Document:

Exhibit 4.2

 

 

REDDY ICE HOLDINGS, INC.

Issuer

 

101/2 %
Senior Discount Notes Due 2012

 

 

 

INDENTURE

 

Dated as of October 27, 2004

 

 

 

U.S. Bank National
Association

Trustee

 

 

 

CROSS-REFERENCE
TABLE

	
  TIA

  Section

  	
   

  	
  Indenture

  Section

  
	
  310

  	
  (a)(1)

  	
   

  	
  7.10

  
	
   

  	
  (a)(2)

  	
   

  	
  7.10

  
	
   

  	
  (a)(3)

  	
   

  	
  N.A.

  
	
   

  	
  (a)(4)

  	
   

  	
  N.A.

  
	
   

  	
  (a)(5)

  	
   

  	
  7.10

  
	
   

  	
  (b)

  	
   

  	
  7.08; 7.10

  
	
   

  	
  (c)

  	
   

  	
  N.A.

  
	
  311

  	
  (a)

  	
   

  	
  7.11

  
	
   

  	
  (b)

  	
   

  	
  7.11

  
	
   

  	
  (c)

  	
   

  	
  N.A.

  
	
  312

  	
  (a)

  	
   

  	
  2.05

  
	
   

  	
  (b)

  	
   

  	
  10.03

  
	
   

  	
  (c)

  	
   

  	
  10.03

  
	
  313

  	
  (a)

  	
   

  	
  7.06

  
	
   

  	
  (b)(1)

  	
   

  	
  7.06

  
	
   

  	
  (b)(2)

  	
   

  	
  7.06

  
	
   

  	
  (c)

  	
   

  	
  N.A.

  
	
   

  	
  (d)

  	
   

  	
  7.06

  
	
  314

  	
  (a)

  	
   

  	
  4.02;

  
	
   

  	
   

  	
   

  	
  4.10; 10.02

  
	
   

  	
  (b)

  	
   

  	
  N.A.

  
	
   

  	
  (c)(1)

  	
   

  	
  10.04

  
	
   

  	
  (c)(2)

  	
   

  	
  10.04

  
	
   

  	
  (c)(3)

  	
   

  	
  N.A.

  
	
   

  	
  (d)

  	
   

  	
  N.A.

  
	
   

  	
  (e)

  	
   

  	
  10.05

  
	
   

  	
  (f)

  	
   

  	
  N.A.

  
	
  315

  	
  (a)

  	
   

  	
  7.01

  
	
   

  	
  (b)

  	
   

  	
  7.05; 10.02

  
	
   

  	
  (c)

  	
   

  	
  7.01

  
	
   

  	
  (d)

  	
   

  	
  7.01

  
	
   

  	
  (e)

  	
   

  	
  6.11

  
	
  316

  	
  (a)(last sentence)

  	
   

  	
  10.06

  
	
   

  	
  (a)(1)(A)

  	
   

  	
  6.05

  
	
   

  	
  (a)(1)(B)

  	
   

  	
  6.04

  
	
   

  	
  (a)(2)

  	
   

  	
  N.A.

  
	
   

  	
  (b)

  	
   

  	
  6.07

  
	
   

  	
  (c)

  	
   

  	
  9.04

  
	
  317

  	
  (a)(1)

  	
   

  	
  6.08

  
	
   

  	
  (a)(2)

  	
   

  	
  6.09

  
	
   

  	
  (b)

  	
   

  	
  2.04

  
	
  318

  	
  (a)

  	
   

  	
  10.01

  

N.A. means Not Applicable.

 

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

 

 

TABLE OF
CONTENTS

 

	
  ARTICLE 1

  	
   

  
	
   

  	
   

  	
   

  
	
  Definitions and Incorporation by Reference

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 1.01.

  	
  Definitions.

  	
   

  
	
  SECTION
  1.02.

  	
  Other
  Definitions.

  	
   

  
	
  SECTION
  1.03.

  	
  Incorporation
  by Reference of Trust Indenture Act

  	
   

  
	
  SECTION
  1.04.

  	
  Rules
  of Construction

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 2

  	
   

  
	
   

  	
   

  	
   

  
	
  The
  Securities

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  2.01.

  	
  Form
  and Dating

  	
   

  
	
  SECTION
  2.02.

  	
  Execution
  and Authentication

  	
   

  
	
  SECTION
  2.03.

  	
  Registrar
  and Paying Agent

  	
   

  
	
  SECTION
  2.04.

  	
  Paying
  Agent To Hold Money in Trust

  	
   

  
	
  SECTION
  2.05.

  	
  Securityholder
  Lists

  	
   

  
	
  SECTION
  2.06.

  	
  Transfer
  and Exchange

  	
   

  
	
  SECTION
  2.07.

  	
  Replacement
  Securities

  	
   

  
	
  SECTION
  2.08.

  	
  Outstanding
  Securities

  	
   

  
	
  SECTION
  2.09.

  	
  Temporary
  Securities

  	
   

  
	
  SECTION
  2.10.

  	
  Cancellation

  	
   

  
	
  SECTION
  2.11.

  	
  Defaulted
  Interest

  	
   

  
	
  SECTION
  2.12.

  	
  CUSIP
  Numbers

  	
   

  
	
  SECTION
  2.13.

  	
  Issuance
  of Additional Securities

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 3

  	
   

  
	
   

  	
   

  	
   

  
	
  Redemption

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  3.01.

  	
  Notices
  to Trustee

  	
   

  
	
  SECTION
  3.02.

  	
  Selection
  of Securities to Be Redeemed

  	
   

  
	
  SECTION
  3.03.

  	
  Notice
  of Redemption

  	
   

  
	
  SECTION
  3.04.

  	
  Effect
  of Notice of Redemption

  	
   

  
	
  SECTION
  3.05.

  	
  Deposit
  of Redemption Price

  	
   

  
	
  SECTION
  3.06.

  	
  Securities
  Redeemed in Part

  	
   

  

 

 

	
  ARTICLE 4

  	
   

  
	
   

  	
   

  	
   

  
	
  Covenants

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  4.01.

  	
  Payment
  of Securities

  	
   

  
	
  SECTION
  4.02.

  	
  Reporting
  Requirements

  	
   

  
	
  SECTION
  4.03.

  	
  Limitation
  on Indebtedness

  	
   

  
	
  SECTION
  4.04.

  	
  Limitation
  on Restricted Payments

  	
   

  
	
  SECTION
  4.05.

  	
  Limitation
  on Restrictions on Distributions from Restricted Subsidiaries

  	
   

  
	
  SECTION
  4.06.

  	
  Limitation
  on Sales of Assets and Subsidiary Stock

  	
   

  
	
  SECTION
  4.07.

  	
  Limitation
  on Affiliate Transactions

  	
   

  
	
  SECTION
  4.08.

  	
  Limitation
  on Line of Business

  	
   

  
	
  SECTION
  4.09.

  	
  Limitation
  on Guarantees of Company Indebtedness

  	
   

  
	
  SECTION
  4.10.

  	
  Change
  of Control

  	
   

  
	
  SECTION
  4.11.

  	
  Limitation
  on Liens

  	
   

  
	
  SECTION
  4.12.

  	
  Compliance
  Certificate

  	
   

  
	
  SECTION
  4.13.

  	
  Further
  Instruments and Acts

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 5

  	
   

  
	
   

  	
   

  	
   

  
	
  Successor
  Company

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  5.01.

  	
  Merger
  and Consolidation

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 6

  	
   

  
	
   

  	
   

  	
   

  
	
  Defaults
  and Remedies

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  6.01.

  	
  Events
  of Default

  	
   

  
	
  SECTION
  6.02.

  	
  Acceleration

  	
   

  
	
  SECTION
  6.03.

  	
  Other
  Remedies

  	
   

  
	
  SECTION
  6.04.

  	
  Waiver
  of Past Defaults

  	
   

  
	
  SECTION
  6.05.

  	
  Control
  by Majority

  	
   

  
	
  SECTION
  6.06.

  	
  Limitation
  on Suits

  	
   

  
	
  SECTION
  6.07.

  	
  Rights
  of Holders to Receive Payment

  	
   

  
	
  SECTION
  6.08.

  	
  Collection
  Suit by Trustee

  	
   

  
	
  SECTION
  6.09.

  	
  Trustee
  May File Proofs of Claim

  	
   

  
	
  SECTION
  6.10.

  	
  Undertaking
  for Costs

  	
   

  
	
  SECTION
  6.11.

  	
  Waiver
  of Stay or Extension Laws

  	
   

  

 

ii

 

	
  ARTICLE 7

  	
   

  
	
   

  	
   

  	
   

  
	
  Trustee

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  7.01.

  	
  Duties
  of Trustee

  	
   

  
	
  SECTION
  7.02.

  	
  Rights
  of Trustee

  	
   

  
	
  SECTION
  7.03.

  	
  Individual
  Rights of Trustee

  	
   

  
	
  SECTION
  7.04.

  	
  Trustee’s
  Disclaimer

  	
   

  
	
  SECTION
  7.05.

  	
  Notice
  of Defaults

  	
   

  
	
  SECTION
  7.06.

  	
  Reports
  by Trustee to Holders

  	
   

  
	
  SECTION
  7.07.

  	
  Compensation
  and Indemnity

  	
   

  
	
  SECTION
  7.08.

  	
  Replacement
  of Trustee

  	
   

  
	
  SECTION
  7.09.

  	
  Successor
  Trustee by Merger

  	
   

  
	
  SECTION
  7.10.

  	
  Eligibility;
  Disqualification

  	
   

  
	
  SECTION
  7.11.

  	
  Preferential
  Collection of Claims Against Company

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 8

  	
   

  
	
   

  	
   

  	
   

  
	
  Discharge
  of Indenture; Defeasance

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  8.01.

  	
  Discharge
  of Liability on Securities; Defeasance

  	
   

  
	
  SECTION
  8.02.

  	
  Conditions
  to Defeasance

  	
   

  
	
  SECTION
  8.03.

  	
  Application
  of Trust Money

  	
   

  
	
  SECTION
  8.04.

  	
  Repayment
  to Company

  	
   

  
	
  SECTION
  8.05.

  	
  Indemnity
  for Government Obligations

  	
   

  
	
  SECTION
  8.06.

  	
  Reinstatement

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 9

  	
   

  
	
   

  	
   

  	
   

  
	
  Amendments

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  9.01.

  	
  Without
  Consent of Holders

  	
   

  
	
  SECTION
  9.02.

  	
  With
  Consent of Holders

  	
   

  
	
  SECTION
  9.03.

  	
  Compliance
  with Trust Indenture Act

  	
   

  
	
  SECTION
  9.04.

  	
  Revocation
  and Effect of Consents and Waivers

  	
   

  
	
  SECTION
  9.05.

  	
  Notation
  on or Exchange of Securities

  	
   

  
	
  SECTION
  9.06.

  	
  Trustee
  To Sign Amendments

  	
   

  
	
  SECTION
  9.07.

  	
  Payment
  for Consent

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  10

  	
   

  
	
   

  	
   

  	
   

  
	
  Miscellaneous

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  10.01.

  	
  Trust
  Indenture Act Controls

  	
   

  
	
  SECTION
  10.02.

  	
  Notices

  	
   

  

 

iii

 

	
  SECTION
  10.03.

  	
  Communication
  by Holders with Other Holders

  	
   

  
	
  SECTION
  10.04.

  	
  Certificate
  and Opinion as to Conditions Precedent

  	
   

  
	
  SECTION
  10.05.

  	
  Statements
  Required in Certificate or Opinion

  	
   

  
	
  SECTION
  10.06.

  	
  When
  Securities Disregarded

  	
   

  
	
  SECTION
  10.07.

  	
  Rules
  by Trustee, Paying Agent and Registrar

  	
   

  
	
  SECTION
  10.08.

  	
  Legal
  Holidays

  	
   

  
	
  SECTION
  10.09.

  	
  Governing
  Law

  	
   

  
	
  SECTION
  10.10.

  	
  No
  Recourse Against Others

  	
   

  
	
  SECTION
  10.11.

  	
  Successors

  	
   

  
	
  SECTION
  10.12.

  	
  Multiple
  Originals

  	
   

  
	
  SECTION
  10.13.

  	
  Table
  of Contents; Headings

  	
   

  
	
   

  	
   

  	
   

  
	
  Rule
  144A/Regulation S/IAI Appendix

  	
   

  
	
   

  	
   

  
	
  Exhibit 1 —

  	
  Form of Initial Security

  
	
   

  	
   

  
	
  Exhibit A —

  	
  Form of Security or Private Exchange Security

  
	
   

  	
   

  
	
  Exhibit
  2 —

  	
  Form
  of Transferee Letter of Representation

  
				

 

iv

 

INDENTURE dated as of October 27, 2004, by and
between REDDY ICE HOLDINGS, INC., a Delaware corporation (the “Company”), and U.S.
BANK NATIONAL ASSOCIATION, a national banking association, as Trustee (the “Trustee”).

 

Each party agrees as follows
for the benefit of the other party and for the equal and ratable benefit of the
Holders of the Company’s 101⁄2% Senior Discount Notes Due 2012 (the “Initial
Securities”) and, if and when issued pursuant to a registered exchange for
Initial Securities, the Company’s 101⁄2% Senior Discount Notes Due 2012 (the “Exchange
Securities”) and if and when issued pursuant to a private exchange for Initial
Securities, the Company’s 101⁄2% Senior Discount Notes Due 2012 (the “Private
Exchange Securities”, and together with the Exchange Securities and the Initial
Securities, the “Securities”):

 

ARTICLE 1

 

Definitions and Incorporation by Reference

 

SECTION
1.01.  Definitions.

 

“Accreted Value” means, as
of any date (the “Specified Date”), the amount provided below for each $1,000
principal amount at maturity of Securities:

 

(1) if the Specified Date
occurs on one of the following dates (each, a “Semi-Annual Accrual Date”), the
Accreted Value shall equal the amount set forth below for such Semi-Annual
Accrual Date:

 

 

	
  Semi-Annual

  Accrual Date

  	
   

  	
  Accreted

  Value

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Issue Date

  	
   

  	
  $

  	
  663.33

  	
   

  
	
  May 1, 2005

  	
   

  	
  $

  	
  698.97

  	
   

  
	
  November 1, 2005

  	
   

  	
  $

  	
  735.66

  	
   

  
	
  May 1, 2006

  	
   

  	
  $

  	
  774.28

  	
   

  
	
  November 1, 2006

  	
   

  	
  $

  	
  814.93

  	
   

  
	
  May 1, 2007

  	
   

  	
  $

  	
  857.71

  	
   

  
	
  November 1, 2007

  	
   

  	
  $

  	
  902.73

  	
   

  
	
  May 1, 2008

  	
   

  	
  $

  	
  950.12

  	
   

  
	
  November 1, 2008

  	
   

  	
  $

  	
  1,000.00

  	
   

  
						

 

(2) if the Specified Date
occurs between two Semi-Annual Accrual Dates, the Accreted Value shall be equal
to the sum of (A) the Accreted Value for the Semi-Annual Accrual Date
immediately preceding such Specified Date and (B) an amount equal to the
product of (x) the Accreted Value for the immediately following Semi-Annual

 

 

Accrual Date less the Accreted Value for the
immediately preceding Semi-Annual Accrual Date multiplied by (y) a fraction,
the numerator of which is the number of days elapsed from the immediately
preceding Semi-Annual Accrual Date to the Specified Date, using a 360-day year
of 12 30-day months, and the denominator of which is 180 (or, if the
Semi-Annual Accrual Date immediately preceding the Specified Date is the Issue
Date, the denominator of which is the number of days from and including the Issue
Date to and excluding the next Semi-Annual Accrual Date); or

 

(3) if the Specified Date
occurs after the last Semi-Annual Accrual Date, the Accreted Value shall equal
$1,000.

 

Notwithstanding the
foregoing, if Additional Interest accrues on the Securities prior to November 1,
2008 as a result of a Registration Default under the Registration Rights
Agreement, subject to the Company’s option to pay Additional Interest on the
Securities in cash, such Additional Interest shall be added to the Accreted
Value, and the Accreted Value as of any Specified Date shall equal the sum of
(A) the Accreted Value, as calculated above, as of the date such Additional
Interest began to accrue, plus (B) the amount of interest that would otherwise
accrue on the Accreted Value from time to time on a daily basis at a rate of
interest per annum borne by the Securities plus the rate of such Additional
Interest as applicable from time to time, compounded semi-annually on each
Semi-Annual Accrual Date from the date such Additional Interest began to
accrete through the Specified Date, computed on the basis of a 360-day year of
twelve 30-day months. If such an event were to occur, the Accreted Value on and
after the last Semi-Annual Accrual Date would exceed $1,000.

 

“Additional Assets” means
(1) any property, plant or equipment used or useful in a Related Business; (2)
the Capital Stock of a Person that becomes a Restricted Subsidiary of the
Company as a result of the acquisition of such Capital Stock by the Company or
another Restricted Subsidiary of the Company; or (3) Capital Stock constituting
a minority interest in any Person that at such time is a Restricted Subsidiary
of the Company; provided, however, that any such Restricted
Subsidiary described in clause (2) or (3) above is primarily engaged in a
Related Business.

 

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

 

“Additional Securities”
means Securities issued under this Indenture after the Issue Date and in
compliance with Sections 2.13 and 4.03, it being understood that any Securities
issued in exchange for or replacement of any Initial Security issued on the
Issue Date shall not be an Additional Security, including any such Securities
issued pursuant to a Registration Rights Agreement.

 

“Affiliate” of any specified
Person means any other Person, directly or indirectly, controlling or
controlled by or under direct or indirect common control with such specified
Person.  For the purposes of this
definition, “control” when used with respect to any Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by

 

2

 

contract or otherwise; and the terms “controlling”
and “controlled” have meanings correlative to the foregoing.  For purposes of Sections 4.04, 4.06 and
4.07 only, “Affiliate” shall also mean any beneficial owner of Capital Stock
representing 10% or more of the total voting power of the Voting Stock (on a
fully diluted basis) of the Company or of rights or warrants to purchase such
Capital Stock (whether or not currently exercisable) and any Person who would
be an Affiliate of any such beneficial owner pursuant to the first sentence
hereof.

 

“Asset Disposition” means,
with respect to any Person (the “Specified Person”) any sale, lease, issuance,
transfer or other disposition (or series of related sales, leases, transfers or
dispositions) by the Specified Person or any Restricted Subsidiary of the
Specified Person, including any disposition by means of a merger, consolidation
or similar transaction (each referred to for the purposes of this definition as
a “disposition”), of:

 

(1)           any shares of Capital Stock of a Restricted Subsidiary of
the Specified Person (other than directors’ qualifying shares or shares
required by applicable law to be held by a Person other than the Specified
Person or a Restricted Subsidiary of the Specified Person);

 

(2)           all or substantially all the assets of any division or
line of business of the Specified Person or any Restricted Subsidiary of the
Specified Person; or

 

(3)           any other assets of the Specified Person or any Restricted
Subsidiary of the Specified Person outside of the ordinary course of business
of the Specified Person or such Restricted Subsidiary of the Specified Person

 

other than, in the case of
clauses (1), (2) and (3) above,

 

(A) a disposition by a
Restricted Subsidiary of the Specified Person to the Specified Person or by the
Specified Person or a Restricted Subsidiary of the Specified Person to a Restricted
Subsidiary of the Specified Person;

 

(B) for purposes of Section 4.06
only, (x) a disposition that constitutes a Restricted Payment (or would
constitute a Restricted Payment but for the exclusions from the definition
thereof) and that is not prohibited by Section 4.04 and (y) a disposition
of all or substantially all the assets of the Specified Person in accordance
with Section 5.01;

 

(C) a disposition of assets
in any transaction or series of related transactions where such assets have an
aggregate Fair Market Value of less than $1.0 million;

 

(D) a disposition of cash or
Temporary Cash Investments;

 

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

 

3

 

(F) the sale or disposition
in the ordinary course of business of obsolete, damaged or worn out assets no
longer used or useful to the business of the Company and its Restricted
Subsidiaries;

 

(G) the sale or discount, in
each case without recourse, of accounts receivable arising in the ordinary course
of business, but only in connection with the compromise or collection thereof;

 

(H) the grant in the
ordinary course of business of any non-exclusive license of patents,
trademarks, registrations thereof and other similar intellectual property;

 

(I) any release of
intangible claims or rights in connection with the loss or settlement of a bona
fide lawsuit, dispute or other controversy;

 

(J) leases or subleases in
the ordinary course of business to third persons not interfering in any
material respect with the business of the Specified Person or any of its
Restricted Subsidiaries;

 

(K) any disposition of
receivables, equipment and related assets (including contract rights of the
type described in the definition of “Qualified Securitization Transaction”) to
a Securitization Entity pursuant to a Qualified Securitization Transaction for
the Fair Market Value thereof, including cash and Temporary Cash Investments in
an amount at least equal to 75% of the Fair Market Value thereof (for purposes
of this clause (K), Purchase Money Notes will be deemed to be cash);

 

(L) any transfer of
receivables, equipment and related assets (including contract rights of the
type described in the definition of “Qualified Securitization Transaction”), or
a fractional undivided interest therein, by a Securitization Entity in a
Qualified Securitization Transaction; and

 

(M) solely for purposes of Section 4.06,
any sale or disposition of all of the Capital Stock of or all or substantially
all of the assets of Cassco Ice and Cold Storage, Inc. and/or Southern Bottled
Water, Inc.

 

“Attributable Debt” in
respect of a Sale/Leaseback Transaction means, as at the time of determination,
the present value (discounted at the rate of interest implied in such
transaction) of the total obligations of the lessee for rental payments during
the remaining term of the lease included in such Sale/Leaseback Transaction
(including any period for which such lease has been extended); provided,
however, that if such Sale/Leaseback Transaction results in a Capital
Lease Obligation, the amount of Indebtedness represented thereby shall be
determined in accordance with the definition of “Capital Lease Obligation”.

 

“Average Life” means, as of
the date of determination, with respect to any Indebtedness, the quotient
obtained by dividing:  (1) the sum
of the

 

4

 

products of the numbers of years from the
date of determination to the dates of each successive scheduled principal
payment of or redemption or similar payment with respect to such Indebtedness
multiplied by the amount of such payment by (2) the sum of all such
payments.

 

“Bank Indebtedness” means
all Obligations pursuant to the Credit Agreement, including all Hedging
Obligations owing to a Lender (as defined in the Credit Agreement) or any
Affiliate of such Lender (or any Person that was a Lender or an Affiliate of
such Lender at the time the applicable Commodity Agreement, Currency Agreement
or Interest Rate Agreement was entered into).

 

“Board of Directors” with
respect to a Person means the Board of Directors of such Person or any
committee thereof duly authorized to act on behalf of such Board.

 

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

 

“Capital Lease Obligation”
means an obligation that is required to be classified and accounted for as a
capital lease for financial reporting purposes in accordance with GAAP, and the
amount of Indebtedness represented by such obligation shall be the capitalized
amount of such obligation determined in accordance with GAAP; and the Stated
Maturity thereof shall be the date of the last payment of rent or any other
amount due under such lease prior to the first date upon which such lease may
be terminated by the lessee without payment of a penalty.

 

“Capital Stock” of any
Person means any and all shares, interests, rights to purchase, warrants,
options, participations or other equivalents of or interests in (however
designated) equity of such Person, including any Preferred Stock, but excluding
any debt securities convertible into such equity.

 

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

 

(1)           any “person” (as such term is used in Sections 13(d)
and 14(d) of the Exchange Act), other than one or more Permitted Holders, is or
becomes the beneficial owner (as defined in Rules 13d-3 and 13d-5 under the
Exchange Act, except that for purposes of this clause (1) such person shall be
deemed to have “beneficial ownership” of all shares that any such person has
the right to acquire, whether such right is exercisable immediately or only
after the passage of time), directly or indirectly, of more than 50% of the
total voting power of the Voting Stock of the Company; provided, however,
that for the purposes of this clause (1), such other person shall be deemed to
beneficially own any Voting Stock of a Person held by any other Person (the “parent
entity”), if such other person is the beneficial owner (as defined above in
this clause (1)), directly or indirectly, of more than 50% of the voting power
of the Voting Stock of such parent entity;

 

(2)           individuals who on August 15, 2003 constituted the
Board of Directors of the Company or the Board of Directors of any parent
entity of the Company (the “Parent Board”) (together with any new directors
whose election

 

5

 

by such Board of Directors
of the Company or Parent Board or whose nomination for election by the
shareholders of the Company or the applicable parent entity, as the case may
be, was approved by (a) a vote of a majority of the directors of the
Company or the applicable parent entity, as the case may be, then still in
office who were either directors on August 15, 2003 or whose election or
nomination for election was previously so approved or (b) the Permitted
Holders acting in accordance with the Shareholders Agreement) cease for any
reason to constitute a majority of the Board of Directors of the Company or the
Parent Board then in office;

 

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

 

(4)           the merger or consolidation of the Company or any parent
entity of the Company with or into another Person or the merger of another
Person with or into the Company or any parent entity of the Company, or the
sale of all or substantially all the assets of the Company or any parent entity
of the Company (determined on a consolidated basis) to another Person other
than (i) a transaction in which the survivor or transferee is a Person that is
controlled by the Permitted Holders or (ii) a transaction following which (A)
in the case of a merger or consolidation transaction, holders of securities
that represented 100% of the Voting Stock of the Company or the applicable
parent entity, as the case may be, immediately prior to such transaction (or
other securities into which such securities are converted as part of such
merger or consolidation transaction) own directly or indirectly at least a
majority of the voting power of the Voting Stock of the surviving Person in
such merger or consolidation transaction immediately after such transaction and
in substantially the same proportion as before the transaction and (B) in the
case of a sale of assets transaction, each transferee becomes an obligor in
respect of the Securities and a Subsidiary of the transferor of such assets;

 

(5)           to the extent any Reddy Group Existing Notes are outstanding,
a “Change of Control,” as defined in the Reddy Group Existing Indenture, shall
have occurred; or

 

(6)           the failure at any time by the Company to beneficially own
(as defined in Rules 13d-3 and 13d-5 under the Exchange Act), directly or
indirectly, 100% of the Voting Stock of Reddy Group (except to the extent Reddy
Group is merged with and into the Company in accordance with the terms of this
Indenture).

 

“Code” means the Internal
Revenue Code of 1986, as amended.

 

“Company” means the party
named as such in this Indenture until a successor replaces it and, thereafter,
means the successor and, for purposes of any provision contained herein and
required by the TIA, each other obligor on the indenture securities.

 

6

 

“Commodity Agreement” means
any forward contract, commodity swap, commodity option or other similar
financial agreement or arrangement relating to, or the value of which is
dependent upon, fluctuations in commodity prices.

 

“Consolidated Coverage Ratio”
with respect to any Person (the “Specified Person”) as of any date of
determination means the ratio of (x) the aggregate amount of EBITDA of the
Specified Person and its Restricted Subsidiaries for the period of the most
recent four consecutive fiscal quarters ending on or prior to such date of
determination for which internal financial statements are available to
(y) Consolidated Interest Expense of the Specified Person and its
Restricted Subsidiaries for such four fiscal quarters; provided, however,
that:

 

(1)           if the Specified Person or any of its Restricted
Subsidiaries has Incurred any Indebtedness since the beginning of such period
that remains outstanding or if the transaction giving rise to the need to
calculate the Consolidated Coverage Ratio is an Incurrence of Indebtedness, or
both, EBITDA and Consolidated Interest Expense for such period shall be
calculated after giving effect on a pro forma
basis to such Indebtedness as if such Indebtedness had been Incurred on the
first day of such period;

 

(2)           if the Specified Person or any of its Restricted
Subsidiaries has repaid, repurchased, defeased or otherwise discharged any
Indebtedness since the beginning of such period or if any Indebtedness is to be
repaid, repurchased, defeased or otherwise discharged (in each case other than
Indebtedness Incurred under any revolving credit facility unless such
Indebtedness has been permanently repaid and has not been replaced) on the date
of the transaction giving rise to the need to calculate the Consolidated
Coverage Ratio, EBITDA and Consolidated Interest Expense for such period shall
be calculated on a pro forma basis as if
such discharge had occurred on the first day of such period and as if the Specified
Person or such Restricted Subsidiary had not earned the interest income
actually earned during such period in respect of cash or Temporary Cash
Investments used to repay, repurchase, defease or otherwise discharge such
Indebtedness;

 

(3)           if since the beginning of such period the Specified Person
or any of its Restricted Subsidiaries shall have made any Asset Disposition,
EBITDA for such period shall be reduced by an amount equal to EBITDA (if
positive) directly attributable to the assets which were the subject of such
Asset Disposition for such period, or increased by an amount equal to EBITDA
(if negative), directly attributable thereto for such period and Consolidated
Interest Expense for such period shall be reduced by an amount equal to the
Consolidated Interest Expense directly attributable to any Indebtedness of the Specified
Person or any of its Restricted Subsidiaries repaid, repurchased, defeased or
otherwise discharged with respect to the Specified Person and its continuing
Restricted Subsidiaries in connection with such Asset Disposition for such
period (or, if the Capital Stock of any of its Restricted Subsidiaries is sold,
the Consolidated Interest Expense for such period directly attributable to the
Indebtedness of such Restricted Subsidiary

 

7

 

to the extent the Specified
Person and its continuing Restricted Subsidiaries are no longer liable for such
Indebtedness after such sale);

 

(4)           if since the beginning of such period the Specified Person
or any of its Restricted Subsidiaries (by merger or otherwise) shall have made
an Investment in any Restricted Subsidiary of the Specified Person (or any
person which becomes a Restricted Subsidiary of the Specified Person) or an
acquisition of assets, including any acquisition of assets occurring in
connection with a transaction requiring a calculation to be made hereunder,
which constitutes all or substantially all of an operating unit of a business,
EBITDA and Consolidated Interest Expense for such period shall be calculated
after giving pro forma effect thereto
(including the Incurrence of any Indebtedness) as if such Investment or
acquisition had occurred on the first day of such period; and

 

(5)           if since the beginning of such period any Person (that
subsequently became a Restricted Subsidiary of the Specified Person or was
merged with or into the Specified Person or any of its Restricted Subsidiaries
since the beginning of such period) shall have made any Asset Disposition, any
Investment or acquisition of assets that would have required an adjustment
pursuant to clause (3) or (4) above if made by the Specified Person or a
Restricted Subsidiary of the Specified Person during such period, EBITDA and
Consolidated Interest Expense for such period shall be calculated after giving pro forma effect thereto as if such Asset
Disposition, Investment or acquisition occurred on the first day of such
period.

 

For purposes of this definition, whenever pro forma effect is to be given to an acquisition of assets, the
amount of income or earnings relating thereto and the amount of Consolidated
Interest Expense associated with any Indebtedness Incurred in connection therewith,
the pro forma calculations shall be
determined in good faith by a responsible financial or accounting Officer of
the Specified Person (and, to the extent applicable, may include any pro forma expense and cost reductions
calculated on a basis consistent with Regulation S-X under the Exchange Act).
If any Indebtedness bears a floating rate of interest and is being given pro forma effect, the interest on such
Indebtedness shall be calculated as if the rate in effect on the date of
determination had been the applicable rate for the entire period (taking into
account any Interest Rate Agreement applicable to such Indebtedness to the
extent such Interest Rate Agreement has a remaining term that includes some or
all of the 12-month period of the date of determination). If any Indebtedness
is incurred under a revolving credit facility and is being given pro forma effect, the interest on such
Indebtedness shall be calculated based on the average daily balance of such
Indebtedness for the four fiscal quarters subject to the pro forma calculation (but, in the case of any revolving credit
facility incurred other than pursuant to Section 4.03(b)(1), only to the
extent such Indebtedness is incurred solely for working capital purposes or
other general corporate purposes in the ordinary course of business and not, in
any case, to support directly or indirectly any acquisitions).

 

“Consolidated Interest
Expense” means, with respect to any Person (the “Specified Person”), for any
period, the total interest expense of the Specified Person and

 

8

 

its consolidated Restricted Subsidiaries, plus,
to the extent not included in such total interest expense, and to the extent
incurred by the Specified Person or its Restricted Subsidiaries, without
duplication:

 

(1)           interest expense attributable to Capital Lease
Obligations;

 

(2)           amortization of debt discount and debt issuance cost;

 

(3)           capitalized interest;

 

(4)           non-cash interest expense;

 

(5)           commissions, discounts and other fees and charges owed
with respect to letters of credit and bankers’ acceptance financing;

 

(6)           net payments pursuant to Hedging Obligations with respect
to Interest Rate Agreements;

 

(7)           dividends accrued in respect of all Disqualified Stock of
the Specified Person or Preferred Stock of a Restricted Subsidiary of the
Specified Person held by Persons other than the Specified Person or a
Restricted Subsidiary of the Specified Person (other than dividends payable
solely in Capital Stock (other than Disqualified Stock) of the Specified Person);
provided, however, that such dividends will be multiplied by a
fraction the numerator of which is one and the denominator of which is one
minus the effective combined tax rate of the issuer of such Preferred Stock
(expressed as a decimal) for such period (as estimated by the Chief Financial
Officer of the Specified Person in good faith);

 

(8)           interest incurred in connection with Investments in
discontinued operations;

 

(9)           interest accruing on any Indebtedness of any other Person
to the extent such Indebtedness is Guaranteed by (or secured by the assets of)
the Specified Person or any Restricted Subsidiary of the Specified Person; and

 

(10)         the cash contributions to any employee stock ownership plan
or similar trust to the extent such contributions are used by such plan or
trust to pay interest or fees to any Person (other than the Specified Person)
in connection with Indebtedness Incurred by such plan or trust.

 

“Consolidated Net Income”
means, with respect to any Person (the “Specified Person”) for any period, the
net income of the Specified Person and its consolidated Subsidiaries; provided,
however, that there shall not be included in such Consolidated Net
Income:

 

(1)           any net income of any Person (other than the Specified
Person) if such Person is not a Restricted Subsidiary of the Specified Person,
except that:

 

9

 

(A)          subject to the exclusions contained in clauses (4) and (6)
below, the Specified Person’s equity in the net income of any such Person for
such period shall be included in such Consolidated Net Income in an amount
equal to the aggregate amount of cash actually distributed by such Person
during such period to the Specified Person or a Restricted Subsidiary of the
Specified Person as a dividend or other distribution (subject, in the case of a
dividend or other distribution paid to a Restricted Subsidiary, to the
limitations contained in clause (3) below); and

 

(B)           the Specified Person’s equity in a net loss of any such
Person for such period shall be included in determining such Consolidated Net
Income;

 

(2)           any net income (or loss) of any Person acquired by the
Specified Person or a Subsidiary of the Specified Person in a pooling of
interests transaction (or any transaction accounted for in a manner similar to
a pooling of interests) for any period prior to the date of such acquisition;

 

(3)           any net income of any Restricted Subsidiary of the
Specified Person if such Restricted Subsidiary is subject to restrictions,
directly or indirectly, on the payment of dividends or the making of
distributions by such Restricted Subsidiary (other than any such restriction
that is permitted under Section 4.05), directly or indirectly, to the
Specified Person, except that:

 

(A)          subject to the exclusion contained in clause (4) below, the
net income of any such Restricted Subsidiary for such period shall be included
in such Consolidated Net Income in an amount equal to the aggregate amount of
cash actually distributed by such Restricted Subsidiary during such period to
the Specified Person or another Restricted Subsidiary of the Specified Person as
a dividend or other distribution (subject, in the case of a dividend or other
distribution paid to another Restricted Subsidiary of the Specified Person, to
the limitation contained in this clause); and

 

(B)           the net loss of any such Restricted Subsidiary for such
period shall be included in determining such Consolidated Net Income;

 

(4)           any gain (or loss) realized upon the sale or other
disposition of any assets of the Specified Person, its consolidated
Subsidiaries or any other Person (including pursuant to any sale-and-leaseback
arrangement) which are not sold or otherwise disposed of in the ordinary course
of business and any gain (or loss) realized upon the sale or other disposition
of any Capital Stock of any Person;

 

(5)           extraordinary gains or losses;

 

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

 

10

 

(7)           any non-recurring fees, charges or other expenses
(including bonus and retention payments and severance expenses) directly
related to the Transactions; and

 

(8)           the amount of any write-off of deferred financing costs or
of debt issuance costs and the amount of charges related to any premium paid in
connection with repurchasing Indebtedness, in each case as a result of the
Transactions.

 

Notwithstanding the foregoing, for the purposes of Section 4.04
only, there shall be excluded from Consolidated Net Income any repurchases,
repayments or redemptions of Investments, proceeds realized on the sale of
Investments or return of capital to the Specified Person or any of its
Restricted Subsidiaries to the extent such repurchases, repayments,
redemptions, proceeds or returns increase the amount of Restricted Payments
permitted under such Section pursuant to Section 4.04(a)(3)(D).

 

“Credit Agreement” means one
or more debt facilities (including the Existing Credit Agreement) or other
financing arrangements (including commercial paper facilities, revolving credit
loans, term loans, receivables financings, letters of credit and any debt
securities or other form of debt, convertible debt or exchangeable debt
financing), in each case, as amended, supplemented, extended, renewed, restated
or otherwise modified (in whole or in part and without limitation as to amount,
terms, conditions, covenants and other provisions) from time to time, and any
agreement (and related document) governing Indebtedness Incurred to Refinance,
in whole or in part, the borrowings and commitments then outstanding or
permitted to be outstanding under such debt facility or other financing
arrangement or a successor debt facility or financing arrangement, whether by
the same or any other lender or group of lenders or creditor or group of
creditors.

 

“Currency Agreement” means
any foreign exchange contract, currency swap agreement or other similar
agreement with respect to currency values.

 

“Default” means any event
which is, or after notice or passage of time or both would be, an Event of
Default.

 

“Disqualified Stock” means,
with respect to any Person, any Capital Stock which by its terms (or by the
terms of any security into which it is convertible or for which it is
exchangeable at the option of the holder) or upon the happening of any event:

 

(1)           matures or is mandatorily redeemable (other than
redeemable only for Capital Stock of such Person which is not itself
Disqualified Stock) pursuant to a sinking fund obligation or otherwise;

 

(2)           is convertible or exchangeable at the option of the holder
for Indebtedness or Disqualified Stock; or

 

(3)           is mandatorily redeemable or must be purchased upon the
occurrence of any event, in whole or in part;

 

11

 

in each case on or prior to the first anniversary of
the Stated Maturity of the Securities; provided, however, that
any Capital Stock that would not constitute Disqualified Stock but for
provisions thereof giving holders thereof the right to require such Person to
purchase or redeem such Capital Stock upon the occurrence of an “asset sale” or
“change of control” occurring prior to the first anniversary of the Stated
Maturity of the Securities shall not constitute Disqualified Stock if:

 

(1) the “asset sale” or “change
of control” provisions applicable to such Capital Stock are not more favorable
to the holders of such Capital Stock than the terms applicable to the
Securities and described in Sections 4.06 and 4.10 of this Indenture; and

 

(2) any such requirement
only becomes operative after compliance with such terms applicable to the
Securities, including the purchase of any Securities tendered pursuant thereto.

 

“EBITDA” with respect to any
Person (the “Specified Person”) for any period means the sum of Consolidated
Net Income of the Specified Person, plus the following to the extent deducted
in calculating such Consolidated Net Income:

 

(1)           all income tax expense of the Specified Person and its
consolidated Restricted Subsidiaries;

 

(2)           Consolidated Interest Expense;

 

(3)           depreciation and amortization expense of the Specified
Person and its consolidated Restricted Subsidiaries (excluding amortization
expense attributable to a prepaid operating activity item that was paid in cash
in a prior period);

 

(4)           unrealized non-cash gains or losses or non-cash charges in
respect of Hedging Obligations required to be taken under GAAP;

 

(5)           unrealized foreign currency translation gains or losses;
and

 

(6)           all other non-cash charges (including any goodwill
impairment charges) of the Specified Person and its consolidated Restricted
Subsidiaries (excluding any such non-cash charge to the extent that it
represents an accrual of or reserve for cash expenditures in any future
period);

 

in each case for such period. 
Notwithstanding the foregoing, the provision for taxes based on the
income or profits of, and the depreciation and amortization and non-cash
charges of, a Restricted Subsidiary of the Specified Person shall be added to
Consolidated Net Income to compute EBITDA only to the extent (and in the same
proportion, including by reason of minority interests) that the net income or
loss of such Restricted Subsidiary was included in calculating Consolidated Net
Income in accordance with the definition of Consolidated Net Income.

 

12

 

“Exchange Act” means the
U.S. Securities Exchange Act of 1934, as amended.

 

“Existing Credit Agreement”
means the credit agreement dated as of August 15, 2003, by and among the
Company, Reddy Group, certain Subsidiaries of Reddy Group, the lenders referred
to therein, Credit Suisse First Boston, Cayman Islands Branch, as
Administrative Agent, Canadian Imperial Bank of Commerce, as Co-Syndication
Agent, and Bear Stearns Corporate Lending Inc., as Co-Syndication Agent,
together with the related documents thereto (including the notes, the term
loans and revolving loans thereunder, any guarantees and security documents),
as amended, extended, renewed, refunded, restated, supplemented or modified (in
whole or in part, and without limitation as to the amount, terms, conditions,
covenants and other provisions) from time to time.

 

“Fair Market Value” means,
with respect to any asset, the price (after taking into account any liabilities
relating to such asset) that would be negotiated in an arm’s length transaction
for cash between a willing seller and a willing and able buyer, neither of
which is under any compulsion to complete the transaction, as such price is
determined in good faith by management of the Company or by the Board of
Directors of the Company or a duly authorized committee thereof.  Fair Market Value (other than of any asset
with a public trading market) in excess of $5.0 million shall be determined by
the Board of Directors of the Company acting reasonably and in good faith and
shall be evidenced by a board resolution 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.

 

“GAAP” means generally
accepted accounting principles in the United States of America as in effect as
of the Issue Date, including those set forth in:

 

(1)           the opinions and pronouncements of the Accounting
Principles Board of the American Institute of Certified Public Accountants;

 

(2)           statements and pronouncements of the Financial Accounting
Standards Board;

 

(3)           such other statements by such other entity as approved by
a significant segment of the accounting profession; and

 

(4)           the rules and regulations of the SEC governing the
inclusion of financial statements (including pro
forma financial statements) in periodic reports required to be filed
pursuant to Section 13 of the Exchange Act, including opinions and
pronouncements in staff accounting bulletins and similar written statements
from the accounting staff of the SEC.

 

13

 

“Guarantee” means any
obligation, contingent or otherwise, of any Person directly or indirectly
guaranteeing any Indebtedness of any Person and any obligation, direct or
indirect, contingent or otherwise, of such Person:

 

(1)           to purchase or pay (or advance or supply funds for the
purchase or payment of) such Indebtedness of such Person (whether arising by
virtue of partnership arrangements, or by agreements to keep-well, to purchase
assets, goods, securities or services, to take-or-pay or to maintain financial
statement conditions or otherwise); or

 

(2)           entered into for the purpose of assuring in any other
manner the obligee of such Indebtedness of the payment thereof or to protect
such obligee against loss in respect thereof (in whole or in part);

 

provided, however, that the
term “Guarantee” shall not include endorsements for collection or deposit in
the ordinary course of business.  The
term “Guarantee” used as a verb has a corresponding meaning.

 

“Hedging Obligations” of any
Person means the obligations of such Person pursuant to any Interest Rate
Agreement, Currency Agreement or Commodity Agreement.

 

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

 

“Incur” means issue, assume,
Guarantee, incur or otherwise become liable for;
provided, however, that any Indebtedness or Capital Stock of
a Person existing at the time such Person becomes a Restricted Subsidiary of
the Company (whether by merger, consolidation, acquisition or otherwise) shall
be deemed to be Incurred by such Person at the time it becomes a Restricted
Subsidiary of the Company.  The term “Incurrence”
when used as a noun shall have a correlative meaning.  Solely for purposes of determining compliance
with Section 4.03:

 

(1)           amortization of debt discount or the accretion of
principal with respect to a non-interest bearing or other discount security;

 

(2)           the payment of regularly scheduled interest in the form of
additional Indebtedness of the same instrument or the payment of regularly
scheduled dividends on Capital Stock in the form of additional Capital Stock of
the same class and with the same terms;

 

(3)           the obligation to pay a premium in respect of Indebtedness
arising in connection with the issuance of a notice of redemption or making of
a mandatory offer to purchase such Indebtedness; and

 

(4)           unrealized losses or charges in respect of Hedging
Obligations

 

will be deemed not to be the
Incurrence of Indebtedness.

 

14

 

“Indebtedness” means, with
respect to any Person on any date of determination (without duplication):

 

(1)           the principal in respect of (A) indebtedness of such
Person for money borrowed and (B) indebtedness evidenced by notes, debentures,
bonds or other similar instruments for the payment of which such Person is
responsible or liable, including, in each case, any premium on such
indebtedness to the extent such premium has become due and payable;

 

(2)           all Capital Lease Obligations of such Person and all
Attributable Debt in respect of Sale/Leaseback Transactions entered into by
such Person;

 

(3)           all obligations of such Person issued or assumed as the
deferred purchase price of property, all conditional sale obligations of such
Person and all obligations of such Person under any title retention agreement
(but excluding trade accounts payable arising in the ordinary course of
business);

 

(4)           all obligations of such Person for the reimbursement of
any obligor on any letter of credit, bankers’ acceptance or similar credit
transaction (other than obligations with respect to letters of credit securing
obligations (other than obligations described in clauses (1) through (3) above)
entered into in the ordinary course of business of such Person to the extent
such letters of credit are not drawn upon or, if and to the extent drawn upon,
such drawing is reimbursed no later than the tenth Business Day following
payment on the letter of credit);

 

(5)           the amount of all obligations of such Person with respect
to the redemption, repayment or other repurchase of any Disqualified Stock of
such Person or any Preferred Stock of a Subsidiary of such Person, with the
amount of Indebtedness represented by such Disqualified Stock or Preferred
Stock, as applicable, being equal to the greatest of (A) its voluntary
liquidation preference, (B) its involuntary liquidation preference and (C) its
maximum fixed repurchase price, but excluding, in each case, accrued and unpaid
dividends, if any;

 

(6)           all obligations of the type referred to in clauses (1)
through (5) of other Persons and all dividends of other Persons for the payment
of which, in either case, such Person is responsible or liable, directly or
indirectly, as obligor, guarantor or otherwise, including by means of any
Guarantee;

 

(7)           all obligations of the type referred to in clauses (1)
through (6) of other Persons secured by any Lien on any property or asset of
such Person (whether or not such obligation is assumed by such Person), the
amount of such obligation being deemed to be the lesser of the value of such
property or assets and the amount of the obligation so secured; and

 

(8)           to the extent not otherwise included in this definition,
Hedging Obligations of such Person.

 

15

 

Notwithstanding the foregoing, in connection with the purchase by the
Company or any Restricted Subsidiary of the Company of any business, the term “Indebtedness”
will exclude (x) customary indemnification obligations and (y)
post-closing payment adjustments to which the seller may become entitled to the
extent such payment is determined by a final closing balance sheet or such
payment depends on the performance of such business after the closing; provided,
however, that, at the time of closing, the amount of any such payment is
not determinable and, to the extent such payment thereafter becomes fixed and
determined, the amount is paid within 60 days thereafter.

 

The amount of Indebtedness
of any Person at any date shall be the outstanding balance at such date of all
unconditional obligations as described above and the maximum liability, upon
the occurrence of the contingency giving rise to the obligation, of any
contingent obligations at such date;  provided,
however, that in the case of Indebtedness sold at a discount, the amount
of such Indebtedness at any time will be the accreted value thereof at such
time.

 

The amount of any
Disqualified Stock or Preferred Stock that does not have a fixed redemption,
repayment or repurchase price will be calculated in accordance with the terms
of such Disqualified Stock or Preferred Stock as if such Disqualified Stock or
Preferred Stock were redeemed, repaid or repurchased on any date on which the
amount of such Disqualified Stock or Preferred Stock is to be determined
pursuant to this Indenture; provided, however, that if such
Disqualified Stock or Preferred Stock could not be required to be redeemed,
repaid or repurchased at the time of such determination, the redemption,
repayment or repurchase price will be the book value of such Disqualified Stock
or Preferred Stock as reflected on the most recent financial statements of such
Person.

 

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

 

“Independent Qualified Party”
means an investment banking firm, accounting firm or appraisal firm of national
standing;  provided, however,
that such firm is not an Affiliate of the Company.

 

“Interest Rate Agreement”
means any interest rate swap agreement, interest rate cap agreement or other
financial agreement or arrangement with respect to exposure to interest rates.

 

“Investment” in any Person
means any direct or indirect advance, loan (other than advances to customers in
the ordinary course of business that are recorded as accounts receivable on the
balance sheet of the lender) or other extensions of credit (including by way of
Guarantee or similar arrangement) or capital contribution to (by means of any
transfer of cash or other property to others or any payment for property or
services for the account or use of others), or any purchase or acquisition of
Capital Stock, Indebtedness or other similar instruments issued by such
Person.  Except as otherwise provided for
herein, the amount of an Investment shall be its fair value at the time the
Investment is made and without giving effect to subsequent changes in value.

 

16

 

For purposes of the
definition of “Unrestricted Subsidiary”, the definition of “Restricted Payment”
and Section 4.04:

 

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

 

(2)           any property transferred to or from an Unrestricted
Subsidiary shall be valued at its Fair Market Value at the time of such
transfer.

 

“Issue Date” means October 27,
2004.

 

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

 

“Lien” means, with respect
to any property or assets of any Person, any mortgage or deed of trust, pledge,
hypothecation, assignment, deposit arrangement, security interest, lien,
charge, easement, encumbrance, preference, priority or other security agreement
or preferential arrangement of any kind or nature whatsoever on or with respect
to such property or assets, including any Capital Lease Obligation, conditional
sale or other title retention agreement having substantially the same economic
effect as any of the foregoing.

 

“Merger” has the meaning
specified in the Reddy Group Existing Indenture whether or not in effect at the
time of determination.

 

“Monitoring Agreement” has
the meaning specified in the Reddy Group Existing Indenture whether or not in
effect at the time of determination.

 

“Net Available Cash” from an
Asset Disposition means cash payments received therefrom (including any cash
payments received by way of deferred payment of principal pursuant to a note or
installment receivable or otherwise and proceeds from the sale or other
disposition of any securities received as consideration, but only as and when
received, but excluding any other consideration received in the form of
assumption by the acquiring Person of Indebtedness or other obligations
relating to such properties or assets or received in any other non-cash form),
in each case net of:

 

(1)           all legal, title and recording tax expenses, commissions
and other fees and expenses incurred, and all Federal, state, provincial,
foreign and local

 

17

 

taxes required to be accrued
as a liability under GAAP, as a consequence of such Asset Disposition;

 

(2)           all payments made on any Indebtedness which is secured by
any assets subject to such Asset Disposition, in accordance with the terms of
any Lien upon or other security agreement of any kind with respect to such
assets, or which must by its terms, or in order to obtain a necessary consent
to such Asset Disposition, or by applicable law, be repaid out of the proceeds
from such Asset Disposition;

 

(3)           all distributions and other payments required to be made
to minority interest holders in Restricted Subsidiaries of the Company as a
result of such Asset Disposition;

 

(4)           the deduction of appropriate amounts provided by the
seller as a reserve, in accordance with GAAP, against any liabilities
associated with the property or other assets disposed in such Asset Disposition
and retained by the Company or any Restricted Subsidiary of the Company after
such Asset Disposition; and

 

(5)           any portion of the purchase price from an Asset
Disposition placed in escrow, whether as a reserve for adjustment of the
purchase price, for satisfaction of indemnities in respect of such Asset
Disposition or otherwise in connection with that Asset Disposition; provided,
however, that upon the termination of that escrow, Net Available Cash
will be increased by any portion of funds in the escrow that are released to
the Company or any Restricted Subsidiary of the Company.

 

“Net Cash Proceeds”, with
respect to any issuance or sale of Capital Stock or Indebtedness, means the
cash proceeds of such issuance or sale net of attorneys’ fees, accountants’
fees, underwriters’ or placement agents’ fees, discounts or commissions and
brokerage, consultant and other fees actually incurred in connection with such
issuance or sale and net of taxes paid or payable as a result thereof.

 

“Non-Recourse Securitization
Entity Indebtedness” has the meaning set forth in the definition of
Securitization Entity.

 

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

 

“Offering Circular” means
the confidential Offering Circular dated October 19, 2004, used in
connection with the offering of the Initial Securities to be issued on the
Issue Date.

 

18

 

“Officer” means the Chairman
of the Board, the President, any Vice President, the Treasurer or the Secretary
of the Company.

 

“Officers’ Certificate”
means a certificate signed by two Officers.

 

“One Year’s Coupon” means,
with respect to an optional redemption, the difference between (1) the
scheduled Accreted Value of the Securities on the date that is one year after
the redemption date and (2) the Accreted Value of the Securities as of the
redemption date.

 

“Opinion of Counsel” means a
written opinion from legal counsel who is acceptable to the Trustee.  The counsel may be an employee of or counsel
to the Company or the Trustee.

 

“Permitted Holders” means
(i) Trimaran Fund Management, L.L.C., Trimaran Fund II, L.L.C., Trimaran
Parallel Fund II, L.P., Trimaran Capital, L.L.C., CIBC Employee Private Equity
Fund (Trimaran) Partners and CIBC MB Inc., (ii) Bear Stearns Merchant Capital
II, L.P., Bear Stearns Merchant Banking Partners II, L.P., Bear Stearns
Merchant Banking Investors II, L.P., Bear Stearns MB-PSERS II, L.P., The BSC
Employee Fund III, L.P. and the BSC Employee Fund IV, L.P., (iii) any
controlled Affiliate of any Person referred to in clauses (i) or (ii) above
that is organized by such Person primarily for the purpose of making equity or
debt investments in one or more Persons, (iv) any officer or director of the
Company who owned common stock of the Company immediately after giving effect
to the Merger and (v) any Related Party. Except for a Permitted Holder
specifically identified by name, in determining whether Voting Stock is owned
by a Permitted Holder, only Voting Stock acquired by a Permitted Holder in its
described capacity will be treated as “beneficially owned” by such Permitted
Holder.

 

“Permitted Investment” means
an Investment by the Company or any Restricted Subsidiary of the Company in:

 

(1)           the Company, a Restricted Subsidiary of the Company or a
Person that will, upon the making of such Investment, become a Restricted
Subsidiary of the Company; provided, however, that the primary
business of such Restricted Subsidiary is a Related Business;

 

(2)           another Person if, as a result of such Investment, such
other Person is merged or consolidated with or into, or transfers or conveys
all or substantially all its assets to, the Company or a Restricted Subsidiary
of the Company; provided, however, that such Person’s primary
business is a Related Business;

 

(3)           cash and Temporary Cash Investments;

 

(4)           receivables owing to the Company or any Restricted
Subsidiary of the Company if created or acquired in the ordinary course of
business and payable or dischargeable in accordance with customary trade terms;
provided, however,

 

19

 

that such trade terms may
include such concessionary trade terms as the Company or any such Restricted
Subsidiary deems reasonable under the circumstances;

 

(5)           payroll, travel and similar advances to cover matters that
are expected at the time of such advances ultimately to be treated as expenses
for accounting purposes and that are made in the ordinary course of business;

 

(6)           loans or advances to employees made in the ordinary course
of business of the Company or such Restricted Subsidiary;

 

(7)           stock, obligations or securities received in settlement of
debts created in the ordinary course of business and owing to the Company or
any Restricted Subsidiary of the Company or in satisfaction of judgments;

 

(8)           any Person to the extent such Investment represents the
non-cash portion of the consideration received for (i) an Asset
Disposition as permitted pursuant to Section 4.06 or (ii) a
disposition of any assets not constituting an Asset Disposition;

 

(9)           any Person where such Investment was acquired by the
Company or any of its Restricted Subsidiaries (a) in exchange for any other
Investment or accounts receivable held by the Company or any such Restricted
Subsidiary in connection with or as a result of a bankruptcy, workout,
reorganization or recapitalization of the issuer of such other Investment or
accounts receivable or (b) as a result of a foreclosure by the Company or any
of its Restricted Subsidiaries with respect to any secured Investment or other
transfer of title with respect to any secured Investment in default;

 

(10)         any Person to the extent such Investments consist of prepaid
expenses, negotiable instruments held for collection and lease, utility and
workers’ compensation, performance and other similar deposits made in the
ordinary course of business by the Company or any Restricted Subsidiary;

 

(11)         any Person to the extent such Investments consist of Hedging
Obligations otherwise permitted pursuant to Section 4.03;

 

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

 

(13)         Investments by the Company in a Securitization Entity or any
Investment by a Securitization Entity in any other Person in connection with a
Qualified Securitization Transaction which Investments consist of the transfer
of receivables, equipment and related assets; provided, however,
that any Investment

 

20

 

in a Securitization Entity
is in the form of (a) a Purchase Money Note, (b) an equity interest, (c)
obligations of the Securitization Entity to pay the purchase price for assets
transferred to it or (d) interests in either (x) equipment owned by the Company
or a Restricted Subsidiary of the Company or (y) accounts receivable generated
by the Company or a Restricted Subsidiary of the Company and, in each case,
transferred to such Securitization Entity or other Person in connection with a
Qualified Securitization Transaction; and

 

(14)         Persons to the extent such Investments, when taken together
with all other Investments made pursuant to this clause (14) outstanding on the
date such Investment is made, do not exceed $25.0 million.

 

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

 

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

 

(2)           Liens in favor of carriers, warehousemen, mechanics,
suppliers, repairmen, materialmen and landlords and other similar Liens imposed
by law, in each case for sums not overdue or being contested in good faith by
appropriate proceedings or other Liens arising out of judgments or awards
against such Person with respect to which such Person shall then be proceeding
with an appeal or other proceedings for review and Liens arising solely by
virtue of any statutory or common law provision relating to banker’s Liens,
rights of set-off or similar rights and remedies as to deposit accounts or
other funds maintained with a creditor depository institution; provided,
however, that (A) such deposit account is not a dedicated cash
collateral account and is not subject to restrictions against access by the
Company in excess of those set forth by regulations promulgated by the Federal
Reserve Board and (B) such deposit account is not intended by the Company
to provide collateral to the depository institution;

 

(3)           Liens for taxes not yet subject to penalties for
non-payment or which are being contested in good faith by appropriate
proceedings;

 

(4)           Liens in favor of issuers of surety bonds or letters of
credit issued pursuant to the request of and for the account of such Person in
the ordinary course of its business; provided, however, that such
letters of credit do not constitute Indebtedness;

 

(5)           minor survey exceptions, minor encumbrances, easements or
reservations of, or rights of others for, licenses, rights-of-way, sewers,
electric

 

21

 

lines, telegraph and
telephone lines and other similar purposes, or zoning or other restrictions as
to the use of real property or Liens incidental to the conduct of the business
of such Person or to the ownership of its properties which were not Incurred in
connection with Indebtedness and which do not in the aggregate materially
adversely affect the value of said properties or materially impair their use in
the operation of the business of such Person;

 

(6)           Liens securing Indebtedness Incurred to finance the
construction, purchase or lease of, or repairs, improvements or additions to,
property, plant or equipment of such Person; provided, however,
that the Lien may not extend to any other property owned by such Person or any
of its Restricted Subsidiaries at the time the Lien is Incurred (other than
assets and property affixed or appurtenant thereto or proceeds or distributions
thereof), and the Indebtedness (other than any interest thereon) secured by the
Lien may not be Incurred more than 180 days after the later of the acquisition,
completion of construction, repair, improvement, addition or commencement of
full operation of the property subject to the Lien;

 

(7)           Liens to secure Indebtedness under any Credit Agreement or
any Guarantee of Indebtedness of a Restricted Subsidiary of the Company permitted
under Section 4.03;

 

(8)           Liens existing on the Issue Date;

 

(9)           Liens on property or shares of Capital Stock of another
Person at the time such other Person becomes a Subsidiary of such Person; provided,
however, that the Liens may not extend to any other property owned by such
Person or any of its Restricted Subsidiaries (other than assets and property
affixed or appurtenant thereto or proceeds or distributions thereof);

 

(10)         Liens on property at the time such Person or any of its
Subsidiaries acquires the property, including any acquisition by means of a
merger or consolidation with or into such Person or a Subsidiary of such
Person; provided, however, that the Liens may not extend to any
other property owned by such Person or any of its Restricted Subsidiaries
(other than assets and property affixed or appurtenant thereto or proceeds or
distributions thereof);

 

(11)         Liens securing Indebtedness or other obligations of a
Subsidiary of such Person owing to such Person or a Restricted Subsidiary of
such Person;

 

(12)         Liens securing Hedging Obligations so long as such Hedging
Obligations relate to Indebtedness that is, and is permitted to be under this
Indenture, secured by a Lien on the same property securing such Hedging
Obligations;

 

(13)         Liens to secure any Refinancing (or successive Refinancings)
as a whole, or in part, of any Indebtedness secured by any Lien referred to in
the foregoing clause (6), (8), (9) or (10); provided, however,
that:

 

22

 

(A)          such new Lien shall be limited to all or part of the same
property and assets that secured or, under the written agreements pursuant to
which the original Lien arose, could secure the original Lien (plus
improvements and accessions to, such property or proceeds or distributions
thereof); and

 

(B)           the Indebtedness secured by such Lien at such time is not
increased to any amount greater than the sum of (x) the outstanding principal
amount or, if greater, committed amount of the Indebtedness described under
clause (6), (8), (9) or (10) at the time the original Lien became a Permitted
Lien and (y) an amount necessary to pay any fees and expenses, including
premiums, related to such refinancing, refunding, extension, renewal or
replacement;

 

(14)         Liens arising under this Indenture in favor of the trustee
for its own benefit and similar Liens in favor of other trustees, agents and
representatives arising under instruments governing Indebtedness permitted to
be Incurred under this Indenture, provided, that such Liens are solely
for the benefit of the trustees, agents or representatives in their capacities
as such and not for the benefit of the holders of such Indebtedness;

 

(15)         other Liens not to exceed $10.0 million outstanding at
any time.

 

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

 

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

 

“Preferred Stock”, as
applied to the Capital Stock of any Person, means Capital Stock of any class or
classes (however designated) which is preferred as to the payment of dividends
or distributions, or as to the distribution of assets upon any voluntary or
involuntary liquidation or dissolution of such Person, over shares of Capital
Stock of any other class of such Person.

 

“principal” of a Security
means the principal of such Security including any amounts accreted thereon, plus
the premium, if any, payable on the Security which is due or overdue or is to
become due at the relevant time.

 

“Public Equity Offering”
means an underwritten public offering of common stock of the Company pursuant
to an effective registration statement under the Securities Act.

 

“Purchase Money Note” means
a promissory note of a Securitization Entity evidencing a line of credit, which
may be irrevocable, from the Company or any Subsidiary of the Company in
connection with a Qualified Securitization Transaction to a

 

23

 

Securitization Entity, which note shall be
repaid from cash available to the Securitization Entity, other than amounts
required to be established as reserves pursuant to agreements, amounts paid to
investors in respect of interest, principal and other amounts paid in
connection with the purchase of newly generated receivables or newly acquired
equipment.

 

“Qualified Equity Offering”
means a public or private offering of Capital Stock (other than Disqualified
Stock) of the Company or any parent entity of the Company.

 

“Qualified Securitization
Transaction” means any transaction or series of transactions that may be
entered into by the Company or any of its Subsidiaries pursuant to which the
Company or any of its Subsidiaries may sell, convey or otherwise transfer to
(1) a Securitization Entity, in the case of a transfer by the Company or any of
its Subsidiaries, and (2) any other Person, in the case of a transfer by a
Securitization Entity, or may grant a security interest in, any accounts
receivable or equipment, whether now existing or arising or acquired in the
future, of the Company or any of its Subsidiaries, and any assets related
thereto, including all collateral securing such accounts receivable and
equipment, all contracts and contract rights and all guarantees or other
obligations in respect of such accounts receivable and equipment, proceeds of
such accounts receivable and equipment and other assets, including contract
rights, that are customarily transferred or in respect of which security
interests are customarily granted in connection with asset securitization
transactions involving accounts receivable and equipment.

 

“Reddy Group” means Reddy
Ice Group, Inc., a Texas corporation, and its successors and assignees.

 

“Reddy Group Existing
Indenture” means the Indenture dated as of July 31, 2003, as supplemented by
the First Supplemental Indenture dated as of August 15, 2003, among Reddy
Group, the Company, the Reddy Group Guarantors and U.S. Bank National
Association, as trustee.

 

“Reddy Group Existing Notes”
means the Reddy Group 8 7/8% Senior Subordinated Notes Due 2011 issued pursuant
to the Reddy Group Existing Indenture.

 

“Reddy Group Guarantors”
means the Subsidiaries of Reddy Group that have guaranteed the Reddy Group
Existing Notes.

 

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

 

“Refinancing Indebtedness”
means Indebtedness that Refinances any Indebtedness of the Company or any
Restricted Subsidiary of the Company existing on the Issue Date or Incurred in
compliance with this Indenture, including Indebtedness that Refinances
Refinancing Indebtedness;  provided, however,
that:

 

24

 

(1)           such Refinancing Indebtedness has a Stated Maturity no
earlier than the Stated Maturity of the Indebtedness being Refinanced;

 

(2)           such Refinancing Indebtedness has an Average Life at the
time such Refinancing Indebtedness is Incurred that is equal to or greater than
the Average Life of the Indebtedness being Refinanced;

 

(3)           such Refinancing Indebtedness has an aggregate principal
amount (or if Incurred with original issue discount, an aggregate issue price)
that is equal to or less than the aggregate principal amount (or if Incurred
with original issue discount, the aggregate accreted value) then outstanding or
committed (plus fees and expenses, including any premium and defeasance costs)
under the Indebtedness being Refinanced; and

 

(4)           if the Indebtedness being Refinanced is subordinated in
right of payment to the Securities, such Refinancing Indebtedness is
subordinated in right of payment to the Securities at least to the same extent
as the Indebtedness being Refinanced;

 

provided further, however,
that Refinancing Indebtedness shall not include (A) Indebtedness of a
Subsidiary that Refinances Indebtedness of the Company, (B) Indebtedness of the
Company or a Restricted Subsidiary of the Company that Refinances Indebtedness
of an Unrestricted Subsidiary or (C) Indebtedness under any Credit Agreement.

 

“Related Business” means any
business in which the Company or any of its Subsidiaries was engaged on the Issue
Date and any business related, ancillary or complementary to any business of the
Company in which the Company or any of its Subsidiaries was engaged on the Issue
Date or any reasonable extension, development or expansion of the business of the
Company or its Restricted Subsidiaries.

 

“Related Party” means (1)
any controlling stockholder, controlling member, general partner, majority
owned Subsidiary, or spouse or immediate family member (in the case of an
individual) of any Permitted Holder, (2) any estate, trust, corporation,
partnership or other entity, the beneficiaries, stockholders, partners, owners
or Persons holding a controlling interest of which consist solely of one or
more Permitted Holders and/or such other Persons referred to in the immediately
preceding clause (1), or (3) any executor, administrator, trustee, manager,
director or other similar fiduciary of any Person referred to in the
immediately preceding clause (2) acting solely in such capacity.

 

“Restricted Payment” with
respect to any Person means:

 

(1)           the declaration or payment of any dividends or any other
distributions of any sort in respect of its Capital Stock (including any
payment in connection with any merger or consolidation involving such Person)
or similar payment to the direct or indirect holders of its Capital Stock
(other than (A) dividends or distributions payable solely in its Capital Stock
(other than

 

25

 

Disqualified Stock), (B)
dividends or distributions payable solely to the Company or a Restricted
Subsidiary of the Company and (C) pro rata dividends or other distributions
made by a Subsidiary that is not a Wholly Owned Subsidiary to minority
stockholders (or owners of an equivalent interest in the case of a Subsidiary
that is an entity other than a corporation));

 

(2)           the purchase, redemption or other acquisition or
retirement for value of any Capital Stock of the Company held by any Person
(other than a Restricted Subsidiary of the Company) or of any Capital Stock of
a Restricted Subsidiary of the Company held by any Affiliate of the Company
(other than the Company or a Restricted Subsidiary of the Company), including
in connection with any merger or consolidation and including the exercise of
any option to exchange any Capital Stock (other than into Capital Stock of the
Company that is not Disqualified Stock);

 

(3)           the purchase, repurchase, redemption, defeasance or other
acquisition or retirement for value, prior to scheduled maturity, scheduled
repayment or scheduled sinking fund payment of any Subordinated Obligations of the
Company (other than (A) from the Company or a Restricted Subsidiary of the
Company or (B) the purchase, repurchase, redemption, defeasance or other
acquisition or retirement for value of Subordinated Obligations purchased in
anticipation of satisfying a sinking fund obligation, principal installment or
final maturity, in each case due within one year of the date of such purchase,
repurchase, redemption, defeasance or other acquisition or retirement for
value); or

 

(4)           the making of any Investment (other than a Permitted
Investment) in any Person.

 

Notwithstanding the foregoing, the payment of (a) an
annual $500,000 monitoring fee (or such higher amount if the $500,000 fee is
increased pursuant to the Monitoring Agreement in connection with acquisitions that
have occurred at any time after August 15, 2003 by an amount equal to 1%
of the trailing twelve-month pro forma
EBITDA of acquired businesses) pursuant to the Monitoring Agreement and (b) transaction
advisory or other similar fees and reimbursable fees and expenses provided for
in the Monitoring Agreement shall not constitute a Restricted Payment.

 

“Restricted Subsidiary” of a
Person means any Subsidiary of such Person that is not an Unrestricted
Subsidiary of such Person.

 

“Sale/Leaseback Transaction”
means an arrangement relating to property owned by the Company or a Restricted
Subsidiary of the Company on the Issue Date or thereafter acquired by the
Company or a Restricted Subsidiary of the Company whereby the Company or a
Restricted Subsidiary of the Company transfers such property to a Person and
the Company or a Restricted Subsidiary of the Company leases it from such
Person.

 

26

 

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

 

“Secured Indebtedness” means
any Indebtedness of the Company secured by a Lien.

 

“Securities” has the meaning
specified in the preamble to this Indenture.

 

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

 

“Securitization Entity”
means a wholly owned Subsidiary of the Company (or a wholly owned Subsidiary of
another Person in which the Company or any Subsidiary of the Company makes an
Investment and in which the Company or any Subsidiary of the Company transfers
accounts receivable or equipment and related assets) that engages in no
activities other than in connection with the financing of accounts receivable
or equipment and that is designated by the Board of Directors of the Company
(as provided below) as a Securitization Entity and:

 

(1)           no portion of the Indebtedness or any other obligations
(contingent or otherwise) of which:

 

(a)           is guaranteed by the Company or any Restricted Subsidiary
of the Company (excluding guarantees of obligations (other than the principal
of, and interest on, Indebtedness) pursuant to Standard Securitization
Undertakings);

 

(b)           is recourse to or obligates the Company or any Restricted
Subsidiary of the Company (other than such Securitization Entity) in any way
other than pursuant to Standard Securitization Undertakings; or

 

(c)           subjects any property or asset of the Company or any Restricted
Subsidiary of the Company (other than such Securitization Entity), directly or
indirectly, contingently or otherwise, to the satisfaction thereof, other than
pursuant to Standard Securitization Undertakings;

 

(such Indebtedness described
in this clause (1), “Non-Recourse Securitization Entity Indebtedness”);

 

(2)           with which neither the Company nor any Restricted
Subsidiary of the Company (other than such Securitization Entity) has any
material contract, agreement, arrangement or understanding other than those
that might be obtained at the time from Persons that are not Affiliates of the
Company, other than fees payable in the ordinary course of business in
connection with servicing accounts receivable of such entity; and

 

(3)           to which neither the Company nor any Restricted Subsidiary
of the Company (other than such Securitization Entity) has any obligation to
maintain or preserve such entity’s financial condition or cause such entity to
achieve certain levels of operating results.

 

27

 

Any designation of a
Subsidiary as a Securitization Entity shall be evidenced to the Trustee by
filing with the Trustee a certified copy of the resolution of the Board of
Directors of the Company giving effect to the designation and an Officers’
Certificate certifying that the designation complied with the preceding
conditions and was permitted by this Indenture.

 

“Senior Indebtedness” means
with respect to any Person:

 

(1)           Indebtedness of such Person, whether outstanding on the
Issue Date or thereafter Incurred; and

 

(2)           all other Obligations of such Person in respect of
Indebtedness described in clause (1) above

 

unless, in the case of clauses (1) and (2), in the instrument creating
or evidencing the same or pursuant to which the same is outstanding, it is provided
that such Indebtedness or other obligations are subordinate in right of payment
to the Securities.

 

“Shareholders Agreement”
means the agreement among the Permitted Holders that provides for voting
arrangements for the election of directors of Reddy Group and the Company.

 

“Significant Subsidiary”
means any Restricted Subsidiary of the Company that would be a “Significant
Subsidiary” of the Company within the meaning of Rule 1-02 under Regulation S-X
promulgated by the SEC as in effect on the Issue Date.

 

“Standard Securitization
Undertakings” means representations, warranties, covenants and indemnities
entered into by the Company or any Restricted Subsidiary of the Company that
are reasonably customary in an accounts receivable or equipment securitization
transaction, including servicing of the obligations thereunder.

 

“Stated Maturity” means,
with respect to any security, the date specified in such security as the fixed
date on which the final payment of principal of such security is due and
payable, including pursuant to any mandatory redemption provision (but
excluding any provision providing for the repurchase of such security at the
option of the holder thereof upon the happening of any contingency unless such
contingency has occurred).

 

“Subordinated Obligation”
means, with respect to a Person, any Indebtedness of such Person (whether
outstanding on the Issue Date or thereafter Incurred) which is subordinate or
junior in right of payment to the Securities pursuant to a written agreement to
that effect.

 

“Subsidiary” means, with
respect to any Person, any corporation, association, partnership or other
business entity of which more than 50% of the total voting power of shares of
Voting Stock is at the time owned or controlled, directly or indirectly, by:  (1) such Person; (2) such Person and
one or more Subsidiaries of such Person; or (3) one or more Subsidiaries
of such Person.

 

28

 

“Tax Sharing Agreement”
means any tax sharing agreement between the Company and any other Person with
which the Company is required to, or is permitted to, file a consolidated,
combined or unitary tax return or with which the Company is or could be part of
a consolidated group for tax purposes.

 

“Temporary Cash Investments”
means any of the following:

 

(1)           any investment in direct obligations of the United States
of America or any agency thereof or obligations guaranteed by the United States
of America or any agency thereof;

 

(2)           investments in demand and time deposit accounts,
certificates of deposit and money market deposits maturing within one year of
the date of acquisition thereof issued by a bank or trust company which is
organized under the laws of the United States of America, any State thereof or
any foreign country recognized by the United States of America, and which bank
or trust company has capital, surplus and undivided profits aggregating in
excess of $50.0 million (or the foreign currency equivalent thereof) and has
outstanding debt which is rated “A” (or such similar equivalent rating) or
higher by at least one nationally recognized statistical rating organization
(as defined in Rule 436 under the Securities Act) or any money-market fund
sponsored by a registered broker dealer or mutual fund distributor;

 

(3)           repurchase obligations with a term of not more than 90 days
for underlying securities of the types described in clause (1) above entered
into with a bank meeting the qualifications described in clause (2) above;

 

(4)           investments in commercial paper, maturing not more than
one year after the date of acquisition, issued by a corporation (other than an
Affiliate of the Company) organized and in existence under the laws of the
United States of America or any foreign country recognized by the United States
of America with a rating at the time as of which any investment therein is made
of “P-1” (or higher) according to Moody’s Investors Service, Inc. or “A-1” (or
higher) according to Standard and Poor’s Ratings Group;

 

(5)           investments in securities with maturities of one year or
less from the date of acquisition issued or fully guaranteed by any state,
commonwealth or territory of the United States of America, or by any political
subdivision or taxing authority thereof, and rated at least “A” by Standard
& Poor’s Ratings Group or “A” by Moody’s Investors Service, Inc.; and

 

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

 

“TIA” means the Trust
Indenture Act of 1939 (15 U.S.C. §§
77aaa-77bbbb) as in effect on the Issue Date.

 

29

 

 

“Transactions”
has the meaning specified in the Reddy Group Existing Indenture.

 

“Trustee”
means U.S. Bank National Association until a successor replaces it and,
thereafter, means the successor.

 

“Trust Officer”
means the Chairman of the Board, the President or any other officer or
assistant officer of the Trustee assigned by the Trustee to administer its
corporate trust matters.

 

“Uniform
Commercial Code” means the New York Uniform Commercial Code as in effect from
time to time.

 

“Unrestricted
Subsidiary” means:

 

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

 

(2)           any Subsidiary of an Unrestricted
Subsidiary.

 

The Board of
Directors of the Company may designate any Subsidiary of the Company (including
any newly acquired or newly formed Subsidiary) to be an Unrestricted Subsidiary
unless such Subsidiary or any of its Subsidiaries owns any Capital Stock or
Indebtedness of, or holds any Lien on any property of, the Company or any other
Subsidiary of the Company that is not a Subsidiary of the Subsidiary to be so
designated or another Unrestricted Subsidiary; provided, however,
that either (A) the Subsidiary to be so designated has total assets of
$1,000 or less or (B) if such Subsidiary has assets greater than $1,000, such
designation would be permitted under Section 4.04.

 

The Board of
Directors of the Company may designate any Unrestricted Subsidiary to be a
Restricted Subsidiary of the Company; provided, however, that
immediately after giving effect to such designation, no Default shall have
occurred and be continuing and either (x) in the case of any Subsidiary of the
Company that is not also a Subsidiary of Reddy Group, the Company could Incur
$1.00 of additional Indebtedness under Section 4.03(a) or (y) in the case of
Reddy Group or any Restricted Subsidiary of Reddy Group, Reddy Group could
Incur $1.00 of additional Indebtedness under Section 4.03(a).  Any such designation by the Board of
Directors of the Company shall be evidenced to the Trustee by promptly filing
with the Trustee a copy of the resolution of the Board of Directors of the
Company giving effect to such designation and an Officers’ Certificate certifying
that such designation complied with the foregoing provisions.

 

“U.S. Dollar
Equivalent” means with respect to any monetary amount in a currency other than
U.S. dollars, at any time for determination thereof, the amount of U.S. dollars
obtained by converting such foreign currency involved in such computation into
U.S. dollars at the spot rate for the purchase of U.S. dollars with the
applicable foreign currency as published in The Wall Street Journal in
the “Exchange Rates”

 

30

 

column under the heading “Currency
Trading” on the date two Business Days prior to such determination.

 

Except as
described in Section 4.03, whenever it is necessary to determine whether
the Company has complied with any covenant in this Indenture or a Default has
occurred and an amount is expressed in a currency other than U.S. dollars, such
amount will be treated as the U.S. Dollar Equivalent determined as of the date
such amount is initially determined in such currency.

 

“U.S. Government
Obligations” means direct obligations (or certificates representing an
ownership interest in such obligations) of the United States of America
(including any agency or instrumentality thereof) for the payment of which the
full faith and credit of the United States of America is pledged and which are
not callable at the issuer’s option.

 

“Voting Stock”
of a Person means all classes of Capital Stock or other interests (including
partnership interests) of such Person then outstanding and normally entitled
(without regard to the occurrence of any contingency) to vote in the election
of directors, managers or trustees thereof.

 

“Wholly Owned
Subsidiary” of a Person means a Restricted Subsidiary of such Person all the
Capital Stock of which (other than directors’ qualifying shares) is owned by
such Person or one or more other Wholly Owned Subsidiaries of such Person.

 

SECTION 1.02. 
Other Definitions.

 

 

	
  Term

  	
   

  	
  Defined in

  Section

  
	
  “Affiliate
  Transaction”

  	
   

  	
  4.07(a)

  
	
  “Appendix”

  	
   

  	
  2.01

  
	
  “Bankruptcy
  Law”

  	
   

  	
  6.01

  
	
  “Change of
  Control Offer”

  	
   

  	
  4.10(b)

  
	
  “covenant
  defeasance option”

  	
   

  	
  8.01(b)

  
	
  “Custodian”

  	
   

  	
  6.01

  
	
  “Event of
  Default”

  	
   

  	
  6.01

  
	
  “Exchange
  Securities”

  	
   

  	
  Appendix

  
	
  “Initial Lien”

  	
   

  	
  4.11

  
	
  “Initial
  Purchasers”

  	
   

  	
  Appendix

  
	
  “Initial
  Securities”

  	
   

  	
  Appendix

  
	
  “legal
  defeasance option”

  	
   

  	
  8.01(b)

  
	
  “Non-Recourse
  Securitization Entity Indebtedness”

  	
   

  	
  1.01(definition
  of Securitization Entity)

  
	
  “Offer”

  	
   

  	
  4.06(b)

  
	
  “Offer Amount”

  	
   

  	
  4.06(c)(2)

  
	
  “Offer Period”

  	
   

  	
  4.06(c)(2)

  

 

31

 

	
  “Parent Board”

  	
   

  	
  1.01
  (definition of Change of Control)

  
	
  “Paying Agent”

  	
   

  	
  2.03

  
	
  “Private
  Exchange Securities”

  	
   

  	
  Appendix

  
	
  “Purchase
  Agreement”

  	
   

  	
  Appendix

  
	
  “Purchase Date”

  	
   

  	
  4.06(c)(1)

  
	
  “Qualified
  Securitization Transaction”

  	
   

  	
  1.01
  (definition of Asset Disposition)

  
	
  “Registrar”

  	
   

  	
  2.03

  
	
  “Registration
  Rights Agreement”

  	
   

  	
  Appendix

  
	
  “Securities”

  	
   

  	
  Preamble

  
	
  “Semi Annual
  Accrual Date”

  	
   

  	
  1.01
  (definition of Accreted Value)

  
	
  “Specified
  Date”

  	
   

  	
  1.01
  (definition of Accreted Value)

  
	
  “Three-Year
  Change of Control Redemption Right”

  	
   

  	
  Appendix

  

 

SECTION 1.03. 
Incorporation by Reference of Trust Indenture Act.  This
Indenture is subject to the mandatory provisions of the TIA which are
incorporated by reference in and made a part of this Indenture.  The following TIA terms have the following
meanings:

 

“Commission”
means the SEC;

 

“indenture
securities” means the Securities;

 

“indenture
security holder” means a Securityholder;

 

“indenture to
be qualified” means this Indenture;

 

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

 

“obligor” on
the indenture securities means the Company and any other obligor on the
indenture securities.

 

All other TIA
terms used in this Indenture that are defined by the TIA, defined by TIA
reference to another statute or defined by SEC rule have the meanings assigned
to them by such definitions.

 

SECTION 1.04. 
Rules of Construction. 
Unless the context otherwise requires:

 

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

 

32

 

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

 

(3)   “or”
is not exclusive;

 

(4)   “including”
means including without limitation;

 

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

 

(6)   unsecured
Indebtedness shall not be deemed to be subordinate or junior to secured
Indebtedness merely by virtue of its nature as unsecured Indebtedness;

 

(7)   secured
Indebtedness shall not be deemed to be subordinate or junior to any other
secured Indebtedness merely because it has a junior priority with respect to
the same collateral;

 

(8)   the
principal amount of any noninterest bearing or other discount security at any
date shall be the principal amount thereof that would be shown on a balance
sheet of the issuer dated such date prepared in accordance with GAAP; and

 

(9)   all
references to the date the Securities were originally issued shall refer to the
Issue Date.

 

ARTICLE 2

The Securities

 

SECTION 2.01.  Form and Dating.  Provisions relating to the Initial Securities,
the Private Exchange Securities and the Exchange Securities are set forth in
the Rule 144A/Regulation S Appendix attached hereto (the “Appendix”) which is
hereby incorporated in, and expressly made part of, this Indenture. The Initial
Securities and the Trustee’s certificate of authentication shall be
substantially in the form of Exhibit 1 to the Appendix which is hereby
incorporated in, and expressly made a part of, this Indenture.  The Exchange Securities, the Private Exchange
Securities and the Trustee’s certificate of authentication shall be
substantially in the form of Exhibit A, which is hereby incorporated in and
expressly made a part of this Indenture. 
The Securities may have notations, legends or endorsements required by
law, stock exchange rule, agreements to which the Company is subject, if any,
or usage (provided that any such notation, legend or endorsement is in a form
acceptable to the Company).  Each
Security shall be dated the date of its authentication.  The terms of the Securities set forth in the
Appendix and Exhibit A are part of the terms of this Indenture.

 

33

 

SECTION 2.02. 
Execution and Authentication. 
Two Officers shall sign the Securities for the Company by manual or
facsimile signature.  The Company’s seal
shall be impressed, affixed, imprinted or reproduced on the Securities and may
be in facsimile form.

 

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

 

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

 

The Trustee
may appoint an authenticating agent reasonably acceptable to the Company to
authenticate the Securities.  Unless
limited by the terms of such appointment, an authenticating agent may
authenticate Securities 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 any Registrar, Paying Agent or agent for service of notices and demands.

 

SECTION 2.03. 
Registrar and Paying Agent. 
The Company shall maintain an office or agency where Securities may be
presented for registration of transfer or for exchange (the “Registrar”) and an
office or agency where Securities may be presented for payment (the “Paying
Agent”).  The Registrar shall keep a
register of the Securities and of their transfer and exchange.  The Company may have one or more
co-registrars and one or more additional paying agents.  The term “Paying Agent” includes any
additional paying agent.

 

The Company
shall enter into an appropriate agency agreement with any Registrar, Paying
Agent or co-registrar not a party to this Indenture, which shall incorporate
the terms of the TIA.  The agreement
shall implement the provisions of this Indenture that relate to such
agent.  The Company shall notify the
Trustee of the name and address of any such agent.  If the Company fails to maintain a Registrar
or Paying Agent, the Trustee shall act as such and shall be entitled to
appropriate compensation therefor pursuant to Section 7.07.  The Company or any Wholly Owned Subsidiary of
the Company incorporated or organized within the United States of America may
act as Paying Agent, Registrar, co-registrar or transfer agent.

 

The Company
initially appoints the Trustee as Registrar and Paying Agent in connection with
the Securities.

 

SECTION 2.04. 
Paying Agent To Hold Money in Trust.  Prior to 10:00 AM New York time on each due
date of the principal and interest on any Security, the Company shall deposit
with the Paying Agent a sum sufficient to pay such principal and interest when
so becoming due.  The Company shall
require each Paying Agent (other than the Trustee) to agree in writing that the
Paying Agent shall hold in trust for the benefit of Securityholders or the
Trustee all money held by the Paying Agent for the payment of principal of or
interest on the Securities and shall notify the Trustee of any

 

34

 

default by the Company in making any such payment.  If the Company or a Subsidiary acts as Paying
Agent, it shall segregate the money held by it as Paying Agent and hold it as a
separate trust fund.  The Company at any
time may require a Paying Agent to pay all money held by it to the Trustee and
to account for any funds disbursed by the Paying Agent.  Upon complying with this Section, the Paying
Agent shall have no further liability for the money delivered to the Trustee.

 

SECTION 2.05. 
Securityholder Lists.  The
Trustee shall preserve in as current a form as is reasonably practicable the
most recent list available to it of the names and addresses of
Securityholders.  If the Trustee is not
the Registrar, the Company shall furnish to the Trustee, in writing at least
five Business Days before each interest payment date and at such other times as
the Trustee may request in writing, a list in such form and as of such date as
the Trustee may reasonably require of the names and addresses of
Securityholders.

 

SECTION 2.06. 
Transfer and Exchange.  The
Securities shall be issued in registered form and shall be transferable only
upon the surrender of a Security for registration of transfer.  When a Security is presented to the Registrar
or a co-registrar with a request to register a transfer, the Registrar shall
register the transfer as requested if the requirements of this Indenture and
Section 8-401(1) of the Uniform Commercial Code are met.  When Securities are presented to the
Registrar or a co-registrar with a request to exchange them for an equal
principal amount at maturity of Securities of other denominations, the
Registrar shall make the exchange as requested if the same requirements are
met.

 

SECTION 2.07. 
Replacement Securities.  If
a mutilated Security is surrendered to the Registrar or if the Holder of a
Security claims that the Security has been lost, destroyed or wrongfully taken,
the Company shall issue and the Trustee shall authenticate a replacement
Security if the requirements of Section 8-405 of the Uniform Commercial
Code are met and the Holder satisfies any other reasonable requirements of the
Trustee.  If required by the Trustee or
the Company, such Holder shall furnish an indemnity bond sufficient in the
judgment of the Company and the Trustee to protect the Company, the Trustee,
the Paying Agent, the Registrar and any co-registrar from any loss which any of
them may suffer if a Security is replaced. 
The Company and the Trustee may charge the Holder for their expenses in
replacing a Security.

 

Every
replacement Security is an additional Obligation of the Company.

 

SECTION 2.08. 
Outstanding Securities. 
Securities outstanding at any time are all Securities authenticated by
the Trustee except for those canceled by it, those delivered to it for
cancellation and those described in this Section as not outstanding.  A Security does not cease to be outstanding
because the Company or an Affiliate of the Company holds the Security.

 

If a Security
is replaced pursuant to Section 2.07, it ceases to be outstanding unless
the Trustee and the Company receive proof satisfactory to them that the
replaced Security is held by a bona fide purchaser.

 

35

 

If the Paying
Agent segregates and holds in trust, in accordance with this Indenture, on a
redemption date or maturity date money sufficient to pay all principal and
interest payable on that date with respect to the Securities (or portions
thereof) to be redeemed or maturing, as the case may be, and the Paying Agent
is not prohibited from paying such money to the Securityholders on that date
pursuant to the terms of this Indenture, then on and after that date such
Securities (or portions thereof) cease to be outstanding and interest on them
ceases to accrue.

 

SECTION 2.09. 
Temporary Securities. 
Until definitive Securities are ready for delivery, the Company may
prepare and the Trustee shall authenticate temporary Securities.  Temporary Securities shall be substantially
in the form of definitive Securities but may have variations that the Company
considers appropriate for temporary Securities. 
Without unreasonable delay, the Company shall prepare and the Trustee
shall authenticate definitive Securities and deliver them in exchange for
temporary Securities.

 

SECTION 2.10. 
Cancellation.  The Company
at any time may deliver Securities to the Trustee for cancellation.  The Registrar and the Paying Agent shall
forward to the Trustee any Securities surrendered to them for registration of
transfer, exchange or payment.  The
Trustee and no one else shall cancel and destroy (subject to the record
retention requirements of the Exchange Act) all Securities surrendered for
registration of transfer, exchange, payment or cancellation and deliver a
certificate of such destruction to the Company unless the Company directs the
Trustee to deliver canceled Securities to the Company.  The Company may not issue new Securities to
replace Securities it has redeemed, paid or delivered to the Trustee for
cancellation.

 

SECTION 2.11. 
Defaulted Interest.  If the
Company defaults in a payment of interest on the Securities, the Company shall
pay defaulted interest (plus interest on such defaulted interest to the
extent lawful) in any lawful manner.  The
Company may pay the defaulted interest to the persons who are Securityholders
on a subsequent special record date.  The
Company shall fix or cause to be fixed any such special record date and payment
date to the reasonable satisfaction of the Trustee and shall promptly mail to
each Securityholder a notice that states the special record date, the payment
date and the amount of defaulted interest to be paid.

 

SECTION 2.12. 
CUSIP Numbers.  The Company
in issuing the Securities may use “CUSIP” numbers (if then generally in use)
and, if so, the Trustee shall use “CUSIP” numbers in notices of redemption as a
convenience to Holders; provided, however, that any such notice
may state that no representation is made as to the correctness of such numbers
either as printed on the Securities or as contained in any notice of a
redemption and that reliance may be placed only on the other identification
numbers printed on the Securities, and any such redemption shall not be
affected by any defect in or omission of such numbers.  The Company shall promptly notify the Trustee
of any change in the CUSIP numbers.

 

SECTION 2.13. 
Issuance of Additional Securities.  After the Issue Date, the Company shall be
entitled, subject to its compliance with Section 4.03, to issue

 

36

 

Additional Securities under this Indenture,
which Securities shall have identical terms as the Initial Securities issued on
the Issue Date, other than with respect to the date of issuance, issue price
and first Semi-Annual Accrual Date or interest payment date.  All the Securities issued under this Indenture
shall be treated as a single class for all purposes of this Indenture.

 

With respect
to any Additional Securities, the Company shall set forth in a 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 at maturity of such Additional Securities to be
authenticated and delivered pursuant to this Indenture and the provision of
Section 4.03 that the Company is relying on to issue such Additional
Securities;

 

(2)           the
issue price, the issue date, the first Semi-Annual Accrual Date or interest
payment date and the CUSIP number of such Additional Securities; provided,
however, that no Additional Securities may be issued at a price that
would cause such Additional Securities to not be fungible for U.S. federal
income tax purposes with any other Securities issued under this Indenture; and

 

(3)           whether
such Additional Securities shall be Initial Securities or shall be issued in
the form of Exchange Securities as set forth in Exhibit A.

 

ARTICLE 3

Redemption

 

SECTION 3.01. 
Notices to Trustee.  If the
Company elects to redeem Securities pursuant to paragraph 5 of the Securities,
it shall notify the Trustee in writing of the redemption date, the principal
amount of Securities to be redeemed and the paragraph of the Securities
pursuant to which the redemption will occur.

 

If the Company
elects to redeem Securities pursuant to paragraph 6 of the Securities, it shall
give each notice to the Trustee provided for in this Section 3.01 at least
30 days before the redemption date unless the Trustee consents to a shorter
period.  Each such notice shall be
accompanied by an Officers’ Certificate and an Opinion of Counsel from the
Company to the effect that such redemption will comply with the conditions
herein.

 

SECTION 3.02. 
Selection of Securities to Be Redeemed.  If fewer than all the Securities are to be
redeemed, the Trustee shall select the Securities to be redeemed on a pro rata
basis to the extent practicable.  The
Trustee shall make the selection from outstanding Securities not previously
called for redemption.  The Trustee may
select for redemption portions of the principal at maturity of Securities that
have denominations larger than $1,000 aggregate principal amount at
maturity.  Securities and portions of

 

37

 

them the Trustee selects shall be in
principal amounts at maturity of $1,000 or a whole multiple of $1,000 principal
amount at maturity.  Provisions of this
Indenture that apply to Securities called for redemption also apply to portions
of Securities called for redemption.  The
Trustee shall notify the Company promptly of the Securities or portions of
Securities to be redeemed.

 

SECTION 3.03. 
Notice of Redemption.  At
least 30 days but not more than 60 days before a date for redemption of
Securities the Company shall mail a notice of redemption by first-class mail to
each Holder of Securities to be redeemed at such Holder’s registered address.

 

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

 

(1)           the
redemption date;

 

(2)           the
redemption price;

 

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

 

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

 

(5)           if
fewer than all the outstanding Securities are to be redeemed, the
identification and principal amounts at maturity of the particular Securities
to be redeemed;

 

(6)           that,
unless the Company defaults in making such redemption payment, interest on
Securities (or portion thereof) called for redemption ceases to accrue on and
after the redemption date;

 

(7)           the
“CUSIP” number, ISIN or “Common Code” number, if any, printed on the Securities
being redeemed; and

 

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

 

At the Company’s
request, the Trustee shall give the notice of redemption in the Company’s name
and at the Company’s expense.  In such
event, the Company shall provide the Trustee with the information required by
this Section.

 

SECTION 3.04. 
Effect of Notice of Redemption. 
Once notice of redemption is mailed, Securities called for redemption
become due and payable on the redemption date and at the redemption price
stated in the notice.  Upon surrender to
the Paying Agent, such Securities shall be paid at the redemption price stated
in the notice, plus accrued interest to the redemption date (subject to
the right of Holders of record on the relevant record date to receive interest
due on the related interest payment date). 
Failure to give notice or any defect in the notice to any Holder shall
not affect the validity of the notice to any other Holder.

 

38

 

SECTION 3.05. 
Deposit of Redemption Price. 
Prior to 10:00 AM New York time on the redemption date, the Company
shall deposit with the Paying Agent (or, if the Company or a Subsidiary is the
Paying Agent, shall segregate and hold in trust) money sufficient to pay the
redemption price of and accrued interest on all Securities to be redeemed on
that date other than Securities or portions of Securities called for redemption
which have been delivered by the Company to the Trustee for cancellation.

 

SECTION 3.06. 
Securities Redeemed in Part. 
Upon surrender of a Security that is redeemed in part, the Company shall
execute and the Trustee shall authenticate for the Holder (at the Company’s
expense) a new Security in principal amount at maturity equal to the unredeemed
portion of the Security surrendered.

 

ARTICLE 4

Covenants

 

SECTION 4.01. 
Payment of Securities.  The
Company shall promptly pay the principal of and interest on the Securities on
the dates and in the manner provided in the Securities and in this
Indenture.  Principal and interest shall
be considered paid on the date due if on such date the Trustee or the Paying
Agent holds in accordance with this Indenture money sufficient to pay all
principal and interest then due.

 

The Company
shall pay interest on overdue principal at the rate specified therefor in the
Securities, and it shall pay interest on overdue installments of interest at
the same rate to the extent lawful.

 

All references
in this Indenture, in any context, to Accreted Value or any interest or other
amount payable on or with respect to the Securities shall be deemed to include
any Additional Interest pursuant to a Registration Rights Agreement.

 

SECTION 4.02. 
Reporting Requirements. 
Notwithstanding that the Company may not be subject to the reporting
requirements of Section 13 or 15(d) of the Exchange Act, the Company shall
file with the SEC (to the extent the SEC will accept such filings) and provide
the Trustee and Securityholders with such annual reports and such information,
documents and other reports as are specified in Sections 13 and 15(d) of
the Exchange Act and applicable to a U.S. corporation subject to such Sections,
such information, documents and other reports to be so filed and provided at
the times specified for the filings of such information, documents and reports
under such Sections.  The Company agrees
that it will not take any action for the purpose of causing the SEC not to
accept any such filings. If, notwithstanding the foregoing, the SEC will not
accept the Company’s filings for any reason, the Company will post the reports,
information and documents referred to in this paragraph on its website within
the time periods that would apply if the Company were required to file those reports
with the SEC.

 

At any time
that any of the Company’s Subsidiaries are Unrestricted Subsidiaries, then the
quarterly and annual financial information required by the

 

39

 

preceding paragraph will include
a reasonably detailed presentation, either on the face of the financial
statements or in the footnotes thereto, and in “Management’s Discussion and
Analysis of Financial Condition and Results of Operations,” of the financial
condition and results of operations of the Company and its Restricted
Subsidiaries separate from the financial condition and results of operations of
the Unrestricted Subsidiaries of the Company.

 

In addition,
the Company shall furnish to the Holders of the Securities and to prospective
investors, upon the requests of such Holders, any information required to be
delivered pursuant to Rule 144A(d)(4) under the Securities Act so long as the
Securities are not freely transferable under the Securities Act.  The Company also shall comply with the other
provisions of TIA § 314(a).

 

SECTION 4.03. 
Limitation on Indebtedness. 
(a)  The Company shall not, and
shall not permit any of its Restricted Subsidiaries to, Incur, directly or
indirectly, any Indebtedness; provided, however, that
(1) the Company and any of its Restricted Subsidiaries shall be entitled
to Incur Indebtedness (including Indebtedness Incurred under a Credit
Agreement) if, on the date of such Incurrence and after giving effect thereto
on a pro forma basis, the Consolidated Coverage Ratio of the Company
exceeds 2 to 1 and (2) notwithstanding that the Company and its Restricted
Subsidiaries may not be entitled to Incur Indebtedness pursuant to clause (1)
above, Reddy Group and any of its Restricted Subsidiaries shall be entitled to
Incur Indebtedness (including Indebtedness Incurred under a Credit Agreement)
if, on the date of such Incurrence and after giving effect thereto on a pro
forma basis, the Consolidated Coverage Ratio of Reddy Group exceeds 2 to 1.

 

(b)           Notwithstanding the foregoing
paragraph (a), the Company and its Restricted Subsidiaries shall be entitled to
Incur any or all of the following Indebtedness:

 

(1)           Indebtedness
Incurred by the Company or any of its Restricted Subsidiaries pursuant to any
Credit Agreement; provided, however, that, immediately after
giving effect to any such Incurrence, the aggregate principal amount of all
Indebtedness Incurred under this clause (b)(1) and clause (b)(13) of this
Section 4.03 and then outstanding does not exceed the greater of (A)
$215.0 million and (B) the sum of (x) $180.0 million, (y) 65% of the book value
of the inventory of the Company and its Restricted Subsidiaries and (z) 85% of
the book value of the accounts receivable of the Company and its Restricted
Subsidiaries, in the case of clauses (A) and (B)(x), less the aggregate sum of
(i) all principal payments actually made from time to time with respect to such
Indebtedness pursuant to Section 4.06(a)(3)(A) and (ii) all scheduled
amortization payments actually made from time to time with respect to such
Indebtedness (other than amortization payments made from any permitted
Refinancings thereof);

 

(2)           Indebtedness
owed to and held by the Company or any of its Restricted Subsidiaries; provided,
however, that (A) any subsequent issuance or transfer of any Capital
Stock which results in any such Restricted Subsidiary ceasing to be a
Restricted Subsidiary or any subsequent transfer of such

 

40

 

Indebtedness (other than to the Company or a Restricted Subsidiary of
the Company) shall be deemed, in each case, to constitute the Incurrence of
such Indebtedness by the obligor thereon and (B) if the Company is the obligor
on such Indebtedness, such Indebtedness is expressly subordinated to the prior
payment in full in cash of all obligations with respect to the Securities;

 

(3)           the
Securities and the Exchange Securities (other than any Additional Securities);

 

(4)           Indebtedness
of the Company and its Subsidiaries outstanding on the Issue Date (other than
Indebtedness described in clause (1), (2) or (3) of this Section 4.03(b));

 

(5)           Indebtedness
of a Restricted Subsidiary of the Company Incurred and outstanding on or prior
to the date on which such Subsidiary became a Restricted Subsidiary of the
Company or was acquired by the Company or a Restricted Subsidiary of the
Company (other than Indebtedness Incurred in connection with, or to provide all
or any portion of the funds or credit support utilized to consummate, the
transaction or series of related transactions pursuant to which such Subsidiary
became a Subsidiary or was acquired by the Company or a Restricted Subsidiary
of the Company); provided, however, that on the date of such
acquisition and after giving pro forma
effect thereto, the Company would have been able to Incur at least $1.00 of
additional Indebtedness pursuant to Section 4.03(a)(1) or, if such
Restricted Subsidiary is a Subsidiary of Reddy Group or was acquired by Reddy
Group or a Subsidiary of Reddy Group, Reddy Group would have been able to Incur
at least $1.00 of additional Indebtedness pursuant to Section 4.03(a)(2);

 

(6)           Refinancing
Indebtedness in respect of Indebtedness Incurred pursuant to
Section 4.03(a) or pursuant to clause (3), (4) or (5) of this
Section 4.03(b) or this clause (6); provided, however, that
to the extent such Refinancing Indebtedness directly or indirectly Refinances
Indebtedness of a Subsidiary Incurred pursuant to clause (5), such Refinancing
Indebtedness shall be Incurred only by such Subsidiary;

 

(7)           Hedging
Obligations entered into in the ordinary course of business to purchase any raw
material or other commodity or to hedge risks or reduce costs with respect to
the interest rate, currency or commodity exposure of the Company or any
Restricted Subsidiary of the Company and not for speculative purposes;

 

(8)           (x)
obligations in respect of performance bonds, bankers’ acceptances, workers’
compensation claims, surety, bid or appeal bonds, completion guarantees and
payment obligations in connection with self-insurance or similar obligations
provided by the Company or any Restricted Subsidiary of the Company in the
ordinary course of business and (y) obligations owed to (including in respect
of letters of credit for the benefit of) any Person in connection with workers’
compensation, health, disability or other employee

 

41

 

benefits or property, casualty or liability insurance provided by such
Person to the Company or any Restricted Subsidiary of the Company pursuant to
reimbursement or indemnification obligations to such Person, in each case,
incurred in the ordinary course of business;

 

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

 

(10)         Indebtedness
consisting of any Guarantee by the Company or any Restricted Subsidiary of the
Company of Indebtedness Incurred by the Company or any Restricted Subsidiary of
the Company pursuant to Section 4.03(a) or Section 4.03(b);

 

(11)         Indebtedness
(including Capital Lease Obligations) Incurred by the Company or any of its
Restricted Subsidiaries to finance the purchase, lease or improvement of
property (real or personal) or equipment (whether through the direct purchase
of assets or the Capital Stock of any Person owning such assets) within 180
days of such purchase, lease or improvement, and any Refinancing Indebtedness
Incurred to Refinance such Indebtedness, in an aggregate principal amount
which, when added together with the amount of Indebtedness Incurred pursuant to
this clause (11) and then outstanding, does not exceed $10.0 million;

 

(12)         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 (12) and then outstanding, does not exceed $2.0 million;

 

(13)         Non-Recourse
Securitization Entity Indebtedness Incurred by a Securitization Entity in
connection with a Qualified Securitization Transaction; provided, however,
that at the time of such Incurrence, the Company or any Restricted Subsidiary
of the Company would have been able to Incur the same amount of Indebtedness
pursuant to clause (1) of this Section 4.03(b); and

 

(14)         Indebtedness
of the Company or of any of its Restricted Subsidiaries in an aggregate
principal amount which, when taken together with all other Indebtedness of the
Company and its Restricted Subsidiaries outstanding on the date of such
Incurrence (other than Indebtedness permitted by clauses (1) through (13) of
this Section 4.03(b) or Section 4.03(a)) does not exceed $25.0 million.

 

(c)           Notwithstanding the foregoing, the
Company shall not Incur any Indebtedness pursuant to Section 4.03(b) if
the proceeds thereof are used, directly or indirectly, to Refinance any
Subordinated Obligations of the Company unless such Indebtedness shall be subordinated
to the Securities to at least the same extent as such Subordinated Obligations.

 

42

 

(d)           For purposes of determining
compliance with this Section 4.03,

 

(1)           any
Indebtedness Incurred or outstanding on the Issue Date under the Credit
Agreement will be deemed to have been Incurred under Section 4.03(b)(1);

 

(2)           in
the event that an item of Indebtedness (or any portion thereof) meets the
criteria of more than one of the types of Indebtedness described above, the
Company, in its sole discretion, will classify such item of Indebtedness (or
any portion thereof) at the time of Incurrence and will only be required to
include the amount and type of such Indebtedness in one of the above clauses;

 

(3)           the
Company will be entitled to divide and classify an item of Indebtedness in more
than one of the types of Indebtedness described above; and

 

(4)           following
the date of its Incurrence, any Indebtedness originally classified as Incurred
pursuant to one of the clauses in Section 4.03(b) (other than pursuant to
clause (1) of Section 4.03(b)) may later be reclassified by the Company
such that it will be deemed as having been Incurred pursuant to
Section 4.03(a) or another clause of Section 4.03(b), as applicable,
to the extent that such reclassified Indebtedness could be Incurred pursuant to
such new paragraph or clause at the time of such reclassification.

 

(e)           For purposes of determining
compliance with any U.S. dollar denominated restriction on the Incurrence of
Indebtedness where the Indebtedness Incurred is denominated in a different
currency, the amount of such Indebtedness shall be the U.S. Dollar Equivalent
determined on the date of the Incurrence of such Indebtedness; provided,
however, that if any such Indebtedness denominated in a different
currency is subject to a Currency Agreement with respect to U.S. dollars
covering all principal, premium, if any, and interest payable on such
Indebtedness, the amount of such Indebtedness expressed in U.S. dollars shall
be as provided in such Currency Agreement. 
The principal amount of any Refinancing Indebtedness being Refinanced
shall be the U.S. Dollar Equivalent of the Indebtedness Refinanced, except to
the extent that (1) such U.S. Dollar Equivalent was determined based on a
Currency Agreement, in which case the Refinancing Indebtedness shall be
determined in accordance with the preceding sentence, and (2) the principal
amount of the Refinancing Indebtedness exceeds the principal amount of the
Indebtedness being Refinanced, in which case the U.S. Dollar Equivalent of such
excess shall be determined on the date such Refinancing Indebtedness is
Incurred.

 

SECTION 4.04. 
Limitation on Restricted Payments.  (a) 
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, make a Restricted Payment if at the
time the Company or such Restricted Subsidiary makes such Restricted Payment:

 

(1)           a Default shall have occurred and be
continuing (or would result therefrom);

 

43

 

(2)           if
the Restricted Payment is made by the Company or any of its Restricted
Subsidiaries (other than Reddy Group and any of its Restricted Subsidiaries)
the Company is not entitled to Incur an additional $1.00 of Indebtedness
pursuant to Section 4.03(a)(1) or, if the Restricted Payment is made by
Reddy Group or any of its Restricted Subsidiaries, Reddy Group is not entitled
to Incur an additional $1.00 of Indebtedness under Section 4.03(a)(2); or

 

(3)           the
aggregate amount of such Restricted Payment and all other Restricted Payments
since July 31, 2003 would exceed the sum of (without duplication):

 

(A)          50%
of the Consolidated Net Income accrued during the period (treated as one
accounting period) from July 1, 2003 to the end of the most recent fiscal
quarter prior to the date of such Restricted Payment for which internal
financial statements are then available (or, in case such Consolidated Net
Income shall be a deficit, minus 100% of such deficit); plus

 

(B)           100%
of the aggregate Net Cash Proceeds received by the Company from the issuance or
sale of its Capital Stock (other than Disqualified Stock) subsequent to
August 15, 2003 (other than an issuance or sale to a Subsidiary of the
Company and other than an issuance or sale to an employee stock ownership plan
or to a trust established by the Company or any of its Subsidiaries for the
benefit of their employees) and 100% of any cash capital contribution received
by the Company from its shareholders subsequent to August 15, 2003; plus

 

(C)           the
amount by which Indebtedness of the Company or any of its Restricted
Subsidiaries is reduced on the Company’s balance sheet upon the conversion or
exchange subsequent to August 15, 2003 of any Indebtedness of the Company
or any of its Restricted Subsidiaries convertible or exchangeable for Capital
Stock (other than Disqualified Stock) of the Company (less the amount of any
cash, or the fair value of any other property, distributed by the Company upon
such conversion or exchange); provided, however, that the
foregoing amount shall not exceed the Net Cash Proceeds received by the Company
or any such Restricted Subsidiary from the sale of such Indebtedness (excluding
Net Cash Proceeds from sales to a Subsidiary of the Company or to an employee
stock ownership plan or to a trust established by the Company or any of its
Subsidiaries for the benefit of their employees); plus

 

(D)          an
amount equal to the sum of (x) the net reduction in the Investments (other than
Permitted Investments) made by the Company or any of its Restricted
Subsidiaries in any Person resulting from repurchases, repayments or
redemptions of such Investments by such Person, proceeds realized on the sale
of such Investment and proceeds representing the return of capital (excluding
dividends and distributions),

 

44

 

in each case received by the Company or any of its Restricted
Subsidiaries, and (y) to the extent such Person is an Unrestricted Subsidiary,
the portion (proportionate to the Company’s equity interest in such Subsidiary)
of the Fair Market Value of the net assets of such Unrestricted Subsidiary at
the time such Unrestricted Subsidiary is designated a Restricted Subsidiary of
the Company; provided, however, that the foregoing sum shall not
exceed, in the case of any such Person or Unrestricted Subsidiary, the amount
of Investments (excluding Permitted Investments) previously made (and treated
as a Restricted Payment) by the Company or any Restricted Subsidiary of the
Company in such Person or Unrestricted Subsidiary.

 

(b)           The
provisions of Section 4.04(a) shall not prohibit:

 

(1)           any
Restricted Payment made out of the Net Cash Proceeds of the substantially
concurrent sale of, or made by exchange for, Capital Stock of the Company
(other than Disqualified Stock and other than Capital Stock issued or sold to a
Subsidiary of the Company or an employee stock ownership plan or to a trust
established by the Company or any of its Subsidiaries for the benefit of their
employees) subsequent to August 15, 2003 or a substantially concurrent
cash capital contribution received by the Company from its shareholders
subsequent to August 15, 2003; provided, however, that
(A) such Restricted Payment shall be excluded in the calculation of the
amount of Restricted Payments and (B) the Net Cash Proceeds from such sale
or such cash capital contribution (to the extent so used for such Restricted
Payment) shall be excluded from the calculation of amounts under
Section 4.04(a)(3)(B);

 

(2)           any
purchase, repurchase, redemption, defeasance or other acquisition or retirement
for value of Subordinated Obligations of the Company made by exchange for, or
out of the proceeds of the substantially concurrent sale of, Subordinated
Indebtedness of the Company which is permitted to be Incurred pursuant to
Section 4.03; provided, however, that such purchase, repurchase,
redemption, defeasance or other acquisition or retirement for value shall be
excluded in the calculation of the amount of Restricted Payments;

 

(3)           dividends
paid within 60 days after the date of declaration thereof if at such date of
declaration such dividend would have complied with this Section 4.04; provided,
however, that at the time of payment of such dividend, no other Default shall
have occurred and be continuing (or result therefrom); provided further, however,
that such dividend shall be included in the calculation of the amount of
Restricted Payments;

 

(4)           so
long as no Default has occurred and is continuing, the purchase, redemption or
other acquisition or retirement for value of shares of Capital Stock of the
Company or any of its Subsidiaries from employees, former employees, directors
or former directors of the Company or any of its Subsidiaries (or permitted
transferees of such employees, former employees, directors or former

 

45

 

directors), pursuant to the terms of the agreements (including
employment agreements) or plans (or amendments thereto) approved by the Board
of Directors of the Company under which such individuals purchase or sell or
are granted the option to purchase or sell, shares of such Capital Stock; provided,
however, that (i) the aggregate amount of such purchases, redemptions and other
acquisitions and retirements (excluding amounts representing cancellation of
Indebtedness) shall not exceed $2.0 million in any calendar year and (ii) any
Restricted Payments permitted (but not made) pursuant to this
Section 4.04(b)(4) in any one calendar year may be carried forward to any
succeeding calendar year but that the aggregate amount of all Restricted
Payments made pursuant to this Section 4.04(b)(4) shall not exceed $5.0
million; provided further, however, that such repurchases and other
acquisitions shall be excluded in the calculation of the amount of Restricted
Payments;

 

(5)   declarations
and payments of dividends on Disqualified Stock issued pursuant to
Section 4.03; provided, however, that such dividends shall
be excluded in the calculation of the amount of Restricted Payments;

 

(6)   repurchases
of Capital Stock deemed to occur upon exercise of stock options if such Capital
Stock represents a portion of the exercise price of such options; provided,
however, that such Restricted Payments shall be excluded in the
calculation of the amount of Restricted Payments;

 

(7)   payments
of intercompany subordinated Indebtedness, the Incurrence of which was
permitted under Section 4.03(b)(2); provided further, however,
that such payments shall be excluded in the calculation of the amount of
Restricted payments;

 

(8)   in
the event of a Change of Control, and if no Default shall have occurred and be
continuing, the payment, purchase, redemption, defeasance or other acquisition
or retirement of Subordinated Obligations of the Company at a purchase price
not greater than 101% of the principal amount of such Subordinated Obligations,
plus any accrued and unpaid interest thereon; provided, however,
that prior to such payment, purchase, redemption, defeasance or other
acquisition or retirement, the Company (or a third party to the extent
permitted by this Indenture) has (A) made a Change of Control Offer with
respect to the Securities as a result of such Change of Control and has
repurchased all Securities validly tendered and not withdrawn in connection
with such Change of Control Offer or (B) delivered a notice of optional
redemption with respect to the Securities and has repurchased all the
Securities; provided further, however, that such repurchase and
other acquisitions shall be included in the calculation of the amount of
Restricted Payments;

 

(9)   in
the event of an Asset Disposition that requires the Company to offer to
repurchase Securities pursuant to Section 4.06, and if no Default shall
have occurred and be continuing, the payment, purchase, redemption, defeasance
or other acquisition or retirement of Subordinated Obligations of the Company
at

 

46

 

a purchase price not greater than 100% of the principal amount (or, if
such Subordinated Obligations were issued with original issue discount, 100% of
the accreted value) of such Subordinated Obligations, plus any accrued
and unpaid interest thereon; provided, however, that (A) prior to
such payment, purchase, redemption, defeasance or other acquisition or retirement,
the Company has made an offer with respect to the Securities pursuant to the
provisions of Section 4.06 and has repurchased all Securities validly
tendered and not withdrawn in connection with such offer and (B) the aggregate
amount of all such payments, purchases, redemptions, defeasances or other
acquisitions or retirements of all such Subordinated Obligations may not exceed
the amount of Net Available Cash remaining after the Company has complied with
the terms of Section 4.06(a)(3); provided further, however,
that such repurchases and other acquisitions shall be included in the
calculation of the amount of Restricted Payments;

 

(10) cash
payments in lieu of the issuance of fractional shares in connection with the
exercise of warrants, options or other securities convertible into or
exchangeable for Capital Stock of the Company; provided, however,
that any such cash payment shall not be for the purpose of evading the
limitation of this Section 4.04 (as determined in good faith by the Board
of Directors of the Company); provided further, however, that
such payments shall be excluded in the calculation of the amount of Restricted
Payments;

 

(11) Restricted
Payments in an amount which, when taken together with all Restricted Payments
made pursuant to this clause (11), does not exceed $15.0 million; provided,
however, that (A) at the time of each such Restricted Payment, no
Default shall have occurred and be continuing (or result therefrom) and (B)
such Restricted Payments shall be excluded in the calculation of the amount of
Restricted Payments;

 

(12) after
the occurrence of any Public Equity Offering (whether or not occurring before
or after the Issue Date), dividends in an aggregate amount per annum not to
exceed 6% of the aggregate Net Cash Proceeds received by the Company in
connection with all such Public Equity Offerings; provided, however,
that such amount shall be included in the calculation of the amount of
Restricted Payments;

 

(13) redemption
of the Company’s 12.00% Series A Cumulative Redeemable Preferred Stock and
payment of accumulated dividends on such 12.00% Series A Cumulative Redeemable
Preferred Stock, in each case with the Net Cash Proceeds received by the
Company from the sale of the Securities on the Issue Date and from amounts received
from Reddy Group, in each case as described in the Offering Circular under the
section “Use of Proceeds”; provided, however, that such amount
shall be excluded in the calculation of the amount of Restricted Payments; or

 

(14) the
declaration and payment of a dividend with the Net Cash Proceeds received by
the Company from the sale of the Securities offered hereby

 

47

 

and from amounts received from Reddy Group, in each case as described
in the Offering Circular under the section “Use of Proceeds”; provided, however,
that such amount shall be excluded in the calculation of the amount of
Restricted Payments.

 

SECTION 4.05. 
Limitation on Restrictions on Distributions from Restricted
Subsidiaries.  The Company shall not,
and shall not permit any Restricted Subsidiary of the Company to, create or
otherwise cause or permit to exist or become effective any consensual
encumbrance or restriction on the ability of any Restricted Subsidiary of the
Company to (a) pay dividends or make any other distributions on its Capital
Stock to the Company or a Restricted Subsidiary of the Company or pay any
Indebtedness owed to the Company, (b) make any loans or advances to the Company
or (c) transfer any of its property or assets to the Company, except:

 

(1)           with respect to clauses (a), (b) and
(c),

 

(i)            any
encumbrance or restriction pursuant to an agreement in effect at or entered
into on the Issue Date, including the Existing Credit Agreement and the Reddy
Group Existing Indenture;

 

(ii)           any
encumbrance or restriction contained in the terms of any Indebtedness if
(A) the encumbrance or restriction applies only in the event of and during
the continuance of a payment default or a default with respect to a financial
covenant contained in such Indebtedness or agreement, (B) the Company in
good faith determines at the time any such Indebtedness is Incurred (and at the
time of any modification of the terms of any such encumbrance or restriction)
that any such encumbrance or restriction is not expected to materially affect
the Company’s ability to make payments of principal or Accreted Value or
scheduled payments of cash interest on the Securities or (C) the
encumbrance or restriction is not materially more disadvantageous to the
holders of the Securities than is customary in comparable financings or
agreements (as determined by the Company in good faith);

 

(iii)          any
encumbrance or restriction with respect to a Restricted Subsidiary of the
Company pursuant to an agreement relating to any Indebtedness Incurred by such
Restricted Subsidiary on or prior to the date on which such Restricted
Subsidiary became a Restricted Subsidiary or was acquired by the Company (other
than Indebtedness Incurred as consideration in, or to provide all or any portion
of the funds or credit support utilized to consummate, the transaction or
series of related transactions pursuant to which such Restricted Subsidiary
became a Restricted Subsidiary or was acquired by the Company) and outstanding
on such date;

 

(iv)          any
encumbrance or restriction pursuant to an agreement effecting a Refinancing (in
whole or in part) of Indebtedness Incurred

 

48

 

pursuant to an agreement referred to in Section 4.05(1)(i), (ii)
or (iii) or this clause (iv) or contained in any amendment to an agreement
referred to in Section 4.05(1)(i), (ii) or (iii) or this clause (iv); provided,
however, that the encumbrances and restrictions with respect to such
Restricted Subsidiary contained in any such refinancing agreement or amendment,
taken as a whole, are no less favorable to the Securityholders than
encumbrances and restrictions with respect to such Restricted Subsidiary
contained in such predecessor agreements;

 

(v)           any
encumbrance or restriction with respect to a Restricted Subsidiary of the
Company imposed pursuant to an agreement entered into for the sale or
disposition of all or substantially all the Capital Stock or any assets of such
Restricted Subsidiary pending the closing of such sale or disposition;

 

(vi)          any
encumbrance or restriction existing under applicable law, rule, regulation or
order;

 

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

 

(viii)        protective
Liens filed in connection with Sale/Leaseback Transactions permitted under this
Indenture;

 

(ix)           customary
restrictions on the assignment or transfer of any property that is subject to a
license or similar contract; and

 

(x)            any
encumbrance or restriction existing under Non-Recourse Securitization Entity
Indebtedness or other contractual requirements of a Securitization Entity in
connection with a Qualified Securitization Transaction; provided, however,
that such restrictions apply only to such Securitization Entity;

 

(2)           with respect to clause (c) only,

 

(A)  any
encumbrance or restriction consisting of customary nonassignment provisions in
leases governing leasehold interests to the extent such provisions restrict the
transfer or assignment of the lease or the property leased thereunder;

 

(B)   any
encumbrance or restriction contained in security agreements or other
documentation governing secured Indebtedness of a Restricted Subsidiary of the
Company to the extent such encumbrance or restriction restricts the transfer of
the property securing such Indebtedness; and

 

49

 

(C)   customary
provisions restricting the disposition or distribution of assets or property to
each holder of Capital Stock of a joint venture contained in any constitutional
documents of such joint venture or any joint venture agreement, shareholders
agreement or similar agreement which restriction is limited to the assets or
property of such joint venture.

 

SECTION 4.06. 
Limitation on Sales of Assets and Subsidiary Stock.  

(a)  The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, directly or indirectly, consummate any Asset
Disposition unless:

 

(1)           the
Company or such Restricted Subsidiary receives consideration at the time of
such Asset Disposition at least equal to the Fair Market Value (including as to
the value of all non-cash consideration) of the shares and assets subject to
such Asset Disposition;

 

(2)           at
least 75% of the consideration thereof received by the Company or such
Restricted Subsidiary is in the form of cash or cash equivalents; provided,
however, that this Section 4.06(a)(2) shall not apply to any
disposition of assets in exchange for assets of a similar nature and to be used
by the Company or a Restricted Subsidiary of the Company in a Related Business,
or a combination of such assets and cash or cash equivalents, in each case
having a Fair Market Value comparable to the Fair Market Value of the assets
disposed of by the Company or a Restricted Subsidiary of the Company; and

 

(3)           an
amount equal to 100% of the Net Available Cash from such Asset Disposition is
applied by the Company (or such Restricted Subsidiary, as the case may be)

 

(A)          first,
to the extent the Company elects (or is required by the terms of any
Indebtedness), to prepay, repay, redeem, defease or purchase Senior
Indebtedness of the Company or Indebtedness of a Restricted Subsidiary of the
Company (in each case other than Indebtedness owed to the Company or an Affiliate
of the Company) within 405 days from the later of the date of such Asset
Disposition or the receipt of such Net Available Cash;

 

(B)           second,
to the extent of the balance of such Net Available Cash after application in
accordance with clause (A), to the extent the Company or the relevant
Restricted Subsidiary elects, to acquire Additional Assets within  405 days from the later of the date of
such Asset Disposition or the receipt of such Net Available Cash or, if the
Company or the relevant Restricted Subsidiary has entered into a binding
agreement within such 405-day period to acquire such Additional Assets, within
an additional six months after such 405-day period; and

 

(C)           third,
to the extent of the balance of such Net Available Cash after application in
accordance with clauses (A) and (B), to make an offer

 

50

 

to the holders of the Securities (and to holders of other Senior
Indebtedness of the Company designated by the Company) to purchase Securities
(and such other Senior Indebtedness of the Company) pursuant to and subject to
the conditions contained in this Indenture;

 

provided, however,
that in connection with any prepayment, repayment, redemption or purchase or
other acquisition or retirement of Indebtedness pursuant to clause (A) or (C)
above, the Company or such Restricted Subsidiary shall permanently retire such
Indebtedness and shall cause the related loan commitment (if any) to be
permanently reduced in an amount equal to the principal amount so prepaid,
repaid, redeemed, purchased, acquired or retired.

 

Notwithstanding
the foregoing provisions of this Section 4.06, if at the time the Company
would be required to make the offer required pursuant to
Section 4.06(a)(3)(C) the Company does not have access to the applicable
Net Available Cash as a result of a restriction permitted by Section 4.05,
then the Company shall have no obligation to make the offer to the holders of
Securities as described in such clause (a)(3)(C).

 

Notwithstanding
the foregoing provisions of this Section 4.06, the Company and its
Restricted Subsidiaries shall not be required to apply any Net Available Cash
in accordance with this Section 4.06 except to the extent that the
aggregate Net Available Cash from all Asset Dispositions which is not applied
in accordance with this Section 4.06 exceeds $10.0 million.  Pending application of Net Available Cash
pursuant to this Section 4.06, such Net Available Cash shall be invested
in Temporary Cash Investments or applied to temporarily reduce revolving credit
indebtedness.

 

For the
purposes of Section 4.06(a)(2), the following are deemed to be cash or
cash equivalents:  (1) the
assumption of Indebtedness of the Company (other than obligations in respect of
Disqualified Stock of the Company) or any Restricted Subsidiary of the Company
and the release of the Company or such Restricted Subsidiary from all liability
on such Indebtedness in connection with such Asset Disposition; and
(2) securities received by the Company or any Restricted Subsidiary of the
Company from the transferee that are converted within 90 days by the Company or
such Restricted Subsidiary into cash, to the extent of cash received in that
conversion.

 

(b)           In the event of an Asset Disposition
that requires the purchase of Securities (and other Senior Indebtedness of the
Company) pursuant to Section 4.06(a)(3)(C), the Company shall purchase
Securities tendered pursuant to an offer by the Company for the Securities (and
such other Senior Indebtedness) at a purchase price of 100% of their Accreted
Value (or, if other than the Securities, 100% of their principal amount or, in
the event such other Senior Indebtedness of the Company was issued with
significant original issue discount, 100% of the accreted value thereof) without
premium, plus accrued but unpaid interest (or, in respect of such other
Senior Indebtedness of the Company, such lesser price, if any, as may be
provided for by the terms of such Senior Indebtedness) in accordance with the
procedures (including prorating in the event of oversubscription) set forth in
this Indenture.  If the aggregate

 

51

 

purchase price of the securities tendered
exceeds the Net Available Cash allotted to their purchase, the Company shall
select the securities to be purchased on a pro rata basis but in round
denominations, which in the case of the Securities shall be denominations of
$1,000 principal amount at maturity or multiples thereof.  The Company shall not be required to make
such an offer to purchase Securities (and other Senior Indebtedness of the
Company) pursuant to this Section 4.06 if the Net Available Cash available
therefor is less than $5.0 million (which lesser amount shall be carried
forward for purposes of determining whether such an offer is required with
respect to the Net Available Cash from any subsequent Asset Disposition).  Upon completion of such an offer to purchase,
Net Available Cash shall be deemed to be reduced by the aggregate amount of
such offer.

 

(c)           The Company shall comply, to the
extent applicable, with the requirements of Section 14(e) of the Exchange
Act and any other securities laws or regulations in connection with the
repurchase of Securities pursuant to this Section 4.06.  To the extent that the provisions of any
securities laws or regulations conflict with provisions of this Section 4.06,
the Company shall comply with the applicable securities laws and regulations
and shall not be deemed to have breached its obligations under this
Section 4.06 by virtue of its compliance with such securities laws or
regulations.

 

SECTION 4.07. 
Limitation on Affiliate Transactions.  (a)  The Company shall not, and
shall not permit any Restricted Subsidiary of the Company to, enter into any
transaction (including the purchase, sale, lease or exchange of any property,
employee compensation arrangements or the rendering of any service) with, or
for the benefit of, any Affiliate of the Company (an “Affiliate Transaction”)
unless:

 

(1)           the
terms of the Affiliate Transaction are no less favorable to the Company or such
Restricted Subsidiary than those that could be obtained at the time of the
Affiliate Transaction in arm’s-length dealings with a Person who is not an
Affiliate;

 

(2)           if
such Affiliate Transaction involves an amount in excess of $2.0 million, the
terms of the Affiliate Transaction are set forth in writing and a majority of
the directors of the Company disinterested with respect to such Affiliate
Transaction shall have determined in good faith that the criteria set forth in
clause (1) are satisfied and shall have approved the relevant Affiliate
Transaction as evidenced by a resolution of the Board of Directors; and

 

(3)           if
such Affiliate Transaction involves an amount in excess of $10.0 million, the
Board of Directors of the Company shall also have received a written opinion
from an Independent Qualified Party to the effect that such Affiliate
Transaction is fair, from a financial standpoint, to the Company and its
Restricted Subsidiaries or is not less favorable to the Company and its
Restricted Subsidiaries than could reasonably be expected to be obtained at the
time in an arm’s-length transaction with a Person who was not an Affiliate.

 

(b)           The
provisions of Section 4.07(a) shall not prohibit:

 

52

 

(1)           any
Investment (other than a Permitted Investment) or other Restricted Payment, in
each case permitted to be made pursuant to Section 4.04;

 

(2)           any
issuance of securities, or other payments, awards or grants in cash, securities
or otherwise pursuant to, or the funding of, employment arrangements, stock
options and stock ownership plans approved by the Board of Directors of the
Company;

 

(3)           loans
or advances to officers, employees and directors in the ordinary course of business
of the Company or its Restricted Subsidiaries, but in any event not to exceed
$3.0 million in the aggregate outstanding at any one time;

 

(4)           reasonable
fees and compensation paid to, and indemnity provided for the benefit of,
officers, directors, employees or consultants of the Company or any Restricted
Subsidiary of the Company as determined in good faith by the Company’s Board of
Directors;

 

(5)           any
transaction with a Restricted Subsidiary of the Company or joint venture or
similar entity which would constitute an Affiliate Transaction solely because
the Company or a Restricted Subsidiary of the Company owns an equity interest
in or otherwise controls such Restricted Subsidiary, joint venture or similar
entity;

 

(6)           the
issuance or sale of any Capital Stock (other than Disqualified Stock) of the
Company;

 

(7)           any
agreement as in effect on the Issue Date and described in the Offering Circular
(including the Monitoring Agreement and any Tax Sharing Agreement) or any
renewals or extensions of any such agreement (so long as such renewals or
extensions are not less favorable to the Company or its Restricted
Subsidiaries) and the transactions evidenced thereby; provided, however,
that this clause (7) shall apply to the Monitoring Agreement only to the extent
the Monitoring Agreement provides for an annual monitoring fee of $500,000 (or
such higher amount if the $500,000 fee is increased pursuant to the Monitoring
Agreement in connection with acquisitions that have occurred at any time after
August 15, 2003 by an amount equal to 1% of the trailing twelve month pro forma EBITDA of acquired businesses), and
not to the extent the Monitoring Agreement provides for the payment of
transaction advisory or other similar fees;

 

(8)           any
merger of the Company with an Affiliate of the Company solely for the purpose
and with the sole effect of reincorporating the Company in another
jurisdiction;

 

(9)           transactions
with customers, clients, suppliers, joint venture partners or purchasers or
sellers of goods or services, in each case, in the ordinary course of business,
including pursuant to joint venture agreements, and otherwise in compliance
with the terms of this Indenture which are fair to the Company and its
Restricted Subsidiaries, in the reasonable determination of the Board of

 

53

 

Directors of the Company or the senior management thereof, or are on
terms at least as favorable as might reasonably have been obtained at such time
in arm’s-length dealings with a Person who is not an Affiliate;

 

(10)         any
transactions involving the Company or any of its Restricted Subsidiaries, on
the one hand, and Bear, Stearns & Co. Inc. or CIBC World Markets Corp. or
any of their respective Affiliates, on the other hand, in connection with the
Transactions and any amendment, modification, supplement, extension,
refinancing, replacement and other transactions related thereto, or any
management, financial advisory, financing, underwriting or placement services
or any other investment banking, capital markets, banking or similar services,
which transactions, in the reasonable determination of a majority of the
directors of the Company disinterested with respect to such transactions, are
on commercially reasonable terms; and

 

(11)         transactions
effected as part of a Qualified Securitization Transaction.

 

SECTION 4.08. 
Limitation on Line of Business. 
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, engage in any business other than a Related Business.

 

SECTION 4.09. 
Limitation on Guarantees of Company Indebtedness.  The
Company shall not permit any of its Restricted Subsidiaries to Guarantee any
Indebtedness of the Company or to secure any Indebtedness of the Company with a
Lien on the assets of such Restricted Subsidiary, unless contemporaneously
therewith (or prior thereto) effective provision is made to Guarantee or secure
the Securities, as the case may be, on an equal and ratable basis with such
Guarantee or Lien for so long as such Guarantee or Lien remains effective; provided,
however, that any Guarantee by a Restricted Subsidiary of any
Subordinated Obligation of the Company shall be subordinated and junior in
right of payment to the contemporaneous Guarantee of the Securities by such
Restricted Subsidiary; provided further, however,
that the Company shall not permit a Restricted Subsidiary to secure any
Subordinated Obligation of the Company or to Guarantee any Capital Stock of the
Company.  Any Guarantee or Lien created
for the benefit of the Holders of the Securities pursuant to the preceding
sentence shall provide by its terms that such Guarantee or Lien shall be
automatically and unconditionally released and discharged upon the release and
discharge of the initial Guarantee or Lien.

 

SECTION 4.10. 
Change of Control. 
(a)  Upon the occurrence of a
Change of Control, if the Company has not exercised the Three-Year Change of
Control Redemption Right (if applicable), each Holder shall have the right to
require that the Company repurchase such Holder’s Securities at a purchase
price in cash equal to 101% of the Accreted Value thereof on the date of
purchase plus accrued and unpaid interest, if any, to the date of purchase
(subject to the right of holders of record on the relevant record date to
receive interest due on the relevant interest payment date), in accordance with
the terms contemplated in Section 4.10(b).

 

54

 

 

(b)           Within 30 days following any Change
of Control, the Company shall mail a notice to each Holder with a copy to the
Trustee (the “Change of Control Offer”) stating:

 

(1)           that
a Change of Control has occurred and that such Holder has the right to require
the Company to purchase such Holder’s Securities at a purchase price in cash
equal to 101% of the Accreted Value thereof on the date of purchase, plus
accrued and unpaid interest, if any, to the date of purchase (subject to the
right of Holders of record on the relevant record date to receive interest on
the relevant interest payment date);

 

(2)           the
circumstances and relevant facts regarding such Change of Control;

 

(3)           the
purchase date (which shall be no earlier than 30 days nor later than 60 days
from the date such notice is mailed);

 

(4)           the
instructions, as determined by the Company, consistent with this Section 4.10,
that a Holder must follow in order to have its Securities purchased; and

 

(5)           if
applicable, that the Company has not exercised and will not exercise the
Three-Year Change of Control Redemption Right.

 

(c)           Holders electing to have a Security
purchased will be required to surrender the Security, with an appropriate form
duly completed, to the Company at the address specified in the notice at least
three Business Days prior to the purchase date. 
Holders will be entitled to withdraw their election if the Trustee or
the Company receives not later than one Business Day prior to the purchase
date, a telegram, telex, facsimile transmission or letter setting forth the
name of the Holder, the principal amount at maturity of the Security which was
delivered for purchase by the Holder and a statement that such Holder is
withdrawing his election to have such Security purchased.

 

(d)           On the purchase date, all Securities
purchased by the Company under this Section 4.10 shall be delivered by the
Company to the Trustee for cancellation, and the Company shall pay the purchase
price plus accrued and unpaid interest, if any, to the Holders entitled
thereto.

 

(e)           Notwithstanding the foregoing
provisions of this Section 4.10, the Company shall not be required to make a
Change of Control Offer following a Change of Control if a third party makes
the Change of Control Offer in the manner, at the times and otherwise in
compliance with the requirements set forth in this Indenture applicable to a
Change of Control Offer made by the Company and purchases all Securities
validly tendered and not withdrawn under such Change of Control Offer.  Additionally, the Company will not be
required to make a Change of Control Offer or purchase the Securities as
described under this Section 4.10 to the extent that it has mailed a
notice to exercise its right to redeem Securities pursuant to Article 3 of this
Indenture and

 

55

 

paragraph 5(a) of the Securities at any time
prior to the time by which consummation of a Change of Control Offer is
required.

 

(f)            The Company shall comply, to the
extent applicable, with the requirements of Section 14(e) of the Exchange
Act and any other securities laws or regulations in connection with the
repurchase of Securities pursuant to this Section 4.10.  To the extent that the provisions of any
securities laws or regulations conflict with the provisions of this Section
4.10, the Company shall comply with the applicable securities laws and
regulations and shall not be deemed to have breached its obligations under this
Section 4.10 by virtue of its compliance with such securities laws or
regulations.

 

SECTION 4.11. 
Limitation on Liens. 
(a)  The Company shall not, directly or indirectly, Incur or
permit to exist any Lien (the “Initial Lien”) of any nature whatsoever on any
of its properties (including Capital Stock of a direct Restricted Subsidiary of
the Company), whether owned at the Issue Date or thereafter acquired, securing
any Indebtedness, other than Permitted Liens, without effectively providing
that the Securities shall be secured equally and ratably with (or, in the case
of any Initial Lien securing Subordinated Obligations of the Company, prior to)
the obligations so secured for so long as such obligations are so secured.

 

(b)           Any Lien created for the benefit of
the holders of the Securities pursuant to the preceding sentence shall provide
by its terms that such Lien shall be automatically and unconditionally released
and discharged upon the release and discharge of the Initial Lien.

 

SECTION 4.12. 
Compliance Certificate. 
The Company shall deliver to the Trustee within 120 days after the end
of each fiscal year of the Company an Officers’ Certificate stating that in the
course of the performance by the signers of their duties as Officers of the
Company they would normally have knowledge of any Default and whether or not
the signers know of any Default that occurred during such period.  If they do, the certificate shall describe
the Default, its status and what action the Company is taking or proposes to
take with respect thereto.  The Company
also shall comply with TIA § 314(a)(4).

 

SECTION 4.13.  Further Instruments and Acts.  Upon request of the Trustee, the Company will
execute and deliver such further instruments and do such further acts as may be
reasonably necessary or proper to carry out more effectively the purpose of
this Indenture.

 

ARTICLE 5

Successor Company

 

SECTION 5.01. 
Merger and Consolidation. 
The Company shall not consolidate with or merge with or into, or convey,
transfer or lease, in one transaction or a series of transactions, directly or
indirectly, all or substantially all its assets (determined

 

56

 

on a consolidated basis for the Company and
its Restricted Subsidiaries) to, any Person, unless:

 

(1)           the
resulting, surviving or transferee Person (the “Successor Company”) shall be a
Person organized and existing under the laws of the United States of America,
any State thereof or the District of Columbia and the Successor Company (if not
the Company) shall expressly assume, by an indenture supplemental thereto,
executed and delivered to the Trustee, in form satisfactory to the Trustee, all
the obligations of the Company under the Securities and this Indenture;

 

(2)           immediately
after giving pro forma effect to such transaction (and treating any
Indebtedness which becomes an obligation of the Successor Company or any
Subsidiary as a result of such transaction as having been Incurred by such
Successor Company or such Subsidiary at the time of such transaction), no
Default shall have occurred and be continuing;

 

(3)           immediately
after giving pro forma effect to such transaction, the Successor Company would
be able to Incur an additional $1.00 of Indebtedness pursuant to the applicable
clause of Section 4.03(a); and

 

(4)           the
Company shall have delivered to the Trustee an Officers’ Certificate and an
Opinion of Counsel, each stating that such consolidation, merger or transfer
and such supplemental indenture (if any) comply with this Indenture;

 

provided, however,
(A) that the foregoing will not prohibit a Restricted Subsidiary of the
Company from merging into or transferring all or part of its properties and
assets to the Company or another Restricted Subsidiary of the Company or
(B) Section 5.01(a)(3) will not be applicable to the Company merging
with an Affiliate of the Company solely for the purpose and with the sole
effect of reincorporating the Company in another jurisdiction.

 

For purposes
of this Section 5.01, the sale, lease, conveyance, assignment, transfer or
other disposition of all or substantially all of the properties and assets of
one or more Subsidiaries of the Company, which properties and assets, if held
by the Company instead of such Subsidiaries, would constitute all or
substantially all of the properties and assets of the Company on a consolidated
basis, shall be deemed to be the transfer of all or substantially all of the
properties and assets of the Company.

 

The Successor
Company shall be the successor to the Company and shall succeed to, and be
substituted for, and may exercise every right and power of, the Company under
this Indenture, and the predecessor Company, except in the case of a lease,
shall be released from the obligation to pay the principal of and interest on
the Securities.

 

57

 

ARTICLE 6

Defaults and Remedies

 

SECTION 6.01. 
Events of Default.  An “Event
of Default” occurs if:

 

(1)           the
Company defaults in the payment of interest on any Security when the same
becomes due and payable and such default continues for a period of 30 days;

 

(2)           the
Company defaults in the payment of the principal of any Security when the same
becomes due and payable at its Stated Maturity, upon optional redemption, upon
required repurchase, upon declaration of acceleration or otherwise;

 

(3)           the
Company fails to comply with Section 5.01;

 

(4)           the
Company fails to comply with Section 4.02, 4.03, 4.04, 4.05, 4.06, 4.07,
4.08, 4.09, 4.10 or 4.11, (other than a failure to purchase Securities when
required under Section 4.06 or 4.10) and such failure continues for 30
days after the notice specified below;

 

(5)           the
Company fails to comply with any of its agreements in the Securities or this
Indenture (other than those referred to in clause (1), (2), (3) or (4) above)
and such failure continues for 60 days after the notice specified below;

 

(6)           Indebtedness
of the Company or any Significant Subsidiary is not paid within any applicable
grace period after final maturity or is accelerated by the holders thereof
because of a default and the total amount of such Indebtedness unpaid or
accelerated exceeds $10.0 million;

 

(7)           the
Company or any Significant Subsidiary pursuant to or within the meaning of any
Bankruptcy Law:

 

(A)          commences
a voluntary case;

 

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

 

(C)           consents
to the appointment of a Custodian of it or for any substantial part of its
property; or

 

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

 

or takes any
comparable action under any foreign laws relating to insolvency;

 

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

 

58

 

(A)          is
for relief against the Company or any Significant Subsidiary in an involuntary
case;

 

(B)           appoints
a Custodian of the Company or any Significant Subsidiary or for any substantial
part of its property; or

 

(C)           orders
the winding up or liquidation of the Company or any Significant Subsidiary;

 

or any similar
relief is granted under any foreign laws and the order or decree remains
unstayed and in effect for 60 days; or

 

(9)           any
judgment or decree for the payment of money in excess of $10.0 million
(excluding the amount of any insurance proceeds or indemnification claims
available to the obligor from insurance carriers and indemnitors who in the
reasonable judgment of the Board of Directors of the Company are creditworthy
and who have acknowledged their liability with respect thereto) is entered
against the Company or any Significant Subsidiary, remains outstanding for a
period of 60 consecutive days following such judgment and is not paid,
discharged, waived or stayed.

 

The foregoing will constitute Events of
Default whatever the reason for any such Event of Default and whether it is
voluntary or involuntary or is effected by operation of law or pursuant to any
judgment, decree or order of any court or any order, rule or regulation of any
administrative or governmental body.

 

The term “Bankruptcy
Law” means Title 11, United States Code, or any similar Federal or state
law for the relief of debtors.  The term “Custodian”
means any receiver, trustee, assignee, liquidator, custodian or similar
official under any Bankruptcy Law.

 

A Default
under clauses (4) and (5) is not an Event of Default until the Trustee or the
holders of at least 25% in principal amount at maturity of the outstanding
Securities notify the Company of the Default and the Company does not cure such
Default within the time specified after receipt of such notice.  Such notice must specify the Default, demand
that it be remedied and state that such notice is a “Notice of Default”.

 

The Company
shall deliver to the Trustee, within 30 days after the occurrence thereof,
written notice in the form of an Officers’ Certificate of any Event of Default
under clause (6) and any event which with the giving of notice or the lapse of
time would become an Event of Default under clause (4) or (5), its status and
what action the Company is taking or proposes to take with respect thereto.

 

SECTION 6.02. 
Acceleration.  If an Event
of Default (other than an Event of Default specified in Section 6.01(7) or
(8) with respect to the Company) occurs and is continuing, the Trustee by
notice to the Company, or the Holders of at least 25% in principal amount at
maturity of the Securities by notice to the Company and the Trustee,

 

59

 

may declare the Accreted Value and accrued
but unpaid interest on all the Securities to be due and payable.  Upon such a declaration, such  Accreted Value and interest shall be due and
payable immediately; provided, however, that so long as any Bank
Indebtedness remains outstanding, no such acceleration shall be effective until
the earlier of (1) five Business Days after the giving of written notice to the
Company and the Administrative Agent (or similar agent if there is no
Administration Agent) under the Credit Agreement and (2) the day on which any
Bank Indebtedness is accelerated.  If an
Event of Default specified in Section 6.01(7) or (8) with respect to the
Company occurs, the  Accreted Value and
interest on all the Securities shall ipso facto become and be immediately due
and payable without any declaration or other act on the part of the Trustee or
any Securityholders.  The Holders of a
majority in principal amount at maturity of the outstanding Securities by
notice to the Trustee may rescind an acceleration and its consequences if the
rescission would not conflict with any judgment or decree and if all existing
Events of Default have been cured or waived except nonpayment of  Accreted Value or interest that has become
due solely because of acceleration.  No
such rescission shall affect any subsequent Default or impair any right
consequent thereto.

 

SECTION 6.03. 
Other Remedies.  If an
Event of Default occurs and is continuing, the Trustee may pursue any available
remedy to collect the payment of Accreted Value of or interest on the
Securities or to enforce the performance of any provision of the Securities or
this Indenture.

 

The Trustee
may maintain a proceeding even if it does not possess any of the Securities or
does not produce any of them in the proceeding. 
A delay or omission by the Trustee or any Securityholder in exercising
any right or remedy accruing upon an Event of Default shall not impair the
right or remedy or constitute a waiver of or acquiescence in the Event of
Default.  No remedy is exclusive of any
other remedy.  All available remedies are
cumulative.

 

SECTION 6.04. 
Waiver of Past Defaults. 
The Holders of a majority in principal amount at maturity of the
outstanding Securities by notice to the Trustee may waive an existing Default
and its consequences except (a) a Default in the payment of the Accreted Value
of or interest on a Security, (b) a Default arising from the failure to redeem
or purchase any Security when required pursuant to this Indenture or (c) a
Default in respect of a provision that under Section 9.02 cannot be
amended without the consent of each Securityholder affected.  When a Default is waived, it is deemed cured,
but no such waiver shall extend to any subsequent or other Default or impair
any consequent right.

 

SECTION 6.05. 
Control by Majority.  The
Holders of a majority in principal amount at maturity of the outstanding
Securities may direct the time, method and place of conducting any proceeding
for any remedy available to the Trustee or of exercising any trust or power
conferred on the Trustee.  However, the
Trustee may refuse to follow any direction that conflicts with law or this
Indenture or, subject to Section 7.01, that the Trustee determines is
unduly prejudicial to the rights of other Securityholders or would involve the
Trustee in personal liability; provided, however, that the
Trustee may take any other action deemed proper by the Trustee that is not

 

60

 

inconsistent with such direction.  Prior to taking any action hereunder, the
Trustee shall be entitled to indemnification satisfactory to it in its sole
discretion against all losses and expenses caused by taking or not taking such
action.

 

SECTION 6.06. 
Limitation on Suits. 
Except to enforce the right to receive payment of Accreted Value,
premium (if any) or interest when due, no Securityholder may pursue any remedy
with respect to this Indenture or the Securities unless:

 

(1)           the
Holder gives to the Trustee written notice stating that an Event of Default is
continuing;

 

(2)           the
Holders of at least 25% in principal amount at maturity of the outstanding
Securities make a written request to the Trustee to pursue the remedy;

 

(3)           such
Holder or Holders offer to the Trustee reasonable security or indemnity against
any loss, liability or expense;

 

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

 

(5)           the
Holders of a majority in principal amount at maturity of the outstanding
Securities do not give the Trustee a direction inconsistent with the request
during such 60-day period.

 

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

 

SECTION 6.07. 
Rights of Holders to Receive Payment.  Notwithstanding any other provision of this
Indenture, the right of any Holder to receive payment of Accreted Value of and
interest on the Securities held by such Holder, on or after the respective due
dates expressed in the Securities, or to bring suit for the enforcement of any
such payment on or after such respective dates, shall not be impaired or affected
without the consent of such Holder.

 

SECTION 6.08. 
Collection Suit by Trustee. 
If an Event of Default specified in Section 6.01(1) or (2) occurs
and is continuing, the Trustee may recover judgment in its own name and as
trustee of an express trust against the Company for the whole amount then due
and owing (together with interest on any unpaid interest to the extent lawful)
and the amounts provided for in Section 7.07.

 

SECTION 6.09. 
Trustee May File Proofs of Claim. 
The Trustee may file such proofs of claim and other papers or documents
as may be necessary or advisable in order to have the claims of the Trustee and
the Securityholders allowed in any judicial proceedings relative to the
Company, its creditors or its property and, unless prohibited by law or
applicable regulations, may vote on behalf of the Holders in any election of a
trustee in bankruptcy or other Person performing similar functions, and any
Custodian in any such judicial proceeding is hereby authorized by each Holder
to make payments to

 

61

 

the Trustee and, in the event that the
Trustee shall consent to the making of such payments directly to the Holders,
to pay to the Trustee any amount due it for the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and its
counsel, and any other amounts due the Trustee under Section 7.07.

 

Priorities.  If the Trustee collects any money or property
pursuant to this Article 6, it shall pay out the money or property in the
following order:

 

FIRST:    to the Trustee for amounts due under
Section 7.07;

 

SECOND:               to Securityholders for amounts
due and unpaid on the Securities for Accreted Value and interest, ratably,
without preference or priority of any kind, according to the amounts due and
payable on the Securities for Accreted Value and interest, respectively; and

 

THIRD:  to the Company.

 

The Trustee
may fix a record date and payment date for any payment to Securityholders
pursuant to this Section.  At least 15
days before such record date, the Company shall mail to each Securityholder and
the Trustee a notice that states the record date, the payment date and amount
to be paid.

 

SECTION 6.10. 
Undertaking for Costs.  In
any suit for the enforcement of any right or remedy under this Indenture or in
any suit against the Trustee for any action taken or omitted by it as Trustee,
a court in its discretion may require the filing by any party litigant in the
suit of an undertaking to pay the costs of the suit, and the court in its discretion
may assess reasonable costs, including reasonable attorneys’ fees, against any
party litigant in the suit, having due regard to the merits and good faith of
the claims or defenses made by the party litigant.  This Section does not apply to a suit by
the Trustee, a suit by a Holder pursuant to Section 6.07 or a suit by
Holders of more than 10% in principal amount at maturity of the Securities.

 

SECTION 6.11. 
Waiver of Stay or Extension Laws. 
The Company (to the extent it may lawfully do so) shall not at any time
insist upon, or plead, or in any manner whatsoever claim or take the benefit or
advantage of, any stay or extension law wherever enacted, now or at any time
hereafter in force, which may affect the covenants or the performance of this Indenture;
and the Company (to the extent that it may lawfully do so) hereby expressly
waives all benefit or advantage of any such law, and shall not hinder, delay or
impede the execution of any power herein granted to the Trustee, but shall
suffer and permit the execution of every such power as though no such law had
been enacted.

 

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ARTICLE 7

Trustee

 

SECTION 7.01. 
Duties of Trustee. 
(a)  If an Event of Default has
occurred and is continuing, the Trustee shall exercise the rights and powers
vested in it by this Indenture and use the same degree of care and skill in
their exercise as a prudent Person would exercise or use under the
circumstances in the conduct of such Person’s own affairs.

 

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

 

(1)           the
Trustee undertakes to perform such duties and only such duties as are
specifically set forth in this Indenture and no implied covenants or
obligations shall be read into this Indenture against the Trustee; and

 

(2)           in
the absence of bad faith on its part, the Trustee may conclusively rely, as to
the truth of the statements and the correctness of the opinions expressed
therein, upon certificates or opinions furnished to the Trustee and conforming
to the requirements of this Indenture. 
However, the Trustee shall examine the certificates and opinions to
determine whether or not they conform to the requirements of this Indenture.

 

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

 

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

 

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

 

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

 

(d)           Every provision of this Indenture
that in any way relates to the Trustee is subject to paragraphs (a), (b) and
(c) of this Section.

 

(e)           The Trustee shall not be liable for
interest on any money received by it except as the Trustee may agree in writing
with the Company.

 

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

 

(g)           No provision of this Indenture shall
require the Trustee to expend or risk its own funds or otherwise incur
financial liability in the performance of any of its

 

63

 

duties hereunder or in the exercise of any of
its rights or powers, if it shall have reasonable grounds to believe that
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it.

 

(h)           Every provision of this Indenture
relating to the conduct or affecting the liability of or affording protection
to the Trustee shall be subject to the provisions of this Section and to
the provisions of the TIA.

 

SECTION 7.02. 
Rights of Trustee. 
(a)  The Trustee may rely on any
document believed by it to be genuine and to have been signed or presented by
the proper person.  The Trustee need not
investigate any fact or matter stated in the document.

 

(b)           Before the Trustee acts or refrains
from acting, it may require an Officers’ Certificate or an Opinion of
Counsel.  The Trustee shall not be liable
for any action it takes or omits to take in good faith in reliance on the
Officers’ Certificate or Opinion of Counsel.

 

(c)           The Trustee may act through agents
and shall not be responsible for the misconduct or negligence of any agent
appointed with due care.

 

(d)           The Trustee shall not be liable for
any action it takes or omits to take in good faith which it believes to be
authorized or within its rights or powers; provided, however, that the Trustee’s
conduct does not constitute willful misconduct or negligence.

 

(e)           The Trustee may consult with counsel,
and the advice or opinion of counsel with respect to legal matters relating to
this Indenture and the Securities shall be full and complete authorization and
protection from liability in respect to any action taken, omitted or suffered
by it hereunder in good faith and in accordance with the advice or opinion of
such counsel.

 

(f)            Except with respect to
Sections 4.01, 4.02 and 4.12, the Trustee shall have no duty to inquire as
to the performance of the Company’s covenants in Article Four hereof.  In addition, the Trustee shall not be deemed
to have knowledge of any Default or Event of Default except (i) any Event of
Default occurring pursuant to Sections 6.01(1) and 6.01(2) or (ii) any
Default or Event of Default of which the Trustee shall have received written
notice in the manner set forth in this Indenture or an officer of the Trustee
shall have obtained actual knowledge. 
Delivery of reports, information and documents to the Trustee under
Section 4.02 is for informational purposes only and the Trustee’s receipt
of the foregoing 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 thereunder (as to which the
Trustee is entitled to rely exclusively on an Officers’ Certificate).

 

SECTION 7.03. 
Individual Rights of Trustee. 
The Trustee in its individual or any other capacity may become the owner
or pledgee of Securities and may otherwise deal with the Company or its
Affiliates with the same rights it would have if it were not Trustee.  Any Paying Agent, Registrar, co-registrar or
co-paying agent may do

 

64

 

the same with like rights.  However, the Trustee must comply with
Sections 7.10 and 7.11.

 

SECTION 7.04. 
Trustee’s Disclaimer.  The
Trustee shall not be responsible for and makes no representation as to the
validity or adequacy of this Indenture or the Securities, it shall not be
accountable for the Company’s use of the proceeds from the Securities, and it
shall not be responsible for any statement of the Company in this Indenture or
in any document issued in connection with the sale of the Securities or in the
Securities other than the Trustee’s certificate of authentication.

 

SECTION 7.05. 
Notice of Defaults.  If a
Default occurs and is continuing and if it is known to the Trustee, the Trustee
shall mail to each Securityholder notice of the Default within 90 days after it
occurs.  Except in the case of a Default
in payment of Accreted Value of or interest on any Security (including payments
pursuant to the mandatory redemption provisions of such Security, if any), the
Trustee may withhold the notice if and so long as a committee of its Trust
Officers in good faith determines that withholding the notice is not opposed to
the interests of Securityholders.

 

SECTION 7.06. 
Reports by Trustee to Holders. 
As promptly as practicable after each May 15 beginning with the May 15
following the date of this Indenture, and in any event prior to July 15 in each
year, the Trustee shall mail to each Securityholder a brief report dated as of
May 15 that complies with TIA § 313(a). 
The Trustee also shall comply with TIA § 313(b).

 

A copy of each
report at the time of its mailing to Securityholders shall be filed with the
SEC and each stock exchange (if any) on which the Securities are listed.  The Company agrees to notify promptly the
Trustee whenever the Securities become listed on any stock exchange and of any
delisting thereof.

 

SECTION 7.07. 
Compensation and Indemnity. 
The Company shall pay to the Trustee from time to time reasonable
compensation for its services.  The
Trustee’s compensation shall not be limited by any law on compensation of a
trustee of an express trust.  The Company
shall reimburse the Trustee upon request for all reasonable out-of-pocket
expenses incurred or made by it, including costs of collection, in addition to
the compensation for its services.  Such
expenses shall include the reasonable compensation and expenses, disbursements
and advances of the Trustee’s agents, counsel, accountants and experts.  The Company shall indemnify the Trustee
against any and all loss, liability or expense (including attorneys’ fees)
incurred by it in connection with the administration of this trust and the
performance of its duties hereunder.  The
Trustee shall notify the Company promptly of any claim for which it may seek
indemnity.  Failure by the Trustee to so
notify the Company shall not relieve the Company of its obligations
hereunder.  The Company shall defend the
claim and the Trustee may have separate counsel and the Company shall pay the
fees and expenses of such counsel.  The
Company need not reimburse any expense or indemnify against any loss, liability
or expense incurred by the Trustee through the Trustee’s own willful
misconduct, negligence or bad faith.

 

65

 

To secure the
Company’s payment obligations in this Section, the Trustee shall have a lien
prior to the Securities on all money or property held or collected by the
Trustee other than money or property held in trust to pay Accreted Value of and
interest on particular Securities.

 

The Company’s
payment obligations pursuant to this Section shall survive the discharge
of this Indenture.  When the Trustee
incurs expenses after the occurrence of a Default specified in
Section 6.01(7) or (8) with respect to the Company, the expenses are
intended to constitute expenses of administration under the Bankruptcy Law.

 

SECTION 7.08. 
Replacement of Trustee. 
The Trustee may resign at any time by so notifying the Company.  The Holders of a majority in principal amount
at maturity of the outstanding Securities may remove the Trustee by so
notifying the Trustee and may appoint a successor Trustee.  The Company shall remove the Trustee if:

 

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

 

(2)           the Trustee is adjudged bankrupt or
insolvent;

 

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

 

(4)           the Trustee otherwise becomes
incapable of acting.

 

If the Trustee
resigns, is removed by the Company or by the Holders of a majority in principal
amount at maturity of the outstanding Securities and such Holders do not
reasonably promptly appoint a successor Trustee, or if a vacancy exists in the
office of Trustee for any reason (the Trustee in such event being referred to
herein as the retiring Trustee), the Company shall promptly appoint a successor
Trustee.

 

A successor
Trustee shall deliver a written acceptance of its appointment to the retiring
Trustee and to the Company.  Thereupon
the resignation or removal of the retiring Trustee shall become effective, and
the successor Trustee shall have all the rights, powers and duties of the
Trustee under this Indenture.  The
successor Trustee shall mail a notice of its succession to
Securityholders.  The retiring Trustee
shall promptly transfer all property held by it as Trustee to the successor
Trustee, subject to the lien provided for in Section 7.07.

 

If a successor
Trustee does not take office within 60 days after the retiring Trustee resigns
or is removed, the retiring Trustee or the Holders of 10% in principal amount
at maturity of the Securities may petition any court of competent jurisdiction
for the appointment of a successor Trustee.

 

If the Trustee
fails to comply with Section 7.10, any Securityholder may petition any
court of competent jurisdiction for the removal of the Trustee and the
appointment of a successor Trustee.

 

66

 

Notwithstanding
the replacement of the Trustee pursuant to this Section, the Company’s
obligations under Section 7.07 shall continue for the benefit of the
retiring Trustee.

 

SECTION 7.09. 
Successor Trustee by Merger. 
If the Trustee consolidates with, merges or converts into, or transfers
all or substantially all its corporate trust business or assets to, another
corporation or banking association, the resulting, surviving or transferee
corporation without any further act shall be the successor Trustee.

 

In case at the
time such successor or successors by merger, conversion or consolidation to the
Trustee shall succeed to the trusts created by this Indenture any of the
Securities shall have been authenticated but not delivered, any such successor
to the Trustee may adopt the certificate of authentication of any predecessor
trustee, and deliver such Securities so authenticated; and in case at that time
any of the Securities shall not have been authenticated, any successor to the
Trustee may authenticate such Securities either in the name of any predecessor
hereunder or in the name of the successor to the Trustee; and in all such cases
such certificates shall have the full force which it is anywhere in the
Securities or in this Indenture provided that the certificate of the Trustee
shall have.

 

SECTION 7.10. 
Eligibility;
Disqualification.  The Trustee shall
at all times satisfy the requirements of TIA § 310(a).  The Trustee shall have a combined capital and
surplus of at least $50,000,000 as set forth in its most recent published
annual report of condition.  The Trustee
shall comply with TIA § 310(b); provided, however, that there
shall be excluded from the operation of TIA § 310(b)(1) any indenture or
indentures under which other securities or certificates of interest or
participation in other securities of the Company are outstanding if the
requirements for such exclusion set forth in TIA § 310(b)(1) are met.

 

SECTION 7.11. 
Preferential Collection of Claims Against Company.  The Trustee shall comply with TIA § 311(a),
excluding any creditor relationship listed in TIA § 311(b).  A Trustee who has resigned or been removed
shall be subject to TIA § 311(a) to the extent indicated.

 

ARTICLE 8

Discharge of Indenture; Defeasance

 

SECTION 8.01. 
Discharge of Liability on Securities; Defeasance.  (a)  When (1) the Company delivers to the Trustee
all outstanding Securities (other than Securities replaced pursuant to
Section 2.07) for cancellation or (2) all outstanding Securities have
become due and payable, whether at maturity or on a redemption date as a result
of the mailing of a notice of redemption pursuant to Article 3 hereof, or (3)
all outstanding Securities will become due and payable within one year or are
to be called for redemption within one year under arrangements reasonably
satisfactory to the Trustee and, in the case of clauses (2) and (3), the
Company irrevocably deposits with the Trustee

 

67

 

funds sufficient to pay at maturity or upon
redemption all outstanding Securities, including interest thereon to maturity
or such redemption date (other than Securities replaced pursuant to
Section 2.07), and if in either case the Company pays all other sums
payable hereunder by the Company, then this Indenture shall, subject to
Section 8.01(c), cease to be of further effect.  The Trustee shall acknowledge satisfaction
and discharge of this Indenture on demand of the Company accompanied by an
Officers’ Certificate and an Opinion of Counsel and at the cost and expense of
the Company.

 

(b)   Subject to Sections 8.01(c) and 8.02,
the Company at any time may terminate (1) all its obligations under the
Securities and this Indenture (“legal defeasance option”) or (2) its
obligations under Sections 4.02, 4.03, 4.04, 4.05, 4.06, 4.07, 4.08, 4.09,
4.10 and 4.11 and the operation of Sections 6.01(4), 6.01(6), 6.01(7),
6.01(8) and 6.01(9) (but, in the case of Sections 6.01(7) and (8), with
respect only to Significant Subsidiaries) and the limitations contained in
Section 5.01(a)(3) (“covenant defeasance option”).  The Company may exercise its legal defeasance
option notwithstanding its prior exercise of its covenant defeasance option.

 

If the Company
exercises its legal defeasance option, payment of the Securities may not be
accelerated because of an Event of Default with respect thereto.  If the Company exercises its covenant
defeasance option, payment of the Securities may not be accelerated because of
an Event of Default specified in Sections 6.01(4), 6.01(6), 6.01(7) or
6.01(8) (but, in the case of Sections 6.01(7), with respect only to
Significant Subsidiaries) or because of the failure of the Company to comply
with Section 5.01(a)(3).

 

Upon
satisfaction of the conditions set forth herein and upon request of the
Company, the Trustee shall acknowledge in writing the discharge of those
obligations that the Company terminates.

 

(c)           Notwithstanding clauses (a) and (b)
above, the Company’s obligations in Sections 2.03, 2.04, 2.05, 2.06, 2.07,
2.08, 7.07 and 7.08 and in this Article 8 shall survive until the Securities
have been paid in full.  Thereafter, the
Company’s obligations in Sections 7.07, 8.04 and 8.05 shall survive.

 

SECTION 8.02. 
Conditions to Defeasance. 
The Company may exercise its legal defeasance option or its covenant
defeasance option only if:

 

(1)           the
Company irrevocably deposits in trust with the Trustee money or U.S. Government
Obligations for the payment of aggregate principal amount of and interest on
the Securities to maturity or redemption, as the case may be;

 

(2)           the
Company delivers to the Trustee a certificate from a nationally recognized firm
of independent accountants expressing their opinion that the payments of
principal and interest when due and without reinvestment on the deposited U.S.
Government Obligations plus any deposited money without investment will
provide cash at such times and in such amounts as will be sufficient to pay
principal and interest when due on all the Securities to maturity or
redemption, as the case may be;

 

68

 

(3)           123
days pass after the deposit is made and during the 123-day period no Default
specified in Sections 6.01(7) or (8) with respect to the Company occurs
which is continuing at the end of the period;

 

(4)           the
deposit does not constitute a default under any other agreement binding on the
Company and is not prohibited by Article 10;

 

(5)           the
Company delivers to the Trustee an Opinion of Counsel to the effect that the
trust resulting from the deposit does not constitute, or is qualified as, a
regulated investment company under the Investment Company Act of 1940;

 

(6)           in
the case of the legal defeasance option, the Company shall have delivered to
the Trustee an Opinion of Counsel stating that (A) the Company has received
from, or there has been published by, the Internal Revenue Service a ruling, or
(B) since the date of this Indenture 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 Securityholders will not
recognize income, gain or loss for Federal income tax purposes as a result of
such 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
defeasance had not occurred;

 

(7)           in
the case of the covenant defeasance option, the Company shall have delivered to
the Trustee an Opinion of Counsel to the effect that the Securityholders 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; and

 

(8)           the
Company delivers to the Trustee an Officers’ Certificate and an Opinion of
Counsel, each stating that all conditions precedent to the defeasance and
discharge of the Securities as contemplated by this Article 8 have been
complied with.

 

Before or
after a deposit, the Company may make arrangements satisfactory to the Trustee
for the redemption of Securities at a future date in accordance with
Article 3.

 

SECTION 8.03. 
Application of Trust Money. 
The Trustee shall hold in trust money or U.S. Government Obligations
deposited with it pursuant to this Article 8. 
It shall apply the deposited money and the money from U.S. Government
Obligations through the Paying Agent and in accordance with this Indenture to
the payment of principal of and interest on the Securities.

 

SECTION 8.04. 
Repayment to Company.  The
Trustee and the Paying Agent shall promptly turn over to the Company upon
request any excess money or securities held by them at any time.

 

69

 

Subject to any
applicable abandoned property law, the Trustee and the Paying Agent shall pay
to the Company upon request any money held by them for the payment of Accreted
Value or interest that remains unclaimed for two years, and, thereafter,
Securityholders entitled to the money must look to the Company for payment as
general creditors.

 

SECTION 8.05. 
Indemnity for Government Obligations.  The Company shall pay and shall indemnify the
Trustee against any tax, fee or other charge imposed on or assessed against
deposited U.S. Government Obligations or the principal and interest received on
such U.S. Government Obligations.

 

SECTION 8.06. 
Reinstatement.  If the
Trustee or Paying Agent is unable to apply any money or U.S. Government
Obligations in accordance with this Article 8 by reason of any legal proceeding
or by reason of any order or judgment of any court or governmental authority
enjoining, restraining or otherwise prohibiting such application, the
obligations under this Indenture and the Securities shall be revived and
reinstated as though no deposit had occurred pursuant to this Article 8 until
such time as the Trustee or Paying Agent is permitted to apply all such money
or U.S. Government Obligations in accordance with this Article 8; provided,
however, that, if the Company has made any payment of interest on or
Accreted Value of any Securities because of the reinstatement of its
obligations, the Company shall be subrogated to the rights of the Holders of
such Securities to receive such payment from the money or U.S. Government
Obligations held by the Trustee or Paying Agent.

 

ARTICLE 9

Amendments

 

SECTION 9.01. 
Without Consent of Holders. 
The Company and the Trustee may amend this Indenture or the Securities
without notice to or consent of any Securityholder:

 

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

 

(2)           to
provide for the assumption by a successor corporation of the obligations of the
Company under this Indenture;

 

(3)           to
comply with Article 5;

 

(4)           to
provide for uncertificated Securities in addition to or in place of
certificated Securities; provided, however, that the
uncertificated Securities are issued in registered form for purposes of
Section 163(f) of the Code or in a manner such that the uncertificated
Securities are described in Section 163(f)(2)(B) of the Code;

 

70

 

(5)           to
add Guarantees with respect to the Securities or to secure the Securities;

 

(6)           to
add to the covenants of the Company for the benefit of the Holders or to
surrender any right or power herein conferred upon the Company;

 

(7)           to
make any change that does not adversely affect the rights of any
Securityholder; or

 

(8)           to
comply with any requirements of the SEC in connection with qualifying, or
maintaining the qualification of, this Indenture under the TIA;

 

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

 

After an
amendment under this Section becomes effective, the Company shall mail to
Securityholders a notice briefly describing such amendment.  The failure to give such notice to all
Securityholders, or any defect therein, shall not impair or affect the validity
of an amendment under this Section.

 

SECTION 9.02. 
With Consent of Holders. 
The Company and the Trustee may amend this Indenture or the Securities
without notice to any Securityholder but with the written consent of the
Holders of at least a majority in principal amount at maturity of the
Securities then outstanding (including consents obtained in connection with a
tender offer or exchange for the Securities). 
However, without the consent of each Securityholder affected thereby, an
amendment or waiver may not:

 

(1)           reduce
the principal amount at maturity of Securities whose Holders must consent to an
amendment;

 

(2)           reduce
the rate of or extend the time for payment of interest on any Security;

 

(3)           reduce
the principal amount at maturity or Accreted Value of or change the Stated Maturity
of any Security;

 

(4)           change
the calculation of Accreted Value so as to reduce the Accreted Value at any
time or change the provisions applicable to the redemption of any Security
contained in Article 3 hereto or paragraph 5 of the Securities;

 

(5)           make
any Security payable in money other than that stated in the Security;

 

71

 

(6)           impair
the right of any Securityholder to receive payment of principal amount or Accreted
Value of and interest on such Securityholder’s Securities on or after the due
dates therefor or to institute suit for the enforcement of any payment on or
with respect to such Securityholder’s Securities;

 

(7)           make
any change in Section 6.04 or 6.07 or the second sentence of this Section;
or

 

(8)           make
any changes in the ranking or priority of any Security that would adversely
affect the Securityholders.

 

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

 

After an
amendment under this Section 9.02 becomes effective, the Company shall
mail to Securityholders a notice briefly describing such amendment.  The failure to give such notice to all
Securityholders, or any defect therein, shall not impair or affect the validity
of an amendment under this Section 9.02.

 

SECTION 9.03. 
Compliance with Trust Indenture Act.  Every amendment to this Indenture or the
Securities shall comply with the TIA as then in effect.

 

SECTION 9.04. 
Revocation and Effect of Consents and Waivers.  A consent to an amendment or a waiver by a
Holder of a Security shall bind the Holder and every subsequent Holder of that
Security or portion of the Security that evidences the same debt as the
consenting Holder’s Security, even if notation of the consent or waiver is not
made on the Security.  However, any such
Holder or subsequent Holder may revoke the consent or waiver as to such Holder’s
Security or portion of the Security if the Trustee receives the notice of
revocation before the date the amendment or waiver becomes effective.  After an amendment or waiver becomes
effective, it shall bind every Securityholder. 
An amendment or waiver becomes effective upon the execution of such
amendment or waiver by the Trustee.

 

The Company
may, but shall not be obligated to, fix a record date for the purpose of
determining the Securityholders entitled to give their consent or take any
other action described above or required or permitted to be taken pursuant to
this Indenture.  If a record date is
fixed, then notwithstanding the immediately preceding paragraph, those Persons
who were Securityholders at such record date (or their duly designated proxies),
and only those Persons, shall be entitled to give such consent or to revoke any
consent previously given or to take any such action, whether or not such
Persons continue to be Holders after such record date.  No such consent shall be valid or effective
for more than 120 days after such record date.

 

SECTION 9.05. 
Notation on or Exchange of Securities.  If an amendment changes the terms of a
Security, the Trustee may require the Holder of the Security to deliver it to
the Trustee.  The Trustee may place an
appropriate notation on the Security regarding the changed terms and return it
to the Holder.  Alternatively, if the
Company or

 

72

 

the Trustee so determines, the Company in
exchange for the Security shall issue and the Trustee shall authenticate a new
Security that reflects the changed terms. 
Failure to make the appropriate notation or to issue a new Security
shall not affect the validity of such amendment.

 

SECTION 9.06. 
Trustee To Sign Amendments. 
The Trustee shall sign any amendment authorized pursuant to this Article
9 if the amendment does not adversely affect the rights, duties, liabilities or
immunities of the Trustee.  If it does,
the Trustee may but need not sign it.  In
signing such amendment the Trustee shall be entitled to receive indemnity
reasonably satisfactory to it and to receive, and (subject to
Section 7.01) shall be fully protected in relying upon, an Officers’
Certificate and an Opinion of Counsel stating that such amendment is authorized
or permitted by this Indenture.

 

SECTION 9.07. 
Payment for Consent. 
Neither the Company nor any Affiliate of the Company shall, directly or
indirectly, pay or cause to be paid any consideration, whether by way of
interest, fee or otherwise, to any Holder for or as an inducement to any
consent, waiver or amendment of any of the terms or provisions of this
Indenture or the Securities unless such consideration is offered to be paid to
all Holders that so consent, waive or agree to amend in the time frame set
forth in solicitation documents relating to such consent, waiver or agreement.

 

ARTICLE 10

Miscellaneous

 

SECTION 10.01. 
Trust Indenture Act Controls. 
If any provision of this Indenture limits, qualifies or conflicts with
another provision which is required to be included in this Indenture by the
TIA, the required provision shall control.

 

SECTION 10.02. 
Notices.  Any notice or
communication shall be in writing and delivered in person or mailed by
first-class mail addressed as follows:

 

if to the
Company:

 

Reddy Ice
Holdings, Inc.

8750 North Central Expressway

Suite 1800

Dallas, TX  75231

Attention:  Corporate Secretary

Facsimile:  (214) 528-1532

 

with a copy
to:

 

73

 

Cahill Gordon
& Reindel LLP

80 Pine Street

New York, NY 10005-1702

Attention:  Roger Meltzer, Esq.

Facsimile:  (212) 269-5420

 

if to the
Trustee:

 

U.S. Bank
National Association

60 Livingston Avenue

St. Paul, MN 55107-2292

Attention:  Corporate Trust Department

Facsimile:  (651) 495-8097

 

The Company or
the Trustee by notice to the other may designate additional or different
addresses for subsequent notices or communications.

 

Any notice or
communication mailed to a Securityholder shall be mailed to the Securityholder
at the Securityholder’s address as it appears on the registration books of the
Registrar and shall be sufficiently given if so mailed within the time
prescribed.

 

Failure to
mail a notice or communication to a Securityholder or any defect in it shall
not affect its sufficiency with respect to other Securityholders.  If a notice or communication is mailed in the
manner provided above, it is duly given, whether or not the addressee receives
it.

 

SECTION 10.03. 
Communication by Holders with Other Holders.  Securityholders may communicate pursuant to
TIA § 312(b) with other Securityholders with respect to their rights under this
Indenture or the Securities.  The
Company, the Trustee, the Registrar and anyone else shall have the protection
of TIA § 312(c).

 

SECTION 10.04. 
Certificate and Opinion as to Conditions Precedent.  Upon any request or application by the
Company to the Trustee to take or refrain from taking any action under this
Indenture, the Company shall furnish to the Trustee:

 

(1)           an
Officers’ Certificate in form and substance reasonably satisfactory to the
Trustee stating that, in the opinion of the signers, all conditions precedent,
if any, provided for in this Indenture relating to the proposed action have
been complied with; and

 

(2)           an
Opinion of Counsel in form and substance reasonably satisfactory to the Trustee
stating that, in the opinion of such counsel, all such conditions precedent
have been complied with.

 

SECTION 10.05. 
Statements Required in Certificate or Opinion.  Each certificate or opinion with respect to
compliance with a covenant or condition provided for in this Indenture shall
include:

 

74

 

(1)           a
statement that the individual making such certificate or opinion has read such
covenant or condition;

 

(2)           a
brief statement as to the nature and scope of the examination or investigation
upon which the statements or opinions contained in such certificate or opinion
are based;

 

(3)           a
statement that, in the opinion of such individual, he has made such examination
or investigation as is necessary to enable him to express an informed opinion
as to whether or not such covenant or condition has been complied with; and

 

(4)           a
statement as to whether or not, in the opinion of such individual, such
covenant or condition has been complied with.

 

SECTION 10.06. 
When Securities Disregarded. 
In determining whether the Holders of the required principal amount at
maturity of Securities have concurred in any direction, waiver or consent,
Securities owned by the Company or by any Person directly or indirectly
controlling or controlled by or under direct or indirect common control with
the Company shall be disregarded and deemed not to be outstanding, except that,
for the purpose of determining whether the Trustee shall be protected in
relying on any such direction, waiver or consent, only Securities which the
Trustee knows are so owned shall be so disregarded.  Also, subject to the foregoing, only
Securities outstanding at the time shall be considered in any such determination.

 

SECTION 10.07. 
Rules by Trustee, Paying
Agent and Registrar.  The Trustee may
make reasonable rules for action by or a meeting of Securityholders.  The Registrar and the Paying Agent may make
reasonable rules for their functions.

 

SECTION 10.08. 
Legal Holidays.  If a
payment date is a Legal Holiday, payment shall be made on the next succeeding
day that is not a Legal Holiday, and no interest shall accrue for the
intervening period.  If a regular record
date is a Legal Holiday, the record date shall not be affected.

 

SECTION 10.09. 
Governing Law.  This
Indenture and the Securities shall be governed by, and construed in accordance
with, the laws of the State of New York.

 

SECTION 10.10. 
No Recourse Against Others. 
A director, officer, employee or stockholder, as such, of the Company
shall not have any liability for any obligations of the Company under the
Securities or this Indenture or for any claim based on, in respect of or by
reason of such obligations or their creation. 
By accepting a Security, each Securityholder shall waive and release all
such liability.  The waiver and release
shall be part of the consideration for the issue of the Securities.

 

SECTION 10.11. 
Successors.  All agreements
of the Company in this Indenture and the Securities shall bind its
successors.  All agreements of the
Trustee in this Indenture shall bind its successors.

 

75

 

SECTION 10.12. 
Multiple Originals.  The
parties may sign any number of copies of this Indenture.  Each signed copy shall be an original, but
all of them together represent the same agreement.  One signed copy is enough to prove this
Indenture.

 

SECTION 10.13. 
Table of Contents;
Headings.  The table of contents,
cross-reference sheet and headings of the Articles and Sections of this
Indenture have been inserted for convenience of reference only, are not
intended to be considered a part hereof and shall not modify or restrict any of
the terms or provisions hereof.

 

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

 

	
   

  	
  REDDY ICE HOLDINGS, INC.,

  
	
   

  	
   

  
	
   

  	
   

  	
  By

  	
  /s/ Steven J. Janusek

  
	
   

  	
   

  	
  Steven J. Janusek, Chief Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  U.S. BANK NATIONAL ASSOCIATION,

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By

  	
  /s/ Lori Anne Rosenberg

  
	
   

  	
   

  	
  Lori Anne Rosenberg, Assistant Vice-President

  
	
   

  	
   

  	
   

  

 

76

 

RULE 144A/REGULATION S/IAI APPENDIX

 

PROVISIONS
RELATING TO INITIAL SECURITIES,

PRIVATE EXCHANGE SECURITIES

AND EXCHANGE SECURITIES

 

1.                                       Definitions

 

1.1           Definitions

 

For the purposes of this Appendix the
following terms shall have the meanings indicated below:

 

“Applicable
Procedures” means, with respect to any transfer or transaction involving a
Temporary Regulation S Global Security or beneficial interest therein, the
rules and procedures of the Depository for such a Temporary Regulation S Global
Security, to the extent applicable to such transaction and as in effect from
time to time.

 

“Definitive
Security” means a certificated Initial Security or Exchange Security or Private
Exchange Security bearing, if required, the appropriate restricted securities
legend set forth in Section 2.3(e).

 

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

 

“Distribution
Compliance Period”, with respect to any Securities, means the period of 40
consecutive days beginning on and including the later of (i) the day on which
such Securities are first offered to Persons other than distributors (as
defined in Regulation S under the Securities Act) in reliance on Regulation S
and (ii) the issue date with respect to such Securities.

 

“Exchange
Securities” means (1) the 101⁄2% Senior Discount Notes Due 2012 issued
pursuant to the Indenture in connection with a Registered Exchange Offer
pursuant to a Registration Rights Agreement and (2) Additional Securities,
if any, offered and sold by the Company pursuant to a registration statement
filed with the SEC under the Securities Act.

 

“IAI” means an
institutional “accredited investor”, as defined in Rule 501(a)(1), (2),
(3) or (7) of Regulation D under the Securities Act.

 

“Initial
Purchasers” means (1) with respect to the Initial Securities issued on the
Issue Date, Credit Suisse First
Boston LLC, CIBC World Markets Corp. and Bear, Stearns & Co. Inc. and
(2) with respect to each issuance of Additional Securities, the Persons
purchasing such Additional Securities under the related Purchase Agreement.

 

 

“Initial
Securities” means (1) $151,000,000 aggregate principal amount at maturity
of 101⁄2% Senior Discount Notes Due 2012 issued on the Issue Date and
(2) Additional Securities, if any, issued in a transaction exempt from the
registration requirements of the Securities Act.

 

“Private
Exchange” means the offer by the Company, pursuant to a Registration Rights
Agreement, to the Initial Purchasers to issue and deliver to each Initial Purchaser, in exchange for the
Initial Securities held by the Initial Purchaser as part of its initial
distribution, a like aggregate principal amount at maturity of Private Exchange
Securities.

 

“Private Exchange
Securities” means any 101⁄2% Senior Discount Notes Due 2012 issued in connection
with a Private Exchange.

 

“Purchase
Agreement” means (1) with respect to the Initial Securities issued on the
Issue Date, the Purchase Agreement dated October 19, 2004, among the
Company and the Initial Purchasers, and (2) with respect to each issuance
of Additional Securities, the purchase agreement or underwriting agreement
among the Company and the Persons purchasing such Additional Securities.

 

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

 

“Registered
Exchange Offer” means the offer by the Company, pursuant to a Registration
Rights Agreement, to certain Holders of Initial Securities, to issue and
deliver to such Holders, in exchange for the Initial Securities, a like
aggregate principal amount at maturity of Exchange Securities registered under
the Securities Act.

 

“Registration
Rights Agreement” means (1) with respect to the Initial Securities issued
on the Issue Date, the Registration Rights Agreement dated October 27,
2004, among the Company and the Initial Purchasers and (2) with respect to
each issuance of Additional Securities issued in a transaction exempt from the
registration requirements of the Securities Act, the registration rights agreement,
if any, among the Company and the Persons purchasing such Additional Securities
under the related Purchase Agreement.

 

“Rule 144A
Securities” means all Securities offered and sold to QIBs in reliance on Rule
144A.

 

“Securities”
means the Initial Securities, the Exchange Securities and the Private Exchange
Securities, treated as a single class.

 

“Securities
Act” means the Securities Act of 1933.

 

“Securities
Custodian” means the custodian with respect to a Global Security (as appointed
by the Depository), or any successor Person thereto and shall initially be the
Trustee.

 

2

 

“Shelf
Registration Statement” means the registration statement issued by the Company
in connection with the offer and sale of Initial Securities or Private Exchange
Securities pursuant to a Registration Rights Agreement.

 

“Transfer
Restricted Securities” means Securities that bear or are required to bear the
legend relating to restrictions on transfer relating to the Securities Act set
forth in Section 2.3(e) hereto.

 

1.2           Other
Definitions

 

	
  TERM

  	
   

  	
  Defined in 

  Section:

  	
   

  
	
  “Agent Members”

  	
   

  	
  2.1(b)

  	
   

  
	
  “Global Securities”

  	
   

  	
  2.1(a)

  	
   

  
	
  “IAI Global Security”

  	
   

  	
  2.1(a)

  	
   

  
	
  “Permanent Regulation S
  Global Security”

  	
   

  	
  2.1(a)

  	
   

  
	
  “Regulation S”

  	
   

  	
  2.1(a)

  	
   

  
	
  “Regulation S Global
  Security”

  	
   

  	
  2.1(a)

  	
   

  
	
  “Rule 144A”

  	
   

  	
  2.1(a)

  	
   

  
	
  “Rule 144A Global Security”

  	
   

  	
  2.1(a)

  	
   

  
	
  “Temporary Regulation S Global Security”

  	
   

  	
  2.1(a)

  	
   

  

 

2.                                       The Securities.

 

2.1           (a)  Form and Dating. 
The Initial Securities shall be offered and sold by the Company pursuant
to a Purchase Agreement.  The Initial
Securities shall be resold initially only to (i) QIBs in reliance on
Rule 144A under the Securities Act (“Rule 144A”) and
(ii) Persons other than U.S. Persons (as defined in Regulation S) in
reliance on Regulation S under the Securities Act (“Regulation S”).  Initial Securities may thereafter be
transferred to, among others, QIBs, IAIs and purchasers in reliance on
Regulation S, subject to the restrictions on transfer set forth herein.  Initial Securities initially resold pursuant
to Rule 144A shall be issued initially in the form of one or more permanent
global Securities in definitive, fully registered form (collectively, the “Rule
144A Global Security”); Initial Securities initially resold to IAIs shall be
issued initially in the form of one or more permanent global Securities in
definitive, fully registered form (collectively, the “IAI Global Security”);
and Initial Securities initially resold pursuant to Regulation S shall be
issued initially in the form of one or more temporary global securities in
fully registered form (collectively, the “Temporary Regulation S Global
Security”), in each case without interest coupons and with the global
securities legend and the applicable restricted securities legend set forth in
Exhibit 1 hereto, which shall be deposited on behalf of the purchasers of
the Initial Securities represented thereby with the Securities Custodian and
registered in the name of the Depository or a nominee of the Depository, duly
executed by the Company and authenticated by the Trustee as provided in the
Indenture.  Except as set forth in this
Section 2.1(a), beneficial ownership interests in the Temporary Regulation
S Global Security will not be exchangeable for interests in the Rule 144A Global
Security, the IAI Global Security, a permanent global security (the “Permanent
Regulation S Global Security”, and together with the Temporary Regulation

 

3

 

S Global Security, the “Regulation S Global Security”) or any other
Security prior to the expiration of the Distribution Compliance Period and
then, after the expiration of the Distribution Compliance Period, may be
exchanged for interests in a Rule 144A Global Security, an IAI Global
Security or the Permanent Regulation S Global Security only upon
certification in form reasonably satisfactory to the Trustee that (i)
beneficial ownership interests in such Temporary Regulation S Global Security
are owned either by non-U.S. persons or U.S. persons who purchased such
interests in a transaction that did not require registration under the
Securities Act and (ii) in the case of an exchange for an IAI Global Security,
certification that the interest in the Temporary Regulation S Global Security
is being transferred to an institutional “accredited investor” under the
Securities Act that is an institutional accredited investor acquiring the
securities for its own account or for the account of an institutional
accredited investor.

 

Beneficial
interests in Temporary Regulation S Global Securities or IAI Global Securities
may be exchanged for interests in Rule 144A Global Securities if (1) such
exchange occurs in connection with a transfer of Securities in compliance with
Rule 144A and (2) the transferor of the beneficial interest in the
Temporary Regulation S Global Security or the IAI Global Security, as
applicable, first delivers to the Trustee a written certificate (in a form
satisfactory to the Trustee) to the effect that the beneficial interest in the
Temporary Regulation S Global Security or the IAI Global Security, as
applicable, is being transferred to a Person (a) who the transferor reasonably
believes to be a QIB, (b) purchasing for its own account or the account of
a QIB in a transaction meeting the requirements of Rule 144A, and (c) in
accordance with all applicable securities laws of the States of the United
States and other jurisdictions.

 

Beneficial
interests in Temporary Regulation S Global Securities and Rule 144A Global
Securities may be exchanged for an interest in IAI Global Securities if
(1) such exchange occurs in connection with a transfer of the securities
in compliance with an exemption under the Securities Act and (2) the
transferor of the Regulation S Global Security or Rule 144A Global Security,
as applicable, first delivers to the trustee a written certificate
(substantially in the form of Exhibit 2) to the effect that (A) the
Regulation S Global Security or Rule 144A Global Security, as applicable,
is being transferred (a) to an institutional “accredited investor” within
the meaning of 501(a)(1), (2), (3) and (7) under the Securities Act that is an
institutional investor acquiring the securities for its own account or for the
account of another institutional accredited investor, in each case in a minimum
principal amount at maturity of the Securities of $250,000, for investment
purposes and not with a view to or for offer or sale in connection with any
distribution in violation of the Securities Act and (B) in accordance with all
applicable securities laws of the States of the United States and other
jurisdictions.

 

Beneficial
interests in a Rule 144A Global Security or an IAI Global Security may be
transferred to a Person who takes delivery in the form of an interest in a
Regulation S Global Security, whether before or after the expiration of
the Distribution Compliance Period, only if the transferor first delivers to
the Trustee a written certificate (in the form provided in the Indenture) to
the effect that such transfer is being made in accordance with Rule 903 or
904 of Regulation S or Rule 144 (if applicable).

 

4

 

 

The Rule 144A
Global Security, the IAI Global Security, the Temporary Regulation S Global
Security and the Permanent Regulation S Global Security are collectively
referred to herein as “Global Securities”. 
The aggregate principal amount at maturity of the Global Securities may
from time to time be increased or decreased by adjustments made on the records
of the Trustee and the Depository or its nominee as hereinafter provided.

 

(b)           Book-Entry Provisions.  This Section 2.1(b) shall apply only to
a Global Security deposited with or on behalf of the Depository.

 

The Company
shall execute and the Trustee shall, in accordance with this
Section 2.1(b), authenticate and deliver initially one or more Global
Securities that (a) shall be registered in the name of the Depository for
such Global Security or Global Securities or the nominee of such Depository and
(b) shall be delivered by the Trustee to such Depository or pursuant to
such Depository’s instructions or held by the Trustee as custodian for the
Depository.

 

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

 

(c)           Definitive Securities.  Except as provided in this Section 2.1 or
Section 2.3 or 2.4, owners of beneficial interests in Global Securities shall
not be entitled to receive physical delivery of Definitive Securities.

 

2.2           Authentication.  The Trustee shall
authenticate and deliver:  (1) on
the Issue Date, an aggregate principal amount at maturity of
$151,000,000 101⁄2% Senior Discount Notes Due 2012 (such aggregate principal
amount at maturity of such Securities issued on the Issue Date subject to
increase pursuant to this Indenture and the Securities), (2) any
Additional Securities for an original issue in an aggregate principal amount at
maturity specified in the written order of the Company pursuant to
Section 2.02 of the Indenture and (3) Exchange Securities or Private
Exchange Securities for issue only in a Registered Exchange Offer or a Private
Exchange, respectively, pursuant to a Registration Rights Agreement, for a like
principal amount at maturity of Initial Securities, in each case upon a written
order of the Company signed by two Officers or by an Officer and either an
Assistant Treasurer or an Assistant Secretary of the Company.  Such order shall specify the amount of the
Securities to be authenticated and the date on which the original issue of
Securities is to be authenticated and, in the case of any 

 

5

 

issuance of Additional
Securities pursuant to Section 2.13 of the Indenture, shall certify that
such issuance is in compliance with Section 4.03 of the Indenture.

 

2.3           Transfer and Exchange.

 

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

 

(x)                                   to
register the transfer of such Definitive Securities; or

 

(y)                                 to
exchange such Definitive Securities for an equal principal amount at maturity
of Definitive Securities 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
Securities surrendered for transfer or exchange:

 

(i) 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 its attorney duly authorized in writing; and

 

(ii) if such
Definitive Securities are required to bear a restricted securities legend, they
are being transferred or exchanged pursuant to an effective registration
statement under the Securities Act, pursuant to Section 2.3(b) or pursuant to
clause (A), (B) or (C) below, and are accompanied by the following additional
information and documents, as applicable:

 

(A)          if such Definitive Securities are
being delivered to the Registrar by a Holder for registration in the name of
such Holder, without transfer, a certification from such Holder to that effect;
or

 

(B)           if such Definitive Securities are
being transferred to the Company, a certification to that effect; or

 

(C)           if such Definitive Securities are
being transferred (x) pursuant to an exemption from registration in accordance
with Rule 144A, Regulation S or Rule 144 under the Securities Act; or (y) in
reliance upon another exemption from the requirements of the Securities Act:
(i) a certification to that effect (in the form set forth on the reverse of the
Security) and (ii) if the Company so requests, an opinion of counsel or other
evidence reasonably satisfactory to it as to the compliance with the
restrictions set forth in the legend set forth in Section 2.3(e)(i).

 

(b)           Restrictions
on Transfer of a Definitive Security for a Beneficial Interest in a Global
Security.  A Definitive Security
may not be exchanged for a beneficial interest in a Rule 144A Global Security,
an IAI Global Security or a Permanent Regulation S Global Security except upon
satisfaction of the requirements set forth

 

6

 

below.  Upon receipt by the Trustee of a Definitive
Security, duly endorsed or accompanied by appropriate instruments of transfer,
in form satisfactory to the Trustee, together with:

 

(i)            certification, in the form set forth
on the reverse of the Security, that such Definitive Security is either (A)
being transferred to a QIB in accordance with Rule 144A, (B) being transferred
to an IAI or (C) being transferred after expiration of the Distribution
Compliance Period by a Person who initially purchased such Security in reliance
on Regulation S to a buyer who elects to hold its interest in such Security in
the form of a beneficial interest in the Permanent Regulation S Global
Security; and

 

(ii)           written instructions directing the
Trustee to make, or to direct the Securities Custodian to make, an adjustment
on its books and records with respect to such Rule 144A Global Security (in the
case of a transfer pursuant to clause (b)(i)(A)), IAI Global Security (in the
case of a transfer pursuant to clause (b)(1)(B)) or Permanent Regulation S
Global Security (in the case of a transfer pursuant to clause (b)(i)(B)) to
reflect an increase in the aggregate principal amount at maturity of the
Securities represented by the Rule 144A Global Security, IAI Global Security or
Permanent Regulation S Global Security, as applicable, such instructions to
contain information regarding the Depository account to be credited with such
increase,

 

then the Trustee shall cancel such Definitive
Security and cause, or direct the Securities Custodian to cause, in accordance
with the standing instructions and procedures existing between the Depository
and the Securities Custodian, the aggregate principal amount at maturity of
Securities represented by the Rule 144A Global Security, IAI Global Security or
Permanent Regulation S Global Security, as applicable, to be increased by the
aggregate principal amount at maturity of the Definitive Security 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 Rule 144A Global
Security, IAI Global Security or Permanent Regulation S Global Security, as
applicable, equal to the principal amount at maturity of the Definitive Security
so canceled.  If no Rule 144A Global
Securities, IAI Global Securities or Permanent Regulation S Global Securities,
as applicable, are then outstanding, the Company shall issue and the Trustee
shall authenticate, upon written order of the Company in the form of an
Officers’ Certificate of the Company, a new Rule 144A Global Security, IAI
Global Security or Permanent Regulation S Global Security, as applicable, in
the appropriate principal amount at maturity.

 

(c)           Transfer
and Exchange of Global Securities.

 

(i)            The transfer and exchange of Global
Securities or beneficial interests therein shall be effected through the
Depository, in accordance with the Indenture (including applicable restrictions
on transfer set forth herein, if any) and the procedures of the Depository

 

7

 

 

therefor.  A transferor of a beneficial interest in a
Global Security shall deliver to the Registrar a written order given in
accordance with the Depository’s procedures containing information regarding
the participant account of the Depository to be credited with a beneficial
interest in the Global Security.  The
Registrar shall, in accordance with such instructions instruct the Depository
to credit to the account of the Person specified in such instructions a
beneficial interest in the Global Security and to debit the account of the
Person making the transfer the beneficial interest in the Global Security being
transferred.

 

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

 

(iii)          Notwithstanding any
other provisions of this Appendix (other than the provisions set forth in
Section 2.4), a Global Security may not be transferred as a whole except
by the Depository to a nominee of the Depository or by a nominee of the
Depository to the Depository or another nominee of the Depository or by the
Depository or any such nominee to a successor Depository or a nominee of such
successor Depository.

 

(iv)          In the event that a
Global Security is exchanged for Definitive Securities pursuant to Section 2.4
of this Appendix, prior to the consummation of a Registered Exchange Offer or
the effectiveness of a Shelf Registration Statement with respect to such
Securities, such Securities may be exchanged only in accordance with such
procedures as are substantially consistent with the provisions of this Section
2.3 (including the certification requirements set forth on the reverse of the
Initial Securities intended to ensure that such transfers comply with Rule
144A, Regulation S or another applicable exemption under the Securities Act, as
the case may be) and such other procedures as may from time to time be adopted
by the Company.

 

(d)           Restrictions on Transfer of
Temporary Regulation S Global Securities. 
During the Distribution Compliance Period, beneficial ownership
interests in Temporary Regulation S Global Securities may only be sold, pledged
or transferred in accordance with the Applicable Procedures and only (i) to the
Company, (ii) in an offshore transaction in accordance with Regulation S
(other than a transaction resulting in an exchange for an interest in a
Permanent Regulation S Global Security), (iii) pursuant to an effective
registration statement under the Securities Act, in each case in accordance
with any applicable securities laws of any State of the United States.

 

8

 

(e)           Legend.

 

(i)            Except as permitted by the following
paragraphs (ii), (iii) and (iv), each Security certificate evidencing the
Global Securities (and all Securities issued in exchange therefor or in
substitution thereof), in the case of Securities offered otherwise than in
reliance on Regulation S, shall bear a legend in substantially the
following form:

 

THIS SECURITY
(OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM
REGISTRATION UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), AND THIS SECURITY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN
THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM.  EACH PURCHASER OF THIS SECURITY IS HEREBY
NOTIFIED THAT THE SELLER OF THIS SECURITY MAY BE RELYING ON THE EXEMPTION FROM
THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY
RULE 144A THEREUNDER.

 

THE HOLDER OF
THIS SECURITY AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) THIS SECURITY
MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (I) TO THE
COMPANY, (II) IN THE UNITED STATES TO A PERSON WHOM THE SELLER REASONABLY
BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER
THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF
RULE 144A, (III) TO AN INSTITUTIONAL “ACCREDITED INVESTOR” WITHIN THE
MEANING OF RULE 501(A)(1),(2),(3) OR (7) UNDER THE SECURITIES ACT THAT,
PRIOR TO SUCH TRANSFER, FURNISHES THE TRUSTEE A SIGNED LETTER CONTAINING
CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE TRANSFER OF THIS
SECURITY (THE FORM OF WHICH CAN BE OBTAINED FROM THE TRUSTEE) AND, IF SUCH
TRANSFER IS IN RESPECT OF AN AGGREGATE PRINCIPAL AMOUNT AT MATURITY OF
SECURITIES LESS THAN $250,000, AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY
THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT, (IV) OUTSIDE
THE UNITED STATES IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 904
UNDER THE SECURITIES ACT, (V) PURSUANT TO EXEMPTION FROM REGISTRATION
UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER

 

9

 

 

(IF AVAILABLE)
OR (VI) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT, IN EACH OF CASES (I) THROUGH (VI) IN ACCORDANCE WITH ANY APPLICABLE
SECURITIES LAWS OF ANY STATE OF THE UNITED STATES, AND (B) THE HOLDER
WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THIS
SECURITY FROM IT OF THE RESALE RESTRICTIONS REFERRED TO IN (A) ABOVE.

 

Each certificate evidencing
a Security offered in reliance on Regulation S shall, in addition to the
foregoing, bear a legend in substantially the following form:

 

THIS SECURITY
(OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION ORIGINALLY EXEMPT
FROM REGISTRATION UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), AND MAY NOT BE TRANSFERRED IN THE UNITED STATES OR TO, OR FOR THE
ACCOUNT OR BENEFIT OF, ANY U.S. PERSON EXCEPT PURSUANT TO AN AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND ALL
APPLICABLE STATE SECURITIES LAWS.  TERMS
USED ABOVE HAVE THE MEANINGS GIVEN TO THEM IN REGULATION S UNDER THE SECURITIES
ACT.

 

Each Definitive Security
shall also 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.

 

(ii)           Upon any sale or transfer of a
Transfer Restricted Security (including any Transfer Restricted Security
represented by a Global Security) pursuant to Rule 144 under the Securities
Act, the Registrar shall permit the transferee thereof to exchange such
Transfer Restricted Security for a Definitive Security that does not bear the
legend set forth above and rescind any restriction on the transfer of such
Transfer Restricted Security, if the transferor thereof certifies in writing to
the Registrar that such sale or transfer was made in reliance on Rule 144
(such certification to be in the form set forth on the reverse of the
Security).

 

10

 

(iii)          After a transfer of any Initial
Securities or Private Exchange Securities pursuant to and during the period of
the effectiveness of a Shelf Registration Statement with respect to such
Initial Securities or Private Exchange Securities, as the case may be, all
requirements pertaining to legends on such Initial Security or such Private
Exchange Security will cease to apply, the requirements requiring any such
Initial Security or such Private Exchange Security issued to certain Holders be
issued in global form will cease to apply, and a certificated Initial Security
or Private Exchange Security or an Initial Security or Private Exchange
Security in global form, in each case without restrictive transfer legends,
will be available to the transferee of the Holder of such Initial Securities or
Private Exchange Securities upon exchange of such transferring Holder’s
certificated Initial Security or Private Exchange Security or directions to
transfer such Holder’s interest in the Global Security, as applicable.

 

(iv)          Upon the consummation of a Registered
Exchange Offer with respect to the Initial Securities, all requirements
pertaining to such Initial Securities that Initial Securities issued to certain
Holders be issued in global form will still apply with respect to Holders of
such Initial Securities that do not exchange their Initial Securities, and
Exchange Securities in certificated or global form, in each case without the
restricted securities legend set forth in Exhibit 1 hereto, will be
available to Holders that exchange such Initial Securities in such Registered
Exchange Offer.

 

(v)           Upon the consummation of a Private
Exchange with respect to the Initial Securities, all requirements pertaining to
such Initial Securities that Initial Securities issued to certain Holders be
issued in global form will still apply with respect to Holders of such Initial
Securities that do not exchange their Initial Securities, and Private Exchange
Securities in global form with the global securities legend and the applicable
restricted securities legend set forth in Exhibit 1 hereto will be
available to Holders that exchange such Initial Securities in such Private
Exchange.

 

(f)            Cancellation
or Adjustment of Global Security.  At
such time as all beneficial interests in a Global Security have either been
exchanged for Definitive Securities, redeemed, purchased or canceled, such
Global Security shall be returned to the Depository for cancellation or
retained and canceled by the Trustee.  At
any time prior to such cancellation, if any beneficial interest in a Global
Security is exchanged for Definitive Securities, redeemed, purchased or
canceled, the principal amount at maturity of Securities represented by such
Global Security shall be reduced and an adjustment shall be made on the books
and records of the Trustee (if it is then the Securities Custodian for such
Global Security) with respect to such Global Security, by the Trustee or the
Securities Custodian, to reflect such reduction.

 

11

 

(g)           No
Obligation of the Trustee.

 

(i)            The Trustee shall have no
responsibility or obligation to any beneficial owner of a Global Security, a
member of, or a participant in the Depository or other Person with respect to
the accuracy of the records of the Depository or its nominee or of any
participant or member thereof, with respect to any ownership interest in the
Securities or with respect to the delivery to any participant, member,
beneficial owner or other Person (other than the Depository) of any notice
(including any notice of redemption) or the payment of any amount, under or
with respect to such Securities.  All
notices and communications to be given to the Holders and all payments to be
made to Holders under the Securities shall be given or made only to or upon the
order of the registered Holders (which shall be the Depository or its nominee
in the case of a Global Security).  The
rights of beneficial owners in any Global Security shall be exercised only
through the Depository subject to the applicable rules and procedures of the
Depository.  The Trustee may rely and
shall be fully protected in relying upon information furnished by the
Depository 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 the Indenture or under applicable law with respect to
any transfer of any interest in any Security (including any transfers between
or among Depository participants, members or beneficial owners in any Global
Security) other than to require delivery of such certificates and other
documentation or evidence as are expressly required by, and to do so if and
when expressly required by, the terms of the Indenture, and to examine the same
to determine substantial compliance as to form with the express requirements
hereof.

 

2.4           Definitive Securities.

 

(a)           A
Global Security deposited with the Depository or with the Trustee as Securities
Custodian for the Depository pursuant to Section 2.1 shall be transferred
to the beneficial owners thereof in the form of Definitive Securities in an
aggregate principal amount at maturity equal to the principal amount at
maturity of such Global Security, in exchange for such Global Security, only if
such transfer complies with Section 2.3 hereof and (i) the Depository
notifies the Company that it is unwilling or unable to continue as Depository
for such Global Security or if at any time such Depository ceases to be a “clearing
agency” registered under the Exchange Act, and in either case, a successor
depository is not appointed by the Company within 90 days of such notice,
or (ii) a 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 Definitive Securities under the Indenture.

 

12

 

(b)           Any
Global Security that is transferable to the beneficial owners thereof pursuant
to this Section 2.4 shall be surrendered by the Depository to the Trustee
located at its corporate trust office in the Borough of Manhattan, the City of
New York, 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 Security, an equal aggregate principal amount at
maturity of Definitive Securities of authorized denominations.  Any portion of a Global Security transferred
pursuant to this Section 2.4 shall be executed, authenticated and
delivered only in denominations of $1,000 principal amount at maturity and any
integral multiple thereof and registered in such names as the Depository shall
direct.  Any Definitive Security
delivered in exchange for an interest in the Transfer Restricted Security
shall, except as otherwise provided by Section 2.3(e) hereof, bear the
applicable restricted securities legend and definitive securities legend set
forth in Exhibit 1 hereto.

 

(c)           Subject
to the provisions of Section 2.4(b) hereof, the registered Holder of a
Global Security shall be entitled to 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 the
Indenture or the Securities.

 

(d)           In
the event of the occurrence of one of the events specified in
Section 2.4(a) hereof, the Company shall promptly make available to the
Trustee a reasonable supply of Definitive Securities in definitive, fully
registered form without interest coupons. 
In the event that such Definitive Securities are not issued, the Company
expressly acknowledges, with respect to the right of any Holder to pursue a
remedy pursuant to Section 6.07 of the Indenture, the right of any
beneficial owner of Securities to pursue such remedy with respect to the
portion of the Global Security that represents such beneficial owner’s
Securities as if such Definitive Securities had been issued.

 

13

 

EXHIBIT 1

to

RULE 144A/REGULATION S/IAI APPENDIX

 

[FORM OF FACE
OF INITIAL SECURITY]

[Global Securities 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 SECURITY 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 SECURITY SHALL BE LIMITED TO TRANSFERS
MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE INDENTURE REFERRED TO
ON THE REVERSE HEREOF.

 

[Restricted
Securities Legend for Securities offered otherwise than in Reliance on
Regulation S]

 

THIS SECURITY
(OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM
REGISTRATION UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), AND THIS SECURITY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN
THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM.  EACH PURCHASER OF THIS SECURITY IS HEREBY
NOTIFIED THAT THE SELLER OF THIS SECURITY MAY BE RELYING ON THE EXEMPTION FROM
THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY
RULE 144A THEREUNDER.

 

THE HOLDER OF
THIS SECURITY AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) THIS SECURITY
MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (I) TO THE
COMPANY, (II) IN THE UNITED STATES TO A PERSON WHOM THE SELLER REASONABLY
BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER
THE SECURITIES ACT) IN A TRANSACTION MEETING THE

 

 

REQUIREMENTS OF RULE 144A,
(III) TO AN INSTITUTIONAL “ACCREDITED INVESTOR” WITHIN THE MEANING OF
RULE 501(A)(1),(2),(3) OR (7) UNDER THE SECURITIES ACT THAT, PRIOR TO SUCH
TRANSFER, FURNISHES THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN
REPRESENTATIONS AND AGREEMENTS RELATING TO THE TRANSFER OF THIS SECURITY (THE
FORM OF WHICH CAN BE OBTAINED FROM THE TRUSTEE) AND, IF SUCH TRANSFER IS IN
RESPECT OF AN AGGREGATE PRINCIPAL AMOUNT AT MATURITY OF SECURITIES LESS THAN
$250,000, AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY THAT SUCH TRANSFER IS
IN COMPLIANCE WITH THE SECURITIES ACT, (IV) OUTSIDE THE UNITED STATES IN
AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 904 UNDER THE SECURITIES
ACT, (V) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES
ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE) OR (VI) PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH OF
CASES (I) THROUGH (VI) IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY
STATE OF THE UNITED STATES, AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT
HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THIS SECURITY FROM IT OF THE
RESALE RESTRICTIONS REFERRED TO IN (A) ABOVE.

 

[Restricted
Securities Legend for Securities Offered in Reliance on Regulation S]

 

THIS SECURITY
(OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION ORIGINALLY EXEMPT
FROM REGISTRATION UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), AND MAY NOT BE TRANSFERRED IN THE UNITED STATES OR TO, OR FOR THE
ACCOUNT OR BENEFIT OF, ANY U.S. PERSON EXCEPT PURSUANT TO AN AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND ALL
APPLICABLE STATE SECURITIES LAWS.  TERMS
USED ABOVE HAVE THE MEANINGS GIVEN TO THEM IN REGULATION S UNDER THE SECURITIES
ACT.

 

[Temporary
Regulation S Global Security Legend]

 

EXCEPT AS SET
FORTH BELOW, BENEFICIAL OWNERSHIP INTERESTS IN THIS TEMPORARY REGULATION S
GLOBAL SECURITY WILL NOT BE EXCHANGEABLE FOR INTERESTS IN THE PERMANENT
REGULATION S GLOBAL SECURITY OR ANY OTHER SECURITY REPRESENTING AN
INTEREST IN THE SECURITIES REPRESENTED HEREBY WHICH DO NOT CONTAIN A LEGEND
CONTAINING RESTRICTIONS ON TRANSFER, UNTIL THE EXPIRATION OF THE “40-DAY
DISTRIBUTION COMPLIANCE PERIOD” (WITHIN THE MEANING OF RULE 903(b)(2) OF
REGULATION S UNDER THE SECURITIES ACT) AND THEN ONLY UPON CERTIFICATION IN
FORM REASONABLY SATISFACTORY TO THE TRUSTEE THAT SUCH BENEFICIAL INTERESTS ARE
OWNED EITHER BY NON-U.S. PERSONS OR U.S. PERSONS WHO PURCHASED SUCH INTERESTS
IN A

 

2

 

TRANSACTION THAT DID NOT
REQUIRE REGISTRATION UNDER THE SECURITIES ACT. 
DURING SUCH 40-DAY DISTRIBUTION COMPLIANCE PERIOD, BENEFICIAL OWNERSHIP
INTERESTS IN THIS TEMPORARY REGULATION S GLOBAL SECURITY MAY ONLY BE SOLD,
PLEDGED OR TRANSFERRED (I) TO THE COMPANY, (II) OUTSIDE THE UNITED STATES
IN A TRANSACTION IN ACCORDANCE WITH RULE 904 OF REGULATION S UNDER THE
SECURITIES ACT, OR (III) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT, IN EACH OF CASES (I) THROUGH (III) IN ACCORDANCE WITH
ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES.  HOLDERS OF INTERESTS IN THIS TEMPORARY
REGULATION S GLOBAL SECURITY WILL NOTIFY ANY PURCHASER OF THIS SECURITY OF
THE RESALE RESTRICTIONS REFERRED TO ABOVE, IF THEN APPLICABLE.

 

AFTER THE
EXPIRATION OF THE DISTRIBUTION COMPLIANCE PERIOD BENEFICIAL INTERESTS IN THIS
TEMPORARY REGULATION S GLOBAL SECURITY MAY BE EXCHANGED FOR INTERESTS IN A RULE
144A GLOBAL SECURITY ONLY IF (1) SUCH EXCHANGE OCCURS IN CONNECTION WITH A
TRANSFER OF THE SECURITIES IN COMPLIANCE WITH RULE 144A AND (2) THE TRANSFEROR
OF THE REGULATION S GLOBAL SECURITY FIRST DELIVERS TO THE TRUSTEE A WRITTEN
CERTIFICATE (IN THE FORM ATTACHED TO THIS CERTIFICATE) TO THE EFFECT THAT THE
REGULATION S GLOBAL SECURITY IS BEING TRANSFERRED (A) TO A PERSON WHO THE
TRANSFEROR REASONABLY BELIEVES TO BE A QUALIFIED INSTITUTIONAL BUYER WITHIN THE
MEANING OF RULE 144A, (B) TO A PERSON WHO IS PURCHASING FOR ITS OWN ACCOUNT OR
THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144A, AND (C) IN ACCORDANCE WITH ALL APPLICABLE SECURITIES
LAWS OF THE STATES OF THE UNITED STATES AND OTHER JURISDICTIONS.

 

AFTER THE
EXPIRATION OF THE DISTRIBUTION COMPLIANCE PERIOD, BENEFICIAL INTERESTS IN THIS
TEMPORARY REGULATION S GLOBAL SECURITY MAY BE EXCHANGED FOR INTERESTS IN AN IAI
GLOBAL SECURITY ONLY IF (1) SUCH EXCHANGE OCCURS IN CONNECTION WITH A
TRANSFER OF THE SECURITIES IN COMPLIANCE WITH AN EXEMPTION UNDER THE SECURITIES
ACT AND (2) THE TRANSFEROR OF THE REGULATION S GLOBAL SECURITY FIRST
DELIVERS TO THE TRUSTEE A WRITTEN CERTIFICATE (IN THE FORM ATTACHED TO THIS
CERTIFICATE) TO THE EFFECT THAT THE REGULATION S GLOBAL SECURITY IS BEING
TRANSFERRED (A) TO AN INSTITUTIONAL “ACCREDITED INVESTOR” WITHIN THE MEANING OF
RULE 501(A)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT THAT, PRIOR TO
SUCH TRANSFER, FURNISHES THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN
REPRESENTATIONS AND AGREEMENTS RELATING TO THE TRANSFER OF THIS SECURITY (THE
FORM OF WHICH CAN BE OBTAINED FROM THE TRUSTEE) AND, IF SUCH TRANSFER IS IN
RESPECT OF AN AGGREGATE PRINCIPAL AMOUNT OF

 

3

 

SECURITIES LESS THAN $250,000,
AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY THAT SUCH TRANSFER IS IN
COMPLIANCE WITH THE SECURITIES ACT AND (B) IN ACCORDANCE WITH ALL
APPLICABLE SECURITIES LAWS OF THE STATES OF THE UNITED STATES AND OTHER
JURISDICTIONS.

 

BENEFICIAL
INTERESTS IN A RULE 144A GLOBAL SECURITY OR AN IAI GLOBAL SECURITY MAY BE
TRANSFERRED TO A PERSON WHO TAKES DELIVERY IN THE FORM OF AN INTEREST IN THE
REGULATION S GLOBAL SECURITY, WHETHER BEFORE OR AFTER THE EXPIRATION OF THE
40-DAY DISTRIBUTION COMPLIANCE PERIOD, ONLY IF THE TRANSFEROR FIRST DELIVERS TO
THE TRUSTEE A WRITTEN CERTIFICATE (IN THE FORM ATTACHED TO THIS CERTIFICATE) TO
THE EFFECT THAT SUCH TRANSFER IS BEING MADE IN ACCORDANCE WITH RULE 903 OR 904
OF REGULATION S OR RULE 144 (IF AVAILABLE).

 

[Definitive
Securities 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.

 

[OID Legend]

 

THIS SECURITY
HAS BEEN ISSUED WITH ORIGINAL ISSUE DISCOUNT (“OID”) FOR PURPOSES OF SECTIONS
1271 ET SEQ. OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED. THE ISSUE DATE
OF THIS SECURITY IS OCTOBER 27, 2004. FOR INFORMATION REGARDING THE ISSUE
PRICE, THE YIELD TO MATURITY AND THE AMOUNT OF OID PER $1,000 OF PRINCIPAL
AMOUNT AT MATURITY, PLEASE CONTACT THE COMPANY AT REDDY ICE HOLDINGS, INC.,
8750 NORTH CENTRAL EXPRESSWAY, SUITE 1800, DALLAS, TX 75231,
ATTENTION: CORPORATE SECRETARY.

 

4

 

 

	
  No.       

  	
  $      

  

 

101⁄2% Senior Discount Notes Due 2012

 

Reddy Ice
Holdings, Inc., a Delaware corporation, promises to pay to Cede & Co., or
registered assigns, the principal sum of                     Dollars
on November 1, 2012.

 

Interest
Payment Dates:  May 1 and
November 1.

 

Record
Dates:  April 15 and
October 15.

 

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

 

Dated:

 

	
  REDDY ICE HOLDINGS, INC.

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

TRUSTEE’S CERTIFICATE OF

AUTHENTICATION

 

	
  U.S. BANK
  NATIONAL ASSOCIATION

  
	
  as Trustee, certifies

  that this is one of

  the Securities referred

  to in the Indenture.

  	
   

  
	
  By

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Authorized Signatory

  
				

 

5

 

[FORM OF REVERSE SIDE OF INITIAL SECURITY]

 

101⁄2% Senior Discount Note Due 2012

 

1.             Interest and Accreted Value

 

REDDY ICE
HOLDINGS, INC., a Delaware corporation (such corporation, and its successors
and assigns under the Indenture hereinafter referred to, being herein called
the “Company”), promises to pay interest on the principal amount at maturity of
this Security at the rate per annum shown above.  No cash interest will accrue on the
Securities prior to November 1, 2008; provided, however, that
interest may be paid in cash under the circumstances specified below.  The Accreted Value of each Security will
increase from the date of issuance until November 1, 2008, at a rate of 10.50%
per annum, reflecting the accrual of non-cash interest, such that the Accreted
Value will equal the stated principal amount at maturity on November 1,
2008.  Cash interest on the Securities
will accrue at the rate of 10.50% per annum from November 1, 2008, or from the
most recent date to which interest has been paid or provided for, and will be
payable semiannually in arrears on May 1 and November 1 of each year,
commencing on May 1, 2009.  The Company
shall make each interest payment to the Holders of record of the Securities on the
immediately preceding April 15 and October 15. 
The Company shall pay interest on overdue principal at 1.0% per annum in
excess of the above rate and will pay interest on overdue installments of
interest at such higher rate to the extent lawful.  Interest will be computed on the basis of a
360-day year of twelve 30-day months.

 

If a
Registration Default (as defined in the Registration Rights Agreement
applicable to this Security) occurs, Additional Interest will accrue on this
Security at a rate of 0.50% per annum (increasing by an additional 0.50% per
annum after each consecutive 90-day period that occurs after the date on which
such Registration Default occurs up to a maximum Additional Interest rate of
1.00%) from and including the date on which any such Registration Default shall
occur to but excluding the date on which all Registration Defaults have been
cured.

 

All Additional
Interest that accrues on this Security prior to November 1, 2008 shall be added
to the Accreted Value of this Security; provided, however, that
the Company, at its option, may elect to pay any such Additional Interest in
cash, and all Additional Interest that accrues after November 1, 2008
shall be payable in cash to the Holder of this Security on each scheduled
interest payment date (except as provided in Section 2.11 of the Indenture).

 

“Accreted
Value” means, as of any date (the “Specified Date”), the amount provided below
for each $1,000 principal amount at maturity of Securities:

 

(a)           if the Specified Date occurs on one of the following dates
(each, a “Semi-Annual Accrual Date”), the Accreted Value shall equal the amount
set forth below for such Semi-Annual Accrual Date:

 

6

 

	
  Semi-Annual

  Accrual Date

  	
   

  	
  Accreted

  Value

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Issue Date

  	
   

  	
  $

  	
  663.33

  	
   

  
	
  May 1, 2005

  	
   

  	
  $

  	
  698.97

  	
   

  
	
  November 1, 2005

  	
   

  	
  $

  	
  735.66

  	
   

  
	
  May 1, 2006

  	
   

  	
  $

  	
  774.28

  	
   

  
	
  November 1, 2006

  	
   

  	
  $

  	
  814.93

  	
   

  
	
  May 1, 2007

  	
   

  	
  $

  	
  857.71

  	
   

  
	
  November 1, 2007

  	
   

  	
  $

  	
  902.73

  	
   

  
	
  May 1, 2008

  	
   

  	
  $

  	
  950.12

  	
   

  
	
  November 1, 2008

  	
   

  	
  $

  	
  1,000.00

  	
   

  

 

(b)           if
the Specified Date occurs between two Semi-Annual Accrual Dates, the Accreted
Value shall be equal to the sum of (A) the Accreted Value for the
Semi-Annual Accrual Date immediately preceding such Specified Date and
(B) an amount equal to the product of (x) the Accreted Value for the
immediately following Semi-Annual Accrual Date less the Accreted Value for the
immediately preceding Semi-Annual Accrual Date multiplied by (y) a
fraction, the numerator of which is the number of days elapsed from the
immediately preceding Semi-Annual Accrual Date to the Specified Date, using a
360-day year of twelve 30-day months, and the denominator of which is 180 (or,
if the Semi-Annual Accrual Date immediately preceding the Specified Date is the
Issue Date, the denominator of which is the number of days from and including
the Issue Date to and excluding the next Semi-Annual Accrual Date); or

 

(c)           if
the Specified Date occurs after the last Semi-Annual Accrual Date, the Accreted
Value shall equal $1,000.

 

Notwithstanding
the foregoing, if Additional Interest accrues on the Securities prior to
November 1, 2008 as a result of a Registration Default under the Registration
Rights Agreement, subject to the Company’s option to pay Additional Interest on
the Securities in cash, such Additional Interest shall be added to the Accreted
Value, and the Accreted Value as of any Specified Date shall equal the sum of
(A) the Accreted Value, as calculated above, as of the date such
Additional Interest began to accrue, plus (B) the amount of interest that
would otherwise accrue on the Accreted Value from time to time on a daily basis
at a rate of interest per annum borne by the Securities plus the rate of such
Additional Interest as applicable from time to time, compounded semi-annually
on each Semi-Annual Accrual Date from the date such Additional Interest began
to accrete through the Specified Date, computed on the basis of a 360-day year
of twelve 30-day months.  If such an
event were to occur, the Accreted Value on and after the last Semi-Annual Accrual
Date would exceed $1,000.

 

All references
in this Security, in any context, to Accreted Value or any interest or other
amount payable on or with respect to the Securities shall be deemed to include
any Additional Interest pursuant to a Registration Rights Agreement.

 

7

 

2.             Method of Payment

 

The Company
shall pay interest on the Securities (except defaulted interest) to the Persons
who are registered holders of Securities at the close of business on the April 15
or October 15 next preceding the interest payment date even if
Securities are canceled after the record date and on or before the interest
payment date.  Holders must surrender
Securities to a Paying Agent to collect payments of Accreted Value.  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. 
Payments in respect of the Securities represented by a Global Security
(including principal, premium and interest) shall be made by wire transfer of
immediately available funds to the accounts specified by the Depository.  The Company will make all payments in respect
of a Definitive Security (including principal, premium and interest) by mailing
a check to the registered address of each Holder thereof; provided, however,
that payments on a Definitive Security will be made by wire transfer to a U.S.
dollar account maintained by the payee with a bank in the United States if such
Holder elects payment by wire transfer by giving written notice to the Trustee
or the Paying Agent to such effect designating such account no later than
30 days immediately preceding the relevant due date for payment (or such
other date as the Trustee may accept in its discretion).

 

If the Company
elects to pay Additional Interest in cash, it shall notify the Trustee in
writing of such election not less than 30 days immediately preceding the
relevant interest payment date.

 

3.             Paying Agent and Registrar

 

Initially,
U.S. Bank National Association, a national banking association (the “Trustee”),
will act as Paying Agent and Registrar. 
The Company may appoint and change any Paying Agent, Registrar or
co-registrar without notice.  The Company
or any of its domestically incorporated Wholly Owned Subsidiaries may act as
Paying Agent, Registrar or co-registrar.

 

4.                                       Indenture

 

The Company
issued the Securities under an Indenture dated as of October 27, 2004 (“Indenture”),
between the Company and the Trustee.  The
terms of the Securities 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 “Act”).  Terms
defined in the Indenture and not defined herein have the meanings ascribed
thereto in the Indenture.  The Securities
are subject to all such terms, and Securityholders are referred to the
Indenture and the Act for a statement of those terms.

 

The Securities
are general unsecured obligations of the Company, of which $151,000,000 in
aggregate principal amount at maturity have been initially issued on the Issue
Date (such aggregate principal amount at maturity of such Securities issued on
the Issue Date subject to increase pursuant to the Indenture and this
Security). 
The Company shall be entitled, subject to its compliance with
Section 4.03 of the Indenture,

 

8

 

to issue an unlimited amount of
Additional Securities pursuant to Section 2.13 of the Indenture.  The Initial Securities issued on the Issue
Date, any Additional Securities and all Exchange Securities or Private Exchange
Securities issued in exchange therefor shall be treated as a single class for
all purposes under the Indenture.  The
Indenture contains covenants that limit the ability of the Company and its
subsidiaries to incur additional indebtedness; pay dividends or distributions
on, or redeem or repurchase capital stock; make investments; engage in
transactions with affiliates; create liens on assets; transfer or sell assets
or subsidiary stock; guarantee indebtedness; restrict dividends or other
payments of subsidiaries; and consolidate, merge or transfer all or
substantially all of its assets and the assets of its subsidiaries.  These covenants are subject to important
exceptions and qualifications.

 

5.                                       Optional
Redemption

 

Except as set
forth below, the Company shall not be entitled to redeem the Securities.

 

(a) On
and after November 1, 2008, the Company shall be entitled at its option to
redeem all or a portion of the Securities upon not less than 30 nor more than
60 days’ notice, at the redemption prices (expressed in percentages of
Accreted Value on the redemption date), plus accrued interest to the redemption
date (subject to the right of Holders of record on the relevant record date to
receive interest due on the relevant interest payment date), if redeemed during
the 12-month period commencing on November 1 of the years set forth below:

 

	
  PERIOD

  	
   

  	
  REDEMPTION

  PRICE

  	
   

  
	
  2008

  	
   

  	
  105.250

  	
  %

  
	
  2009

  	
   

  	
  102.625

  	
  %

  
	
  2010 and thereafter

  	
   

  	
  100.000

  	
  %

  

 

In addition,
prior to November 1, 2007, the Company shall be entitled at its option on
one or more occasions to redeem Securities (which includes Additional
Securities, if any) in an aggregate principal amount at maturity not to exceed
35% of the aggregate principal amount at maturity of the Securities (which
includes Additional Securities, if any) issued prior to such time at a
redemption price (expressed as a percentage of Accreted Value as of the date of redemption) of 110.50%, plus
accrued and unpaid interest to the redemption date, if any, with the net cash
proceeds from one or more Qualified Equity Offerings (provided that if the
Qualified Equity Offering is an offering by any parent entity of the Company, a
portion of the Net Cash Proceeds thereof equal to the amount required to redeem
any such Securities is contributed to the equity capital of the Company); provided,
however, that (1) at least 65% of such aggregate principal amount
at maturity of Securities (which includes Additional Securities, if any)
remains outstanding immediately after the occurrence of each such redemption
(other than Securities held, directly or indirectly, by the Company or its
Affiliates); and (2) each
such redemption occurs within 90 days after the date of the related Qualified
Equity Offering.

 

9

 

(b) At
any time on or prior to November 1, 2007, if a Change of Control occurs the
Company may, at its election, redeem all, but not less than all, of the
Securities upon not less than 30 nor more than 60 days’ prior notice, at a
redemption price equal to the sum of 100% of the Accreted Value of the
Securities as of the redemption date, a premium equal to the product of
(x) 1.25 and (y) One Year’s Coupon, and accrued and unpaid interest,
if any, to, the date of redemption.  If
the Company elects to exercise the redemption right set forth in this paragraph
(the “Three-Year Change of Control Redemption Right”), it must do so by mailing
a notice to each Holder with a copy to the Trustee within 30 days following the
Change of Control and before mailing notice of a Change of Control Offer, and
the Company shall not make a Change of Control Offer.  If the Company has made a Change of Control
Offer, it may not exercise the Three-Year Change of Control Redemption Right.

 

6.                                       Notice
of Redemption

 

Notice of
redemption shall be mailed at least 30 days but not more than 60 days before
the redemption date to each Holder of Securities to be redeemed at his
registered address.  Securities in
denominations larger than $1,000 principal amount at maturity may be redeemed
in part but only in whole multiples of $1,000 principal amount at
maturity.  If money sufficient to pay the
redemption price of and accrued interest on all Securities (or portions
thereof) to be redeemed on the redemption date is deposited with the Paying
Agent on or before the redemption date and certain other conditions are
satisfied, on and after such date interest ceases to accrue on such Securities
(or such portions thereof) called for redemption.

 

7.                                       Put
Provisions

 

Upon a Change
of Control, any Holder of Securities will have the right to cause the Company
to repurchase all or any part of the Securities of such Holder at a repurchase
price equal to 101% of the Accreted Value of the Securities to be repurchased
plus accrued interest to the date of repurchase (subject to the right of
holders of record on the relevant record date to receive interest due on the
related interest payment date) as provided in, and subject to the terms of, the
Indenture.

 

8.                                       Denominations;
Transfer; Exchange

 

The Securities
are in registered form without coupons in denominations of $1,000 principal
amount at maturity and whole multiples of $1,000 principal amount at
maturity.  A Holder may transfer or
exchange Securities in accordance with the Indenture.  The Registrar may require a Holder, among
other things, to furnish appropriate endorsements or transfer documents and to
pay any taxes and fees required by law or permitted by the Indenture.  The Registrar need not register the transfer
of or exchange any Securities selected for redemption (except, in the case of a
Security to be redeemed in part, the portion of the Security not to be
redeemed) or any Securities for a period of 15 days before a selection of
Securities to be redeemed or 15 days before an interest payment date.

 

10

 

9.                                       Persons
Deemed Owners

 

The registered
Holder of this Security may be treated as the owner of it for all purposes.

 

10.                                 Unclaimed
Money

 

If money for
the payment of Accreted Value, principal or interest remains unclaimed for two
years, the Trustee or Paying Agent shall pay the money back to the Company at
its request unless an abandoned property law designates another Person.  After any such payment, Holders entitled to
the money must look only to the Company and not to the Trustee for payment.

 

11.                                 Discharge
and Defeasance

 

Subject to
certain conditions set forth in the Indenture, the Company at any time shall be
entitled to terminate some or all of its obligations under the Securities and
the Indenture if the Company deposits with the Trustee money or U.S. Government
Obligations for the payment of principal and interest on the Securities to
redemption or maturity, as the case may be.

 

12.                                 Amendment,
Waiver

 

Subject to
certain exceptions set forth in the Indenture, (a) the Indenture and the
Securities may be amended with the written consent of the Holders of at least a
majority in principal amount at maturity outstanding of the Securities and
(b) any default or noncompliance with any provision may be waived with the
written consent of the Holders of a majority in principal amount at maturity
outstanding of the Securities.  Subject
to certain exceptions set forth in the Indenture, without the consent of any
Securityholder, the Company and the Trustee shall be entitled to amend the
Indenture or the Securities to cure any ambiguity, omission, defect or
inconsistency, or to comply with Article 5 of the Indenture, or to provide
for uncertificated Securities in addition to or in place of Definitive
Securities, or to add guarantees with respect to the Securities or to secure
the Securities, or to add additional covenants or surrender rights and powers
conferred on the Company, or to comply with any requirement of the SEC in
connection with qualifying the Indenture under the Act, or to make any change
that does not adversely affect the rights of any Securityholder, or to make
amendments to provisions of the Indenture relating to the form, authentication,
transfer and legending of the Securities.

 

13.                                 Defaults
and Remedies

 

Under the
Indenture, Events of Default include (a) default for 30 days in
payment of interest on the Securities; (b) default in payment of principal
on the Securities at maturity, upon redemption pursuant to paragraph 5 of
the Securities, upon acceleration or otherwise, or failure by the Company to
redeem or purchase Securities when required; (c) failure by the Company to
comply with other agreements in the Indenture or the Securities, in certain
cases subject to notice and lapse of time; (d) certain accelerations
(including failure to pay within any grace period after final maturity) of
other

 

11

 

Indebtedness of the Company if
the amount accelerated (or so unpaid) exceeds $10.0 million;
(e) certain events of bankruptcy or insolvency with respect to the Company
and the Significant Subsidiaries; and (f) certain judgments or decrees for
the payment of money in excess of $10.0 million.  If an Event of Default occurs and is
continuing, the Trustee or the Holders of at least 25% in principal amount at
maturity of the Securities may declare all the Securities to be due and payable
immediately.  Certain events of
bankruptcy or insolvency are Events of Default which shall result in the
Securities being due and payable immediately upon the occurrence of such Events
of Default.

 

Securityholders
may not enforce the Indenture or the Securities except as provided in the
Indenture.  The Trustee may refuse to
enforce the Indenture or the Securities unless it receives indemnity or
security satisfactory to it.  Subject to
certain limitations, Holders of a majority in principal amount at maturity of
the Securities may direct the Trustee in its exercise of any trust or
power.  The Trustee may withhold from
Securityholders notice of any continuing Default (except a Default in payment
of principal or interest) if it determines that withholding notice is in the
interest of the Holders.

 

14.                                 Trustee
Dealings with the Company

 

Subject to
certain limitations imposed by the Act, 
the Trustee under the Indenture, in its individual or any other
capacity, may become the owner or pledgee of Securities and may otherwise deal
with and collect obligations owed to it by the Company or its Affiliates and
may otherwise deal with the Company or its Affiliates with the same rights it
would have if it were not Trustee.

 

15.                                 No
Recourse Against Others

 

A director,
officer, employee or stockholder, as such, of the Company or the Trustee shall
not have any liability for any obligations of the Company under the Securities
or the Indenture or for any claim based on, in respect of or by reason of such
obligations or their creation.  By
accepting a Security, each Securityholder waives and releases all such
liability.  The waiver and release are
part of the consideration for the issue of the Securities.

 

16.                                 Authentication

 

This Security
shall not be valid until an authorized signatory of the Trustee (or an
authenticating agent) manually signs the certificate of authentication on the
other side of this Security.

 

17.                                 Abbreviations

 

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

 

12

 

18.                                 CUSIP
Numbers

 

Pursuant to a
recommendation promulgated by the Committee on Uniform Security Identification
Procedures the Company has caused CUSIP numbers to be printed on the Securities
and has directed the Trustee to use CUSIP numbers in notices of redemption as a
convenience to Securityholders.  No
representation is made as to the accuracy of such numbers either as printed on
the Securities or as contained in any notice of redemption and reliance may be
placed only on the other identification numbers placed thereon.

 

19.                                 Holders’
Compliance with Registration Rights Agreement.

 

Each Holder of
a Security, by acceptance hereof, acknowledges and agrees to the provisions of
the Registration Rights Agreement applicable to this Security, including the
obligations of the Holders with respect to a registration and the indemnification
of the Company to the extent provided therein.

 

20.                                 Governing
Law.

 

THIS SECURITY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NEW YORK.

 

The Company
will furnish to any Securityholder upon written request and without charge to
the Securityholder a copy of the Indenture which has in it the text of this
Security in larger type.  Requests may be
made to:

 

Reddy Ice
Holdings, Inc.

8750 North
Central Expressway

Suite 1800

Dallas, TX
75231

Attention:  Corporate Secretary

 

13

 

ASSIGNMENT FORM

 

To assign this Security, fill in the form
below:

 

I or we assign and transfer this Security 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 Security 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 Security.

 

In connection with any transfer of any of the
Securities evidenced by this certificate occurring prior to the expiration of
the period referred to in Rule 144(k) under the Securities Act after
the later of the date of original issuance of such Securities and the last
date, if any, on which such Securities were owned by the Company or any
Affiliate of the Company, the undersigned confirms that such Securities are
being transferred in accordance with its terms:

 

CHECK ONE BOX BELOW

 

o            to the Company; or

 

(1)           o            pursuant to an effective
registration statement under the Securities Act of 1933; or

 

(2)                                  o            inside the United States to a “qualified
institutional buyer” (as defined in Rule 144A under the Securities Act of
1933) that purchases for its own account or for the account of a qualified
institutional buyer to whom notice is given that such transfer is being made in
reliance on Rule 144A, in each case pursuant to and in compliance with
Rule 144A under the Securities Act of 1933; or

 

(3)                                  o            outside the United States in an
offshore transaction within the meaning of Regulation S under the Securities
Act in compliance with Rule 904 under the Securities Act of 1933; or

 

14

 

(4)                                  o            pursuant to the exemption from
registration provided by Rule 144 under the Securities Act of 1933; or

 

(5)                                  o            to an institutional “accredited
investor” (as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities
Act of 1933) that has furnished to the Trustee a signed letter containing
certain representations and agreements.

 

Unless one of
the boxes is checked, the Trustee will refuse to register any of the Securities
evidenced by this certificate in the name of any person other than the
registered holder thereof; provided, however, that if box (4) is
checked, the Trustee shall be entitled to require, prior to registering any
such transfer of the Securities, such legal opinions, certifications and other
information as the Company has reasonably requested to confirm that such
transfer is being made pursuant to an exemption from, or in a transaction not
subject to, the registration requirements of the Securities Act of 1933, such
as the exemption provided by Rule 144 under such Act.

 

	
   

  	
   

  
	
  Signature

  

 

Signature Guarantee:

 

	
   

  	
   

  	
   

  
	
  Signature must be guaranteed

  	
   

  	
  Signature

  

 

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.

 

15

 

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

 

The
undersigned represents and warrants that it is purchasing this Security for its
own account or an account with respect to which it exercises sole investment
discretion and that it and any such account is a “qualified institutional buyer”
within the meaning of Rule 144A under the Securities Act of 1933, and is
aware that the sale to it is being made in reliance on Rule 144A and
acknowledges that it has received such information regarding the Company as the
undersigned has requested pursuant to Rule 144A or has determined not to
request such information and that it is aware that the transferor is relying
upon the undersigned’s foregoing representations in order to claim the
exemption from registration provided by Rule 144A.

 

	
  DATED:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  NOTICE:

  	
  To be executed by

  an executive officer

  

 

16

 

 

[TO BE
ATTACHED TO GLOBAL SECURITIES]

SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY

The following increases or decreases in this Global Security have been made:

 

	
  Date of

  Exchange

  	
   

  	
  Amount of decrease in

  Principal amount at

  maturity of this Global

  Security

  	
   

  	
  Amount of increase in

  Principal amount at maturity

  of this Global Security

  	
   

  	
  Principal amount at maturity

  of this Global Security

  following such decrease or

  increase)

  	
   

  	
  Signature of authorized 

  officer of Trustee or

  Securities Custodian

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

17

 

 

OPTION OF
HOLDER TO ELECT PURCHASE

 

If you want to
elect to have this Security purchased by the Company pursuant to
Section 4.06 or 4.10 of the Indenture, check the box:       o

 

If you want to
elect to have only part of this Security purchased by the Company pursuant to
Section 4.06 or 4.10 of the Indenture, state the amount in principal
amount at maturity:  $                

 

	
  Dated:

  	
   

  	
  Your Signature:

  	
   

  
	
   

  	
   

  	
  (Sign
  exactly as your name appears

  on the other side of this Security.)

  

 

	
  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.

 

18

 

EXHIBIT A

 

[FORM OF FACE
OF EXCHANGE SECURITY

OR PRIVATE EXCHANGE SECURITY]

 

[OID
Legend]*/**/

 

THIS SECURITY
HAS BEEN ISSUED WITH ORIGINAL ISSUE DISCOUNT (“OID”) FOR PURPOSES OF SECTIONS
1271 ET SEQ. OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED. THE ISSUE DATE
OF THIS SECURITY IS OCTOBER 27, 2004. FOR INFORMATION REGARDING THE ISSUE
PRICE, THE YIELD TO MATURITY AND THE AMOUNT OF OID PER $1,000 OF PRINCIPAL
AMOUNT AT MATURITY, PLEASE CONTACT THE COMPANY AT REDDY ICE HOLDINGS, INC.,
8750 NORTH CENTRAL EXPRESSWAY, SUITE 1800, DALLAS, TX 75231,
ATTENTION: CORPORATE SECRETARY.

 

 

*/
[If the Security is to be issued in global form add the Global Securities
Legend from Exhibit 1 to Appendix A and the attachment from such Exhibit 1
captioned “[TO BE ATTACHED TO GLOBAL SECURITIES] - SCHEDULE OF INCREASES OR
DECREASES IN GLOBAL SECURITY”.]

 

**/[If
the Security is a Private Exchange Security issued in a Private Exchange to an
Initial Purchaser holding an unsold portion of its initial allotment, add the
Restricted Securities Legend from Exhibit 1 to Appendix A and replace the
Assignment Form included in this Exhibit A with the Assignment Form included in
such Exhibit 1.]  

 

 

	
  No.

  	
  $         

  

 

10 1/2% Senior Discount Notes Due 2012

 

Reddy Ice
Holdings, Inc., a Delaware corporation, promises to pay to
          , or registered
assigns, the principal sum of                      
Dollars on November 1, 2012.

 

Interest
Payment Dates:  May 1 and November 1.

 

Record
Dates:  April 15 and October 15.

 

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

 

Dated:

 

	
   

  	
  REDDY
  ICE HOLDINGS, INC.

  
	
   

  	
   

  
	
   

  	
  by

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  by

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

TRUSTEE’S CERTIFICATE OF

AUTHENTICATION

 

	
  U.S. BANK
  NATIONAL ASSOCIATION

  	
   

  
	
   

  	
  as Trustee, certifies

  
	
  that this is one of

  the Securities referred

  to in the Indenture.

  	
   

  
	
   

  	
  by

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Authorized Signatory

  
					

 

2

 

[FORM OF REVERSE SIDE OF EXCHANGE SECURITY

OR PRIVATE EXCHANGE SECURITY]

 

101/2% Senior Discount
Note Due 2012

 

1.                                       Interest

 

REDDY ICE
HOLDINGS, INC., a Delaware corporation (such corporation, and its successors
and assigns under the Indenture hereinafter referred to, being herein called
the “Company”), promises to pay interest on the principal amount at maturity of
this Security at the rate per annum shown above.  No cash interest will accrue on the
Securities prior to November 1, 2008; provided, however, that
interest may be paid in cash under the circumstances specified below.  The Accreted Value of each Security will
increase from the date of issuance until November 1, 2008, at a rate of 10.50%
per annum, reflecting the accrual of non-cash interest, such that the Accreted
Value will equal the stated principal amount at maturity on November 1,
2008.  Cash interest on the Securities
will accrue at the rate of 10.50% per annum from November 1, 2008, or from the
most recent date to which interest has been paid or provided for, and will be
payable semiannually in arrears on May 1 and November 1 of each year,
commencing on May 1, 2009.  The Company
shall make each interest payment to the Holders of record of the Securities on
the immediately preceding April 15 and October 15.  The Company shall pay interest on overdue
principal at 1.0% per annum in excess of the above rate and will pay interest
on overdue installments of interest at such higher rate to the extent lawful.  Interest will be computed on the basis of a
360-day year of twelve 30-day months.

 

[If a
Registration Default (as defined in the Registration Rights Agreement
applicable to this Security) occurs, Additional Interest will accrue on this
Security at a rate of 0.50% per annum (increasing by an additional 0.50% per
annum after each consecutive 90-day period that occurs after the date on which
such Registration Default occurs up to a maximum Additional Interest rate of
1.00%) from and including the date on which any such Registration Default shall
occur to but excluding the date on which all Registration Defaults have been
cured.](1)

 

All Additional
Interest that accrues on this Security prior to November 1, 2008 will be added
to the Accreted Value of this Security; provided, however, that
the Company, at its option, may elect to pay any such Additional Interest in
cash, and all Additional Interest that accrues after November 1, 2008
shall be payable in cash to the Holder of this Security on each scheduled
interest payment date (except as provided in Section 2.11 of the Indenture).

 

“Accreted
Value” means, as of any date (the “Specified Date”), the amount provided below
for each $1,000 principal amount at maturity of Securities:

 

(1) Insert if
at the date of issuance of the Exchange Security or Private Exchange Security
(as the case may be) any Registration Default has occurred with respect to the
related Initial Securities during the interest period in which such date of
issuance occurs and this language is appropriate.  All references to "Additional
Interest" in this Form of Reverse Side of Exchange Security or Private
Exchange Security will be reviewed for relevance upon the appropriate issuance.

 

3

 

(d)   if the Specified Date occurs on one of the following dates (each,
a “Semi-Annual Accrual Date”), the Accreted Value shall equal the amount set
forth below for such Semi-Annual Accrual Date:

 

	
  Semi-Annual

  Accrual Date

  	
   

  	
  Accreted

  Value

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Issue Date

  	
   

  	
  $

  	
  663.33

  	
   

  
	
  May 1, 2005

  	
   

  	
  $

  	
  698.97

  	
   

  
	
  November 1, 2005

  	
   

  	
  $

  	
  735.66

  	
   

  
	
  May 1, 2006

  	
   

  	
  $

  	
  774.28

  	
   

  
	
  November 1, 2006

  	
   

  	
  $

  	
  814.93

  	
   

  
	
  May 1, 2007

  	
   

  	
  $

  	
  857.71

  	
   

  
	
  November 1, 2007

  	
   

  	
  $

  	
  902.73

  	
   

  
	
  May 1, 2008

  	
   

  	
  $

  	
  950.12

  	
   

  
	
  November 1, 2008

  	
   

  	
  $

  	
  1,000.00

  	
   

  

 

(e)   if the Specified Date occurs between two Semi-Annual Accrual
Dates, the Accreted Value shall be equal to the sum of (A) the Accreted
Value for the Semi-Annual Accrual Date immediately preceding such Specified
Date and (B) an amount equal to the product of (x) the Accreted Value
for the immediately following Semi-Annual Accrual Date less the Accreted Value
for the immediately preceding Semi-Annual Accrual Date multiplied by (y) a
fraction, the numerator of which is the number of days elapsed from the
immediately preceding Semi-Annual Accrual Date to the Specified Date, using a
360-day year of twelve 30-day months, and the denominator of which is 180 (or,
if the Semi-Annual Accrual Date immediately preceding the Specified Date is the
Issue Date, the denominator of which is the number of days from and including
the Issue Date to and excluding the next Semi-Annual Accrual Date); or

 

(f)    if the Specified Date occurs after the last Semi-Annual Accrual
Date, the Accreted Value shall equal $1,000.

 

Notwithstanding
the foregoing, if Additional Interest accrues on the Securities prior to
November 1, 2008 as a result of a Registration Default under the Registration
Rights Agreement, subject to the Company’s option to pay Additional Interest on
the Securities in cash, such Additional Interest shall be added to the Accreted
Value, and the Accreted Value as of any Specified Date shall equal the sum of
(A) the Accreted Value, as calculated above, as of the date such
Additional Interest began to accrue, plus (B) the amount of interest that
would otherwise accrue on the Accreted Value from time to time on a daily basis
at a rate of interest per annum borne by the Securities plus the rate of such
Additional Interest as applicable from time to time, compounded semi-annually
on each Semi-Annual Accrual Date from the date such Additional Interest began
to accrete through the Specified Date, computed on the basis of a 360-day year
of twelve 30-day months.  If such an
event were to occur, the Accreted Value on and after the last Semi-Annual
Accrual Date would exceed $1,000.

 

4

 

All references
in this Security, in any context, to Accreted Value or any interest or other
amount payable on or with respect to the Securities shall be deemed to include
any Additional Interest pursuant to a Registration Rights Agreement.

 

2.                                       Method
of Payment

 

The Company
shall pay interest on the Securities (except defaulted interest) to the Persons
who are registered holders of Securities at the close of business on
the April 15 or October 15 next preceding the interest payment
date even if Securities are canceled after the record date and on or before the
interest payment date.  Holders must
surrender Securities to a Paying Agent to collect payments of Accreted
Value.  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. 
Payments in respect of the Securities represented by a Global Security
(including principal, premium and interest) shall be made by wire transfer of
immediately available funds to the accounts specified by the Depository.  The Company will make all payments in respect
of a Definitive Security (including principal, premium and interest) by mailing
a check to the registered address of each Holder thereof; provided, however,
that payments on a Definitive Security will be made by wire transfer to a U.S.
dollar account maintained by the payee with a bank in the United States if such
Holder elects payment by wire transfer by giving written notice to the Trustee
or the Paying Agent to such effect designating such account no later than
30 days immediately preceding the relevant due date for payment (or such
other date as the Trustee may accept in its discretion).

 

If the Company
elects to pay Additional Interest in cash, it shall notify the Trustee in
writing of such election not less than 30 days immediately preceding the
relevant interest payment date.

 

3.                                       Paying
Agent and Registrar

 

Initially,
U.S. Bank National Association, a national banking association (the “Trustee”),
will act as Paying Agent and Registrar. 
The Company may appoint and change any Paying Agent, Registrar or
co-registrar without notice.  The Company
or any of its domestically incorporated Wholly Owned Subsidiaries may act as
Paying Agent, Registrar or co-registrar.

 

4.                                       Indenture

 

The Company
issued the Securities under an Indenture dated as of October 27, 2004 (“Indenture”),  between the Company and the Trustee.  The terms of the Securities 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) as in
effect on the date of the Indenture (the “Act”).  Terms defined in the Indenture and not
defined herein have the meanings ascribed thereto in the Indenture.  The Securities are subject to all such terms,
and Securityholders are referred to the Indenture and the Act for a statement
of those terms.

 

5

 

The Securities
are general unsecured obligations of the Company, of which $151,000,000 in aggregate
principal amount at maturity have been initially issued on the Issue Date (such
aggregate principal amount at maturity of such Securities issued on the Issue
Date subject to increase pursuant to the Indenture and this Security).  The
Company shall be entitled, subject to its compliance with Section 4.03 of
the Indenture, to issue an unlimited amount of Additional Securities pursuant
to Section 2.13 of the Indenture. 
The Initial Securities issued on the Issue Date, any Additional
Securities and all Exchange Securities or Private Exchange Securities issued in
exchange therefor shall be treated as a single class for all purposes under the
Indenture.  The Indenture contains
covenants that limit the ability of the Company and its subsidiaries to incur additional
indebtedness; pay dividends or distributions on, or redeem or repurchase
capital stock; make investments; engage in transactions with affiliates; create
liens on assets; transfer or sell assets or subsidiary stock; guarantee
indebtedness; restrict dividends or other payments of subsidiaries; and
consolidate, merge or transfer all or substantially all of its assets and the
assets of its subsidiaries.  These covenants are subject to
important exceptions and qualifications.

 

5.                                       Optional
Redemption

 

Except as set
forth below, the Company shall not be entitled to redeem the Securities.

 

(a) On
and after November 1, 2008, the Company shall be entitled at its option to
redeem all or a portion of the Securities upon not less than 30 nor more than
60 days’ notice, at the redemption prices (expressed in percentages of Accreted Value,
on the redemption date) plus accrued interest to the redemption date (subject
to the right of Holders of record on the relevant record date to receive
interest due on the relevant interest payment date), if redeemed during the
12-month period commencing on November 1 of the years set forth below:

 

	
  PERIOD

  	
   

  	
  REDEMPTION

  PRICE

  	
   

  
	
  2008

  	
   

  	
  105.250

  	
  %

  
	
  2009

  	
   

  	
  102.625

  	
  %

  
	
  2010 and thereafter

  	
   

  	
  100.000

  	
  %

  

 

In addition,
prior to November 1, 2007, the Company shall be entitled at its option on
one or more occasions to redeem Securities (which includes Additional
Securities, if any) in an aggregate principal amount at maturity not to exceed
35% of the aggregate principal amount at maturity of the Securities (which
includes Additional Securities, if any) issued prior to such time at a
redemption price (expressed as a percentage of Accreted Value as of the date of
redemption) of 110.50%, plus accrued and unpaid interest to the redemption
date, if any, with the net cash proceeds from one or more Qualified Equity
Offerings (provided that if the Qualified Equity Offering is an offering by any
parent entity of the Company, a portion of the Net Cash Proceeds thereof equal
to the amount required to redeem any such Securities is contributed to the
equity capital of the Company); provided, however, that
(1) at least 65% of such aggregate principal

 

6

 

amount at maturity of
Securities (which includes Additional Securities, if any) remains outstanding
immediately after the occurrence of each such redemption (other than Securities
held, directly or indirectly, by the Company or its Affiliates); and (2) each such redemption occurs
within 90 days after the date of the related Qualified Equity Offering.

 

(b) At
any time on or prior to November 1, 2007, if a Change of Control occurs the
Company may, at its election, redeem all, but not less than all, of the
Securities upon not less than 30 nor more than 60 days’ prior notice, at a
redemption price equal to the sum of 100% of the Accreted Value of the
Securities as of the redemption date, a premium equal to the product of
(x) 1.25 and (y) One Year’s Coupon, and accrued and unpaid interest,
if any, to, the date of redemption.  If
the Company elects to exercise the redemption right set forth in this paragraph
(the “Three-Year Change of Control Redemption Right”), it must do so by mailing
a notice to each Holder with a copy to the Trustee within 30 days following the
Change of Control and before mailing notice of a Change of Control Offer, and
the Company shall not make a Change of Control Offer.  If the Company has made a Change of Control
Offer, it may not exercise the Three-Year Change of Control Redemption Right.

 

6.                                       Notice
of Redemption

 

Notice of
redemption shall be mailed at least 30 days but not more than 60 days before
the redemption date to each Holder of Securities to be redeemed at his
registered address.  Securities in
denominations larger than $1,000 principal amount at maturity may be redeemed
in part but only in whole multiples of $1,000 principal amount at
maturity.  If money sufficient to pay the
redemption price of and accrued interest on all Securities (or portions
thereof) to be redeemed on the redemption date is deposited with the Paying
Agent on or before the redemption date and certain other conditions are
satisfied, on and after such date interest ceases to accrue on such Securities
(or such portions thereof) called for redemption.

 

7.                                       Put
Provisions

 

Upon a Change
of Control, any Holder of Securities will have the right to cause the Company
to repurchase all or any part of the Securities of such Holder at a repurchase
price equal to 101% of the Accreted
Value of the Securities to be repurchased plus accrued interest to the
date of repurchase (subject to the right of holders of record on the relevant
record date to receive interest due on the related interest payment date) as
provided in, and subject to the terms of, the Indenture.

 

8.                                       Denominations;
Transfer; Exchange

 

The Securities
are in registered form without coupons in denominations of $1,000 principal
amount at maturity and whole multiples of $1,000 principal amount at
maturity.  A Holder may transfer or
exchange Securities in accordance with the Indenture.  The Registrar may require a Holder, among
other things, to furnish appropriate endorsements or transfer documents and to
pay any taxes and fees required by law or permitted by the Indenture.  The Registrar need not register the transfer
of or exchange any Securities

 

7

 

selected for redemption
(except, in the case of a Security to be redeemed in part, the portion of the
Security not to be redeemed) or any Securities for a period of 15 days
before a selection of Securities to be redeemed or 15 days before an
interest payment date.

 

9.                                       Persons
Deemed Owners

 

The registered
Holder of this Security may be treated as the owner of it for all purposes.

 

10.                                 Unclaimed
Money

 

If money for
the payment of the Accreted Value, principal or interest remains unclaimed for
two years, the Trustee or Paying Agent shall pay the money back to the Company
at its request unless an abandoned property law designates another Person.  After any such payment, Holders entitled to
the money must look only to the Company and not to the Trustee for payment.

 

11.                                 Discharge
and Defeasance

 

Subject to
certain conditions set forth in the Indenture, the Company at any time shall be
entitled to terminate some or all of its obligations under the Securities and
the Indenture if the Company deposits with the Trustee money or U.S. Government
Obligations for the payment of principal and interest on the Securities to
redemption or maturity, as the case may be.

 

12.                                 Amendment;
Waiver

 

Subject to
certain exceptions set forth in the Indenture, (1) the Indenture and the
Securities may be amended with the written consent of the Holders of at least a
majority in principal amount at maturity outstanding of the Securities and
(2) any default or noncompliance with any provision may be waived with the
written consent of the Holders of a majority in principal amount at maturity
outstanding of the Securities.  Subject
to certain exceptions set forth in the Indenture, without the consent of any
Securityholder, the Company and the Trustee shall be entitled to amend the
Indenture or the Securities to cure any ambiguity, omission, defect or
inconsistency, or to comply with Article 5 of the Indenture, or to provide
for uncertificated Securities in addition to or in place of Definitive
Securities, or to add guarantees with respect to the Securities or to secure
the Securities, or to add additional covenants or surrender rights and powers
conferred on the Company, or to comply with any requirement of the SEC in
connection with qualifying the Indenture under the Act, or to make any change
that does not adversely affect the rights of any Securityholder, or to make
amendments to provisions of the Indenture relating to the form, authentication,
transfer and legending of the Securities.

 

13.                                 Defaults
and Remedies

 

Under the
Indenture, Events of Default include (a) default for 30 days in
payment of interest on the Securities; (b) default in payment of principal
on the Securities at

 

8

 

maturity, upon redemption
pursuant to paragraph 5 of the Securities, upon acceleration or otherwise,
or failure by the Company to redeem or purchase Securities when required;
(c) failure by the Company to comply with other agreements in the Indenture
or the Securities, in certain cases subject to notice and lapse of time;
(d) certain accelerations (including failure to pay within any grace
period after final maturity) of other Indebtedness of the Company if the amount
accelerated (or so unpaid) exceeds $10.0 million; (e) certain events
of bankruptcy or insolvency with respect to the Company and the Significant
Subsidiaries; and (f) certain judgments or decrees for the payment of
money in excess of $10.0 million. 
If an Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in principal amount at maturity of the Securities may
declare all the Securities to be due and payable immediately.  Certain events of bankruptcy or insolvency
are Events of Default which shall result in the Securities being due and
payable immediately upon the occurrence of such Events of Default.

 

Securityholders
may not enforce the Indenture or the Securities except as provided in the
Indenture.  The Trustee may refuse to
enforce the Indenture or the Securities unless it receives indemnity or
security satisfactory to it.  Subject to
certain limitations, Holders of a majority in principal amount at maturity of
the Securities may direct the Trustee in its exercise of any trust or
power.  The Trustee may withhold from
Securityholders notice of any continuing Default (except a Default in payment
of principal or interest) if it determines that withholding notice is in the
interest of the Holders.

 

14.                                 Trustee
Dealings with the Company

 

Subject to
certain limitations imposed by the Act, 
the Trustee under the Indenture, in its individual or any other
capacity, may become the owner or pledgee of Securities and may otherwise deal
with and collect obligations owed to it by the Company or its Affiliates and
may otherwise deal with the Company or its Affiliates with the same rights it
would have if it were not Trustee.

 

15.                                 No
Recourse Against Others

 

A director,
officer, employee or stockholder, as such, of the Company or the Trustee shall
not have any liability for any obligations of the Company under the Securities
or the Indenture or for any claim based on, in respect of or by reason of such
obligations or their creation.  By
accepting a Security, each Securityholder waives and releases all such
liability.  The waiver and release are
part of the consideration for the issue of the Securities.

 

16.                                 Authentication

 

This Security
shall not be valid until an authorized signatory of the Trustee (or an
authenticating agent) manually signs the certificate of authentication on the
other side of this Security.

 

9

 

17.                                 Abbreviations

 

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

 

18.                                 CUSIP
Numbers

 

Pursuant to a
recommendation promulgated by the Committee on Uniform Security Identification
Procedures the Company has caused CUSIP numbers to be printed on the Securities
and has directed the Trustee to use CUSIP numbers in notices of redemption as a
convenience to Securityholders.  No
representation is made as to the accuracy of such numbers either as printed on
the Securities or as contained in any notice of redemption and reliance may be
placed only on the other identification numbers placed thereon.

 

[19.  Holders’
Compliance with Registration Rights Agreement

 

Each Holder of
a Security, by acceptance hereof, acknowledges and agrees to the provisions of
the Registration Rights Agreement applicable to this Security, including the
obligations of the Holders with respect to a registration and the
indemnification of the Company to the extent provided therein.](1)

 

20.                                 Governing
Law

 

THIS
SECURITY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF NEW YORK.

 

The Company
will furnish to any Securityholder upon written request and without charge to
the Securityholder a copy of the Indenture which has in it the text of this
Security in larger type.  Requests may be
made to:

 

Reddy Ice
Holdings, Inc.

8750 North
Central Expressway

Suite 1800

Dallas, TX
75231

Attention:  Corporate Secretary

 

(2) Delete if
this Security is not being issued in exchange for an Initial Security.  

 

10

 

ASSIGNMENT
FORM

 

To assign this Security, fill in the form
below:

 

I or we assign and transfer this Security 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 Security 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 Security.

 

11

 

OPTION OF
HOLDER TO ELECT PURCHASE

 

If you want to
elect to have this Security purchased by the Company pursuant to
Section 4.06 or 4.10 of the Indenture, check the box:   o

 

If you want to
elect to have only part of this Security purchased by the Company pursuant to
Section 4.06 or 4.10 of the Indenture, state the amount in principal
amount at maturity:  $                 

 

	
  Dated:

  	
   

  	
   

  	
  Your Signature:

  	
   

  	
   

  
	
   

  	
   

  	
  (Sign exactly as your name appears

  on the other side of this Security.)

  

 

	
  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.

 

12

 

EXHIBIT 2 to
Rule 144A/REGULATION S/IAI APPENDIX

 

Form of

Transferee Letter of Representation

 

Reddy Ice Holdings, Inc.

 

In care of

U.S. Bank National Association

60 Livingston Avenue

St. Paul, MN 55107-2292

Attention: Corporate Trust Department

 

Ladies and Gentlemen:

 

This
certificate is delivered to request a transfer of $              principal
amount at maturity of the 101⁄2% Senior Discount Notes Due 2012 (the “Securities”)
of Reddy Ice Holdings, Inc. (the “Company”).

 

Upon transfer,
the Securities would be registered in the name of the new beneficial owner as
follows:

 

	
  Name:                          

  
	
   

  
	
  Address:

  
	
   

  
	
  Taxpayer ID Number:

  

 

The
undersigned represents and warrants to you that:

 

1.  We are an institutional “accredited investor”
(as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act of
1933, as amended (the “Securities Act”)), purchasing for our own account or for
the account of such an institutional “accredited investor” at least $250,000
principal amount at maturity of the Securities, and we are acquiring the
Securities not with a view to, or for offer or sale in connection with, any
distribution in violation of the Securities Act.  We have such knowledge and experience in
financial and business matters as to be capable of evaluating the merits and
risks of our investment in the Securities, and we invest in or purchase securities
similar to the Securities in the normal course of our business.  We, and any accounts for which we are acting,
are each able to bear the economic risk of our or its investment.

 

2.  We understand that the Securities have not
been registered under the Securities Act and, unless so registered, may not be
sold except as permitted in the following sentence.  We agree on our own behalf and on behalf of
any investor account for which

 

13

 

we are purchasing Securities to
offer, sell or otherwise transfer such Securities prior to the date that is two
years after the later of the date of original issue and the last date on which
the Company or any affiliate of the Company was the owner of such Securities
(or any predecessor thereto) (the “Resale Restriction Termination Date”) only
(i) to the Company, (ii) in the United States to a person whom the seller
reasonably believes is a qualified institutional buyer in a transaction meeting
the requirements of Rule 144A, (iii) to an institutional “accredited investor”
within the meaning of Rule 501(a)(1), (2), (3) or (7) under the Securities
Act that is an institutional accredited investor purchasing for its own account
or for the account of an institutional accredited investor, in each case in a
minimum principal amount at maturity of the Securities of $250,000,  (iv) outside the United States in a
transaction complying with the provisions of Rule 904 under the Securities Act,
(v) pursuant to an exemption from registration under the Securities Act
provided by Rule 144 (if available) or (vi) pursuant to an effective
registration statement under the Securities Act, in each of cases (i) through
(vi) subject to any requirement of law that the disposition of our property or
the property of such investor account or accounts be at all times within our or
their control and in compliance with any applicable state securities laws.  The foregoing restrictions on resale will not
apply subsequent to the Resale Restriction Termination Date.  If any resale or other transfer of the
Securities is proposed to be made pursuant to clause (iii) above prior to
the Resale Restriction Termination Date, the transferor shall deliver a letter
from the transferee substantially in the form of this letter to the Company and
the Trustee, which shall provide, among other things, that the transferee is an
institutional “accredited investor” within the meaning of Rule 501(a)(1),
(2), (3) or (7) under the Securities Act and that it is acquiring such
Securities for investment purposes and not for distribution in violation of the
Securities Act.  Each purchaser
acknowledges that the Company and the Trustee reserve the right prior to the
offer, sale or other transfer prior to the Resale Restriction Termination Date of
the Securities pursuant to clause (iii), (iv) or (v) above to require
the delivery of an opinion of counsel, certifications or other information
satisfactory to the Company and the Trustee.

 

	
   

  	
  TRANSFEREE:

  	
                              ,

  
	
   

  	
   

  
	
   

  	
   

  	
  by:

  	
   

  	
   

  
						

 

2EXHIBIT 10.1

 

EXECUTION COPY

 

$151,000,000

principal amount at maturity

 

Reddy Ice Holdings, Inc.

 

101⁄2% Senior Discount Notes Due 2012

 

PURCHASE AGREEMENT

 

October 19, 2004

 

	
  Credit Suisse First Boston LLC

  
	
  CIBC World Markets Corp.

  
	
  Bear, Stearns &
  Co. Inc.,

  
	
   

  	
  c/o Credit Suisse First Boston LLC,

  
	
   

  	
  Eleven Madison Avenue,

  
	
   

  	
  New York, N.Y. 10010-3629

  

 

Dear Sirs:

 

1.  Introductory.  Reddy Ice Holdings, Inc., a Delaware
corporation (the “Company”),
proposes, subject to the terms and conditions stated herein, to issue and sell
to Credit Suisse First Boston LLC (“CSFB”),
CIBC World Markets Corp. (“CIBC”)
and Bear, Stearns & Co. Inc. (together with CSFB and CIBC, the “Purchasers”) $151,000,000 aggregate
principal amount at maturity of its 101⁄2% Senior Discount Notes Due
2012 (the “Offered Securities”).  The Offered Securities are to be issued
pursuant to an indenture (the “Indenture”)
to be dated as of October 27, 2004 (the “Closing
Date”), between the Company and U.S. Bank National Association, as
trustee (the “Trustee”) on a
private placement basis pursuant to an exemption under Section 4(2) of the
United States Securities Act of 1933 (the “Securities
Act”).

 

The Company hereby agrees with the several Purchasers as follows:

 

2.  Representations and Warranties of the Company.  The Company represents and warrants to, and
agrees with, the several Purchasers that:

 

(a)  A preliminary offering circular and an
offering circular relating to the Offered Securities to be purchased by the
Purchasers have been prepared by the Company. Such preliminary offering
circular (the “Preliminary Offering Circular”)
and offering circular (the “Offering Circular”),
as supplemented as of the date of this Agreement, together with any other
document approved by the Company for use in connection with the contemplated
resale of the Offered Securities, are hereinafter collectively referred to as
the “Offering Document”. On the
date of this Agreement, the Offering Document does not include any untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading. The preceding sentence does not apply to
statements in or omissions from the Offering Document based upon written
information furnished to the Company by any Purchaser through CSFB specifically
for use therein, it being understood and agreed that the only such information
is that described as such in Section 7(b) hereof.

 

 

(b)  The Company is subject to the reporting
requirements of either Section 13 or Section 15(d) of the Securities Exchange
Act of 1934 and files reports with the Commission on the Electronic Data
Gathering, Analysis, and Retrieval (EDGAR) system.

 

(c)  The Company has been duly incorporated and is
an existing corporation in good standing under the laws of the State of
Delaware, with power and authority (corporate and other) to own its properties
and conduct its business as described in the Offering Document; and the Company
is duly qualified to do business as a foreign corporation in good standing in
all other jurisdictions in which its ownership or lease of property or the
conduct of its business requires such qualification.

 

(d)  Each subsidiary of the Company has been duly
incorporated and is an existing corporation in good standing under the laws of
the jurisdiction of its incorporation, with power and authority (corporate and
other) to own its properties and conduct its business as described in the
Offering Document; and each subsidiary of the Company is duly qualified to do
business as a foreign corporation in good standing in all other jurisdictions
in which its ownership or lease of property or the conduct of its business
requires such qualification, except where the failure to be in good standing or
so qualified (i) could not reasonably be expected to have a material adverse
effect on the performance of this Agreement or the consummation of any of the
transactions contemplated hereby or (ii) could not reasonably be expected to
have a Material Adverse Effect; all of the issued and outstanding capital stock
of each subsidiary of the Company has been duly authorized and validly issued
and is fully paid and nonassessable; and the capital stock of each subsidiary
owned by the Company, directly or through subsidiaries, is owned free from
liens (except as described in the Offering Document), encumbrances and defects.

 

(e)  On the Closing Date, the Indenture will be
duly authorized by the Company; on the Closing Date, the Offered Securities
will be duly authorized by the Company; and when the Offered Securities are
delivered and paid for pursuant to this Agreement and the Indenture on the
Closing Date, the Indenture will have been duly executed and delivered by the Company,
such Offered Securities will have been duly executed, authenticated, issued and
delivered by the Company and will conform to the description thereof contained
in the Offering Document and the Indenture and such Offered Securities will
constitute valid and legally binding obligations of the Company, enforceable in
accordance with their terms and entitled to the benefits of the Indenture,
subject to the effects of bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium or similar laws of general applicability relating to
or affecting creditors’ rights and to general equity principles.

 

(f)  On the Closing Date, the Exchange Securities (as
defined in the Registration Rights Agreement) will have been duly authorized by
the Company.  When the Exchange
Securities are issued, executed and authenticated in accordance with the terms
of the Exchange Offer (as defined in the Registration Rights Agreement) and the
Indenture, the Exchange Securities will be entitled to the benefits of the
Indenture and will be the valid and binding obligations of the Company, enforceable
against the Company in accordance with their terms, subject to the effects of
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium or
similar laws of general applicability relating to or affecting creditors’
rights and to general equity principles.

 

(g)  Except as disclosed in the Offering Document,
there are no contracts, agreements or understandings between the Company and
any person that would give rise to a valid claim against the Company or any Purchaser
for a brokerage commission, finder’s fee or other like payment in connection
with the offering of the Offered Securities.

 

(h)  No consent, approval, authorization, or order
of, or filing with, any governmental agency or body or any court is required
for the consummation of the transactions contemplated by

 

2

 

this Agreement
and the Registration Rights Agreement dated the date hereof among the Company
and the Purchasers (the “Registration Rights
Agreement”) in connection with the issuance and sale of the Offered
Securities by the Company, except for the order of the Commission declaring the
Exchange Offer Registration Statement or the Shelf Registration Statement (each
as defined in the Registration Rights Agreement) effective.

 

(i)  The execution, delivery and performance by
the Company of each of the Indenture, this Agreement and the Registration Rights
Agreement, and the issuance and sale of the Offered Securities and compliance
with the terms and provisions thereof will not result in a breach or violation
of any of the terms and provisions of, or constitute a default under, any
statute, rule, regulation or order of any governmental agency or body or any
court, domestic or foreign, that has jurisdiction over the Company or any of
the Company’s subsidiaries or any of their properties, or, subject to the
execution of the amendment to the Credit Agreement (as defined) pursuant to Section
6(m) of this Agreement, any agreement or instrument to which the Company or any
such subsidiary is a party or by which the Company or any such subsidiary is
bound or to which any of the properties of the Company or any such subsidiary is
subject, or the charter, by-laws or similar governing documents of the Company
or any such subsidiary; and the Company has full corporate power and authority
to authorize, issue and sell the Offered Securities as contemplated by this
Agreement.

 

(j)  This Agreement and the Registration Rights
Agreement have been duly authorized by the Company.  This Agreement has been and, as of the
Closing Date, the Registration Rights Agreement will have been duly executed
and delivered by the Company.  This
Agreement and the Registration Rights Agreement conform or will conform to the
descriptions thereof contained in the Offering Document and this Agreement constitutes
and the Registration Rights Agreement will constitute valid and legally binding
obligations of the Company, enforceable in accordance with their respective
terms, except that any rights to indemnity and contribution may be limited by
federal and state securities laws and public policy considerations and subject
to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium or
similar laws of general applicability relating to or affecting creditors’
rights and to general equity principles.

 

(k)  Except as disclosed in the Offering Document,
the Company and its subsidiaries have good and marketable title to all real
properties and all other properties and assets owned by them, in each case free
from liens, encumbrances and defects that would materially affect the value
thereof or materially interfere with the use made or to be made thereof by
them; and except as disclosed in the Offering Document, the Company and its
subsidiaries hold any leased real or personal property under valid and
enforceable leases with no exceptions that would materially interfere with the
use made or to be made thereof by them.

 

(l)  The Company and its subsidiaries possess
adequate certificates, authorities or permits issued by appropriate
governmental agencies or bodies necessary to conduct the business now operated
by them and have not received any notice of proceedings relating to the
revocation or modification of any such certificate, authority or permit that,
if determined adversely to the Company or any of its subsidiaries, would
individually or in the aggregate have a material adverse effect on the
condition (financial or other), business, properties or results of operations
of the Company and its subsidiaries taken as a whole (“Material Adverse Effect”).

 

(m)  No labor dispute with the employees of the
Company or any subsidiary exists or, to the knowledge of the Company, is
imminent that might have a Material Adverse Effect.

 

(n)  The Company and its subsidiaries own, possess
or can acquire on reasonable terms, adequate trademarks, trade names and other
rights to inventions, know-how, patents, copyrights, confidential information
and other intellectual property (collectively, “intellectual property rights”)

 

3

 

necessary to
conduct the business now operated by them, or presently employed by them, and
have not received any notice of infringement of or conflict with asserted
rights of others with respect to any intellectual property rights that, if
determined adversely to the Company or any of its subsidiaries, would
individually or in the aggregate have a Material Adverse Effect.

 

(o)  Except as disclosed in the Offering Document,
neither the Company nor any of its subsidiaries is in violation of any statute,
any rule, regulation, decision or order of any governmental agency or body or
any court, domestic or foreign, relating to the use, disposal or release of
hazardous or toxic substances or relating to the protection or restoration of
the environment or human exposure to hazardous or toxic substances
(collectively, “environmental laws”),
owns or operates any real property contaminated with any substance that is
subject to any environmental laws, is liable for any off-site disposal or
contamination pursuant to any environmental laws, or is subject to any claim
relating to any environmental laws, which violation, contamination, liability
or claim would individually or in the aggregate have a Material Adverse Effect;
and the Company is not aware of any pending investigation which might lead to
such a claim.

 

(p)  Except as disclosed in the Offering Document,
there are no pending actions, suits or proceedings against or affecting the
Company or any of the Company’s subsidiaries or any of their respective
properties that, if determined adversely to the Company or any of its
subsidiaries, would individually or in the aggregate have a Material Adverse
Effect, or would materially and adversely affect the ability of the Company to
perform its obligations under this Agreement, the Registration Rights Agreement
or the Indenture, or which are otherwise material in the context of the sale of
the Offered Securities; and no such actions, suits or proceedings are
threatened or, to the knowledge of the Company, contemplated.

 

(q)  The financial statements included in the
Offering Document present fairly the financial position of (i) the Company and
its consolidated subsidiaries as of the dates shown and their results of
operations and cash flows for the periods shown, and (ii) Triangle Ice Co.,
Inc. and its consolidated subsidiaries as of the dates shown and their results
of operations and cash flows for the periods shown, and in the cases of clauses
(i) and (ii), such financial statements have been prepared in conformity with
the generally accepted accounting principles in the United States applied on a
consistent basis; and the assumptions used in preparing the pro forma financial
statements and other pro forma information included in the Offering Document
provide a reasonable basis for presenting the significant effects directly
attributable to the transactions or events described therein, the related pro
forma adjustments give appropriate effect to those assumptions, and the pro
forma columns therein reflect the proper application of those adjustments to
the corresponding historical financial statement amounts.

 

(r)  Except as disclosed in the Offering Document,
since the date of the latest audited financial statements included in the
Offering Document there has been no material adverse change, nor any
development or event involving a prospective material adverse change, in the
condition (financial or other), business, properties or results of operations
of the Company and its subsidiaries taken as a whole, and, except as disclosed
in or contemplated by the Offering Document, there has been no dividend or
distribution of any kind declared, paid or made by the Company on any class of
its capital stock.

 

(s)  Neither the Company nor any of its
subsidiaries is an open-end investment company, unit investment trust or
face-amount certificate company that is or is required to be registered under
Section 8 of the United States Investment Company Act of 1940 (the “Investment Company Act”); and neither the
Company nor any of its subsidiaries is, and after giving effect to the offering
and sale of the Offered Securities, and the application of the proceeds thereof
as described in the Offering Document, will be, an “investment company” as defined
in the Investment Company Act.

 

4

 

(t)  No securities of the same class (within the
meaning of Rule 144A(d)(3) under the Securities Act) as the Offered
Securities are listed on any national securities exchange registered under
Section 6 of the Exchange Act or quoted in a U.S. automated inter-dealer
quotation system.

 

(u)  The offer and sale of the Offered Securities
in the manner contemplated by this Agreement will be exempt from the
registration requirements of the Securities Act by reason of Section 4(2)
thereof and Regulation S thereunder; and it is not necessary to qualify an
indenture in respect of the Offered Securities under the United States Trust
Indenture Act of 1939, as amended (the “Trust
Indenture Act”).

 

(v)  Neither the Company, nor any of its
affiliates, nor any person acting on its or their behalf (i) has, within
the six-month period prior to the date hereof, offered or sold in the United
States or to any U.S. person (as such terms are defined in Regulation S
under the Securities Act) the Offered Securities or any security of the same
class or series as the Offered Securities or (ii) has offered or will
offer or sell the Offered Securities (A) in the United States by means of
any form of general solicitation or general advertising within the meaning of
Rule 502(c) under the Securities Act or (B) with respect to any such securities
sold in reliance on Rule 903 of Regulation S (“Regulation S”) under the Securities Act, by means of any
directed selling efforts within the meaning of Rule 902(c) of Regulation S.  The Company and its affiliates and any person
acting on its or their behalf have complied and will comply with the offering
restrictions requirement of Regulation S.  Neither the Company nor any of the Company’s
subsidiaries has entered or will enter into any contractual arrangement with
respect to the distribution of the Offered Securities except for this
Agreement.  The entities listed on
Schedule B hereto are the only subsidiaries, direct or indirect, of the
Company.

 

(w)  On the Closing Date, the Indenture will
conform in all material respects to the requirements of the Trust Indenture
Act, and the rules and regulations of the Commission applicable to an indenture
which is qualified thereunder.

 

(x)  Neither the Company nor any of its
subsidiaries is in violation of its respective charter or by-laws or in default
in the performance of any obligation, agreement, covenant or condition
contained in any indenture, loan agreement, mortgage, lease or other agreement
or instrument that is material to the Company and its subsidiaries, taken as a
whole, to which the Company or any of its subsidiaries is a party or by which
the Company or its subsidiaries or their respective property is, bound.

 

(y)  There are no contracts, agreements or
understandings between the Company or any of its subsidiaries and any person
granting such person the right to require the Company or any of its
subsidiaries to include securities of the Company or any of its subsidiaries
with the Securities (as defined in Registration Rights Agreement) registered
pursuant to any Registration Statement (as defined in the Registration Rights
Agreement), and other than as contained in the Reddy Ice Holdings, Inc.
Shareholders Agreement made as of August 14, 2003 by and among the Company and
the shareholders listed therein, there are no contracts, agreements or
understandings between the Company or any of its subsidiaries and any person
granting such person the right to require the Company or any of its
subsidiaries to file a registration statement under the Securities Act with
respect to any securities of the Company or any such subsidiary.

 

(z)  None of the Company, any of its subsidiaries or
any agent thereof acting on the behalf of them has taken, and none of them will
take, any action that might cause this Agreement or the issuance or sale of the
Offered Securities to violate Regulation T, Regulation U or Regulation X of the
Board of Governors of the Federal Reserve System.

 

5

 

(aa)  No “nationally recognized statistical rating
organization” as such term is defined for purposes of Rule 436(g)(2) under the
Securities Act (i) has imposed (or has informed the Company or any of its
subsidiaries that it is considering imposing) any condition (financial or
otherwise) on the Company’s or any of its subsidiaries’ retaining any rating
assigned to the Company or any of its subsidiaries, any securities of the
Company or any of its subsidiaries or (ii) has indicated to the Company or
any of its subsidiaries that it is considering (a) the downgrading,
suspension, or withdrawal of, or any review for a possible change that does not
indicate the direction of the possible change in, any rating so assigned or
(b) any change in the outlook for any rating of the Company, or any of its
subsidiaries or any securities of the Company or any of its subsidiaries.

 

(bb)  No form of general solicitation or general
advertising (as defined in Regulation D under the Securities Act) was used by
the Company or any of its subsidiaries, or any of their respective
representatives (other than the Purchasers, as to whom the Company makes no
representation) in connection with the offer and sale of the Offered Securities
contemplated hereby, including, but not limited to, articles, notices or other
communications published in any newspaper, magazine, or similar medium or
broadcast over television or radio, or any seminar or meeting whose attendees
have been invited by any general solicitation or general advertising.  No securities of the same class as the
Offered Securities have been issued and sold by the Company within the
six-month period immediately prior to the date hereof.

 

(cc)  None of the Company, any of its affiliates or
any person acting on its or their behalf (other than the Purchasers, as to whom
the Company makes no representation) has engaged or will engage in any directed
selling efforts within the meaning of Regulation S with respect to the Offered
Securities.

 

(dd)  The Offered Securities offered and sold in
reliance on Regulation S have been and will be offered and sold only in
offshore transactions.

 

(ee)  The sale of the Offered Securities pursuant
to Regulation S is not part of a plan or scheme to evade the registration
provisions of the Securities Act.

 

(ff)  No registration under the Securities Act of
the Offered Securities is required for the sale of the Offered Securities to
the Purchasers as contemplated hereby or for the Exempt Resales assuming the
accuracy of the Purchasers’ representations set forth in Section 4 hereof.  For purposes of this Agreement, “Exempt
Resales” means resales of Offered Securities made in reliance on the exemption
from the registration requirements under the Securities Act provided by Rule
144A under the Securities Act (“Rule 144A”).

 

(gg)  The Company maintains and will maintain disclosure
controls and procedures (as defined in Rule 13a-15 under the Exchange Act)
designed to ensure that information required to be disclosed by the Company in
the reports that it files or submits under the Exchange Act is recorded,
processed, summarized and reported in accordance with the Exchange Act and the
rules and regulations thereunder.  The
Company has carried out and will carry out evaluations, under the supervision
and with the participation of the Company’s management, of the effectiveness of
the design and operation of the Company’s disclosure controls and procedures in
accordance with Rule 13a-15 under the Exchange Act.

 

3.  Purchase, Sale and Delivery of Offered Securities.  On the basis of the representations,
warranties and agreements herein contained, but subject to the terms and
conditions herein set forth, the Company agrees to sell to the Purchasers, and
the Purchasers agree, severally and not jointly, to purchase from the Company,
at a purchase price of 64.342913% of the principal amount at maturity thereof
plus

 

6

 

accreted amount, if any, from October
27, 2004 to the Closing Date (as hereinafter defined), U.S. $151,000,000
principal amount at maturity of Offered Securities.

 

The Company will deliver against payment of the purchase price the
Offered Securities in the form of one or more permanent Global Securities in
definitive form (the “Global Securities”)
deposited with the Trustee as custodian for The Depository Trust Company (“DTC”) and registered in the name of Cede
& Co., as nominee for DTC. Interests in any permanent Global Securities
will be held only in book-entry form through DTC, except in the limited
circumstances described in the Offering Document. Payment for the Offered
Securities shall be made by the Purchasers in Federal (same day) funds by wire
transfer to an account at a bank designated by the Company and reasonably
acceptable to CSFB drawn to the order of the Company at the office of Cravath,
Swaine & Moore LLP at 10:00 A.M. (New York time), on October
27, 2004, or at such other time not later than seven full business days
thereafter as CSFB and the Company determine, such time being herein referred
to as the “Closing Date”, against
delivery to the Trustee as custodian for DTC of the Global Securities
representing all of the Securities. The Global Securities will be made
available for checking at the above office of Cravath, Swaine & Moore LLP
at least 24 hours prior to the Closing Date.

 

4.  Representations by Purchasers; Resale by Purchasers.

 

(a)  Each Purchaser severally represents and
warrants to the Company that it is an “accredited investor” within the meaning
of Regulation D under the Securities Act.

 

(b)  Each Purchaser severally acknowledges that
the Offered Securities have not been registered under the Securities Act and
may not be offered or sold within the United States or to, or for the account
or benefit of, U.S. persons except in accordance with Regulation S or pursuant
to an exemption from the registration requirements of the Securities Act. Each
Purchaser severally represents and agrees that it has offered and sold the
Offered Securities, and will offer and sell the Offered Securities (i) as part
of its distribution at any time and (ii) otherwise until 40 days after the
later of the commencement of the offering and the Closing Date, only in accordance
with Rule 903 or Rule 144A.  Accordingly,
neither such Purchaser nor its affiliates, nor any persons acting on its or
their behalf, have engaged or will engage in any directed selling efforts with
respect to the Offered Securities, and such Purchaser, its affiliates and all
persons acting on its or their behalf have complied and will comply with the
offering restrictions requirement of Regulation S. Each Purchaser severally agrees
that, at or prior to confirmation of sale of the Offered Securities, other than
a sale pursuant to Rule 144A, such Purchaser will have sent to each
distributor, dealer or person receiving a selling concession, fee or other
remuneration that purchases the Offered Securities from it during the
restricted period a confirmation or notice to substantially the following
effect:

 

“The
Securities covered hereby have not been registered under the U.S. Securities
Act of 1933 (the “Securities Act”) and may not be offered or sold within the
United States or to, or for the account or benefit of, U.S. persons (i) as part
of their distribution at any time or (ii) otherwise until 40 days after the
later of the date of the commencement of the offering and the closing date,
except in either case in accordance with Regulation S (or Rule 144A if
available) under the Securities Act. Terms used above have the meanings given
to them by Regulation S.”

 

Terms used in this subsection (b) have the meanings given to them by
Regulation S.

 

(c)  Each Purchaser severally agrees that it and
each of its affiliates has not entered and will not enter into any contractual
arrangement with respect to the distribution of the Offered

 

7

 

Securities
except for any such arrangements with the other Purchasers or affiliates of the
other Purchasers, with the prior written consent of the Company.

 

(d)  Each Purchaser severally agrees that it and
each of its affiliates will not offer or sell the Offered Securities in the
United States by means of any form of general solicitation or general
advertising within the meaning of Rule 502(c) under the Securities Act,
including, but not limited to (i) any advertisement, article, notice or
other communication published in any newspaper, magazine or similar media or
broadcast over television or radio, or (ii) any seminar or meeting whose
attendees have been invited by any general solicitation or general advertising.
Each Purchaser severally agrees, with respect to resales made in reliance on
Rule 144A of any of the Offered Securities, to deliver either with the
confirmation of such resale or otherwise prior to settlement of such resale a
notice to the effect that the resale of such Offered Securities has been made
in reliance upon the exemption from the registration requirements of the
Securities Act provided by Rule 144A.

 

(e)  Each of the Purchasers severally represents
and agrees that (i) it has not offered or sold and prior to the expiry of
a period of six months from the closing date, will not offer or sell any
Offered Securities to persons in the United Kingdom except to persons whose
ordinary activities involve them in acquiring, holding, managing or disposing
of investments (as principal or agent) for the purposes of their businesses or
otherwise in circumstances which have not resulted and will not result in an
offer to the public in the United Kingdom within the meaning of the Public
Offers of Securities Regulations 1995; (ii) it has only communicated or
caused to be communicated and will only communicate or cause to be communicated
any invitation or inducement to engage in investment activity (within the
meaning of section 21 of the Financial Services and Markets Act 2000 (the “FSMA”)) received by it in connection with
the issue or sale of any Offered Securities in circumstances in which section
21(1) of the FSMA does not apply to the Company; and (iii) it has complied
and will comply with all applicable provisions of the FSMA with respect to
anything done by it in relation to the Offered Securities in, from or otherwise
involving the United Kingdom.

 

5.  Certain Agreements of the Company.  The Company agrees with the several
Purchasers that:

 

(a)  The Company will advise CSFB promptly of any
proposal to amend or supplement the Offering Document and will not effect such
amendment or supplementation without CSFB’s consent.  If, at any time prior to the completion of the
resale of the Offered Securities by the Purchasers, any event occurs as a
result of which the Offering Document as then amended or supplemented would
include an untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, the Company promptly
will notify CSFB of such event and promptly will prepare, at its own expense,
an amendment or supplement which will correct such statement or omission.
Neither CSFB’s consent to, nor its delivery to offerees or investors of, any
such amendment or supplement shall constitute a waiver of any of the conditions
set forth in Section 6.

 

(b)  The Company will furnish to CSFB copies of
any preliminary offering circular, the Offering Document and all amendments and
supplements to such documents, in each case as soon as available and in such
quantities as CSFB requests.  At any time
when the Company is not subject to Section 13 or 15(d) of the Exchange
Act, the Company will promptly furnish or cause to be furnished to CSFB (and,
upon request, to each of the other Purchasers) and, upon request of holders and
prospective purchasers of the Offered Securities, to such holders and purchasers,
copies of the information required to be delivered to holders and prospective
purchasers of the Offered Securities pursuant to Rule 144A(d)(4) under the
Securities Act (or any successor provision thereto) in order to permit
compliance with Rule 144A in connection with resales by

 

8

 

such holders
of the Offered Securities.  The Company will
pay the expenses of printing and distributing to the Purchasers all such
documents.

 

(c)  The Company will arrange for the
qualification of the Offered Securities for sale and the determination of their
eligibility for investment under the laws of such jurisdictions in the United
States and Canada as CSFB designates and will continue such qualifications in
effect so long as reasonably required for the resale of the Offered Securities
by the Purchasers, provided that the Company will not be required to qualify as
a foreign corporation or to file a general consent to service of process in any
such state.

 

(d)  During the period of three years hereafter,
the Company will furnish to CSFB and, upon request, to each of the other
Purchasers, as soon as practicable after the end of each fiscal year, a copy of
its annual report to shareholders for such year; and the Company will furnish
to CSFB and, upon request, to each of the other Purchasers (i) as soon as
available, a copy of each report and any definitive proxy statement it filed
with the Commission under the Exchange Act or mailed to shareholders and
(ii) from time to time, such other information concerning the Company or
the Company as CSFB may reasonably request; provided that unless specifically
so requested, no such documents, reports or information shall be required to be
furnished to CSFB or the other Purchasers to the extent any such document,
report or information is readily available on the Internet.

 

(e)  During the period of two years after the
Closing Date, the Company will, upon request, furnish to CSFB, each of the
other Purchasers and any holder of Offered Securities a copy of the
restrictions on transfer applicable to the Offered Securities.

 

(f)  During the period of two years after the
Closing Date, the Company will not permit any of its affiliates (as defined in
Rule 144 under the Securities Act) to, resell any of the Offered
Securities that have been reacquired by any of them.

 

(g)  During the period of two years after Closing
Date, the Company will not be or become an open-end investment company, unit
investment trust or face-amount certificate company that is or is required to
be registered under Section 8 of the Investment Company Act.

 

(h)  The Company will pay all expenses incidental
to the performance of its obligations under this Agreement, the Indenture and the
Registration Rights Agreement, including (i) the fees and expenses of
counsel and accountants for the Company and of the Trustee and its professional
advisors; (ii) all expenses in connection with the execution, issue,
authentication, packaging and initial delivery of the Offered Securities and,
as applicable, the Exchange Securities, and the printing of the Offering
Document and amendments and supplements thereto, and any other document
relating to the issuance, offer, sale and delivery of the Offered Securities
and, as applicable, the Exchange Securities; (iii) the cost of listing the
Offered Securities and qualifying the Offered Securities for trading in The
PortalSM Market (“PORTAL”)
and any expenses incidental thereto; (iv) the cost of any advertising
approved by the Company in connection with the issue of the Offered Securities;
(v) for any expenses (including reasonable fees and disbursements of
counsel to the Purchasers) incurred in connection with qualification of the
Offered Securities or the Exchange Securities for sale under the laws of such
jurisdictions in the United States and Canada as CSFB designates and the
printing of memoranda relating thereto; (vi) for any fees charged by
investment rating agencies for the rating of the Offered Securities or the
Exchange Securities; and (vii) for expenses incurred in printing and
distributing any Offering Document (including any amendments and supplements
thereto) to or at the direction of the Purchasers.  The Company will also pay or reimburse the
Purchasers (to the extent incurred by them) for all travel expenses of the
Purchasers and the Company’s officers and employees and any

 

9

 

other expenses
of the Purchasers and the Company in connection with attending or hosting
meetings with prospective purchasers of the Offered Securities from the
Purchasers.

 

(i)  In connection with the offering, until CSFB
shall have notified the Company and the other Purchasers of the completion of
the resale of the Offered Securities, neither the Company nor any its affiliates
has or will, either alone or with one or more other persons, bid for or
purchase for any account in which it or any of its affiliates has a beneficial
interest any Offered Securities or attempt to induce any person to purchase any
Offered Securities; and neither the Company nor its affiliates will make bids
or purchases for the purpose of creating actual, or apparent, active trading
in, or of raising the price of, the Offered Securities.

 

(j)  Without the prior written consent of the
Purchasers, for a period of 180 days after the date of the initial
offering of the Offered Securities by the Purchasers, neither the Company nor
any of its subsidiaries will offer, sell, contract to sell, pledge or otherwise
dispose of, directly or indirectly, or file with the Commission a registration
statement under the Securities Act relating to, any United States
dollar-denominated debt securities issued or guaranteed by the Company or any
of the Company’s subsidiaries and having a maturity of more than one year from
the date of issue.  Neither the Company nor
any of its subsidiaries will at any time offer, sell, contract to sell, pledge
or otherwise dispose of, directly or indirectly, any securities under
circumstances where such offer, sale, pledge, contract or disposition would
cause the exemption afforded by Section 4(2) of the Securities Act or the safe
harbor of Regulation S thereunder to cease to be applicable to the offer and
sale of the Offered Securities.

 

(k)  The Company will use the net proceeds from the
sale of the Offered Securities in substantially the manner described in the
Offering Document under the caption “Use of Proceeds”.

 

(l)  Neither the Company nor any of its subsidiaries
will sell, offer for sale or solicit offers to buy or otherwise negotiate in
respect of any security (as defined in the Securities Act) that would be
integrated with the sale of the Offered Securities in a manner that would
require the registration under the Securities Act of the sale to the Purchasers
of the Offered Securities or to take any other action that would result in the
resale of the Offered Securities not being exempt from registration under the
Securities Act.

 

(m)  Neither the Company nor any of its
subsidiaries will take, directly or indirectly, any action designed to, or that
might reasonably be expected to, cause or result in stabilization or
manipulation of the price of any security of the Company to facilitate the
resale of the Offered Securities.  Except
as permitted by the Securities Act, the Company will not distribute any (i)
preliminary offering memorandum or offering memorandum, including without
limitation, the Offering Document, or (ii) other offering material in
connection with the offering and sale of the Offered Securities.

 

6.  Conditions of the Obligations of the Purchasers.  The
obligations of the several Purchasers to purchase and pay for the Offered
Securities will be subject to the accuracy of the representations and
warranties on the part of the Company herein, to the accuracy of the statements
of officers of the Company made pursuant to the provisions hereof, to the
performance by the Company of its obligations hereunder and to the following
additional conditions precedent:

 

(a)  The Purchasers shall have received a letter,
dated the date of this Agreement, of Deloitte & Touche LLP in form and
substance satisfactory to the Purchasers concerning the financial information
with respect to the Company and its subsidiaries set forth in the Offering
Document.

 

10

 

(b)  The Purchasers shall have received a
letter, dated the date of this Agreement, of PricewaterhouseCoopers LLP in form
and substance satisfactory to the Purchasers concerning the financial
information with respect to Triangle Ice Co., Inc. and its subsidiaries set
forth in the Offering Document.

 

(c)  Subsequent to the execution and delivery of
this Agreement, there shall not have occurred (i) any change, or any
development or event involving a prospective change, in the condition (financial
or other), business, properties or results of operations of the Company and its
subsidiaries taken as one enterprise which, in the judgment of a majority in
interest of the Purchasers including CSFB, is material and adverse and makes it
impractical or inadvisable to proceed with completion of the offering or the
sale of and payment for the Offered Securities; (ii) any downgrading in
the rating of any debt securities of the Company by any “nationally recognized
statistical rating organization” (as defined for purposes of Rule 436(g)
under the Securities Act), or any public announcement that any such
organization has under surveillance or review its rating of any debt securities
of the Company (other than an announcement with positive implications of a
possible upgrading, and no implication of a possible downgrading, of such
rating)  or any announcement that
the Company has been placed on negative outlook; (iii) any change in U.S.
or international financial, political or economic conditions or currency
exchange rates or exchange controls as would, in the judgment of a majority in
interest of the Purchasers including CSFB, be likely to prejudice materially
the success of the proposed issue, sale or distribution of the Offered
Securities, whether in the primary market or in respect of dealings in the
secondary market, (iv) any material suspension or material limitation of
trading in securities generally on the New York Stock Exchange, or any setting
of minimum prices for trading on such exchange, or any suspension of trading of
any securities of the Company on any exchange or in the over-the-counter
market; (v) any banking moratorium declared by U.S. Federal or New York authorities;
(vi) any major disruption of settlements of securities or clearance
services in the United States; or (vii) any attack on, outbreak or
escalation of hostilities or act of terrorism involving the United States, any
declaration of war by Congress or any other national or international calamity
or emergency if, in the judgment of a majority in interest of the Purchasers
including CSFB, the effect of any such attack, outbreak, escalation, act,
declaration, calamity or emergency makes it impractical or inadvisable to
proceed with completion of the offering or sale of and payment for the Offered
Securities.

 

(d)  The Purchasers shall have received opinions,
dated the Closing Date, of the counsel for the Company that are reasonably
satisfactory to the Purchasers.

 

(e)  The Purchasers shall have received from Cravath,
Swaine & Moore LLP, counsel for the Purchasers, such opinion or
opinions, dated the Closing Date, with respect to the incorporation of the
Company, the validity of the Offered Securities, the Offering Circular, the
exemption from registration for the offer and sale of the Offered Securities by
the Company to the several Purchasers and the resales by the several Purchasers
as contemplated hereby and other related matters as CSFB may require, and the Company
shall have furnished to such counsel such documents as they request for the
purpose of enabling them to pass upon such matters.

 

(f)  The Purchasers shall have received a letter,
dated the Closing Date, of Deloitte & Touche LLP which meets the
requirements of subsection (a) of this Section, except that the specified date
referred to in such subsection will be a date not more than three days prior to
the Closing Date for the purposes of this subsection.

 

(g)  The Purchasers shall have received a
letter, dated the Closing Date, of PricewaterhouseCoopers LLP which meets the
requirements of subsection (b) of this Section, except that the specified date
referred to in such subsection will be a date not more than three days prior to
the Closing Date for purposes of this subsection.

 

11

 

(h)  The Purchasers shall have received a
certificate, dated the Closing Date, of the Chief Executive Officer or any Vice
President and a principal financial or accounting officer of the Company in
which such officers, to the best of their knowledge after reasonable
investigation, shall state that the representations and warranties made by the
Company in this Agreement are true and correct and that, subsequent to the
respective date of the most recent financial statements in the Offering
Document, there has been no material adverse change, nor any development or
event involving a prospective material adverse change, in the financial
condition, business, properties or results of operations of the Company and its
subsidiaries taken as a whole except as set forth in or contemplated by the
Offering Document or as described in such certificate.

 

(i)  The Company shall have entered into the
Indenture and the Purchasers shall have received counterparts, conformed as
executed, thereof.

 

(j)  The Company shall have entered into the
Registration Rights Agreement and the Purchasers shall have received
counterparts, conformed as executed, thereof.

 

(k)  The Offered Securities shall have been
designated PORTAL securities in accordance with the rules and regulations
adopted by the NASD relating to trading in the PORTAL market.

 

(l)  On or prior to the Closing Date, the Company
shall have provided to each of the Purchasers and counsel to the Purchasers
copies of this Agreement, the Indenture and the Registration Rights Agreement.

 

(m)  On or prior to the Closing Date, Reddy Ice
Group, Inc., a Texas corporation, which is a wholly owned subsidiary of the
Company, shall have entered into an amendment to its Credit Agreement, dated as
of August 15, 2003, with Credit Suisse First Boston, acting through its Cayman
Islands Branch, as administrative agent, Canadian Imperial Bank of Commerce and
Bear Stearns Corporate Lending Inc., as the co-syndication agents and the
lenders named therein, as amended by the first amendment thereto, dated as of
October 17, 2003 and as further amended by the second amendment thereto, dated
as of February 20, 2004 (such Credit Agreement, as so amended, the “Credit Agreement”), and a copy of such
amendment, which shall have been duly executed and delivered by all parties
thereto, shall have been delivered to CSFB.

 

The Company will furnish the Purchasers with
such conformed copies of such opinions, certificates, letters and documents as
the Purchasers reasonably request. CSFB may in its sole discretion waive on
behalf of the Purchasers compliance with any conditions to the obligations of
the Purchasers hereunder.

 

7.  Indemnification and Contribution.  (a)  The
Company will indemnify and hold harmless each Purchaser, its partners,
directors and officers and each person, if any, who controls such Purchaser
within the meaning of Section 15 of the Securities Act, against any losses,
claims, damages or liabilities, joint or several, to which such Purchaser may
become subject, under the Securities Act or the Exchange Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any breach of any of the
representations and warranties of the Company contained herein or any untrue
statement or alleged untrue statement of any material fact contained in the
Offering Document, or any amendment or supplement thereto, or any related
preliminary offering circular, or arise out of or are based upon the omission
or alleged omission to state therein a material fact necessary in order to make
the statements therein, in the light of the circumstances under which they were
made, not misleading, including any losses, claims, damages or liabilities
arising out of or based upon the Company’s failure to perform its obligations
under Section 5(a) of this Agreement, and will reimburse each Purchaser for any
legal or other expenses reasonably incurred by such Purchaser in connection
with investigating or defending any such loss, claim, damage, liability or
action as such expenses are incurred; provided, however, that the Company will
not be liable in any such case to the extent that any such loss, claim, damage
or liability arises out of or

 

12

 

is based upon an untrue
statement or alleged untrue statement in or omission or alleged omission from
any of such documents in reliance upon and in conformity with written
information furnished to the Company by any Purchaser through CSFB specifically
for use therein, it being understood and agreed that the only such information
consists of the information described as such in subsection (b) below.

 

(b)  Each
Purchaser will severally and not jointly indemnify and hold harmless the Company,
its directors and officers and each person, if any, who controls the Company within
the meaning of Section 15 of the Securities Act, against any losses, claims,
damages or liabilities to which the Company may become subject, under the
Securities Act or the Exchange Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon any untrue statement or alleged untrue statement of any material
fact contained in the Offering Document, or any amendment or supplement
thereto, or any related preliminary offering circular, or arise out of or are
based upon the omission or the alleged omission to state therein a material
fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, in each case to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in reliance upon and in
conformity with written information furnished to the Company by such Purchaser
through CSFB specifically for use therein, and will reimburse any legal or
other expenses reasonably incurred by the Company in connection with
investigating or defending any such loss, claim, damage, liability or action as
such expenses are incurred, it being understood and agreed that the only such
information furnished by any Purchaser consists of the following information in
the Offering Document furnished on behalf of each Purchaser: the third, sixth,
eleventh and twelfth paragraphs under the caption “Plan of Distribution”; provided,
however, that the Purchasers shall not be liable for any losses, claims,
damages or liabilities arising out of or based upon the Company’s failure to
perform its obligations under Section 5(a) of this Agreement.

 

(c)  Promptly
after receipt by an indemnified party under this Section of notice of the
commencement of any action, such indemnified party will, if a claim in respect
thereof is to be made against the indemnifying party under subsection (a) or
(b) above, notify the indemnifying party of the commencement thereof; but the
failure to notify the indemnifying party shall not relieve it from any
liability that it may have under subsection (a) or (b) above except to the
extent that it has been materially prejudiced (through the forfeiture of
substantive rights or defenses) by such failure; and provided further that the
failure to notify the indemnifying party shall not relieve it from any
liability that it may have to an indemnified party otherwise than under
subsection (a) or (b) above.  In case any
such action is brought against any indemnified party and it notifies the
indemnifying party of the commencement thereof, the indemnifying party will be
entitled to participate therein and, to the extent that it may wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel satisfactory to such indemnified party (who shall not,
except with the consent of the indemnified party, be counsel to the
indemnifying party), and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party will not be liable to such indemnified party under this
Section for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than reasonable
costs of investigation.  No indemnifying
party shall, without the prior written consent of the indemnified party, effect
any settlement of any pending or threatened action in respect of which any
indemnified party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party unless such settlement includes (i)
an unconditional release of such indemnified party from all liability on any claims
that are the subject matter of such action and (ii) does not include a
statement as to or an admission of fault, culpability or failure to act by or
on behalf of any indemnified party.

 

(d)  If
the indemnification provided for in this Section is unavailable or insufficient
to hold harmless an indemnified party under subsection (a) or (b) above, then
each indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of the losses, claims, damages or liabilities
referred to in subsection (a) or (b) above (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company on the one
hand and the Purchasers on the other from the offering of the Offered
Securities or (ii) if the allocation provided by clause (i) above is not
permitted

 

13

 

by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of the Company on the one
hand and the Purchasers on the other in connection with the statements or
omissions which resulted in such losses, claims, damages or liabilities as well
as any other relevant equitable considerations.  The relative benefits received by the Company on
the one hand and the Purchasers on the other shall be deemed to be in the same
proportion as the total net proceeds from the offering (before deducting
expenses) received by the Company bear to the total discounts and commissions
received by the Purchasers from the Company under this Agreement.  The relative fault shall be determined by
reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by the Company or the Purchasers
and the parties’ relative intent, knowledge, access to information and
opportunity to correct or prevent such untrue statement or omission.  The amount paid by an indemnified party as a
result of the losses, claims, damages or liabilities referred to in the first
sentence of this subsection (d) shall be deemed to include any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any action or claim which is the subject of this
subsection (d).  Notwithstanding
the provisions of this subsection (d), no Purchaser shall be required to
contribute any amount in excess of the amount by which the total discounts,
fees and commissions received by such Purchaser exceeds the amount of any
damages which such Purchaser has otherwise been required to pay by reason
of such untrue or alleged untrue statement or omission or alleged omission.  The Purchasers’ obligations in this subsection
(d) to contribute are several in proportion to their respective purchase
obligations and not joint.

 

(e)  The
obligations of the Company under this Section shall be in addition to any
liability which the Company may otherwise have and shall extend, upon the same
terms and conditions, to each person, if any, who controls any Purchaser within
the meaning of the Securities Act or the Exchange Act; and the obligations of
the Purchasers under this Section shall be in addition to any liability which
the respective Purchasers may otherwise have and shall extend, upon the same
terms and conditions, to each person, if any, who controls the Company within
the meaning of the Securities Act or the Exchange Act.

 

8.  Default of Purchasers. 
If any Purchaser or Purchasers default in their obligations to purchase Offered
Securities hereunder and the aggregate principal amount at maturity of Offered
Securities that such defaulting Purchaser or Purchasers agreed but failed to
purchase does not exceed 10% of the total principal amount at maturity of Offered
Securities, CSFB may make arrangements satisfactory to the Company for the
purchase of such Offered Securities by other persons, including any of the
Purchasers, but if no such arrangements are made by the Closing Date, the
non-defaulting Purchasers shall be obligated severally, in proportion to their
respective commitments hereunder, to purchase the Offered Securities that such
defaulting Purchasers agreed but failed to purchase.  If any Purchaser or Purchasers so default and
the aggregate principal amount at maturity of Offered Securities with respect
to which such default or defaults occur exceeds 10% of the total principal
amount at maturity of Offered Securities and arrangements satisfactory to CSFB
and the Company for the purchase of such Offered Securities by other persons
are not made within 36 hours after such default, this Agreement will
terminate without liability on the part of any non-defaulting Purchaser or the Company,
except as provided in Section 9.  As
used in this Agreement, the term “Purchaser” includes any person substituted
for a Purchaser under this Section.  Nothing
herein will relieve a defaulting Purchaser from liability for its default.

 

9.  Survival of Certain Representations and Obligations.  The respective indemnities, agreements,
representations, warranties and other statements of the Company or its officers
and of the several Purchasers set forth in or made pursuant to this Agreement
will remain in full force and effect, regardless of any investigation, or
statement as to the results thereof, made by or on behalf of any Purchaser, the
Company or any of their respective representatives, officers or directors or
any controlling person, and will survive delivery of and payment for the
Offered Securities.  If this Agreement is
terminated pursuant to Section 8 or if for any reason the purchase of the
Offered Securities by the Purchasers is not consummated, the Company shall
remain responsible for the expenses to be paid or reimbursed by it pursuant to Section 5
and the respective obligations of the Company and the Purchasers pursuant to
Section 7 shall remain in effect. If the purchase of the Offered
Securities by the Purchasers is not consummated for any reason other

 

14

 

than solely because of the
occurrence of any event specified in clause (iii), (iv), (v), (vi) or (vii) of
Section 6(c), the Company will reimburse the Purchasers for all
out-of-pocket expenses (including fees and disbursements of counsel) reasonably
incurred by them in connection with the offering of the Offered Securities.

 

10.  Notices.  All
communications hereunder will be in writing and, if sent to the Purchasers will
be mailed, delivered or telegraphed and confirmed to the Purchasers c/o Credit
Suisse First Boston LLC, Eleven Madison Avenue, New York, N.Y. 10010-3629,
Attention:  Transactions Advisory Group,
or, if sent to the Company, will be mailed, delivered or telegraphed and
confirmed to it at Reddy Ice Holdings, Inc., 3535 Travis Street, Suite 170,
Dallas, TX 75204, Attention:  Chief
Financial Officer; provided, however, that any notice to a Purchaser pursuant
to Section 7 will be mailed, delivered or telegraphed and confirmed to
such Purchaser.

 

11.  Successors.  This
Agreement will inure to the benefit of and be binding upon the parties hereto
and their respective successors and the controlling persons referred to in
Section 7, and no other person will have any right or obligation hereunder,
except that holders of Offered Securities shall be entitled to enforce the
agreements for their benefit contained in the second and third sentences of
Section 5(b) hereof against the Company as if such holders were parties
thereto.

 

12.  Representation of Purchasers.  CSFB will act for the several Purchasers in
connection with this purchase, and any action under this Agreement taken by CSFB
will be binding upon all the Purchasers.

 

13.  Counterparts.  This
Agreement may be executed in any number of counterparts, each of which shall be
deemed to be an original, but all such counterparts shall together constitute
one and the same Agreement.

 

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

 

The Company hereby submits to the
non-exclusive jurisdiction of the Federal and state courts in the Borough of
Manhattan in The City of New York in any suit or proceeding arising out of or
relating to this Agreement or the transactions contemplated hereby.

 

15

 

If the foregoing is in accordance with the
Purchasers’ understanding of our agreement, kindly sign and return to us one of
the counterparts hereof, whereupon it will become a binding agreement among the
Company and the several Purchasers in accordance with its terms.

 

	
   

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
  Reddy Ice Holdings, Inc.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ William P. Brick

  	
   

  
	
   

  	
  William P. Brick, Chief Executive Officer

  
	
   

  	
   

  

 

16

 

The foregoing Purchase Agreement

is hereby confirmed and accepted

as of the date first above written.

 

Credit Suisse First Boston LLC

CIBC World Markets Corp.

Bear, Stearns & Co. Inc.

 

Acting on behalf of itself

and as the Representative of

the several Purchasers

 

	
  By
  Credit Suisse First Boston LLC

  
	
   

  
	
   

  
	
  By

  	
  /s/ Heather
  Suggitt

  	
   

  
	
  Heather Suggitt, Director

  
	
   

  

 

17

 

SCHEDULE A

 

	
  Manager

  	
   

  	
  Principal

  Amount at

  Maturity of

  Offered

  Securities

  	
   

  
	
  Credit Suisse First Boston LLC

  	
   

  	
  $

  	
  60,400,000

  	
   

  
	
  Bear, Stearns & Co. Inc.

  	
   

  	
  $

  	
  45,300,000

  	
   

  
	
  CIBC World Markets Corp

  	
   

  	
  $

  	
  45,300,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Total

  	
   

  	
  $

  	
  151,000,000

  	
   

  

 

18

 

SCHEDULE B

 

Cassco Ice & Cold Strorage, Inc.

Reddy Ice IP, Inc.

Reddy Ice Corporation

Reddy Ice Group, Inc.

Southern Bottled Water Company, Inc.

 

19

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