  
	
   

  	
   

  	
   

  
	
  II.

  	
  ARTICLE 2

  	
  28

  
	
   

  	
   

  	
   

  
	
   

  	
  (A)

  	
  Section 201:
  Forms Generally

  	
  28

  
	
   

  	
   

  	
   

  
	
  III.

  	
  ARTICLE 3

  	
  29

  
	
   

  	
   

  	
   

  
	
   

  	
  (A)

  	
  Section 302:
  Denominations

  	
  29

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (B)

  	
  Section 303:
  Execution and Authorization

  	
  29

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (C)

  	
  Section 314:
  Issuance of Additional Notes

  	
  30

  
	
   

  	
   

  	
   

  
	
  IV.

  	
  ARTICLE 4

  	
  30

  
	
   

  	
   

  	
   

  
	
   

  	
  (A)

  	
  Section 401:
  Satisfaction and Discharge of Indenture

  	
  30

  
	
   

  	
   

  	
   

  
	
  V.

  	
  ARTICLE 5

  	
  31

  
	
   

  	
   

  	
   

  
	
   

  	
  (A)

  	
  Section 501:
  Events of Default

  	
  31

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (B)

  	
  Section 502:
  Acceleration of Maturity

  	
  33

  
	
   

  	
   

  	
   

  	
   

  
	
  VI.

  	
  ARTICLE 7

  	
  33

  
	
   

  	
   

  	
   

  
	
   

  	
  (A)

  	
  Section 703:
  Reports by the Company

  	
  33

  
							

 

i

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  VII.

  	
  ARTICLE 8

  	
  34

  
	
   

  	
   

  	
   

  
	
   

  	
  (A)

  	
  Section 801:
  Company May Consolidate, Etc., Only on Certain Terms

  	
  34

  
	
   

  	
   

  	
   

  
	
  VIII.

  	
  ARTICLE 9

  	
  36

  
	
   

  	
   

  	
   

  
	
   

  	
  (A)

  	
  Section 901:
  Supplemental Indentures Without Consent of Holders

  	
  36

  
	
   

  	
   

  	
   

  
	
   

  	
  (B)

  	
  Section 902:
  Supplemental Indentures With Consent of Holders

  	
  37

  
	
   

  	
   

  	
   

  
	
  IX.

  	
  ARTICLE 10

  	
  38

  
	
   

  	
   

  	
   

  
	
   

  	
  (A)

  	
  Section 1004:
  Statement by Officers as to Default

  	
  38

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (B)

  	
  Section 1007:
  Waiver of Certain Covenants

  	
  38

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (C)

  	
  Section 1008:
  Change of Control

  	
  39

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (D)

  	
  Section 1009:
  Suspension of Certain Covenants when Notes Rated Investment Grade

  	
  40

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (E)

  	
  Section 1010:
  Limitation on Restricted Payments

  	
  41

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (F)

  	
  Section 1011:
  Limitation on Incurrence of Additional Indebtedness

  	
  45

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (G)

  	
  Section 1012:
  Limitations on Transactions with Affiliates

  	
  45

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (H)

  	
  Section 1013:
  Limitation on Liens

  	
  47

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (I)

  	
  Section 1014:
  Limitation on Dividend and Other Payment Restrictions Affecting Subsidiaries

  	
  48

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (J)

  	
  Section 1015:
  Limitation on Asset Sales

  	
  50

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (K)

  	
  Section 1016:
  Limitation of Guarantees by Restricted Subsidiaries

  	
  53

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (L)

  	
  Section 1017:
  Payment of Taxes and Other Claims

  	
  54

  
	
   

  	
   

  	
   

  
	
  X.

  	
  ARTICLE 11

  	
  54

  
	
   

  	
   

  	
   

  
	
   

  	
  (A)

  	
  Section 1102:
  Election to Redeem; Notice to Trustee

  	
  54

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (B)

  	
  Section 1103:
  Selection by Trustee of Notes to be Redeemed

  	
  55

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (C)

  	
  Section 1104:
  Notice of Redemption

  	
  55

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (D)

  	
  Section 1105:
  Deposit of Redemption Price

  	
  56

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (E)

  	
  Section 1106:
  Securities Payable on Redemption Date

  	
  56

  
						

 

ii

 

	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (F)

  	
  Section 1107:
  Securities Redeemed in Part

  	
  57

  
	
   

  	
   

  	
   

  
	
  XI.

  	
  ARTICLE 12: SINKING FUNDS

  	
  57

  
	
   

  	
   

  	
   

  
	
  XII.

  	
  ARTICLE 14

  	
  57

  
	
   

  	
   

  	
   

  
	
   

  	
  (A)

  	
  Section 1401:
  Company’s Option to Effect Defeasance or Covenant Defeasance

  	
  57

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (B)

  	
  Section 1402:
  Legal Defeasance and Discharge

  	
  57

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (C)

  	
  Section 1403: Covenant Defeasance

  	
  58

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (D)

  	
  Section 1404:
  Conditions to Defeasance or Covenant Defeasance

  	
  59

  
	
   

  	
   

  	
   

  
	
   

  	
  SECTION THREE

  	
   

  
	
   

  	
  ADDITIONAL TERMS OF THE SUPPLEMENTAL INDENTURE

  	
   

  
	
   

  	
   

  	
   

  
	
  I.

  	
  INTERPRETATION OF BASE AND SUPPLEMENTAL
  INDENTURE

  	
  60

  
	
   

  	
   

  	
   

  
	
  II.

  	
  CONFLICT OF ANY PROVISION OF INDENTURE WITH
  TRUST INDENTURE ACT

  	
  60

  
	
   

  	
   

  	
   

  
	
  III.

  	
  SUCCESSORS AND ASSIGNS

  	
  60

  
	
   

  	
   

  	
   

  
	
  IV.

  	
  SEVERABILITY

  	
  60

  
	
   

  	
   

  	
   

  
	
  V.

  	
  BENEFITS OF INDENTURE

  	
  60

  
	
   

  	
   

  	
   

  
	
  VI.

  	
  GOVERNING LAW

  	
  61

  
	
   

  	
   

  	
   

  
	
  VII.

  	
  DEFINITIONS

  	
  61

  
	
   

  	
   

  	
   

  
	
  VIII.

  	
  DUPLICATE ORIGINALS

  	
  61

  

 

iii

 

FIRST SUPPLEMENTAL INDENTURE, dated as of July 1, 2008 (the “Supplemental
Indenture”), between BE AEROSPACE, INC., a corporation duly organized and
existing under the laws of the State of Delaware (herein called, the “Company”),
having its principal office at 1400 Corporate Center Way, Wellington, FL 33414,
and WILMINGTON TRUST COMPANY, a banking corporation with trust powers organized
and existing under the laws of the State of Delaware, as Trustee (herein
called, the “Trustee”) to the Indenture, dated as of July 1, 2008,
between the Company and the Trustee (the “Base Indenture” and, as
supplemented by this Supplemental Indenture, the “Indenture”).

 

RECITALS OF
THE COMPANY

 

WHEREAS, the Company
and the Trustee entered into the Base Indenture to provide for the issuance
from time to time of debentures, notes, bonds or other evidences of unsecured
senior indebtedness (including instruments in global, temporary or definitive
form) to be issued in one or more series (hereinafter called the “Securities”);

 

WHEREAS, Section 901
of the Base Indenture provides, among other things, that the Company and the
Trustee may enter into indentures supplemental to the Base Indenture, without
the consent of any Holders of Securities, to establish the form of any
Security, as permitted by Section 201 of the Base Indenture, and to
provide for the issuance of the Notes (as defined below), as permitted by Section 301
of the Base Indenture, and to set forth the terms thereof;

 

WHEREAS, pursuant to
Section 201 of the Base Indenture, the Company desires to execute this
Supplemental Indenture to establish the form and pursuant to Section 301
of the Base Indenture to provide for the issuance of a series of its senior
notes designated as 8.50% Senior Notes due 2018 (the “Initial Notes”),
in an aggregate principal amount of $600,000,000.  The Initial Notes are a series of securities
as referred to in Section 301 of the Base Indenture.

 

WHEREAS, the Company
may, as set forth in the Indenture and in the Initial Notes, issue an unlimited
aggregate principal amount of additional notes under this Indenture (the “Additional
Notes” and, together with the Initial Notes, the “Notes”).  The Initial Notes and the Additional Notes,
if any, will be treated as a single class for all purposes of this Indenture,
including waivers, amendments, redemptions and offers to purchase.  Unless the context otherwise requires, all
references in this Indenture to the Notes include any Additional Notes actually
issued;

 

WHEREAS, this
Supplemental Indenture shall be subject to and governed by the provisions of
the Trust Indenture Act;

 

WHEREAS, all things
necessary have been done by the Company to make this Supplemental Indenture, when
executed and delivered by the Company, a valid, binding and legal instrument;

 

WHEREAS, all things
necessary have been done by the Company to make the Notes, when executed by the
Company and authenticated and delivered in accordance with the provisions of
this Indenture, the valid obligations of the Company; and

 

1

 

NOW, THEREFORE, THIS
SUPPLEMENTAL INDENTURE WITNESSETH:

 

For and in consideration of the premises and the purchase of the Notes
by the Holders thereof, it is mutually covenanted and agreed, for the equal and
proportionate benefit of all Holders of the Notes, as follows:

 

SECTION ONE

 

APPLICATION OF SUPPLEMENTAL INDENTURE

AND CREATION OF THE INITIAL NOTES

 

I.                                         Application
of This Supplemental Indenture.

 

Notwithstanding any other provision of this Supplemental Indenture, all
provisions of this Supplemental Indenture are expressly and solely for the
benefit of the Holders of the Notes and any such provisions shall not be deemed
to apply to any other securities issued under this Indenture and shall not be
deemed to amend, modify or supplement the Base Indenture for any purpose other
than with respect to the Notes.  Unless
otherwise expressly specified, references in this Supplemental Indenture to specific
Article numbers or Section numbers refer to Articles and Sections
contained in this Supplemental Indenture as they amend or supplement the Base
Indenture, and not the Base Indenture or any other document.  All Initial Notes and Additional Notes, if any,
will be treated as a single class for all purposes of this Indenture, including
waivers, amendments, redemptions and offers to purchase.

 

II.                                     Effect
of Supplemental Indenture.

 

With respect to the Notes only, the Base Indenture shall be
supplemented pursuant to Section 901 thereof to establish the terms of the
Notes as set forth in this Supplemental Indenture.

 

To the extent that the provisions of this Supplemental Indenture
conflict with any provision of the Base Indenture, the provisions of this Supplemental
Indenture shall govern and be controlling.

 

III.                                 Rules of
Construction.

 

Unless the context otherwise requires:

 

(a)                                 the
terms defined in this Supplemental Indenture have the meanings assigned to them
in the Supplemental Indenture and include the plural as well as the singular;

 

(b)                                all
terms used herein which are defined in the Trust Indenture Act or the rules and
regulations of the Commission hereunder, either directly or by reference
therein, have the meanings assigned to them therein;

 

(c)                                 all
accounting terms not otherwise defined herein have the meanings assigned to
them in accordance with GAAP;

 

2

 

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

 

(e)                                 references
to any Article, Section or other subdivision in this Supplemental
Indenture, unless otherwise described, are references to an Article, Section or
subdivision of the Base Indenture as supplemented by this Supplemental
Indenture;

 

(f)                                   “including”
means including without limitation; and

 

(g)                                words
used herein implying any gender shall apply to every gender.

 

IV.                                 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 Company.

 

SECTION TWO

 

AMENDMENT OF THE BASE INDENTURE

 

I.                                         Set
forth below are the changes to Article 1 of the Base Indenture:
Definitions and Other Provisions of General Application:

 

(A)                              Section 101 of the
Base Indenture shall be amended to add new definitions thereto in appropriate
alphabetical sequence, as follows:

 

“Acquired Indebtedness” means
Indebtedness of a Person or any of its Restricted Subsidiaries existing at the
time such Person becomes a Restricted Subsidiary of the Company or at the time
it merges or consolidates with the Company or any of its Restricted
Subsidiaries or is assumed in connection with the acquisition of assets from
such Person and not incurred by such Person in connection with, or in
anticipation or contemplation of, such Person becoming a Restricted Subsidiary
of the Company or such acquisition, merger or consolidation.

 

“Additional Notes” has the meaning
specified in the recitals hereto.

 

“Affiliate Transaction” has the
meaning specified in Section 1012.

 

“Asset Acquisition” means:

 

(a)                                  an
Investment by the Company or any Restricted Subsidiary of the Company in any
other Person pursuant to which such Person becomes a Restricted Subsidiary of
the Company or any Restricted Subsidiary of the Company, or is merged with or
into the Company or any Restricted Subsidiary of the Company; or

 

3

 

(b)                                 the acquisition by the
Company or any Restricted Subsidiary of the Company of the assets of any Person
which constitute all or substantially all of the assets of such Person, any division
or line of business of such Person or any other properties or assets of such
Person other than in the ordinary course of business.

 

“Asset Sale” means any direct or indirect sale, conveyance,
transfer or other disposition for value by the Company or any of its Restricted
Subsidiaries, including any Sale and Leaseback Transaction that does not give
rise to a Capitalized Lease Obligation, to any Person other than the Company or
a Restricted Subsidiary of the Company of:

 

(a)                                  any
Capital Stock of any Restricted Subsidiary of the Company; or

 

(b)                                any
other property or assets, other than cash or Cash Equivalents, of the Company
or any Restricted Subsidiary of the Company other than in the ordinary course
of business;

 

provided, however, that Asset Sales will not
include:

 

(1)                                 a
transaction or series of related transactions for which the Company or its
Restricted Subsidiaries receive aggregate consideration, exclusive of
indemnities, of less than $25.0 million;

 

(2)                                 the
sale of accounts receivable and inventory or other assets held for sale in the
ordinary course of business;

 

(3)                                 the
sale, conveyance, transfer or other disposition of assets in the ordinary
course of business;

 

(4)                                 the
sale, conveyance, transfer or other disposition of all or substantially all of
the assets of the Company and its Restricted Subsidiaries or any guarantor as
permitted under Section 801;

 

(5)                                 sales,
conveyances, transfers or other dispositions of assets resulting from the
creation, incurrence or assumption of (or foreclosure with respect to) any Lien
not prohibited by Section 1013;

 

(6)                                 sales,
conveyances, transfers or other dispositions of damaged, obsolete or worn out
property or equipment, or property or equipment that is no longer necessary or
useful in the conduct of the business of the Company and its Restricted
Subsidiaries;

 

(7)                                 to
the extent allowable under Section 1031 of the Internal Revenue Code of
1986, as amended, or any comparable or successor provision, any exchange of
like property (excluding any boot thereon) for use in a Related Business;

 

(8)                                 sales,
conveyances, transfers or other dispositions of assets in a transaction
constituting a Permitted Investment or a Restricted Payment permitted by Section 1010;

 

4

 

 

(9)                                 the grant of licenses to third parties in
respect of intellectual property in the ordinary course of business of the
Company or any of its Restricted Subsidiaries;

 

(10)                           execution of
settlement of or unwinding of any Hedging Protection Obligations;

 

(11)                           any sale of
Capital Stock in, or Indebtedness or other securities of, an Unrestricted
Subsidiary;

 

(12)                           sales,
transfers and other dispositions of Investments in joint ventures to the extent
required by, or made pursuant to, customary buy/sell or put/call arrangements
between the joint venture parties set forth in joint venture arrangements and
similar binding arrangements; and

 

(13)                           the lease,
assignment or sublease of any real or personal property in the ordinary course
of business.

 

“Attributable
Debt” in respect of a Sale and Leaseback Transaction consummated subsequent
to the Issue Date means, at the time of determination, the present value,
discounted at the rate of interest implicit in such transaction, determined in
accordance with GAAP, of the obligation of the lessee for net rental payments
during the remaining term of the lease included in such Sale and Leaseback
Transaction, including any period for which such lease has been extended or
may, at the option of the lessor, be extended; provided,
however, that “Attributable Debt”
shall not include any such obligations to the extent they relate to the lease
of manufacturing facilities, warehouses, offices, distribution facilities or
other facilities, including without limitation, the fixtures appertaining
thereto, unless such obligations are required to be recorded on the Company’s
balance sheet in accordance with GAAP.

 

“Average Life” means, with respect to
any Indebtedness, as at any date of determination, the quotient obtained by
dividing (a) the sum of the products of (i) the number of years from
such date to the date or dates of each successive scheduled principal payment
(including, without limitation, any sinking fund requirements) of such
Indebtedness multiplied by (ii) the amount of each such principal payment
by (b) the sum of all such principal payments.

 

“Base
Indenture” has the meaning specified in the first paragraph hereto.

 

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

 

“Cash Equivalents” means

 

(1)                                 United States
dollars, euros or the currency of any country recognized by the United States;

 

(2)                                 marketable
direct obligations issued by, or unconditionally guaranteed by, the United
States of America or issued by any agency thereof and backed by the full 

 

5

 

faith and credit of the United States, in each case
maturing within two years from the date of acquisition thereof;

 

(3)                                 marketable
direct obligations issued by any state of the United States of America or any
political subdivision of any such state or any public instrumentality thereof
maturing within two years from the date of acquisition thereof and, at the time
of acquisition, having one of the two highest ratings obtainable from either
S&P or Moody’s;

 

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

 

(5)                                 certificates of
deposit or bankers’ acceptances (or, with respect to foreign banks, similar
instruments) maturing within two years from the date of acquisition thereof
issued by any bank organized under the laws of the United States of America or
any state thereof or the District of Columbia or any country recognized by the
United States having at the date of acquisition thereof combined capital and
surplus of not less than $250.0 million;

 

(6)                                 repurchase
obligations with a term of not more than thirty days for underlying securities
of the types described in clause (2) and (3) above entered into with
any bank meeting the qualifications specified in clause (5) above; and

 

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

 

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

 

(1)                                 any sale,
lease, exchange or other transfer, in one transaction or a series of related
transactions, of all or substantially all of the assets of the Company to any
Person or group of related Persons for purposes of Section 13(d) of
the Exchange Act (a “Group”) (whether or not otherwise in compliance
with the provisions of this Indenture);

 

(2)                                 the approval by the holders of Capital
Stock of the Company of any plan for the liquidation or dissolution of the
Company (whether or not otherwise in compliance with the provisions of this
Indenture);

 

(3)                                 any Person or
Group shall become the owner, directly or indirectly, beneficially, of shares
representing more than 50% of the aggregate voting power represented by the
issued and outstanding Capital Stock of the Company entitled under ordinary
circumstances to elect a majority of the directors of the Company (the “Voting
Stock”); or

 

(4)                                 the first day
on which a majority of the members of the Board of Directors are not Continuing
Directors.

 

6

 

“Change
of Control Offer” has the meaning specified in Section 1008(b).

 

“Change
of Control Payment Date” has the meaning specified in Section 1008(b)(2).

 

“Commodity
Price Protection Obligation” means, in respect of a Person, any forward
contract, commodity swap agreement, commodity option agreement or other similar
agreement or arrangement designed to fix or hedge commodity price risk.

 

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

 

(1)                                 Consolidated
Net Income; plus

 

(2)                                 to the extent Consolidated Net Income has
been reduced thereby, all losses from Asset Sales or abandonments or reserves
relating thereto, all items classified as extraordinary losses and all income
taxes of such Person and its Restricted Subsidiaries paid or accrued in
accordance with GAAP for such period (other than income taxes attributable to
extraordinary gains or losses); plus

 

(3)                                 Consolidated
Interest Expense; plus

 

(4)                                 Consolidated
Non-Cash Charges.

 

“Consolidated
Fixed Charge Coverage Ratio” means, with respect to any Person, the ratio
of Consolidated EBITDA of such Person during the four full fiscal quarters for
which internal financial statements are available (the “Four Quarter Period”)
ending on or prior to the date of the transaction giving rise to the need to
calculate the Consolidated Fixed Charge Coverage Ratio (the “Transaction
Date”) to Consolidated Fixed Charges of such Person for the Four Quarter
Period. In addition to and without limitation of the foregoing, for purposes of
this definition, “Consolidated EBITDA” and “Consolidated Fixed Charges” will be
calculated after giving effect on a pro forma basis for the period of such
calculation to:

 

(1)                                 the incurrence,
or repayment, retirement or extinguishment of any Indebtedness of such Person
or any of its Restricted Subsidiaries (and the application of the proceeds
thereof) giving rise to the need to make such calculation and any incurrence or
repayment, retirement or extinguishment of other Indebtedness (and the
application of the proceeds thereof) occurring during the Four Quarter Period
or at any time subsequent to the last day of the Four Quarter Period and on or
prior to the Transaction Date (other than the incurrence or repayment of
Indebtedness in the ordinary course of business for working capital purposes
pursuant to working capital facilities), as if such incurrence or repayment,
retirement or extinguishment, as the case may be (and the application of the
proceeds thereof), occurred on the first day of the Four Quarter Period; and

 

(2)                                 any Asset Sales
or Asset Acquisitions (including, without limitation, any Asset Acquisition
giving rise to the need to make such calculation as a result of such Person or
one of its Restricted Subsidiaries (including by any Person who becomes a
Restricted Subsidiary as a result of an Asset Acquisition) incurring, 

 

7

 

assuming
or otherwise being liable for Acquired Indebtedness and also including any
Consolidated EBITDA (including any pro forma expense and cost reductions
calculated on a basis consistent with Regulation S-X under the Securities Act,
except that such pro forma calculations may include expense and cost reductions
for such period not calculated on a basis consistent with Regulation S-X under
the Securities Act resulting from the Asset Sale or Asset Acquisition
(including, without limitation, the Honeywell Acquisition) for which pro forma
effect is being given (A) that have been realized or (B) for which
steps have been taken or are reasonably expected to be taken within 12 months
of the date of such transaction and are reasonably identifiable and factually
supportable, provided that, in either case,
such adjustments are set forth in an Officers’ Certificate, signed on behalf of
the Company by its principal executive officer or principal financial officer,
that states (x) the amount of such adjustment or adjustments and (y) that
such adjustment or adjustments are based on the reasonable good faith
expectation of the officer executing such certificate at the time of such
execution) attributable to the assets which are the subject of the Asset
Acquisition or Asset Sale during the Four Quarter Period) occurring during the
Four Quarter Period or at any time subsequent to the last day of the Four
Quarter Period and on or prior to the Transaction Date, as if such Asset Sale
or Asset Acquisition (including the incurrence, assumption or liability for any
such Indebtedness or Acquired Indebtedness and the elimination of such
operating expense and the realization of such cost reduction) occurred on the
first day of the Four Quarter Period.

 

Furthermore, in calculating “Consolidated Fixed Charges” of this “Consolidated
Fixed Charge Coverage Ratio,”

 

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

 

(b)                                if interest on any Indebtedness actually
incurred on the Transaction Date 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 rates, then the interest rate in effect on the
Transaction Date will be deemed to have been in effect during the Four Quarter
Period or, if none, then based upon such optional rate chosen as the Company
may designate; and

 

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

 

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

 

(1)                                 Consolidated
Interest Expense; plus

 

8

 

(2)                                 the product of:

 

(x)                                  the amount of
all dividend payments on any series of Disqualified Stock of such Person or
Preferred Stock of a Restricted Subsidiary of such Person (other than dividends
paid in Qualified Capital Stock) paid or accrued during such period; and

 

(y)                                a fraction, the
numerator of which is one and the denominator of which is one minus the then
current effective consolidated federal, state and local tax rate of such Person
expressed as a decimal.

 

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

 

(1)                                 the aggregate of all cash and non-cash
interest expense with respect to all outstanding Indebtedness of such Person
and its Restricted Subsidiaries, including the net costs associated with
Hedging Protection Obligations, capitalized interest, and imputed interest with
respect to Attributable Debt (but excluding (a) the write-off of deferred
financing costs, (b) the amortization of deferred financing charges and (c) non-cash
interest expense attributable to the movement in the mark-to-market valuation
of Hedging Protection Obligations or other derivative instruments pursuant to
GAAP), for such period determined on a consolidated basis in accordance with
GAAP; and

 

(2)                                 the interest
component of Capitalized Lease Obligations paid, accrued and/or scheduled to be
paid or accrued by such Person and its Restricted Subsidiaries during such
period as determined on a consolidated basis in accordance with GAAP; less

 

(3)                                 interest income
for such Person and its Restricted Subsidiaries.

 

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

 

(a)                                 after tax gains
or losses from Asset Sales (without regard to the $25.0 million threshold in
clause (1) of the definition of Asset Sales) or abandonments or reserves
relating thereto;

 

(b)                                items
classified as extraordinary gains or losses, and the related tax effects
according to GAAP;

 

(c)                                 solely for the
purposes of calculating the Consolidated Fixed Charge Coverage Ratio test set
forth in Section 1011, unusual or non-recurring gains or losses and
expenses and severance, relocation costs, consolidation and closing costs,
integration and facilities opening costs, transition costs, restructuring
costs, signing, retention or completion bonuses, and curtailments or
modifications to 

 

9

 

pension
and post-retirement employee benefit plans (in each case, as determined in good
faith by an executive officer of the Company and set forth in an Officer’s
Certificate);

 

(d)                                the cumulative
effect of a change in accounting principles during such period;

 

(e)                                 the net income
of any Restricted Subsidiary to the extent that the declaration of dividends or
similar distributions by that subsidiary of that income is restricted by
contract, operation of law or otherwise; provided that
Consolidated Net Income of such Person will be increased by the amount of the
cash dividends or distributions actually paid to such Person or a Restricted
Subsidiary of such Person to the extent not already included therein;

 

(f)                                   the net income
(or net loss) of any Person (other than a Restricted Subsidiary), including
Unrestricted Subsidiaries, in which such Person has an interest, except to the
extent of cash dividends or distributions actually paid to such Person or a
Restricted Subsidiary of such Person;

 

(g)                                amounts
attributable to dividends paid in respect of Qualified Capital Stock to the
extent such dividends are paid in shares of Qualified Capital Stock;

 

(h)                                any non-cash
impairment charges resulting from the application of Statement of Financial
Accounting Standards No. 142—“Goodwill and Other Intangibles” and No. 144—“Accounting
for the Impairment or Disposal of Long-Lived Assets” and the amortization of
intangibles including arising pursuant to Statement of Financial Accounting
Standards No. 141—“Business Combinations” and any successor statements,

 

(i)                                    accruals and
reserves that are established or adjusted within twelve months after the Issue
Date that are so required to be established as a result of the Transactions in
accordance with GAAP, or changes as a result of the adoption or modification of
accounting policies;

 

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

 

(k)                                 any non-cash compensation charges or
other non-cash expenses (including write-offs and write-downs) or charges
arising from the grant of or issuance or repricing of stock, stock options or
other equity-based awards or any amendment, modification, substitution or
change of any such stock, stock options or other equity-based awards; and

 

10

 

(l)                                    any fees and
expenses incurred during such period, or any amortization thereof for such
period, in connection with any Asset Acquisition, Investment, Asset Sale,
issuance or repayment of Indebtedness, issuance of Equity Interests,
refinancing transaction or amendment or modification of any debt instrument,
including any net gain or loss arising from the extinguishment of any
Indebtedness of any Person and the amortization or write-off of debt issuance
costs or debt discount.

 

Notwithstanding
the foregoing, for the purpose of Section 1010 only (other than clause (3)(y) thereof),
there shall be excluded from Consolidated Net Income any income arising from
any sale or other disposition of Restricted Investments made by the Company and
its Restricted Subsidiaries, any repurchases and redemptions of Restricted
Investments from the Company and its Restricted Subsidiaries, any repayments of
loans and advances which constitute Restricted Investments by the Company or
any of its Restricted Subsidiaries, any sale of the stock of an Unrestricted
Subsidiary or any distribution or dividend from an Unrestricted Subsidiary, in
each case only to the extent such amounts increase the amount of Restricted
Payments permitted under Section 1010 pursuant to clause (3)(y) thereof.

 

“Consolidated
Non-Cash Charges” means, with respect to any Person for any period, the
aggregate depreciation, amortization (including amortization of intangibles)
and other non-cash expenses (including, without duplication, impairment charges
and the impact of purchase accounting) of such Person and its Restricted
Subsidiaries reducing Consolidated Net Income of such Person and its Restricted
Subsidiaries for such period, determined on a consolidated basis in accordance
with GAAP (excluding any such charges constituting an accrual of or a reserve
for cash charges for any future period).

 

“Continuing Directors” means, as of any date of determination,
any member of the Board of Directors who:

 

(1)                                 was a member of
such Board of Directors on the date hereof; or

 

(2)                                 was nominated
for election or elected to such Board of Directors with the approval or
subsequent ratification of a majority of the Continuing Directors who were
members of such Board of Directors at the time of such nomination or election.

 

“Covenant
Suspension Event” has the meaning specified in Section 1009.

 

“Credit
Agreement” means (a) the Credit Agreement in effect on the Issue Date
between the Company and the lenders party thereto and (b) the Amended and
Restated Credit Agreement to be dated on or about the Honeywell Acquisition
Closing Date, including in each case all related notes and collateral
documents, in each case as such agreement may be amended (including any
amendment and restatement thereof), supplemented or otherwise modified from
time to time, including any agreement extending the maturity of, increasing the
total commitment under, refinancing, replacing or otherwise restructuring
(including adding subsidiaries of the Company as additional borrowers or
guarantors thereunder) all or any portion of the Indebtedness under such
agreement or any successor or replacement agreement and whether by the same or
any other agent, lender or group of lenders.

 

11

 

“Credit
Facilities” means one or more debt facilities (including, without
limitation, the Credit Agreement or commercial paper facilities or other
agreements or indentures, in each case with banks or other lenders providing
for revolving credit loans, term loans, receivables financing (including
through the sale of receivables to such lenders or to special purpose entities
formed to borrow from such lenders against such receivables) or other debt) or
letters of credit or other debt, in each case, as amended, restated, modified,
renewed, refunded, replaced (which replacement can occur after termination of
the relevant agreement), refinanced or substituted in whole or in part from
time to time by one or more of such facilities, whether with the same or
different banks or lenders and whether or not increasing the amount thereunder.

 

“Currency
Exchange Protection Obligation” means, in respect of a Person, any foreign
exchange contract, currency swap agreement, currency option or other similar
agreement or arrangement designed to fix or hedge currency exchange risk.

 

“Debt
Securities Lien” means any Lien securing Indebtedness incurred in
connection with (a) any registered offering of securities under the
Securities Act or (b) any private placement of securities (including under
Rule 144A of the Securities Act) pursuant to an exemption from the
registration requirements of the Securities Act which does not include, among
other things, Liens securing Indebtedness incurred in connection with (i) the
Credit Agreement and (ii) debt facilities or other agreements with one or more
banks or one or more lenders providing for revolving credit loans, term loans
or letters of credit facilities.

 

“Description
of Notes” means that section of the same name in the prospectus supplement,
dated June 26, 2008, in connection with the Notes.

 

“Designated
Non-Cash Consideration” means the Fair Market Value of non-cash
consideration received by the Company 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 executed by an executive officer of the
Company or such Restricted Subsidiary;

 

“Disqualified
Capital Stock” means any Capital Stock which, by its terms (or by the terms
of any security into which it is convertible or for which it is exchangeable),
or upon the happening of any event (other than an event which would constitute
a Change of Control or an Asset Sale), matures (excluding any maturity as the
result of an optional redemption by the issuer thereof) or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or is
redeemable at the sole option of the Holder thereof (except, in each case, upon
the occurrence of a Change of Control or an Asset Sale), in whole or in part,
on or prior to the final maturity date of the Notes.

 

“Equity
Interests” means all Capital Stock and all warrants, profits, interests,
equity appreciation rights or options with respect to, or other rights to
purchase, Capital Stock, but excluding Indebtedness convertible into equity.

 

“Equity
Offering” means any private or public offering of Qualified Capital Stock
of the Company, other than any issuance registered on Form S-8 or any
successor thereto.

 

“Fair
Market Value” means, with respect to any asset or property, as determined
in good faith by the Company, the price which could be negotiated in an arm’s-length
transaction taking into account the circumstances of the subject transaction; provided that where the value of the assets 

 

12

 

or
property is in excess of $50.0 million, the Fair Market Value shall be
determined by the Board of Directors in good faith and will be evidenced by a
Board Resolution delivered to the Trustee.

 

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

 

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

 

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

 

“Government
Securities” means securities that are direct obligations of the United
States of America for the timely payment of which its full faith and credit is
pledged.

 

“Group”
has the meaning specified in the “Change of Control” definition.

 

“Hedging
Protection Obligations” means, with respect to any specified Person, the
obligations of such Person under Interest Rate Protection Obligations,
Commodity Price Protection Obligations and Currency Exchange Protection
Obligations.

 

“Honeywell
Acquisition” means the acquisition by the Company of the Honeywell
Consumables Solutions Business and the other transactions contemplated by the
Honeywell Acquisition Documents.

 

“Honeywell
Acquisition Agreement” means the Stock and Asset Purchase Agreement, dated June 9,
2008, among the Company, Honeywell International Inc., Honeywell UK Limited,
Honeywell Holding France SAS and Honeywell Deutschland GmbH, with respect to
the Honeywell Acquisition, as the same may be amended, modified or supplemented
from time to time.

 

“Honeywell
Acquisition Closing Date” means the date the Honeywell Acquisition is
consummated in accordance with the Honeywell Acquisition Documents.

 

“Honeywell
Acquisition Documents” means the Honeywell Acquisition Agreement, including
all exhibits and schedules thereto, and all other agreements, documents and
instruments relating to the Honeywell Acquisition, in each case as the same may
be amended, modified or supplemented form time to time in accordance with the
provisions thereof.

 

“Honeywell
Consumables Solutions Business” means the assets of the consumables
solutions distribution business of Honeywell International Inc. to be purchased
by the Company pursuant to the Honeywell Acquisition Documents on the Honeywell
Acquisition Closing Date.

 

“Incur”
or “incur” means, with respect to any Indebtedness, to, directly or
indirectly, create, incur, assume, guarantee, acquire, become liable,
contingently or otherwise with respect to, or otherwise become responsible for,
payment of such Indebtedness.

 

“Initial
Notes” has the meaning specified in recitals hereto.

 

13

 

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

 

“Investment”
means, with respect to any Person, any direct or indirect loan or other
extension of credit (including, without limitation, a guarantee) or capital
contribution to (by means of any transfer of cash or other property to others
or any payment for property or services for the account or use of others), or
any purchase or other acquisition for consideration by such Person of any
Capital Stock, bonds, notes, debentures or other securities or evidences of
Indebtedness issued by any other Person. “Investment” shall exclude extensions
of trade credit, advances to customers, travel and similar advances to officers
and employees in the ordinary course of business by the Company and its
subsidiaries. For the purposes of Section 1010:

 

(1)                                 “Investment” will include and be valued
at the Fair Market Value of the net assets of any Restricted Subsidiary at the
time that such Restricted Subsidiary is designated an Unrestricted Subsidiary;
and

 

(2)                                 the amount of
any Investment will be the original cost of such Investment plus the cost of
all additional Investments by the Company or any of its Restricted
Subsidiaries, without any adjustments for increases or decreases in value, or
write-ups, write-downs or write-offs with respect to such Investment, reduced
by the payment of dividends or distributions (including tax sharing payments)
in connection with such Investment or any other amounts received in respect of
such Investment.

 

If
the Company or any Restricted Subsidiary sells or otherwise disposes of any
Capital Stock of any Restricted Subsidiary such that, after giving effect to
any such sale or disposition, such Person is no longer a Restricted Subsidiary,
the Company will be deemed to have made an Investment on the date of any such
sale or disposition equal to the Fair Market Value of the Capital Stock of such
subsidiary not sold or disposed.

 

“Investment
Grade Rating” means BBB- or higher by S&P or Baa3 or higher by Moody’s,
or the equivalent of such ratings by S&P and Moody’s, or of another Rating
Agency.

 

“Issue
Date” means the date on which the Notes are originally issued under this
Supplemental Indenture.

 

“Legal
Defeasance” has the meaning specified in Section 1402.

 

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

 

“maximum
fixed purchase price” has the meaning specified in the definition of “Indebtedness.”

 

14

 

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

 

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

 

(a)                                 all
out-of-pocket expenses and fees relating to such Asset Sale (including, without
limitation, legal, accounting and investment banking fees and sales
commissions);

 

(b)                                taxes paid or
payable after taking into account any reduction in consolidated tax liability
due to available tax credits or deductions and any tax sharing arrangements;

 

(c)                                 the amounts of:

 

(x)                                  any repayments
of debt secured, directly or indirectly, by Liens on the assets that are the
subject of such Asset Sale; and

 

(y)                                any repayments
of debt associated with such assets that is due by reason of such Asset Sale (i.e., such disposition is permitted by the
terms of the instruments evidencing or applicable to such debt, or by the terms
of a consent granted thereunder, on the condition the proceeds (or portion
thereof) of such disposition be applied to such debt), and other fees, expenses
and other expenditures, in each case, reasonably incurred as a consequence of
such repayment of debt (whether or not such fees, expenses or expenditures are
then due and payable or made, as the case may be);

 

(d)                                any portion of cash proceeds which the
Company determines in good faith should be reserved for post-closing
adjustments, it being understood and agreed that on the day that all such post-closing
adjustments have been determined, the amount (if any) by which the reserved
amount in respect of such Asset Sale exceeds the actual post-closing
adjustments payable by the Company or any of its Restricted Subsidiaries will
constitute Net Cash Proceeds on such date;

 

(e)                                 all amounts
deemed appropriate by the Company to be provided as a reserve, in accordance
with GAAP, against any liabilities associated with such assets which are the
subject of such Asset Sale;

 

(f)                                   all foreign,
federal, state and local taxes payable (including taxes reasonably estimated to
be payable) in connection with or as a result of such Asset Sale; and

 

(g)                                with respect to
Asset Sales by Restricted Subsidiaries of the Company, the portion of such cash
payments attributable to Persons holding a minority interest in such Restricted
Subsidiary.

 

15

 

Notwithstanding the foregoing, Net Cash Proceeds will not include
proceeds received in a foreign jurisdiction from an Asset Sale of an asset
located outside the United States to the extent (and only to the extent):

 

(1)                                 such
proceeds cannot under applicable law be transferred to the United States; or

 

(2)                                 such transfer would
result (in the good faith determination of the Company) in an aggregate tax
liability that would be materially greater than if such Asset Sale occurred in
the United States;

 

provided that if,
as, and to the extent that any of such proceeds may lawfully be in the case of
clause (1) or are in the case of clause (2) transferred to the United
States, such proceeds will be deemed to be cash payments that are subject to
the terms of this definition of Net Cash Proceeds.

 

“Net Proceeds Offer” has the meaning specified in Section 1015.

 

“Net Proceeds Offer Amount” has the meaning specified in Section 1015.

 

“Net Proceeds Offer Payment Date” has the meaning specified in Section 1015.

 

“Net Proceeds Offer Trigger Date” has the meaning specified in Section 1015.

 

“Notes” has the meaning specified in the recitals hereto.

 

“Pari Passu Indebtedness” means any Indebtedness of the Company
or a guarantor of the Notes ranking pari passu with
the Notes or a guarantee of the Notes, as the case may be, that the obligor
thereon is required to offer to repurchase or repay on a permanent basis in
connection with an Asset Sale.

 

“Permitted Indebtedness” means, without duplication:

 

(1)                                 the
Notes (other than Additional Notes) and the guarantees thereof;

 

(2)                                 Indebtedness
incurred pursuant to Credit Facilities by the Company and any guarantee
thereunder and the issuance and creation of letters of credit and bankers’
acceptances thereunder (with letters of credit and bankers’ acceptances being
deemed to have a principal amount equal to the face amount thereof), up to an
aggregate principal amount at any time outstanding not to exceed $1,075
million, less the amount of any permanent prepayment thereunder made with the proceeds
of an Asset Sale in accordance with and in satisfaction of Section 1015;

 

(3)                                 Indebtedness
(other than Indebtedness contemplated by clause (1) or (2) of this
definition) of the Company and its subsidiaries outstanding on the Issue Date;

 

(4)                                 Indebtedness
under any of the Honeywell Acquisition Documents and Indebtedness of the
Honeywell Consumables Solutions Business existing on the Honeywell Acquisition
Closing Date following the Honeywell Acquisition 

 

16

 

(including any Indebtedness assumed by the Company or any of its
Restricted Subsidiaries pursuant to the Honeywell Acquisition Documents);

 

(5)                                 obligations
of the Company or any Restricted Subsidiary pursuant to Hedging Protection
Obligations which are not incurred for speculative purposes;

 

(6)                                 intercompany
Indebtedness owed by the Company to any Restricted Subsidiary of the Company or
by any Restricted Subsidiary of the Company to the Company or any other
Restricted Subsidiary of the Company for so long as such Indebtedness is held
by the Company or a Restricted Subsidiary of the Company; provided, however,
that if, as of any date any Person other than the Company or a Restricted
Subsidiary of the Company owns or holds any such Indebtedness, such date will
be deemed the date of incurrence of Indebtedness not constituting Permitted
Indebtedness by the issuer of such Indebtedness under this clause (6);

 

(7)                                 Acquired
Indebtedness, provided that after giving effect
to the acquisition or merger, the Company could Incur at least $1.00 of
Indebtedness under the Consolidated Fixed Charge Coverage Ratio in accordance
with Section 1011 on the date such Indebtedness became Acquired
Indebtedness;

 

(8)                                 (A) guarantees
by Restricted Subsidiaries of Indebtedness of the Company or guarantees by
Restricted Subsidiaries of Indebtedness of other Restricted Subsidiaries to the
extent that such Indebtedness is otherwise permitted under this Indenture and (B) guarantees
by the Company of any of its Restricted Subsidiaries’ Indebtedness; provided that such Indebtedness is permitted to be incurred
under this Indenture;

 

(9)                                 Indebtedness
(including Capitalized Lease Obligations and purchase money obligations)
incurred by the Company or any Restricted Subsidiary in connection with the
purchase, lease or improvement of property (real or personal) or equipment or
other capital expenditures in connection with a related business whether
through a direct purchase of assets or the Capital Stock of any Person owning
such assets, in aggregate not to exceed $30.0 million in any fiscal year of the
Company;

 

(10)                           guarantees,
letters of credit and indemnity agreements relating to performance, bid, appeal
and surety bonds and completion guarantees incurred in the ordinary course of
business;

 

(11)                           any
refinancing, modification, replacement, renewal, restatement, refunding,
deferral, extension, substitution, supplement, reissuance or resale of existing
or future Indebtedness incurred in accordance with the Consolidated Fixed
Charge Coverage Ratio test set forth in Section 1011 and clauses (1), (3),
(4), (7), (9) and this clause (11) of this definition, including any
additional Indebtedness incurred to pay premiums reasonably determined by the
Company (including tender premiums) (“Required Premiums”), defeasance
costs and fees and expenses in connection therewith prior to its respective
maturity; provided, however, that any 

 

17

 

such event does not (1) result in an increase in the aggregate
principal amount of Permitted Indebtedness (except to the extent such increase
is a result of a simultaneous incurrence of additional Indebtedness (A) to
pay premiums, defeasance costs and related fees and expenses or (B) otherwise
permitted to be incurred under this Indenture) of the Company and its
subsidiaries and (2) create Indebtedness with a Weighted Average Life to
Maturity at the time such refinanced Indebtedness is incurred that is less than
the Weighted Average Life to Maturity at such time of the Indebtedness being
refinanced, modified, replaced, renewed, restated, refunded, deferred,
extended, substituted, supplemented, reissued or resold;

 

(12)                           additional
Indebtedness of the Company or any Restricted Subsidiary in an aggregate
principal amount not to exceed $100.0 million at any one time outstanding
(which amount may, but need not, be incurred in whole or in part under the
Credit Agreement);

 

(13)                           Indebtedness
incurred by the Company 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 or employee health claims, or other Indebtedness with respect to
reimbursement-type obligations regarding workers’ compensation or employee
health 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;

 

(14)                           Indebtedness
arising from agreements of the Company 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 such Indebtedness is not reflected on the balance sheet of the Company, or
any of its Restricted Subsidiaries (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 (14));

 

(15)                           the
guarantee by the Company or any Restricted Subsidiary that guarantees
Indebtedness of the Company or a Restricted Subsidiary that was permitted to be
incurred by another provision of this definition; provided
that if the Indebtedness being guaranteed is subordinated to, or pari passu with, the Notes, then the
guarantee shall be subordinated or pari
passu, as applicable, to the same extent as the Indebtedness
guaranteed;

 

(16)                           the
incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness
arising from the honoring by a bank or other financial institution of 

 

18

 

a check, draft or similar instrument drawn against insufficient funds,
so long as such Indebtedness is extinguished within five business days;

 

(17)                           Indebtedness
of Foreign Subsidiaries in an aggregate principal amount which, when taken
together with all other Indebtedness of Foreign Subsidiaries Incurred pursuant
to this clause (17) and outstanding on the date of such incurrence, does not
exceed $75.0 million; and

 

(18)                           Indebtedness of the Company
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.

 

For purposes of determining compliance with Section 1011:

 

(a)                                 In
the event that an item of Indebtedness meets the criteria of more than one of
the categories of Permitted Indebtedness, or is permitted to be incurred
pursuant to the Consolidated Fixed Charge Coverage Ratio test set forth in Section 1011,
the Company in its sole discretion, will be permitted to classify and/or divide
such item of Indebtedness on the date of its incurrence or later reclassify
and/or divide all or a portion of such item of Indebtedness in any manner that
complies with Section 1011; provided,
however, that all Indebtedness under the Credit Agreement which is in
existence or available on or prior to the date of the Honeywell Acquisition
Closing Date, and any renewals, extensions, substitutions, refundings,
refinancings or replacements thereof, will be deemed to have been incurred on
such date under clause (2) of this definition of “Permitted Indebtedness,”
and the Company will not be permitted to reclassify any portion of such
Indebtedness thereafter.

 

(b)                                For
purposes of determining compliance with any U.S. dollar-denominated restriction
on the incurrence of Indebtedness, the U.S. dollar-equivalent principal amount
of Indebtedness denominated in a foreign currency shall be calculated based on
the relevant currency exchange rate in effect on the date such Indebtedness was
incurred, in the case of term Indebtedness, or first committed, in the case of
revolving credit Indebtedness; provided that
if such Indebtedness is incurred to refinance other Indebtedness denominated in
a foreign currency, and such refinancing would cause the applicable U.S.
dollar-dominated restriction to be exceeded if calculated at the relevant currency
exchange rate in effect on the date of such refinancing, such U.S.
dollar-dominated restriction shall be deemed not to have been exceeded so long
as the principal amount of such refinancing Indebtedness does not exceed the
principal amount, together with any accrued and unpaid interest thereon and any
premium or fees and expenses related thereto, 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 refinancing Indebtedness is denominated
that is in effect on the date of such refinancing.  Notwithstanding any other provision of this
Indenture, the maximum amount of Indebtedness that 

 

19

 

the Company may incur pursuant to Section 1011 shall not be deemed
to be exceeded solely as a result of fluctuations in the exchange rate of
currencies.

 

(c)                                 Accrual of interest,
the accretion of accreted value and the payment of interest in the form of
additional Indebtedness, Disqualified Capital Stock or Preferred Stock will not
be deemed to be an incurrence of Indebtedness, Disqualified Capital Stock or
Preferred Stock for purposes of Section 1011.

 

“Permitted Investments” means:

 

(1)                                 Investments
in the Company or any Restricted Subsidiary of the Company, or for the benefit
of, any Restricted Subsidiary of the Company (whether existing on the Issue
Date or created thereafter and including Investments in any Person, if after
giving effect to such Investment, such Person would be a Restricted Subsidiary
of the Company or such Person is merged, consolidated or amalgamated with or
into, or transfers or conveys all or substantially all of its assets to, or is
liquidated into, the Company or a Restricted Subsidiary of the Company);

 

(2)                                 Investments
in cash or Cash Equivalents;

 

(3)                                 Investments
existing on the Issue Date or acquired in connection with the Honeywell
Acquisition;

 

(4)                                 Investments
in securities of trade creditors or customers received pursuant to any plan of
reorganization or similar arrangement upon the bankruptcy or insolvency of such
trade creditors or customers or in settlement of or other resolution of claims
or disputes, and in each case, extensions, modifications and amendments
thereof;

 

(5)                                 loans
and advances in the ordinary course of business by the Company and its
Restricted Subsidiaries to their respective employees not to exceed $15.0
million at any one time outstanding;

 

(6)                                 Investments
in an amount not to exceed $50.0 million at any one time outstanding;

 

(7)                                 Investments
received by the Company or its Restricted Subsidiaries as non-cash
consideration for asset sales, including Asset Sales; provided, however,
in the case of an Asset Sale, such Asset Sale is effected in compliance with Section 1015;

 

(8)                                 Hedging
Protection Obligations entered into in the ordinary course of the Company’s or
its Restricted Subsidiaries’ business;

 

(9)                                 extensions
of credit to customers and suppliers in the ordinary course of business;

 

(10)                           Investments
in joint ventures (in each case that are not subsidiaries of the Company)
(measured on the date each such investment was made and without 

 

20

 

giving effect to subsequent changes in value) in an aggregate amount
not to exceed the greater of (a) $75.0 million and (b) 2.5% of Total
Assets;

 

(11)                           guarantees
by the Company or any of its Restricted Subsidiaries of Indebtedness permitted
by Section 1011;

 

(12)                           any
Investments received in exchange for the issuance of Qualified Capital Stock of
the Company or any warrants, rights or options to purchase or acquire shares of
any such Qualified Capital Stock; and

 

(13)                           Investments
in Unrestricted Subsidiaries not to exceed $75.0 million.

 

“Permitted Liens” means:

 

(1)                                 Liens
(other than Debt Securities Liens) securing Indebtedness under a Credit
Facility permitted to be incurred under this Indenture;

 

(2)                                 Liens
outstanding on the Issue Date and on the Honeywell Acquisition Closing Date;

 

(3)                                 Liens
securing the Notes (other than any Additional Notes) or any guarantees;

 

(4)                                 Liens
imposed by any governmental authority for taxes, assessments or charges not yet
overdue for a period of more than 30 days or payable or subject to penalties
for nonpayment or which are being contested in good faith and by appropriate
proceedings if adequate reserves with respect thereto are maintained on the
books of the Company or the affected Restricted Subsidiaries, as the case may
be, in accordance with GAAP;

 

(5)                                 Liens
imposed by law, such as carriers’, warehousemen’s, mechanics’, materialmen’s,
repairmen’s or other like Liens arising in the ordinary course of business
which are not overdue for a period of more than 60 days or which are being
contested in good faith and by appropriate proceedings and Liens arising out of
judgments or awards against the Company or its Restricted Subsidiary with
respect to which the Company or its Restricted Subsidiary shall then be
proceeding with an appeal or other proceedings for review if adequate reserves
with respect thereto are maintained on the books of the Company in accordance
with GAAP;

 

(6)                                 pledges
or deposits under worker’s compensation, unemployment insurance and other
similar legislation;

 

(7)                                 deposits
in connection with bids, tenders, contracts (other than for the payment of
Indebtedness) or leases to which the Company or any of its Restricted
Subsidiaries is a party, or deposits to secure public or statutory obligations
of the Company or any of its Restricted Subsidiaries or deposits of cash or
U.S. government bonds to secure surety or appeal bonds to which the Company or
any of its Restricted Subsidiaries 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;

 

(8)                                 easements,
rights-of-way, restrictions and other similar encumbrances incurred in the
ordinary course of business and encumbrances consisting of zoning restrictions,
easements, licenses, restrictions on the use of property or minor imperfections
in title thereto which, do not in the aggregate materially adversely affect the
value of the property subject thereto or materially interfere with the ordinary
conduct of the business of the Company or any of its Restricted Subsidiaries;

 

(9)                                 Liens
on property of any entity (including shares of stock owned by such entity)
which becomes a Restricted Subsidiary of the Company after the date on which
the Notes are originally issued; provided that
such Liens are in existence at the time such entity becomes a Restricted
Subsidiary of the Company and were not created in anticipation thereof and do
not extend to any other property of the Company or any Restricted Subsidiary;

 

(10)                           Liens
upon property, including software and license rights with respect to software,
acquired after the date on which the Notes are originally issued (by purchase,
construction or otherwise) by the Company or any of its Restricted
Subsidiaries, any of which Liens either (A) existed on such property
before the time of its acquisition and was not created in anticipation thereof,
or (B) was created solely for the purpose of securing Indebtedness
representing, or incurred to finance, refinance or refund, the cost (including
the cost of construction) of such property; provided that
no such Lien shall extend to or cover any property of the Company or such
Restricted Subsidiary other than the property so acquired and improvements
thereon; and provided, further,
that the principal amount of Indebtedness secured by any such Lien shall not
exceed (at the time of incurrence) 100% of the fair market value (as determined
in good faith by a senior financial officer of the Company) of such property at
the time it was acquired (by purchase, construction or otherwise);

 

(11)                           any
Liens arising as a result of the sale of property owned by the Company or any
Restricted Subsidiary of the Company which property is, immediately following
such sale, leased back to the Company or any Restricted Subsidiary;

 

(12)                           Liens
in favor of the Company or any Restricted Subsidiary;

 

(13)                           Liens
securing Hedging Protection Obligations of the Company or any of its Restricted
Subsidiaries permitted to be incurred under this Indenture;

 

(14)                           Liens
on property necessary to defease Indebtedness that was not incurred in
violation of this Indenture;

 

(15)                           Liens
in favor of collecting or payor banks having a right of setoff, revocation,
refund or chargeback with respect to money or instruments of the Company or any
Restricted Subsidiary on deposit or in possession of such bank;

 

22

 

(16)                           Liens
on the property of Foreign Subsidiaries to secure Indebtedness of Foreign
Subsidiaries permitted to be incurred under this Indenture;

 

(17)                           Liens
related to bonds or similar instruments related to the Company’s or any
Restricted Subsidiary’s 401(k) or other retirement based benefit plans;

 

(18)                           Liens
incurred with respect to any environmental remediation program;

 

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

 

(20)                           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 Company or any of its Restricted Subsidiaries;

 

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

 

(22)                           Liens
that are contractual rights of set-off (i) relating to the establishment
of depository relations with banks or other financial institutions not given in
connection with the issuance of Indebtedness or (ii) relating to pooled
deposit or sweep accounts of the Company or any Restricted Subsidiary of the
Company to permit satisfaction of overdraft or similar obligations incurred in
the ordinary course of business of the Company and its Subsidiaries;

 

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

 

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

 

(25)                           Liens
incurred pursuant to the Honeywell Acquisition Documents; and

 

(26)                           any
extension, renewal or replacement (which replacement can occur after
termination of the relevant agreement) of the foregoing; provided, however,
that the Liens permitted hereunder shall not be spread to cover any additional
Indebtedness or property (other than a substitution of like property).

 

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

 

“Pro Rata Share” has the meaning specified in Section 1015.

 

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

 

23

 

“Record Date” means the applicable Record Date (whether or not a
Business Day) specified in the Notes.

 

“Rating Agency” means (i) S&P, (ii) Moody’s or (iii) if
neither S&P nor Moody’s is rating the Notes, another recognized rating
agency, selected by the Company.

 

“Related Business” means, as determined by the Company in good
faith, the businesses of (x) the Company and its Restricted Subsidiaries
as conducted on the Issue Date and (y) the Honeywell Consumables Solutions
Business on the Honeywell Acquisition Closing Date, and, in each case similar,
complementary or related businesses or reasonable extensions, developments or
expansions thereof.

 

“Replacement Assets” means (a) assets of a kind used or
usable in the businesses of the Company and its Restricted Subsidiaries
(including capital expenditures) as conducted on the date of the relevant Asset
Sale or (b) any Related Business (including the Capital Stock of a Person
or Persons in any such businesses or Related Business and licenses or similar
rights to operate).

 

“Required Premiums” has the meaning specified in the definition
of “Permitted Indebtedness” .

 

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

 

“Restricted Payment” has the meaning specified in Section 1010.

 

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

 

“Reversion Date” has the meaning specified in Section 1009.

 

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

 

“Sale and Leaseback Transaction” means any direct or indirect
arrangement with any Person or to which any such Person is a party, providing
for the leasing to the Company or a Restricted Subsidiary of any property,
whether owned by the Company or any Restricted Subsidiary at the Issue Date or
later acquired, which has been or is to be sold or transferred by the Company
or such Restricted Subsidiary to such Person or to any other Person from whom
funds have been or are to be advanced by such Person on the security of such
property.

 

“Securities Act” means the Securities Act of 1933, as amended.

 

“Senior Debt” means any indebtedness that is pari passu as to ranking with the Notes issued under this
Indenture.

 

“Significant Subsidiary” shall have the meaning set forth in Rule 1.02(w) of
Regulation S-X under the Securities Act.

 

24

 

“Subordinated Indebtedness” means Indebtedness of the Company
which is expressly subordinated in right of payment to the Notes.

 

“Surviving Entity” has the meaning specified in Section 801(1).

 

“Supplemental Indenture” has the meaning specified in the first
paragraph hereto.

 

“Suspended Covenants” has the meaning specified in Section 1009.

 

“Suspension Date” has the meaning specified in Section 1009.

 

“Suspension Period” has the meaning specified in Section 1009.

 

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

 

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

 

“Transactions” means:

 

(a)                                 the
consummation of the Honeywell Acquisition and the payment of all consideration,
fees and expenses contemplated by the Honeywell Acquisition Documents;

 

(b)                                the
issuance of Capital Stock of the Company as contemplated by the Honeywell
Acquisition Agreement;

 

(c)                                 the
entering into of the credit agreement to be dated on or about the Honeywell
Acquisition Closing Date and the payment of all fees and expenses in connection
therewith;

 

(d)                                the
repayment by the Company of Indebtedness under its existing credit agreement in
effect on the Issue Date;

 

(e)                                 the
issuance of the Notes and the guarantees thereof, and the payment of all fees
and expenses in connection therewith; and

 

(f)                                   payment
of all other fees and expenses payable in connection with and related to the
items listed in (a) through (e).

 

“Unrestricted Subsidiary” of any Person means:

 

(1)                                 any
subsidiary of such Person that at the time of determination is or continues to
be designated an Unrestricted Subsidiary by the board of directors of such
Person in the manner provided below; and

 

(2)                                 any
subsidiary of an Unrestricted Subsidiary.

 

25

 

The Board of Directors may designate any subsidiary (including any
existing or newly acquired or newly formed subsidiary) to be an Unrestricted
Subsidiary unless such subsidiary owns any Capital Stock of, or owns or holds
any Lien on any property of, any subsidiary of the Company that is not a
subsidiary of the subsidiary to be so designated; provided, however,
that:

 

(x)                                  the
Company certifies to the Trustee that such designation complies with Section 1010;
and

 

(y)                                each
subsidiary to be so designated and each of its subsidiaries has not at the time
of designation, and does not thereafter, create, incur, issue, assume,
guarantee or otherwise become directly or indirectly liable with respect to any
Indebtedness pursuant to which the lender has recourse to any of the assets of
the Company or any of its Restricted Subsidiaries except to the extent
permitted by Section 1010 and Section 1011.

 

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

 

(x)                                  immediately
after giving effect to such designation, the Company is able to incur at least
$1.00 of additional Indebtedness (other than Permitted Indebtedness) in
compliance with Section 1011; and

 

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

 

Any such
designation by the Board of Directors will be evidenced to the Trustee by
promptly filing with the Trustee a copy of the resolution giving effect to such
designation and an Officers’ Certificate certifying that such designation
complied with the foregoing provisions. As of the Issue Date, the following
Subsidiaries of the Company are Unrestricted Subsidiaries: Advanced Thermal
Sciences Corporation, Aerospace Lighting Corporation and each of their
respective subsidiaries.

 

“Voting Stock” has the meaning specified in the definition of “Change
of Control.”

 

“Weighted Average Life to Maturity” means, when applied to any
Indebtedness at any date, the number of years obtained by dividing:

 

(a)                                 the
then outstanding aggregate principal amount of such Indebtedness into;

 

(b)                                the
sum of the total of the products obtained by multiplying:

 

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

 

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

 

26

 

(B)                                Section 101
of the Base Indenture shall be amended so that the following definitions in the
Base Indenture shall be deleted in their entirety and replaced with the
following:

 

An “Affiliate” of a Person means a Person who directly or
indirectly through one or more intermediaries controls, or is controlled by, or
is under common control with, such Person; provided,
however, that with respect to the
Company, the term Affiliate shall not include the Company or any subsidiary of
the Company so long as no Affiliate of the Company has any direct or indirect
interest therein, except through the Company or its subsidiaries.  The term “control” means the possession,
directly or indirectly, of the power to direct or cause the direction of the management
and policies of a Person, whether through the ownership of voting securities,
by contract or otherwise.

 

“Capital Stock” means (1) with respect to any Person that
is a corporation, any and all shares, interests, participations or other
equivalents, however designated, of corporate stock, including each class of
common stock and preferred stock of such Person and (2) with respect to
any Person that is not a corporation, any and all partnership or other equity
interests of such other Person or any other interest that confers on a Person
the right to receive a share of the profits and losses of, or distribution of
assets of, the issuing Person.

 

“control” has the meaning specified in definition of “Affiliate.”

 

“Covenant Defeasance” has the meaning specified in Section 1403.

 

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

 

“Event of Default” has the meaning specified in Section 501.

 

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

 

(1)                                 the
principal amount of all obligations of such Person for borrowed money;

 

(2)                                 the
principal amount of all obligations of such Person evidenced by bonds,
debentures, notes or other similar instruments;

 

(3)                                 all
Capitalized Lease Obligations of such Person;

 

(4)                                 all
obligations of such Person to pay the deferred purchase price of property (but
excluding trade accounts payable and other similar liabilities arising in the
ordinary course of business and excluding any earn-out obligations);

 

(5)                                 all
obligations of such Person for the reimbursement of any obligor on any letter
of credit or banker’s acceptance;

 

(6)                                 guarantees
of such Person in respect of Indebtedness of a Person referred to in clauses (1) through
(5) above and clause (8) below;

 

27

 

(7)                                 all
Indebtedness of any other Person of the type referred to in clauses (1) through
(6) above which is secured by any Lien on any property or asset of such
Person, the amount of such obligation being deemed to be the lesser of the Fair
Market Value at such date of any asset subject to any Lien securing the
Indebtedness of others and the amount of the Indebtedness secured;

 

(8)                                 all
Hedging Protection Obligations of such Person, excluding non-speculative
Hedging Protection Obligations;

 

(9)                                 all
Preferred Stock of any Restricted Subsidiary of such Person; and

 

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

 

For purposes hereof, (1) the “maximum fixed repurchase price” of
any Disqualified Capital Stock which does not have a fixed repurchase price
shall be calculated in accordance with the terms of such Disqualified Capital
Stock as if such Disqualified Capital Stock were purchased on any date on which
Indebtedness is required to be determined pursuant to this Indenture, and if
such price is based upon, or measured by, the fair market value of such
Disqualified Capital Stock, such fair market value will be determined
reasonably and in good faith by the issuer of such Disqualified Capital Stock
and (2) accrual of interest, accretion or amortization of original issue
discount, the payment of interest on any Indebtedness in the form of additional
Indebtedness with the same terms, and the payment of dividends on Disqualified
Capital Stock in the form of additional shares of the same class of
Disqualified Capital Stock will not be deemed to be an incurrence of
Indebtedness or an issuance of Disqualified Capital Stock for purposes of Section 1011.  The amount of Indebtedness of any Person at
any date will be the amount of all unconditional obligations described above,
as such amount would be reflected on a balance sheet prepared in accordance
with GAAP.

 

“Indenture” has the meaning specified in the first paragraph
hereto.

 

“Stated Maturity” means, when used with respect to any Note or
any installment of interest thereon, the date specified in such Note as the
fixed date on which the principal of such Note or such installment of interest
is due and payable, and, when used with respect to any other Indebtedness,
means the date specified in the instrument governing such Indebtedness as the
fixed date on which the principal of such Indebtedness, or any installment of
interest thereon, is due and payable.

 

II.                                     Set
forth below are the changes to Article 2 of the Base Indenture: Security
Forms:

 

(A)                              Section 201
of the Base Indenture shall be amended to include the following as an
additional paragraph:

 

Provisions relating to the Initial Notes are set forth in Appendix A
hereto which is hereby incorporated in, and expressly made part of, this
Indenture.  The Initial Notes and the
Trustee’s certificate of authentication thereof shall be substantially in the
form of Exhibit 1 to Appendix A 

 

28

 

hereto, which is hereby incorporated in, and expressly made a part of,
this Indenture.  The Notes may have
notations, legends or endorsements required by law, stock exchange rule or
usage.  The Company and the Trustee shall
approve the form of the Notes and any notation, legend or endorsement on
them.  Each Notes shall be dated the date
of its authentication and shall show the date of its issuance.  The terms of the Notes set forth in Appendix
A and the exhibits thereto are part of the terms of this Indenture.

 

III.                                 Set
forth below are the changes to Article 3 of the Base Indenture: The
Securities:

 

(A)                              Section 302
of the Base Indenture shall be deleted in its entirety and replaced with the
following:

 

Section 302                                   Denominations.

 

The Notes shall be issuable only in registered form without coupons in
minimum denominations of $2,000 and any greater integral multiple of $1,000.

 

(B)                                Section 303
of the Base Indenture shall be deleted in its entirety and replaced with the
following:

 

Section 303                                   Execution and
Authentication.

 

An Officer shall sign the Notes for the Company by manual or facsimile
signature.

 

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

 

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

 

The Trustee shall authenticate Notes for original issue on the Issue
Date in the aggregate principal amount of $600,000,000 and, at any time and
from time to time thereafter, the Trustee shall authenticate Notes for original
issue in an aggregate principal amount specified in a written order of the
Company in the form of an Officers’ Certificate.  The Officers’ Certificate shall specify the
amount of Notes to be authenticated and the date on which the Notes are to be authenticated
and, in the case of an issuance of Additional Securities pursuant to Section 314
after the Issue Date, shall certify that such issuance is in compliance with Section 1011.  Upon receipt of a written order of the
Company in the form of an Officers’ Certificate, the Trustee shall authenticate
Notes in substitution for Notes originally issued to reflect any name change of
the Company.  The Trustee may appoint an
authenticating agent reasonably acceptable to the Company to authenticate
Notes.  Unless otherwise provided in the
appointment, an authenticating agent may authenticate Notes whenever the
Trustee may do so.  Each reference in
this Indenture to authentication by the Trustee includes authentication by such
agent.  An authenticating agent has the
same rights as an Agent to deal with the Company and Affiliates of the Company.

 

29

 

(C)                                The
following shall be added to the Base Indenture as Section 314:

 

Section 314                                   Issuance of
Additional Notes.

 

After the Issue Date, the Company shall be entitled, subject to its
compliance with Section 1011, to issue Additional Notes under this
Indenture in an unlimited aggregate principal amount, which Notes shall have
identical terms as the Initial Notes issued on the Issue Date, other than with
respect to the date of issuance and issue price.  The Initial Notes issued on the Issue Date
and any Additional Notes shall be treated as a single class for all purposes
under this Indenture, including waivers, amendments, redemptions and offers to
purchase.

 

With respect to any Additional Notes, the Company shall set forth in a
Board Resolution of the Board of Directors and an Officers’ Certificate, a copy
of each which shall be delivered to the Trustee, the following information:

 

(1)                                 the
aggregate principal amount of such Additional Notes to be authenticated and
delivered pursuant to this Indenture and the provision of Section 1011
that the Company is relying on to issue such Additional Notes; and

 

(2)                                 the
issue price, the issue date and the CUSIP number of such Additional Notes.

 

The Trustee shall have the right to decline to authenticate and deliver
any Additional Notes under this Section 314 if the Trustee determines that
such action may not lawfully be taken by the Company or if the Trustee in good
faith by its board of directors or Responsible Officers shall determine that
such action would expose the Trustee to personal liability to existing Holders.

 

IV.                                 Set
forth below are the changes to Article 4 of the Base Indenture:  Satisfaction and Discharge:

 

(A)                              Section 401
of the Base Indenture shall be deleted in its entirety and replaced with the
following:

 

Section 401                                  Satisfaction and
Discharge of Indenture.

 

This Indenture shall be discharged and will cease to be of further
effect as to all Notes issued hereunder when:

 

(1)                                 either
(a) all Notes that have been authenticated (except lost, stolen or
destroyed Notes that have been replaced or paid and Notes for whose payment
money has theretofore been deposited in trust and thereafter repaid to the
Company) have been delivered to the Trustee for cancellation or (b) all
Notes that have not been delivered to the Trustee for cancellation have become
due and payable by reason of the making of a notice of redemption or otherwise
or will become due and payable within one year and the Company has irrevocably
deposited or caused to be deposited with the Trustee as trust funds in trust
solely for the benefit of the Holders, cash in U.S. dollars, non-callable
Government Securities, or a combination thereof, in such amounts as will be
sufficient without consideration 

 

30

 

of any reinvestment of interest, to pay and discharge the entire
indebtedness on the notes not delivered to the trustee for cancellation for
principal, premium, if any, and accrued interest to the date of maturity or
redemption;

 

(2)                                 no
Default or Event of Default 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, any
other instrument to which the Company is a party or by which the Company is
bound;

 

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

 

(4)                                 the
Company has delivered irrevocable instructions to the Trustee under this
Indenture 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 Company must deliver an Officers’ Certificate and an
Opinion of Counsel to the Trustee stating that all conditions precedent to
satisfaction and discharge have been satisfied.

 

V.                                     Set
forth below are the changes to Article 5 of the Base Indenture: Remedies:

 

(A)                              Section 501
of the Base Indenture shall be deleted in its entirety and replaced with the
following:

 

Section 501                                  Events of Default.

 

An “Event of Default” means any of the following events:

 

(1)                                 the
failure to pay interest on any Notes when the same becomes due and payable and
such default continues for a period of 30 days; or

 

(2)                                 the
failure to pay the principal on any Notes, when such principal becomes due and
payable, at maturity, upon redemption or otherwise, including the failure to
make a payment to repurchase Notes tendered pursuant to a Change of Control
Offer or a Net Proceeds Offer; or

 

(3)                                 a
default in the observance or performance of any other covenant or agreement
contained in this Indenture not specified in clause (1) or (2) above
which default continues for a period of 60 days after the Company receives
written notice specifying the default, and demanding that such default be
remedied, from the Trustee or the Holders of at least 25% of the Outstanding
principal amount of the Notes; or

 

(4)                                 the
failure to pay at final maturity, giving effect to any extensions thereof, the
principal amount of any Indebtedness of the Company or any Restricted
Subsidiary of the Company that is a Significant Subsidiary, other than
intercompany Indebtedness, or the acceleration of the final stated maturity of
any such Indebtedness, if, in either case, the aggregate principal amount of
such 

 

31

 

Indebtedness, together with the principal amount of any other such
Indebtedness in default for failure to pay principal at final maturity or which
has been accelerated, aggregates $50.0 million or more at any time; or

 

(5)                                 failure
by the Company or a Restricted Subsidiary of the Company that is a Significant
Subsidiary to pay any final judgment or final judgments entered by a court or
courts of competent jurisdiction for the payment of money in excess (net of
amounts covered by third-party insurance) of $50.0 million rendered against the
Company or any Restricted Subsidiary of the Company that is a Significant
Subsidiary and is not discharged for any period of 60 consecutive days during
which a stay of enforcement is not in effect; or

 

(6)                                 the
Company or any Restricted Subsidiary of the Company that is a Significant
Subsidiary (i) admits in writing its inability to pay its debts generally
as they become due, (ii) commences a voluntary case or proceeding under
any Bankruptcy Law with respect to itself, (iii) consents to the entry of
a judgment, decree or order for relief against it in an involuntary case or
proceeding under any Bankruptcy Law, (iv) consents to the appointment of a
Custodian of it or for substantially all of its property, (v) consents to
or acquiesces in the institution of a bankruptcy or an insolvency proceeding
against it, (vi) makes a general assignment for the benefit of its
creditors or (vii) takes any partnership or corporate action, as the case
may be, to authorize or effect any of the foregoing;

 

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

 

(8)                                 any
of the guarantee of a Significant Subsidiary of the Company ceases to be in full
force and effect or any guarantee of a Significant Subsidiary of the Company is
held in a judicial proceeding to be null and void and unenforceable or any
guarantee of a Significant Subsidiary of the Company is found to be invalid by
a final judgment or order that is not appealable or any Significant Subsidiary
of the Company that is a guarantor denies its liability under its guarantee,
other than by reason of a release of such Significant Subsidiary in accordance
with the terms of this Indenture.

 

32

 

(B)                                Section 502
of the Base Indenture shall be deleted in its entirety and replaced with the
following:

 

Section 502                                  Acceleration of
Maturity.

 

If an Event of
Default (other than an Event of Default specified in Section 501(6) and
(7) above with respect to the Company) shall occur and be continuing, the
Trustee or the Holders of at least 25% in principal amount of Outstanding Notes
may declare the principal of and accrued and unpaid interest on all the Notes to
be due and payable by notice in writing to the Company and the Trustee
specifying the respective Event of Default and that it is a “notice of
acceleration,” and the same will become immediately due and payable.  If an Event of Default specified in Section (6) and
(7) with respect to the Company occurs and is continuing, then all unpaid
principal of and accrued and unpaid interest on all Outstanding Notes shall
become and be immediately due and payable without any declaration or other act
on the part of the Trustee or any Holder of Notes.

 

At any time after a declaration of acceleration with respect to the
Notes as described in the preceding paragraph, the Holders of a majority in
principal amount of the Notes may rescind and cancel such declaration and its
consequences:

 

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

 

(2)                                 if
all existing Events of Default have been cured or waived except nonpayment of
principal or interest 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 other than
by such declaration of acceleration, has been paid;

 

(4)                                 if
the Company has paid the Trustee its reasonable compensation and reimbursed the
Trustee for its reasonable expenses, disbursements and advances; and

 

(5)                                 in
the event of the cure or waiver of an Event of Default of the type described in
Section 501(6) and (7), the Trustee has received an Officers’ Certificate
and an Opinion of Counsel that such Event of Default has been cured or waived.

 

No such recession shall affect any subsequent Default or impair any
right consequent thereto.

 

VI.                                 Set
forth below are the changes to Article 7 of the Base Indenture: Holders’
Lists and Reports by the Trustee and Company:

 

(A)                              Section 703
of the Base Indenture shall be deleted in its entirety and replaced with the
following:

 

Section 703                                  Reports by the
Company.

 

(1)                                 Whether
or not the Company is subject to the reporting requirements of Section 13
or 15(d) of the Exchange Act, the Company will file with the Commission,
to the 

 

33

 

extent
permitted, such quarterly and annual reports and such information, documents
and other reports specified in Sections 13 and 15(d) of the Exchange Act
within the time periods specified in those sections.  The Company promptly will deliver to the
Trustee, but in any event no later than 15 days after the filing of the
same with the Commission, copies of the quarterly and annual reports and of the
information, documents and other reports, if any, which the Company is required
to file with the Commission pursuant to Section 13 or 15(d) of the
Exchange Act.  For purposes of this Section 703,
the Company will be deemed to have furnished all required reports and
information referred to in this Section 703 to the Trustee and the Holders
of the Notes as required by this Section 703 if it has timely filed the
reports referred to in this paragraph with the Commission via the EDGAR filing
system and such reports are publicly available. 
The Company will also comply with the other provisions of TIA Section 314(a).

 

(2)                                  Notwithstanding
anything herein to the contrary, the Company will not be deemed to have failed
to comply with any of its obligations under this Section 703 for purposes
of Section 501(3) until 90 days after the date any report hereunder
is due.

 

(3)                                  Delivery
of such reports, information and documents to the Trustee under this Section 703
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 Company’s
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to conclusively rely exclusively on an Officers’ Certificate).

 

VII.                             Set
forth below are the changes to Article 8 of the Base Indenture:
Consolidation, Merger, Conveyance, Transfer or Lease:

 

(A)                              Section 801
of the Base Indenture shall be deleted in its entirety and replaced with the
following:

 

Section 801                                  Company May Consolidate,
Etc., Only on Certain Terms.

 

The Company will not, directly or indirectly, (1) consolidate or
merge with or into another Person (whether or not the Company is the surviving
corporation) in one or more related transactions or (2) sell, assign,
transfer, convey or otherwise dispose of all or substantially all of the
properties or assets of the Company and its Restricted Subsidiaries taken as a
whole, in one or more related transactions, to another Person, (other than if a
Restricted Subsidiary merges or consolidates with or into, or sells, assigns,
transfers, leases or otherwise disposes of all or substantially all of its
properties and assets as an entity to, the Company) unless:

 

(1)                                 either
(A) the Company shall be the surviving or continuing Person or (B) the
Person, if other than the Company, formed by such consolidation or into which
the Company is merged, or the Person that acquires by sale, assignment,
transfer, lease, conveyance or other disposition of all or substantially all of
the Company’s assets determined on a consolidated basis for the Company and its
Restricted Subsidiaries (the “Surviving Entity”), (x) shall be a
Person organized and validly existing under the laws of the United States or
any State thereof or the District of 

 

34

 

Columbia and (y) shall expressly assume, by supplemental
indenture, executed and delivered to the Trustee, the due and punctual payment
of the principal of and premium, if any, and interest on all of the Notes and
the performance of every covenant of the Notes and this Indenture on the part
of the Company to be performed or observed;

 

(2)                                 immediately
after giving effect to such transaction, the Company or such Surviving Entity,
as the case may be, shall be able to incur at least $1.00 of additional
Indebtedness, other than Permitted Indebtedness, pursuant to Section 1011
or the Consolidated Fixed Charge Coverage Ratio for the Company or the
Surviving Entity, as the case may be, would be greater than such ratio
immediately prior to such transaction, provided, however, in no event shall the Consolidated Fixed Charge
Coverage Ratio for the Company or the Surviving Entity, as the case may be, be
less than 1.5 to 1.0 immediately after giving effect to such transaction;

 

(3)                                 immediately
before and immediately after giving effect to such transaction, including,
without limitation, giving effect to any Indebtedness and Acquired Indebtedness
incurred or anticipated to be incurred and any Lien granted in connection with
or in respect of the transaction, no Default or Event of Default shall have
occurred and be continuing; and

 

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

 

Upon any consolidation, combination or merger or any transfer of all or
substantially all of the assets of the Company in accordance with the
foregoing, in which the Company is not the continuing Person, the successor
Person formed by such consolidation or into which the Company is merged or to
which such conveyance, lease or transfer is made shall succeed to, and be
substituted for, and may exercise every right and power of, the Company under
this Indenture and the Notes with the same effect as if such Surviving Entity
had been named as such and the Company shall be relieved of all of its
obligations and duties under this Indenture and the Notes.

 

35

 

VIII.                         Set
forth below are the changes to Article 9 of the Base Indenture:
Supplemental Indentures:

 

(A)                              Section 901 of the
Base Indenture shall be deleted in its entirety and replaced with the
following:

 

Section 901                                  Supplemental
Indentures Without Consent of Holders.

 

The Company and the Trustee,
together, may amend or supplement this Indenture or the Notes without notice to
or consent of any Holder:

 

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

 

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

 

(3)                                 to comply with Section 801
and Section 1015;

 

(4)                                 to provide for the
assumption of the Company’s or any guarantor’s obligations under 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 Company or any guarantor;

 

(7)                                 to
comply with requirements of the Commission 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 add a guarantor
under this Indenture;

 

(10)                           to conform the text of this
Indenture or the Notes to any provision of the “Description of Notes,” as set
forth, to the extent that such provision in the “Description of Notes” was
intended to be a verbatim recitation of a provision of this Indenture or the
Notes;

 

(11)                           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; or

 

(12)                           to mortgage, pledge,
hypothecate or grant any other Lien in favor of the Trustee for the benefit of
the Holders of the Notes, as security for the payment and performance of all or
any portion of the Notes, in any property or assets.

 

36

 

provided that the Company has delivered to the
Trustee an Opinion of Counsel and an Officers’ Certificate, each stating that
such amendment or supplement complies with the provisions of this Section 901.

 

(B)                                Section 902 of the
Base Indenture shall be deleted in its entirety and replaced with the
following:

 

Section 902                                 Supplemental
Indentures With Consent of Holders.

 

Subject to Section 508,
the Company and the Trustee, together, with the written consent of the Holder
or Holders of at least a majority in aggregate principal amount, unless a
greater principal amount is specified herein, of the Outstanding Notes, may
amend or supplement this Indenture or the Notes, without notice to any other
Holders.  Subject to Section 508,
the Holder or Holders of a majority in aggregate principal amount, unless a
greater principal amount is specified herein, of the Outstanding Notes may
waive compliance by the Company with any provision of this Indenture or the
Notes without notice to any other Holders. 
Without the consent of each Holder affected, however, no amendment,
supplement or waiver, including a waiver pursuant to Section 513, may:

 

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

 

(2)                                 reduce the rate of or
extend the time for payment of interest, including defaulted interest, on any
Notes;

 

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

 

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

 

(5)                                 at any time after a
Change of Control has occurred or the requirement to make a Net Proceeds Offer
has occurred, amend, change or modify the obligation of the Company to make and
consummate a Change of Control Offer in the event of a Change of Control in
accordance with Section 1008 or a Net Proceeds Offer if one is required
under Section 1015, as the case may be, including amending, changing or
modifying any definition relating thereto;

 

(6)                                 make
any change in provisions of this Indenture protecting the right of each Holder
of a Note to receive payment of principal of and interest on such Note on or
after the due date thereof or to bring suit to enforce such payment, or
permitting Holders of a majority in principal amount of the Notes to waive
Defaults or Events of Default (other than Defaults or Events of Default with
respect to the payment of principal of or interest on the Notes);

 

(7)                                 adversely affect the
classification of the Notes or the guarantees as Senior Debt in this Indenture;
or

 

37

 

(8)                                  release
any guarantor from any of its obligations under its guarantee or this Indenture
other than in accordance with the terms of this Indenture.

 

It shall not be necessary for
the consent of the Holders under this Section 902 to approve the
particular form of any proposed amendment, supplement or waiver, but it shall
be sufficient if such consent approves the substance thereof.

 

After an amendment, supplement
or waiver under this Section 902 becomes effective, the Company shall mail
to the Holders affected thereby a notice briefly describing the amendment,
supplement or waiver.  Any failure of the
Company to mail such notice, or any defect therein, shall not, however, in any
way impair or affect the validity of any such amendment, supplement, waiver or
supplemental indenture.

 

IX.                                Set
forth below are the changes to Article 10 of the Base Indenture:
Covenants:

 

(A)                              Section 1004 of the
Base Indenture shall be deleted in its entirety and replaced with the
following:

 

Section 1004                           Statement
by Officers as to Default.

 

(a)                                 The
Company will deliver to the Trustee, within 120 days after the end of each
fiscal year, a brief certificate from the principal executive officer,
principal financial officer or principal accounting officer as to his or her
knowledge of compliance by the Company with all conditions and covenants under
this Indenture.  For purposes of this Section 1004(a),
such compliance shall be determined without regard to any period of grace or
requirement of notice under this Indenture.

 

(b)                                The
Company shall deliver to the Trustee, within 10 days after the Company becomes
aware of such event, written notice in the form of an Officers’ Certificate of
any event that with the giving of notice and/or the lapse of time would become
an Event of Default, its status and what action the Company is taking or
proposes to take with respect thereto.

 

(B)                                Section 1007 of
the Base Indenture shall be deleted in its entirety and replaced with the
following:

 

Section 1007                           Waiver
of Certain Covenants.

 

The Company may omit in any particular
instance to comply with any term, provision or condition set forth in Sections
1010 through 1014, inclusive, if before or after the time for such compliance
the Holders of at least a majority in principal amount of the Outstanding
Notes, by Act of such Holders, waive such compliance in such instance with such
term, provision or condition, but no such waiver shall extend to or affect such
term, provision or condition except to the extent so expressly waived, and,
until such waiver shall become effective, the obligations of the Company and
the duties of the Trustee in respect of any such term, provision or condition
shall remain in full force and effect; provided, however, that the Holders of each Outstanding Note affected
thereby is required to waive the obligation of the Company to make and 

 

38

 

consummate a Change in Control Offer in the
event of a Change of Control or make and consummate a Net Proceeds Offer with
respect to any Asset Sale.

 

(C)                                The following shall be
added to Article 10 of the Base Indenture as follows:

 

Section 1008                           Change
of Control.

 

(a)                                  Upon
the occurrence of a Change of Control, each Holder will have the right to
require that the Company repurchase all or a portion (in integral multiples of
$1,000; provided that the Company will
repurchase Notes of $2,000 or less in whole and not in part) of such Holder’s
Notes, at a purchase price equal to 101% of the principal amount thereof, plus
accrued and unpaid interest, if any, to the date of repurchase.

 

(b)                                 Within
30 days following the date upon which the Change of Control occurred, the
Company will send, by first class mail, a notice to each Holder, with a copy to
the Trustee, offering to purchase the Notes as described above (the “Change
of Control Offer”).  The notice to
the Holders shall contain instructions and materials necessary to enable such
Holders to tender Notes pursuant to the Change of Control Offer.  Such notice shall state:

 

(1)                                 that
the Change of Control Offer is being made pursuant to this Section 1008
and that all Notes tendered and not withdrawn will be accepted for payment;

 

(2)                                 the
purchase price (including the amount of accrued interest) and the purchase
date, which shall be no earlier than 30 days nor later than 70 days from the
date such notice is mailed, other than as may be required by law (the “Change
of Control Payment Date”);

 

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

 

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

 

(5)                                 that
Holders electing to have a Note purchased pursuant to a Change of Control Offer
will be required to surrender the Note, with the form entitled “Option of
Holder to Elect Purchase” on the reverse of the Note completed, to the Paying
Agent at the address specified in the notice prior to 5:00 p.m. New York
City time on the third Business Day prior to the Change of Control Payment
Date;

 

(6)                                 that
Holders will be entitled to withdraw their election if the Paying Agent
receives, not later than 5:00 p.m. New York City time on the second
Business Day prior to the Change of Control Payment Date, a letter or facsimile
transmission setting forth the name of the Holder, the principal amount of the
Notes the Holder delivered for purchase and a statement that such Holder is
withdrawing his election to have such Note purchased;

 

39

 

(7)                                 that
Holders whose Notes are purchased only in part will be issued new Notes in a
principal amount equal to the unpurchased portion of the Notes surrendered; and

 

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

 

On or before the Change of
Control Payment Date, the Company will (i) accept for payment Notes or
portions thereof tendered (in integral multiples of $1,000; provided that the Company will repurchase notes of $2,000 or
less in whole and not in part) pursuant to the Change of Control Offer, (ii) deposit
with the Paying Agent money in an amount sufficient to pay the purchase price
plus accrued but unpaid interest, if any, of all Notes so tendered and (iii) deliver
to the Trustee Notes so accepted together with an Officers’ Certificate stating
the Notes or portions thereof being purchased by the Company.  The Paying Agent shall promptly mail to the
Holders of Notes so accepted payment in an amount equal to the purchase price
plus accrued and unpaid interest, if any, thereon to the Change of Control
Payment Date and the Trustee shall promptly authenticate and mail to such
Holders new Notes equal in principal amount to any unpurchased portion of the
Notes surrendered.  For purposes of this Section 1008,
the Trustee shall act as the Paying Agent.

 

Any amounts remaining after the
purchase of Notes pursuant to a Change of Control Offer promptly shall be
returned by the Trustee to the Company.

 

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.

 

The Company will not be
required to make a Change of Control Offer upon a Change of Control if (i) a
third party makes the Change of Control Offer in the manner, at the times and
otherwise in compliance with the requirements set forth in this Indenture
applicable to a Change of Control Offer made by the Company and purchases all
Notes properly tendered and not withdrawn under the Change of Control Offer or (ii) notice
of redemption has been given pursuant to this Indenture as described under Section 1108,
unless and until there is a default of the applicable Redemption Price.

 

The Company will comply with the requirements
of Rule 14e-1 under the Exchange Act and any other securities laws and
regulations thereunder to the extent such laws and regulations are applicable
in connection with the repurchase of Notes pursuant to a Change of Control
Offer. To the extent that the provisions of any securities laws or regulations
conflict with this Section 1008, the Company shall comply with the
applicable securities laws and regulations and shall not be deemed to have
breached their obligations under this Section 1008 by virtue thereof.

 

(D)                               Section 1009                             Suspension
of Certain Covenants when Notes Rated Investment Grade.

 

During any period of time that:
(i) the Notes have an Investment Grade Rating from either Rating Agency
and (ii) no Default or Event of Default has occurred and is continuing
under this Indenture (the occurrence of the events described in the foregoing
clauses (i) and (ii) being 

 

40

 

collectively referred to as a “Covenant
Suspension Event”), the Company and the Restricted Subsidiaries will not be
subject to Sections 1010, 1011, 1012, 1014, 1015 and clause (2) of the
first paragraph of Section 801 (collectively, the “Suspended Covenants”).  The Company shall give prompt written notice
of any Covenant Suspension Event to the Trustee.

 

Upon the occurrence of a
Covenant Suspension Event (the “Suspension Date”), the amount of Net
Cash Proceeds that have not been invested or applied as provided under Section 1015
shall be set at zero as of such date. In the event that, on any date subsequent
to any Suspension Date (the “Reversion Date”), the Notes do not have an
Investment Grade Rating from at least one Rating Agency, or a Default or Event
of Default occurs and is continuing, then the Company and the Restricted
Subsidiaries shall thereafter again be subject to the Suspended Covenants with
respect to future events. The period of time between the Suspension Date and the
Reversion Date is referred to in this Indenture as the “Suspension Period.”
Notwithstanding the reinstatement of the Suspended Covenants, no Default or
Event of Default will be deemed to have occurred as a result of a failure to
comply with the Suspended Covenants during the Suspension Period (or upon
termination of the Suspension Period or after that time based solely on events
that occurred during the Suspension Period).

 

Calculations made after the Reversion Date of
the amount available to be made as Restricted Payments under Section 1010
will be made as though Section 1010 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 the first
paragraph of Section 1010.  On the
Reversion Date all Indebtedness Incurred during the Suspension Period will be
classified as having been Incurred under clause (3) of the definition of
Permitted Indebtedness.

 

(E)                                 Section 1010                             Limitation
on Restricted Payments.

 

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

 

(a)                                 declare or pay any
dividend or make any distribution (other than dividends or distributions
payable in Qualified Capital Stock of the Company or in warrants, rights or
options (other than debt securities or Disqualified Capital Stock) to acquire
Qualified Capital Stock of the Company) on or in respect of shares of the
Company’s Capital Stock to holders of such Capital Stock (other than dividends
or distributions to a Restricted Subsidiary that owns Capital Stock of the
Company);

 

(b)                                purchase, redeem or
otherwise acquire or retire for value any Equity Interests, other than the
exchange of Equity Interests to acquire Qualified Capital Stock;

 

(c)                                 make
any principal payment on or repurchase, redeem, defease or otherwise acquire or
retire for value, prior to a scheduled principal payment, scheduled sinking
fund payment or maturity, any Subordinated Indebtedness (other than payments on
or repurchases, redemptions, defeasances or other acquisitions or retirement of
(a) any Subordinated Indebtedness purchased in anticipation of 

 

41

 

satisfying a scheduled principal payment,
maturity, sinking fund or amortization or other installment obligation or
mandatory redemption, in each case due within one year of the date of payment,
repurchase, acquisition or retirement) or (b) Subordinated Indebtedness
permitted to be incurred under clause (6) of the definition of Permitted
Indebtedness);

 

(d)                                make any Restricted
Investment (other than Permitted Investments);

 

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

 

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

 

(2)                                 the Company is not
able to incur at least $1.00 of additional Indebtedness (other than Permitted
Indebtedness) in compliance with Section 1011; or

 

(3)                                 the
aggregate amount of Restricted Payments made subsequent to the Issue Date
(without duplication and excluding Restricted Payments permitted by clauses
(2)(a), (3), (4), (5), (6), (8) and (11) of the following paragraph) shall
exceed the sum of:

 

(v)                                50%
of the cumulative Consolidated Net Income, or if cumulative Consolidated Net
Income shall be a loss, minus 100% of such loss of the Company earned during
the period beginning January 1, 2008 and ending on the last day of the
most recent fiscal quarter for which internal financial statements are
available as of the date the Restricted Payment occurs, treating such period as
a single accounting period; plus

 

(w)                              the aggregate net cash
proceeds and the Fair Market Value of property or assets received (i) by
the Company or any of its Restricted Subsidiaries from any Person (other than a
Restricted Subsidiary of the Company) from the issuance and sale subsequent to
the Issue Date and on or prior to the date the Restricted Payment occurs of
Qualified Capital Stock, or in respect of warrants, rights or options (other
than debt securities or Disqualified Capital Stock) to acquire Qualified
Capital Stock, including Qualified Capital Stock issued upon the conversion or
exchange of Indebtedness and (ii) by the Company as capital contributions
to the Company from its shareholders subsequent to the Issue Date and on or
prior to the date the Restricted Payment occurs; provided, however, that any Equity Interests of the Company issued in
connection with the Honeywell Acquisition shall be excluded from this paragraph
(w); plus

 

(x)                                  the amount by which
Indebtedness of the Company or a Restricted Subsidiary is reduced on the
Company’s consolidated balance sheet upon the conversion or exchange (other
than by a Restricted Subsidiary of the Company) subsequent to the Issue Date of
any Indebtedness of the Company or a Restricted Subsidiary for Qualified
Capital Stock of the 

 

42

 

Company (less
the amount of any cash, or the Fair Market Value of any other property,
distributed by the Company upon such conversion or exchange); plus

 

(y)                                an
amount equal to the net cash proceeds and Fair Market Value of property or
assets received by the Company or any of its Restricted Subsidiaries after the
Issue Date or from repayments of loans or advances or other transfers of
assets, in each case to the Company or any Restricted Subsidiary, or from the
net cash proceeds from the sale of any such Restricted Investment (except, in
each case, to the extent any such payment or proceeds are included in the
calculation of the Company’s Consolidated Net Income), from the release of any
guarantee (except to the extent any amounts are paid under such guarantee) or,
in the case of a redesignation of an Unrestricted Subsidiary as a Restricted
Subsidiary, the Fair Market Value of the Investment in such Unrestricted
Subsidiary at the time of such redesignation.

 

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

 

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

 

(2)                                 the
making of any Restricted Payment, either:

 

(a)                                 in
exchange for shares of Qualified Capital Stock and/or warrants, rights or
options (other than debt securities or Disqualified Capital Stock) to acquire
Qualified Capital Stock, or

 

(b)                                through the application
of the net proceeds of a sale for cash (other than to a Restricted Subsidiary
of the Company) of shares of Qualified Capital Stock and/or warrants, rights or
options (other than debt securities or Disqualified Capital Stock) to acquire
Qualified Capital Stock, so long as such net proceeds are applied pursuant to
this clause (b) within 180 days of such sale;

 

(3)                                 the repurchase by the
Company of its Capital Stock if after giving effect thereto the aggregate
consideration paid or payable for all such purchases does not exceed $100.0
million;

 

(4)                                 so long as no Default
or Event of Default shall have occurred and be continuing, the repurchase of
any Subordinated Indebtedness of the Company at a purchase price not greater
than 100% of the principal amount of such Subordinated Indebtedness in the
event of an Asset Sale pursuant to a provision similar to Section 1015; provided that prior to or concurrently with such repurchase
the Company has made the Net Proceeds Offer as provided in such covenant with 

 

43

 

respect to the
Notes and has repurchased all Notes validly tendered for payment in connection
with such Net Proceeds Offer;

 

(5)                                 so long as no Default
or Event of Default shall have occurred and be continuing, the repurchase of
any Subordinated Indebtedness of the Company at a purchase price not greater
than 101% of the principal amount of such Subordinated Indebtedness in the
event of a Change of Control pursuant to a provision similar to Section 1008;
provided that prior to or concurrently
with such repurchase the Company has made the Change of Control Offer as
provided in Section 1008 with respect to the Notes and has repurchased all
Notes validly tendered for payment in connection with such Change of Control
Offer;

 

(6)                                 the purchase,
redemption or other acquisition or retirement for value of Subordinated
Indebtedness (other than Disqualified Capital Stock) in exchange for, or out of
the net cash proceeds of a substantially concurrent incurrence (other than to a
Restricted Subsidiary) of, Indebtedness of the Company so long as (A) the
principal amount of such new Indebtedness does not exceed the principal amount
(or, if such Indebtedness being refinanced provides for an amount less than the
principal amount thereof to be due and payable upon a declaration of
acceleration thereof, such lesser amount as of the date of determination) of
the Indebtedness being so purchased, redeemed, acquired or retired, plus any
accrued and unpaid interest thereon, plus the amount of any premium required to
be paid in connection with such refinancing pursuant to the terms of the
Subordinated Indebtedness refinanced or the amount of any premium reasonably
determined by the Company as necessary to accomplish such refinancing, plus the
amount of any fees, expenses or defeasance costs of the Company incurred in
connection with such refinancing, (B) such new Indebtedness is
subordinated to the Notes at least to the same extent as the Subordinated
Indebtedness so purchased, redeemed, acquired or retired and (C) such new
Indebtedness has an Average Life longer than the Average Life of the
Subordinated Indebtedness and a Stated Maturity later than the Stated Maturity
of the Subordinated Indebtedness;

 

(7)                                 so long as no Default
or Event of Default shall have occurred and be continuing, other Restricted
Payments by the Company in an aggregate amount expended pursuant to this clause
(7) not to exceed $100.0 million;

 

(8)                                 the repurchase of any
Capital Stock of the Company or any warrants, rights or options to purchase or
acquire shares of any such Capital Stock deemed to occur upon the exercise of
stock options or warrants to acquire Qualified Capital Stock or other similar
arrangements to acquire Qualified Capital Stock (including any fractional
interests resulting therefrom), if such repurchased Capital Stock or warrants,
rights or options to acquire shares of any such Capital Stock represent a
portion of the exercise price thereof and applicable withholding taxes, if any;

 

(9)                                 so long as no Default
or Event of Default shall have occurred and be continuing, the purchase,
redemption or other acquisition or retirement for value of Equity Interests of
the Company held by any future, present or former officers, directors, 

 

44

 

employees,
members of management or consultants (or their heirs, family members, spouses,
former spouses or their estates or other beneficiaries under their estates),
upon death, disability, retirement, severance or termination of employment or
pursuant to any plan or agreement under which the Equity Interests were issued;
provided that the aggregate cash
consideration paid therefor in any calendar year after the Issue Date does not
exceed an aggregate amount of $10.0 million (with unused amounts in any
calendar year being carried over to succeeding calendar years subject to a
maximum of $15.0 million in any calendar year); provided, further, that cancellation of Indebtedness owing to the
Company or any Restricted Subsidiary from members of management of the Company
or any of the Company’s Restricted Subsidiaries in connection with a repurchase
of Equity Interests of the Company will not be deemed to constitute a
Restricted Payment for purposes of this Section or any other provision of
this Indenture;

 

(10)                           the declaration and payment
of dividends to holders of any class or series of Disqualified Stock of the
Company or any of its Restricted Subsidiaries or any class or series of
Preferred Stock of any Restricted Subsidiary issued in accordance with Section 1011;
and

 

(11)                           Restricted Payments that are
made in connection with or related to the Honeywell Acquisition.

 

In determining the aggregate amount of
Restricted Payments made subsequent to the Issue Date in accordance with clause
(3) of the immediately preceding paragraph, amounts expended (to the
extent such expenditure is in the form of cash) pursuant to clauses (1),
(2)(b), (7) and (9) of this paragraph will be included in such
calculation.

 

(F)                                 Section 1011                             Limitation
on Incurrence of Additional Indebtedness.

 

The Company will not, and will
not permit any of its Restricted Subsidiaries to, incur any Indebtedness, other
than Permitted Indebtedness; provided, however, that the Company, any guarantor (or a Restricted
Subsidiary which guarantees the Notes at the time of such incurrence) may incur
Indebtedness if on the date of the incurrence of such Indebtedness, after
giving effect to the incurrence thereof and application of proceeds therefrom,
the Consolidated Fixed Charge Coverage Ratio of the Company would be equal to
or greater than 2.0 to 1.0.

 

(G)                                Section 1012                             Limitations
on Transactions with Affiliates.

 

The Company will not, and will
not permit any of its Restricted Subsidiaries to, directly or indirectly, 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 Company
in any transaction or series of related transactions (each of the foregoing, an
“Affiliate Transaction”) involving aggregate payments or consideration
in excess of $20.0 million unless:

 

(1)                                 such
Affiliate Transaction, as determined by the Company in good faith, is on terms
that are not materially less favorable to the Company or its relevant 

 

45

 

Restricted Subsidiary than those that
would have been obtained in a comparable transaction by the Company or such
Restricted Subsidiary with an unrelated Person on an arm’s-length basis;

 

(2)                                 the Company delivers
to the Trustee an Officer’s Certificate with respect to such Affiliate
Transaction stating that the Company has approved such Affiliate Transaction
and stating that such Affiliate Transaction complies with clause (1) above;
and

 

(3)                                 for any transaction or
series of related transactions with an aggregate value of $50.0 million or
more, such Affiliate Transaction has been approved by a majority of the
disinterested members of the Board of Directors of the Company, if any.

 

The foregoing restrictions will
not apply to:

 

(1)                                 payment
of reasonable fees and compensation paid to, or loans made to, and indemnity
provided on behalf of, officers, directors, employees or consultants of the
Company or any subsidiary (including any employment agreements, employee
benefit plans or indemnification agreements entered into with such Persons) as
determined, in good faith, by the Company;

 

(2)                                 any transaction
between the Company and any of its Restricted Subsidiaries or between
Restricted Subsidiaries of the Company;

 

(3)                                 transactions
(including the payment of fees and expenses related thereto) pursuant to any of
the Honeywell Acquisition Documents or agreements of the Honeywell Consumables
Solutions Business in effect on the Honeywell Acquisition Closing Date;

 

(4)                                 any agreement as in
effect as of the Issue Date or the Honeywell Acquisition Closing Date in the
case of the Honeywell Consumables Solutions Business or any amendment thereto
or any transaction contemplated thereby (including pursuant to any amendment
thereto) or in any replacement agreement thereto so long as any such amendment
or replacement agreement is, as determined by the Company, not more materially
disadvantageous to the Holders when taken as a whole than the original
agreement as in effect on the Issue Date or the Honeywell Acquisition Closing
Date in the case of the Honeywell Consumables Solutions Business;

 

(5)                                 Permitted Investments
and Restricted Payments permitted by this Indenture;

 

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

 

46

 

(7)                                 commercially
reasonable transactions between the Company or a Restricted Subsidiary and any
joint venture or any Unrestricted Subsidiary and otherwise in compliance with
the terms of this Indenture which are, in the determination of the Company at
the time of entry into such transactions, fair to the Company and its
Restricted Subsidiaries or are on terms at least as favorable as might
reasonably have been obtained at such time from an unaffiliated party; and

 

(8)                                 the issuance or sale
of any Equity Interests of the Company.

 

(H)                               Section 1013                             Limitation on Liens.

 

(a)                                 The
Company will not, and will not permit:

 

(x)                                  any of the guarantors,
directly or indirectly, to create, incur or assume any Lien securing
Indebtedness; or

 

(y)                                any of its
non-guarantor Restricted Subsidiaries, directly or indirectly, to create, incur
or assume any Debt Securities Lien;

 

in each case
(other than Permitted Liens) upon any property or asset now owned or hereafter
acquired by them, or any income or profits therefrom, or assign or convey any
right to receive income therefrom.

 

(b)                                Notwithstanding
the foregoing, in addition to creating Permitted Liens on their properties or
assets:

 

(x)                                  the
Company and any of the guarantors may create any Lien securing Indebtedness
upon any of their properties or assets (including, but not limited to, any
Capital Stock of its subsidiaries); or

 

(y)                                any of the Company’s
non-guarantor Restricted Subsidiaries may create Debt Securities Liens upon any
of its properties or assets (including, but not limited to, any Capital Stock
of its subsidiaries);

 

in each case,
if the Notes are secured equally and ratably with (or, if the Indebtedness to
be secured by the Lien is subordinated in right of payment to the Notes, prior
to) the Indebtedness so secured, as the case may be, for so long as such
obligations are so secured.

 

(c)                                 Any
such Lien shall be automatically and unconditionally released and discharged in
all respects upon (i) the release and discharge of the other Lien to which
it relates (except a release and discharge upon payment of the obligation
secured by such Lien during the pendency of any Default or Event of Default
under this Indenture, in which case such Liens shall only be discharged and
released upon payment of the Notes or cessation of such Default or Event of
Default), (ii) in the case of any such Lien in favor of any guarantee,
upon the termination and discharge of such guarantee in accordance with the
terms of this Indenture or 

 

47

 

(iii) any sale, exchange or transfer
(other than a transfer constituting a transfer of all or substantially all of
the assets of the Company that is governed by Section 801 in compliance
with this Indenture to any Person (not an Affiliate of the Company) of the
property or assets secured by such initial Lien, or of all of the Capital Stock
held by the Company, any guarantor or any non-guarantor Restricted Subsidiary,
as the case may be, in, or all or substantially all the assets of, any
guarantor or any non-guarantor Restricted Subsidiary, as the case may be,
creating such initial Lien.

 

(I)                                    Section 1014                             Limitation
on Dividend and Other Payment Restrictions Affecting Subsidiaries.

 

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

 

(a)                                 pay dividends or make
any other distributions on or in respect of its Capital Stock;

 

(b)                                make
loans or advances to or pay any Indebtedness owed to the Company or any other
Restricted Subsidiary of the Company; or

 

(c)                                 transfer any of its
property or assets to the Company or any other Restricted Subsidiary of the
Company;

 

except for such encumbrances or
restrictions existing under or by reason of:

 

(1)                                 applicable law, rule,
regulation or order of, or agreements with, governmental authorities with
respect to assets located in their jurisdiction;

 

(2)                                 the Notes, this
Indenture or any guarantee thereof;

 

(3)                                 (A) customary
provisions (i) restricting the subletting or assignment of any property or
asset that is a lease, license, conveyance or contract or similar property or
asset or (ii) contained in agreements related to the license of
copyrighted or patented materials or other intellectual property, (B) provisions
in agreements that restrict the assignment of such agreements or rights
thereunder, (C) contained in the terms of Capital Stock restricting the
payment of dividends and the making of distributions on Capital Stock or (D) in
contracts with customers entered into the ordinary course of business that
impose restriction on cash or other deposits or net worth;

 

(4)                                 any agreement or other
instrument of a Person acquired by the Company or any Restricted Subsidiary or
merged with or into the Company or any Restricted Subsidiary, which encumbrance
or restriction is not applicable to any Person, or the properties or assets of
any Person, other than (a) the Person or the properties or assets of the
Person so acquired (including the Capital Stock of such Person), or (b) any
Restricted Subsidiary having no assets other than (i) the Person or the
properties or assets of the Person so acquired (including the Capital Stock of
such 

 

48

 

Person) and (ii) other
assets having a fair market value not in excess of $1.0 million, and, in each
case, the monetary proceeds thereof;

 

(5)                                 any agreement or
instrument (A) in effect at or entered into on the Issue Date or on the
Honeywell Acquisition Closing Date or (B) governing Indebtedness,
including the Credit Agreement, provided that (x) such
Indebtedness is permitted under this Indenture and (y) the Company has
determined in good faith at the time of incurrence that such encumbrance or
restriction will not adversely affect in any material respect the Company’s
ability to make principal or interest payments on the Notes as and when due;

 

(6)                                 purchase money
obligations for property acquired in the ordinary course of business that
impose restrictions of the nature discussed in clause (c) above on the
property so acquired;

 

(7)                                 restrictions on the
transfer of assets subject to any Lien permitted under this Indenture;

 

(8)                                 restrictions imposed
by any agreement to sell assets not in violation of this Indenture to any
Person pending the closing of such sale;

 

(9)                                 customary provisions
in joint venture agreements and other agreements or arrangements relating
solely to such joint venture;

 

(10)                           the subordination of any
Indebtedness owed by the Company or any of its Restricted Subsidiaries to the
Company or any other Restricted Subsidiary to any other Indebtedness of the
Company or any of its Restricted Subsidiaries; provided
that such other Indebtedness is permitted under this Indenture;

 

(11)                           the Honeywell Acquisition
Documents; or

 

(12)                           any encumbrances or
restrictions of the type referred to in clauses (a), (b) and (c) above
imposed by any amendments, modifications, restatements, renewals, increases,
supplements, refundings, replacements or refinancing of the contracts,
instruments or obligations referred to in subclauses (1) through (11)
above; provided that such amendments,
modifications, restatements, renewals, increases, supplements, refundings,
replacements or refinancings are, in the good faith judgment of the Company,
not materially more restrictive with respect to such encumbrance and other restrictions
taken as a whole than those prior to such amendment, modification, restatement,
renewal, increase, supplement, refunding, replacement or refinancing.

 

49

 

(J)                                Section 1015           Limitation on Asset Sales.

 

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

 

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

 

(2)           at least 75% of
the consideration received by the Company or such Restricted Subsidiary from
such Asset Sale is cash or Cash Equivalents, Replacement Assets or a
combination thereof; provided that
the amount of (a) any liabilities (other than Subordinated Indebtedness)
of the Company or any such Restricted Subsidiary, as shown on the Company’s or
such Restricted Subsidiary’s most recent balance sheet, that are assumed by the
transferee of any such assets, (b) any securities, notes or other
obligations received by the Company or any such Restricted Subsidiary from such
transferee that are converted by the Company or such Restricted Subsidiary into
cash or Cash Equivalents within 90 days of the time of such disposition, to the
extent of the cash or Cash Equivalents received and (c) any Designated
Non-Cash Consideration received by the Company 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 $50.0 million, 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, will
each be deemed to be cash for the purposes of this clause (2); provided that the 75% limitation referred to above will not
apply to any sale, transfer or other disposition of assets in which the cash
portion of the consideration received therefor is equal to or greater than what
the after-tax net proceeds would have been had such transaction complied with
the aforementioned 75% limitation.

 

Within
365 days of the receipt of Net Cash Proceeds of any Asset Sale, the Company may
apply directly or through a Restricted Subsidiary, or causes such Restricted
Subsidiary to apply, an amount equal to the Net Cash Proceeds relating to such Asset
Sale thereof either (A) to repay Indebtedness under the Credit Agreement
or any other Credit Facility (and in the case of any Indebtedness outstanding
under a revolving credit facility and repaid in satisfaction of this Section 1015,
to permanently reduce the amounts that may be reborrowed thereunder by an
equivalent amount), or Indebtedness of a Restricted Subsidiary with the Net
Cash Proceeds received in respect thereof, (B) to reinvest in Replacement
Assets or (C) a combination of prepayment, reduction and investment
permitted by the foregoing clauses (A) and (B); provided
that, if during such 365-day period the Company or Restricted Subsidiary enters
into a definitive written agreement committing it to apply such Net Cash
Proceeds in accordance with the requirements of clauses (B) above, such
365-day period shall be extended with respect to the amount of Net Cash
Proceeds so committed until the later of the date required to be paid in
accordance with such agreement and 90 days. Pending the final application of
any Net Cash Proceeds pursuant to clause (B) above, the Company may
temporarily reduce revolving credit 

 

50

 

borrowings
or otherwise invest the Net Cash Proceeds in any manner that is not prohibited
by this Indenture.

 

On
the later of the 366th day after an Asset Sale and the date the Company or such
Restricted Subsidiary agreed to apply such Net Cash Proceeds in accordance with
it previously entered into definitive agreement; provided
that such date may be earlier, as the Company or such Restricted Subsidiary may
determine (the “Net Proceeds Offer Trigger Date”), such aggregate amount
of Net Cash Proceeds that have not been so applied on or before such Net
Proceeds Offer Trigger Date as permitted in clauses (A), (B) and (C) of
the preceding sentence (each, a “Net Proceeds Offer Amount”) will be
applied by the Company to make an offer to repurchase (the “Net Proceeds
Offer”) on a date (the “Net Proceeds Offer Payment Date”) not less
than 30 nor more than 60 days following the applicable Net Proceeds Offer
Trigger Date, from all Holders on a pro rata basis that amount of Notes equal
to the Net Proceeds Offer Amount multiplied by a fraction, the numerator of
which is the aggregate principal amount of Notes then Outstanding and the
denominator of which is the sum of the aggregate principal amount of Notes and
Pari Passu Indebtedness then outstanding (the “Pro Rata Share”), at a
price equal to 100% of the principal amount of the Notes to be repurchased,
plus accrued interest to the date of repurchase.

 

Notwithstanding
the foregoing, if a Net Proceeds Offer Amount is less than $50.0 million, the
application of the Net Cash Proceeds constituting such Net Proceeds Offer
Amount to a Net Proceeds Offer may be deferred until such time as such Net
Proceeds Offer Amount plus the aggregate amount of all Net Proceeds Offer
Amounts arising subsequent to the Net Proceeds Offer Trigger Date relating to
such initial Net Proceeds Offer Amount from all Asset Sales by the Company and
its Restricted Subsidiaries aggregates at least $50.0 million, at which time
the Company will apply all Net Cash Proceeds constituting all Net Proceeds
Offer Amounts that have been so deferred to make a Net Proceeds Offer, the
first date the aggregate of all such deferred Net Proceeds Offer Amounts is at
least $50.0 million being deemed to be a Net Proceeds Offer Trigger Date. To
the extent that the aggregate purchase price of Notes tendered pursuant to any
Net Proceeds Offer is less than the Pro Rata Share, the Company or any
guarantor may use such amount for any purpose not prohibited by this Indenture.
Upon completion of any Net Proceeds Offer, the Net Proceeds Offer Amount shall
be reset to zero.

 

Notice
of a Net Proceeds Offer will be mailed, by first class mail, by the Company to
Holders as shown on the register of Holders at their last registered address
not less than 30 days nor more than 60 days before the Net Proceeds Offer
Payment Date, with a copy to the Trustee. 
The notice shall contain instructions and materials necessary to enable
such Holders to tender their Notes pursuant to the Net Proceeds Offer and shall
state the following terms:

 

(1)                                that the Net
Proceeds Offer is being made pursuant to this Section 1015, that all Notes
tendered will be accepted for payment; provided
,however, that if the aggregate
principal amount of Notes tendered in a Net Proceeds Offer plus accrued
interest at the expiration of such offer exceeds the aggregate amount of the
Net Proceeds Offer, the Company shall select the Notes to be purchased on a pro
rata basis (with such adjustments as may be deemed appropriate by the Company
so that only Notes in denominations of $2,000 or multiples thereof shall be
purchased) and that the Net Proceeds Offer shall remain open for a period of 20
Business Days or such longer period as may be required by law;

 

51

 

(2)                                the Net
Proceeds Offer Amount (including the amount of accrued interest) and the Net
Proceeds Offer Payment Date (which shall be not less than 30 nor more than 60
days following the applicable Net Proceeds Offer Trigger Date and which shall
be at least five Business Days after the Trustee receives notice thereof from
the Company);

 

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

 

(4)                                that, unless
the Company defaults in making payment therefor, any Note accepted for payment
pursuant to the Net Proceeds Offer shall cease to accrue interest after the Net
Proceeds Offer Payment Date;

 

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

 

(6)                                that Holders
will be entitled to withdraw their election if the Paying Agent receives, not
later than the second Business Day prior to the Net Proceeds Offer Payment
Date, a telegram, telex, facsimile transmission or letter setting forth the
name of the Holder, the principal amount of the Notes such Holder delivered for
purchase and a statement that such Holder is withdrawing his election to have
such Notes purchased; and

 

(7)                                that Holders
whose Notes are purchased only in part will be issued new Notes in a principal
amount equal to the unpurchased portion of the Notes surrendered; provided, however,
that each Note purchased and each new Note issued shall be in an original
principal amount of $2,000 or any greater integral multiple of $1,000 thereof.

 

On
or before the Net Proceeds Offer Payment Date, the Company shall (i) accept
for payment Notes or portions thereof tendered pursuant to the Net Proceeds
Offer which are to be purchased in accordance with item (1) above, (ii) deposit
with the Paying Agent money in an amount sufficient to pay the purchase price
plus accrued interest, if any, of all Notes to be purchased and (iii) deliver
to the Trustee Notes so accepted together with an Officers’ Certificate stating
the Notes or portions thereof being purchased by the Company.  The Paying Agent shall promptly mail to the
Holders of Notes so accepted payment in an amount equal to the purchase price plus
accrued interest, if any.  For purposes
of this Section 1015, the Trustee shall act as the Paying Agent.

 

Any
amounts remaining after the purchase of Notes pursuant to a Net Proceeds Offer
promptly shall be returned by the Trustee to the Company.

 

If an offer is made to repurchase the Notes
pursuant to a Net Proceeds Offer, the Company will and will cause its
Restricted Subsidiaries to comply with all tender offer rules under state
and federal securities laws, including, but not limited to, Section 14(e) under
the Exchange Act and Rule 14e-1 thereunder, to the extent applicable to
such offer. To the extent that the provisions of 

 

52

 

any securities laws or regulations conflict
with Section 1015, the Company shall comply with the applicable securities
laws and regulations and shall not be deemed to have breached their obligations
hereunder by virtue thereof.

 

(K)                            Section 1016           Limitation of Guarantees by
Restricted Subsidiaries.

 

	
  (a)

  	
   

  	
  The
  Company will not permit any Restricted Subsidiary (other than a guarantor) to
  guarantee any Indebtedness of the Company unless, in any such case:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (1)

  	
   

  	
  such Restricted Subsidiary
  executes and delivers a supplemental indenture to this Indenture, providing a
  guarantee of payment of the Notes by such Restricted Subsidiary in the form
  required by this Indenture; and

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (2)

  	
   

  	
  if such guarantee is
  provided in respect of Indebtedness that is expressly subordinated to the
  Notes, the guarantee or other instrument provided by such Restricted
  Subsidiary in respect of such subordinated Indebtedness is similarly
  subordinated to the guarantee of the Notes;

  

 

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

 

(b)                                 Any guarantee of the Notes by a
Restricted Subsidiary will provide by its terms that it will be automatically
and unconditionally released and discharged, without any further action
required on the part of the Trustee or any Holder, upon:

 

(1)                                 the release of
such Restricted Subsidiary from its liability in respect of the Indebtedness in
connection with which such guarantee of the Notes was executed and delivered
pursuant to paragraph (a) above (except a release by or as a result of
payment under such Indebtedness);

 

(2)                                 any sale or
other disposition (by merger or otherwise) to any Person that is not an
Affiliate of the Company, of the Company’s Capital Stock in such Restricted
Subsidiary such that, after giving effect to any such sale or disposition, such
Person is no longer a Restricted Subsidiary; provided, however, that:

 

(x)                                 such sale or
disposition of such Capital Stock is otherwise in compliance with the terms of
this Indenture; and

 

(y)                                 the Company is deemed to
have made an Investment on the date of any such sale or disposition equal to
the Fair Market Value of the Capital Stock of such entity not sold or disposed
plus the Fair Market Value of any guarantee by the Company or any Restricted
Subsidiary of Indebtedness of such entity;

 

53

 

(3)                                 any sale or
other disposition (by merger or otherwise) to any Person that is not an
Affiliate of the Company, of all of the Company’s Capital Stock in, or all or
substantially all of the assets of, such Restricted Subsidiary; provided, however, that:

 

	
  (x)

  	
   

  	
  such
  sale or disposition of such Capital Stock or assets is otherwise in
  compliance with the terms of this Indenture; and

  
	
   

  	
   

  	
   

  
	
  (y)

  	
   

  	
  such
  assumption, guarantee or other liability of such Restricted Subsidiary has
  been released by the holders of the other Indebtedness so guaranteed;

  

 

(4)           the designation
of such Restricted Subsidiary as an Unrestricted Subsidiary in compliance with
the terms of this Indenture; or

 

(5)           the exercise by
the Company of its Legal Defeasance option under Article 14 or the
discharge of the Company’s obligations under this Indenture.

 

(L)                              Section 1017                                Payment of
Taxes and Other Claims.

 

The Company shall pay prior
to delinquency, all material taxes, assessments and governmental levies except
such as are contested in good faith and by appropriate negotiations or
proceedings or where the failure to effect such payment is not adverse in any
material respect to the Holders of the Notes.

 

X.                                    Set forth below
are the changes to Article 11 of the Base Indenture: Redemption of
Securities:

 

(A)                              Section 1102
of the Base Indenture shall be deleted in its entirety and replaced with the
following:

 

Section 1102          Election
to Redeem; Notice to Trustee.

 

If
the Company elects to redeem Notes pursuant to the redemption provisions of
Paragraphs 5 through 7 of the Notes, it shall notify the Trustee in writing of
the Redemption Date, the Redemption Price and the principal amount of Notes to
be redeemed.  The Company shall give
notice of redemption, which notice shall include all information referenced in Section 1104(1) through
(8), to the Paying Agent and Trustee at least 45 days but not more than 60 days
before the Redemption Date (unless a shorter notice shall be satisfactory to
the Trustee), together with an Officers’ Certificate stating that such
redemption will comply with the conditions contained herein.  Any such notice may be cancelled at any time
prior to notice of such redemption being mailed to any Holder and shall thereby
be void and of no effect.

 

54

 

(B)                                Section 1103
of the Base Indenture shall be deleted in its entirety and replaced with the
following:

 

Section 1103          Selection
by Trustee of Notes to be Redeemed.

 

In
the event that less than all of the Notes are to be redeemed at any time
pursuant to the redemption provisions of Paragraphs 5 through 7 of the Notes,
the Trustee will select the Notes or portions thereof to be redeemed among the
Holders of the Notes as follows:

 

	
  (1)

  	
   

  	
  if
  the Notes are listed, in compliance with any applicable requirements of the
  principal national securities exchange on which the notes are listed; or

  
	
   

  	
   

  	
   

  
	
  (2)

  	
   

  	
  if the Notes are not so
  listed, on a pro rata basis, by lot or by any other method the Trustee
  considers fair and appropriate;

  

 

The
Trustee shall make the selection from the Notes Outstanding and not previously
called for redemption and shall promptly notify the Company in writing of the
Notes selected for redemption and, in the case of any Notes selected for
partial redemption, the principal amount thereof to be redeemed.  Notes in denominations of $2,000 or less may
be redeemed only in whole.  The Trustee
may select for redemption portions (equal to $2,000 or any greater integral
multiple of $1,000 thereof) of the principal amount of Notes that have
denominations larger than $2,000.  Provisions
of this Indenture that apply to Notes called for redemption also apply to
portions of Notes called for redemption.

 

(C)           Section 1104 of
the Base Indenture shall be deleted in its entirety and replaced with the
following:

 

Section 1104          Notice
of Redemption.

 

In
the case of an optional redemption pursuant to the provisions of Paragraphs 6
and 7 of the Notes, at least 30 days but not more than 60 days before a
Redemption Date, the Company shall mail a notice of redemption by first class
mail, postage prepaid, to each Holder whose Notes are to be redeemed at its
registered address.  At the Company’s
request, the Trustee shall give the notice of redemption in the Company’s name
and at the Company’s expense, provided,
however, the Trustee shall not be
required to give such notice if it has not received notice from the Company in
accordance with Section 1102.  Each
notice for redemption shall identify the Notes to be redeemed (including the
CUSIP number(s), if any) and shall state:

 

	
  (1)

  	
   

  	
  the
  Redemption Date;

  
	
   

  	
   

  	
   

  
	
  (2)

  	
   

  	
  the
  Redemption Price and the amount of accrued interest, if any, to be paid;

  
	
   

  	
   

  	
   

  
	
  (3)

  	
   

  	
  the
  name and address of the Paying Agent;

  
	
   

  	
   

  	
   

  
	
  (4)

  	
   

  	
  that
  Notes called for redemption must be surrendered to the Paying Agent to
  collect the Redemption Price plus accrued interest, if any;

  

 

55

 

	
  (5)

  	
   

  	
  that,
  unless the Company defaults in making the redemption payment or the Paying
  Agent is prohibited from making such payment pursuant to the terms of this
  Indenture, interest on Notes called for redemption ceases to accrue on and
  after the Redemption Date, and the only remaining right of the Holders of
  such Notes is to receive payment of the Redemption Price upon surrender to
  the Paying Agent of the Notes redeemed;

  
	
   

  	
   

  	
   

  
	
  (6)

  	
   

  	
  if
  any Note is being redeemed in part, the portion of the principal amount of
  such Security to be redeemed and that, after the Redemption Date, and upon
  surrender of such Note, a new Note or Notes in aggregate principal amount
  equal to the unredeemed portion thereof will be issued upon surrender of the
  original Note;

  
	
   

  	
   

  	
   

  
	
  (7)

  	
   

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

  
	
   

  	
   

  	
   

  
	
  (8)

  	
   

  	
  the
  paragraph of the Notes pursuant to which the Securities are to be redeemed.

  

 

(D)          Section 1105 of
the Base Indenture shall be deleted in its entirety and replaced with the
following:

 

Section 1105          Deposit
of Redemption Price.

 

On or before 11:00 a.m. New York Time on
the Business Day prior to the Redemption Date, the Company shall deposit with
the Paying Agent (or, if the Company or a Subsidiary of the Company is the
Paying Agent, shall segregate and hold in trust) an amount of money sufficient
to pay the Redemption Price plus accrued and unpaid interest, if any, of all
Notes to be redeemed on that date (other than Notes or portions thereof called
for redemption on that date which have been delivered by the Company to the
Trustee for cancellation).  The Paying
Agent or Trustee shall promptly return to the Company any money so deposited
which is not required for that purpose.

 

If
the Company complies with the preceding paragraph, then, unless the Company
defaults in the payment when due of such Redemption Price plus accrued and
unpaid interest, if any, or the Paying Agent is prohibited from making such
payment pursuant to the terms of this Indenture, interest on the Notes to be
redeemed will cease to accrue on and after the applicable Redemption Date,
whether or not such Notes are presented for payment.

 

(E)           Section 1106 of
the Base Indenture shall be deleted in its entirety and replaced with the
following:

 

Section 1106          Securities
Payable on Redemption Date.

 

Once notice of redemption is mailed in
accordance with Section 1104, Notes called for redemption become due and
payable on the Redemption Date and at the Redemption Price plus accrued
interest, if any.  Upon surrender to the
Trustee or Paying Agent, such Notes called for redemption shall be paid at the
Redemption Price (which shall include accrued interest thereon to 

 

56

 

the Redemption Date), but installments of
interest, the maturity of which is on or prior to the Redemption Date, shall be
payable to Holders of record at the close of business on the relevant Record
Dates.

 

(F)           Section 1107 of
the Base Indenture shall be deleted in its entirety and replaced with the
following:

 

Section 1107          Securities
Redeemed in Part.

 

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

 

XI.           Set forth below
are the changes to Article 12 of the Base Indenture: Sinking Funds:

 

(A)          Article 12 of
the Base Indenture shall be deleted in its entirety and replaced with the
following:

 

The
Company is not required to make mandatory redemption or sinking fund payments
with respect to the Notes.

 

XII.         Set forth below
are the changes to Article 14 of the Base Indenture: Defeasance and
Covenant Defeasance:

 

(A)          Section 1401 of
the Base Indenture shall be deleted in its entirety and replaced with the
following:

 

Section 1401          Company’s
Option to Effect Defeasance or Covenant Defeasance.

 

The
Company may, at its option by Board Resolution of the Board of Directors of the
Company, at any time, elect to have either Section 1402 or Section 1403
be applied to all Outstanding Notes upon compliance with the conditions set
forth in Section 1404.

 

(B)           Section 1402 of
the Base Indenture shall be deleted in its entirety and replaced with the
following:

 

Section 1402          Legal
Defeasance and Discharge.

 

Upon
the Company’s exercise under Section 1401 hereof of the option applicable
to this Section 1402, the Company shall, subject to the satisfaction of
the conditions set forth in Section 1404, be deemed to have been discharged
from its obligations with respect to all Outstanding Notes on the date the
conditions set forth below are satisfied (hereinafter, “Legal Defeasance”).  For this purpose, Legal Defeasance means that
the Company shall be deemed to have paid and discharged the entire Indebtedness
represented by the Outstanding Notes, which shall thereafter be deemed to be “Outstanding”
only for the purposes of Section 1405 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 (and the Trustee, on
demand of and at the expense of the Company, shall execute proper instruments
acknowledging the same), and Holders of the Notes 

 

57

 

and
any amounts deposited under Section 1404 shall cease to be subject to any
other obligations, except for the following provisions, which shall survive
until otherwise terminated or discharged hereunder: (A) the rights of
Holders of Outstanding Notes to receive payments in respect of the principal
of, or interest or premium and liquidated damages, if any, on such Notes when
such payments are due from the trust fund described in Section 1404; (B) the
Company’s obligations with respect to the Notes concerning issuing temporary
notes, registration of 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 Company’s obligations in connection therewith; and (D) this
Article 14.  Subject to compliance
with this Article 14, the Company may exercise its option under this Section 1402
notwithstanding the prior exercise of its option under Section 1403 with
respect to such Securities.

 

(C)           Section 1403
shall be deleted in its entirety and replaced with the following:

 

Section 1403          Covenant
Defeasance.

 

Upon
the Company’s exercise under Section 1401 of the option applicable to this
Section 1403, the Company shall be released from its obligations under Section 703,
Section 1006, Section 1008 and Sections 1010 through 1017 and Article 8,
and its obligations under any other covenant, with respect to such Outstanding
Notes on and after the date the conditions set forth in Section 1404 are
satisfied (hereinafter, “Covenant Defeasance”), and such Notes shall
thereafter be deemed to be 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 financial accounting purposes) and Holders of the
Notes and any amounts deposited under Section 1404 shall cease to be
subject to any other obligations.  For
this purpose, such Covenant Defeasance means that, with respect to such
Outstanding Notes, the Company may omit to comply with and shall have no
liability in respect of any term, condition or limitation set forth in any such
covenant, whether directly or indirectly, by reason of any reference elsewhere
herein to any such covenant or by reason of 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 501(3) or
Section 501(4) or otherwise, as the case may be, but, except as
specified above, the remainder of this Indenture and such Notes shall be
unaffected thereby.  In addition, upon
the Company’s exercise under Section 1401 hereof of the option applicable
to this Section 1403, subject to the satisfaction of the conditions set
forth in Section 1404, Sections 501(3), 501(4), 501(5) and 501(8) shall
not constitute Events of Default.

 

58

 

(D)          Section 1404 of
the Base Indenture shall be deleted in its entirety and replaced with the
following:

 

Section 1404                          Conditions to
Defeasance or Covenant Defeasance.

 

In order to exercise either Legal Defeasance as described in Section 1402
or Covenant Defeasance as described in Section 1403:

 

(1)                                 the Company
must irrevocably deposit with the Trustee, in trust, for the benefit of the
Holders of the Notes, cash in U.S. dollars, non-callable 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, or interest and premium, if any, on the Outstanding Notes on the
Stated Maturity or on the applicable Redemption Date, as the case may be, and
the Company must specify whether the Notes are being defeased to maturity or to
a particular Redemption Date;

 

(2)                                 in the case of
Legal Defeasance, the Company shall have delivered to the Trustee an Opinion of
Counsel reasonably acceptable to the Trustee confirming that (a) the
Company has received from, or there has been published by, the Internal Revenue
Service a ruling or (b) since the date hereof, there has been a change in
the applicable federal income tax law, in either case to the effect that, and
based thereon such Opinion of Counsel shall confirm that, the Holders and
beneficial owners of the Outstanding Notes will not recognize income, gain or
loss for federal income tax purposes as a result of such Legal Defeasance and
will be subject to 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 Company shall have delivered to the Trustee an Opinion
of Counsel reasonably acceptable to the Trustee confirming that the Holders and
beneficial owners of the Outstanding Notes will not recognize income, gain or
loss for federal income tax purposes as a result of such Covenant Defeasance
and will be subject to federal income tax on the same amounts, in the same
manner and at the same times as would have been the case if such Covenant
Defeasance had not occurred;

 

(4)                                 the Company
delivers 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;

 

(5)                                 such Legal
Defeasance or Covenant Defeasance will not result in a breach or violation of,
or constitute a default under any material agreement or instrument to which the
Company or any of its subsidiaries is a party or by which the Company or any of
its subsidiaries is bound;

 

59

 

	
  (6)

  	
   

  	
  the
  Company must deliver to the Trustee an Officers’ Certificate stating that the
  deposit was not made by the Company with the intent of preferring the Holders
  of Notes over the other creditors of the Company with the intent of
  defeating, hindering, delaying or defrauding creditors of the Company or
  others; and

  
	
   

  	
   

  	
   

  
	
  (7)

  	
   

  	
  the
  Company must deliver to the Trustee an Officers’ Certificate and an Opinion
  of Counsel, each stating that all conditions precedent relating to the Legal
  Defeasance or the Covenant Defeasance have been complied with.

  

 

SECTION THREE

ADDITIONAL TERMS OF THE SUPPLEMENTAL INDENTURE

 

I.              Interpretation
of Base and Supplemental Indenture

 

The Base Indenture, as supplemented and amended by
this Supplemental Indenture, is in all respects ratified and confirmed, and the
Base Indenture and this Supplemental Indenture shall be read, taken and
construed as one and the same instrument. 
All provisions included in this Supplemental Indenture supersede any
similar provisions included in the Base Indenture unless not permitted by law.

 

II.            Conflict of Any
Provision of Indenture with Trust Indenture Act

 

If any provision hereof limits, qualifies or
conflicts with another provision hereof which is required to be included in
this Supplemental Indenture by any of the provisions of the Trust Indenture
Act, such required provision shall control.

 

III.           Successors and
Assigns

 

All covenants and agreements in this Supplemental
Indenture by the Company shall bind its successors and assigns, whether so
expressed or not.

 

IV.           Severability

 

In case any provision in this Supplemental Indenture
or in the Notes shall be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions (or of the other series
of Notes) shall not in any way be affected or impaired thereby.

 

V.            Benefits of
Indenture

 

Nothing in this Supplemental Indenture, expressed or
implied, shall give to any Person, other than the parties hereto and their
successors hereunder, and the Holders of the Notes any benefit or any legal or
equitable right, remedy or claim under this Supplemental Indenture.

 

60

 

VI.           Governing Law

 

This
Supplemental Indenture and each Note shall be deemed to a contract made under
the laws of the State of New York and this Supplemental Indenture and each such
Note shall be governed by and construed in accordance with the laws of the
State of New York, without regard to conflicts of laws principles that would
apply any other law.

 

VII.          Definitions

 

All terms used in this Supplemental Indenture not
otherwise defined herein that are defined in the Base Indenture shall have the
meanings set forth therein.

 

VIII.        Duplicate
Originals

 

This Supplemental Indenture may be executed in any
number of counterparts, each of which shall be an original; but such
counterparts shall together constitute but one and the same instrument.

 

61

 

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

 

	
   

  	
  BE
  AEROSPACE, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  THOMAS P. MCCAFFREY

  
	
   

  	
   

  	
  Name:
  

  	
  Thomas
  P. McCaffrey

  
	
   

  	
   

  	
  Title:

  	
  Senior
  Vice President and Chief

  Financial Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  WILMINGTON TRUST COMPANY,

  as Trustee

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  MICHAEL G. OLLER, JR.

  
	
   

  	
   

  	
  Name:

  	
  Michael
  G. Oller, Jr.

  
	
   

  	
   

  	
  Title:

  	
  Assistant
  Vice President

  
					

 

62

 

APPENDIX A

 

PROVISIONS RELATING TO
INITIAL NOTES 

AND ADDITIONAL NOTES

 

1.                                      Definitions

 

1.1.                           Definitions.

 

Capitalized terms used in this
Appendix and not otherwise defined shall have the meanings provided in the
Indenture.  For the purposes of this
Appendix A and the Indenture as a whole, the following terms shall have the
meanings indicated below:

 

“Definitive Note” means
a certificated Initial Note that does not include the Global Notes Legend.

 

“Depositary” means The
Depository Trust Company, its nominees and their respective successors or
another Person designated as Depositary by the Company, which must be a
clearing agency registered under the Exchange Act.

 

“Global Notes Legend”
means the legend set forth under that caption in Exhibit 1 to this Appendix.

 

“Initial Notes” means (1) $600.0
million aggregate principal amount of 8.50% Senior Notes due 2018 issued on the
Issue Date and (2) Additional Notes, if any, issued in a transaction
exempt from the registration requirements of the Securities Act.

 

“Notes Custodian” means
the custodian with respect to a Global Note (as appointed by the Depositary) or
any successor person thereto, who shall initially be the Trustee.

 

“Securities Act” means
the Securities Act of 1933, as amended.

 

“Underwriting Agreement”
means (1) with respect to the Initial Notes issued on the Issue Date, the
Underwriting Agreement dated as of June 26, 2008, among the Company and
the representatives for the Underwriters and (2) any other similar
purchase or underwriting agreement relating to Additional Notes.

 

“Underwriters” means (1) with
respect to the Initial Notes issued on the Issue Date, J.P. Morgan Securities
Inc., Credit Suisse Securities (USA) LLC, UBS Securities LLC, Greenwich Capital
Markets, Inc., SunTrust Robinson Humphrey, Inc., Wells Fargo
Securities, LLC, and Mizuho Securities USA Inc. and (2) with respect to
each issuance of Additional Notes, the Persons purchasing such Additional Notes
under the related underwriting agreement.

 

A-1

 

1.2.          Other
Definitions.

 

	
  Term:

  	
   

  	
  Defined in Section:

  
	
   

  	
   

  	
   

  
	
  “Agent Members”

  	
   

  	
  2.1(c)

  
	
  “Global Note”

  	
   

  	
  2.1(b)

  

 

2.                                      The
Notes

 

2.1.                              Form and
Dating.

 

(a)           The Initial Notes
issued on the date hereof were offered and sold by the Company pursuant to the
Underwriting Agreement to the Underwriters. 
Additional Notes offered after the date hereof may be offered and sold
by the Company from time to time pursuant to one or more Underwriting
Agreements in accordance with applicable law.

 

(b)           Global Notes. 
The Initial Notes shall be issued initially in the form of one or more
permanent global Notes in definitive, fully registered form (collectively, the “Global Note”) without interest
coupons and bearing the Global Notes Legend, which shall be deposited on behalf
of the purchasers of the Notes represented thereby with the Notes Custodian,
and registered in the name of the Depositary or a nominee of the Depositary,
duly executed by the Company and authenticated by the Trustee as provided in
this Indenture.  The aggregate principal
amount of the Global Notes may from time to time be increased or decreased by
adjustments made on the records of the Trustee and the Depositary or its
nominee.

 

(c)           Book-Entry
Provisions.  This Section 2.1(c) shall apply only to a Global
Note deposited with or on behalf of the Depositary.

 

The Company shall execute and
the Trustee shall, in accordance with this Section 2.1(c) and Section 303
of this Indenture, and pursuant to an authentication order delivered to the
Trustee pursuant to Section 303 of this Indenture, authenticate and
deliver initially one or more Global Notes that (i) shall be registered in
the name of the Depositary for such Global Note or Global Notes or the nominee
of such Depositary and (ii) shall be delivered by the Trustee to
such Depositary or pursuant to such Depositary’s instructions or held by the
Trustee as Notes Custodian.

 

Members of, or participants in, the
Depositary (“Agent Members”)
shall have no rights under this Indenture with respect to any Global Note held
on their behalf by the Depositary or by the Trustee as Notes Custodian or under
such Global Note, and the Depositary may be treated by the Company, the Trustee
and any agent of the Company (including any Agent) or the Trustee as the
absolute owner of such Global Note for all purposes whatsoever. 
Notwithstanding the foregoing, nothing herein shall prevent the Company, the
Trustee or any agent of the Company or the Trustee from giving effect to any
written certification, proxy or other authorization furnished by the Depositary
or impair, as between the Depositary and its Agent Members, the operation of
customary practices of such Depositary governing the exercise of the rights of
a holder of a beneficial interest in any Global Note.

 

A-2

 

(d)           Definitive Notes. 
Except as provided in Section 2.2 or 2.3, owners of beneficial interests
in Global Notes will not be entitled to receive physical delivery of
certificated Notes.

 

2.2.                              Transfer
and Exchange.  (a)  Transfer
and Exchange of Definitive Notes.  When Definitive Notes are presented
to the Registrar with a request:

 

(i)            to register the transfer of such Definitive Notes; or

 

(ii)           to exchange such Definitive Notes for an equal principal
amount of Definitive Notes of other authorized denominations,

 

the Registrar shall register the transfer or make the exchange as
requested if its reasonable requirements for such transaction are met; provided, however, that
the Definitive Notes surrendered for transfer or exchange shall be duly
endorsed or accompanied by a written instrument of transfer in form reasonably
satisfactory to the Company and the Registrar, duly executed by the Holder
thereof or his attorney duly authorized in writing.

 

(b)           Restrictions on
Transfer of a Definitive Note for a Beneficial Interest in a Global Note. 
A Definitive Note may not be exchanged for a beneficial interest in a Global
Note except upon receipt by the Trustee of a Definitive Note, duly endorsed or
accompanied by a written instrument of transfer in form reasonably satisfactory
to the Company and the Registrar, together with written instructions directing
the Trustee to make, or to direct the Notes Custodian to make, an adjustment on
its books and records with respect to such Global Note to reflect an increase
in the aggregate principal amount of the Notes represented by the Global Note,
such instructions to contain information regarding the Depositary account to be
credited with such increase, then the Trustee shall cancel such
Definitive Note and cause, or direct the Notes Custodian to cause, in
accordance with the standing instructions and procedures existing between the
Depositary and the Notes Custodian, the aggregate principal amount of Notes
represented by the Global Note to be increased by the aggregate principal
amount of the Definitive Note to be exchanged and shall credit or cause to be
credited to the account of the Person specified in such instructions a
beneficial interest in the Global Note equal to the principal amount of the Definitive
Note so canceled.  If no Global Notes are then outstanding and the Global
Note has not been previously exchanged for certificated Notes pursuant to Section 2.3,
the Company shall issue and the Trustee shall authenticate, in accordance with Section 303
of this Indenture, a new Global Note in the appropriate principal amount.

 

(c)           Transfer and
Exchange of Global Notes.  (i) 
The transfer and exchange of Global Notes or beneficial interests therein shall
be effected through the Depositary, in accordance with this Indenture
(including applicable restrictions on transfer set forth herein, if any) and
the procedures of the Depositary therefor.  A transferor of a beneficial
interest in a Global Note shall deliver a written order given in accordance
with the Depositary’s procedures containing information regarding the
participant account of the Depositary to be credited with a beneficial interest
in such Global Note or another Global Note and such account shall be credited
in accordance with such order with a beneficial interest in the applicable
Global Note and the account of the Person making the transfer shall be debited
by an amount equal to the beneficial interest in the Global Note being
transferred.

 

A-3

 

(ii)           If
the proposed transfer is a transfer of a beneficial interest in one Global Note
to a beneficial interest in another Global Note, the Registrar shall reflect on
its books and records the date and an increase in the principal amount of the
Global Note to which such interest is being transferred in an amount equal to
the principal amount of the interest to be so transferred, and the Registrar
shall reflect on its books and records the date and a corresponding decrease in
the principal amount of the Global Note from which such interest is being
transferred.

 

(iii)          Notwithstanding
any other provisions of this Appendix (other than the provisions set forth in Section 2.3),
a Global Note may not be transferred as a whole except 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.

 

(d)           Legend.

 

Each Definitive Note shall bear
the following additional legend:

 

IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL
DELIVER TO THE REGISTRAR AND TRANSFER AGENT SUCH CERTIFICATES AND OTHER
INFORMATION AS SUCH TRANSFER AGENT MAY REASONABLY REQUIRE TO CONFIRM THAT
THE TRANSFER COMPLIES WITH THE FOREGOING RESTRICTIONS.

 

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

 

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

 

(i)            To
permit registrations of transfers and exchanges, the Company shall execute and
the Trustee shall authenticate, Definitive Notes and Global Notes at the
Registrar’s request.

 

(ii)           No
service charge shall be made for any registration of transfer or exchange, but
the Company or the Trustee may require payment of a sum sufficient to cover any
transfer tax, assessments, or similar governmental charge payable in connection
therewith (other than any such transfer taxes, 

 

A-4

 

assessments or similar governmental charge
payable upon exchanges pursuant to Sections 306, 1015 and1107 of this
Indenture).

 

(iii)          Prior
to the due presentation for registration of transfer of any Note, the Company,
the Trustee, the Paying Agent or the Registrar may deem and treat the person in
whose name a Note is registered as the absolute owner of such Note for the
purpose of receiving payment of principal of and interest on such Note and for
all other purposes whatsoever, whether or not such Note is overdue, and none of
the Company, the Trustee, the Paying Agent or the Registrar shall be affected
by notice to the contrary.

 

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

 

(g)           No Obligation of
the Trustee.

 

(i)            The
Trustee shall have no responsibility or obligation to any beneficial owner of a
Global Note, a member of, or a participant in the Depositary or any other
Person with respect to the accuracy of the records of the Depositary or its
nominee or of any participant or member thereof, with respect to any ownership
interest in the Notes or with respect to the delivery to any participant,
member, beneficial owner or other Person (other than the Depositary) of any
notice (including any notice of redemption or repurchase) or the payment of any
amount, under or with respect to such Notes.  All notices and
communications to be given to the Holders and all payments to be made to
Holders under the Notes shall be given or made only to the registered Holders
(which shall be the Depositary or its nominee in the case of a Global
Note).  The rights of beneficial owners in any Global Note shall be
exercised only through the Depositary subject to the applicable rules and
procedures of the Depositary.  The Trustee may rely and shall be fully
protected in relying upon information furnished by the Depositary with respect
to its members, participants and any beneficial owners.

 

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

 

A-5

 

2.3.          Definitive Notes.

 

(a)           A Global Note
deposited with the Depositary or with the Trustee as Notes Custodian pursuant
to Section 2.1 or issued in connection with a Registered Exchange Offer
shall be transferred to the beneficial owners thereof in the form of Definitive
Notes in an aggregate principal amount equal to the principal amount of such
Global Note, in exchange for such Global Note, only if such transfer complies
with Section 2.2 and (i) the Depositary notifies the Company that it
is unwilling or unable to continue as a Depositary for such Global Note or if
at any time the Depositary ceases to be a “clearing agency” registered under
the Exchange Act, and a successor depositary is not appointed by the Company
within 60 days of such notice or after the Company becomes aware of such cessation,
(ii) an Event of Default has occurred and is continuing or (iii) the
Company, in its sole discretion, notifies the Trustee in writing that it elects
to cause the issuance of certificated Notes under this Indenture.

 

(b)           Any Global Note that
is transferable to the beneficial owners thereof pursuant to this Section 2.4
shall be surrendered by the Depositary to the Trustee, to be so transferred, in
whole or from time to time in part, without charge, and the Trustee shall
authenticate and deliver, upon such transfer of each portion of such Global
Note, an equal aggregate principal amount of Definitive Notes of authorized
denominations.  Any portion of a Global Note transferred pursuant to this Section shall
be executed, authenticated and delivered only in denominations of $2,000 and
any greater integral multiple of $1,000 thereof and registered in such names as
the Depositary shall direct.

 

(c)           Subject to the provisions of Section 2.3(b),
the registered Holder of a Global Note may grant proxies and otherwise
authorize any Person, including Agent Members and Persons that may hold
interests through Agent Members, to take any action which a Holder is entitled
to take under this Indenture or the Notes.

 

(d)           In the event of the occurrence of any
of the events specified in Section 2.3(a)(i), (ii) or (iii), the Company
will promptly make available to the Trustee a reasonable supply of Definitive
Notes in fully registered form without interest coupons.

 

A-6

 

EXHIBIT 1

To

APPENDIX A

 

[FORM OF FACE OF INITIAL NOTE]

 

[Global Notes Legend]

 

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

 

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

 

[Definitive Notes Legend]

 

IN
CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE REGISTRAR AND
TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS SUCH TRANSFER AGENT MAY REASONABLY
REQUIRE TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOING RESTRICTIONS.

 

 

	
  No

  	
   

  	
  $

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  CUSIP

  

 

8.50% Senior
Notes due 2018

 

BE Aerospace, Inc., a
Delaware corporation, promises to pay to
[               ]
or registered assigns, the principal sum of [           ]
Dollars [as such sum may be increased or reduced as reflected on the records of
the Trustee in accordance with the Indenture] on July 1, 2018.

 

Interest Payment Dates:  January 1 and July 1

 

Record Dates:  December 15 and June 15

 

Additional provisions of this Note are set forth on
the other side of this Note.

 

 

IN
WITNESS HEREOF, the Issuer has caused this instrument to be duly executed.

 

Dated:
July  , 2008

	
   

  	
  BE AEROSPACE, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

 

TRUSTEE’S
CERTIFICATE OF

AUTHENTICATION

 

Dated:
July 1, 2008

 

WILMINGTON
TRUST

COMPANY 

 

as
Trustee, certifies

that this is one of

the Notes referred

to in the Indenture.

 

	
  By

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Authorized Signatory

  

 

 

[FORM OF REVERSE SIDE
OF INITIAL NOTE]

 

8.50% Senior Notes due 2018

 

1.  Interest

 

BE AEROSPACE,
INC., a Delaware corporation (the “Company” or the “Issuer”), promises to pay
interest on the principal amount of this Note at the rate per annum shown
above.  The Company will pay interest
semi-annually on January 1 and July 1 of each year (each an “Interest
Payment Date”), commencing January 1, 2009. 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 July 1, 2008. Interest will be computed on
the basis of a 360-day year of twelve 30-day months.

 

The Company
shall pay interest at the rate of interest then borne by the Notes on overdue
installments of principal and on overdue installments of interest to the extent
lawful as provided in the Indenture.

 

2.  Method of Payment

 

The Company
shall pay interest on the Notes (except defaulted interest) to the Persons who
are the registered Holders at the close of business on the Record Date immediately
preceding the Interest Payment Date even if the Notes are cancelled after such
Record Date and before the corresponding Interest Payment Date. Holders must
surrender Notes to a Paying Agent to collect principal payments. The Company
shall pay principal and interest in money of the United States that at the time
of payment is legal tender for payment of public and private debts (“U.S. Legal
Tender”). The Company may pay principal and interest by wire transfer of
federal funds, or interest by check payable in such U.S. Legal Tender.  The Company may deliver any such interest
payment to the Paying Agent or to a Holder at the Holder’s registered address.

 

3.  Paying Agent and Registrar

 

Initially, Wilmington Trust
Company (the “Trustee”) will act as Paying Agent and Registrar.  The Company may change any Paying Agent or Registrar
without notice to the Holders.  The
Company or any of the Company’s Subsidiaries may act as Registrar or Paying
Agent.

 

4.  Indenture

 

The Company issued the Notes under an Indenture,
dated as of July 1, 2008 (the “Base Indenture”) as supplemented by the
Supplemental Indenture dated as of July 1, 2008 (the “Supplemental
indenture” and collectively, the “Indenture”), by and between the Company and
the Trustee. Capitalized terms herein are used as defined in the Indenture unless otherwise defined herein. The terms
of the Notes include those stated in the Indenture and those made part of the
Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C.
§§ 77aaa-77bbbb) 

 

 

(the
“TIA”), as in effect on the date of the Indenture until such time as the
Indenture is qualified under the TIA, and thereafter as in effect on the date
on which the Indenture is qualified under the TIA and as it may be amended from
time to time. Notwithstanding anything to the contrary herein, the Notes are
subject to all such terms, and Holders are referred to the Indenture and the
TIA for a statement of them. The Notes are senior obligations of the Company
initially limited in aggregate principal amount to $600,000,000 on the Issue
Date, and, subject to compliance with Section 1011 of the Indenture,
unlimited in aggregate principal amount

 

5.  Optional Redemption

 

On and after July 1,
2013, the Company will be entitled, at its option on one or more occasions, to
redeem all or any portion of the Notes upon not less than 30 nor more than 60
days’ notice, at the following Redemption Prices (expressed as percentages of
the principal amount thereof) if redeemed during the twelve-month period
commencing on July 1 of the years set forth below, plus, in each case,
accrued and unpaid interest to the Redemption Date, subject to the rights of
Holders on the relevant record date to receive interest on the relevant
interest payment date:

 

	
  Period

  	
   

  	
  Percentage

  	
   

  
	
  2013

  	
   

  	
  104.250

  	
  %

  
	
  2014

  	
   

  	
  102.833

  	
  %

  
	
  2015

  	
   

  	
  101.417

  	
  %

  
	
  2016 and thereafter

  	
   

  	
  100.000

  	
  %

  

 

6.  Optional Redemption upon Equity Offering

 

On or prior to
July 1, 2011, the Company may, at its option on one or more occasions,
redeem up to 35% of the initially issued aggregate principal amount of the
Notes (which includes Additional Notes, if any) with the net cash proceeds
received by the Company from one or more Equity Offerings, at a Redemption
Price equal to 108.5% of the principal amount thereof, plus accrued and unpaid
interest to the date of redemption; provided, however, that:

 

(1)           at least 65% of the initially issued aggregate principal
amount of the Notes (which includes Additional Notes, if any) remains
outstanding immediately after any such redemption; and

 

(2)           each such redemption occurs within 90 days after the date
of the related Equity Offering.

 

 

7.  Redemption at Make-Whole Premium

 

At any time
prior to July 1, 2013, the Company may redeem all or any portion of the
Notes on one or more occasions upon not less than 30 nor more than 60 days
notice 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, if
any, to the date of redemption subject to the rights of Holders of Notes on the
relevant Record Dates occurring prior to the Redemption Date to receive
interest due on the relevant Interest Payment Date.

 

As used in the
preceding paragraph the following terms have the following meanings:

 

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

 

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

 

(b)           the excess, if any,
of:

 

(1)           the present value at such Redemption
Date of (i) the Redemption Price of the Note at July 1, 2013 (such Redemption
Price being set forth in the table appearing in Paragraph 5 of the Notes) plus (ii) all
remaining required interest payments due on the Note through July 1, 2013
(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

 

(2)                                  the
principal amount of the Note.

 

“Treasury Rate” means, as of any Redemption
Date, the yield to maturity as of such Redemption Date of United States
Treasury securities with a constant maturity (as compiled and published in the
most recent Federal Reserve Statistical Release H.15 (519) that has become
publicly available at least two Business Days prior to the Redemption Date (or,
if such Statistical Release is no longer published, any publicly available
source of similar market data)) most nearly equal to the period from the
Redemption Date to July 1, 2013; provided that,
if the period from the Redemption Date to such date 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.  The United
States Treasury security used to calculate the Treasury Rate shall be selected
by the Quotation Agent.

 

“Quotation
Agent” means a nationally recognized investment banking firm selected by the
Company that is a primary U.S. Government securities dealer.

 

 

8.  Notice of Redemption

 

Notice of
redemption will be sent, by first class mail, postage prepaid, at least 30 days
but not more than 60 days before the Redemption Date to each Holder of Notes to
be redeemed at such Holder’s registered address. Notes in denominations larger
than $2,000 may be redeemed in part.

 

Except as set
forth in the Indenture, if monies for the redemption of the Notes called for
redemption shall have been deposited with the Paying Agent for redemption on
such Redemption Date, then, unless the Company defaults in the payment of such
Redemption Price plus accrued and unpaid interest, if any, the Notes called for
redemption will cease to bear interest from and after such Redemption Date and
the only right of the Holders of such Notes will be to receive payment of the
Redemption Price plus accrued and unpaid interest, if any, to the Redemption
Date.

 

9.  
Offers to Purchase

 

Sections 1008
and 1015 of the Indenture provide that upon the occurrence of a Change of
Control (as defined in the Indenture) and after certain Asset Sales (as defined
in the Indenture), and subject to further limitations contained therein, the
Company will make an offer to purchase certain amounts of the Notes in
accordance with the procedures set forth in the Indenture.

 

10.  
Denominations; Transfer; Exchange

 

The Notes are
in registered form, without coupons, in denominations of $2,000 and greater
integral multiples of $1,000. A Holder shall register the transfer of or
exchange Notes in accordance with the Indenture. The Registrar may require a
Holder, among other things, to furnish appropriate endorsements and transfer
documents and to pay certain transfer taxes or similar governmental charges
payable in connection therewith as permitted by the Indenture. The Registrar
need not register the transfer of or exchange any Notes or portions thereof (i) during
a period beginning at the opening of business 15 days before the mailing of a
notice of redemption of Notes and ending at the close of business on the day of
such mailing and (ii) selected for redemption, except the unredeemed
portion of any Note being redeemed in part.

 

11.  
Persons Deemed Owners

 

The registered
Holder of this Note shall be treated as the owner of it for all purposes.

 

 

12.  
Unclaimed Funds

 

If funds for
the payment of principal or interest remain unclaimed for one year, the Trustee
and the Paying Agent will repay the funds to the Company at its request. After
that, all liability of the Trustee and such Paying Agent with respect to such
funds shall cease.

 

13.  
Legal Defeasance and Covenant Defeasance

 

The Company
may be discharged from its Obligations under the Indenture and the Notes except
for certain provisions thereof, and may be discharged from its Obligations to
comply with certain covenants contained in the Indenture and the Notes, in each
case upon satisfaction of certain conditions specified in the Indenture.

 

14.  
Amendment; Supplement; Waiver

 

Subject to
certain exceptions, the Indenture and the Notes may be amended or supplemented
with the written consent of the Holders of at least a majority in aggregate
principal amount of the Notes then outstanding, and any existing Default or
Event of Default or compliance with any provision may be waived with the
consent of the Holders of a majority in aggregate principal amount of the Notes
then outstanding (other than a default in the payment of the principal of or interest
on the Notes).  Without notice to or
consent of any Holder, the parties thereto may amend or supplement the
Indenture and the Notes to, among other things, cure any ambiguity, defect or
inconsistency, provide for uncertificated Notes in addition to or in place of
certificated Notes or comply with any requirements of the Commission in
connection with the qualification of the Indenture under the TIA, or make any
other change that does not adversely affect the legal rights of any Holder.

 

15.  
Restrictive Covenants

 

The Indenture
contains certain covenants that, among other things, limit the ability of the
Company and its Restricted Subsidiaries to incur additional Indebtedness,
create certain liens, pay dividends or make certain other restricted payments,
consummate certain asset sales, enter into certain transactions with affiliates
and merge or consolidate with any other person or sell, assign, transfer,
lease, convey or otherwise dispose of all or substantially all of the assets of
the Company and its Restricted Subsidiaries, taken as a whole. The limitations
are subject to a number of important qualifications and exceptions. The Company
must annually report to the Trustee on compliance with such covenants.

 

16.  
Defaults and Remedies

 

If an Event of
Default occurs and is continuing, the Trustee or the Holders of at least 25% in
aggregate principal amount of Notes then outstanding may declare the principal
of and accrued interest on all the Notes to be due and payable immediately in
the manner and with the effect provided in the Indenture. Notwithstanding the
foregoing, if an Event of Default originating from certain bankruptcy events
occurs, all Outstanding Notes will become due and payable without further
action or notice.  Holders of Notes may
not enforce the Indenture or the Notes except as provided in the Indenture. The
Trustee is not obligated to enforce the Indenture 

 

 

or the Notes unless it has
received indemnity satisfactory to it. The Indenture permits, subject to
certain limitations therein provided, Holders of a majority in aggregate
principal amount of the Notes then outstanding to direct the Trustee in its
exercise of any trust or power. The Trustee may withhold from Holders of Notes
notice of certain continuing Defaults or Events of Default if it determines
that withholding notice is in their interest.

 

17.  
Trustee Dealings with Company

 

The Trustee
under the Indenture, in its individual or any other capacity, may become the
owner or pledgee of Notes and may otherwise deal with the Company, the
Subsidiaries of the Company or their respective Affiliates as if it were not
the Trustee.

 

18.  
No Recourse Against Others

 

No
stockholder, director, officer, employee or incorporator, as such, of the
Company shall have any liability for any obligation of the Company under the
Notes or the Indenture or for any claim based on, in respect of or by reason
of, such Obligations or their creation. Each Holder of a Note by accepting a
Note waives and releases all such liability. The waiver and release are part of
the consideration for the issuance of the Notes.

 

19.  
Authentication

 

This Note
shall not be valid until the Trustee or authenticating agent signs the
certificate of authentication on this Security by its manual signature.

 

20.  
Abbreviations

 

Customary
abbreviations may be used in the name of a Holder of a Security or an assignee,
such as: TEN COM (= tenants in common), TEN ENT (= tenants by the entireties),
JT TEN (= joint tenants with right of survivorship and not as tenants in
common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors Act).

 

21.  
CUSIP Numbers

 

Pursuant to a
recommendation promulgated by the Committee on Uniform Security Identification
Procedures, the Company has caused a CUSIP number to be printed on the Notes as
a convenience to the Holders. No representation is made as to the accuracy of
such numbers as printed on the Notes and reliance may be placed only on the
other identification numbers printed hereon.

 

24.  
Governing Law

 

This Note and
the Indenture shall be governed by and construed in accordance with the laws of
the State of New York, without regard to conflicts of laws principles that
would apply any other law.

 

 

ASSIGNMENT FORM

 

To
assign this Note, fill in the form below:

 

I
or we assign and transfer this Note to

 

	
   

  	
   

  	
   

  
	
   

  	
  (Print or type assignee’s name, address and zip code)

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  (Insert assignee’s soc. sec. or tax I.D. No.)

  	
   

  

 

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

 

	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Date:

  	
   

  	
   

  	
  Your Signature:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
								

 

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

 

In
connection with any transfer of any of the Notes evidenced by this certificate,
the undersigned confirms that such Notes are being transferred in accordance
with its terms.

 

 

	
   

  	
   

  
	
   

  	
  Your Signature

  

 

Signature
Guarantee:

 

	
  Date:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
  Signature of Signature Guarantee

  	
   

  

 

Signatures
must be guaranteed by an “eligible guarantor institution” meeting the
requirements of the Registrar, which requirements include membership or
participation in the Security Transfer Agent Medallion Program (“STAMP”) or
such other “signature guarantee program” as may be 

 

 

determined
by the Registrar in addition to, or in substitution for, STAMP, all in
accordance with the Securities Exchange Act of 1934, as amended.

 

 

OPTION OF HOLDER TO ELECT
PURCHASE

 

If you want to
elect to have this Note purchased by the Company pursuant to Section 1008
(Change of Control) or 1015 (Asset Sales) of the Indenture, check the box:

 

o  Change of Control

 

o  Asset Sales

 

If you want to
elect to have only part of this Note purchased by the Company pursuant to Section 1008
or 1015 of the Indenture, state the amount in principal amount:  $

 

 

	
  Dated:

  	
   

  	
   

  	
  Your Signature:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  (Sign exactly as your name appears

  on the other side of this Note.)

  

 

	
  Signature Guarantee:

  	
   

  
	
   

  	
  (Signature must be guaranteed)

  

 

Signatures
must be guaranteed by an “eligible guarantor institution” meeting the
requirements of the Registrar, which requirements include membership or
participation in the Security Transfer Agent Medallion Program (“STAMP”) or
such other “signature guarantee program” as may be determined by the Registrar
in addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.Exhibit 10.1

 

MODIFICATION
AND EXTENSION

OF

CONSULTING
AGREEMENT

 

Southwest Casino Corporation, a Nevada corporation (“Southwest”), and
Operadora Dominicana Macao, S.A., a corporation organized and existing under
the laws of the Dominican Republic (“PR”), enter into this Modification and
Extension of Consulting Agreement (“Agreement”) effective June 25, 2008
(the “Effective Date”).  This Agreement
extends and modifies the prior Consulting Agreement between Southwest and PR
that was effective September 20, 2007 (the “Original Agreement”).  This Agreement amends and restates the
Original Agreement in its entirety.

 

BACKGROUND

 

A.                                    PURPOSE.  This
Agreement states the terms and conditions under which PR and Southwest agree to
extend and modify the existing consulting relationship between Palace Resorts
and Southwest, under which Southwest is providing Palace Resorts consulting
services related to a gaming operation (the “Casino”) owned and operated by PR
in Punta Cana in the Dominican Republic.

 

B.                                    GOAL AND OBJECTIVE.  The
goals and objectives of this Agreement are to extend the period during which
Southwest will provide consulting services resulting in the successful opening
of  the Casino and to state the terms and
conditions under which Southwest will provide consulting/management services to
PR after the opening of the Casino. Southwest’s consulting expertise will
specifically include, but is not limited to, providing PR with advice regarding
pre-opening development of the Casino, pre-opening marketing, staffing advice,
advice regarding the Casino floor layout, and providing advice with respect to
the number and type of gaming equipment for the Casino and ensuring that all
gaming equipment, including slot machines, are ordered, installed, and
operational during the first quarter of 2009. 
It is acknowledged by the parties that it is PR’s responsibility to
specifically approve all plans and provide all funds for the development of the
Casino and purchase of the aforementioned gaming equipment.  Upon opening, Southwest will then manage and
consult with PR regarding all operations of the Casino and endeavor to develop
and expand PR’s gaming market in Punta Cana while running an efficient gaming
operation, subject to the terms and conditions contained herein.

 

NOW, THEREFORE, for good and
valuable consideration, the receipt and sufficiency of which are acknowledged
by Southwest and PR, the parties hereby agree as follows:

 

AGREEMENT

 

1.              CONSULTING
AND MANAGEMENT SERVICES.  PR engages
Southwest to provide consulting and management services to PR in connection
with the Casino, and Southwest agrees to provide such consulting and management
services to PR in connection with the Casino, on the terms and conditions
stated in this Agreement.  Southwest’s
advise given to PR during the term of this Agreement will be revised from
time-to-time, as necessary, based on changes in law, circumstances, and
prevailing industry standards.

 

2.              TERM.  The term of this Agreement begins on the
Effective Date and extends until the fifth anniversary of the first day of the
first full calendar month during which the Casino is open to the public (the “Casino
Opening Date”), unless otherwise terminated earlier under Section 14 of
this Agreement.  PR and Southwest agree
to enter into discussions at least 180 days before the end of 

 

1

 

the initial term regarding the possible
extension of their management relationship after the initial term.

 

3.              TIME
SCHEDULE.  Beginning
thirty (30) days after the Effective Date of this Agreement (or sooner if
requested by PR) and continuing on a monthly basis thereafter, Southwest and PR
will meet and discuss the progress of this engagement and the time deadlines
for the development of the Casino and the proposed Casino Opening Date.  At such times the parties will agree to any
additional or modified deadlines, and modifications hereto to the extent
necessary.

 

4.              PRE-OPENING
CONSULTING SERVICES.

 

4.1                               Development.  Southwest will assist in the
development of, and review plans for, and assist in the implementation of any
capital improvement plans for the Casino, including facility design or
modifications, equipment selection and purchasing, negotiations with vendors,
ordering, set-up and testing of the gaming equipment.  This review will include a cost/benefit
analysis or other appropriate method of analyzing the economic effects of all
capital improvements.  Copies of any such
analysis will be provided to PR promptly. 
PR will cause the Casino space to be constructed and all capital
improvements, other than installation of gaming equipment, to be completed no
later than thirty (30) days before the planned opening date so that Southwest
has adequate time to equip the Casino, interview, hire and train Casino
personal, in order to permit Casino operations to begin during the first
quarter of 2009.

 

4.2                               Accounting, Internal Controls, Licensing and Procedures.

 

4.2.A                   Southwest will
advise PR regarding the establishment and implementation of accounting and
other internal control systems and operations, employee and compliance manuals,
and review and provide input to PR regarding the operation of the accounting
and internal control systems and the adequacy of the operations, employee and
compliance manuals established for the Casino.  Southwest’s review will include working with
PR to determine all applicable legal requirements in the Dominican Republic and
any other applicable jurisdictional, governmental or quasi-governmental body
having regulatory authority over the Casino and its operations and personnel,
and licensing with respect thereto, and the implementation of adequate
procedures and practices to maintain compliance by the Casino.  In addition, Southwest will provide PR with
advice and assistance during the licensing phase of the opening process, to
enable PR to commence operation in accordance with the timetable set forth
herein, in full compliance with all applicable licensing requirements.

 

4.2.B                   Southwest will
immediately and continuously throughout the term hereof provide advice with
respect to the preparation and review of all financial projections and
pre-opening and post-opening operating budgets to ensure that PR has reliable
and accurate information with which to make its decisions.  Southwest will immediately advise PR of any
deficiency in any such budget and provide PR with recommendations for
corrections and/or changes thereto.  Such
advice will include, without limitation, training of appropriate personnel with
respect thereto in order to facilitate the successful operation of the Casino.

 

4.2.C                   Southwest will
analyze and provide PR with written comments regarding any projections and all
budgets prepared (or which need to be prepared) for the Casino.  Southwest will assist PR in the development
and preparation of an initial annual budget for the Casino. The initial annual
budget will be consistent with, to the extent reasonably practicable, gaming
industry standards.  The Annual Budget
will cover, among other items, the following sections:

 

(i)                                    Operating
Budget:  A budget that states in
detail, among other items, anticipated income, expense and reserves on a
month-by-month basis, supported by estimates of patronage, 

 

2

 

sources of income and
expense, and similar items, and is tied to the strategic plan, both short term
and long term;

 

(ii)                                Capital
Expense Budget:  A budget that
covers, among other items, anticipated and proposed capital expenditures for
the year, with justification for each capital expenditure, and which is tied to
the strategic plan for the Casino, both short term and long term;

 

(iii)                            Casino
Contracts:  A separate
schedule, including all anticipated material contracts for the Casino,
including the identities of anticipated contracting parties, if known, and a
detailed explanation of the purpose for each such contract (which such material
contracts will include, without limitation, all material licenses and permits,
contracts, agreements, leases and any other undertakings which may be required
and/or material to/for the operation of the Casino);

 

(iv)                               Labor
Budget:  A separate schedule
enumerating, by job description, all employees (and the number thereof)
required to fill all necessary positions on each shift, and the hours and days
per week of employment of each such employee; and

 

(v)                                   Salary/Wage
Schedule:  Detailed salary
and wage schedules for each position in the Casino including the terms of any
proposed fringe benefits and paid time off such as vacations, bonuses, sick
leave, etc.  Southwest shall advise PR as
to the industry norm regarding all benefits for employees (at each level)
employed to work in the Casino. 
Southwest will also recommend to PR any incentives for attracting and/or
retaining top management.

 

4.2.D                   Southwest will
advise PR on the industry standards for cash and security controls and
compliance procedures for the Casino, at all times in accordance with
applicable laws and regulations.  In
conjunction therewith, Southwest will assist PR in the development, adoption,
and implementation of a written system of internal controls and compliance
procedures, including granting credit to Casino patrons, procurement and
inventory control, and the safekeeping and monitoring of all monies, inventory
and other items of value in connection with the Casino’s gaming operations,
sales, receipts, prizes, gaming and other activities relating to the operation
of the Casino and the implementation of such procedures to be utilized by
Casino personnel.  Southwest will also
cooperate with PR and its auditors with respect to any control recommendations
that PR’s auditors may suggest and which PR has agreed to implement.

 

4.2.E                     Southwest will
assist in the establishment of security procedures to have all gaming materials
and receipts secured at all times, including the placement of such funds in the
facility safe or vault and otherwise complying with any requirements imposed or
recommended by any insurer of PR, the Casino and its property, security,
auditing or bonding.  Southwest will also
analyze whether any rooms in which a safe or vault is maintained will be
equipped with coded-access alarms, television monitors, motion detectors, or
such other security systems to maintain adequate 24-hour security, where
appropriate.  Southwest shall provide PR
with its comprehensive recommendation for the security of the Casino, its
assets and its patrons.

 

4.3                               Human
Resources.

 

4.3.A                   Southwest will
review and advise PR regarding staffing needs and necessary training of
personnel, and will evaluate each position, consistent with gaming industry
standards, to achieve the most efficient staffing for each shift.

 

4.3.B                   Southwest will
advise and assist PR with respect to the development of procedures and forms
for interviewing, evaluating, hiring and maintaining Casino employees who meet
all testing, background examination and licensing standards as required by all
applicable law.

 

3

 

4.3.C                   Southwest will
evaluate and advise PR regarding surveillance and security systems and personnel,
including the development of procedures, forms and training programs necessary
or appropriate for the operation of the Casino.

 

4.3.D                   Southwest will
review, evaluate and make recommendations to PR with regard to personnel
policies and procedures, addressing, but not limited to, the following
concerns:

 

	
  (i)

  	
   

  	
  Standards of personal and professional conduct;

  
	
  (ii)

  	
   

  	
  Employee and management communication guidelines;

  
	
  (iii)

  	
   

  	
  Customer and guest relations;

  
	
  (iv)

  	
   

  	
  Development and discipline standards;

  
	
  (v)

  	
   

  	
  Harassment in the workplace;

  
	
  (vi)

  	
   

  	
  Employee substance and alcohol abuse;

  
	
  (vii)

  	
   

  	
  Employee smoking and tobacco product use;

  
	
  (viii)

  	
   

  	
  Employee attendance;

  
	
  (ix)

  	
   

  	
  Standards of appearance;

  
	
  (x)

  	
   

  	
  Grievance and termination review;

  
	
  (xi)

  	
   

  	
  References and recommendations;

  
	
  (xii)

  	
   

  	
  Telephone use standards;

  
	
  (xiii)

  	
   

  	
  Employee assistance;

  
	
  (xiv)

  	
   

  	
  Outside employment;

  
	
  (xv)

  	
   

  	
  Found money;

  
	
  (xvi)

  	
   

  	
  Illegal activities;

  
	
  (xvii)

  	
   

  	
  Pre- employment and employment drug and
  illegal substance testing; and

  
	
  (xviii)

  	
   

  	
  Compliance with the gaming ordinance and regulations.

  

 

4.4                               Marketing.

 

4.4.A                   Southwest will
advise PR with respect to, and assist PR in the development and implementation
of a pre-opening advertising, public relations and marketing plans for the
Casino, including:

 

(i)                                    Assistance in (A) establishing
a Casino marketing department, (B) developing and using a data base
marketing system, and (C) gathering, by survey or otherwise, information
from customers to evaluate customer experiences at the Casino, including likes
and dislikes; and

 

(ii)                                Advice and
employee training programs regarding marketing, promotion and signage for the
Casino as a whole.

 

4.4.B                   Southwest will
advise PR regarding the use of newsletters, player’s clubs, mailing lists, tour
operators, or other forms of marketing, promotion and advertisement.

 

4.4.C                   Southwest will
provide recommendations for advertising placement and purchasing.  Recommended expenditures for advertising will
be in accordance with the industry standards for an operation of comparable
size.  Southwest will recommend placement
of advertising and a marketing strategy that maximizes market potential for the
Casino.

 

4.4.D                   Southwest will
provide recommendations and advice for establishing and maintaining good
relationships with the media, together with a protocol for dealing with the
media.

 

4.5                               Advice and training regarding the mix of games offered by the Casino.  Southwest will advise PR
regarding all factors to be considered, the weight given to each, and all other
relevant information for selecting the types and mixes of gaming to be
available in the Casino in order to maximize profits, and the manner in which
such mixes should be modified from time to time in order 

 

4

 

to continue to meet customer
demand to ensure the highest return to PR from operation of the Casino.

 

4.6                               Compliance.  Southwest will review and
advise PR regarding all compliance systems and manuals, internal controls,
procedures and employee training and implementation of same, to ensure that the
Casino is run in compliance with all applicable laws, regulations and licensing
requirements.

 

4.7                               Insurance.  Southwest will advise PR regarding
appropriate insurance coverage and minimum coverage levels for all aspects of
the Casino operation, in accordance with industry standards.  If requested, by PR, Southwest will provide
PR with a list of recommended insurers through which appropriate insurance
coverage for the Casino may be obtained.

 

5.              Management Services after Casino Opens.  Southwest will consult with and
advise PR regarding the operation of the Casino after the Casino opens to the
public.  Southwest will provide
management services to the Casino both in a corporate capacity and through the
General Manager of the Casino.  Southwest
will not be involved in any way in the management of any other facilities or
services of the Punta Cana resort, including without limitation, food and
beverage services, hotel, condominiums, and any other amenities or services
provided by PR other than the Casino.

 

5.1                               Southwest’s
responsibilities include management and advice regarding, but not limited to,
the following:

 

5.1.A                   Supervising and
managing all activities necessary for the conduct of gaming at the Casino.

 

5.1.B                   Equipping,
maintaining and improving the Casino, including management of the mix of games
offered by the Casino as described in Section 4.5 of this Agreement.

 

5.1.C                   In conjunction
with PR, establishing the operating days and hours at the Casino.

 

5.1.D                   Managing,
implementing and enforcing the human resources program, policies and practices
developed in accordance with Section 4.3 of this Agreement, including
hiring, firing, training and promoting employees at the Casino, which includes
overseeing the initial hiring, qualifying and training process for Casino
employees, all in accordance with practices and procedures approved by PR, in
its sole discretion.

 

5.1.E                     Managing and
implementing the marketing and promotion activities developed in accordance
with Section 4.4 of this Agreement.

 

5.1.F                     In conjunction
with PR, establishing, maintaining and managing appropriate security personnel,
systems and protocols with respect to the Gaming Operations at the Casino, its
customers and employees and the handling of monies related to the Gaming
Operations at the Casino; provided, however, that at no time shall Southwest’s
handling of monies related to the Gaming Operations of the Casino exceed the
authority granted pursuant to the policies and procedures prepared by Southwest
and agreed to in writing by PR.

 

5.1.G                   Maintaining all
books and records necessary for the Gaming Operations at the Casino.  Notwithstanding the foregoing, Southwest
shall provide PR with complete and unfettered access to the books and records
of the Casino.

 

5.1.H                   Implementing
and managing the compliance systems developed in accordance with Section 4.6
of this Agreement to comply with laws and regulations that apply to the
operation of the Casino.  This will
include providing PR with all information necessary for PR to comply with laws
and regulations that apply to the operation of the Casino.

 

5

 

5.1.I                        Such other
duties agreed upon from time to time by Southwest and PR.

 

5.2                               General Manager.  Subject at all times to the prior consultation
with, and consent and approval of PR, Southwest will appoint and hire, as an
employee of Southwest, as the on-site General Manager of the Casino.  The General Manager will have primary
authority over the operation of the Casino and all Casino personnel and who
will make, or delegate to an appropriate staff member responsibility and
authority for making, all day-to-day business decisions required for the
operation of the Casino; provided, however, that in no event shall the General
Manager delegate any responsibility expressly set forth in the General Manager’s
job description, prepared by Southwest and approved in writing by PR, as
non-delegable.  The General Manager will
have ultimate authority over and responsibility for adequately supervising and
monitoring these delegated tasks. The General Manager will be an employee of
Southwest.  The salary and costs of
benefits provided to the General Manager will be paid by Southwest, except that
any bonus paid to the General Manager based on the performance of the Casino
(which bonus must be approved by PR) will be paid by the Casino and considered
a Casino Operating Expense.

 

5.3                               Standard
of Care.  In the exercise of its management duties hereunder, Southwest and General
Manager shall at all times manage and maintain the Casino in a manner utilizing
standards and procedures which are comparable to the management of a “first-class”
casino similar in quality to existing casinos in the Caribbean, subject to such
adjustments as Southwest, in its reasonable, good-faith discretion, deems
necessary or appropriate.  Southwest
shall establish such standards and procedures in consultation with PR.

 

6.              EMPLOYEES
AND OPERATIONS

 

6.1                               Personnel.  All employees of the Casino will be PR
employees assigned to the Casino under the authority and supervision of the
General Manager, who will work in conjunction with Southwest.  Employees of the Casino must not be employees
of Southwest.  All responsibility for
employment decisions, including, but not limited to, the hiring, firing, promotion,
transfer, compensation and discipline of employees will, however, be the sole
responsibility of Southwest, who will make these decisions in accordance with
the rules, regulations, policies and procedures and prudent employment
practices established by Southwest and approved by PR in its sole discretion,
for use in the operation of the Casino.

 

6.2                               Security Clearance and Background Reviews.  Southwest must conduct adequate
background reviews, at a minimum, in accordance with industry standards, as may
be necessary and appropriate to the position to be filled and the
responsibilities of that position at the Casino.  Any background review must be sufficient to
meet the requirements of Applicable Law.

 

6.3                               Limited Appointment of Southwest as Agent of PR.  Southwest is appointed,
delegated, retained and authorized to act on behalf of PR as PR’s agent in
carrying out solely those duties set forth herein which are necessary to the
proper and efficient management and operation of the Casino; provided, however,
that Southwest’s actions as agent hereunder shall at all times be in strict
compliance with the terms and conditions hereof and the policies and procedures
prepared by Southwest and approved in writing by PR.

 

6.4                               Operation of General Business and Business Affairs.  Southwest will advise and
consult with PR regarding the day-to-day operation of the gaming operations and
the Casino, including, but not limited to, the advice with respect to the
general business and business affairs of PR in connection with the operation,
equipping, management and maintenance of the Casino

 

6.5                               Engage Other Professionals.  Southwest
will recommend to PR  and with the
prior written consent of PR, arrange for the engagement of other advisors and
appropriate professionals

 

6

 

from time-to-time as reasonably necessary to promote the sound and
efficient operation of the Casino.

 

7.     BUDGETING, ACCOUNTING AND
FINANCIAL REPORTING

 

7.1          Budgeting.  At
least ninety (90) days before the start of each fiscal year of the Casino,
Southwest will submit to PR a detailed proposed annual budget for the next
fiscal year as described in Section 4.2.C. 
Southwest will then consult with PR regarding the proposed budget for a
period of thirty (30) days immediately following delivery thereof and negotiate
with PR during such period any requested revisions to the proposed budget.  Within fifteen (15) days of the termination
of such immediately preceding thirty (30) day period, PR will provide Southwest
with a written list of all line items included thereon with respect to which
the parties have failed to agree and to which PR objects (the “Objection List”).  Southwest and PR will negotiate in good faith
to resolve such line items prior to the start of the upcoming fiscal year;
provided, however, that PR shall have the ultimate authority to approve such
disputed line items listed in the Objection List which have not been resolved
between the parties, in a form, satisfactory to PR.  Such approval must be at least ten (10) days
prior to the start of the next fiscal year (this approved budget is referred to
as the “Annual Budget” in this Agreement). 
In the event the parties are still negotiating any disputed items on the
Objection List at the time of the start of the fiscal year, to the extent such
disputed items were on the prior year’s budget, until resolved, such disputed
item shall be included in the Annual Budget using the prior fiscal year’s
amounts until a resolution of such disputed item has been made.  Southwest may submit revised budgets to PR
during the fiscal year if necessary to reflect significant unexpected events or
changes or unanticipated revenue or expenses. 
Upon approval by PR, a revised budget will become the Annual Budget.

 

7.2          Emergency Expenses.  Whenever, by reason of circumstances beyond
the reasonable control of the parties, emergency expenditures are required to
be made to ensure that the operations of the Casino are maintained, or to
protect life, person or property, Southwest shall immediately notify PR, or
vice versa, of such emergency and the parties will immediately negotiate in
good faith any necessary modification to the Annual Budget to enable the
parties to undertake to correct the emergency.

 

7.3          Accounting.  Southwest will assist in the creation and
maintenance of, and provide oversight to, the accounting systems and procedures
described in Section 4.2. that must, at a minimum:  (a) include an adequate system of
internal accounting controls; (b) permit the preparation of financial
statements in accordance with GAAP; (c) be susceptible to audit; and (d) permit
PR and Southwest to accurately calculate Southwest’s compensation.

 

7.4          Financial Records and Statements. 
Southwest will cause the Casino to maintain full and accurate books and
records pertaining to the operation of the Casino.  PR and its authorized representatives shall
have full and unfettered access to the Casino’s books and records.  The Casino’s books will be kept in compliance
with GAAP and the requirements of any other applicable laws or
regulations.  Southwest will cause the
Casino’s in-house accounting/bookkeeping staff to prepare and provide to PR and
Southwest a weekly revenue flash report and comparative monthly, quarterly and
annual financial statements showing all sales, revenue, other income and all
other amounts collected and received, and all expenses, deductions and
disbursements made therefrom in connection with the operation of the Casino and
in conformance with the Budget and appropriate accounting standards followed by
the Casino.  PR will engage Ernst &
Young, or such other accounting firm reasonably acceptable to Southwest, to
perform an annual audit of the annual financial statements and  of the Casino revenue and of all major contracts for
supplies, services or concessions reflected in the Casino Operating
Expenses.  The annual audited financial
statements 

 

7

 

must be delivered to Southwest and PR as soon
as available, but in no event more than ninety (90) days after the end of each
fiscal year of the Casino.

 

8.     EXPERIENCE, SUITABILITY, AND AUTHORITY

 

8.1          Experience.  Southwest represents and
warrants to PR that Southwest has the experience and ability to successfully
open and the experience of successfully operating, a gaming enterprise substantially
equivalent to the projected size and revenue of the Casino.

 

8.2          Suitability of Southwest. 
Southwest represents and warrants that each of Southwest and every
officer, director, employee or agent of Southwest, is of good repute and moral
character, and none of them (i) has been denied a gaming license by any
gaming licensing jurisdiction, (ii) currently has a gaming license which
has been suspended by any gaming licensing jurisdiction, (iii) has had a
gaming license revoked by any gaming licensing jurisdiction, or (iv) is
employed in any part-time or full-time employment with a government or private
employer in any capacity that would create a conflict of interest between
Southwest’s employment and the interests and objectives of PR.  No officer, director, employee, agent or
shareholder of Southwest has been arrested, indicted for, convicted of, or
pleaded nolo contendere to any
felony or any gaming offense, nor has any such person had any association with
individuals or entities connected with organized crime, nor is any such person
or entity a person or entity whose prior activities, criminal record, if any,
or reputation, habits and associations pose a threat to the public interest or
the effective regulation of gaming, or who would create or enhance the dangers
of unsuitable, unfair or illegal practices, methods and activities in the
conduct of gaming, or the carrying on of the business and financial
arrangements incidental thereto.

 

8.3          Background Investigation.  Upon execution of this Agreement, each of
Southwest and PR will have a period of thirty (30) days in which to complete
any background or other suitability investigation into the other party that
Southwest or PR deems necessary.  Each of
Southwest and PR agrees to provide promptly to the other any information
reasonably requested by the other in connection with their respective
background investigations.  If either
Southwest or PR concludes, each in its sole discretion, that it is unable or
unwilling to work with the other as a result of any background investigation
they choose to pursue, this Agreement will terminate immediately upon written
notice to the other party and be of no further force or effect and no
compensation will be due nor will any liability arise to or from Southwest and
PR.

 

8.4          Authority.  Southwest and PR have all required corporate
power and authority to enter into and perform its respective obligations in
accordance with this Agreement.  The
undersigned representatives of Southwest and PR have full power and authority
to enter into this Agreement and to bind Southwest and PR, respectively, to the
terms and conditions hereof.

 

8.5          Insurance.  Southwest currently has in place the
insurance coverage listed on Schedule 8.5 hereto, which such schedule
contains the name of the insurer, a description of the coverage, the coverage
limitations and the maximum amount per claim and in the aggregate under each
such policy.  Southwest warrants that
such insurance coverage will cover all potential liabilities of Southwest
arising hereunder.  Southwest covenants
and agrees that at all times hereunder it will maintain the insurance policies
set forth on Schedule 8.5, on terms and conditions at least as favorable as
those described thereon, unless PR shall require a change in any of the terms
or conditions thereof in light of the facts and circumstances at such time,
upon thirty (30) days notice to Southwest. 
PR shall be named an additional insured on each such policy and each
policy shall contain a provision whereby the insurer shall be required to
provide PR with prior written notice of any default hereunder, which PR in its
sole discretion may cure, and thirty (30) days prior written notice of the
termination of any such policy.  Any
amounts paid by PR hereunder shall reduce 

 

8

 

amounts payable to Southwest
under this Agreement, unless paid by Southwest to PR within five (5) days
of payment by PR.  Upon delivery to PR of
copies of all of the insurance policies for the coverage listed on Exhibit 8.5
and proof of insurance containing the terms and conditions contained herein,
with PR named as an additional insured, PR shall have fourteen business days
(14) to review such information and if deemed inadequate by PR, in its sole
discretion, to terminate this Agreement by notice to Southwest.

 

9.     COMPLIANCE WITH LAWS.  Southwest agrees and covenants that it
complies and will continue to comply with all applicable laws pertaining to its
status as a gaming consultant, and when applicable, manager of gaming
operations, including all applicable licensing requirements.  All advice provided by Southwest to PR will
at all times, if followed by PR, be in full compliance with applicable law.

 

10.  COMPENSATION OF SOUTHWEST.  In consideration for the
services performed by Southwest under this Agreement, PR will pay to Southwest
the following:

 

10.1        Pre-opening Services.  For consulting, advisory and training services provided by Southwest to
PR prior to the Casino Opening Date, PR agrees to pay a consulting fee to
Southwest equal to $50,000 per month for each full or partial calendar month
before the Casino Opening Date.  PR will
make successive $50,000 payments to Southwest on the 1st day of each
month.

 

10.2        Management Services.  For
continuing consulting, advisory and management services provided to PR with
respect to the Casino after the Casino Opening Date, beginning the first full
calendar month of Casino operations, Southwest will be paid a monthly fee equal
to five percent (5%) of Net Casino Revenues (as defined below), but not less
than $100,000 per month.  To the extent
five percent (5%) of Net Casino Revenues is less than $100,000 in any month,
such deficiency amount will be debited to a deficit account established on the
Casino’s books and records.  In any month
that five percent (5%) of Net Casino Revenues exceeds $100,000, the management
fee will be reduced to $100,000 and the excess credited to the deficit
account.  At year end PR will pay
Southwest the $100,000 of Net Casino Revenues as the final monthly management
fee for the then fiscal year.  Following
the audit of the Casino in accordance with Section 7.4 herein, including
the deficit account so established, and within sixty (60) days of delivery of
the audited financials of the Casino, the positive balance, if any, in the fee
deficit account will be paid to Southwest as the final payment for the prior
fiscal year.

 

10.2.A    Net Casino Revenues means the Gross Gaming Revenues of the Casino less (a) amounts
paid out as, or paid for, prizes and (b) operating expenses of the Casino
as described below (“Casino Operating Expenses”).  For purposes hereof, “Gross Gaming Revenues”
shall mean (y) in the case of machines, drop from the machines less
jackpots and fills and, (z) in the case of table games, drop less fills.

 

10.2.B    Net Casino Revenues will include an amount equal to eight percent (8%)
of the face value of any free play on slot machines and similar games, and
eighteen percent (18%) of the face value of any free play on table games given
to resort guests by PR.  These
percentages will be adjusted annually throughout the term of this Agreement to
equal the actual % of hold to drop for machine play and table games at the
Casino.

 

10.2.C    Casino Operating Expenses means the following direct costs of operation
of the Casino incurred during the applicable fiscal period:

 

(i)            Wages,
salaries, training and benefit expenses for employees of the Casino (including
all expenses related to background checks and licensing of Casino employees and
any bonus paid to General Manager, if any);

 

9

 

(ii)           Materials and supplies used in the Casino
post Casino Opening Date;

 

(iii)         All operational maintenance expenses of the
Casino and its gaming equipment, post Casino Opening Date;

 

(iv)          Any costs incurred in connection with the
licensing and regulation of the Casino’s gaming operations;

 

(v)            All
costs of Casino-specific marketing programs;

 

(vi)          Actual cost of all promotional goods provided
to Casino patrons by the Casino;

 

(vii)         Actual costs of travel provided to Casino
patrons by the Casino; and

 

(viii)        Taxes and other fees imposed by the licensing
authority of the Casino.

 

10.2.D    Casino Operating Expenses also include the following indirect or shared
operating expenses of the Casino:

 

(i)            Costs
of lodging at the Moon Palace Resort provided by the Casino to Casino
patrons.  Lodging costs will be charged
to the Casino at the rate of $100/person/night double occupancy, or
$150/person/night single occupancy, during the fiscal year 2009.  Thereafter, PR shall be permitted to make
reasonable adjustments to such rates on an annual basis by delivery of the new
rate schedule to be used hereunder to Southwest.  These rates include lodging and all other “all-inclusive”
amenities provided without additional charge to resort guests generally.  Southwest covenants and agrees that such
rates may not be disclosed by Southwest or its Representatives to anyone, and
will be subject to the confidentiality provisions contained in Section 13.

 

(ii)           Costs of any other resort amenities (i.e.
golf, spa services) provided to Casino patrons by the Casino that are not
included in the resort’s all-inclusive rates will be charged to the Casino at
the actual cost to the resort of providing such amenities.

 

(iii)         A portion of any expenses for marketing
efforts coordinated between the Casino and the resort generally.  PR and Southwest will agree upon the
appropriate portion of the expenses to be charged to the Casino on a case-by-case
basis.  In no event shall the shared
marketing expense be included in 10.2C above.

 

10.2.E     Casino Operating Expenses do not include, and no deduction will be made
when determining Net Casino Revenues for the following charges or expenses:

 

	
  (i)

  	
  The management fee (or any part thereof) paid to Southwest under this
  Agreement.

  
	
   

  	
   

  
	
  (ii)

  	
  Any charge in the nature of overhead for the resort generally.

  
	
   

  	
   

  
	
  (iii)

  	
  Any charge in the nature of rent or utility expenses.

  
	
   

  	
   

  
	
  (iv)

  	
  Any charge in the nature of interest expense.

  
	
   

  	
   

  
	
  (v)

  	
  Any charge in the nature of depreciation or amortization.

  

 

10.3        Reimbursement of Pre-Opening
Costs.  PR
will reimburse or pay directly any and all reasonably documented pre-approved
costs incurred by Southwest in fulfilling Southwest’s responsibilities under
this Agreement approved in accordance with the terms of this Agreement (the “Pre-Opening
Expenses”); provided, however, that such costs will not include: its employees
salaries or related benefit costs, taxes on income earned hereunder, licensing
fees incurred by Southwest as a result of its doing business in the Dominican
Republic, and any other similar general business or 

 

10

 

overhead expenses incurred by Southwest as a
result of its entering into this Agreement. 
Pre-Opening Expenses will include the pre-approved costs of architects,
interior designers, information technology, surveillance, lighting and other
consultants and advisers retained to assist in the initial design of the
Casino, as well as other pre-approved, pre-opening costs incurred in connection
with the development of the Casino. 
Pre-Opening Expense also includes any pre-opening marketing and
pre-opening labor costs, including wages paid to PR employees in training, to
the extent not paid directly by PR.  Southwest
will submit its Pre-Opening Expenses to PR for reimbursement in accordance with
the procedures communicated to Southwest by PR from time to time.  Southwest must receive approval from PR
before incurring any single Pre-Opening Expense not included in a PR approved
budget.  If Southwest incurs any single
Pre-Opening Expense before receiving written approval from PR, PR may, but is
not obligated to, reimburse such expense. 
For purposes of this Agreement, the following expenses that may be
incurred by Southwest will not be Pre-Opening Expenses and will be paid by
Southwest and will not be reimbursed (in whole or in part as described below)
by PR:

 

10.3.A    Pre-opening Travel Expenses.  Before
the Casino Opening Date, PR will reimburse to Southwest fifty percent (50%) of
all expenses incurred by Southwest for travel, food and lodging for Southwest
personnel providing Consulting Services under this Agreement.  Total travel expenses reimbursed by PR before
the Casino Opening Date cannot exceed $50,000 plus $5,000 for each month after August 2008
that Southwest provides pre-opening consulting services, without the express
written consent of PR to such additional travel expenses.

 

10.3.B    Market Study. 
Southwest paid all expenses incurred in connection with the completion
of an independent third party market study for the Casino prepared by Gaming
Market Advisors.

 

10.4               Reimbursement of Management
Costs.  The
Casino will reimburse or pay directly any and all pre-approved reasonable costs
incurred by Southwest in fulfilling Southwest’s responsibilities under this
Agreement after the Casino Opening Date (the “Continuing Expenses”).  Except as stated below, Continuing Expenses
will include all pre-approved costs that may be incurred by Southwest in
connection with the operation of the Casino, including marketing expenses and
labor costs, which include wages paid to PR employees in training, to the
extent not paid directly by PR, as well as all expenses incurred by Southwest
for travel, food and lodging for Southwest personnel providing Services under
this Agreement after the Casino Opening Date. 
Southwest will submit its Continuing Expenses to the Casino for
reimbursement in accordance with the standard expense approval procedures
established for the Casino.  Southwest
must receive approval from PR before incurring any single Continuing Expense
item that is not included in the Annual Budget of the Casino.  If Southwest incurs any single Continuing
Expense item that is not included in the Annual Budget before receiving
approval from PR, PR may, but is not obligated to, reimburse such expense.

 

10.5               Operational Consultants and
Advisors.  The fees and expenses of any consultants and
professional advisors engaged by PR or engaged by Southwest with the approval
of PR will be paid by the Casino.

 

10.6               Expenses Approvals.  All expenses requiring approval hereunder must receive the prior
written approval of Mr. Roberto Chapur or Mr. Rodrigo Chapur, or such
other person as shall be designated from time to time, in writing, by Mr. Roberto
Chapur.

 

11.  INDEPENDENT CONTRACTOR. Both PR and Southwest agree that Southwest will act strictly as an
independent contractor in the performance of its duties under this
Agreement.  Accordingly, Southwest will
be responsible for payment of all taxes including federal, state and local
taxes arising 

 

11

 

out of Southwest’s activities in accordance
with this Agreement, including by way of illustration but not by limitation,
federal and state income tax, social security tax, unemployment insurance
taxes, and any other taxes or gaming or business license fees as may be
required.

 

12.  NO PARTNERSHIP, NO THIRD PARTY BENEFICIARIES.  Nothing in this Agreement may be deemed as creating a partnership,
joint venture or similar business relationship between Southwest and PR.  Nothing in this Agreement may be construed to
create any contract right on the part of any third party or any duty or
obligation to such third party on the part of Southwest or PR whatsoever.

 

13.  CONFIDENTIAL INFORMATION. Each Party agrees that any information received by it or any agent,
representative, officer, director, partner, shareholder, member, employee,
affiliate, consultant or other professional retained by it (“Representatives”),
concerning the other party during the performance of this Agreement, regarding
the other parties’ organization, financial matters, marketing plans, or other
information of a proprietary, confidential or personal nature, will be treated
by such party as “Confidential Information” 
The Confidential Information may not be disclosed at any time to
the public or to any third party.  During
the Term of this Agreement and from and after the date on which this Agreement
is terminated, each party agrees to, and agrees that its Representatives will,
keep confidential and refrain from using, divulging, disclosing or making
available or assessable to any person, employer or other entity or to use, or
permit the use of, for its own benefit or for the benefit of others, at any
time, any or all of the Confidential Information.  In the event that a party or any of its
Representatives becomes legally compelled to disclose any Confidential
Information, such party agrees to provide the other party with prompt written
notice so that the such party may seek a protective order or other appropriate
remedy and/or waive compliance with the provisions of this Agreement.  In the event that such a protective order or
other remedy is not timely obtained, or that the party owning the Confidential
Information waives compliance in writing with the provisions of this Agreement,
the other party shall furnish only that portion of the Confidential Information
which the disclosing party’s counsel advises in writing is legally required,
and shall exercise its best efforts to obtain reliable assurances that the
Confidential Information so furnished shall be afforded confidential
treatment.  Each party (on its own behalf
and on behalf of its Representatives) acknowledges that a breach by it or its
Representatives of the terms of this Section would cause irreparable and
irremediable injury or harm to the other party and its shareholders,
affiliates, directors, officers, members, employees and clients, the damages
for which would be difficult if not impossible to calculate or determine.  Accordingly, each party (on its own behalf
and on behalf of its Representatives) acknowledges and agrees that upon the
occasion of its or its Representatives breach hereunder, the other party shall
be entitled to specific performance of the covenants of this Agreement,
including temporary or permanent injunctive relief to the extent permissible,
in addition to such other equitable and legal remedies as may be available
under the circumstances.  In addition, PR acknowledges and agrees that
Southwest is a public company that is required to file periodic reports and
other information with United States Securities and Exchange Commission and
provide public information in accordance with the rules and regulations of
the Securities and Exchange Commission. 
Nothing in this Agreement limits the ability of Southwest to make such
filings and announcements as Southwest reasonably determines, in its sole
discretion, are required or advisable under applicable securities laws.  This provision will survive the termination
of this Agreement.

 

14.  TERMINATION AND DEFAULT.

 

14.1        Involuntary Termination Due
to Changes in or Compliance with Applicable Laws.  It is
the understanding of the parties that the operation of the Casino will comply
with all applicable laws. If this Agreement or the Casino is determined by a
court of competent jurisdiction no longer to be lawful, the obligations of the
parties will immediately cease and this Agreement will 

 

12

 

be null and void.  In the event that Southwest determines the
Casino or its operations may not comply with rules, regulations or laws
applicable to the Casino, PR or Southwest, Southwest may terminate this
Agreement.

 

14.2        Events of Default.

 

14.2.A    Any one or more of the following will constitute an event of default as
that term is used in this Agreement:

 

(i)            Upon a default in the payment of any amount
due under this Agreement if such default continues for more than ten (10) days
after the due date thereof; or

 

(ii)           Upon any material default in the observance
or performance of any covenant, condition, or agreement by either party and
such default has continued for more than thirty (30) days after receipt of
written notice to cure the default; or

 

(iii)         Upon any breach by Southwest of any of its
representations or warranties provided herein and such breach has not been
cured within thirty (30) days after delivery of written notice to cure the
breach; or

 

(iv)          If either party shall become insolvent, or
shall make a transfer for the benefit of its creditors; or

 

(v)            If either party shall file a petition under
any section or chapter of the United States Bankruptcy Code, as amended, or
under any similar law or statute of any governmental authority, or either party
is adjudged bankrupt or insolvent in proceedings filed against such party
thereunder; or

 

(vi)          If a receiver or trustee shall be appointed
for a party or for all or substantially all of its assets, and such appointment
is not vacated or otherwise caused to be set aside within ninety (90) days from
the occurrence thereof; or

 

(vii)         Southwest shall lose any license that it
holds or is required to hold to perform its services hereunder; or

 

(viii)        By PR, in accordance with Section 8.5
hereof; or

 

(ix)          in the event the real property upon which the
Casino is built is taken by condemnation at any time during the term hereof, PR
may terminate this Agreement. .

 

14.3        Termination.

 

14.3.A    After the end of the second full year of Casino Operations, PR may terminate
this Agreement at the end of any full year of operation of the Casino if Net
Casino Revenues during that year are more than thirty percent (30%) lower than
the Net Casino Revenues stated in the Annual Budget of the Casino for that
year.  Such termination shall be
effective ninety (90) days after delivery of written notice of termination to
Southwest.

 

14.3.B    After the end of each successive six (6) month period of Casino
Operations, PR may terminate this Agreement by notice to Southwest if the
average Casino win percentage for the games twenty-one (blackjack), craps,
roulette and baccarat during such six (6) month period is 25 percent or
more below the average win percentages for twenty-one of 11.41%, craps of
13.35%, roulette of 17.94% and baccarat of 12.46% (as reported by the Nevada
State Gaming Control Board for the Clark County Las Vegas Strip Area during
period April 1, 2007 to March 31, 2008) (each, the “Las Vegas %”).  For purposes of clarification, the Las Vegas
%s used herein will be changed annually, unless such percentages are changed
and available every six (6) months from the Nevada State Gaming Board for
the Clark County Las Vegas Strip Area, in which event such Las Vegas %s 

 

13

 

shall be changed hereunder
every six (6) months.  For purposes of determining
whether the average Casino win percentage is 25% or more below the Las Vegas %,
actual Casino drop (cash in the table drop box plus any credit issued) for each
of twenty-one, craps, roulette and baccarat will be multiplied by the Las Vegas
% applicable to each game to determine the theoretical win for that game.  The theoretical win for the four games will
then be totaled to determine the aggregate theoretical win.  The aggregate theoretical win will then be
compared to the actual Casino win (drops minus fills, plus credits, plus the
net change between the opening and closing value of the dealer’s tray) for
twenty-one, craps, roulette and baccarat.

 

14.3.C    The non-defaulting party may terminate this Agreement immediately upon
an Event of Default (as defined in Section 14.2) by the other party.

 

14.4        Rights on Termination.  If PR
exercises its right to terminate this Agreement, PR will pay Southwest all fees
due Southwest under this Agreement to the date of termination and reimburse all
expenses incurred by Southwest in accordance with this Agreement up to the date
this Agreement terminates as determined under Section 14.3 (the “Early
Termination Date”).  PR will pay all such
fees on or before the Early Termination Date and reimburse all such expenses no
later than fifteen (15) days after the later of (a) the Early Termination
Date; or (b) the date Southwest submits expenses for reimbursement in
accordance with this Agreement.

 

15.  FORCE MAJEURE.  All obligations set forth in this Agreement
will be subject to impossibility of performance as a consequence of any strike,
lock-out, fire, destruction, acts of God, restrictions of any governmental
authority, civil commotion, unavoidable casualty or other cause beyond the
control of either party (including, but not limited to, material damage by
hurricane), and neither party shall be deemed to be in default hereunder if
such performance is delayed as a result of such impossibility and any
corresponding payment obligations arising during the suspended period shall be
waived; provided, however, that if such suspended performance cannot be
performed within nine (9) months as a result of such impossibility, PR may
terminate this Agreement, at its option, by thirty (30) days prior notice to
Southwest.

 

16.  SEVERABILITY.  To the extent any provision of this Agreement
is found invalid or unenforceable, it will be considered deleted from this
Agreement and the remainder of that provision and this Agreement will be
unaffected and will continue in full force and effect.

 

17.  GOVERNING LAW.  The parties acknowledge and agree to comply
with applicable governmental law in connection with the development and
operation of the Casino.  The terms of
this Agreement shall be governed and construed under the laws of the State of
New York without regard to principles of conflicts of law.  If an inconsistency or conflict between the
terms of this provision and any other provision in any document made a part of
this transaction occurs, the terms of this provision will control and prevail.

 

18.  NOTICES.  Any notice required to be given under this
Agreement will be delivered by hand, by nationally recognized overnight
courier, or by certified mail, return receipt requested, addressed as follows:

 

to PR at:

 

Operadora
Dominicana Macao, S.A.

c/o
PALACE RESORTS

8725
NW 18TH Terrace Suite 301

Miami,
Florida 33172

Attention:  Lourdes Rodriguez

Fax. No.:  (305) 416-6567

 

14

 

Email:  lrodriguez@palaceresorts.com

 

With
a copy to:

 

Curtis,
Mallet-Prevost, Colt & Mosle LLP

101 Park Avenue

New York, New York  10178-0061

Attention:  William L. Bricker, Jr.

Fax No.: (212) 697-1559

Email:  wbricker@curtis.com

 

to Southwest at:

 

Southwest Casino Corporation

2001 Killebrew Drive, Suite 350

Minneapolis, Minnesota 55425

Attention: Thomas E. Fox, President

Fax. No.: 952-853-9991

Email: tefox@swcasino.com

 

With a copy to:

 

Southwest Casino Corporation

2001 Killebrew Drive, Suite 350

Minneapolis, MN 55425

Attention: General Counsel

Fax. No.: 952-853-9991

Email:
tsnook@swcasino.com

 

The above addresses may be changed at any
time by written notice to the other party.

 

19.  ASSIGNMENTS.  This Agreement is for personal services and
specialized experience and expertise of Southwest and may not be assigned by
either party without the written consent of the other party; provided, however,
that PR may assign this Agreement to an affiliate who is the assignee of the
resort and the Casino.

 

20.  ENTIRE AGREEMENT.  This Agreement contains the
entire agreement of the parties on the subject matters stated in this
Agreement, and neither party is relying on any statements, representations or
promises made by another (whether or not a party hereto) that are not in this
document.  This document will be deemed
drafted by both parties and will not be construed against any party by virtue
of such draftsmanship.

 

21.  NATURE OF SERVICES AND RECOMMENDATIONS. 
Southwest will use commercially reasonable efforts when providing its
services and recommendations under this agreement.  Southwest and PR agree that the nature of the
services and recommendations that Southwest will provide under this agreement
require Southwest to apply its experience and expertise on behalf of PR and the
Casino, which requires the application of considerable judgment and the making
of assumptions, all of which may prove inaccurate.  PR and Southwest acknowledge and agree that
in providing consulting, advisory and management services under this Agreement,
Southwest is not 

 

15

 

guaranteeing the success of the Casino and
nothing in this Agreement can be construed as an assurance or guarantee of any
operating result or level of performance of the Casino.  Southwest does not guarantee any level of
performance or profitability, including without limitation revenue, profits,
net income, cash flow or customer levels at the Casino.  Except as set forth in Section 22, in no
event will Southwest be liable, for any payment to PR in excess of the fees
actually paid to Southwest by PR nor will Southwest be liable to PR, whether in
contract, warranty, tort or otherwise for any special, indirect, incidental or
consequential damages of any kind or nature whatsoever.

 

22.  INDEMNITY.  (a)         Southwest
hereby indemnifies and holds PR, any of its shareholders, members, directors,
managers, officers, employees, affiliates, agents and representatives
(collectively, the “Indemnified Parties”) harmless from and against any and all
judgments, damages, liabilities, losses, penalties, excise taxes, fines, fees,
costs, expenses (including, but not limited to fees and expenses of attorneys
and other professionals) and awards finally determined to be due and owing, and
amounts actually paid in settlement by PR, directly or indirectly, arising out
of or related to the bad faith, willful misconduct, willful negligence or fraud
of Southwest, its shareholders, members, directors, managers, officers,
employees, affiliates, contractors or subcontractors, agents or representatives
in carrying out or failing to carry out its duties, obligations and liabilities
under the Agreement.  Any amounts not
paid within five (5) days of submission of a claim therefore by PR shall
reduce any amount due to Southwest hereunder.

 

22.1.A    Notice of Third
Party Claim.  PR shall promptly
notify Southwest (the “Indemnifying Party”) in writing within fifteen (15) days
of notice of any pending or threatened claim or demand asserted by a third
party which the Indemnified Party has determined has given or could give rise
to a right of indemnification under this Agreement (“Third Party Claims”)
against the Indemnified Party, describing in reasonable detail the facts and
circumstances with respect to the subject matter of such claim or demand; provided, however, that the failure to provide such notice shall not
release the Indemnifying Party from any of its obligations under this Section 22
except to the extent the Indemnifying Party is materially prejudiced by such
failure.  Subject to the Indemnifying
Party’s right to defend in good faith Third Party Claims as hereinafter
provided, the Indemnifying Party shall satisfy or contest its obligations under
this Section 22 within fifteen (15) days after the receipt of written
notice thereof from the Indemnified Party. 
If the Indemnifying Party acknowledges in writing its obligation to
indemnify the Indemnified Party hereunder against any losses that may result
from a Third Party Claim, then the Indemnifying Party shall be entitled to
assume and control the defense of such Third Party Claim at its expense and
through counsel of its choice if it gives notice of its intention to do so to
the Indemnified Party within fifteen (15) days of the receipt of such notice
from the Indemnified Party; provided,
however, that the Indemnified
Party may participate in such defense and retain separate counsel at its own
cost and expense, without prejudice to the rights of the parties to control the
defense of their respective interests. 
In the event the Indemnifying Party exercises the right to undertake any
such defense against any such Third Party Claim as provided above, the
Indemnified Party shall cooperate with the Indemnifying Party in such defense
and make available to the Indemnifying Party, at the Indemnifying Party’s
expense, all witnesses, pertinent records, materials and information in the
Indemnified Party’s possession or under the Indemnified Party’s control
relating thereto as is reasonably required by the Indemnifying Party.  Similarly, in the event the Indemnified Party
is, directly or indirectly, conducting the defense against any such Third Party
Claim, the Indemnifying Party shall cooperate with the Indemnified Party in
such defense and make available to the Indemnified Party, at the Indemnifying
Party’s expense, all such witnesses, records, materials and information in the
Indemnifying Party’s possession or under the Indemnifying Party’s control
relating thereto as is reasonably required by the Indemnified Party.  No such Third Party Claim may be settled by
the Indemnifying Party without the written consent of the Indemnified 

 

16

 

Party (which consent shall not
be unreasonably withheld); provided, however that any such settlement shall in
all cases release the Indemnified Party from all liability with respect
thereto.

 

22.1.B    Claims between PR and
Southwest.  PR and Southwest shall
attempt to resolve between themselves any claims for indemnification hereunder
not a result of a Third Party Claim.  The
notification provisions of Section 22.1A shall also apply to claims
between PR and Southwest.

 

22.1.C    Survival.  This indemnity shall survive the termination
of this Agreement.

 

23.  AMENDMENTS.  This Agreement may only be amended in a
writing signed by both parties.

 

24.  USE OF INFORMATION AND MATERIALS.  This
Agreement will not be construed as granting any rights or interest to PR with
respect to the equipment of Southwest or to the use of any of the proprietary
marks of Southwest without the prior written approval of Southwest.  However, project deliverables and all other
materials provided to PR as part of Southwest’s duties under this Agreement
will become the property of PR. 
Information contained in any operations, personnel, marketing, internal
controls and other manuals, as well as operating procedures which will be
developed and utilized by Southwest for PR are the property of PR.

 

Southwest agrees that this Agreement will
not be construed as granting Southwest any rights or interest of whatever
nature in or to PR’s proprietary information and materials provided to
Southwest in the course of this Agreement, nor to any service marks, trademarks
or other intellectual property owned or licensed by PR and used in the
operation of the Casino.  Southwest
agrees that all such information is the sole and exclusive property of PR, and
Southwest will not utilize such information, nor reproduce it for use by
others, nor provide it to any other person, corporation, or business entity of
whatever kind without the express written consent of PR.

 

Remainder
of page intentionally blank.

Signatures
on next page.

 

17

 

IN WITNESS
WHEREOF, Southwest
and PR have executed this Agreement as of the date first stated above.

 

	
   

  	
  SOUTHWEST CASINO CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  OPERADORA DOMINICANA MACAO, S.A.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

18

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