Document:

Exhibit 4.3

 

 

 

INDENTURE

 

Dated as of October 31, 2006

 

Among

 

MICHAELS STORES, INC.,

 

THE GUARANTORS NAMED ON THE SIGNATURE PAGES HERETO

 

and

 

WELLS FARGO BANK, NATIONAL ASSOCIATION,

as Trustee

 

13% SUBORDINATED DISCOUNT NOTES DUE 2016

 

 

 

 

CROSS-REFERENCE TABLE*

 

	
  Trust Indenture Act Section

  	
   

  	
  Indenture
  Section

  	
   

  
	
  310(a)(1)

  	
   

  	
  7.10

  	
   

  
	
  (a)(2)

  	
   

  	
  7.10

  	
   

  
	
  (a)(3)

  	
   

  	
  N.A.

  	
   

  
	
  (a)(4)

  	
   

  	
  N.A.

  	
   

  
	
  (a)(5)

  	
   

  	
  7.10

  	
   

  
	
  (b)

  	
   

  	
  7.03, 7.10

  	
   

  
	
  (c)

  	
   

  	
  N.A.

  	
   

  
	
  311(a)

  	
   

  	
  7.11

  	
   

  
	
  (b)

  	
   

  	
  7.11

  	
   

  
	
  (c)

  	
   

  	
  N.A.

  	
   

  
	
  312(a)

  	
   

  	
  2.05

  	
   

  
	
  (b)

  	
   

  	
  7.06, 14.03

  	
   

  
	
  (c)

  	
   

  	
  14.03

  	
   

  
	
  313(a)

  	
   

  	
  2.05, 7.06

  	
   

  
	
  (b)(1)

  	
   

  	
  N.A.

  	
   

  
	
  (b)(2)

  	
   

  	
  7.06;7.07

  	
   

  
	
  (c)

  	
   

  	
  7.06;14.02

  	
   

  
	
  (d)

  	
   

  	
  7.06

  	
   

  
	
  314(a)

  	
   

  	
  4.03;14.02;14.05

  	
   

  
	
  (b)

  	
   

  	
  N.A.

  	
   

  
	
  (c)(1)

  	
   

  	
  14.04

  	
   

  
	
  (c)(2)

  	
   

  	
  14.04

  	
   

  
	
  (c)(3)

  	
   

  	
  N.A.

  	
   

  
	
  (d)

  	
   

  	
  N.A.

  	
   

  
	
  (e)

  	
   

  	
  14.05

  	
   

  
	
  (f)

  	
   

  	
  N.A.

  	
   

  
	
  315(a)

  	
   

  	
  7.01

  	
   

  
	
  (b)

  	
   

  	
  7.05;14.02

  	
   

  
	
  (c)

  	
   

  	
  7.01

  	
   

  
	
  (d)

  	
   

  	
  7.01

  	
   

  
	
  (e)

  	
   

  	
  6.14

  	
   

  
	
  316(a)(last sentence)

  	
   

  	
  2.09

  	
   

  
	
  (a)(1)(A)

  	
   

  	
  6.05

  	
   

  
	
  (a)(1)(B)

  	
   

  	
  6.04

  	
   

  
	
  (a)(2)

  	
   

  	
  N.A

  	
   

  
	
  (b)

  	
   

  	
  6.07

  	
   

  
	
  (c)

  	
   

  	
  2.12;9.04

  	
   

  
	
  317(a)(1)

  	
   

  	
  6.08

  	
   

  
	
  (a)(2)

  	
   

  	
  6.12

  	
   

  
	
  (b)

  	
   

  	
  2.04

  	
   

  
	
  318(a)

  	
   

  	
  14.01

  	
   

  
	
  (b)

  	
   

  	
  N.A.

  	
   

  
	
  (c)

  	
   

  	
  14.01

  	
   

  

 

N.A.
means not applicable.

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

 

 

TABLE OF CONTENTS

 

	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 1

  
	
   

  
	
  DEFINITIONS AND INCORPORATION BY REFERENCE

  
	
   

  
	
  Section
  1.01

  	
  Definitions

  	
   

  	
  1

  
	
  Section
  1.02

  	
  Other
  Definitions

  	
   

  	
  33

  
	
  Section
  1.03

  	
  Incorporation
  by Reference of Trust Indenture Act

  	
   

  	
  34

  
	
  Section
  1.04

  	
  Rules
  of Construction.

  	
   

  	
  34

  
	
  Section
  1.05

  	
  Acts
  of Holders

  	
   

  	
  35

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 2

  
	
   

  	
   

  	
   

  	
   

  
	
  THE NOTES

  
	
   

  	
   

  	
   

  	
   

  
	
  Section
  2.01

  	
  Form
  and Dating; Terms

  	
   

  	
  36

  
	
  Section
  2.02

  	
  Execution
  and Authentication

  	
   

  	
  38

  
	
  Section
  2.03

  	
  Registrar
  and Paying Agent

  	
   

  	
  38

  
	
  Section
  2.04

  	
  Paying
  Agent To Hold Money in Trust

  	
   

  	
  39

  
	
  Section
  2.05

  	
  Holder
  Lists

  	
   

  	
  39

  
	
  Section
  2.06

  	
  Transfer
  and Exchange

  	
   

  	
  39

  
	
  Section
  2.07

  	
  Replacement
  Notes

  	
   

  	
  51

  
	
  Section
  2.08

  	
  Outstanding
  Notes

  	
   

  	
  51

  
	
  Section
  2.09

  	
  Treasury
  Notes

  	
   

  	
  51

  
	
  Section
  2.10

  	
  Temporary
  Notes

  	
   

  	
  51

  
	
  Section
  2.11

  	
  Cancellation

  	
   

  	
  52

  
	
  Section
  2.12

  	
  Defaulted
  Interest

  	
   

  	
  52

  
	
  Section
  2.13

  	
  CUSIP
  Numbers

  	
   

  	
  52

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 3

  
	
   

  	
   

  	
   

  	
   

  
	
  REDEMPTION

  
	
   

  	
   

  	
   

  	
   

  
	
  Section
  3.01

  	
  Notices
  to Trustee

  	
   

  	
  53

  
	
  Section
  3.02

  	
  Selection
  of Notes To Be Redeemed or Purchased

  	
   

  	
  53

  
	
  Section
  3.03

  	
  Notice
  of Redemption

  	
   

  	
  53

  
	
  Section
  3.04

  	
  Effect
  of Notice of Redemption

  	
   

  	
  54

  
	
  Section
  3.05

  	
  Deposit
  of Redemption or Purchase Price

  	
   

  	
  54

  
	
  Section
  3.06

  	
  Notes
  Redeemed or Purchased in Part

  	
   

  	
  55

  
	
  Section
  3.07

  	
  Optional
  Redemption

  	
   

  	
  55

  
	
  Section
  3.08

  	
  Mandatory
  Redemption

  	
   

  	
  56

  
	
  Section
  3.09

  	
  Offers
  To Repurchase by Application of Excess Proceeds

  	
   

  	
  56

  

 

i

 

	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 4

  
	
   

  	
   

  	
   

  	
   

  
	
  COVENANTS

  
	
   

  	
   

  	
   

  	
   

  
	
  Section
  4.01

  	
  Payment
  of Notes

  	
   

  	
  58

  
	
  Section
  4.02

  	
  Maintenance
  of Office or Agency

  	
   

  	
  58

  
	
  Section
  4.03

  	
  Reports
  and Other Information

  	
   

  	
  59

  
	
  Section
  4.04

  	
  Compliance
  Certificate

  	
   

  	
  60

  
	
  Section
  4.05

  	
  Taxes

  	
   

  	
  61

  
	
  Section
  4.06

  	
  Stay,
  Extension and Usury Laws

  	
   

  	
  61

  
	
  Section
  4.07

  	
  Limitation
  on Restricted Payments

  	
   

  	
  61

  
	
  Section
  4.08

  	
  Dividend
  and Other Payment Restrictions Affecting Restricted Subsidiaries

  	
   

  	
  68

  
	
  Section
  4.09

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

  	
   

  	
  69

  
	
  Section
  4.10

  	
  Asset
  Sales

  	
   

  	
  75

  
	
  Section
  4.11

  	
  Transactions
  with Affiliates

  	
   

  	
  77

  
	
  Section
  4.12

  	
  Liens

  	
   

  	
  79

  
	
  Section
  4.13

  	
  Corporate
  Existence

  	
   

  	
  80

  
	
  Section
  4.14

  	
  Offer
  to Repurchase Upon Change of Control

  	
   

  	
  80

  
	
  Section
  4.15

  	
  Limitation
  on Guarantees of Indebtedness by Restricted Subsidiaries

  	
   

  	
  82

  
	
  Section
  4.16

  	
  Discharge
  and Suspension of Covenants

  	
   

  	
  83

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 5

  
	
   

  	
   

  	
   

  	
   

  
	
  SUCCESSORS

  
	
   

  	
   

  	
   

  	
   

  
	
  Section
  5.01

  	
  Merger,
  Consolidation or Sale of All or Substantially All Assets

  	
   

  	
  84

  
	
  Section
  5.02

  	
  Successor
  Corporation Substituted

  	
   

  	
  85

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 6

  
	
   

  	
   

  	
   

  	
   

  
	
  DEFAULTS AND REMEDIES

  
	
   

  	
   

  	
   

  	
   

  
	
  Section
  6.01

  	
  Events
  of Default

  	
   

  	
  86

  
	
  Section
  6.02

  	
  Acceleration

  	
   

  	
  88

  
	
  Section
  6.03

  	
  Other
  Remedies

  	
   

  	
  89

  
	
  Section
  6.04

  	
  Waiver
  of Past Defaults

  	
   

  	
  89

  
	
  Section
  6.05

  	
  Control
  by Majority

  	
   

  	
  89

  
	
  Section
  6.06

  	
  Limitation
  on Suits

  	
   

  	
  89

  
	
  Section
  6.07

  	
  Rights
  of Holders of Notes To Receive Payment

  	
   

  	
  90

  
	
  Section
  6.08

  	
  Collection
  Suit by Trustee

  	
   

  	
  90

  
	
  Section
  6.09

  	
  Restoration
  of Rights and Remedies

  	
   

  	
  90

  
	
  Section
  6.10

  	
  Rights
  and Remedies Cumulative

  	
   

  	
  90

  
	
  Section
  6.11

  	
  Delay
  or Omission Not Waiver

  	
   

  	
  91

  
	
  Section
  6.12

  	
  Trustee
  May File Proofs of Claim

  	
   

  	
  91

  
	
  Section
  6.13

  	
  Priorities

  	
   

  	
  91

  
	
  Section
  6.14

  	
  Undertaking
  for Costs

  	
   

  	
  92

  

 

ii

 

	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 7

  
	
   

  	
   

  	
   

  	
   

  
	
  TRUSTEE

  
	
   

  	
   

  	
   

  	
   

  
	
  Section
  7.01

  	
  Duties
  of Trustee

  	
   

  	
  92

  
	
  Section
  7.02

  	
  Rights
  of Trustee

  	
   

  	
  93

  
	
  Section
  7.03

  	
  Individual
  Rights of Trustee

  	
   

  	
  94

  
	
  Section
  7.04

  	
  Trustee’s
  Disclaimer

  	
   

  	
  94

  
	
  Section
  7.05

  	
  Notice
  of Defaults

  	
   

  	
  94

  
	
  Section
  7.06

  	
  Reports
  by Trustee to Holders of the Notes

  	
   

  	
  95

  
	
  Section
  7.07

  	
  Compensation
  and Indemnity

  	
   

  	
  95

  
	
  Section
  7.08

  	
  Replacement
  of Trustee

  	
   

  	
  96

  
	
  Section
  7.09

  	
  Successor
  Trustee by Merger, etc.

  	
   

  	
  96

  
	
  Section
  7.10

  	
  Eligibility;
  Disqualification

  	
   

  	
  97

  
	
  Section
  7.11

  	
  Preferential
  Collection of Claims Against Issuer

  	
   

  	
  97

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 8

  
	
   

  	
   

  	
   

  	
   

  
	
  LEGAL DEFEASANCE AND COVENANT DEFEASANCE

  
	
   

  	
   

  	
   

  	
   

  
	
  Section
  8.01

  	
  Option
  To Effect Legal Defeasance or Covenant Defeasance

  	
   

  	
  97

  
	
  Section
  8.02

  	
  Legal
  Defeasance and Discharge

  	
   

  	
  97

  
	
  Section
  8.03

  	
  Covenant
  Defeasance

  	
   

  	
  98

  
	
  Section
  8.04

  	
  Conditions
  to Legal or Covenant Defeasance

  	
   

  	
  98

  
	
  Section
  8.05

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

  	
   

  	
  99

  
	
  Section
  8.06

  	
  Repayment
  to Issuer

  	
   

  	
  100

  
	
  Section
  8.07

  	
  Reinstatement

  	
   

  	
  100

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 9

  
	
   

  	
   

  	
   

  	
   

  
	
  AMENDMENT, SUPPLEMENT AND WAIVER

  
	
   

  	
   

  	
   

  	
   

  
	
  Section
  9.01

  	
  Without
  Consent of Holders of Notes

  	
   

  	
  100

  
	
  Section
  9.02

  	
  With
  Consent of Holders of Notes

  	
   

  	
  102

  
	
  Section
  9.03

  	
  Compliance
  with Trust Indenture Act

  	
   

  	
  103

  
	
  Section
  9.04

  	
  Revocation
  and Effect of Consents

  	
   

  	
  103

  
	
  Section
  9.05

  	
  Notation
  on or Exchange of Notes

  	
   

  	
  104

  
	
  Section
  9.06

  	
  Trustee
  To Sign Amendments, etc

  	
   

  	
  104

  
	
  Section
  9.07

  	
  Payment
  for Consent

  	
   

  	
  104

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 10

  
	
   

  	
   

  	
   

  	
   

  
	
  SUBORDINATION

  
	
   

  	
   

  	
   

  	
   

  
	
  Section
  10.01

  	
  Agreement
  To Subordinate

  	
   

  	
  104

  
	
  Section
  10.02

  	
  Liquidation,
  Dissolution, Bankruptcy

  	
   

  	
  105

  
	
  Section
  10.03

  	
  Default
  on Senior Indebtedness of the Issuer

  	
   

  	
  105

  
	
  Section
  10.04

  	
  Acceleration
  of Payment of Notes

  	
   

  	
  106

  
	
  Section
  10.05

  	
  When
  Distribution Must Be Paid Over

  	
   

  	
  107

  

 

iii

 

	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  
	
  Section
  10.06

  	
  Subrogation

  	
   

  	
  107

  
	
  Section
  10.07

  	
  Relative
  Rights

  	
   

  	
  107

  
	
  Section
  10.08

  	
  Subordination
  May Not Be Impaired by Issuer

  	
   

  	
  107

  
	
  Section
  10.09

  	
  Rights
  of Trustee and Paying Agent

  	
   

  	
  107

  
	
  Section
  10.10

  	
  Distribution
  or Notice to Representative

  	
   

  	
  108

  
	
  Section
  10.11

  	
  Article 10
  Not To Prevent Events of Default or Limit Right To Accelerate

  	
   

  	
  108

  
	
  Section
  10.12

  	
  Trust
  Moneys Not Subordinated

  	
   

  	
  108

  
	
  Section
  10.13

  	
  Trustee
  Entitled To Rely

  	
   

  	
  108

  
	
  Section
  10.14

  	
  Trustee
  To Effectuate Subordination

  	
   

  	
  109

  
	
  Section
  10.15

  	
  Trustee
  Not Fiduciary for Holders of Senior Indebtedness of the Issuer

  	
   

  	
  109

  
	
  Section
  10.16

  	
  Reliance
  by Holders of Senior Indebtedness of the Issuer on Subordination Provisions

  	
   

  	
  109

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 11

  
	
   

  	
   

  	
   

  	
   

  
	
  GUARANTEES

  
	
   

  	
   

  	
   

  	
   

  
	
  Section
  11.01

  	
  Guarantee

  	
   

  	
  110

  
	
  Section
  11.02

  	
  Limitation
  on Guarantor Liability

  	
   

  	
  111

  
	
  Section
  11.03

  	
  Execution
  and Delivery

  	
   

  	
  112

  
	
  Section
  11.04

  	
  Subrogation

  	
   

  	
  112

  
	
  Section
  11.05

  	
  Benefits
  Acknowledged

  	
   

  	
  112

  
	
  Section
  11.06

  	
  Release
  of Guarantees

  	
   

  	
  112

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 12

  
	
   

  	
   

  	
   

  	
   

  
	
  SUBORDINATION OF GUARANTEES

  
	
   

  	
   

  	
   

  	
   

  
	
  Section
  12.01

  	
  Agreement
  To Subordinate

  	
   

  	
  113

  
	
  Section
  12.02

  	
  Liquidation,
  Dissolution, Bankruptcy

  	
   

  	
  113

  
	
  Section
  12.03

  	
  Default
  on Senior Indebtedness of a Guarantor

  	
   

  	
  114

  
	
  Section
  12.04

  	
  Demand
  for Payment

  	
   

  	
  115

  
	
  Section
  12.05

  	
  When
  Distribution Must Be Paid Over

  	
   

  	
  115

  
	
  Section
  12.06

  	
  Subrogation

  	
   

  	
  116

  
	
  Section
  12.07

  	
  Relative
  Rights

  	
   

  	
  116

  
	
  Section
  12.08

  	
  Subordination
  May Not Be Impaired by a Guarantor

  	
   

  	
  116

  
	
  Section
  12.09

  	
  Rights
  of Trustee and Paying Agent

  	
   

  	
  116

  
	
  Section
  12.10

  	
  Distribution
  or Notice to Representative

  	
   

  	
  117

  
	
  Section
  12.11

  	
  Article 12
  Not To Prevent Events of Default or Limit Right To Demand Payment

  	
   

  	
  117

  
	
  Section
  12.12

  	
  Trust
  Moneys Not Subordinated

  	
   

  	
  117

  
	
  Section
  12.13

  	
  Trustee
  Entitled To Rely

  	
   

  	
  117

  
	
  Section
  12.14

  	
  Trustee
  To Effectuate Subordination

  	
   

  	
  118

  
	
  Section
  12.15

  	
  Trustee
  Not Fiduciary for Holders of Senior Indebtedness of Guarantors

  	
   

  	
  118

  
	
  Section
  12.16

  	
  Reliance
  by Holders of Senior Indebtedness of a Guarantor on Subordination Provisions

  	
   

  	
  118

  

 

iv

 

	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 13

  
	
   

  	
   

  	
   

  	
   

  
	
  SATISFACTION AND DISCHARGE

  
	
   

  	
   

  	
   

  	
   

  
	
  Section
  13.01

  	
  Satisfaction
  and Discharge

  	
   

  	
  119

  
	
  Section
  13.02

  	
  Application
  of Trust Money

  	
   

  	
  120

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 14

  
	
   

  	
   

  	
   

  	
   

  
	
  MISCELLANEOUS

  
	
   

  	
   

  	
   

  	
   

  
	
  Section
  14.01

  	
  Trust
  Indenture Act Controls

  	
   

  	
  120

  
	
  Section
  14.02

  	
  Notices

  	
   

  	
  120

  
	
  Section
  14.03

  	
  Communication
  by Holders of Notes with Other Holders of Notes

  	
   

  	
  122

  
	
  Section
  14.04

  	
  Certificate
  and Opinion as to Conditions Precedent

  	
   

  	
  122

  
	
  Section
  14.05

  	
  Statements
  Required in Certificate or Opinion

  	
   

  	
  122

  
	
  Section
  14.06

  	
  Rules
  by Trustee and Agents

  	
   

  	
  122

  
	
  Section
  14.07

  	
  No
  Personal Liability of Directors, Officers, Employees and Stockholders

  	
   

  	
  123

  
	
  Section
  14.08

  	
  Governing
  Law

  	
   

  	
  123

  
	
  Section
  14.09

  	
  Waiver
  of Jury Trial

  	
   

  	
  123

  
	
  Section
  14.10

  	
  Force
  Majeure

  	
   

  	
  123

  
	
  Section
  14.11

  	
  No
  Adverse Interpretation of Other Agreements

  	
   

  	
  123

  
	
  Section
  14.12

  	
  Successors

  	
   

  	
  123

  
	
  Section
  14.13

  	
  Severability

  	
   

  	
  123

  
	
  Section
  14.14

  	
  Counterpart
  Originals

  	
   

  	
  124

  
	
  Section
  14.15

  	
  Table
  of Contents, Headings, etc.

  	
   

  	
  124

  
	
  Section
  14.16

  	
  Qualification
  of Indenture

  	
   

  	
  124

  
	
   

  	
   

  	
   

  	
   

  
	
  EXHIBITS

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Exhibit
  A

  	
  Form
  of Subordinated Discount Note

  	
   

  	
   

  
	
  Exhibit
  B

  	
  Form
  of Certificate of Transfer

  	
   

  	
   

  
	
  Exhibit
  C

  	
  Form
  of Certificate of Exchange

  	
   

  	
   

  
	
  Exhibit
  D

  	
  Form
  of Supplemental Indenture to Be Delivered by Subsequent Guarantors

  	
   

  	
   

  

 

v

 

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

 

W I  T
N  E  S  S  E  T  H

 

WHEREAS,
Michaels has duly authorized the creation of an issue of $469,449,000 aggregate
principal amount at maturity of 13% Subordinated Discount Notes due 2016 (the “Initial
Notes”);

 

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

 

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

 

ARTICLE
1

 

DEFINITIONS
AND INCORPORATION BY REFERENCE

 

Section 1.01                                Definitions.

 

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

 

“Accreted
Value” means, as of any date of determination, the sum of (1) the initial
Accreted Value (which is $532.54 per $1,000 in principal amount at maturity of
Notes) and (2) the portion of the excess of the principal amount at maturity of
each Note over such initial Accreted Value which shall have been amortized
through such date, such amount to be so amortized on a daily basis and
compounded semiannually on May 1 and November 1 at the rate of 13% per annum
from the date of original issuance of the Notes through the date of
determination, increased by the rate of any Additional Interest accruing,
computed on the basis of a 360-day year of twelve 30-day months. The Accreted
Value of any Note on or after November 1, 2011 shall be equal to 100% of its
stated principal amount at maturity; it being understood that if Additional
Interest accrued each Note will accrete to 100% of its stated principal amount
at maturity on an earlier date and the final Accreted Value will exceed 100%.

 

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

 

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

 

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

 

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

 

 

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

 

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

 

“Agent”
means any Registrar or Paying Agent.

 

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

 

(1)                                  1.0% of the Accreted Value of such Note; and

 

(2)                                  the excess, if any, of (a) the present value
at such Redemption Date of the redemption price of such Note at November
1, 2011 (such redemption price being set forth in Section 3.07 hereof) computed
using a discount rate equal to the Treasury Rate as of such Redemption Date
plus 50 basis points; over (b) the Accreted Value of such Note.

 

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

 

“Asset
Sale” means:

 

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

 

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

 

in
each case, other than:

 

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

 

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

 

2

 

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

 

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

 

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

 

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

 

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

 

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

 

(i)                                     foreclosures on or expropriations of assets;

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“Capital
Stock” means:

 

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

 

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

 

3

 

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

 

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

 

“Capitalized
Lease Obligation” means, at the time any determination thereof is to be
made, the amount of the liability in respect of a capital lease that would at
such time be required to be capitalized and reflected as a liability on a
balance sheet (excluding the footnotes thereto) prepared in accordance with
GAAP.

 

“Cash
Equivalents” means:

 

(1)                                  United States dollars and Canadian dollars;

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(8)                                  readily marketable direct obligations issued
by any state, commonwealth or territory of the United States or any political
subdivision or taxing authority thereof having an 

 

4

 

Investment
Grade Rating from either Moody’s or S&P with maturities of 24 months
or less from the date of acquisition;

 

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

 

(10)                            Investments with average maturities of 12 months or less from the date
of acquisition in money market funds rated AAA- (or the equivalent thereof) or
better by S&P or Aaa3 (or the equivalent thereof) or better by Moody’s and
in each case in a currency permitted under clause (1) or (2) above;

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“Clearstream”
means Clearstream Banking, Société Anonyme.

 

“Consolidated
Depreciation and Amortization Expense” means with respect to any Person for
any period, the total amount of depreciation and amortization expense,
including the amortization 

 

5

 

of deferred financing fees of
such Person and its Restricted Subsidiaries for such period on a consolidated
basis and otherwise determined in accordance with GAAP.

 

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

 

(1)                                  consolidated interest expense of such Person
and its Restricted Subsidiaries for such period, to the extent such expense was
deducted (and not added back) in computing Consolidated Net Income (including
(a) amortization of original issue discount resulting from the issuance of
Indebtedness at less than par, (b) all commissions, discounts and other fees
and charges owed with respect to letters of credit or bankers acceptances, (c)
non-cash interest payments (but excluding any non-cash interest
expense attributable to the movement in the mark to market valuation of Hedging
Obligations or other derivative instruments pursuant to GAAP), (d) the interest
component of Capitalized Lease Obligations, and (e) net payments, if any, made
(less net payments, if any, received) pursuant to interest rate Hedging
Obligations with respect to Indebtedness, and excluding (v) penalties and
interest related to taxes, (w) any Additional Interest with respect to the
Initial Notes and any “additional interest” with respect to the Senior Notes or
the Senior Subordinated Notes, (x) amortization of deferred financing fees,
debt issuance costs, discounted liabilities, commissions, fees and expenses,
(y) any expensing of bridge, commitment and other financing fees and (z)
commissions, discounts, yield and other fees and charges (including any
interest expense) related to any Receivables Facility); plus (2) consolidated
capitalized interest of such Person and its Restricted Subsidiaries for such
period, whether paid or accrued; less

 

(3)                                  interest income for such period.

 

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

 

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

 

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

 

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

 

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

 

6

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

7

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(2)                                  to advance or supply funds

 

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

 

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

 

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

 

“Corporate
Trust Office of the Trustee” shall be at the address of the Trustee
specified in Section 14.02 hereof or such other address as to which the Trustee
may give notice to the Holders and the Issuer.

 

8

 

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

 

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

 

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

 

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

 

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

 

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

 

“Designated
Senior Indebtedness” means:

 

(1)                                  any Indebtedness outstanding under the Senior
Credit Facilities; and

 

(2)                                  any other Senior Indebtedness permitted under
this Indenture, the principal amount of which is $50.0 million or more and
that has been specifically designated by the Issuer as “Designated Senior
Indebtedness” for purposes of this Indenture in the instrument evidencing or
governing such Senior Indebtedness.

 

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

 

9

 

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

 

(1)                                  increased (without duplication) by:

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

10

 

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

 

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

 

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

 

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

 

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

 

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

 

(2)                                  decreased (without duplication) by:

 

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

 

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

 

11

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(1)                                  contributions to its common equity capital,
and

 

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

 

in
each case designated as Excluded Contributions pursuant to an Officer’s
Certificate executed by the principal financial officer of the Issuer on the
date such capital contributions are made or the date such

 

12

 

Equity Interests are sold, as
the case may be, which are excluded from the calculation set forth in clause
(3) of Section 4.07(a) hereof.

 

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

 

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

 

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

 

13

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“Government
Securities” means securities that are:

 

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

 

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

 

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

 

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

 

14

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(a)                                  in respect of borrowed money;

 

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

 

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

 

(d)                                 representing any Hedging Obligations;

 

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

 

(2)                                  to the extent not otherwise included, any
obligation by such Person to be liable for, or to pay, as obligor, guarantor or
otherwise, on the obligations of the type referred to in clause (1) of a third
Person (whether or not such items would appear upon the balance sheet of the 

 

15

 

such
obligor or guarantor), other than by endorsement of negotiable instruments for
collection in the ordinary course of business; and

 

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

 

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

 

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

 

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

 

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

 

“Initial
Notes” is defined in the recitals hereto.

 

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

 

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

 

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

 

“Investment
Grade Securities” means:

 

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

 

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

 

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

 

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

 

“Investments”
means, with respect to any Person, all investments by such Person in other
Persons (including Affiliates) in the form of loans (including guarantees),
advances or capital contributions (excluding accounts receivable, credit card
and debit card receivables, trade credit, advances to customers, commission,
travel and similar advances to officers and employees, in each case made in the
ordinary 

 

16

 

course of business), purchases
or other acquisitions for consideration of Indebtedness, Equity Interests or
other securities issued by any other Person and investments that are required
by GAAP to be classified on the balance sheet (excluding the footnotes) of the
Issuer in the same manner as the other investments included in this definition
to the extent such transactions involve the transfer of cash or other
property.  For purposes of the definition
of “Unrestricted Subsidiary” and Section 4.07 hereof:

 

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

 

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

 

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

 

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

 

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

 

“Issue
Date” means October 31, 2006.

 

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

 

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

 

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

 

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

 

“Lien”
means, with respect to any asset, any mortgage, lien (statutory or otherwise),
pledge, hypothecation, charge, security interest, preference, priority or
encumbrance of any kind in respect of such asset, whether or not filed,
recorded or otherwise perfected under applicable law, including any conditional
sale or other title retention agreement, any lease in the nature thereof, any
option or other agreement to sell or give a security interest in and any filing
of or agreement to give any financing statement 

 

17

 

under the Uniform Commercial
Code (or equivalent statutes) of any jurisdiction; provided that in no
event shall an operating lease be deemed to constitute a Lien.

 

“Michaels”
is defined in the preamble hereto.

 

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

 

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

 

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

 

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

 

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

 

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

 

“Offering
Memorandum” means the offering memorandum, dated October 27, 2006, relating
to the sale of the Initial Notes.

 

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

 

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

 

18

 

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

 

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

 

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

 

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

 

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

 

“Permitted
Holders” means each of the Investors and members of management of the
Issuer (or its direct parent) who are holders of Equity Interests of the Issuer
(or any of its direct or indirect parent companies) on the Issue Date and any
group (within the meaning of Section 13(d)(3) or Section 14(d)(2) of the
Exchange Act or any successor provision) of which any of the foregoing are
members; provided that, in the case of such group and without giving
effect to the existence of such group or any other group, such Investors and
members of management, collectively, have beneficial ownership of more than 50%
of the total voting power of the Voting Stock of the Issuer or any of its
direct or indirect parent companies. Any person or group whose acquisition of
beneficial ownership (within the meaning of Rule 13d-3 under the Exchange Act,
or any successor provision) constitutes a Change of Control in respect of which
a Change of Control Offer is made in accordance with the requirements of
Section 4.14 (or would result in a Change of Control Offer in the absence of
the waiver of such requirement by Holders in accordance with Section 4.14 will
thereafter, together with its Affiliates, constitute an additional Permitted
Holder.

 

“Permitted
Investments” means:

 

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

 

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

 

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

 

(a)                                  such Person becomes a Restricted Subsidiary;
or

 

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

 

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

 

19

 

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

 

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

 

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

 

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

 

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

 

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

 

(8)                                  any Investment in a Similar Business having
an aggregate fair market value, taken together with all other Investments made
pursuant to this clause (8) that are at that time outstanding, not to
exceed $75.0 million (with the fair market value of each Investment being
measured at the time made and without giving effect to subsequent changes in
value);

 

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

 

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

 

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

 

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

 

(13)                            additional Investments having an aggregate fair market value, taken
together with all other Investments made pursuant to this clause (13) that are
at that time outstanding (without giving effect to the sale of an Unrestricted
Subsidiary to the extent the proceeds of such sale do 

 

20

 

not
consist of, or have not been subsequently sold or transferred for, cash or
marketable securities), not to exceed $100.0 million (with the fair market
value of each Investment being measured at the time made and without giving
effect to subsequent changes in value);

 

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

 

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

 

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

 

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

 

“Permitted
Junior Securities” means:

 

(1)                                  Equity Interests in any direct or indirect
parent of the Issuer; or

 

(2)                                  unsecured debt securities that are
subordinated to all Senior Indebtedness (and any debt securities issued in
exchange for Senior Indebtedness) to substantially the same extent as, or to a
greater extent than, the Notes and the related Guarantees are subordinated to
Senior Indebtedness under this Indenture and which do not mature or become
subject to a mandatory redemption obligation prior to the final maturity of the
Notes;

 

provided that the term “Permitted Junior Securities”
shall not include any securities distributed pursuant to a plan of
reorganization if the Indebtedness under the Senior Credit Facilities is
treated as part of the same class as the Notes for purposes of such plan of
reorganization; provided further that to the extent that any Senior
Indebtedness of the Issuer or the Guarantors outstanding on the date of
consummation of any such plan of reorganization is not paid in full in cash on
such date, the holders of any such Senior Indebtedness not so paid in full in cash
have consented to the terms of such plan of reorganization.

 

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

 

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

 

(2)                                  Liens imposed by law, such as carriers’,
warehousemen’s, materialmen’s, repairmen’s and mechanics’ Liens, in each case
for sums not yet overdue for a period of more than 30 days or being contested
in good faith by appropriate actions or other Liens arising out of judgments or
awards against such Person with respect to which such Person shall then be
proceeding 

 

21

 

with
an appeal or other proceedings for review if adequate reserves with respect
thereto are maintained on the books of such Person in accordance with GAAP;

 

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

 

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

 

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

 

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

 

(7)                                  Liens existing on the Issue Date;

 

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

 

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

 

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

 

22

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(22)                            Liens (i) of a collection bank arising under Section 4-210
of the Uniform Commercial Code on items in the course of collection,
(ii) attaching to commodity trading accounts or other commodity brokerage
accounts incurred in the ordinary course of business, and (iii) in favor 

 

23

 

of
banking institutions arising as a matter of law encumbering deposits (including
the right of set-off) and which are within the general parameters customary in
the banking industry;

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

24

 

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

 

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

 

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

 

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

 

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

 

“Proof
of Claim” shall mean a proof of claim or debt filed in accordance with and
pursuant to any applicable provisions of the Bankruptcy Law, the Federal Rules
of Bankruptcy Procedure and/or a final order of the U.S. bankruptcy court.

 

“Proper
Proof of Claim” shall mean, at any time, a Proof of Claim in an amount not
less than the sum of the aggregate outstanding Accreted Value of the Notes at
such time plus accrued but unpaid interest, if any, on the Notes at such time.

 

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

 

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

 

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

 

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

 

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

 

25

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

26

 

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

 

“Representative”
means any trustee, agent or representative (if any) for an issue of Senior
Indebtedness of the Issuer or any Guarantor.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

27

 

“Sale
and Lease-Back Transaction” means any arrangement providing for the
leasing by the Issuer or any of its Restricted Subsidiaries of any real or
tangible personal property, which property has been or is to be sold or
transferred by the Issuer or such Restricted Subsidiary to a third Person in
contemplation of such leasing.

 

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

 

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

 

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

 

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

 

“Senior
Indebtedness” means:

 

(1)                                  all Indebtedness of the Issuer or any
Guarantor outstanding under the Senior Credit Facilities, the Senior Notes or
the Senior Subordinated Notes and related guarantees (including interest
accruing on or after the filing of any petition in bankruptcy or any similar
proceeding or for reorganization of the Issuer or any Guarantor (at the rate
provided for in the documentation with respect thereto, regardless of whether
or not a claim for post-filing interest is allowed in such proceedings)),
and any and all other fees, expense reimbursement obligations, indemnification
amounts, penalties, and other amounts (whether existing on the Issue Date or
thereafter created or incurred) and all obligations of the Issuer or any
Guarantor to reimburse any bank or other Person in respect of amounts paid under
letters of credit, acceptances or other similar instruments;

 

(2)                                  all Hedging Obligations (and guarantees
thereof) owing to a lender or any affiliate of a lender under any Senior Credit
Facility (or a Person who was such a lender or an affiliate at the time such
Hedging Obligations were entered into);

 

(3)                                  any other Indebtedness of the Issuer or any
Guarantor permitted to be incurred under the terms of this Indenture, unless
the instrument under which such Indebtedness is incurred expressly provides that
it is on a parity with or subordinated in right of payment to the Notes or any
Guarantee; and

 

(4)                                  all Obligations with respect to the items
listed in the preceding clauses (1), (2) and (3);

 

provided, however, that Senior Indebtedness
shall not include:

 

(a)                                  any obligation of such Person to the Issuer
or any of its Subsidiaries;

 

(b)                                 any liability for federal, state, local or
other taxes owed or owing by such Person;

 

(c)                                  any accounts payable or other liability to
trade creditors arising in the ordinary course of business; provided
that obligations incurred pursuant to the Senior Credit Facilities shall not be
excluded pursuant to this clause (c); or

 

28

 

(d)                                 that portion of any Indebtedness which at the
time of incurrence is incurred in violation of this Indenture; provided,
however that such Indebtedness shall be deemed not to have been incurred
in violation of this Indenture for purposes of this clause if such Indebtedness
consists of Designated Senior Indebtedness, and the holder(s) of such
Indebtedness and their Representative shall have received a certificate from an
officer of the Issuer to the effect that the incurrence of such Indebtedness
does not (or, in the case of a revolving credit facility thereunder, the
incurrence of the entire committed amount thereof at the date on which the
initial borrowing thereunder is made would not) violate the provisions of this
Indenture.

 

“Senior
Notes” means the $750,000,000 aggregate principal amount of the Issuer’s
10% senior notes due 2014 issued on the Issue Date.

 

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

 

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

 

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

 

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

 

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

 

“Sponsor
Management Agreement” means the management agreements between certain of
the management companies associated with the Investors and Highfields Capital,
and the Issuer, as in effect on the Issue Date and as amended, supplemented,
amended and restated, replaced or otherwise modified from time to time;
provided, however, that the terms of any such amendment, supplement, 

 

29

 

amendment and restatement or
replacement agreement are not, taken as a whole, less favorable to the holders
of the Notes in any material respect than the original agreement in effect on
the Issue Date.

 

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

 

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

 

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

 

“Subsidiary”
means, with respect to any Person:

 

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

 

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

 

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

 

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

 

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

 

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

 

30

 

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

 

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

 

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

 

“Treasury
Rate” means, as of any Redemption Date, the yield to maturity as of such
Redemption Date of United States Treasury securities with a constant maturity
(as compiled and published in the most recent Federal Reserve Statistical
Release H.15 (519) that has become publicly available at least two Business
Days prior to the Redemption Date (or, if such Statistical Release is no longer
published, any publicly available source of similar market data)) most nearly
equal to the period from the Redemption Date to November 1, 2011; provided,
however, that if the period from the Redemption Date to November 1, 2011
is less than one year, the weekly average yield on actually traded United
States Treasury securities adjusted to a constant maturity of one year will be
used.

 

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

 

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

 

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

 

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

 

“Unrestricted
Subsidiary” means:

 

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

 

(2)                                  any Subsidiary of an Unrestricted Subsidiary.

 

The
Issuer may designate any Subsidiary of the Issuer (including any existing
Subsidiary and any newly acquired or newly formed Subsidiary) to be an
Unrestricted Subsidiary unless such Subsidiary or any of its Subsidiaries owns
any Equity Interests or Indebtedness of, or owns or holds any Lien on, any
property of, the Issuer or any Subsidiary of the Issuer (other than solely any
Subsidiary of the Subsidiary to be so designated); provided that

 

31

 

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

 

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

 

(3)                                  each of:

 

(a)                                  the Subsidiary to be so designated; and

 

(b)                                 its Subsidiaries

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(2)                                  the sum of all such payments.

 

32

 

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

 

Section 1.02                                          Other
Definitions.

 

	
  Term

  	
   

  	
  Defined in 

  Section

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  “Acceptable
  Commitment”

  	
   

  	
  4.10(b)

  	
   

  
	
  “Affiliate
  Transaction”

  	
   

  	
  4.11(a)

  	
   

  
	
  “AHYDO
  Amount”

  	
   

  	
  3.08

  	
   

  
	
  “Asset
  Sale Offer”

  	
   

  	
  4.10(c)

  	
   

  
	
  “Authentication
  Order”

  	
   

  	
  2.02

  	
   

  
	
  “Blockage
  Notice”

  	
   

  	
  10.03

  	
   

  
	
  “Change
  of Control Offer”

  	
   

  	
  4.14(a)

  	
   

  
	
  “Change
  of Control Payment”

  	
   

  	
  4.14(a)

  	
   

  
	
  “Change
  of Control Payment Date”

  	
   

  	
  4.14(a)

  	
   

  
	
  “Covenant
  Defeasance”

  	
   

  	
  8.03

  	
   

  
	
  “Covenant
  Suspension Event”

  	
   

  	
  4.16(a)

  	
   

  
	
  “DTC”

  	
   

  	
  2.03

  	
   

  
	
  “Event
  of Default”

  	
   

  	
  6.01(a)

  	
   

  
	
  “Excess
  Proceeds”

  	
   

  	
  4.10(c)

  	
   

  
	
  “Guarantee
  Blockage Notice”

  	
   

  	
  12.03

  	
   

  
	
  “Guarantee
  Payment Blockage Period”

  	
   

  	
  12.03

  	
   

  
	
  “Guarantor
  Non-Payment Default”

  	
   

  	
  12.03

  	
   

  
	
  “Guarantor
  Payment Default”

  	
   

  	
  12.03

  	
   

  
	
  “incur”
  or “incurrence”

  	
   

  	
  4.09(a)

  	
   

  
	
  “Legal
  Defeasance”

  	
   

  	
  8.02

  	
   

  
	
  “Non-Payment
  Default”

  	
   

  	
  10.03

  	
   

  
	
  “Note
  Register”

  	
   

  	
  2.03

  	
   

  
	
  “Offer
  Amount”

  	
   

  	
  3.09(b)

  	
   

  
	
  “Offer
  Period”

  	
   

  	
  3.09(b)

  	
   

  
	
  “Pari
  Passu Indebtedness”

  	
   

  	
  4.10(c)

  	
   

  
	
  “pay
  its Guarantee”

  	
   

  	
  12.03

  	
   

  
	
  “pay
  the Notes”

  	
   

  	
  10.03

  	
   

  
	
  “Paying
  Agent”

  	
   

  	
  2.03

  	
   

  
	
  “Payment
  Blockage Period”

  	
   

  	
  10.03

  	
   

  
	
  “Payment
  Default”

  	
   

  	
  10.03

  	
   

  
	
  “Purchase
  Date”

  	
   

  	
  3.09(b)

  	
   

  
	
  “Redemption
  Date”

  	
   

  	
  3.07(a)

  	
   

  
	
  “Refinancing
  Indebtedness”

  	
   

  	
  4.09(b)

  	
   

  
	
  “Refunding
  Capital Stock”

  	
   

  	
  4.07(b)

  	
   

  
	
  “Registrar”

  	
   

  	
  2.03

  	
   

  
	
  “Restricted
  Payments”

  	
   

  	
  4.07(a)

  	
   

  
	
  “Reversion
  Date”

  	
   

  	
  4.16(b)

  	
   

  
	
  “Second
  Commitment”

  	
   

  	
  4.10(b)

  	
   

  
	
  “Successor
  Company”

  	
   

  	
  5.01(a)

  	
   

  
	
  “Successor
  Person”

  	
   

  	
  5.01(c)

  	
   

  

 

33

 

	
  Term

  	
   

  	
  Defined in 

  Section

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  “Suspended
  Covenants”

  	
   

  	
  4.16(a)

  	
   

  
	
  “Suspension
  Period”

  	
   

  	
  4.16(b)

  	
   

  
	
  “Treasury
  Capital Stock”

  	
   

  	
  4.07(b)

  	
   

  

 

Section 1.03                                          Incorporation
by Reference of Trust Indenture Act.

 

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

 

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

 

“indenture
securities” means the Notes;

 

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

 

“indenture
to be qualified” means this Indenture;

 

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

 

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

 

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

 

Section 1.04                                          Rules of Construction.

 

Unless
the context otherwise requires:

 

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

 

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

 

(c)                                  “or” is not exclusive;

 

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

 

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

 

(f)                                    provisions apply to successive events and
transactions;

 

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

 

34

 

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

 

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

 

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

 

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

 

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

 

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

 

Section 1.05                                          Acts
of Holders.

 

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

 

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

 

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

 

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

 

(e)                                  The Issuer may, in the circumstances
permitted by the Trust Indenture Act, set a record date for purposes of
determining the identity of Holders entitled to give any request, demand,
authorization, 

 

35

 

direction, notice, consent,
waiver or take any other act, or to vote or consent to any action by vote or
consent authorized or permitted to be given or taken by Holders.  Unless otherwise specified, if not set by the
Issuer prior to the first solicitation of a Holder made by any Person in
respect of any such action, or in the case of any such vote, prior to such
vote, any such record date shall be the later of 30 days prior to the first
solicitation of such consent or the date of the most recent list of Holders
furnished to the Trustee prior to such solicitation.

 

(f)                                    Without limiting the foregoing, a Holder
entitled to take any action hereunder with regard to any particular Note may do
so with regard to all or any part of the principal amount at maturity of such
Note or by one or more duly appointed agents, each of which may do so pursuant
to such appointment with regard to all or any part of such principal amount at
maturity.  Any notice given or action
taken by a Holder or its agents with regard to different parts of such
principal amount at maturity pursuant to this paragraph shall have the same
effect as if given or taken by separate Holders of each such different part.

 

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

 

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

 

ARTICLE
2

 

THE
NOTES

 

Section 2.01                                          Form
and Dating; Terms.

 

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

 

(b)                                 Global Notes. 
Notes issued in global form shall be substantially in the form of Exhibit
A attached hereto (including the Global Note Legend thereon and the “Schedule
of Exchanges of Interests in the Global Note” attached thereto).  Notes issued in definitive form shall be
substantially in the form of Exhibit A attached hereto (but without the
Global Note Legend thereon and without the “Schedule of Exchanges of Interests
in the Global Note” attached thereto). 
Each Global Note shall represent such of the outstanding Notes as shall
be specified in the “Schedule of Exchanges of Interests in the Global Note”
attached thereto and each shall provide that it shall represent up to the
aggregate principal 

 

36

 

amount at maturity of Notes
from time to time endorsed thereon and that the aggregate principal amount at
maturity of outstanding Notes represented thereby may from time to time be
reduced or increased, as applicable, to reflect exchanges and redemptions.  Any endorsement of a Global Note to reflect
the amount of any increase or decrease in the aggregate principal amount at
maturity of outstanding Notes represented thereby shall be made by the Trustee
or the Custodian, at the direction of the Trustee, in accordance with
instructions given by the Holder thereof as required by Section 2.06 hereof.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

Additional
Notes ranking pari  passu with the Initial Notes may be
created and issued from time to time by the Issuer without notice to or consent
of the Holders and shall be consolidated with and form a single class with the
Initial Notes and shall have the same terms as to status, redemption or 

 

37

 

otherwise as the Initial Notes;
provided that the Issuer’s ability to issue Additional Notes shall be
subject to the Issuer’s compliance with Section 4.09 hereof.  Any Additional Notes shall be issued with the
benefit of an indenture supplemental to this Indenture.

 

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

 

Section 2.02                                          Execution
and Authentication.

 

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

 

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

 

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

 

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

 

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

 

Section 2.03                                          Registrar
and Paying Agent.

 

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

 

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

 

38

 

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

 

Section 2.04                                          Paying
Agent To Hold Money in Trust.

 

The
Issuer shall require each Paying Agent other than the Trustee to agree in
writing that the Paying Agent shall hold in trust for the benefit of Holders or
the Trustee all money held by the Paying Agent for the payment of Accreted
Value, premium, if any, or Additional Interest, if any, or interest on the
Notes, and will notify the Trustee of any default by the Issuer in making any
such payment. While any such default continues, the Trustee may require a
Paying Agent to pay all money held by it to the Trustee.  The Issuer at any time may require a Paying
Agent to pay all money held by it to the Trustee.  Upon payment over to the Trustee, the Paying
Agent (if other than the Issuer or a Subsidiary) shall have no further
liability for the money.  If the Issuer
or a Subsidiary acts as Paying Agent, it shall segregate and hold in a separate
trust fund for the benefit of the Holders all money held by it as Paying
Agent.  Upon any bankruptcy or
reorganization proceedings relating to the Issuer, the Trustee shall serve as
Paying Agent for the Notes.

 

Section 2.05                                          Holder
Lists.

 

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

 

Section 2.06                                          Transfer
and Exchange.

 

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

 

(b)                                 Transfer and Exchange of Beneficial Interests
in the Global Notes.  The transfer and exchange of beneficial
interests in the Global Notes shall be effected through the Depositary, in
accordance with the provisions of this Indenture and the Applicable Procedures.  Beneficial interests in the 

 

39

 

Restricted Global Notes shall
be subject to restrictions on transfer comparable to those set forth herein to
the extent required by the Securities Act. 
Transfers of beneficial interests in the Global Notes also shall require
compliance with either subparagraph (i) or (ii) below, as applicable, as well
as one or more of the other following subparagraphs, as applicable:

 

(i)                                     Transfer of Beneficial Interests in the Same
Global Note.  Beneficial interests in any Restricted Global
Note may be transferred to Persons who take delivery thereof in the form of a
beneficial interest in the same Restricted Global Note in accordance with the
transfer restrictions set forth in the Private Placement Legend; provided,
however, that prior to the expiration of the Restricted Period,
transfers of beneficial interests in the Regulation S Temporary Global Note may
not be made to a U.S. Person or for the account or benefit of a U.S. Person
(other than an Initial Purchaser). 
Beneficial interests in any Unrestricted Global Note may be transferred
to Persons who take delivery thereof in the form of a beneficial interest in an
Unrestricted Global Note.  No written
orders or instructions shall be required to be delivered to the Registrar to
effect the transfers described in this Section 2.06(b)(i).

 

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

 

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

 

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

 

40

 

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

 

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

 

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

 

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

 

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

 

(D)                           the Registrar receives the following:

 

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

 

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

 

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

 

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

 

41

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(ii)                                  Beneficial Interests in Regulation S
Temporary Global Note to Definitive Notes.   Notwithstanding Sections
2.06(c)(i)(A) and (C) hereof, a beneficial interest in the Regulation S
Temporary Global Note may not be exchanged for a Definitive Note or transferred
to a Person who takes delivery 

 

42

 

thereof in the form of a
Definitive Note prior to (A) the expiration of the Restricted Period and (B)
the receipt by the Registrar of any certificates required pursuant to Rule
903(b)(3)(ii)(B) of the Securities Act, except in the case of a transfer
pursuant to an exemption from the registration requirements of the Securities
Act other than Rule 903 or Rule 904.

 

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

 

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

 

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

 

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

 

(D)                               the Registrar receives the following:

 

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

 

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

 

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

 

(iv)                              Beneficial Interests in Unrestricted Global
Notes to Unrestricted Definitive Notes.  If any holder of a beneficial
interest in an Unrestricted Global Note proposes to exchange such beneficial
interest for a Definitive Note or to transfer such beneficial interest to a
Person who takes delivery thereof in the form of a Definitive Note, then, upon
the occurrence of any of the events in subsection (i) or (ii) of Section
2.06(a) hereof and satisfaction of the conditions set forth in Section
2.06(b)(ii) hereof, the Trustee shall cause the aggregate principal amount at
maturity of the applicable Global Note to be reduced accordingly pursuant to
Section 2.06(h) hereof, and the Issuer shall execute and the Trustee shall
authenticate and mail to the Person designated in the instructions a Definitive
Note in the applicable principal amount at maturity.  Any Definitive Note issued in exchange for a
beneficial interest pursuant to this 

 

43

 

Section 2.06(c)(iv) shall be
registered in such name or names and in such authorized denomination or
denominations as the holder of such beneficial interest shall instruct the
Registrar through instructions from or through the Depositary and the
Participant or Indirect Participant.  The
Trustee shall mail such Definitive Notes to the Persons in whose names such
Notes are so registered.  Any Definitive
Note issued in exchange for a beneficial interest pursuant to this Section
2.06(c)(iv) shall not bear the Private Placement Legend.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(A)                              such exchange or transfer is effected pursuant to the Exchange Offer in
accordance with the Registration Rights Agreement and the Holder, in the case
of an exchange, or the 

 

44

 

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

 

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

 

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

 

(D)                               the Registrar receives the following:

 

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

 

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

 

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

 

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

 

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

 

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

 

(e)                                  Transfer and Exchange of Definitive Notes for
Definitive Notes.  Upon request by a Holder of Definitive Notes
and such Holder’s compliance with the provisions of this Section 2.06(e), the
Registrar shall register the transfer or exchange of Definitive Notes.  Prior to such registration of transfer or
exchange, the requesting Holder shall present or surrender to the Registrar the
Definitive Notes duly endorsed or accompanied by a written instruction of
transfer in form satisfactory to the Registrar

 

45

 

duly executed by such Holder or
by its attorney, duly authorized in writing. 
In addition, the requesting Holder shall provide any additional
certifications, documents and information, as applicable, required pursuant to
the following provisions of this Section 2.06(e):

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(D)                               the Registrar receives the following:

 

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

 

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

 

and,
in each such case set forth in this subparagraph (D), if the Registrar so
requests, an Opinion of Counsel in form reasonably acceptable to the Registrar
to the effect that such exchange or transfer is in compliance with the
Securities Act and that the restrictions on transfer contained 

 

46

 

herein
and in the Private Placement Legend are no longer required in order to maintain
compliance with the Securities Act.

 

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

 

(f)                                    Exchange Offer.  Upon
the occurrence of the Exchange Offer in accordance with the Registration Rights
Agreement, the Issuer shall issue and, upon receipt of an Authentication Order
in accordance with Section 2.02 hereof, the Trustee shall authenticate (i) one
or more Unrestricted Global Notes in an aggregate principal amount at maturity
equal to the principal amount at maturity of the beneficial interests in the
Restricted Global Notes tendered for acceptance by Persons that certify in the
applicable Letters of Transmittal that (x) they are not Participating
Broker-Dealers, (y) they are not participating in a distribution of the
Exchange Notes and (z) they are not affiliates (as defined in Rule 144) of the
Issuer, and accepted for exchange in the Exchange Offer and
(ii) Unrestricted Definitive Notes in an aggregate principal amount at
maturity equal to the principal amount at maturity of the Restricted Definitive
Notes tendered for acceptance by Persons that certify in the applicable Letters
of Transmittal that (x) they are not Participating Broker-Dealers, (y) they are
not participating in a distribution of the Exchange Notes and (z) they are not
affiliates (as defined in Rule 144) of the Issuer, and accepted for exchange in
the Exchange Offer.  Concurrently with
the issuance of such Notes, the Trustee shall cause the aggregate principal
amount at maturity of the applicable Restricted Global Notes to be reduced
accordingly, and the Issuer shall execute and the Trustee shall authenticate
and mail to the Persons designated by the Holders of Definitive Notes so
accepted Unrestricted Definitive Notes in the applicable principal amount at
maturity.  Any Notes that remain
outstanding after the consummation of the Exchange Offer, and Exchange Notes
issued in connection with the Exchange Offer, shall be treated as a single
class of securities under this Indenture.

 

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

 

(i)                                     Private Placement Legend.

 

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

 

“THIS
SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS
AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD
WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS
EXCEPT AS SET FORTH BELOW. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS
THAT (A) IT IS A “QUALIFIED INSTITUTIONAL BUYER” (AS DEFINED IN RULE 144A UNDER
THE SECURITIES ACT), (B) IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS SECURITY
IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT
OR (C) IT IS AN ACCREDITED INVESTOR (AS DEFINED IN RULE 501(a)(1), (2), (3), OR
(7) UNDER THE SECURITIES ACT (AN “ACCREDITED INVESTOR”), (2) AGREES THAT IT
WILL NOT WITHIN TWO YEARS AFTER THE ORIGINAL ISSUANCE 

 

47

 

OF
THIS SECURITY RESELL OR OTHERWISE TRANSFER THIS SECURITY EXCEPT (A) TO THE
ISSUER OR ANY SUBSIDIARY THEREOF, (B) INSIDE THE UNITED STATES TO A QUALIFIED
INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, (C)
INSIDE THE UNITED STATES TO AN ACCREDITED INVESTOR THAT, PRIOR TO SUCH
TRANSFER, FURNISHES (OR HAS FURNISHED ON ITS BEHALF BY A U.S. BROKER-DEALER) TO
THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS
RELATING TO THE RESTRICTIONS ON TRANSFER OF THIS SECURITY (THE FORM OF WHICH
LETTER CAN BE OBTAINED FROM THE TRUSTEE FOR THIS SECURITY), (D)OUTSIDE THE
UNITED STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE
SECURITIES ACT (IF AVAILABLE), (E) PURSUANT TO THE EXEMPTION FROM REGISTRATION
PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE), (F) IN ACCORDANCE
WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT
(AND BASED UPON AN OPINION OF COUNSEL IF THE ISSUER SO REQUESTS), OR (G)
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND
(3) AGREES THAT IT WILL GIVE TO EACH PERSON TO WHOM THIS SECURITY IS
TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND.  IN CONNECTION WITH ANY TRANSFER OF THIS
SECURITY WITHIN TWO YEARS AFTER THE ORIGINAL ISSUANCE OF THIS SECURITY, IF THE
PROPOSED TRANSFEREE IS AN ACCREDITED INVESTOR, THE HOLDER MUST, PRIOR TO SUCH
TRANSFER, FURNISH TO THE TRUSTEE AND THE ISSUER SUCH CERTIFICATIONS, LEGAL
OPINIONS OR OTHER INFORMATION AS EITHER OF THEM MAY REASONABLY REQUIRE TO
CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT.  AS USED HEREIN, THE TERMS “OFFSHORE
TRANSACTION,” “UNITED STATES” AND “U.S. PERSON” HAVE THE MEANING GIVEN TO THEM
BY REGULATION S UNDER THE SECURITIES ACT.”

 

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

 

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

 

“THIS
GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE GOVERNING
THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL OWNERS
HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT
THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT
TO SECTION 2.06(h) OF THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE EXCHANGED 

 

48

 

IN
WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE, (III) THIS
GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO
SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO A
SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE ISSUER.  UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR
IN PART FOR NOTES IN DEFINITIVE FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT
AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF
THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE
DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH
SUCCESSOR DEPOSITARY.  UNLESS THIS
CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) (“DTC”) TO THE ISSUER OR
ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER
NAME AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY
PAYMENT IS MADE TO CEDE & CO. OR SUCH OTHER ENTITY AS MAY BE REQUESTED BY
AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF
FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.”

 

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

 

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

 

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

 

49

 

(i)                                     General Provisions Relating to Transfers and
Exchanges.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

50

 

Section 2.07                                          Replacement
Notes.

 

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

 

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

 

Section 2.08                                          Outstanding
Notes.

 

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

 

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

 

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

 

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

 

Section 2.09                                          Treasury
Notes.

 

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

 

Section 2.10                                          Temporary
Notes.

 

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

 

51

 

delay, the Issuer shall prepare
and the Trustee shall authenticate definitive Notes in exchange for temporary
Notes.

 

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

 

Section 2.11                                          Cancellation.

 

The
Issuer at any time may deliver Notes to the Trustee for cancellation. The
Registrar and Paying Agent shall forward to the Trustee any Notes surrendered
to them for registration of transfer, exchange or payment.  The Trustee or, at the direction of the
Trustee, the Registrar or the Paying Agent and no one else shall cancel all
Notes surrendered for registration of transfer, exchange, payment, replacement
or cancellation and shall dispose of cancelled Notes (subject to the record
retention requirement of the Exchange Act) in its customary manner.  Certification of the disposal of all
cancelled Notes shall be delivered to the Issuer upon its request therefor.  The Issuer may not issue new Notes to replace
Notes that it has paid or that have been delivered to the Trustee for
cancellation.

 

Section 2.12                                          Defaulted
Interest.

 

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

 

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

 

Section 2.13                                          CUSIP Numbers

 

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

 

52

 

ARTICLE
3

 

REDEMPTION

 

Section 3.01                                          Notices
to Trustee.

 

If
the Issuer elects to redeem Notes pursuant to Section 3.07 hereof, it shall
furnish to the Trustee, at least 2 Business Days before notice of redemption is
required to be mailed or caused to be mailed to Holders pursuant to Section
3.03 hereof but not more than 60 days before a redemption date, an Officer’s
Certificate setting forth (i) the paragraph or subparagraph of such Notes
and/or Section of this Indenture pursuant to which the redemption shall occur,
(ii) the redemption date, (iii) the Accreted Value of the Notes (or, in
relation to Section 3.08, portion of each Note) to be redeemed and (iv) the
redemption price.

 

Section 3.02                                          Selection
of Notes To Be Redeemed or Purchased.

 

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

 

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

 

Section 3.03                                          Notice
of Redemption.

 

Subject
to Section 3.09 hereof, the Issuer shall mail or cause to be mailed by
first-class mail, postage prepaid, notices of redemption at least 30 days but
not more than 60 days before the redemption date to each Holder of Notes to be
redeemed at such Holder’s registered address or shall otherwise deliver on such
timeframe such notice in accordance with the procedures of DTC, except that
redemption notices may be mailed more than 60 days prior to a redemption date
if the notice is issued in connection with Article 8 or Article 13 hereof.  Except as set forth in Section 3.07(b)
hereof, notices of redemption may not be conditional.

 

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

 

(a)                                  the redemption date;

 

(b)                                 the redemption price;

 

53

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

Section 3.04                                          Effect
of Notice of Redemption.

 

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

 

Section 3.05                                          Deposit
of Redemption or Purchase Price.

 

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

 

54

 

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

 

Section 3.06                                          Notes
Redeemed or Purchased in Part.

 

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

 

Section 3.07                                          Optional
Redemption.

 

(a)                                  At any time prior to November 1, 2011, the
Issuer may redeem all or a part of the Notes, upon not less than 30 nor more
than 60 days’ prior notice mailed by first-class mail to the registered
address of each Holder of Notes or otherwise delivered in accordance with the
procedures of DTC, at a redemption price equal to 100% of the Accreted Value of
the Notes redeemed plus the Applicable Premium as of the date of redemption
(the “Redemption Date”).

 

(b)                                 Until November 1, 2009, the Issuer may, at
its option, on one or more occasions redeem up to 35% of the aggregate
principal amount at maturity of Notes (including the aggregate principal amount
at maturity of Notes issued after the Issue Date), upon notice provided as
described in Section 3.03 hereof, at a redemption price equal to 113.000% of
the Accreted Value thereof, as of the applicable Redemption Date, with the net
cash proceeds of one or more Equity Offerings; provided that at least
50% of the sum of the aggregate principal amount at maturity of Notes
originally issued under this Indenture and any Additional Notes that are issued
under this Indenture after the Issue Date remains outstanding immediately after
the occurrence of each such redemption; provided  further that
each such redemption occurs within 90 days of the date of closing of each such
Equity Offering.  Notice of any
redemption upon any Equity Offering may be given prior to such redemption, and
any such redemption or notice may, at the Issuer’s discretion, be subject to
one or more conditions precedent, including, but not limited to, completion of
the related Equity Offering.

 

(c)                                  Except pursuant to Sections 3.07(a) and (b),
the Notes will not be redeemable at the Issuer’s option before November 1,
2011.

 

(d)                                 On and after November 1, 2011, the Issuer may
redeem the Notes, in whole or in part, at the redemption prices (expressed as
percentages of Accreted Value of the Notes to be redeemed) set forth below,
plus accrued and unpaid interest thereon, if any, and Additional Interest (to
the extent not 

 

55

 

already included in Accreted
Value), if any, to the applicable Redemption Date, subject to the right of
Holders of record on the relevant Record Date to receive interest due on the
relevant Interest Payment Date, if redeemed during the twelve-month
period beginning on November 1 of each of the years indicated below:

 

	
  Year

  	
   

  	
  Percentage

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  2011

  	
   

  	
  106.500

  	
  %

  
	
  2012

  	
   

  	
  104.333

  	
  %

  
	
  2013

  	
   

  	
  102.167

  	
  %

  
	
  2014 and
  thereafter

  	
   

  	
  100.000

  	
  %

  

 

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

 

Section 3.08                                          Mandatory
Redemption.

 

On
May 1, 2012, and, if necessary, any Interest Payment Date thereafter prior to
November 1, 2016, the Issuer will be required to redeem a portion of each Note
outstanding on such date equal to the AHYDO Amount on such date.

 

The
redemption price for each portion of a Note so redeemed will equal 100% of the
Accreted Value of such portion as of the Redemption Date.

 

“AHYDO
Amount” means the amount sufficient, but not in excess of the amount
necessary, to ensure that a Note will not be an “applicable high yield discount
obligation” within the meaning of Section 163(i)(1) of the Internal Revenue
Code of 1986.

 

Any
redemption pursuant to this Section 3.08 shall be made pursuant to the
provisions of Sections 3.01 through 3.06 hereof (other than Section 3.02).

 

Section 3.09                                          Offers To Repurchase by Application of Excess
Proceeds.

 

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

 

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

 

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

 

56

 

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

 

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

 

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

 

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

 

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

 

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

 

(vi)                              that Holders electing to have a Note purchased pursuant to any Asset
Sale Offer shall be required to surrender the Note, with the form entitled “Option
of Holder to Elect Purchase” attached to the Note completed, or transfer such
Note by book-entry transfer, to the Issuer, the Depositary, if appointed by the
Issuer, or a Paying Agent at the address specified in the notice at least three
days before the Purchase Date;

 

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

 

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

 

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

 

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

 

57

 

with an Officer’s Certificate
stating the aggregate principal amount at maturity of Notes or portions thereof
so tendered.

 

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

 

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

 

ARTICLE
4

 

COVENANTS

 

Section 4.01                                          Payment
of Notes.

 

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

 

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

 

The
Issuer shall pay interest (including post-petition interest in any proceeding
under any Bankruptcy Law) on overdue Accreted Value at the rate equal to the
then applicable interest rate on the Notes to the extent lawful; it shall pay
interest (including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue installments of interest and, to the extent not
already included in Accreted Value, Additional Interest (without regard to any
applicable grace period) at the same rate to the extent lawful.

 

Section 4.02                                          Maintenance
of Office or Agency.

 

The
Issuer shall maintain in the Borough of Manhattan in the City of New York an
office or agency (which may be an office of the Trustee or an affiliate of the
Trustee, Registrar or co-registrar) where Notes may be surrendered for
registration of transfer or for exchange or presented for payment and where
notices and demands to or upon the Issuer in respect of the Notes and this
Indenture may be served.  The Issuer
shall give prompt written notice to the Trustee of the location, and any
change in the location,

 

58

 

of such office or agency.  If at any time the Issuer shall fail to
maintain any such required office or agency or shall fail to furnish the
Trustee with the address thereof, such presentations, surrenders, notices and
demands may be made or served at the Corporate Trust Office of the Trustee.

 

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

 

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

 

Section 4.03                                          Reports
and Other Information.

 

(a)                                  Notwithstanding that the Issuer may not be
subject to the reporting requirements of Section 13 or 15(d) of the Exchange
Act or otherwise report on an annual and quarterly basis on forms provided for
such annual and quarterly reporting pursuant to rules and regulations
promulgated by the SEC, the Issuer shall file with the SEC (and make available
to the Trustee and Holders of the Notes (without exhibits), without cost to any
Holder, within 15 days after the Issuer files them with the SEC) from and
after the Issue Date,

 

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

 

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

 

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

 

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

 

in
each case, in a manner that complies in all material respects with the
requirements specified in such form; provided that the Issuer shall not
be so obligated to file such reports with the SEC (i) if the SEC does not
permit such filing or (ii) prior to the consummation of an exchange offer or
the effectiveness of a shelf registration statement as required by the
Registration Rights Agreement, so long as if clause (i) or (ii) is
applicable the Issuer makes available such information to prospective
purchasers of Notes, in addition to providing such information to the Trustee
and the Holders of the Notes, in each case within 15 days after the time the
Issuer would be required to file such information with the SEC, if it were
subject to Sections 13 or 15(d) of the Exchange Act.  To the extent any such information is not so
filed or furnished, as applicable, within the time periods specified above and
such information is subsequently filed or furnished, as applicable, the Issuer
shall be deemed to have satisfied its obligations with respect thereto at such
time and any Default with respect thereto shall be deemed to have been cured; provided
that such 

 

59

 

cure
shall not otherwise affect the rights of the Holders under Article 6 hereto if
Holders of at least 25% in principal amount at maturity of the then total
outstanding Notes have declared the Accreted Value, premium, if any, interest
and any other monetary obligations on all the then outstanding Notes to be due
and payable immediately and such declaration shall not have been rescinded or
cancelled prior to such cure.  In
addition, to the extent not satisfied by the foregoing, for so long as any
Notes are outstanding, the Issuer shall furnish to Holders and to securities
analysts and prospective investors, upon their request, the information
required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act.

 

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

 

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

 

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

 

Section 4.04                                          Compliance
Certificate.

 

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

 

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

 

60

 

Section 4.05                                          Taxes.

 

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

 

Section 4.06                                          Stay,
Extension and Usury Laws.

 

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

 

Section 4.07                                          Limitation
on Restricted Payments.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(B)                                the purchase, repurchase or other acquisition of Subordinated
Indebtedness purchased in anticipation of satisfying a sinking fund obligation,
principal installment 

 

61

 

or
final maturity, in each case due within one year of the date of purchase,
repurchase or acquisition; or

 

(IV)                            make any Restricted Investment

 

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

 

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

 

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

 

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

 

(a)                                  50% of the Consolidated Net Income of the
Issuer for the period (taken as one accounting period) beginning July 30, 2006
to the end of the Issuer’s most recently ended fiscal quarter for which
internal financial statements are available at the time of such Restricted
Payment, or, in the case such Consolidated Net Income for such period is a
deficit, minus 100% of such deficit; plus

 

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

 

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

 

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

 

(y)                                 Designated Preferred Stock; and

 

(B)
to the extent such net cash proceeds are actually contributed to the Issuer,
Equity Interests of the Issuer’s direct or indirect parent companies (excluding
contributions of the proceeds from the sale of Designated Preferred Stock of
such companies or contributions to the extent such amounts have been applied to
Restricted 

 

62

 

Payments
made in accordance with clause (4) of Section 4.07(b) hereof); or

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

63

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(4)                                  a Restricted Payment to pay for the
repurchase, retirement or other acquisition or retirement for value of Equity
Interests (other than Disqualified Stock) of the Issuer or any of its direct or
indirect parent companies held by any future, present or former employee,
director or 

 

64

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(b)                                 the declaration and payment of dividends to a
direct or indirect parent company of the Issuer, the proceeds of which will be
used to fund the payment of dividends to holders of 

 

65

 

any
class or series of Designated Preferred Stock (other than Disqualified Stock)
of such parent company issued after the Issue Date, provided that the
amount of dividends paid pursuant to this clause (b) shall not exceed the
aggregate amount of cash actually contributed to the Issuer from the sale of
such Designated Preferred Stock; or

 

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

 

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

 

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

 

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

 

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

 

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

 

(11)                            other Restricted Payments in an aggregate amount taken together with
all other Restricted Payments made pursuant to this clause (11) that are at the
time outstanding (without giving effect to the sale of an Investment to the
extent the proceeds of such sale do not consist of, or have not been
subsequently sold or transferred for, cash or marketable securities) not to
exceed $75.0 million;

 

(12)                            distributions or payments of Receivables Fees;

 

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

 

(14)                            the repurchase, redemption or other acquisition or retirement for value
of any Subordinated Indebtedness pursuant to the provisions similar to those
described under Sections 

 

66

 

4.10
and Section 4.14 hereof; provided that all Notes tendered by Holders in
connection with a Change of Control Offer or Asset Sale Offer, as applicable,
have been repurchased, redeemed or acquired for value;

 

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

 

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

 

(b)                                 federal, state and local income taxes, to the
extent such income taxes are attributable to the income of the Issuer and its
Restricted Subsidiaries and, to the extent of the amount actually received from
its Unrestricted Subsidiaries, in amounts required to pay such taxes to the
extent attributable to the income of such Unrestricted Subsidiaries; provided that in each case the amount of
such payments in any fiscal year does not exceed the excess (if any) of (A) the
amount that the Issuer and its Restricted Subsidiaries would be required to pay
in respect of federal, state and local income taxes for such fiscal year were
the Issuer, its Restricted Subsidiaries and its Unrestricted Subsidiaries (to
the extent described above) to pay such taxes separately from any such parent
company over (B) the aggregate federal, state and local income taxes paid by
the Issuer and its Restricted Subsidiaries;

 

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

 

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

 

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

 

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

 

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

 

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

 

67

 

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

 

(c)                                  The Issuer shall not permit any Unrestricted
Subsidiary to become a Restricted Subsidiary except pursuant to the second to
last sentence of the definition of “Unrestricted Subsidiary.”  For purposes of designating any Restricted
Subsidiary as an Unrestricted Subsidiary, all outstanding Investments by the
Issuer and its Restricted Subsidiaries (except to the extent repaid) in the
Subsidiary so designated shall be deemed to be Investments in an amount
determined as set forth in the last sentence of the definition of “Investments.”  Such designation shall be permitted only if a
Restricted Payment in such amount would be permitted at such time, whether
pursuant to Section 4.07(a) hereof or under clause (7), (10), (11) or (16) of
Section 4.07(b) hereof, or pursuant to the definition of “Permitted
Investments,” and if such Subsidiary otherwise meets the definition of an
Unrestricted Subsidiary.

 

Section 4.08                                          Dividend
and Other Payment Restrictions 

Affecting Restricted Subsidiaries.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(2)                                  this Indenture and the Notes;

 

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

 

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

 

(5)                                  any agreement or other instrument of a Person
acquired by the Issuer or any of its Restricted Subsidiaries in existence at
the time of such acquisition (but not created in contemplation 

 

68

 

thereof),
which encumbrance or restriction is not applicable to any Person, or the
properties or assets of any Person, other than the Person so acquired and its
Subsidiaries, or the property or assets of the Person so acquired and its
Subsidiaries;

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

Section 4.09                                          Limitation
on Incurrence of Indebtedness and 

Issuance of Disqualified Stock and Preferred Stock.

 

(a)                                  The Issuer shall not, and shall not permit
any of its Restricted Subsidiaries to, directly or indirectly, create, incur,
issue, assume, guarantee or otherwise become directly or indirectly liable,
contingently or otherwise (collectively, “incur” and collectively, an “incurrence”)
with respect to any Indebtedness (including Acquired Indebtedness) and the
Issuer shall not issue any shares of Disqualified 

 

69

 

Stock and shall not permit any
Restricted Subsidiary to issue any shares of Disqualified Stock or Preferred
Stock; provided, however, that the Issuer may incur Indebtedness
(including Acquired Indebtedness) or issue shares of Disqualified Stock, and
any of its Restricted Subsidiaries may incur Indebtedness (including Acquired
Indebtedness), issue shares of Disqualified Stock and issue shares of Preferred
Stock, if the Fixed Charge Coverage Ratio on a consolidated basis for the
Issuer and its Restricted Subsidiaries’ most recently ended four fiscal
quarters for which internal financial statements are available immediately
preceding the date on which such additional Indebtedness is incurred or such
Disqualified Stock or Preferred Stock is issued would have been at least 2.00
to 1.00, determined on a pro forma
basis (including a pro forma
application of the net proceeds therefrom), as if the additional Indebtedness
had been incurred, or the Disqualified Stock or Preferred Stock had been
issued, as the case may be, and the application of the proceeds therefrom had
occurred at the beginning of such four-quarter period; provided that the
amount of Indebtedness (including Acquired Indebtedness), Disqualified Stock
and Preferred Stock that may be incurred or issued, as applicable, pursuant to
the foregoing by Restricted Subsidiaries that are not Guarantors shall not
exceed $150.0 million at any one time outstanding.

 

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

 

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

 

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

 

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

 

(4)                                  (i) Indebtedness (including Capitalized Lease
Obligations) incurred or Disqualified Stock and Preferred Stock issued by the
Issuer or any of its Restricted Subsidiaries, to finance the purchase, lease or
improvement of property (real or personal) or equipment that is used or useful
in a Similar Business, whether through the direct purchase of assets or the
Capital Stock of any Person owning such assets and (ii) any Indebtedness
incurred or Disqualified Stock or Preferred Stock issued to refund, refinance
or replace any other Indebtedness incurred or Disqualified Stock or Preferred
Stock issued pursuant to this clause (4); provided that the aggregate 

 

70

 

amount
of Indebtedness incurred and Disqualified Stock and Preferred Stock issued
pursuant to clauses (i) and (ii) of this clause (4) does not exceed $125.0
million at any one time outstanding;

 

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

 

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

 

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

 

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

 

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

 

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

 

71

 

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

 

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

 

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

 

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

 

(13)                            the incurrence by the Issuer or any
Restricted Subsidiary of Indebtedness or issuance by the Issuer or any
Restricted Subsidiary of Disqualified Stock or Preferred Stock which serves to
refund or refinance any Indebtedness incurred or Disqualified Stock or
Preferred Stock issued as permitted under Section 4.09(a) hereof and clauses
(2), (3) and (12)(a) of this Section 4.09(b), this clause (13) and clause (14)
of this Section 4.09(b) or any Indebtedness incurred or Disqualified Stock or
Preferred Stock issued to so refund or refinance such Indebtedness,
Disqualified Stock or Preferred Stock including additional Indebtedness
incurred or Disqualified Stock or Preferred Stock issued to pay premiums
(including tender premiums), defeasance costs 

 

72

 

and
fees in connection therewith (the “Refinancing Indebtedness”) prior to
its respective maturity; provided, however, that such Refinancing
Indebtedness:

 

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

 

(B)                                to the extent such Refinancing Indebtedness refinances
(i) Indebtedness subordinated or pari
passu to 0the Notes or any Guarantee thereof, such Refinancing
Indebtedness is subordinated or pari passu
to the Notes or the Guarantee at least to the same extent as the Indebtedness
being refinanced or refunded or (ii) Disqualified Stock or Preferred Stock,
such Refinancing Indebtedness must be Disqualified Stock or Preferred Stock,
respectively, and

 

(C)                                shall not include:

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

73

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

74

 

that
all Indebtedness outstanding under the Senior Credit Facilities on the Issue
Date shall at all times be deemed to be outstanding in reliance on clause (1)
of Section 4.09(b) hereof; and

 

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

 

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

 

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

 

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

 

Section 4.10                                          Asset
Sales.

 

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

 

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

 

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

 

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

 

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

 

75

 

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

 

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

 

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

 

(1)                                  to permanently reduce:

 

(A)                              Obligations under Senior Indebtedness, and to correspondingly reduce
commitments with respect thereto;

 

(B)                                Obligations under Indebtedness not constituting Senior Indebtedness and
not constituting Subordinated Indebtedness (and to correspondingly reduce
commitments with respect thereto), provided that the Issuer shall
equally and ratably reduce Obligations under the Notes as provided under
Section 3.07 hereof through open-market purchases (to the extent such purchases
are at or above 100% of the Accreted Value thereof) or by making an offer (in
accordance with the procedures set forth under Section 4.10(c) hereof) to all
Holders to purchase their Notes at 100% of the Accreted Value thereof, plus the
amount of accrued but unpaid interest, if any, and Additional Interest, if any,
on the amount of Notes that would otherwise be prepaid; or

 

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

 

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

 

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

 

provided that, in the case of clauses (2) and (3)
above, a binding commitment shall be treated as a permitted application of the
Net Proceeds from the date of such commitment so long as the Issuer or such
other Restricted Subsidiary enters into such commitment with the good faith
expectation that such Net Proceeds shall be applied to satisfy such commitment
within 180 days of such commitment (an “Acceptable Commitment”) and, in
the event any Acceptable Commitment is later cancelled or terminated for any
reason before the Net Proceeds are applied in connection therewith, the Issuer
or such Restricted Subsidiary enters 

 

76

 

into
another Acceptable Commitment (a “Second Commitment”) within 180 days
of such cancellation or termination; provided  further that if any
Second Commitment is later cancelled or terminated for any reason before such
Net Proceeds are applied, then such Net Proceeds shall constitute Excess
Proceeds.

 

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

 

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

 

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

 

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

 

Section 4.11                                          Transactions
with Affiliates.

 

(a)                                  The Issuer shall not, and shall not permit
any of its Restricted Subsidiaries to, make any payment to, or sell, lease,
transfer or otherwise dispose of any of its properties or assets to, or
purchase any property or assets from, or enter into or make or amend any
transaction, contract, agreement, understanding, loan, advance or guarantee
with, or for the benefit of, any Affiliate of the Issuer (each of the
foregoing, an “Affiliate Transaction”) involving aggregate payments or
consideration in excess of $10.0 million, unless:

 

77

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

78

 

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

 

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

 

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

 

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

 

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

 

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

 

Section 4.12                                          Liens.

 

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

 

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

 

(2)                                   in all other cases, the Notes or the
Guarantees are equally and ratably secured, except that the foregoing shall not
apply to or restrict (a) Liens securing the Notes and the related Guarantees,
(b) Liens securing Senior Indebtedness of the Issuer or any Guarantor and (c)
Liens securing both Indebtedness permitted to be incurred under Senior Credit
Facilities, including any letter of credit facility relating thereto, that was
permitted by the terms of this Indenture to be incurred and obligations of the
Issuer or any Guarantor in respect of any Bank Products or Cash Management
Services provided by any lender party to any Senior Credit Facility or any
affiliate of such lender (or any Person that was a lender or an affiliate of a
lender at the time the applicable 

 

79

 

agreements
pursuant to which such Bank Products or Cash Management Services are provided
were entered into).

 

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

 

Section 4.13                                          Corporate
Existence.

 

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

 

Section 4.14                                          Offer
to Repurchase Upon Change of Control.

 

(a)                                  If a Change of Control occurs, unless the
Issuer has previously or concurrently mailed a redemption notice with respect
to all the outstanding Notes as described under Section 3.07 hereof, the Issuer
shall make an offer to purchase all of the Notes pursuant to the offer
described below (the “Change of Control Offer”) at a price in cash (the “Change
of Control Payment”) equal to 101% of the Accreted Value thereof plus
accrued and unpaid interest, if any, and Additional Interest (to the extent not
already included in Accreted Value), if any, to the date of purchase, subject
to the right of Holders of record of the Notes on the relevant Record Date to
receive interest due, if any, on the relevant Interest Payment Date.  Within 30 days following any Change of
Control, the Issuer shall send notice of such Change of Control Offer by
first-class mail, with a copy to the Trustee, to each Holder of Notes to the
address of such Holder appearing in the security register or otherwise in
accordance with the procedures of DTC, with the following information:

 

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

 

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

 

(3)                                  that any Note not properly tendered will
remain outstanding and continue to accrue interest or accrete in value, as
applicable;

 

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

 

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

 

(6)                                  that Holders shall be entitled to withdraw
their tendered Notes and their election to require the Issuer to purchase such
Notes, provided that the paying agent receives, not later 

 

80

 

than
the close of business on the second Business Day prior to the Change of Control
Payment Date, a telegram, telex, facsimile transmission or letter setting forth
the name of the Holder of the Notes, the Accreted Value of Notes tendered for
purchase, and a statement that such Holder is withdrawing its tendered Notes
and its election to have such Notes purchased;

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(c)                                  In the event a Change of Control occurs at a
time when the Issuer is prohibited by the terms of any Senior Indebtedness from
purchasing Notes, then notwithstanding anything to the contrary in this
Indenture, the Issuer (x) shall have 90 days following such Change of Control
to mail the notice of a Change of Control Offer to Holders and (y) shall
undertake, within 90 days following such Change of Control, to (1) repay
in full all Obligations, and terminate all commitments, under the Senior Credit
Facilities and all other Senior Indebtedness, the terms of which require repayment
and/or termination of commitments upon a Change of Control or offer to repay in
full all Obligations, and terminate all commitments, under the Senior Credit
Facilities and all other such Senior Indebtedness and to repay the Obligations
owed to (and terminate all commitments of) each lender which has accepted such
offer or (2) obtain the requisite consents under the agreements governing such
Senior Indebtedness to permit the repurchase of the Notes.

 

81

 

(d)                                 The Issuer shall first comply with Section
4.14(c) hereof before it shall be required to repurchase Notes pursuant to the
provisions of this Section 4.14.  The
Issuer’s failure to comply with Section 4.14(c) hereof may (with notice and
lapse of time) constitute an Event of Default described in clause (3) of
Section 6.01(a) hereof, but shall not constitute an Event of Default described
in clause (1), of Section 6.01(a) hereof.

 

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

 

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

 

Section 4.15                                          Limitation
on Guarantees of Indebtedness by Restricted Subsidiaries.

 

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

 

(1)                                  such Restricted Subsidiary within 30 days
executes and delivers a supplemental indenture to this Indenture, the form of
which is attached as Exhibit D hereto, providing for a Guarantee by such
Restricted Subsidiary, except that with respect to a guarantee of Indebtedness
of the Issuer or any Guarantor:

 

(a)                                  if the Notes or such Guarantor’s Guarantee
are subordinated in right of payment to such Indebtedness, the Guarantee under
the supplemental indenture shall be subordinated to such Restricted Subsidiary’s
guarantee with respect to such Indebtedness substantially to the same extent as
the Notes are subordinated to such Indebtedness; and

 

(b)                                 if such Indebtedness is by its express terms
subordinated in right of payment to the Notes or such Guarantor’s Guarantee,
any such guarantee by such Restricted Subsidiary with respect to such
Indebtedness shall be subordinated in right of payment to such Guarantee
substantially to the same extent as such Indebtedness is subordinated to the
Notes;

 

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

 

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

 

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

 

82

 

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

 

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

 

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

 

Section 4.16                                          Discharge
and Suspension of Covenants.

 

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

 

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

 

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

 

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

 

83

 

ARTICLE
5

 

SUCCESSORS

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

84

 

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

 

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

 

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

 

(B)                                the Successor Person, if other than such Guarantor, expressly assumes
all the obligations of such Guarantor under this Indenture and such Guarantor’s
related Guarantee pursuant to supplemental indentures or other documents or
instruments in form reasonably satisfactory to the Trustee;

 

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

 

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

 

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

 

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

 

Section 5.02                                          Successor
Corporation Substituted.

 

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

 

85

 

Notes except in the case of a
sale, assignment, transfer, lease, conveyance or other disposition of all of
the Issuer’s assets that meets the requirements of Section 5.01 hereof.

 

ARTICLE
6

 

DEFAULTS
AND REMEDIES

 

Section 6.01                                          Events
of Default.

 

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

 

(1)                                  default in payment when due and payable, upon
redemption, acceleration or otherwise, of Accreted Value of, or premium, if
any, on the Notes (whether or not prohibited by the subordination provisions of
this Indenture);

 

(2)                                  default for 30 days or more in the payment
when due of interest or Additional Interest on or with respect to the Notes
(whether or not prohibited by the subordination provisions of this Indenture);

 

(3)                                  failure by the Issuer or any Guarantor for 60
days after receipt of written notice given by the Trustee or the Holders of not
less than 25% in principal amount at maturity of the Notes to comply with any
of its obligations, covenants or agreements (other than a default referred to
in clauses (1) and (2) above) contained in this Indenture or the Notes
(whether or not prohibited by the subordination provisions of this Indenture);

 

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

 

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

 

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

 

(5)                                  failure by the Issuer or any Significant
Subsidiary, or any group of Restricted Subsidiaries that, taken together (as of
the latest audited consolidated financial statements for the Issuer), would
constitute a Significant Subsidiary, to pay final judgments aggregating in
excess of $50.0 million, which final judgments remain unpaid, undischarged and
unstayed for a period of 

 

86

 

more
than 60 days after such judgment becomes final, and in the event such judgment
is covered by insurance, an enforcement proceeding has been commenced by any
creditor upon such judgment or decree which is not promptly stayed;

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(8)                                  the Guarantee of any Significant Subsidiary,
or any group of Restricted Subsidiaries that, taken together (as of the latest
audited consolidated financial statements for the Issuer), 

 

87

 

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

 

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

 

(1)                                  the Indebtedness or guarantee that is the
basis for such Event of Default has been discharged; or

 

(2)                                  holders thereof have rescinded or waived the
acceleration, notice or action (as the case may be) giving rise to such Event
of Default; or

 

(3)                                  the default that is the basis for such Event
of Default has been cured.

 

Section 6.02                                          Acceleration.

 

If
any Event of Default (other than an Event of Default specified in clause (6) or
(7) of Section 6.01(a) hereof with respect to the Issuer) occurs and is
continuing under this Indenture, the Trustee or the Holders of at least 25% in
principal amount at maturity of the then total outstanding Notes may declare
the Accreted Value, premium, if any, interest, if any, and any other monetary
obligations on all the then outstanding Notes to be due and payable
immediately; provided, however, that so long as any Indebtedness
permitted to be incurred under this Indenture as part of the Senior Credit
Facilities shall be outstanding, no such acceleration shall be effective until
the earlier of:

 

(1) acceleration of any such Indebtedness under
the Senior Credit Facilities; or

 

(2) five Business Days after the giving of
written notice of such acceleration to the Issuer and the Representative under
each of the Senior Credit Facilities.

 

Upon
the effectiveness of such declaration, such Accreted Value and interest shall
be due and payable immediately.  The
Trustee shall have no obligation to accelerate the Notes if and so long as a
committee of its Responsible Officers in good faith determines acceleration is
not in the best interest of the Holders of the Notes.

 

Notwithstanding
the foregoing, in the case of an Event of Default arising under clause (6) or
(7) of Section 6.01(a) hereof with respect to the Issuer, all outstanding Notes
shall be due and payable immediately without further action or notice.

 

The
Holders of a majority in aggregate principal amount at maturity of the then
outstanding Notes by written notice to the Trustee may on behalf of all of the
Holders rescind an acceleration and its consequences:

 

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

 

88

 

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

 

(3)                                  to the extent the payment of such interest is
lawful, interest on overdue installments of interest and overdue Accreted
Value, which has become due otherwise than by such declaration of acceleration,
has been paid; and

 

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

 

Section 6.03                                          Other
Remedies.

 

If
an Event of Default occurs and is continuing, the Trustee may pursue any
available remedy to collect the payment of Accreted Value, premium, if any, and
interest on the Notes or to enforce the performance of any provision of the
Notes or this Indenture.

 

The
Trustee may maintain a proceeding even if it does not possess any of the Notes
or does not produce any of them in the proceeding.  A delay or omission by the Trustee or any
Holder of a Note in exercising any right or remedy accruing upon an Event of
Default shall not impair the right or remedy or constitute a waiver of or
acquiescence in the Event of Default. 
All remedies are cumulative to the extent permitted by law.

 

Section 6.04                                          Waiver
of Past Defaults.

 

Holders
of not less than a majority in aggregate principal amount at maturity of the
then outstanding Notes by notice to the Trustee may on behalf of the Holders of
all of the Notes waive any existing Default and its consequences hereunder,
except a continuing Default in the payment of the Accreted Value of, premium,
if any, Additional Interest, if any, or interest on, any Note held by a
non-consenting Holder (including in connection with an Asset Sale Offer or a
Change of Control Offer); provided, subject to Section 6.02 hereof, that
the Holders of a majority in aggregate principal amount at maturity of the then
outstanding Notes may rescind an acceleration and its consequences, including
any related payment default that resulted from such acceleration.  Upon any such waiver, such Default shall
cease to exist, and any Event of Default arising therefrom shall be deemed to
have been cured for every purpose of this Indenture; but no such waiver shall
extend to any subsequent or other Default or impair any right consequent
thereto.

 

Section 6.05                                          Control
by Majority.

 

Holders
of a majority in principal amount at maturity of the then total outstanding
Notes may direct the time, method and place of conducting any proceeding for
any remedy available to the Trustee or of exercising any trust or power
conferred on the Trustee.  The Trustee,
however, may refuse to follow any direction that conflicts with law or this
Indenture or that the Trustee determines is unduly prejudicial to the rights of
any other Holder of a Note or that would involve the Trustee in personal
liability.

 

Section 6.06                                          Limitation
on Suits.

 

Subject
to Section 6.07 hereof, no Holder of a Note may pursue any remedy with respect
to this Indenture or the Notes unless:

 

89

 

(1)                                  such Holder has previously given the Trustee
notice that an Event of Default is continuing;

 

(2)                                  Holders of at least 25% in principal amount
at maturity of the total outstanding Notes have requested the Trustee to pursue
the remedy;

 

(3)                                  Holders of the Notes have offered the Trustee
security or indemnity reasonably satisfactory to it against any loss, liability
or expense;

 

(4)                                  the Trustee has not complied with such
request within 60 days after the receipt thereof and the offer of security or
indemnity; and

 

(5)                                  Holders of a majority in principal amount at
maturity of the total outstanding Notes have not given the Trustee a direction
inconsistent with such request within such 60-day period.

 

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

 

Section 6.07                                          Rights
of Holders of Notes To Receive Payment.

 

Notwithstanding
any other provision of this Indenture, the right of any Holder of a Note to
receive payment of Accreted Value, premium, if any, Additional Interest, if
any, and interest on the Note, on or after the respective due dates expressed
in the Note (including in connection with an Asset Sale Offer or a Change of
Control Offer), or to bring suit for the enforcement of any such payment on or
after such respective dates, shall not be impaired or affected without the
consent of such Holder.

 

Section 6.08                                          Collection
Suit by Trustee.

 

If
an Event of Default specified in Section 6.01(a)(1) or (2) hereof occurs and is
continuing, the Trustee is authorized to recover judgment in its own name and
as trustee of an express trust against the Issuer for the whole amount of
Accreted Value of, premium, if any, and Additional Interest (to the extent not
already included in Accreted Value), if any, and interest remaining unpaid on
the Notes and interest on overdue Accreted Value and, to the extent lawful,
interest and such further amount as shall be sufficient to cover the costs and
expenses of collection, including the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel.

 

Section 6.09                                          Restoration
of Rights and Remedies.

 

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

 

Section 6.10                                          Rights
and Remedies Cumulative.

 

Except
as otherwise provided with respect to the replacement or payment of mutilated,
destroyed, lost or stolen Notes in Section 2.07 hereof, no right or remedy
herein conferred upon or reserved to the Trustee or to the Holders is intended
to be exclusive of any other right or remedy, and every 

 

90

 

right and remedy shall, to the
extent permitted by law, be cumulative and in addition to every other right and
remedy given hereunder or now or hereafter existing at law or in equity or
otherwise.  The assertion or employment
of any right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.

 

Section 6.11                                          Delay
or Omission Not Waiver.

 

No
delay or omission of the Trustee or of any Holder of any Note to exercise any
right or remedy accruing upon any Event of Default shall impair any such right
or remedy or constitute a waiver of any such Event of Default or an
acquiescence therein.  Every right and
remedy given by this Article or by law to the Trustee or to the Holders may be
exercised from time to time, and as often as may be deemed expedient, by the
Trustee or by the Holders, as the case may be.

 

Section 6.12                                          Trustee
May File Proofs of Claim.

 

The
Trustee is authorized to file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the claims of the
Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and the
Holders of the Notes allowed in any judicial proceedings relative to the Issuer
(or any other obligor upon the Notes including the Guarantors), its creditors
or its property and shall be entitled and empowered to participate as a member
in any official committee of creditors appointed in such matter and to collect,
receive and distribute any money or other property payable or deliverable on
any such claims and any custodian in any such judicial proceeding is hereby
authorized by each Holder to make such payments to the Trustee, and in the
event that the Trustee shall consent to the making of such payments directly to
the Holders, to pay to the Trustee any amount due to it for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, and any other amounts due the Trustee under Section 7.07 hereof.  To the extent that the payment of any such
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, and any other amounts due the Trustee under Section 7.07 hereof
out of the estate in any such proceeding, shall be denied for any reason,
payment of the same shall be secured by a Lien on, and shall be paid out of,
any and all distributions, dividends, money, securities and other properties
that the Holders may be entitled to receive in such proceeding whether in liquidation
or under any plan of reorganization or arrangement or otherwise.  Nothing herein contained shall be deemed to
authorize the Trustee to authorize or consent to or accept or adopt on behalf
of any Holder any plan of reorganization, arrangement, adjustment or
composition affecting the Notes or the rights of any Holder, or to authorize
the Trustee to vote in respect of the claim of any Holder in any such
proceeding.

 

Section 6.13                                          Priorities.

 

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

 

(i)                                     to the Trustee, its agents and attorneys for
amounts due under Section 7.07 hereof, including payment of all compensation,
expenses and liabilities incurred, and all advances made, by the Trustee and the
costs and expenses of collection;

 

(ii)                                  to holders of Senior Indebtedness of the
Issuer and, if such money or property has been collected from a Guarantor, to
holders of Senior Indebtedness of such Guarantor, in each case to the extent
required by Article 10 and/or Article 12 hereof, as applicable;

 

91

 

(iii)                               to Holders of Notes for amounts due and unpaid on the Notes for
Accreted Value, premium, if any, and Additional Interest (to the extent not
already included in Accreted Value), if any, and interest, ratably, without
preference or priority of any kind, according to the amounts due and payable on
the Notes for Accreted Value, premium, if any, and Additional Interest (to the
extent not already included in Accreted Value), if any, and interest,
respectively; and

 

(iv)                              to the Issuer or to such party as a court of competent jurisdiction
shall direct including a Guarantor, if applicable.

 

The
Trustee may fix a record date and payment date for any payment to Holders of
Notes pursuant to this Section 6.13.

 

Section 6.14                                          Undertaking
for Costs.

 

In
any suit for the enforcement of any right or remedy under this Indenture or in
any suit against the Trustee for any action taken or omitted by it as a
Trustee, a court in its discretion may require the filing by any party litigant
in the suit of an undertaking to pay the costs of the suit, and the court in
its discretion may assess reasonable costs, including reasonable attorneys’
fees and expenses, against any party litigant in the suit, having due regard to
the merits and good faith of the claims or defenses made by the party
litigant.  This Section 6.14 does not
apply to a suit by the Trustee, a suit by a Holder of a Note pursuant to
Section 6.07 hereof, or a suit by Holders of more than 10% in principal amount
at maturity of the then outstanding Notes.

 

ARTICLE
7

 

TRUSTEE

 

Section 7.01                                          Duties
of Trustee.

 

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

 

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

 

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

 

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

 

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

 

92

 

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

 

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

 

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

 

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

 

(e)                                  The Trustee shall be under no obligation to
exercise any of its rights or powers under this Indenture at the request or
direction of any of the Holders of the Notes unless the Holders have offered to
the Trustee indemnity or security reasonably satisfactory to it against any
loss, liability or expense.

 

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

 

Section 7.02                                          Rights
of Trustee.

 

(a)                                  The Trustee may conclusively rely upon any
document believed by it to be genuine and to have been signed or presented by
the proper Person.  The Trustee need not
investigate any fact or matter stated in the document, but the Trustee, in its
discretion, may make such further inquiry or investigation into such facts or
matters as it may see fit, and, if the Trustee shall determine to make such
further inquiry or investigation, it shall be entitled to examine the books,
records and premises of the Issuer, personally or by agent or attorney at the
sole cost of the Issuer and shall incur no liability or additional liability of
any kind by reason of such inquiry or investigation.

 

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

 

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

 

(d)                                 The Trustee shall not be liable for any
action it takes or omits to take in good faith that it believes to be
authorized or within the rights or powers conferred upon it by this Indenture.

 

(e)                                  Unless otherwise specifically provided in
this Indenture, any demand, request, direction or notice from the Issuer shall
be sufficient if signed by an Officer of the Issuer.

 

(f)                                    None of the provisions of this Indenture
shall require the Trustee to expend or risk its own funds or otherwise to incur
any liability, financial or otherwise, in the performance of any of its duties
hereunder, or in the exercise of any of its rights or powers if it shall have
reasonable grounds for 

 

93

 

believing that repayment of
such funds or indemnity satisfactory to it against such risk or liability is
not assured to it.

 

(g)                                 The Trustee shall not be deemed to have
knowledge or notice of any Default or Event of Default unless a Responsible
Officer of the Trustee has actual knowledge thereof or unless written notice of
any event which is in fact such a Default or Event of Default is received by
the Trustee at the Corporate Trust Office of the Trustee, and such notice
references the Notes and this Indenture.

 

(h)                                 In no event shall the Trustee be responsible
or liable for special, indirect, or consequential loss or damage of any kind
whatsoever (including, but not limited to, loss of profit) irrespective of
whether the Trustee has been advised of the likelihood of such loss or damage
and regardless of the form of action.

 

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

 

(j)                                     In the event the Issuer is required to pay
Additional Interest, the Issuer will provide written notice to the Trustee of
the Issuer’s obligation to pay Additional Interest no later than 15 days prior
to the next Interest Payment Date, which notice shall set forth the amount of
the Additional Interest to be paid by the Issuer.  The Trustee shall not at any time be under
any duty or responsibility to any Holders to determine whether the Additional
Interest is payable and the amount thereof.

 

Section 7.03                                          Individual
Rights of Trustee.

 

The
Trustee in its individual or any other capacity may become the owner or pledgee
of Notes and may otherwise deal with the Issuer or any Affiliate of the Issuer
with the same rights it would have if it were not Trustee.  However, in the event that the Trustee
acquires any conflicting interest it must eliminate such conflict within 90
days, apply to the SEC for permission to continue as trustee or resign.  Any Agent may do the same with like rights
and duties.  The Trustee is also subject
to Sections 7.10 and 7.11 hereof.

 

Section 7.04                                          Trustee’s
Disclaimer.

 

The
Trustee shall not be responsible for and makes no representation as to the
validity or adequacy of this Indenture or the Notes, it shall not be
accountable for the Issuer’s use of the proceeds from the Notes or any money
paid to the Issuer or upon the Issuer’s direction under any provision of this
Indenture, it shall not be responsible for the use or application of any money
received by any Paying Agent other than the Trustee, and it shall not be
responsible for any statement or recital herein or any statement in the Notes
or any other document in connection with the sale of the Notes or pursuant to
this Indenture other than its certificate of authentication.

 

Section 7.05                                          Notice
of Defaults.

 

If
a Default occurs and is continuing and if it is known to the Trustee, the
Trustee shall mail to Holders of Notes a notice of the Default within 90 days
after it occurs.  Except in the case of a
Default relating to the payment of Accreted Value, premium, if any, or interest
on any Note, the Trustee may withhold from the Holders notice of any continuing
Default if and so long as a committee of its Responsible Officers in good faith
determines that withholding the notice is in the interests of the Holders of
the Notes.

 

94

 

Section 7.06                                          Reports
by Trustee to Holders of the Notes.

 

Within
60 days after each May 15, beginning with the May 15 following the
date of this Indenture, and for so long as Notes remain outstanding, the
Trustee shall mail to the Holders of the Notes a brief report dated as of such
reporting date that complies with Trust Indenture Act Section 313(a) (but if no
event described in Trust Indenture Act Section 313(a) has occurred within the
twelve months preceding the reporting date, no report need be transmitted).  The Trustee also shall comply with Trust
Indenture Act Section 313(b)(2). 
The Trustee shall also transmit by mail all reports as required by Trust
Indenture Act Section 313(c).

 

A
copy of each report at the time of its mailing to the Holders of Notes shall be
mailed to the Issuer and filed with the SEC and each stock exchange on which
the Notes are listed in accordance with Trust Indenture Act Section
313(d).  The Issuer shall promptly notify
the Trustee when the Notes are listed on any stock exchange or delisted therefrom.

 

Section 7.07                                          Compensation
and Indemnity.

 

The
Issuer shall pay to the Trustee from time to time such compensation for its
acceptance of this Indenture and services hereunder as the parties shall agree
in writing from time to time.  The
Trustee’s compensation shall not be limited by any law on compensation of a
trustee of an express trust.  The Issuer
shall reimburse the Trustee promptly upon request for all reasonable
disbursements, advances and expenses incurred or made by it in addition to the
compensation for its services.  Such
expenses shall include the reasonable compensation, disbursements and expenses
of the Trustee’s agents and counsel.

 

The
Issuer and the Guarantors, jointly and severally, shall indemnify the Trustee
for, and hold the Trustee harmless against, any and all loss, damage, claims,
liability or expense (including attorneys’ fees) incurred by it in connection
with the acceptance or administration of this trust and the performance of its
duties hereunder (including the costs and expenses of enforcing this Indenture
against the Issuer or any of the Guarantors (including this Section 7.07) or
defending itself against any claim whether asserted by any Holder, the Issuer
or any Guarantor, or liability in connective with the acceptance, exercise or
performance of any of its powers or duties hereunder).  The Trustee shall notify the Issuer promptly
of any claim for which it may seek indemnity. 
Failure by the Trustee to so notify the Issuer shall not relieve the
Issuer of its obligations hereunder.  The
Issuer shall defend the claim and the Trustee may have separate counsel and the
Issuer shall pay the fees and expenses of such counsel.  The Issuer need not reimburse any expense or
indemnify against any loss, liability or expense incurred by the Trustee
through the Trustee’s own willful misconduct, negligence or bad faith.

 

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

 

To
secure the payment obligations of the Issuer and the Guarantors in this Section
7.07, the Trustee shall have a Lien prior to the Notes on all money or property
held or collected by the Trustee, except that held in trust to pay Accreted
Value and interest on particular Notes. 
Such Lien shall survive the satisfaction and discharge of this
Indenture.

 

When
the Trustee incurs expenses or renders services after an Event of Default
specified in Section 6.01(a)(6) or (7) hereof occurs, the expenses and the compensation
for the services (including the fees and expenses of its agents and counsel)
are intended to constitute expenses of administration under any Bankruptcy Law.

 

95

 

The
Trustee shall comply with the provisions of Trust Indenture Act Section
313(b)(2) to the extent applicable.

 

Section 7.08                                          Replacement
of Trustee.

 

A
resignation or removal of the Trustee and appointment of a successor Trustee
shall become effective only upon the successor Trustee’s acceptance of
appointment as provided in this Section 7.08. 
The Trustee may resign in writing at any time and be discharged from the
trust hereby created by so notifying the Issuer.  The Holders of a majority in principal amount
at maturity of the then outstanding Notes may remove the Trustee by so
notifying the Trustee and the Issuer in writing.  The Issuer may remove the Trustee if:

 

(a)                                  the Trustee fails to comply with Section 7.10
hereof;

 

(b)                                 the Trustee is adjudged a bankrupt or an
insolvent or an order for relief is entered with respect to the Trustee under
any Bankruptcy Law;

 

(c)                                  a custodian or public officer takes charge of
the Trustee or its property; or

 

(d)                                 the Trustee becomes incapable of acting.

 

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

 

If
a successor Trustee does not take office within 60 days after the retiring
Trustee resigns or is removed, the retiring Trustee (at the Issuer’s expense),
the Issuer or the Holders of at least 10% in principal amount at maturity of
the then outstanding Notes may petition any court of competent jurisdiction for
the appointment of a successor Trustee.

 

If
the Trustee, after written request by any Holder who has been a Holder for at
least six months, fails to comply with Section 7.10 hereof, such Holder may
petition any court of competent jurisdiction for the removal of the Trustee and
the appointment of a successor Trustee.

 

A
successor Trustee shall deliver a written acceptance of its appointment to the
retiring Trustee and to the Issuer. 
Thereupon, the resignation or removal of the retiring Trustee shall
become effective, and the successor Trustee shall have all the rights, powers
and duties of the Trustee under this Indenture. 
The successor Trustee shall mail a notice of its succession to
Holders.  The retiring Trustee shall
promptly transfer all property held by it as Trustee to the successor Trustee; provided
all sums owing to the Trustee hereunder have been paid and subject to the Lien
provided for in Section 7.07 hereof. 
Notwithstanding replacement of the Trustee pursuant to this Section
7.08, the Issuer’s obligations under Section 7.07 hereof shall continue for the
benefit of the retiring Trustee.

 

Section 7.09                                          Successor Trustee by Merger, etc.

 

If
the Trustee consolidates, merges or converts into, or transfers all or
substantially all of its corporate trust business to, another corporation, the
successor corporation without any further act shall be the successor Trustee.

 

96

 

Section 7.10                                          Eligibility;
Disqualification.

 

There
shall at all times be a Trustee hereunder that is a corporation organized and
doing business under the laws of the United States of America or of any state
thereof that is authorized under such laws to exercise corporate trustee power,
that is subject to supervision or examination by federal or state authorities
and that has a combined capital and surplus of at least $50,000,000 as set
forth in its most recent published annual report of condition.

 

This
Indenture shall always have a Trustee who satisfies the requirements of Trust
Indenture Act Sections 310(a)(1), (2) and (5). 
The Trustee is subject to Trust Indenture Act Section 310(b).

 

Section 7.11                                          Preferential
Collection of Claims Against Issuer.

 

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

 

ARTICLE
8

 

LEGAL
DEFEASANCE AND COVENANT DEFEASANCE

 

Section 8.01                                          Option
To Effect Legal Defeasance or Covenant Defeasance.

 

The
Issuer may, at its option and at any time, elect to have either Section 8.02 or
8.03 hereof applied to all outstanding Notes upon compliance with the
conditions set forth below in this Article 8.

 

Section 8.02                                          Legal
Defeasance and Discharge.

 

Upon
the Issuer’s exercise under Section 8.01 hereof of the option applicable to
this Section 8.02, the Issuer and the Guarantors shall, subject to the
satisfaction of the conditions set forth in Section 8.04 hereof, be deemed to
have been discharged from their obligations with respect to all outstanding
Notes and Guarantees on the date the conditions set forth below are satisfied (“Legal
Defeasance”).  For this purpose,
Legal Defeasance means that the Issuer shall be deemed to have paid and
discharged the entire Indebtedness represented by the outstanding Notes, which shall
thereafter be deemed to be “outstanding” only for the purposes of Section 8.05
hereof and the other Sections of this Indenture referred to in (a) and (b)
below, and to have satisfied all its other obligations under such Notes and
this Indenture including that of the Guarantors (and the Trustee, on demand of
and at the expense of the Issuer, shall execute proper instruments
acknowledging the same), except for the following provisions which shall
survive until otherwise terminated or discharged hereunder:

 

(a)                                  the rights of Holders of Notes to receive
payments in respect of the Accreted Value of, premium, if any, and interest on
the Notes when such payments are due solely out of the trust created pursuant
to this Indenture referred to in Section 8.04 hereof;

 

(b)                                 the Issuer’s obligations with respect to
Notes concerning issuing temporary Notes, registration of such Notes,
mutilated, destroyed, lost or stolen Notes and the maintenance of an office or
agency for payment and money for security payments held in trust;

 

(c)                                  the rights, powers, trusts, duties and
immunities of the Trustee, and the Issuer’s obligations in connection
therewith; and

 

97

 

(d)                                 this Section 8.02.

 

Subject
to compliance with this Article 8, the Issuer may exercise its option under
this Section 8.02 notwithstanding the prior exercise of its option under
Section 8.03 hereof.

 

Section 8.03                                          Covenant
Defeasance.

 

Upon
the Issuer’s exercise under Section 8.01 hereof of the option applicable to this
Section 8.03, the Issuer and the Guarantors shall, subject to the satisfaction
of the conditions set forth in Section 8.04 hereof, be released from their
obligations under the covenants contained in Sections 4.03, 4.04, 4.05, 4.07,
4.08, 4.09, 4.10, 4.11, 4.12, 4.13, 4.14, 4.15 and 4.17 hereof and clauses (4)
and (5) of Section 5.01(a), Sections 5.01(c) and 5.01(d) hereof with respect to
the outstanding Notes on and after the date the conditions set forth in Section
8.04 hereof are satisfied (“Covenant Defeasance”), and the Notes shall
thereafter be deemed not “outstanding” for the purposes of any direction,
waiver, consent or declaration or act of Holders (and the consequences of any
thereof) in connection with such covenants, but shall continue to be deemed “outstanding”
for all other purposes hereunder (it being understood that such Notes shall not
be deemed outstanding for accounting purposes). 
For this purpose, Covenant Defeasance means that, with respect to the
outstanding Notes, the Issuer may omit to comply with and shall have no
liability in respect of any term, condition or limitation set forth in any such
covenant, whether directly or indirectly, by reason of any reference elsewhere
herein to any such covenant or by reason of any reference in any such covenant
to any other provision herein or in any other document and such omission to
comply shall not constitute a Default or an Event of Default under Section 6.01
hereof, but, except as specified above, the remainder of this Indenture and
such Notes shall be unaffected thereby. 
In addition, upon the Issuer’s exercise under Section 8.01 hereof of the
option applicable to this Section 8.03 hereof, subject to the satisfaction of
the conditions set forth in Section 8.04 hereof, Sections 6.01(a)(3), 6.01(a)(4),
6.01(a)(5), 6.01(a)(6) (solely with respect to Restricted Subsidiaries subject
thereto), 6.01(a)(7) (solely with respect to Restricted Subsidiaries subject
thereto) and 6.01(a)(8) hereof shall not constitute Events of Default.

 

Section 8.04                                          Conditions
to Legal or Covenant Defeasance.

 

In
order to exercise either Legal Defeasance or Covenant Defeasance with respect
to the Notes:

 

(1)                                  the Issuer must irrevocably deposit with the
Trustee, in trust, for the benefit of the Holders of the Notes, cash in U.S.
dollars, Government Securities, or a combination thereof, in such amounts as
will be sufficient, in the opinion of a nationally recognized firm of
independent public accountants, to pay the Accreted Value of, premium, if any,
and interest due on the Notes on the stated maturity date or on the redemption
date, as the case may be, of such Accreted Value of premium, if any, or
interest on such Notes and the Issuer must specify whether such Notes are being
defeased to maturity or to a particular redemption date;

 

(2)                                  in the case of Legal Defeasance, the Issuer
shall have delivered to the Trustee an Opinion of Counsel reasonably acceptable
to the Trustee confirming that, subject to customary assumptions and
exclusions,

 

(a)                                  the Issuer has received from, or there has
been published by, the United States Internal Revenue Service a ruling, or

 

(b)                                 since the issuance of the Notes, there has
been a change in the applicable U.S. federal income tax law,

 

98

 

in either case to the effect that, and based thereon
such Opinion of Counsel shall confirm that, subject to customary assumptions
and exclusions, the Holders of the Notes will not recognize income, gain or
loss for U.S. federal income tax purposes, as applicable, as a result of such
Legal Defeasance and will be subject to U.S. federal income tax on the same
amounts, in the same manner and at the same times as would have been the case
if such Legal Defeasance had not occurred;

 

(3)                                  in the case of Covenant Defeasance, the
Issuer shall have delivered to the Trustee an Opinion of Counsel reasonably
acceptable to the Trustee confirming that, subject to customary assumptions and
exclusions, the Holders of the Notes will not recognize income, gain or loss
for U.S. federal income tax purposes as a result of such Covenant Defeasance
and will be subject to such tax on the same amounts, in the same manner and at
the same times as would have been the case if such Covenant Defeasance had not
occurred;

 

(4)                                  no Default (other than that resulting from
borrowing funds to be applied to make such deposit and any similar and
simultaneous deposit relating to other Indebtedness including the Senior Notes
and the Senior Subordinated Notes, and in each case the granting of Liens in
connection therewith) shall have occurred and be continuing on the date of such
deposit;

 

(5)                                  such Legal Defeasance or Covenant Defeasance
shall not result in a breach or violation of, or constitute a default under the
Senior Credit Facilities, the Senior Notes or the indenture pursuant to which
the Senior Notes are issued, the Senior Notes or the indenture pursuant to
which the Senior Notes are issued or any other material agreement or instrument
(other than this Indenture) to which the Issuer or any Guarantor is a party or
by which the Issuer or any Guarantor is bound (other than that resulting from
any borrowing of funds to be applied to make the deposit required to effect
such Legal Defeasance or Covenant Defeasance and any similar and simultaneous
deposit relating to other Indebtedness, including the Senior Notes and the
Senior Subordinated Notes, and the granting of Liens in connection therewith);

 

(6)                                  the Issuer shall have delivered to the
Trustee an Opinion of Counsel to the effect that, as of the date of such
opinion and subject to customary assumptions and exclusions following the
deposit, the trust funds will not be subject to the effect of Section 547 of
Title 11 of the United States Code;

 

(7)                                  the Issuer shall have delivered to the
Trustee an Officer’s Certificate stating that the deposit was not made by the
Issuer with the intent of defeating, hindering, delaying or defrauding any
creditors of the Issuer or any Guarantor or others; and

 

(8)                                  the Issuer shall have delivered to the
Trustee an Officer’s Certificate and an Opinion of Counsel (which Opinion of
Counsel may be subject to customary assumptions and exclusions) each stating
that all conditions precedent provided for or relating to the Legal Defeasance
or the Covenant Defeasance, as the case may be, have been complied with.

 

Section 8.05                                          Deposited
Money and Government Securities 

To Be Held in Trust; Other Miscellaneous Provisions.

 

Subject
to Section 8.06 hereof, all money and Government Securities (including the
proceeds thereof) deposited with the Trustee (or other qualifying trustee,
collectively for purposes of this Section 8.05, the “Trustee”) pursuant
to Section 8.04 hereof in respect of the outstanding Notes shall be held in
trust and applied by the Trustee, in accordance with the provisions of such
Notes and this Indenture, to the payment, either directly or through any Paying
Agent (including the Issuer or a Guarantor acting 

 

99

 

as Paying Agent) as the Trustee
may determine, to the Holders of such Notes of all sums due and to become due
thereon in respect of Accreted Value, premium, if any, and Additional Interest
(to the extent not already included in Accreted Value), if any, and interest,
but such money need not be segregated from other funds except to the extent
required by law. Money and Government Securities so held in trust are not
subject to Article 10 or Article 12 hereof, except as contemplated by Section
10.12 or Section 12.12, as the case may be.

 

The
Issuer shall pay and indemnify the Trustee against any tax, fee or other charge
imposed on or assessed against the cash or Government Securities deposited
pursuant to Section 8.04 hereof or the principal and interest received in
respect thereof other than any such tax, fee or other charge which by law is
for the account of the Holders of the outstanding Notes.

 

Anything
in this Article 8 to the contrary notwithstanding, the Trustee shall deliver or
pay to the Issuer from time to time upon the request of the Issuer any money or
Government Securities held by it as provided in Section 8.04 hereof which, in
the opinion of a nationally recognized firm of independent public accountants
expressed in a written certification thereof delivered to the Trustee (which
may be the opinion delivered under Section 8.04(1) hereof), are in excess
of the amount thereof that would then be required to be deposited to effect an
equivalent Legal Defeasance or Covenant Defeasance.

 

Section 8.06                                          Repayment
to Issuer.

 

Any
money deposited with the Trustee or any Paying Agent, or then held by the
Issuer, in trust for the payment of the Accreted Value of, premium and
Additional Interest, if any, or interest on any Note and remaining unclaimed
for two years after such Accreted Value, and premium and Additional Interest,
if any, or interest has become due and payable shall be paid to the Issuer on
its request or (if then held by the Issuer) shall be discharged from such
trust; and the Holder of such Note shall thereafter look only to the Issuer for
payment thereof, and all liability of the Trustee or such Paying Agent with
respect to such trust money, and all liability of the Issuer as trustee
thereof, shall thereupon cease.

 

Section 8.07                                          Reinstatement.

 

If
the Trustee or Paying Agent is unable to apply any United States dollars or
Government Securities in accordance with Section 8.02 or 8.03 hereof, as the
case may be, by reason of any order or judgment of any court or governmental
authority enjoining, restraining or otherwise prohibiting such application,
then the Issuer’s obligations under this Indenture and the Notes shall be
revived and reinstated as though no deposit had occurred pursuant to Section
8.02 or 8.03 hereof until such time as the Trustee or Paying Agent is permitted
to apply all such money in accordance with Section 8.02 or 8.03 hereof, as the
case may be; provided that, if the Issuer makes any payment of Accreted
Value of, premium and Additional Interest, if any, or interest on any Note
following the reinstatement of its obligations, the Issuer shall be subrogated
to the rights of the Holders of such Notes to receive such payment from the
money held by the Trustee or Paying Agent.

 

ARTICLE
9

 

AMENDMENT,
SUPPLEMENT AND WAIVER

 

Section 9.01                                          Without
Consent of Holders of Notes.

 

Notwithstanding
Section 9.02 hereof, the Issuer, any Guarantor (with respect to a Guarantee to
which it is party or this Indenture) and the Trustee may amend or supplement
this Indenture and any Guarantee or Notes without the consent of any Holder:

 

100

 

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

 

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

 

(3)                                  to comply with Section 5.01 hereof;

 

(4)                                  to provide for the assumption of the Issuer’s
or any Guarantor’s obligations to the Holders in a transaction that complies
with this Indenture;

 

(5)                                  to make any change that would provide any
additional rights or benefits to the Holders or that does not adversely affect
the legal rights under this Indenture of any such Holder;

 

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

 

(7)                                  to comply with requirements of the SEC in
order to effect or maintain the qualification of this Indenture under the Trust
Indenture Act;

 

(8)                                  to evidence and provide for the acceptance
and appointment under this Indenture of a successor Trustee thereunder pursuant
to the requirements thereof;

 

(9)                                  to provide for the issuance of exchange notes
or private exchange notes, which are identical to exchange notes except that
they are not freely transferable;

 

(10)                            to add a Guarantor under this Indenture;

 

(11)                            to conform the text of this Indenture,
Guarantees or the Notes to any provision of the “Description of Subordinated
Discount Notes” section of the Offering Memorandum to the extent that such
provision in such “Description of Subordinated Discount Notes” section was
intended to be a verbatim recitation of a provision of this Indenture,
Guarantee or Notes; or

 

(12)                            to make any amendment to the provisions of
this Indenture relating to the transfer and legending of Notes as permitted by
this Indenture, including, without limitation to facilitate the issuance and
administration of the Notes; provided, however, that (i)
compliance with this Indenture as so amended would not result in Notes being
transferred in violation of the Securities Act or any applicable securities law
and (ii) such amendment does not materially and adversely affect the rights of
Holders to transfer Notes.

 

Upon
the request of the Issuer accompanied by a resolution of its board of directors
authorizing the execution of any such amended or supplemental indenture, and
upon receipt by the Trustee of the documents described in Section 7.02 hereof,
the Trustee shall join with the Issuer and the Guarantors in the execution of
any amended or supplemental indenture authorized or permitted by the terms of
this Indenture and to make any further appropriate agreements and stipulations
that may be therein contained, but the Trustee shall not be obligated to enter
into such amended or supplemental indenture that affects its own rights, duties
or immunities under this Indenture or otherwise.  Notwithstanding the foregoing, no Opinion of
Counsel shall be required in connection with the addition of a Guarantor under
this Indenture upon execution and delivery by such Guarantor and the Trustee of
a supplemental indenture to this Indenture, the form of which is attached as Exhibit
D hereto, and delivery of an Officer’s Certificate.

 

101

 

Section 9.02                                          With
Consent of Holders of Notes.

 

Except
as provided below in this Section 9.02, the Issuer and the Trustee may amend or
supplement this Indenture, the Notes and the Guarantees with the consent of the
Holders of at least a majority in principal amount at maturity of the Notes
(including Additional Notes, if any) then outstanding voting as a single class
(including, without limitation, consents obtained in connection with a tender
offer or exchange offer for, or purchase of, the Notes), and, subject to
Sections 6.04 and 6.07 hereof, any existing Default or Event of Default (other
than a Default or Event of Default in the payment of the Accreted Value of,
premium and Additional Interest, if any, or interest on the Notes, except a
payment default resulting from an acceleration that has been rescinded) or
compliance with any provision of this Indenture, the Guarantees or the Notes
may be waived with the consent of the Holders of a majority in principal amount
at maturity of the then outstanding Notes (including Additional Notes, if any)
voting as a single class (including consents obtained in connection with a
tender offer or exchange offer for, or purchase of, the Notes).  Section 2.08 hereof and Section 2.09 hereof
shall determine which Notes are considered to be “outstanding” for the purposes
of this Section 9.02.

 

Upon
the request of the Issuer accompanied by a resolution of its board of directors
authorizing the execution of any such amended or supplemental indenture, and
upon the filing with the Trustee of evidence satisfactory to the Trustee of the
consent of the Holders of Notes as aforesaid, and upon receipt by the Trustee
of the documents described in Section 7.02 hereof, the Trustee shall join
with the Issuer in the execution of such amended or supplemental indenture
unless such amended or supplemental indenture directly affects the Trustee’s
own rights, duties or immunities under this Indenture or otherwise, in which
case the Trustee may in its discretion, but shall not be obligated to, enter
into such amended or supplemental indenture.

 

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

 

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

 

Without
the consent of each affected Holder of Notes, an amendment or waiver under this
Section 9.02 may not (with respect to any Notes held by a non-consenting
Holder):

 

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

 

(2)                                  reduce the principal at maturity of or change
the fixed final maturity of any such Note or alter or waive the provisions with
respect to the redemption of such Notes (other than provisions relating to
Section 3.09, Section 4.10 and Section 4.14 hereof to the extent that any such
amendment or waiver does not have the effect of reducing the principal at
maturity of or changing the fixed final maturity of any such Note or altering
or waiving the provisions with respect to the redemption of such Notes);

 

(3)                                  reduce the rate of or change the time for
payment of interest on any Note;

 

(4)                                  waive a Default in the payment of Accreted
Value of or premium, if any, or interest on the Notes, except a rescission of
acceleration of the Notes by the Holders of at least a 

 

102

 

majority
in aggregate principal amount at maturity of the Notes and a waiver of the
payment default that resulted from such acceleration, or in respect of a
covenant or provision contained in this Indenture or any Guarantee which cannot
be amended or modified without the consent of all affected Holders;

 

(5)                                  make any Note payable in money other than
that stated therein;

 

(6)                                  make any change in the provisions of this
Indenture relating to waivers of past Defaults or the rights of Holders to
receive payments of Accreted Value of or premium, if any, or interest on the
Notes;

 

(7)                                  make any change to this paragraph of this
Section 9.02;

 

(8)                                  impair the right of any Holder to receive
payment of Accreted Value of, or interest on, such Holder’s Notes on or after
the due dates therefor or to institute suit for the enforcement of any payment
on or with respect to such Holder’s Notes;

 

(9)                                  make any change to Article 10, Article 12 or
any other of the subordination provisions of this Indenture (or the component
definitions used therein) that would adversely affect the Holders;

 

(10)                            change the method of calculation of Accreted
Value; or

 

(11)                            except as expressly permitted by this
Indenture, modify the Guarantees of any Significant Subsidiary, or any group of
Restricted Subsidiaries that, taken together (as of the latest audited
consolidated financial statements for the Issuer), would constitute a
Significant Subsidiary, in any manner adverse to the Holders of the Notes.

 

Notwithstanding
anything in this Indenture to the contrary, no amendment to or waiver of the
subordination provisions of this Indenture (or the component definitions used
therein) may be made without the consent of the holders of a majority of the
Indebtedness in respect of the Senior Credit Facilities of the Issuer and the
Guarantors (or their Representative(s)).

 

Section 9.03                                          Compliance
with Trust Indenture Act.

 

Every
amendment or supplement to this Indenture or the Notes shall be set forth in an
amended or supplemental indenture that complies with the Trust Indenture Act as
then in effect.

 

Section 9.04                                          Revocation
and Effect of Consents.

 

Until
an amendment, supplement or waiver becomes effective, a consent to it by a
Holder of a Note is a continuing consent by the Holder of a Note and every
subsequent Holder of a Note or portion of a Note that evidences the same debt
as the consenting Holder’s Note, even if notation of the consent is not made on
any Note.  However, any such Holder of a
Note or subsequent Holder of a Note may revoke the consent as to its Note if
the Trustee receives written notice of revocation before the date the waiver,
supplement or amendment becomes effective. 
An amendment, supplement or waiver becomes effective in accordance with
its terms and thereafter binds every Holder.

 

The
Issuer may, but shall not be obligated to, fix a record date for the purpose of
determining the Holders entitled to consent to any amendment, supplement, or
waiver.  If a record date is fixed, then,
notwithstanding the preceding paragraph, those Persons who were Holders at such
record date 

 

103

 

(or their duly designated
proxies), and only such Persons, shall be entitled to consent to such
amendment, supplement, or waiver or to revoke any consent previously given,
whether or not such Persons continue to be Holders after such record date.  No such consent shall be valid or effective
for more than 120 days after such record date unless the consent of the
requisite number of Holders has been obtained.

 

Section 9.05                                          Notation
on or Exchange of Notes.

 

The
Trustee may place an appropriate notation about an amendment, supplement or
waiver on any Note thereafter authenticated. 
The Issuer in exchange for all Notes may issue and the Trustee shall,
upon receipt of an Authentication Order, authenticate new Notes that reflect
the amendment, supplement or waiver.

 

Failure
to make the appropriate notation or issue a new Note shall not affect the
validity and effect of such amendment, supplement or waiver.

 

Section 9.06                                          Trustee
To Sign Amendments, etc.

 

The
Trustee shall sign any amendment, supplement or waiver authorized pursuant to
this Article 9 if the amendment or supplement does not adversely affect the
rights, duties, liabilities or immunities of the Trustee.  The Issuer may not sign an amendment,
supplement or waiver until the board of directors approves it.  In executing any amendment, supplement or
waiver, the Trustee shall be provided with and (subject to Section 7.01 hereof)
shall be fully protected in relying upon, in addition to the documents required
by Section 14.04 hereof, an Officer’s Certificate and an Opinion of Counsel
stating that the execution of such amended or supplemental indenture is
authorized or permitted by this Indenture and that such amendment, supplement
or waiver is the legal, valid and binding obligation of the Issuer and any
Guarantors party thereto, enforceable against them in accordance with its
terms, subject to customary exceptions, and complies with the provisions hereof
(including Section 9.03). 
Notwithstanding the foregoing, no Opinion of Counsel will be required
for the Trustee to execute any amendment or supplement adding a new Guarantor
under this Indenture.

 

Section 9.07                                          Payment
for Consent.

 

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

 

ARTICLE
10

 

SUBORDINATION

 

Section 10.01                                    Agreement
To Subordinate.

 

The
Issuer agrees, and each Holder by accepting a Note agrees, that the payment of
all Obligations owing in respect of the Notes is subordinated in right of
payment, to the extent and in the manner provided in this Article 10, to the
prior payment in full in cash of all existing and future Senior Indebtedness of
the Issuer and that the subordination is for the benefit of and enforceable by
the holders of such Senior Indebtedness. 
All provisions of this Article 10 shall be subject to
Section 10.12.

 

104

 

Section 10.02                                    Liquidation, Dissolution, Bankruptcy.

 

Upon
any payment or distribution of the assets of the Issuer to creditors upon a
total or partial liquidation or a total or partial dissolution of the Issuer or
in a reorganization, insolvency or bankruptcy of or similar proceeding relating
to the Issuer or its property:

 

(i)                                     the holders of Senior Indebtedness of the
Issuer shall be entitled to receive payment in full in cash of such Senior
Indebtedness before Holders shall be entitled to receive any payment or
distribution of any kind or character with respect to any Obligations on, or
relating to, the Notes; and

 

(ii)                                  until the Senior Indebtedness of the Issuer
is paid in full in cash, any payment or distribution to which Holders would be
entitled but for the subordination provisions of this Article 10 shall be made
to holders of such Senior Indebtedness as their interests may appear, except
that Holders may receive Permitted Junior Securities.

 

To
the extent any payment of Senior Indebtedness of the Issuer (whether by or on
behalf of the Issuer, as proceeds of security or enforcement of any right of
setoff or otherwise) is declared to be fraudulent or preferential, set aside or
required to be paid to any receiver, trustee in bankruptcy, liquidating
trustee, agent or other similar Person under any bankruptcy, insolvency,
receivership, fraudulent conveyance or similar law, then, if such payment is
recovered by, or paid over to, such receiver, trustee in bankruptcy,
liquidating trustee, agent or similar Person, the Senior Indebtedness of the
Issuer or part thereof originally intended to be satisfied shall be deemed to
be reinstated and outstanding as if such payment had not occurred.  It is further agreed that any diminution
(whether pursuant to court decree or otherwise, including without limitation
for any of the reasons described in the preceding sentence) of the Issuer’s
obligation to make any distribution or payment pursuant to any Senior
Indebtedness of the Issuer, except to the extent such diminution occurs by
reason of the repayment (which has not been disgorged or returned) of such
Senior Indebtedness of the Issuer in cash, shall have no force or effect for
purposes of the subordination provisions contained in Article 10, with any
turnover of payments as otherwise calculated pursuant to this Article 10 to be
made as if no such diminution had occurred. 
The Issuer shall promptly give written notice to the Trustee of any such
dissolution, winding-up, liquidation, or reorganization of the Issuer; provided
that any delay or failure to give such notice shall have no effect on the
subordination provisions contained in this Article 10.

 

Section 10.03                                    Default
on Senior Indebtedness of the Issuer.

 

The
Issuer shall not pay Accreted Value of, premium, if any, or interest on the
Notes (or pay any other Obligations relating to the Notes, including Additional
Interest, fees, costs, expenses, indemnities and rescission or damage claims)
or make any deposit pursuant to Article 8 or Article 13 hereof and may not
purchase, redeem or otherwise retire or acquire for cash or property any Notes
(collectively, “pay the Notes”) (except in the form of Permitted Junior
Securities (other than Disqualified Stock)) if either of the following occurs
(a “Payment Default”):

 

(i)                                     any Obligation on any Designated Senior
Indebtedness of the Issuer is not paid in full in cash when due; or

 

(ii)                                  any other default on Designated Senior
Indebtedness of the Issuer occurs and the maturity of such Designated Senior
Indebtedness is accelerated in accordance with its terms;

 

unless,
in either case, the Payment Default has been cured or waived and any such
acceleration has been rescinded or such Designated Senior Indebtedness has been
paid in full in cash; provided, 

 

105

 

however, that the Issuer shall be entitled to pay
the Notes without regard to the foregoing if the Issuer and the Trustee receive
written notice approving such payment from the Representatives of all
Designated Senior Indebtedness with respect to which the Payment Default has
occurred and is continuing.

 

During
the continuance of any default (other than a Payment Default) (a “Non-Payment
Default”) with respect to any Designated Senior Indebtedness of the Issuer
pursuant to which the maturity thereof may be accelerated without further
notice (except such notice as may be required to effect such acceleration) or
the expiration of any applicable grace periods, the Issuer shall not pay the
Notes (except in the form of Permitted Junior Securities (other than Disqualified
Stock)) for a period (a “Payment Blockage Period”) commencing upon the
receipt by the Trustee (with a copy to the Issuer) of written notice (a “Blockage
Notice”) of such Non-Payment Default from the Representative of such
Designated Senior Indebtedness specifying an election to effect a Payment
Blockage Period and ending 179 days thereafter. The Payment Blockage
Period shall end earlier if such Payment Blockage Period is terminated
(i) by written notice to the Trustee and the Issuer from the Person or
Persons who gave such Blockage Notice; (ii) because the default giving
rise to such Blockage Notice is cured, waived or otherwise no longer
continuing; or (iii) because such Designated Senior Indebtedness has been
discharged or repaid in full in cash.

 

Notwithstanding
the provisions described in the immediately preceding paragraph (but subject to
the provisions contained in the first paragraph of this Section 10.03 and
Section 10.02 hereof), unless the holders of such Designated Senior
Indebtedness or the Representative of such Designated Senior Indebtedness shall
have accelerated the maturity of such Designated Senior Indebtedness or a
Payment Default has occurred and is continuing, the Issuer shall be permitted
to resume paying the Notes after the end of such Payment Blockage Period.  The Notes shall not be subject to more than
one Payment Blockage Period in any consecutive 360-day period irrespective of
the number of Non-Payment Defaults with respect to Designated Senior
Indebtedness during such period; provided that if any Blockage Notice is
delivered to the Trustee by or on behalf of the holders of Designated Senior
Indebtedness of the Issuer (other than the holders of Indebtedness under the
Senior Credit Facilities), a Representative of holders of Indebtedness under
the Senior Credit Facilities may in the aggregate give one other Blockage
Notice within such period.  However, in
no event shall the total number of days during which any Payment Blockage
Period or Periods on the Notes is in effect exceed 179 days in the aggregate
during any consecutive 360-day period, and there must be at least 181
days during any consecutive 360-day period during which no Payment
Blockage Period is in effect. 
Notwithstanding the foregoing, however, no Non-Payment Default that
existed or was continuing on the date of commencement of any Payment Blockage
Period with respect to any Designated Senior Indebtedness and that was the
basis for the initiation of such Payment Blockage Period shall be, or be made,
the basis for a subsequent Payment Blockage Period by the Representative of
such Designated Senior Indebtedness unless such default shall have been waived
for a period of not less than 90 consecutive days (it being acknowledged that
any subsequent action, or any breach of any financial covenants during the
period after the date of delivery of such initial Blockage Notice, that, in
either case, would give rise to a Non-Payment Default pursuant to any
provisions under which a Non-Payment Default previously existed or was
continuing shall constitute a new Non-Payment Default for this purpose).

 

Section 10.04                                    Acceleration
of Payment of Notes.

 

If
payment of the Notes is accelerated because of an Event of Default, the Issuer
shall promptly notify the holders of the Designated Senior Indebtedness of the
Issuer or the Representative of such Designated Senior Indebtedness of the
acceleration; provided that any failure to give such notice shall have
no effect whatsoever on the provisions of this Article 10. So long as there
shall remain outstanding any Senior Indebtedness under the Senior Credit
Facilities, a Blockage Notice may be given only 

 

106

 

by the respective
Representatives thereunder unless otherwise agreed to in writing by the requisite
lenders named therein. If any Designated Senior Indebtedness of the Issuer is
outstanding, the Issuer may not pay the Notes until five Business Days after
the Representatives of all such Designated Senior Indebtedness receive notice
of such acceleration and, thereafter, may pay the Notes only if this Indenture
otherwise permits payment at that time.

 

Section 10.05                                    When
Distribution Must Be Paid Over.

 

If
a distribution is made to Holders that, due to this Article 10, should not have
been made to them, such Holders are required to hold it in trust for the
holders of Senior Indebtedness of the Issuer and pay it over to them as their
interests may appear.

 

Section 10.06                                    Subrogation.

 

After
all Senior Indebtedness of the Issuer is paid in full in cash and until the
Notes are paid in full, Holders shall be subrogated to the rights of holders of
such Senior Indebtedness to receive distributions applicable to such Senior
Indebtedness.  A distribution made under
this Article 10 to holders of such Senior Indebtedness which otherwise would
have been made to Holders is not, as between the Issuer and Holders, a payment
by the Issuer on such Senior Indebtedness.

 

Section 10.07                                    Relative
Rights.

 

This
Article 10 defines the relative rights of Holders and holders of Senior
Indebtedness of the Issuer.  Nothing in
this Indenture shall:

 

(i)                                     impair, as between the Issuer and Holders,
the obligation of the Issuer, which is absolute and unconditional, to pay
Accreted Value of and interest on the Notes in accordance with their terms;

 

(ii)                                  prevent the Trustee or any Holder from
exercising its available remedies upon a Default, subject to the rights of
holders of Senior Indebtedness of the Issuer to receive payments or
distributions otherwise payable to Holders and such other rights of such
holders of Senior Indebtedness as set forth herein; or

 

(iii)                               affect the relative rights of Holders and creditors of the Issuer other
than their rights in relation to holders of Senior Indebtedness.

 

Section 10.08                                    Subordination
May Not Be Impaired by Issuer.

 

No
right of any holder of Senior Indebtedness of the Issuer to enforce the
subordination of the Indebtedness evidenced by the Notes shall be impaired by
any act or failure to act by the Issuer or by its failure to comply with this
Indenture.

 

Section 10.09                                    Rights
of Trustee and Paying Agent.

 

Notwithstanding
Section 10.03 hereof, the Trustee or any Paying Agent may continue to make
payments on the Notes and shall not be charged with knowledge of the existence
of facts that would prohibit the making of any payments unless a Responsible
Officer of the Trustee receives notice satisfactory to him that payments may
not be made under this Article 10; provided that notwithstanding the
foregoing, the subordination of the Obligations under the Notes to Senior
Indebtedness of the Issuer shall not be affected and the Holders receiving any
payments in contravention of Section 10.02 and/or 10.03 (and 

 

107

 

such respective payments) shall
otherwise be subject to the provisions of this Article 10.  The Issuer, the Registrar, the Paying Agent,
a Representative or a holder of Senior Indebtedness of the Issuer shall be
entitled to give the notice; provided, however, that, if an issue
of Senior Indebtedness of the Issuer has a Representative, only the
Representative shall be entitled to give the notice.

 

The
Trustee in its individual or any other capacity shall be entitled to hold
Senior Indebtedness of the Issuer with the same rights it would have if it were
not Trustee.  The Registrar and the
Paying Agent shall be entitled to do the same with like rights.  The Trustee shall be entitled to all the
rights set forth in this Article 10 with respect to any Senior Indebtedness of
the Issuer which may at any time be held by it, to the same extent as any other
holder of such Senior Indebtedness; and nothing in Article 7 shall deprive the
Trustee of any of its rights as such holder. 
Nothing in this Article 10 shall apply to claims of, or payments to, the
Trustee under or pursuant to Section 7.07 hereof or any other Section of this
Indenture.

 

Section 10.10                                    Distribution
or Notice to Representative.

 

Whenever
a distribution is to be made or a notice given to holders of Senior
Indebtedness of the Issuer, the distribution may be made and the notice given
to their Representative (if any).

 

Section 10.11                                    Article 10
Not To Prevent Events of Default or Limit Right To Accelerate.

 

The
failure to make a payment pursuant to the Notes by reason of any provision in
this Article 10 shall not be construed as preventing the occurrence of a
Default.  Nothing in this Article 10
shall have any effect on the right of the Holders or the Trustee to accelerate
the maturity of the Notes.

 

Section 10.12                                    Trust
Moneys Not Subordinated.

 

Notwithstanding
anything contained herein to the contrary, payments from money or the proceeds
of Government Securities held in trust by the Trustee for the payment of
Accreted Value of and interest on the Notes pursuant to Article 8 or Article 13
hereof shall not be subordinated to the prior payment of any Senior
Indebtedness of the Issuer or subject to the restrictions set forth in this
Article 10, and none of the Holders shall be obligated to pay over any such
amount to the Issuer or any holder of Senior Indebtedness of the Issuer or any
other creditor of the Issuer, provided that the subordination provisions
of this Article 10 were not violated at the time the applicable amounts were
deposited in trust pursuant to Article 8 or Article 13 hereof, as the case may
be, and such deposit was otherwise made in accordance with Article 8 or Article
13 hereof.

 

Section 10.13                                    Trustee
Entitled To Rely.

 

Upon
any payment or distribution pursuant to this Article 10, the Trustee and the
Holders shall be entitled to rely (a) upon any order or decree of a court
of competent jurisdiction in which any proceedings of the nature referred to in
Section 10.02 hereof are pending, (b) upon a certificate of the
liquidating trustee or agent or other Person making such payment or distribution
to the Trustee or to the Holders or (c) upon the Representatives of Senior
Indebtedness of the Issuer for the purpose of ascertaining the Persons entitled
to participate in such payment or distribution, the holders of such Senior
Indebtedness and other Indebtedness of the Issuer, the amount thereof or
payable thereon, the amount or amounts paid or distributed thereon and all
other facts pertinent thereto or to this Article 10.  In the event that the Trustee determines, in
good faith, that evidence is required with respect to the right of any Person
as a holder of Senior Indebtedness of the Issuer to participate in any payment
or distribution pursuant to this Article 10, the Trustee shall be entitled to
request such Person to furnish evidence to the reasonable satisfaction of the
Trustee as to the amount of such Senior Indebtedness held by such Person, the
extent to 

 

108

 

which such Person is entitled
to participate in such payment or distribution and other facts pertinent to the
rights of such Person under this Article 10, and, if such evidence is not
furnished, the Trustee shall be entitled to defer any payment to such Person
pending judicial determination as to the right of such Person to receive such
payment.  The provisions of Sections 7.01
and 7.02 hereof shall be applicable to all actions or omissions of actions by
the Trustee pursuant to this Article 10.

 

Section 10.14                                    Trustee
To Effectuate Subordination.

 

A
Holder by its acceptance of a Note agrees to be bound by this Article 10 and
authorizes and expressly directs the Trustee, on its behalf, to take such
action as may be necessary or appropriate to effectuate the subordination
between the Holders and the holders of Senior Indebtedness of the Issuer as provided
in this Article 10 and appoints the Trustee as its attorney-in-fact for such
purpose.

 

If
the Trustee does not file a Proper Proof of Claim in any proceeding prior to 15
days before the expiration of the time to file a Proof of Claim in such
proceeding, then the holders of Designated Senior Indebtedness of the Issuer
(or their Representative) are hereby authorized to have the right to file and
are (or is) hereby authorized to file, in the name of the Trustee, a Proof of
Claim for and on behalf of the Holders; provided that (i) if the holders of the
Designated Senior Indebtedness of the Issuer (or their Representative) file any
Proof of Claim as contemplated above and the Trustee shall subsequently file a
Proper Proof of Claim in such proceeding before the expiration of the time to
file a Proof of Claim in such proceeding, such subsequent Proper Proof of Claim
filed by the Trustee shall supersede any such Proof of Claim theretofore filed
by the holders of the Designated Senior Indebtedness of the Issuer (or their
Representative), and such Proof of Claim theretofore filed by the holders of
the Designated Senior Indebtedness of the Issuer (or their Representative)
shall thereupon deemed to be withdrawn, and (ii) the foregoing provisions of
this paragraph shall not be construed to authorize the holders of the
Designated Senior Indebtedness (or their Representative) to authorize or
consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Notes, or
to authorize the holders of the Designated Senior Indebtedness (or their
Representative) to vote in respect of the claim of any Holder in any such
proceeding. This paragraph is intended solely to permit the holders of
Designated Senior Indebtedness of the Issuer to preserve their “turnover right”
pursuant to the applicable subordination provisions in this Article 10 in
circumstances where a Proper Proof of Claim has not been filed by the Trustee
before the expiration of the time to file a Proof of Claim in a bankruptcy
proceeding, and nothing herein shall impair the rights of the Trustee under
Section 6.13 and 7.07.

 

Section 10.15                                    Trustee
Not Fiduciary for Holders of Senior Indebtedness of the Issuer.

 

The
Trustee shall not be deemed to owe any fiduciary duty to the holders of Senior
Indebtedness of the Issuer and shall not be liable to any such holders if it
shall mistakenly pay over or distribute to Holders or the Issuer or any other
Person, money or assets to which any holders of Senior Indebtedness of the
Issuer shall be entitled by virtue of this Article 10 or otherwise.

 

Section 10.16                                    Reliance
by Holders of Senior Indebtedness of the Issuer on Subordination Provisions.

 

Each
Holder by accepting a Note acknowledges and agrees that the subordination
provisions of this Article 10 are, and are intended to be, an inducement and a
consideration to each holder of any Senior Indebtedness of the Issuer, whether
such Senior Indebtedness was created or acquired before or after the issuance
of the Notes, to acquire and continue to hold, or to continue to hold, such
Senior Indebtedness and such holder of such Senior Indebtedness shall be deemed
conclusively to have relied on such subordination provisions in acquiring and
continuing to hold, or in continuing to hold, such Senior Indebtedness.

 

109

 

Without
in any way limiting the generality of the foregoing paragraph, the holders of
Senior Indebtedness of the Issuer may, at any time and from time to time, without
the consent of or notice to the Trustee or the Holders, without incurring
responsibility to the Trustee or the Holders and without impairing or releasing
the subordination provided in this Article 10 or the obligations hereunder
of the Holders to the holders of the Senior Indebtedness of the Issuer, do any
one or more of the following:  (i) change the manner, place or
terms of payment or extend the time of payment of, or renew or alter, Senior
Indebtedness of the Issuer, or otherwise amend or supplement in any manner
Senior Indebtedness of the Issuer, or any instrument evidencing the same or any
agreement under which Senior Indebtedness of the Issuer is outstanding;
(ii) sell, exchange, release or otherwise deal with any property pledged,
mortgaged or otherwise securing Senior Indebtedness of the Issuer;
(iii) release any Person liable in any manner for the payment or
collection of Senior Indebtedness of the Issuer; and (iv) exercise or
refrain from exercising any rights against the Issuer and any other Person.

 

ARTICLE
11

 

GUARANTEES

 

Section 11.01                                    Guarantee.

 

Subject
to this Article 11, each of the Guarantors hereby, jointly and severally,
unconditionally guarantees, subject to Article 12, to each Holder of a Note
authenticated and delivered by the Trustee and to the Trustee and its
successors and assigns, irrespective of the validity and enforceability of this
Indenture, the Notes or the obligations of the Issuer hereunder or thereunder,
that: (a) the Accreted Value of, and interest, premium and Additional Interest
(to the extent not already included in Accreted Value), if any, on the Notes
shall be promptly paid in full when due, whether at maturity, by acceleration,
redemption or otherwise, and interest on the overdue Accreted Value of and
interest on the Notes, if any, if lawful, and all other Obligations of the
Issuer to the Holders or the Trustee hereunder or thereunder shall be promptly
paid in full or performed, all in accordance with the terms hereof and thereof;
and (b) in case of any extension of time of payment or renewal of any
Notes or any of such other obligations, that same shall be promptly paid in
full when due or performed in accordance with the terms of the extension or
renewal, whether at stated maturity, by acceleration or otherwise.  Failing payment when due of any amount so
guaranteed or any performance so guaranteed for whatever reason, the Guarantors
shall be jointly and severally obligated to pay the same immediately.  Each Guarantor agrees that this is a
guarantee of payment and not a guarantee of collection.

 

The
Guarantors hereby agree that their obligations hereunder shall be
unconditional, irrespective of the validity, regularity or enforceability of
the Notes or this Indenture, the absence of any action to enforce the same, any
waiver or consent by any Holder of the Notes with respect to any provisions
hereof or thereof, the recovery of any judgment against the Issuer, any action
to enforce the same or any other circumstance which might otherwise constitute
a legal or equitable discharge or defense of a guarantor.  Each Guarantor hereby waives diligence,
presentment, demand of payment, filing of claims with a court in the event of
insolvency or bankruptcy of the Issuer, any right to require a proceeding first
against the Issuer, protest, notice and all demands whatsoever and covenants
that this Guarantee shall not be discharged except by complete performance of
the obligations contained in the Notes and this Indenture.

 

Each
Guarantor also agrees to pay any and all costs and expenses (including
reasonable attorneys’ fees) incurred by the Trustee or any Holder in enforcing
any rights under this Section 11.01.

 

If
any Holder or the Trustee is required by any court or otherwise to return to
the Issuer, the Guarantors or any custodian, trustee, liquidator or other
similar official acting in relation to either the 

 

110

 

Issuer or the Guarantors, any
amount paid either to the Trustee or such Holder, this Guarantee, to the extent
theretofore discharged, shall be reinstated in full force and effect.

 

Each
Guarantor agrees that it shall not be entitled to any right of subrogation in
relation to the Holders in respect of any obligations guaranteed hereby until
payment in full of all obligations guaranteed hereby.  Each Guarantor further agrees that, as
between the Guarantors, on the one hand, and the Holders and the Trustee, on
the other hand, (x) the maturity of the obligations guaranteed hereby may be
accelerated as provided in Article 6 hereof for the purposes of this Guarantee,
notwithstanding any stay, injunction or other prohibition preventing such
acceleration in respect of the obligations guaranteed hereby, and (y) in the
event of any declaration of acceleration of such obligations as provided in
Article 6 hereof, such obligations (whether or not due and payable) shall
forthwith become due and payable by the Guarantors for the purpose of this
Guarantee.  The Guarantors shall have the
right to seek contribution from any non-paying Guarantor so long as the
exercise of such right does not impair the rights of the Holders under the
Guarantees.

 

Each
Guarantee shall remain in full force and effect and continue to be effective
should any petition be filed by or against the Issuer for liquidation, reorganization,
should the Issuer become insolvent or make an assignment for the benefit of
creditors or should a receiver or trustee be appointed for all or any
significant part of the Issuer’s assets, and shall, to the fullest extent
permitted by law, continue to be effective or be reinstated, as the case may
be, if at any time payment and performance of the Notes are, pursuant to
applicable law, rescinded or reduced in amount, or must otherwise be restored
or returned by any obligee on the Notes or Guarantees, whether as a “voidable
preference,” “fraudulent transfer” or otherwise, all as though such payment or
performance had not been made.  In the
event that any payment or any part thereof, is rescinded, reduced, restored or
returned, the Notes shall, to the fullest extent permitted by law, be
reinstated and deemed reduced only by such amount paid and not so rescinded,
reduced, restored or returned.

 

In
case any provision of any Guarantee shall be invalid, illegal or unenforceable,
the validity, legality, and enforceability of the remaining provisions shall
not in any way be affected or impaired thereby.

 

The
Guarantee issued by any Guarantor shall be a general unsecured subordinated
obligation of such Guarantor and shall be subordinated in right of payment to
all existing and future Senior Indebtedness of such Guarantor, if any.

 

Each
payment to be made by a Guarantor in respect of its Guarantee shall be made
without set-off, counterclaim, reduction or diminution of any kind or nature.

 

The
obligations of each Guarantor to the Holders and to the Trustee pursuant to the
Guarantee of such Guarantor and this Indenture are expressly subordinate and
subject in right of payment to the prior payment in full of all Senior
Indebtedness of such Guarantor, to the extent and in the manner provided in
Article 12.

 

Section 11.02                                    Limitation
on Guarantor Liability.

 

Each
Guarantor, and by its acceptance of Notes, each Holder, hereby confirms that it
is the intention of all such parties that the Guarantee of such Guarantor not
constitute a fraudulent transfer or conveyance for purposes of Bankruptcy Law,
the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or
any similar federal or state law to the extent applicable to any Guarantee.  To effectuate the foregoing intention, the
Trustee, the Holders and the Guarantors hereby irrevocably agree that the
obligations of each Guarantor shall be limited to the maximum amount as will,
after giving effect 

 

111

 

to such maximum amount and all
other contingent and fixed liabilities of such Guarantor (including, without
limitation, all Senior Indebtedness of such Guarantor) that are relevant under
such laws and after giving effect to any collections from, rights to receive
contribution from or payments made by or on behalf of any other Guarantor in
respect of the obligations of such other Guarantor under this Article 11,
result in the obligations of such Guarantor under its Guarantee not
constituting a fraudulent conveyance or fraudulent transfer under applicable
law.  Each Guarantor that makes a payment
under its Guarantee shall be entitled upon payment in full of all guaranteed
obligations under this Indenture to a contribution from each other Guarantor in
an amount equal to such other Guarantor’s pro
rata portion of such payment based on the respective net assets of
all the Guarantors at the time of such payment determined in accordance with
GAAP.

 

Section 11.03                                    Execution
and Delivery.

 

To
evidence its Guarantee set forth in Section 11.01 hereof, each Guarantor hereby
agrees that this Indenture shall be executed on behalf of such Guarantor by its
President, one of its Vice Presidents or one of its Assistant Vice Presidents.

 

Each
Guarantor hereby agrees that its Guarantee set forth in Section 11.01 hereof
shall remain in full force and effect notwithstanding the absence of the
endorsement of any notation of such Guarantee on the Notes.

 

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

 

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

 

If
required by Section 4.15 hereof, the Issuer shall cause any newly created or
acquired Restricted Subsidiary to comply with the provisions of Section 4.15
hereof and this Article 11, to the extent applicable.

 

Section 11.04                                    Subrogation.

 

Each
Guarantor shall be subrogated to all rights of Holders of Notes against the
Issuer in respect of any amounts paid by any Guarantor pursuant to the
provisions of Section 11.01 hereof; provided that, if an Event of
Default has occurred and is continuing, no Guarantor shall be entitled to
enforce or receive any payments arising out of, or based upon, such right of
subrogation until all amounts then due and payable by the Issuer under this
Indenture or the Notes shall have been paid in full.

 

Section 11.05                                    Benefits
Acknowledged.

 

Each
Guarantor acknowledges that it will receive direct and indirect benefits from
the financing arrangements contemplated by this Indenture and that the
guarantee and waivers made by it pursuant to its Guarantee are knowingly made
in contemplation of such benefits.

 

Section 11.06                                    Release
of Guarantees.

 

A
Guarantee by a Guarantor shall be automatically and unconditionally released
and discharged, and no further action by such Guarantor, the Issuer or the
Trustee is required for the release of such Guarantor’s Guarantee, upon:

 

112

 

(1)                                  (A) 
any sale, exchange, disposition or transfer (by merger or otherwise) of
(x) the Capital Stock of such Guarantor, after which the applicable Guarantor
is no longer a Restricted Subsidiary, or (y) all or substantially all the
assets of such Guarantor which sale, exchange, disposition or transfer in each
case is made in compliance with Sections 4.10(a)(1) and (2);

 

(B)                                the release or discharge of the guarantee by such Guarantor of the
Senior Credit Facilities or the guarantee which resulted in the creation of
such Guarantee, except a discharge or release by or as a result of payment
under such guarantee;

 

(C)                                the proper designation of any Restricted Subsidiary that is a Guarantor
as an Unrestricted Subsidiary; or

 

(D)                               the Issuer exercising Legal Defeasance or Covenant Defeasance in
accordance with Article 8 hereof or the Issuer’s obligations under this
Indenture being discharged in accordance with the terms of this Indenture; and

 

(2)                                   the Issuer delivering to the Trustee an
Officer’s Certificate and an Opinion of Counsel, each stating that all
conditions precedent provided for in this Indenture relating to such
transaction have been complied with.

 

ARTICLE
12

 

SUBORDINATION
OF GUARANTEES

 

Section 12.01                                    Agreement
To Subordinate.

 

Each
Guarantor agrees, and each Holder by accepting a Note agrees, that the
Obligations of such Guarantor under its Guarantee are subordinated in right of
payment, to the extent and in the manner provided in this Article 12, to the
prior payment in full in cash of all existing and future Senior Indebtedness of
such Guarantor and that the subordination is for the benefit of and enforceable
by the holders of such Senior Indebtedness.  All provisions of this Article 12 shall
be subject to Section 12.12.

 

Section 12.02                                    Liquidation,
Dissolution, Bankruptcy.

 

Upon
any payment or distribution of the assets of a Guarantor to creditors upon a
total or partial liquidation or a total or partial dissolution of such
Guarantor or in a reorganization, insolvency or bankruptcy of or similar
proceeding relating to such Guarantor or its property:

 

(i)                                     the holders of Senior Indebtedness of such
Guarantor shall be entitled to receive payment in full in cash of such Senior
Indebtedness before Holders shall be entitled to receive any payment or
distribution of any kind or character with respect to any Obligations on, or
relating to, such Guarantor’s Guarantee; and

 

(ii)                                  until the Senior Indebtedness of such
Guarantor is paid in full in cash, any payment or distribution to which Holders
would be entitled but for the subordination provisions of this Article 12 shall
be made to holders of such Senior Indebtedness as their interests may appear,
except that Holders may receive Permitted Junior Securities.

 

To
the extent any payment of Senior Indebtedness of any Guarantor (whether by or
on behalf of such Guarantor, as proceeds of security or enforcement of any
right of setoff or otherwise) is declared to be 

 

113

 

fraudulent
or preferential, set aside or required to be paid to any receiver, trustee in
bankruptcy, liquidating trustee, agent or other similar Person under any
bankruptcy, insolvency, receivership, fraudulent conveyance or similar law,
then, if such payment is recovered by, or paid over to, such receiver, trustee
in bankruptcy, liquidating trustee, agent or similar Person, the Senior
Indebtedness of such Guarantor or part thereof originally intended to be satisfied
shall be deemed to be reinstated and outstanding as if such payment had not
occurred.  It is further agreed that any
diminution (whether pursuant to court decree or otherwise, including without
limitation for any of the reasons described in the preceding sentence) of any
Guarantor’s obligation to make any distribution or payment pursuant to any
Senior Indebtedness of such Guarantor, except to the extent such diminution
occurs by reason of the repayment (which has not been disgorged or returned) of
such Senior Indebtedness of such Guarantor in cash, shall have no force or
effect for purposes of the subordination provisions contained in Article 12,
with any turnover of payments as otherwise calculated pursuant to this Article
12 to be made as if no such diminution had occurred.  The Issuer shall promptly give written notice
to the Trustee of any such dissolution, winding-up, liquidation, or
reorganization of any Guarantor, provided that any delay or failure to give
such notice shall have no effect on the subordination provisions contained in
this Article 12.

 

Section 12.03                                    Default
on Senior Indebtedness of a Guarantor.

 

A
Guarantor shall not make any payment pursuant to its Guarantee (or pay any
other Obligations relating to its Guarantee, including Additional Interest,
fees, costs, expenses, indemnities and rescission or damage claims) and may not
purchase, redeem or otherwise retire or acquire for cash or property any Notes
(collectively, “pay its Guarantee”) (except in the form of Permitted
Junior Securities (other than Disqualified Stock)) if either of the following
occurs (a “Guarantor Payment Default”):

 

(i)                                     any Obligation on any Designated Senior
Indebtedness of such Guarantor is not paid in full in cash when due; or

 

(ii)                                  any other default on Designated Senior
Indebtedness of such Guarantor occurs and the maturity of such Designated
Senior Indebtedness is accelerated in accordance with its terms;

 

unless,
in either case, the Guarantor Payment Default has been cured or waived and any
such acceleration has been rescinded or such Designated Senior Indebtedness has
been paid in full in cash; provided, however, that such Guarantor
shall be entitled to pay its Guarantee without regard to the foregoing if such
Guarantor and the Trustee receive written notice approving such payment from
the Representatives of all Designated Senior Indebtedness with respect to which
the Guarantor Payment Default has occurred and is continuing.

 

During
the continuance of any default (other than a Guarantor Payment Default) (a “Guarantor
Non-Payment Default”) with respect to any Designated Senior Indebtedness of
a Guarantor pursuant to which the maturity thereof may be accelerated without
further notice (except such notice as may be required to effect such
acceleration) or the expiration of any applicable grace periods, such Guarantor
shall not pay its Guarantee (except in the form of Permitted Junior Securities
(other than Disqualified Stock)) for a period (a “Guarantee Payment Blockage
Period”) commencing upon the receipt by the Trustee (with a copy to such
Guarantor and the Issuer) of written notice (a “Guarantee Blockage Notice”)
of such Guarantor Non-Payment Default from the Representative of such
Designated Senior Indebtedness specifying an election to effect a Guarantee
Payment Blockage Period and ending 179 days thereafter.  The Guarantee Payment Blockage Period shall
end earlier if such Guarantee Payment Blockage Period is terminated (i) by
written notice to the Trustee, the relevant Guarantor and the Issuer from the
Person or Persons who gave such Guarantee Blockage Notice; (ii) because
the default giving rise to such Guarantee 

 

114

 

Blockage Notice is cured,
waived or otherwise no longer continuing; or (iii) because such Designated
Senior Indebtedness has been discharged or repaid in full in cash.

 

Notwithstanding
the provisions described in the immediately preceding paragraph (but subject to
the provisions contained in the first paragraph of this Section 12.03 and
Section 12.02 hereof), unless the holders of such Designated Senior
Indebtedness or the Representative of such Designated Senior Indebtedness shall
have accelerated the maturity of such Designated Senior Indebtedness or a
Guarantor Payment Default has occurred and is continuing, the relevant
Guarantor shall be permitted to resume paying its Guarantee after the end of
such Guarantee Payment Blockage Period. 
Each Guarantee shall not be subject to more than one Guarantee Payment Blockage
Period in any consecutive 360-day period irrespective of the number of
Non-Payment Defaults with respect to Designated Senior Indebtedness during such
period; provided that if any Guarantee Blockage Notice is delivered to
the Trustee by or on behalf of the holders of Designated Senior Indebtedness of
such Guarantor (other than the holders of Indebtedness under the Senior Credit
Facilities), a Representative of holders of Indebtedness under the Senior
Credit Facilities may in the aggregate give one other Guarantee Blockage Notice
within such period.  However, in no event
shall the total number of days during which any Guarantee Payment Blockage
Period or Periods on a Guarantee is in effect exceed 179 days in the aggregate
during any consecutive 360-day period, and there must be at least 181
days during any consecutive 360-day period during which no Guarantee
Payment Blockage Period is in effect. 
Notwithstanding the foregoing, however, no Guarantor Non-Payment Default
that existed or was continuing on the date of commencement of any Guarantee
Payment Blockage Period with respect to any Designated Senior Indebtedness and
that was the basis for the initiation of such Guarantee Payment Blockage Period
shall be, or be made, the basis for a subsequent Guarantee Payment Blockage
Period by the Representative of such Designated Senior Indebtedness unless such
default shall have been waived for a period of not less than 90 consecutive
days (it being acknowledged that any subsequent action, or any breach of any
financial covenants during the period after the date of delivery of such
initial Guarantee Blockage Notice, that, in either case, would give rise to a
Guarantor Non-Payment Default pursuant to any provisions under which a
Guarantor Non-Payment Default previously existed or was continuing shall constitute
a new Guarantor Non-Payment Default for this purpose).

 

Section 12.04                                    Demand
for Payment.

 

If
payment of the Notes is accelerated because of an Event of Default and a demand
for payment is made on a Guarantor pursuant to Article 11 hereof, the Issuer or
such Guarantor shall promptly notify the holders of the Designated Senior
Indebtedness of such Guarantor or the Representative of such Designated Senior
Indebtedness of such demand; provided that any failure to give such
notice shall have no effect whatsoever on the provisions of this Article
12.  So long as there shall remain
outstanding any Senior Indebtedness under the Senior Credit Facilities and the
relevant Guarantor is a guarantor thereof, a Guarantee Blockage Notice may be
given only by the respective Representatives thereunder unless otherwise agreed
to in writing by the requisite lenders named therein.  If any Designated Senior Indebtedness of a
Guarantor is outstanding, such Guarantor may not pay its Guarantee until five
Business Days after the Representatives of all such Designated Senior
Indebtedness receive notice of such acceleration and, thereafter, may pay its
Guarantee only if this Indenture otherwise permits payment at that time.

 

Section 12.05                                    When
Distribution Must Be Paid Over.

 

If
a distribution is made to Holders that, due to this Article 12, should not have
been made to them, such Holders are required to hold it in trust for the
holders of Senior Indebtedness of the relevant Guarantor and pay it over to
them as their interests may appear.

 

115

 

Section 12.06                                    Subrogation.

 

After
all Senior Indebtedness of a Guarantor is paid in full in cash and until the
Notes are paid in full, Holders shall be subrogated to the rights of holders of
such Senior Indebtedness to receive distributions applicable to such Senior
Indebtedness.  A distribution made under
this Article 12 to holders of such Senior Indebtedness which otherwise would
have been made to Holders is not, as between the relevant Guarantor and
Holders, a payment by such Guarantor on such Senior Indebtedness.

 

Section 12.07                                    Relative
Rights.

 

This
Article 12 defines the relative rights of Holders and holders of Senior
Indebtedness of a Guarantor.  Nothing in
this Indenture shall:

 

(i)                                     impair, as between such Guarantor and
Holders, the obligation of such Guarantor, which is absolute and unconditional,
to make payments under its Guarantee in accordance with its terms;

 

(ii)                                  prevent the Trustee or any Holder from
exercising its available remedies upon a default by such Guarantor under its
obligations with respect to its Guarantee, subject to the rights of holders of
Senior Indebtedness of such Guarantor to receive payments or distributions
otherwise payable to Holders and such other rights of such holders of Senior
Indebtedness as set forth herein; or

 

(iii)                               affect the relative rights of Holders and creditors of such Guarantor
other than their rights in relation to holders of Senior Indebtedness.

 

Section 12.08                                    Subordination
May Not Be Impaired by a Guarantor.

 

No
right of any holder of Senior Indebtedness of a Guarantor to enforce the
subordination of the Obligations of such Guarantor under its Guarantee shall be
impaired by any act or failure to act by such Guarantor or by its failure to
comply with this Indenture.

 

Section 12.09                                    Rights
of Trustee and Paying Agent.

 

Notwithstanding
Section 12.03 hereof, the Trustee or any Paying Agent may continue to make
payments on the Notes and shall not be charged with knowledge of the existence
of facts that would prohibit the making of any payments unless a Responsible
Officer of the Trustee receives notice satisfactory to him that payments may
not be made under this Article 12; provided  however that
notwithstanding the foregoing, the subordination of the Guarantees to Senior
Indebtedness of the Guarantors shall not be affected and the Holders receiving
any payments in contravention of Section 12.02 and/or 12.03 (and such
respective payments) shall otherwise be subject to the provisions of this
Article 12.  A Guarantor, the Registrar,
the Paying Agent, a Representative or a holder of Senior Indebtedness of such
Guarantor shall be entitled to give the notice; provided, however,
that, if an issue of Senior Indebtedness of such Guarantor has a
Representative, only the Representative shall be entitled to give the notice.

 

The
Trustee in its individual or any other capacity shall be entitled to hold
Senior Indebtedness of a Guarantor with the same rights it would have if it
were not Trustee.  The Registrar and the
Paying Agent shall be entitled to do the same with like rights.  The Trustee shall be entitled to all the
rights set forth in this Article 12 with respect to any Senior Indebtedness of
a Guarantor which may at any time be held by it, to the same extent as any
other holder of such Senior Indebtedness; and nothing in Article 7 shall
deprive the Trustee of any of its rights as such holder.  Nothing in this Article 12 shall apply 

 

116

 

to claims of, or payments to,
the Trustee under or pursuant to Section 7.07 hereof or any other Section of
this Indenture.

 

Section 12.10                                    Distribution
or Notice to Representative.

 

Whenever
a distribution is to be made or a notice given to holders of Senior
Indebtedness of a Guarantor, the distribution may be made and the notice given
to their Representative (if any).

 

Section 12.11                                    Article 12
Not To Prevent Events of Default or Limit Right To Demand Payment.

 

The
failure of a Guarantor to make a payment pursuant its Guarantee by reason of
any provision in this Article 12 shall not be construed as preventing the
occurrence of a default by such Guarantor under its Guarantee.  Nothing in this Article 12 shall have any
effect on the right of the Holders or the Trustee to make a demand for payment
on a Guarantor pursuant to Article 11 hereof.

 

Section 12.12                          Trust
Moneys Not Subordinated.

 

Notwithstanding
anything contained herein to the contrary, payments from money or the proceeds
of Government Securities held in trust by the Trustee for the payment of
Accreted Value of and interest on the Notes pursuant to Article 8 or Article 13
hereof shall not be subordinated to the prior payment of any Senior
Indebtedness of any Guarantor or subject to the restrictions set forth in this
Article 12, and none of the Holders shall be obligated to pay over any such
amount to such Guarantor or any holder of Senior Indebtedness of such Guarantor
or any other creditor of such Guarantor, provided that the subordination
provisions of this Article 12 were not violated at the time the applicable
amounts were deposited in trust pursuant to Article 8 or Article 13 hereof, as
the case may be, and such deposit was otherwise made in accordance with Article
8 or Article 13 hereof.

 

Section 12.13                                    Trustee
Entitled To Rely.

 

Upon
any payment or distribution pursuant to this Article 12, the Trustee and the
Holders shall be entitled to rely (a) upon any order or decree of a court
of competent jurisdiction in which any proceedings of the nature referred to in
Section 12.02 hereof are pending, (b) upon a certificate of the
liquidating trustee or agent or other Person making such payment or
distribution to the Trustee or to the Holders or (c) upon the
Representatives of Senior Indebtedness of a Guarantor for the purpose of ascertaining
the Persons entitled to participate in such payment or distribution, the
holders of such Senior Indebtedness and other Indebtedness of such Guarantor,
the amount thereof or payable thereon, the amount or amounts paid or
distributed thereon and all other facts pertinent thereto or to this Article
12.  In the event that the Trustee
determines, in good faith, that evidence is required with respect to the right
of any Person as a holder of Senior Indebtedness of a Guarantor to participate
in any payment or distribution pursuant to this Article 12, the Trustee shall
be entitled to request such Person to furnish evidence to the reasonable
satisfaction of the Trustee as to the amount of such Senior Indebtedness held
by such Person, the extent to which such Person is entitled to participate in
such payment or distribution and other facts pertinent to the rights of such
Person under this Article 12, and, if such evidence is not furnished, the
Trustee shall be entitled to defer any payment to such Person pending judicial
determination as to the right of such Person to receive such payment.  The provisions of Sections 7.01 and 7.02
hereof shall be applicable to all actions or omissions of actions by the
Trustee pursuant to this Article 12.

 

117

 

Section 12.14                                    Trustee
To Effectuate Subordination.

 

A
Holder by its acceptance of a Note agrees to be bound by this Article 12 and
authorizes and expressly directs the Trustee, on its behalf, to take such
action as may be necessary or appropriate to effectuate the subordination
between the Holders and the holders of Senior Indebtedness of a Guarantor as
provided in this Article 12 and appoints the Trustee as its attorney-in-fact
for such purpose.

 

If
the Trustee does not file a Proper Proof of Claim in any proceeding prior to 15
days before the expiration of the time to file a Proof of Claim in such
proceeding, then the holders of Designated Senior Indebtedness of any Guarantor
(or their Representative) are hereby authorized to have the right to file and
are (or is) hereby authorized to file, in the name of the Trustee, a Proof of
Claim for and on behalf of the Holders; provided that (i) if the holders of the
Designated Senior Indebtedness of such Guarantor (or their Representative) file
any Proof of Claim as contemplated above and the Trustee shall subsequently
file a Proper Proof of Claim in such proceeding before the expiration of the
time to file a Proof of Claim in such proceeding, such subsequent Proper Proof
of Claim filed by the Trustee shall supersede any such Proof of Claim
theretofore filed by the holders of the Designated Senior Indebtedness of such
Guarantor (or their Representative), and such Proof of Claim theretofore filed
by the holders of the Designated Senior Indebtedness of such Guarantor (or
their Representative) shall thereupon deemed to be withdrawn, and (ii) the
foregoing provisions of this paragraph shall not be construed to authorize the
holders of the Designated Senior Indebtedness (or their Representative) to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Notes, or
to authorize the holders of the Designated Senior Indebtedness (or their
Representative) to vote in respect of the claim of any Holder in any such
proceeding. This paragraph is intended solely to permit the holders of
Designated Senior Indebtedness of any Guarantor to preserve their “turnover
right” pursuant to the applicable subordination provisions in this Article 12
in circumstances where a Proper Proof of Claim has not been filed by the
Trustee before the expiration of the time to file a Proof of Claim in a
bankruptcy proceeding, and nothing herein shall impair the rights of the
Trustee under Section 6.13 and 7.07.

 

Section 12.15                                    Trustee
Not Fiduciary for Holders of Senior Indebtedness of Guarantors.

 

The
Trustee shall not be deemed to owe any fiduciary duty to the holders of Senior
Indebtedness of a Guarantor and shall not be liable to any such holders if it
shall mistakenly pay over or distribute to Holders or such Guarantor or any
other Person, money or assets to which any holders of Senior Indebtedness of
such Guarantor shall be entitled by virtue of this Article 12 or otherwise.

 

Section 12.16                          Reliance by Holders of Senior Indebtedness of
a Guarantor on Subordination Provisions

 

Each
Holder by accepting a Note acknowledges and agrees that the subordination
provisions in this Article 12 are, and are intended to be, an inducement and a
consideration to each holder of any Senior Indebtedness of a Guarantor, whether
such Senior Indebtedness was created or acquired before or after the issuance
of the Notes, to acquire and continue to hold, or to continue to hold, such
Senior Indebtedness and such holder of such Senior Indebtedness shall be deemed
conclusively to have relied on such subordination provisions in acquiring and
continuing to hold, or in continuing to hold, such Senior Indebtedness.

 

Without
in any way limiting the generality of the foregoing paragraph, the holders of
Senior Indebtedness of a Guarantor may, at any time and from time to time,
without the consent of or notice to the Trustee or the Holders, without
incurring responsibility to the Trustee or the Holders and without impairing or
releasing the subordination provided in this Article 12 or the obligations
hereunder of the 

 

118

 

Holders to the holders of the
Senior Indebtedness of such Guarantor, do any one or more of the following:  (i) change
the manner, place or terms of payment or extend the time of payment of, or
renew or alter, Senior Indebtedness of such Guarantor, or otherwise amend or
supplement in any manner Senior Indebtedness of such Guarantor, or any instrument
evidencing the same or any agreement under which Senior Indebtedness of such
Guarantor is outstanding; (ii) sell, exchange, release or otherwise deal
with any property pledged, mortgaged or otherwise securing Senior Indebtedness
of such Guarantor; (iii) release any Person liable in any manner for the
payment or collection of Senior Indebtedness of such Guarantor; and
(iv) exercise or refrain from exercising any rights against such Guarantor
and any other Person.

 

ARTICLE
13

 

SATISFACTION
AND DISCHARGE

 

Section 13.01                                    Satisfaction
and Discharge.

 

This
Indenture shall be discharged and shall cease to be of further effect as to all
Notes, when either:

 

(1)                                  all Notes theretofore authenticated and
delivered, except lost, stolen or destroyed Notes which have been replaced or
paid and Notes for whose payment money has theretofore been deposited in trust,
have been delivered to the Trustee for cancellation; or

 

(2)                                  (A) 
all Notes not theretofore delivered to the Trustee for cancellation have
become due and payable by reason of the making of a notice of redemption or
otherwise, shall become due and payable within one year or are to be called for
redemption within one year under arrangements satisfactory to the Trustee for
the giving of notice of redemption by the Trustee in the name, and at the
expense, of the Issuer and the Issuer or any Guarantor have irrevocably
deposited or caused to be deposited with the Trustee as trust funds in trust
solely for the benefit of the Holders of the Notes, cash in U.S. dollars,
Government Securities, or a combination thereof, in such amounts as will be
sufficient without consideration of any reinvestment of interest to pay and
discharge the entire indebtedness on the Notes not theretofore delivered to the
Trustee for cancellation for Accreted Value of, premium, if any, and accrued
interest to the date of maturity or redemption;

 

(B)                                no Default (other than that resulting from borrowing funds to be
applied to make such deposit and any similar and simultaneous deposit relating
to other Indebtedness, including the Senior Notes and the Senior Subordinated
Notes, and the granting of Liens in connection therewith) with respect to this
Indenture or the Notes shall have occurred and be continuing on the date of
such deposit or shall occur as a result of such deposit and such deposit will
not result in a breach or violation of, or constitute a default under the
Senior Credit Facilities, Senior Notes (or the indenture under which the Senior
Notes are issued), Senior Subordinated Notes (or the indenture under which the
Senior Subordinated Notes are issued) or any other material agreement or
instrument (other than this Indenture) to which the Issuer or any Guarantor is
a party or by which the Issuer or any Guarantor is bound (other than that
resulting from any borrowing of funds to be applied to make such deposit and
any similar and simultaneous deposit relating to other Indebtedness, including
the Senior Notes and the Senior Subordinated Notes, and the granting of Liens
in connection therewith);

 

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

 

119

 

(D)                               the Issuer has delivered irrevocable instructions to the Trustee to
apply the deposited money toward the payment of the Notes at maturity or the
redemption date, as the case may be.

 

In
addition, the Issuer must deliver an Officer’s Certificate and an Opinion of
Counsel to the Trustee stating that all conditions precedent to satisfaction
and discharge have been satisfied.

 

Notwithstanding
the satisfaction and discharge of this Indenture, if money shall have been
deposited with the Trustee pursuant to subclause (A) of clause (2) of this
Section 13.01, the provisions of Section 13.02 and Section 8.06 hereof shall
survive such satisfaction and discharge.

 

Section 13.02                                    Application
of Trust Money.

 

Subject
to the provisions of Section 8.06 hereof, all money deposited with the Trustee
pursuant to Section 13.01 hereof shall be held in trust and applied by it, in
accordance with the provisions of the Notes and this Indenture, to the payment,
either directly or through any Paying Agent (including the Issuer acting as its
own Paying Agent) as the Trustee may determine, to the Persons entitled
thereto, of the Accreted Value (and premium and Additional Interest (to the
extent not already included in Accreted Value), if any) and interest for whose
payment such money has been deposited with the Trustee; but such money need not
be segregated from other funds except to the extent required by law.

 

If
the Trustee or Paying Agent is unable to apply any money or Government
Securities in accordance with Section 13.01 hereof by reason of any legal
proceeding or by reason of any order or judgment of any court or governmental
authority enjoining, restraining or otherwise prohibiting such application, the
Issuer’s and any Guarantor’s obligations under this Indenture and the Notes
shall be revived and reinstated as though no deposit had occurred pursuant to
Section 13.01 hereof; provided that if the Issuer has made any payment
of Accreted Value of, premium and Additional Interest, if any, or interest on
any Notes because of the reinstatement of its obligations, the Issuer shall be
subrogated to the rights of the Holders of such Notes to receive such payment
from the money or Government Securities held by the Trustee or Paying Agent.

 

ARTICLE
14

 

MISCELLANEOUS

 

Section 14.01                                    Trust
Indenture Act Controls.

 

If
any provision of this Indenture limits, qualifies or conflicts with the duties
imposed by Trust Indenture Act Section 318(c), the imposed duties shall
control.

 

Section 14.02                                    Notices.

 

Any
notice or communication by the Issuer, any Guarantor or the Trustee to the
others is duly given if in writing and delivered in person or mailed by
first-class mail (registered or certified, return receipt requested), fax or
overnight air courier guaranteeing next day delivery, to the others’ address:

 

120

 

If
to the Issuer and/or any Guarantor:

 

c/o
Michaels Stores, Inc. 

8000 Bent Branch Drive

Irving, TX 75063

Attention: General Counsel

 

with
a copy to:

 

Ropes
& Gray LLP

One International Place

Boston,
MA 02110

Attention:
Byung W. Choi, Esq.

 

Telephone:
                                 (617) 951-7000

Facsimile:                                            (617) 951-7050

 

If
to the Trustee:

 

Wells Fargo Bank, National Association

1445 Ross Avenue - 2nd Floor

Dallas, Texas 75202-2812

Fax No.: 214-777-4086 

Attention:                 Patrick Giordano

Corporate
Trust Services

 

The
Issuer, any Guarantor or the Trustee, by notice to the others, may designate
additional or different addresses for subsequent notices or communications.

 

All
notices and communications (other than those sent to Holders) shall be deemed
to have been duly given: at the time delivered by hand, if personally
delivered; five calendar days after being deposited in the mail, postage
prepaid, if mailed by first-class mail; when receipt acknowledged, if faxed;
and the next Business Day after timely delivery to the courier, if sent by overnight
air courier guaranteeing next day delivery; and, subject to compliance with the
Trust Indenture Act, on the first date on which publication is made, if given
by publication; provided that any notice or communication delivered to
the Trustee shall be deemed effective upon actual receipt thereof.

 

Any
notice or communication to a Holder shall be mailed by first-class mail,
certified or registered, return receipt requested, or by overnight air courier
guaranteeing next day delivery to its address shown on the register kept by the
Registrar.  Any notice or communication
shall also be so mailed to any Person described in Trust Indenture Act Section
313(c), to the extent required by the Trust Indenture Act.  Failure to mail a notice or communication to
a Holder or any defect in it shall not affect its sufficiency with respect to
other Holders.

 

If
a notice or communication is mailed or otherwise delivered in the manner
provided above within the time prescribed, it is duly given, whether or not the
addressee receives it.

 

If
the Issuer mails a notice or communication to Holders, it shall mail a copy to
the Trustee and each Agent at the same time.

 

121

 

Section 14.03                                    Communication
by Holders of Notes with Other Holders of Notes.

 

Holders
may communicate pursuant to Trust Indenture Act Section 312(b) with other
Holders with respect to their rights under this Indenture or the Notes.  The Issuer, the Trustee, the Registrar and
anyone else shall have the protection of Trust Indenture Act Section 312(c).

 

Section 14.04                                    Certificate
and Opinion as to Conditions Precedent.

 

Upon
any request or application by the Issuer or any of the Guarantors to the
Trustee to take any action under this Indenture, the Issuer or such Guarantor,
as the case may be, shall furnish to the Trustee:

 

(a)                                  An Officer’s Certificate in form and
substance reasonably satisfactory to the Trustee (which shall include the
statements set forth in Section 14.05 hereof) stating that, in the opinion of the
signers, all conditions precedent and covenants, if any, provided for in this
Indenture relating to the proposed action have been satisfied; and

 

(b)                                 An Opinion of Counsel in form and substance
reasonably satisfactory to the Trustee (which shall include the statements set
forth in Section 14.05 hereof) stating that, in the opinion of such counsel,
all such conditions precedent and covenants have been satisfied.

 

Section 14.05                                    Statements
Required in Certificate or Opinion.

 

Each
certificate or opinion with respect to compliance with a condition or covenant
provided for in this Indenture (other than a certificate provided pursuant to
Section 4.04 hereof or Trust Indenture Act Section 314(a)(4)) shall comply with
the provisions of Trust Indenture Act Section 314(e) and shall include:

 

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

 

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

 

(c)                                  a statement that, in the opinion of such
Person, he or she has made such examination or investigation as is necessary to
enable him to express an informed opinion as to whether or not such covenant or
condition has been complied with (and, in the case of an Opinion of Counsel,
may be limited to reliance on an Officer’s Certificate as to matters of fact);
and

 

(d)                                 a statement as to whether or not, in the
opinion of such Person, such condition or covenant has been complied with; provided, however, that with respect to
matters of fact an Opinion of Counsel may rely on an Officer’s Certificate or
certificates of public officials.

 

Section 14.06                                    Rules
by Trustee and Agents.

 

The
Trustee may make reasonable rules for action by or at a meeting of
Holders.  The Registrar or Paying Agent
may make reasonable rules and set reasonable requirements for its functions.

 

122

 

Section 14.07                                    No
Personal Liability of Directors,

Officers, Employees and Stockholders.

 

No
past, present or future director, officer, employee, incorporator, member,
partner or stockholder of the Issuer or any Guarantor or any of their direct or
indirect parent companies shall have any liability for any obligations of the
Issuer or the Guarantors under the Notes, the Guarantees or this Indenture or
for any claim based on, in respect of, or by reason of such obligations or
their creation.  Each Holder by accepting
Notes waives and releases all such liability. 
The waiver and release are part of the consideration for issuance of the
Notes.

 

Section 14.08                                    Governing
Law.

 

THIS
INDENTURE, THE NOTES AND ANY GUARANTEE WILL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

 

Section 14.09                                    Waiver
of Jury Trial.

 

EACH
OF THE ISSUER, THE GUARANTORS AND THE TRUSTEE HEREBY IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY
IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS INDENTURE, THE NOTES
OR THE TRANSACTIONS CONTEMPLATED HEREBY.

 

Section 14.10                                    Force
Majeure.

 

In
no event shall the Trustee be responsible or liable for any failure or delay in
the performance of its obligations under this Indenture arising out of or caused
by, directly or indirectly, forces beyond its reasonable control, including
without limitation strikes, work stoppages, accidents, acts of war or
terrorism, civil or military disturbances, nuclear or natural catastrophes or
acts of God, and interruptions, loss or malfunctions of utilities,
communications or computer (software or hardware) services.

 

Section 14.11                                    No
Adverse Interpretation of Other Agreements.

 

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

 

Section 14.12                                    Successors.

 

All
agreements of the Issuer in this Indenture and the Notes shall bind its successors.  All agreements of the Trustee in this
Indenture shall bind its successors.  All
agreements of each Guarantor in this Indenture shall bind its successors,
except as otherwise provided in Section 11.06 hereof.

 

Section 14.13                                    Severability.

 

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

 

123

 

Section 14.14                                    Counterpart
Originals.

 

The
parties may sign any number of copies of this Indenture.  Each signed copy shall be an original, but
all of them together represent the same agreement.  This Indenture may be executed in multiple
counterparts which, when taken together, shall constitute one instrument.

 

Section 14.15                                    Table of Contents, Headings, etc.

 

The
Table of Contents, Cross-Reference Table and headings of the Articles and
Sections of this Indenture have been inserted for convenience of reference
only, are not to be considered a part of this Indenture and shall in no way
modify or restrict any of the terms or provisions hereof.

 

Section 14.16                                    Qualification
of Indenture.

 

The
Issuer and the Guarantors shall qualify this Indenture under the Trust
Indenture Act in accordance with the terms and conditions of the Registration
Rights Agreement and shall pay all reasonable costs and expenses (including
attorneys’ fees and expenses for the Issuer, the Guarantors and the Trustee)
incurred in connection therewith, including, but not limited to, costs and
expenses of qualification of this Indenture and the Notes and printing this
Indenture and the Notes.  The Trustee
shall be entitled to receive from the Issuer and the Guarantors any such Officer’s
Certificates, Opinions of Counsel or other documentation as it may reasonably
request in connection with any such qualification of this Indenture under the
Trust Indenture Act.

 

[Signatures on following page]

 

124

 

	
   

  	
  MICHAELS
  STORES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ Lisa
  K. Klinger

  
	
   

  	
   

  	
  Name:

  	
  Lisa
  K. Klinger

  
	
   

  	
   

  	
  Title:

  	
  Vice President – Treasurer

  and Investor Relations

  

 

Signature Page to Senior Subordinated Indenture

 

 

	
   

  	
  AARON
  BROTHERS, INC.

  
	
   

  	
  MICHAELS
  FINANCE COMPANY, INC.

  
	
   

  	
  MICHAELS
  STORES PROCUREMENT

  
	
   

  	
  COMPANY, INC.

  
	
   

  	
  MICHAELS
  OF CANADA, ULC

  
	
   

  	
  MICHAELS
  STORES CARD SERVICES, LLC

  
	
   

  	
  ARTISTREE,
  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ Lisa
  K. Klinger

  
	
   

  	
   

  	
  Name:

  	
  Lisa
  K. Klinger

  
	
   

  	
   

  	
  Title:

  	
  Vice President and Treasurer

  

 

Signature Page to Senior Subordinated Indenture

 

 

	
   

  	
  WELLS
  FARGO BANK, NATIONAL ASSOCIATION,

  
	
   

  	
  as
  Trustee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ Frank
  McDonald

  
	
   

  	
   

  	
  Name:

  	
  Frank
  McDonald

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  

 

Signature Page to Senior Subordinated Indenture

 

 

EXHIBIT A

 

[Face of Note]

 

[Insert
the Global Note Legend, if applicable pursuant to the provisions of the
Indenture]

 

[Insert
the Private Placement Legend, if applicable pursuant to the provisions of the
Indenture]

 

[Insert
the Regulation S Temporary Global Note Legend, if applicable pursuant to the
provisions of the Indenture]

 

[THIS NOTE IS ISSUED WITH ORIGINAL ISSUE DISCOUNT FOR
PURPOSES OF SECTION 1271 ET SEQ. OF THE INTERNAL REVENUE CODE.  THE ISSUE DATE IS OCTOBER 31, 2006.  INFORMATION REGARDING THE ISSUE PRICE, THE
YIELD TO MATURITY AND THE AMOUNT OF ORIGINAL ISSUE DISCOUNT UNDER THIS NOTE CAN
BE PROMPTLY OBTAINED BY SENDING A WRITTEN REQUEST TO THE GENERAL COUNSEL OF THE
ISSUER AT 8000 BENT BRANCH DRIVE, IRVING, TX 75063.]

 

A-1

 

CUSIP  [                    ]

ISIN 
[               ](1)

 

[[RULE 144A][REGULATION S] GLOBAL NOTE

representing up to

$                            ]

 

13% Subordinated Discount Notes due 2016

 

	
  No.

  	
  [$                 ]

  

 

MICHAELS STORES, INC.

 

promises
to pay to CEDE & CO. or registered assigns, the principal sum [set forth on
the Schedule of Exchanges of Interests in the Global Note attached hereto] [of                                                 
United States Dollars] on November 1, 2016.

 

Interest
Payment Dates:  May 1 and November 1,
with cash interest payments commencing on May 1, 2012

 

Record
Dates:  April 15 and October 15

 

(1)                                  Rule 144A CUSIP:
594087 AN 8

Rule 144A ISIN:
US594087AN84

Regulation S CUSIP: U59329 AE 9

Regulation S ISIN: USU59329AE98

 

A-2

 

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

 

Dated:
[       ], 2006

 

	
   

  	
  MICHAELS
  STORES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

A-3

 

This
is one of the Notes referred to in the within-mentioned Indenture:

 

	
   

  	
  WELLS
  FARGO BANK, NATIONAL ASSOCIATION,

  
	
   

  	
  as
  Trustee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Authorized Signatory

  

 

A-4

 

[Back of Subordinated Discount Note]

 

13% Subordinated Discount Notes due 2016

 

Capitalized
terms used herein shall have the meanings assigned to them in the Indenture
referred to below unless otherwise indicated.

 

1.                                       INTEREST. 
Michaels Stores, Inc., a Delaware corporation, promises to pay interest
on this Note until maturity and shall pay the Additional Interest, if any,
payable pursuant to the Registration Rights Agreement referred to below, all in
the manner referred to in this paragraph. 
Until November 1, 2011, the Notes will accrete at the rate of 13% per
annum, compounded semiannually on May 1 and November 1 of each year to but
not including November 1, 2011 (the “Full Accretion Date”), using a
360-day year comprised of 30-day months, from an initial Accreted Value of
$532.54 per $1,000 principal amount at maturity on the Issue Date to $1,000 per
$1,000 principal amount at maturity on the Full Accretion Date, as reflected in
the definition of Accreted Value.  The
Issuer will pay cash interest plus the amount of any Additional Interest (to
the extent not already included in Accreted Value), if any, semi-annually in
arrears on May 1 and November 1 of each year, commencing on May 1, 2012, or if
any such day is not a Business Day, on the next succeeding Business Day (each,
an “Interest Payment Date”).  Cash
interest on the Notes will accrue from the most recent date to which interest
has been paid or, if no interest has been paid, from November 1, 2011.  The Issuer will pay interest (including
post-petition interest in any proceeding under any Bankruptcy Law) on overdue
Accreted Value and premium, if any, from time to time on demand at the interest
rate on the Notes; it shall pay interest (including post-petition interest in
any proceeding under any Bankruptcy Law) on overdue installments of interest
and Additional Interest (to the extent not already included in Accreted Value),
if any, (without regard to any applicable grace periods) from time to time on
demand at the interest rate on the Notes. 
Interest will be computed on the basis of a 360-day year comprised of
twelve 30-day months.  Notwithstanding
anything herein to the contrary, the principal amount at maturity of any Note
shall be reduced by the portion of the principal amount at maturity of such
Note redeemed by the Issuer pursuant to Section 6 of this Note.

 

2.                                       METHOD OF PAYMENT.  Commencing May 1, 2012, the Issuer will
pay interest on the Notes and Additional Interest (to the extent not already
included in Accreted Value), if any, to the Persons who are registered Holders
of Notes at the close of business on the April 15 or October 15 (whether or not
a Business Day), as the case may be, next preceding the Interest Payment Date,
even if such Notes are canceled after such record date and on or before such
Interest Payment Date, except as provided in Section 2.12 of the Indenture with
respect to defaulted interest.  Payment
of interest and Additional Interest, if any, may be made by check mailed to the
Holders at their addresses set forth in the register of Holders, provided
that payment by wire transfer of immediately available funds will be required
with respect to Accreted Value of and interest, premium and Additional
Interest, if any, on, all Global Notes and all other Notes the Holders of which
shall have provided wire transfer instructions to the Issuer or the Paying
Agent.  Such payment shall be in such
coin or currency of the United States of America as at the time of payment is
legal tender for payment of public and private debts.

 

3.                                       PAYING AGENT AND REGISTRAR.  Initially, Wells Fargo Bank, National
Association, the Trustee under the Indenture, will act as Paying Agent and
Registrar.  The Issuer may change any
Paying Agent or Registrar without notice to the Holders.  The Issuer or any of its Subsidiaries may act
in any such capacity.

 

4.                                       INDENTURE. 
The Issuer issued the Notes under an Indenture, dated as of October 31,
2006 (the “Indenture”), among Michaels Stores, Inc., the Guarantors
named therein and the Trustee.  This Note
is one of a duly authorized issue of notes of the Issuer designated as its 13%
Subordinated 

 

A-5

 

Discount Notes due 2016.  The Issuer shall be entitled to issue
Additional Notes pursuant to Section 2.01 and 4.09 of the Indenture.  The terms of the Notes include those stated
in the Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939, as amended (the “Trust Indenture Act”).  The Notes are subject to all such terms, and
Holders are referred to the Indenture and such Act for a statement of such
terms.  To the extent any provision of
this Note conflicts with the express provisions of the Indenture, the
provisions of the Indenture shall govern and be controlling.

 

5.                                       OPTIONAL REDEMPTION.

 

(a)                                  Except as described below under clauses 5(b)
and 5(c) hereof, the Notes will not be redeemable at the Issuer’s option before
November 1, 2011.

 

(b)                                 At any time prior to November 1, 2011, the
Issuer may redeem all or a part of the Notes, upon not less than 30 nor more
than 60 days’ prior notice mailed by first-class mail to the registered
address of each Holder of Notes or otherwise delivered in accordance with the
procedures of DTC, at a redemption price equal to 100% of the Accreted Value of
the Notes redeemed plus the Applicable Premium as of the date of redemption
(the “Redemption Date”).

 

(c)                                  Until November 1, 2009, the Issuer may, at
its option, on one or more occasions redeem up to 35% of the aggregate
principal amount at maturity of Notes (including the aggregate principal amount
at maturity of Notes issued after the Issue Date) at a redemption price equal
to 113.000% of the Accreted Value thereof as of the applicable Redemption Date,
with the net cash proceeds of one or more Equity Offerings; provided
that at least 50% of the sum of the aggregate principal amount at maturity of
Notes originally issued under the Indenture and any Additional Notes that are
issued under the Indenture after the Issue Date remains outstanding immediately
after the occurrence of each such redemption; provided  further
that each such redemption occurs within 90 days of the date of closing of each
such Equity Offering.  Notice of any
redemption upon any Equity Offering may be given prior to such redemption, and
any such redemption or notice may, at the Issuer’s discretion, be subject to
one or more conditions precedent, including, but not limited to, completion of
the related Equity Offering.

 

(d)                                 On and after November 1, 2011, the Issuer may
redeem the Notes, in whole or in part, at the redemption prices (expressed as
percentages of the Accreted Value of the Notes to be redeemed) set forth below,
plus accrued and unpaid interest thereon, if any, and Additional Interest (to
the extent not already included in Accreted Value), if any, to the applicable
Redemption Date, subject to the right of Holders of record on the relevant
Record Date to receive interest due on the relevant Interest Payment Date, if
redeemed during the twelve-month period beginning on November 1 of each
of the years indicated below:

 

	
  Year

  	
   

  	
  Percentage

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  2011

  	
   

  	
  106.500

  	
  %

  
	
  2012

  	
   

  	
  104.333

  	
  %

  
	
  2013

  	
   

  	
  102.167

  	
  %

  
	
  2014 and
  thereafter

  	
   

  	
  100.000

  	
  %

  

 

(e)                                  Any redemption pursuant to this
paragraph 5 shall be made pursuant to the provisions of Sections 3.01
through 3.06 of the Indenture.

 

A-6

 

6.                                       MANDATORY REDEMPTION.  On May 1, 2012, and, if necessary, any
Interest Payment Date thereafter prior to November 1, 2016, the Issuer will be
required to redeem a portion of each Note outstanding on such date equal to the
AHYDO Amount on such date.

 

The
redemption price for each portion of a Note so redeemed will equal 100% of the
Accreted Value of such portion as of the Redemption Date.

 

“AHYDO
Amount” means the amount sufficient, but not in excess of the amount
necessary, to ensure that a Note will not be an “applicable high yield discount
obligation” within the meaning of Section 163(i)(1) of the Internal Revenue
Code of 1986.

 

7.                                       NOTICE OF REDEMPTION.  Subject to Section 3.03 of the Indenture,
notice of redemption will be mailed by first-class mail at least 30 days but
not more than 60 days before the redemption date (except that redemption
notices may be mailed more than 60 days prior to a redemption date if the
notice is issued in connection with Article 8 or Article 13 of the Indenture)
to each Holder whose Notes are to be redeemed at its registered address.  Notes in denominations larger than $1,000 may
be redeemed in part but only in whole multiples of $1,000, unless all of the
Notes held by a Holder are to be redeemed. 
On and after the redemption date interest ceases to accrue on Notes or
portions thereof called for redemption.

 

8.                                       OFFERS TO REPURCHASE.

 

(a)                                  Upon the occurrence of a Change of Control,
the Issuer shall make an offer (a “Change of Control Offer”) to each
Holder to repurchase all or any part (equal to $1,000 or an integral multiple
thereof) of each Holder’s Notes at a purchase price equal to 101% of the
Accreted Value thereof plus accrued and unpaid interest and Additional Interest
(to the extent not already included in Accreted Value) thereon, if any, to the
date of purchase (the “Change of Control Payment”).  The Change of Control Offer shall be made in
accordance with Section 4.14 of the Indenture.

 

(b)                                 If the Issuer or any of its Restricted
Subsidiaries consummates an Asset Sale, within 10 Business Days of each date
that Excess Proceeds exceed $50.0 million, the Issuer shall commence, an offer
to all Holders of the Notes and, if required by the terms of any Indebtedness
that is pari passu with the Notes
(“Pari Passu Indebtedness”), to the holders of such Pari Passu
Indebtedness (an “Asset Sale Offer”), to purchase the maximum Accreted
Value of Notes (including any Additional Notes) and principal amount or
accreted value of such other Pari Passu Indebtedness that may be purchased out
of the Excess Proceeds at an offer price in cash in an amount equal to 100% of
the Accrued Value (or principal amount or accreted value) thereof plus accrued
and unpaid interest and Additional Interest (to the extent not already included
in Accreted Value) thereon, if any, to the date fixed for the closing of such
offer, in accordance with the procedures set forth in the Indenture.  To the extent that the aggregate amount of
Notes (including any Additional Notes) and such Pari Passu Indebtedness
tendered pursuant to an Asset Sale Offer is less than the Excess Proceeds, the
Issuer may use any remaining Excess Proceeds for general corporate purposes,
subject to other covenants contained in the Indenture.  If the sum of the aggregate Accreted Value of
Notes and the aggregate principal amount or accreted value of the Pari Passu
Indebtedness surrendered by such holders thereof exceeds the amount of Excess
Proceeds, the Trustee shall select the Notes and such Pari Passu Indebtedness to
be purchased on a pro rata basis
based on the Accreted Value of the Notes or the accreted value or principal
amount of such Pari Passu Indebtedness tendered.  Upon completion of any such Asset Sale Offer,
the amount of Excess Proceeds shall be reset at zero.  Holders of Notes that are the subject of an
offer to purchase will receive an Asset Sale Offer from the Issuer prior to any
related purchase date and may elect to have such Notes purchased by completing
the form entitled “Option of Holder to Elect Purchase” attached to the Notes.

 

A-7

 

9.                                       DENOMINATIONS, TRANSFER, EXCHANGE.  The Notes are in registered form without
coupons in denominations of principal amount at maturity of $1,000 and integral
multiples of $1,000.  The transfer of
Notes may be registered and Notes may be exchanged as provided in the
Indenture.  The Registrar and the Trustee
may require a Holder, among other things, to furnish appropriate endorsements
and transfer documents and the Issuer may require a Holder to pay any taxes and
fees required by law or permitted by the Indenture.  The Issuer need not exchange or register the
transfer of any Note or portion of a Note selected for redemption, except for
the unredeemed portion of any Note being redeemed in part.  Also, the Issuer need not exchange or
register the transfer of any Notes for a period of 15 days before a selection
of Notes to be redeemed.

 

10.                                 SUBORDINATION.  The Notes and the Guarantees are subordinated
to Senior Indebtedness of the Issuer and the Guarantors on the terms and
subject to the conditions set forth in the Indenture.  To the extent provided in the Indenture,
Senior Indebtedness must be paid before the Notes and Guarantees may be paid.  The Issuer agrees, and each Holder by
accepting a Note agrees, to the subordination provisions contained in the
Indenture and authorizes the Trustee to give them effect and appoints the
Trustee as attorney-in-fact for such purpose.

 

11.                                 PERSONS DEEMED OWNERS.  The registered Holder of a Note may be
treated as its owner for all purposes.

 

12.                                 AMENDMENT, SUPPLEMENT AND WAIVER.  The Indenture, the Guarantees or the Notes
may be amended or supplemented as provided in the Indenture.

 

13.                                 DEFAULTS AND REMEDIES.  The Events of Default relating to the Notes
are defined in Section 6.01 of the Indenture. 
If any Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in principal amount at maturity of the then outstanding
Notes may declare the Accreted Value, premium, if any, interest, if any, and
any other monetary obligations on all the then outstanding Notes to be due and
payable immediately; provided, however, that so long as any
Indebtedness permitted to be incurred under the Indenture as part of the Senior
Credit Facilities shall be outstanding, no such acceleration shall be effective
until the earlier of: (1) acceleration of any such Indebtedness under the
Senior Credit Facilities; or (2) five Business Days after the giving of written
notice of such acceleration to the Issuer and the Representative under each of
the Senior Credit Facilities. Notwithstanding the foregoing, in the case of an
Event of Default arising from certain events of bankruptcy or insolvency, all
outstanding Notes will become due and payable immediately without further
action or notice.  Holders may not
enforce the Indenture, the Notes or the Guarantees except as provided in the
Indenture.  Subject to certain
limitations, Holders of a majority in aggregate principal amount at maturity of
the then outstanding Notes may direct the Trustee in its exercise of any trust
or power.  The Trustee may withhold from
Holders of the Notes notice of any continuing Default (except a Default
relating to the payment of Accreted Value, premium, if any, Additional Interest,
if any, or interest) if it determines that withholding notice is in their
interest.  The Holders of a majority in
aggregate principal amount at maturity of the Notes then outstanding by notice
to the Trustee may on behalf of the Holders of all of the Notes waive any
existing Default or and its consequences under the Indenture except a
continuing Default in payment of the Accreted Value of, premium, if any,
Additional Interest, if any, or interest on, any of the Notes held by a
non-consenting Holder.  The Issuer and
each Guarantor (to the extent that such Guarantor is so required under the
Trust Indenture Act) is required to deliver to the Trustee annually a statement
regarding compliance with the Indenture, and the Issuer is required within five
(5) Business Days after becoming aware of any Default, to deliver to the
Trustee a statement specifying such Default and what action the Issuer proposes
to take with respect thereto.

 

A-8

 

14.                                 AUTHENTICATION.  This Note shall not be entitled to any
benefit under the Indenture or be valid or obligatory for any purpose until
authenticated by the manual signature of the Trustee.

 

15.                                 ADDITIONAL RIGHTS OF HOLDERS OF RESTRICTED
GLOBAL NOTES AND RESTRICTED DEFINITIVE NOTES. 
In addition to the rights provided to Holders of Notes under the
Indenture, Holders of Restricted Global Notes and Restricted Definitive Notes
shall have all the rights set forth in the Registration Rights Agreement, dated
as of October 31, 2006, among Michaels Stores, Inc., the Guarantors named
therein and the other parties named on the signature pages thereof (the “Registration
Rights Agreement”), including the right to receive Additional Interest (as
defined in the Registration Rights Agreement).

 

16.                                 GOVERNING LAW.  THE LAWS OF THE STATE OF NEW YORK SHALL
GOVERN AND BE USED TO CONSTRUE THE INDENTURE, THE NOTES AND THE GUARANTEES.

 

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

 

The
Issuer will furnish to any Holder upon written request and without charge a
copy of the Indenture and/or the Registration Rights Agreement.  Requests may be made to the Issuer at the
following address:

 

8000
Bent Branch Drive

Irving, TX 75063

Attention: General Counsel

 

A-9

 

ASSIGNMENT FORM

 

To
assign this Note, fill in the form below:

 

	
  (I)
  or (we) assign and transfer this Note to:

  	
   

  
	
   

  	
  (Insert assignee’ legal name)

  

 

 

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

 

	
   

  
	
   

  
	
   

  
	
   

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

  

 

	
  and
  irrevocably appoint

  	
   

  
	
  to
  transfer this Note on the books of the Issuer. The agent may substitute
  another to act for him.

  

 

 

	
  Date:

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Your
  Signature:

  	
   

  
	
   

  	
   

  	
  (Sign
  exactly as your name appears on

  the face of this Note)

  
	
   

  	
   

  
	
   

  	
   

  
	
  Signature
  Guarantee*:

  	
   

  	
   

  
								

 

*
Participant in a recognized Signature Guarantee Medallion Program (or other signature
guarantor acceptable to the Trustee).

 

A-10

 

OPTION OF HOLDER TO ELECT PURCHASE

 

If
you want to elect to have this Note purchased by the Issuer pursuant to
Section 4.10 or 4.14 of the Indenture, check the appropriate box below:

 

o Section 4.10           o Section 4.14

 

If
you want to elect to have only part of this Note purchased by the Issuer
pursuant to Section 4.10 or Section 4.14 of the Indenture, state the amount you
elect to have purchased:

 

$                    

 

	
  Date:

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Your
  Signature:

  	
   

  
	
   

  	
   

  	
  (Sign
  exactly as your name appears on

  the face of this Note)

  
	
   

  	
  Tax
  Identification No.:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Signature
  Guarantee*:

  	
   

  	
   

  
										

 

*
Participant in a recognized Signature Guarantee Medallion Program (or other signature
guarantor acceptable to the Trustee).

 

A-11

 

SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE*

 

The
initial outstanding principal amount at maturity of this Global Note is $                    .  The following exchanges of a part of this
Global Note for an interest in another Global Note or for a Definitive Note, or
exchanges of a part of another Global or Definitive Note for an interest in
this Global Note, have been made:

 

	
  Date of Exchange

  	
   

  	
  Amount of 

  decrease

  in Principal 

  Amount at 

  Maturity

  	
   

  	
  Amount of increase

  in Principal

  Amount at Maturity 

  of this

  Global Note

  	
   

  	
  Principal Amount 

  at Maturity of

  this Global Note

  following such

  decrease or 

  increase

  	
   

  	
  Signature of

  authorized officer

  of Trustee or 

  Note Custodian

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

*This
schedule should be included only if the Note is issued in global form.

 

A-12

 

EXHIBIT B

 

FORM OF CERTIFICATE OF TRANSFER

 

Michaels
Stores, Inc. 

8000 Bent Branch Drive

Irving, TX 75063

Attention: General Counsel

 

Wells
Fargo Bank, National Association

1445 Ross Avenue - 2nd Floor

Dallas, Texas 75202-2812

Fax No.: 214-777-4086 

Attention:                 Patrick Giordano

Corporate
Trust Services

 

Re:  13% Subordinated Discount Notes due 2016

 

Reference
is hereby made to the Indenture, dated as of October 31, 2006 (the “Indenture”),
among Michaels Stores, Inc., the Guarantors named therein and the Trustee.  Capitalized terms used but not defined herein
shall have the meanings given to them in the Indenture.

 

                              
(the “Transferor”) owns and proposes to transfer the Note[s] or interest
in such Note[s] specified in Annex A hereto, in the principal amount at maturity
of $                      
in such Note[s] or interests (the “Transfer”), to                               
(the “Transferee”), as further specified in Annex A hereto.  In connection with the Transfer, the
Transferor hereby certifies that:

 

[CHECK ALL THAT APPLY]

 

1.                                       o  CHECK
IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST IN THE 144A GLOBAL
NOTE OR A DEFINITIVE NOTE PURSUANT TO RULE 144A.  The Transfer is being effected pursuant to and
in accordance with Rule 144A under the United States Securities Act of 1933, as
amended (the “Securities Act”), and, accordingly, the Transferor hereby
further certifies that the beneficial interest or Definitive Note is being
transferred to a Person that the Transferor reasonably believes is purchasing
the beneficial interest or Definitive Note for its own account, or for one or
more accounts with respect to which such Person exercises sole investment
discretion, and such Person and each such account is a “qualified institutional
buyer” within the meaning of Rule 144A in a transaction meeting the
requirements of Rule 144A and such Transfer is in compliance with any
applicable blue sky securities laws of any state of the United States.

 

2.                                       o  CHECK
IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST IN THE REGULATION S
GLOBAL NOTE OR A DEFINITIVE NOTE PURSUANT TO REGULATION S.  The Transfer is being effected pursuant to
and in accordance with Rule 903 or Rule 904 under the Securities Act and,
accordingly, the Transferor hereby further certifies that (i) the Transfer is
not being made to a person in the United States and (x) at the time the buy
order was originated, the Transferee was outside the United States or such
Transferor and any Person acting on its behalf reasonably believed and believes
that the Transferee was outside the United States or (y) the transaction was
executed in, on or through the facilities of a designated offshore securities
market and neither such Transferor nor any Person acting on its behalf knows
that the transaction was prearranged with a buyer in the United States, (ii) no
directed selling efforts have been made in contravention of the requirements of
Rule 903(b) 

 

B-1

 

or Rule 904(b) of Regulation S
under the Securities Act (iii) the transaction is not part of a plan or scheme
to evade the registration requirements of the Securities Act and (iv) if the
proposed transfer is being made prior to the expiration of the Restricted
Period, the transfer is not being made to a U.S. Person or for the account or
benefit of a U.S. Person (other than an Initial Purchaser).  Upon consummation of the proposed transfer in
accordance with the terms of the Indenture, the transferred beneficial interest
or Definitive Note will be subject to the restrictions on Transfer enumerated
in the Indenture and the Securities Act.

 

3.                                       o  CHECK
AND COMPLETE IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST IN THE
DEFINITIVE NOTE PURSUANT TO ANY PROVISION OF THE SECURITIES ACT OTHER THAN RULE
144A OR REGULATION S.  The Transfer is
being effected in compliance with the transfer restrictions applicable to
beneficial interests in Restricted Global Notes and Restricted Definitive Notes
and pursuant to and in accordance with the Securities Act and any applicable blue
sky securities laws of any state of the United States, and accordingly the
Transferor hereby further certifies that (check one):

 

(a)                                  o  such Transfer is being effected pursuant to
and in accordance with Rule 144 under the Securities Act;

 

or

 

(b)                                 o  such Transfer is being effected to the Issuer
or a subsidiary thereof;

 

or

 

(c)                                  o  such Transfer is being effected pursuant to
an effective registration statement under the Securities Act and in compliance
with the prospectus delivery requirements of the Securities Act.

 

4.                                       o  CHECK
IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST IN AN UNRESTRICTED
GLOBAL NOTE OR OF AN UNRESTRICTED DEFINITIVE NOTE.

 

(a)                                  o  CHECK
IF TRANSFER IS PURSUANT TO RULE 144. (i) The Transfer is being effected
pursuant to and in accordance with Rule 144 under the Securities Act and in
compliance with the transfer restrictions contained in the Indenture and any
applicable blue sky securities laws of any state of the United States and (ii)
the restrictions on transfer contained in the Indenture and the Private
Placement Legend are not required in order to maintain compliance with the
Securities Act.  Upon consummation of the
proposed Transfer in accordance with the terms of the Indenture, the
transferred beneficial interest or Definitive Note will no longer be subject to
the restrictions on transfer enumerated in the Private Placement Legend printed
on the Restricted Global Notes, on Restricted Definitive Notes and in the
Indenture.

 

(b)                                 o  CHECK
IF TRANSFER IS PURSUANT TO REGULATION S. (i) The Transfer is being effected
pursuant to and in accordance with Rule 903 or Rule 904 under the Securities
Act and in compliance with the transfer restrictions contained in the Indenture
and any applicable blue sky securities laws of any state of the United States
and (ii) the restrictions on transfer contained in the Indenture and the
Private Placement Legend are not required in order to maintain compliance with
the Securities Act.  Upon consummation of
the proposed Transfer in accordance with the terms of the Indenture, the
transferred beneficial interest or Definitive Note will no longer be subject to
the restrictions on transfer enumerated in the Private Placement Legend printed
on the Restricted Global Notes, on Restricted Definitive Notes and in the
Indenture.

 

B-2

 

(c)                                  o  CHECK
IF TRANSFER IS PURSUANT TO OTHER EXEMPTION. 
(i) The Transfer is being effected pursuant to and in compliance
with an exemption from the registration requirements of the Securities Act
other than Rule 144, Rule 903 or Rule 904 and in compliance with the transfer
restrictions contained in the Indenture and any applicable blue sky securities
laws of any State of the United States and (ii) the restrictions on transfer
contained in the Indenture and the Private Placement Legend are not required in
order to maintain compliance with the Securities Act.  Upon consummation of the proposed Transfer in
accordance with the terms of the Indenture, the transferred beneficial interest
or Definitive Note will not be subject to the restrictions on transfer
enumerated in the Private Placement Legend printed on the Restricted Global
Notes or Restricted Definitive Notes and in the Indenture.

 

B-3

 

This
certificate and the statements contained herein are made for your benefit and
the benefit of the Issuer.

 

	
   

  	
  [Insert
  Name of Transferor]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
  Dated:

  	
   

  	
   

  	
   

  
					

 

B-4

 

ANNEX A TO CERTIFICATE OF TRANSFER

 

1.                                       The Transferor owns and proposes to transfer
the following:

 

[CHECK ONE OF (a) OR (b)]

 

(a)                                  o a beneficial interest in the:

 

(i)                                     o 144A Global Note (CUSIP 594087AN8, or

 

(ii)                                  o Regulation S Global Note (CUSIP U59329AE9,
or

 

(b)                                 o a Restricted Definitive Note.

 

2.                                       After the Transfer the Transferee will hold:

 

[CHECK ONE]

 

(a)                                  o a beneficial interest in the:

 

(i)                                     o 144A Global Note (CUSIP 594087AN8, or

 

(ii)                                  o
Regulation S Global Note (CUSIP U59329AE9, or

 

(iii)                               o
Unrestricted Global Note (CUSIP [                                                                                            ]; or

 

(b)                                 o a Restricted Definitive Note; or

 

(c)                                  o an
Unrestricted Definitive Note, in accordance with the terms of the Indenture.

 

B-5

 

EXHIBIT C

 

FORM OF CERTIFICATE OF EXCHANGE

 

Michaels
Stores, Inc. 

8000 Bent Branch Drive

Irving, TX 75063

Attention: General Counsel

 

Wells
Fargo Bank, National Association

1445 Ross Avenue - 2nd Floor

Dallas, Texas 75202-2812

Fax No.: 214-777-4086 

Attention:                 Patrick Giordano

Corporate
Trust Services

 

Re:  13% Subordinated Discount Notes due 2016

 

Reference
is hereby made to the Indenture, dated as of October 31, 2006 (the “Indenture”),
among Michaels Stores, Inc., the Guarantors named therein and the Trustee.  Capitalized terms used but not defined herein
shall have the meanings given to them in the Indenture.

 

                      
(the “Owner”) owns and proposes to exchange the Note[s] or interest in
such Note[s] specified herein, in the principal amount at maturity of $                    
in such Note[s] or interests (the “Exchange”).  In connection with the Exchange, the Owner
hereby certifies that:

 

1)                                      EXCHANGE OF RESTRICTED DEFINITIVE NOTES OR
BENEFICIAL INTERESTS IN A RESTRICTED GLOBAL NOTE FOR UNRESTRICTED DEFINITIVE
NOTES OR BENEFICIAL INTERESTS IN AN UNRESTRICTED GLOBAL NOTE

 

a)                                      o  CHECK
IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A RESTRICTED GLOBAL NOTE TO
BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL NOTE.  In connection with the Exchange of the Owner’s
beneficial interest in a Restricted Global Note for a beneficial interest in an
Unrestricted Global Note in an equal principal amount at maturity, the Owner
hereby certifies (i) the beneficial interest is being acquired for the Owner’s
own account without transfer, (ii) such Exchange has been effected in
compliance with the transfer restrictions applicable to the Global Notes and
pursuant to and in accordance with the United States Securities Act of 1933, as
amended (the “Securities Act”), (iii) the restrictions on transfer
contained in the Indenture and the Private Placement Legend are not required in
order to maintain compliance with the Securities Act and (iv) the beneficial
interest in an Unrestricted Global Note is being acquired in compliance with
any applicable blue sky securities laws of any state of the United States.

 

b)                                     o  CHECK
IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A RESTRICTED GLOBAL NOTE TO
UNRESTRICTED DEFINITIVE NOTE.  In
connection with the Exchange of the Owner’s beneficial interest in a Restricted
Global Note for an Unrestricted Definitive Note, the Owner hereby certifies (i)
the Definitive Note is being acquired for the Owner’s own account without
transfer, (ii) such Exchange has been effected in compliance with the
transfer restrictions applicable to the Restricted Global Notes and pursuant to
and in accordance with the Securities Act, (iii) the restrictions on transfer
contained in the Indenture and the 

 

C-1

 

Private
Placement Legend are not required in order to maintain compliance with the
Securities Act and (iv) the Definitive Note is being acquired in compliance
with any applicable blue sky securities laws of any state of the United States.

 

c)                                      o  CHECK
IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE TO BENEFICIAL INTEREST IN AN
UNRESTRICTED GLOBAL NOTE.  In connection
with the Owner’s Exchange of a Restricted Definitive Note for a beneficial
interest in an Unrestricted Global Note, the Owner hereby certifies (i) the
beneficial interest is being acquired for the Owner’s own account without
transfer, (ii) such Exchange has been effected in compliance with the transfer
restrictions applicable to Restricted Definitive Notes and pursuant to and in
accordance with the Securities Act, (iii) the restrictions on transfer contained
in the Indenture and the Private Placement Legend are not required in order to
maintain compliance with the Securities Act and (iv) the beneficial interest is
being acquired in compliance with any applicable blue sky securities laws of
any state of the United States.

 

d)                                     o  CHECK
IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE TO UNRESTRICTED DEFINITIVE
NOTE.  In connection with the Owner’s
Exchange of a Restricted Definitive Note for an Unrestricted Definitive Note,
the Owner hereby certifies (i) the Unrestricted Definitive Note is being
acquired for the Owner’s own account without transfer, (ii) such Exchange has
been effected in compliance with the transfer restrictions applicable to
Restricted Definitive Notes and pursuant to and in accordance with the Securities
Act, (iii) the restrictions on transfer contained in the Indenture and the
Private Placement Legend are not required in order to maintain compliance with
the Securities Act and (iv) the Unrestricted Definitive Note is being acquired
in compliance with any applicable blue sky securities laws of any state of the
United States.

 

2)                                      EXCHANGE OF RESTRICTED DEFINITIVE NOTES OR
BENEFICIAL INTERESTS IN RESTRICTED GLOBAL NOTES FOR RESTRICTED DEFINITIVE NOTES
OR BENEFICIAL INTERESTS IN RESTRICTED GLOBAL NOTES

 

a)                                      o  CHECK
IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A RESTRICTED GLOBAL NOTE TO
RESTRICTED DEFINITIVE NOTE.  In
connection with the Exchange of the Owner’s beneficial interest in a Restricted
Global Note for a Restricted Definitive Note with an equal principal amount at
maturity, the Owner hereby certifies that the Restricted Definitive Note is
being acquired for the Owner’s own account without transfer.  Upon consummation of the proposed Exchange in
accordance with the terms of the Indenture, the Restricted Definitive Note
issued will continue to be subject to the restrictions on transfer enumerated
in the Private Placement Legend printed on the Restricted Definitive Note and
in the Indenture and the Securities Act.

 

b)                                     o  CHECK
IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE TO BENEFICIAL INTEREST IN A
RESTRICTED GLOBAL NOTE.  In connection
with the Exchange of the Owner’s Restricted Definitive Note for a beneficial
interest in the [CHECK ONE]  o 144A Global Note  o
Regulation S Global Note, with an equal principal amount at maturity, the Owner
hereby certifies (i) the beneficial interest is being acquired for the Owner’s
own account without transfer and (ii) such Exchange has been effected in
compliance with the transfer restrictions applicable to the Restricted Global
Notes and pursuant to and in accordance with the Securities Act, and in
compliance with any applicable blue sky securities laws of any state of the
United States.  Upon consummation of the
proposed Exchange in accordance with the terms of the Indenture, the beneficial
interest issued will be subject to the restrictions on transfer 

 

C-2

 

enumerated
in the Private Placement Legend printed on the relevant Restricted Global Note
and in the Indenture and the Securities Act.

 

This
certificate and the statements contained herein are made for your benefit and
the benefit of the Issuer and are dated                                             .

 

	
   

  	
  [Insert
  Name of Transferor]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
  Dated:

  	
   

  	
   

  	
   

  
					

 

C-3

 

EXHIBIT D

 

[FORM OF SUPPLEMENTAL INDENTURE

TO BE DELIVERED BY SUBSEQUENT GUARANTORS]

 

Supplemental
Indenture (this “Supplemental Indenture”), dated as of                     ,
among                                     
(the “Guaranteeing Subsidiary”), a subsidiary of Michaels Stores, Inc.,
a Delaware Corporation (the “Issuer”), and Wells Fargo Bank, National
Association, as trustee (the “Trustee”).

 

W I T N E S S E T H

 

WHEREAS,
each of Michaels Stores, Inc. and the Guarantors (as defined in the Indenture referred
to below) has heretofore executed and delivered to the Trustee an indenture
(the “Indenture”), dated as of October 31, 2006, providing for the
issuance of an unlimited aggregate principal amount at maturity of 13%
Subordinated Discount Notes due 2016 (the “Notes”);

 

WHEREAS,
the Indenture provides that under certain circumstances the Guaranteeing
Subsidiary shall execute and deliver to the Trustee a supplemental indenture
pursuant to which the Guaranteeing Subsidiary shall unconditionally guarantee
all of the Issuer’s Obligations under the Notes and the Indenture on the terms
and conditions set forth herein and under the Indenture (the “Guarantee”);
and

 

WHEREAS,
pursuant to Section 9.01 of the Indenture, the Trustee is authorized to execute
and deliver this Supplemental Indenture.

 

NOW
THEREFORE, in consideration of the foregoing and for other good and valuable
consideration, the receipt of which is hereby acknowledged, the parties
mutually covenant and agree for the equal and ratable benefit of the Holders of
the Notes as follows:

 

(1)                                  Capitalized Terms. 
Capitalized terms used herein without definition shall have the meanings
assigned to them in the Indenture.

 

(2)                                  Agreement to Guarantee.  The
Guaranteeing Subsidiary hereby agrees as follows:

 

(a)                                  Along with all Guarantors named in the
Indenture, to jointly and severally unconditionally guarantee to each Holder of
a Note authenticated and delivered by the Trustee and to the Trustee and its
successors and assigns, irrespective of the validity and enforceability of the
Indenture, the Notes or the obligations of the Issuer hereunder or thereunder,
that:

 

(i)                                     the Accreted Value of and interest, premium
and Additional Interest (to the extent not already included in Accreted Value),
if any, on the Notes will be promptly paid in full when due, whether at
maturity, by acceleration, redemption or otherwise, and interest on the overdue
Accreted Value of and interest on the Notes, if any, if lawful, and all other
obligations of the Issuer to the Holders or the Trustee hereunder or thereunder
will be promptly paid in full or performed, all in accordance with the terms
hereof and thereof; and

 

(ii)                                  in case of any extension of time of payment
or renewal of any Notes or any of such other obligations, that same will be
promptly paid in full when due or performed in accordance with the terms of the
extension or renewal, whether at stated maturity, by acceleration or
otherwise.  Failing payment when due of
any amount so guaranteed 

 

D-1

 

or
any performance so guaranteed for whatever reason, the Guarantors and the
Guaranteeing Subsidiary shall be jointly and severally obligated to pay the
same immediately.  This is a guarantee of
payment and not a guarantee of collection.

 

(b)                                 The obligations hereunder shall be
unconditional, irrespective of the validity, regularity or enforceability of
the Notes or the Indenture, the absence of any action to enforce the same, any
waiver or consent by any Holder of the Notes with respect to any provisions
hereof or thereof, the recovery of any judgment against the Issuer, any action
to enforce the same or any other circumstance which might otherwise constitute
a legal or equitable discharge or defense of a guarantor.

 

(c)                                  The following is hereby waived:  diligence, presentment, demand of payment,
filing of claims with a court in the event of insolvency or bankruptcy of the
Issuer, any right to require a proceeding first against the Issuer, protest,
notice and all demands whatsoever.

 

(d)                                 This Guarantee shall not be discharged except
by complete performance of the obligations contained in the Notes, the
Indenture and this Supplemental Indenture, and the Guaranteeing Subsidiary
accepts all obligations of a Guarantor under the Indenture.

 

(e)                                  If any Holder or the Trustee is required by
any court or otherwise to return to the Issuer, the Guarantors (including the
Guaranteeing Subsidiary), or any custodian, trustee, liquidator or other
similar official acting in relation to either the Issuer or the Guarantors, any
amount paid either to the Trustee or such Holder, this Guarantee, to the extent
theretofore discharged, shall be reinstated in full force and effect.

 

(f)                                    The Guaranteeing Subsidiary shall not be
entitled to any right of subrogation in relation to the Holders in respect of
any obligations guaranteed hereby until payment in full of all obligations
guaranteed hereby.

 

(g)                                 As between the Guaranteeing Subsidiary, on
the one hand, and the Holders and the Trustee, on the other hand, (x) the
maturity of the obligations guaranteed hereby may be accelerated as provided in
Article 6 of the Indenture for the purposes of this Guarantee, notwithstanding
any stay, injunction or other prohibition preventing such acceleration in
respect of the obligations guaranteed hereby, and (y) in the event of any
declaration of acceleration of such obligations as provided in Article 6 of the
Indenture, such obligations (whether or not due and payable) shall forthwith
become due and payable by the Guaranteeing Subsidiary for the purpose of this
Guarantee.

 

(h)                                 The Guaranteeing Subsidiary shall have the
right to seek contribution from any non-paying Guarantor so long as the
exercise of such right does not impair the rights of the Holders under this
Guarantee.

 

(i)                                     Pursuant to Section 11.02 of the Indenture,
after giving effect to all other contingent and fixed liabilities that are
relevant under any applicable Bankruptcy or fraudulent conveyance laws, and
after giving effect to any collections from, rights to receive contribution
from or payments made by or on behalf of any other Guarantor in respect of the
obligations of such other Guarantor under Article 11 of the Indenture, this new
Guarantee shall be limited to the maximum amount permissible such that the
obligations of such Guaranteeing Subsidiary under this Guarantee will not
constitute a fraudulent transfer or conveyance.

 

D-2

 

(j)                                     This Guarantee shall remain in full force and
effect and continue to be effective should any petition be filed by or against
the Issuer for liquidation, reorganization, should the Issuer become insolvent
or make an assignment for the benefit of creditors or should a receiver or
trustee be appointed for all or any significant part of the Issuer’s assets,
and shall, to the fullest extent permitted by law, continue to be effective or
be reinstated, as the case may be, if at any time payment and performance of
the Notes are, pursuant to applicable law, rescinded or reduced in amount, or
must otherwise be restored or returned by any obligee on the Notes and
Guarantee, whether as a “voidable preference”, “fraudulent transfer” or
otherwise, all as though such payment or performance had not been made.  In the event that any payment or any part
thereof, is rescinded, reduced, restored or returned, the Note shall, to the
fullest extent permitted by law, be reinstated and deemed reduced only by such
amount paid and not so rescinded, reduced, restored or returned.

 

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

 

(l)                                     This Guarantee shall be a general unsecured
subordinated obligation of such Guaranteeing Subsidiary in accordance with
Article 12 of the Indenture.

 

(m)                               Each payment to be made by the Guaranteeing Subsidiary in respect of
this Guarantee shall be made without set-off, counterclaim, reduction or
diminution of any kind or nature.

 

(3)                                  Execution and Delivery.  The
Guaranteeing Subsidiary agrees that the Guarantee shall remain in full force
and effect notwithstanding the absence of the endorsement of any notation of
such Guarantee on the Notes.

 

(4)                                  Merger, Consolidation or Sale of All or Substantially
All Assets.

 

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

 

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

 

(B)                                the Successor Person, if other than the Guaranteeing Subsidiary,
expressly assumes all the obligations of the Guaranteeing Subsidiary under the
Indenture and the Guaranteeing Subsidiary’s related Guarantee pursuant to
supplemental indentures or other documents or instruments in form reasonably
satisfactory to the Trustee;

 

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

 

D-3

 

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

 

(ii)                                  the transaction is made in compliance with
Sections 4.10(a)(1) and (2) of the Indenture;

 

(b)                                 Subject to certain limitations described in
the Indenture, the Successor Person will succeed to, and be substituted for,
the Guaranteeing Subsidiary under the Indenture and the Guaranteeing Subsidiary’s
Guarantee.  Notwithstanding the
foregoing, the Guaranteeing Subsidiary may merge into or transfer all or part
of its properties and assets to another Guarantor or the Issuer.

 

(5)                                  Releases.

 

The
Guarantee of the Guaranteeing Subsidiary shall be automatically and
unconditionally released and discharged, and no further action by the
Guaranteeing Subsidiary, the Issuer or the Trustee is required for the release
of the Guaranteeing Subsidiary’s Guarantee, upon:

 

(1)                                  (A) 
any sale, exchange, disposition or transfer (by merger or otherwise) of
(x) the Capital Stock of the Guaranteeing Subsidiary, after which the
Guaranteeing Subsidiary is no longer a Restricted Subsidiary, or (y) all or
substantially all the assets of the Guaranteeing Subsidiary which sale,
exchange, disposition or transfer in each case is made in compliance with
Sections 4.10(a)(1) and (2) of the Indenture;

 

(B)                                the release or discharge of the guarantee by the Guaranteeing
Subsidiary of the Senior Credit Facilities or the guarantee which resulted in
the creation of the Guarantee, except a discharge or release by or as a result
of payment under such guarantee;

 

(C)                                the proper designation of the Guaranteeing Subsidiary as an
Unrestricted Subsidiary; or

 

(D)                               the Issuer exercising Legal Defeasance or Covenant Defeasance in
accordance with Article 8 of the Indenture or the Issuer’s obligations under
the Indenture being discharged in accordance with the terms of the Indenture;
and

 

(2)                                  the Issuer delivering to the Trustee an
Officer’s Certificate and an Opinion of Counsel, each stating that all
conditions precedent provided for in the Indenture relating to such transaction
have been complied with.

 

(6)                                  No Recourse Against Others.  No
past, present or future director, officer, employee, incorporator, member,
partner or stockholder of the Guaranteeing Subsidiary or any of its direct or
indirect parent companies shall have any liability for any obligations of the
Issuer or the Guarantors (including the Guaranteeing Subsidiary) under the
Notes, any Guarantees, the Indenture or this Supplemental Indenture or for any
claim based on, in respect of, or by reason of, such obligations or their
creation.  Each Holder by accepting Notes
waives and releases all such liability. 
The waiver and release are part of the consideration for issuance of the
Notes.

 

(7)                                  Governing Law.  THIS
SUPPLEMENTAL INDENTURE WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK.

 

D-4

 

(8)                                  Counterparts.  The
parties may sign any number of copies of this Supplemental Indenture.  Each signed copy shall be an original, but
all of them together represent the same agreement.

 

(9)                                  Effect of Headings.  The
Section headings herein are for convenience only and shall not affect the
construction hereof.

 

(10)                            The Trustee.  The Trustee shall not be
responsible in any manner whatsoever for or in respect of the validity or
sufficiency of this Supplemental Indenture or for or in respect of the recitals
contained herein, all of which recitals are made solely by the Guaranteeing Subsidiary.

 

(11)                            Subrogation.  The Guaranteeing Subsidiary
shall be subrogated to all rights of Holders of Notes against the Issuer in
respect of any amounts paid by the Guaranteeing Subsidiary pursuant to the
provisions of Section 2 hereof and Section 11.01 of the Indenture; provided
that, if an Event of Default has occurred and is continuing, the Guaranteeing
Subsidiary shall not be entitled to enforce or receive any payments arising out
of, or based upon, such right of subrogation until all amounts then due and
payable by the Issuer under the Indenture or the Notes shall have been paid in
full.

 

(12)                            Benefits Acknowledged.  The
Guaranteeing Subsidiary’s Guarantee is subject to the terms and conditions set
forth in the Indenture.  The Guaranteeing
Subsidiary acknowledges that it will receive direct and indirect benefits from
the financing arrangements contemplated by the Indenture and this Supplemental
Indenture and that the guarantee and waivers made by it pursuant to this
Guarantee are knowingly made in contemplation of such benefits.

 

(13)                            Successors.  All agreements of the
Guaranteeing Subsidiary in this Supplemental Indenture shall bind its
Successors, except as otherwise provided in Section 2(k) hereof or elsewhere in
this Supplemental Indenture.  All agreements
of the Trustee in this Supplemental Indenture shall bind its successors.

 

D-5

 

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

 

	
   

  	
  [GUARANTEEING
  SUBSIDIARY]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  WELLS
  FARGO BANK,

  
	
   

  	
  NATIONAL
  ASSOCIATION, as Trustee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

D-6Exhibit 4.4

 

 

REGISTRATION RIGHTS AGREEMENT

 

Dated as of October 31, 2006

 

Among

 

MICHAELS STORES, INC.,

 

THE GUARANTORS LISTED ON SCHEDULE I HERETO

 

and

 

DEUTSCHE BANK SECURITIES INC.,

J.P. MORGAN SECURITIES INC.,

BANC OF AMERICA SECURITIES LLC

 

and

 

CREDIT SUISSE SECURITIES (USA) LLC

 

 

10% Senior Notes due 2014

 

 

 

TABLE OF CONTENTS

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  1.

  	
  Definitions

  	
  1

  
	
   

  	
   

  	
   

  
	
  2.

  	
  Exchange Offer

  	
  4

  
	
   

  	
   

  	
   

  
	
  3.

  	
  Shelf Registration

  	
  8

  
	
   

  	
   

  	
   

  
	
  4.

  	
  Additional Interest

  	
  9

  
	
   

  	
   

  	
   

  
	
  5.

  	
  Registration Procedures

  	
  10

  
	
   

  	
   

  	
   

  
	
  6.

  	
  Registration Expenses

  	
  17

  
	
   

  	
   

  	
   

  
	
  7.

  	
  Indemnification and Contribution.

  	
  17

  
	
   

  	
   

  	
   

  
	
  8.

  	
  Rules 144 and 144A

  	
  21

  
	
   

  	
   

  	
   

  
	
  9.

  	
  Underwritten Registrations

  	
  22

  
	
   

  	
   

  	
   

  
	
  10.

  	
  Miscellaneous

  	
  22

  

 

i

 

REGISTRATION RIGHTS AGREEMENT

 

This
Registration Rights Agreement (this “Agreement”) is dated as of October
31, 2006, among MICHAELS STORES INC., a Delaware corporation (the “Issuer”),
the guarantors listed on Schedule I hereto (the “Guarantors”) and
DEUTSCHE BANK SECURITIES INC., J.P. MORGAN SECURITIES INC., BANC OF AMERICA
SECURITIES LLC and CREDIT SUISSE SECURITIES (USA) LLC (together, the “Initial
Purchasers”).

 

This
Agreement is entered into in connection with the Purchase Agreement, dated as
of October 25, 2006 (the “Purchase Agreement”), by and among the Issuer
and the Initial Purchasers, which provides for, among other things, the sale by
the Issuer to the Initial Purchasers of $750,000,000 aggregate principal amount
of the Issuer’s 10% Senior Notes due 2014 (the “Notes”) and $400,000,000
aggregate principal amount of the Issuer’s 11 3/8% Senior Subordinated Notes
due 2016 (the “Senior Subordinated Notes”). The Notes are issued under
an indenture, dated as of the date hereof (as amended or supplemented from time
to time, the “Indenture”), among the Issuer, the Guarantors and Wells
Fargo Bank, National Association, as trustee (the “Trustee”). Pursuant
to the Purchase Agreement and the Indenture, the Guarantors are required to
guarantee (collectively, the “Guarantees”) the Issuer’s obligations
under the Notes and the Indenture. References to the “Securities” shall
mean, collectively, the Notes and the Guarantees. In order to induce the
Initial Purchasers to enter into the Purchase Agreement, the Issuer has agreed
to provide the registration rights set forth in this Agreement for the benefit
of the Initial Purchasers and any subsequent holder or holders of the
Securities. The execution and delivery of this Agreement is a condition to the
Initial Purchasers’ obligations under the Purchase Agreement.

 

The
parties hereby agree as follows:

 

1.                                       Definitions

 

As
used in this Agreement, the following terms shall have the following meanings:

 

Additional Interest:  See Section 4(a) hereof.

 

Advice:  See the last paragraph of Section 5
hereof.

 

Agreement:  See the introductory paragraphs hereto.

 

Applicable Period:  See Section 2(b) hereof.

 

Business Day:  Shall have the meaning ascribed to such term
in Rule 14d-1 under the Exchange Act.

 

Effectiveness Date:  With respect to any Shelf
Registration Statement, the 90th day after the Filing Date with respect
thereto; provided, however, that if the Effectiveness Date would
otherwise fall on a day that is not a Business Day, then the Effectiveness Date
shall be the next succeeding Business Day.

 

 

Effectiveness Period:  See Section 3(a) hereof.

 

Event Date:  See Section 4(b) hereof.

 

Exchange Act:  The Securities Exchange Act of 1934, as
amended, and the rules and regulations of the SEC promulgated thereunder.

 

Exchange Notes:  See Section 2(a) hereof.

 

Exchange Offer:  See Section 2(a) hereof.

 

Exchange Offer Registration Statement:  See
Section 2(a) hereof.

 

Exchange Securities:  See Section 2(a) hereof.

 

Filing Date:  The 90th day after the delivery of a Shelf
Notice as required pursuant to Section 2(c) hereof; provided, however,
that if the Filing Date would otherwise fall on a day that is not a Business
Day, then the Filing Date shall be the next succeeding Business Day.

 

Guarantees:  See the introductory paragraphs hereto.

 

Guarantors:  See the introductory paragraphs hereto.

 

Holder:  Any holder of a Registrable Security or
Registrable Securities.

 

Indenture:  See the introductory paragraphs hereto.

 

Information:  See Section 5(n) hereof.

 

Initial Purchasers:  See the introductory
paragraphs hereto.

 

Initial Shelf Registration:  See Section 3(a) hereof.

 

Inspectors:  See Section 5(n) hereof.

 

Issue Date:  October 31, 2006, the date of original
issuance of the Notes.

 

Issuer:  See the introductory paragraphs hereto.

 

NASD:  See Section 5(r) hereof.

 

New Guarantees:  See Section 2(a) hereof.

 

Notes:  See the introductory paragraphs hereto.

 

Participant:  See Section 7(a) hereof.

 

2

 

Participating Broker-Dealer:  See Section 2(b) hereof.

 

Person:  An individual, trustee, corporation,
partnership, limited liability company, joint stock company, trust,
unincorporated association, union, business association, firm or other legal
entity.

 

Private Exchange:  See Section 2(b) hereof.

 

Private Exchange Notes:  See Section 2(b) hereof.

 

Prospectus:  The prospectus included in any Registration
Statement (including, without limitation, any prospectus subject to completion
and a prospectus that includes any information previously omitted from a
prospectus filed as part of an effective registration statement in reliance
upon Rule 430A under the Securities Act and any term sheet filed pursuant
to Rule 434 under the Securities Act), as amended or supplemented by any
prospectus supplement, and all other amendments and supplements to the
Prospectus, including post-effective amendments, and all material incorporated
by reference or deemed to be incorporated by reference in such Prospectus.

 

Purchase Agreement:  See the introductory
paragraphs hereof.

 

Records:  See Section 5(n) hereof.

 

Registrable Securities:  Each Security upon its
original issuance and at all times subsequent thereto, each Exchange Security
as to which Section 2(c)(iv) hereof is applicable upon original issuance
and at all times subsequent thereto and each Private Exchange Note (and the
related Guarantees) upon original issuance thereof and at all times subsequent
thereto, until, in each case, the earliest to occur of (i) a Registration
Statement (other than, with respect to any Exchange Securities as to which
Section 2(c)(iv) hereof is applicable, the Exchange Offer Registration
Statement) covering such Security, Exchange Security or Private Exchange Note
(and the related Guarantees) has been declared effective by the SEC and such
Security, Exchange Security or such Private Exchange Note (and the related
Guarantees), as the case may be, has been disposed of in accordance with such
effective Registration Statement, (ii) such Security has been exchanged
pursuant to the Exchange Offer for an Exchange Security or Exchange Securities
that may be resold without restriction under state and federal securities laws,
(iii) such Security, Exchange Security or Private Exchange Note (and the
related Guarantees), as the case may be, ceases to be outstanding for purposes
of the Indenture or (iv) such Security, Exchange Security or Private
Exchange Note (and the related Guarantees), as the case may be, may be resold
without restriction pursuant to Rule 144(k) (as amended or replaced) under
the Securities Act.

 

Registration Statement:  Any registration statement of
the Issuer that covers any of the Securities, the Exchange Securities or the
Private Exchange Notes (and the related Guarantees) filed with the SEC under
the Securities Act, including, in each case, the Prospectus, amendments and
supplements to such registration statement, including post-effective
amendments, all exhibits, and all material incorporated by reference or deemed
to be incorporated by reference in such registration statement.

 

Rule 144:  Rule 144 under the Securities Act.

 

Rule 144A:  Rule 144A under the Securities Act.

 

3

 

Rule 405:  Rule 405 under the Securities Act.

 

Rule 415:  Rule 415 under the Securities Act.

 

Rule 424:  Rule 424 under the Securities Act.

 

SEC:  The U.S. Securities and Exchange Commission.

 

Securities:  See the introductory paragraphs hereto.

 

Securities Act:  The Securities Act of 1933, as amended, and
the rules and regulations of the SEC promulgated thereunder.

 

Senior Subordinated Notes:  See the introductory paragraphs
hereto.

 

Shelf Notice:  See Section 2(c) hereof.

 

Shelf Registration:  See Section 3(b) hereof.

 

Shelf Registration Statement:  Any Registration Statement
relating to a Shelf Registration.

 

Shelf Suspension Period:  See Section 3(a) hereof.

 

Subordinated Discount Notes:  The Issuer’s 13% Subordinated
Discount Notes due 2016.

 

Subsequent Shelf Registration:  See Section 3(b) hereof.

 

TIA:  The Trust Indenture Act of 1939, as amended.

 

Trustee:  The trustee under the Indenture and the
trustee under any indenture (if different) governing the Exchange Securities
and Private Exchange Notes (and the related Guarantees).

 

Underwritten registration or underwritten offering:  A
registration in which securities of the Issuer is sold to an underwriter for
reoffering to the public.

 

Except
as otherwise specifically provided, all references in this Agreement to acts,
laws, statutes, rules, regulations, releases, forms, no-action letters and
other regulatory requirements (collectively, “Regulatory Requirements”)
shall be deemed to refer also to any amendments thereto and all subsequent
Regulatory Requirements adopted as a replacement thereto having substantially
the same effect therewith; provided that Rule 144 shall not be
deemed to amend or replace Rule 144A.

 

2.                                       Exchange Offer

 

(a)                                  Unless the Exchange Offer would violate
applicable law or any applicable interpretation of the staff of the SEC, the
Issuer and the Guarantors shall use their reasonable best efforts to file with
the SEC a Registration Statement (the “Exchange Offer Registration Statement”)
on an appropriate

 

4

 

registration
form with respect to a registered offer (the “Exchange Offer”) to
exchange any and all of the Registrable Securities for a like aggregate
principal amount of debt securities of the Issuer (the “Exchange Notes”),
guaranteed, to the extent applicable, on an unsecured senior basis by the
Guarantors (the “New Guarantees” and, together with the Exchange Notes,
the “Exchange Securities”), that are identical in all material respects
to the Notes, except that (i) the Exchange Notes shall contain no
restrictive legend thereon, (ii) interest thereon shall accrue (A) from
the later of (x) the last date on which interest was paid on such Notes or (y)
if such Notes are surrendered for exchange on a date in a period that includes
the record date for an interest payment date to occur on or after the date of
such exchange and as to which interest on such Note will be paid, the date of
such interest payment date or (B) if no such interest has been paid, from the
Issue Date and (iii) the Exchange Notes shall be entitled to the benefits of
the Indenture or a trust indenture which is identical in all material respects
to the Indenture (other than such changes to the Indenture or any such
identical trust indenture as are necessary to comply with the TIA) and which,
in either case, has been qualified under the TIA. The Exchange Offer shall
comply with all applicable tender offer rules and regulations under the Exchange
Act and other applicable laws. The Issuer shall use its reasonable best efforts
to (x) prepare and file with the SEC the Exchange Offer Registration Statement
with respect to the Exchange Offer; (y) keep the Exchange Offer open for
at least 20 Business Days (or longer if required by applicable law) after the
date that notice of the Exchange Offer is mailed to Holders; and
(z) consummate the Exchange Offer on or prior to the 360th day following
the Issue Date.

 

Each
Holder (including, without limitation, each Participating Broker-Dealer) that
participates in the Exchange Offer, as a condition to participation in the
Exchange Offer, will be required to represent to the Issuer in writing (which
may be contained in the applicable letter of transmittal) that:  (i) any Exchange Securities acquired in
exchange for Registrable Securities tendered are being acquired in the ordinary
course of business; (ii) at the time of the commencement or consummation
of the Exchange Offer such Holder has no arrangement or understanding with any
Person to participate in the distribution (within the meaning of the Securities
Act) of the Exchange Securities in violation of the provisions of the
Securities Act; (iii) such Holder is not an “affiliate” (as defined in
Rule 405) of the Issuer or, if it is an affiliate of the Issuer, it will
comply with the registration and prospectus delivery requirements of the
Securities Act to the extent applicable and will provide information to be
included in the Shelf Registration Statement in accordance with Section 5
hereof in order to have their Securities included in the Shelf Registration
Statement and benefit from the provisions regarding Additional Interest in
Section 4 hereof; (iv) if such Holder is not a broker-dealer, such
Holder is not engaged in and does not intend to engage in a distribution of the
Exchange Securities; and (v) if such Holder is a Participating
Broker-Dealer, such Holder has acquired the Registrable Securities for its own
account in exchange for Securities that were acquired as a result of
market-making activities or other trading activities and that it will comply
with the applicable provisions of the Securities Act (including, but not
limited to, the prospectus delivery requirements thereunder).

 

Upon
consummation of the Exchange Offer in accordance with this Section 2, the
provisions of this Agreement shall continue to apply, mutatis  mutandis,
solely with respect to Registrable Securities that are Private Exchange Notes
(and the related Guarantees), Exchange Securities as to which
Section 2(c)(iv) is applicable and Exchange Securities held by
Participating Broker-Dealers, and the Issuer shall have no further obligation
to register Registrable Securities (other than Private Exchange Notes (and the
related Guarantees), Exchange Securities as to which clause 2(c)(iv)
hereof applies and Exchange Securities held by Participating Broker-Dealers)
pursuant to Section 3 hereof.

 

5

 

No
securities other than the Exchange Securities, the Senior Subordinated Notes
and the Subordinated Discount Notes (and the related guarantees) shall be
included in the Exchange Offer Registration Statement.

 

(b)                                 The Issuer shall include within the
Prospectus contained in the Exchange Offer Registration Statement a section
entitled “Plan of Distribution,” which shall contain a summary statement of the
positions taken or policies made by the staff of the SEC with respect to the
potential “underwriter” status of any broker-dealer that is the “beneficial owner”
(as defined in Rule 13d-3 under the Exchange Act) of Exchange Notes
received by such broker-dealer in the Exchange Offer (a “Participating
Broker-Dealer”), whether such positions or policies have been publicly
disseminated by the staff of the SEC or such positions or policies represent
the prevailing views of the staff of the SEC. Such “Plan of Distribution”
section shall also expressly permit, to the extent permitted by applicable
policies and regulations of the SEC, the use of the Prospectus by all Participating
Broker-Dealers, and include a statement describing the means by which
Participating Broker-Dealers may resell the Exchange Securities in compliance
with the Securities Act.

 

The
Issuer shall use its reasonable best efforts to keep the Exchange Offer
Registration Statement effective and to amend and supplement the Prospectus
contained therein in order to permit such Prospectus to be lawfully delivered
by all Persons subject to the prospectus delivery requirements of the
Securities Act for such period of time as is necessary to comply with
applicable law in connection with any resale of the Exchange Securities; provided,
however, that such period shall not be required to exceed 90 days, or
such longer period if extended pursuant to the last paragraph of Section 6
hereof (the “Applicable Period”).

 

If,
prior to consummation of the Exchange Offer, the Initial Purchasers hold any
Notes acquired by them that have the status of an unsold allotment in the
initial distribution, the Issuer, upon the request of the Initial Purchasers,
shall simultaneously with the delivery of the Exchange Notes issue and deliver
to the Initial Purchasers, in exchange (the “Private Exchange”) for such
Notes held by any such Holder, a like principal amount of notes (the “Private
Exchange Notes”) of the Issuer, guaranteed by the Guarantors, that are
identical in all material respects to the Exchange Notes except for the
placement of a restrictive legend on such Private Exchange Notes. The Private
Exchange Notes shall be issued pursuant to the same indenture as the Exchange
Notes and bear the same CUSIP number as the Exchange Notes if permitted by the
CUSIP Service Bureau.

 

In
connection with the Exchange Offer, the Issuer shall:

 

(1)                                  mail, or cause to be mailed, to each Holder
of record entitled to participate in the Exchange Offer a copy of the
Prospectus forming part of the Exchange Offer Registration Statement, together
with an appropriate letter of transmittal and related documents;

 

(2)                                  use their respective reasonable best efforts
to keep the Exchange Offer open for not less than 20 Business Days from the
date that notice of the Exchange Offer is mailed to Holders (or longer if
required by applicable law);

 

(3)                                  utilize the services of a depositary for the
Exchange Offer with an address in the Borough of Manhattan, The City of New
York or in Wilmington, Delaware;

 

6

 

(4)                                  permit Holders to withdraw tendered Notes at
any time prior to the close of business, New York time, on the last Business
Day on which the Exchange Offer remains open; and

 

(5)                                  otherwise comply in all material respects
with all laws, rules and regulations applicable to the Exchange Offer.

 

As
soon as practicable after the close of the Exchange Offer and any Private Exchange,
the Issuer shall:

 

(1)                                  accept for exchange all Registrable
Securities validly tendered and not validly withdrawn pursuant to the Exchange
Offer and any Private Exchange;

 

(2)                                  deliver to the Trustee for cancellation all
Registrable Securities so accepted for exchange; and

 

(3)                                  cause the Trustee to authenticate and deliver
promptly to each Holder of Notes, Exchange Notes or Private Exchange Notes, as
the case may be, equal in principal amount to the Notes of such Holder so
accepted for exchange; provided that, in the case of any Notes held in
global form by a depositary, authentication and delivery to such depositary of
one or more replacement Notes in global form in an equivalent principal amount
thereto for the account of such Holders in accordance with the Indenture shall
satisfy such authentication and delivery requirement.

 

The
Exchange Offer and the Private Exchange shall not be subject to any conditions,
other than that (i) the Exchange Offer or Private Exchange, as the case
may be, does not violate applicable law or any applicable interpretation of the
staff of the SEC; (ii) no action or proceeding shall have been instituted
or threatened in any court or by any governmental agency which might materially
impair the ability of the Issuer to proceed with the Exchange Offer or the
Private Exchange, and no material adverse development shall have occurred in
any existing action or proceeding with respect to the Issuer; and
(iii) all governmental approvals shall have been obtained, which approvals
the Issuer deem necessary for the consummation of the Exchange Offer or Private
Exchange.

 

The
Exchange Securities and the Private Exchange Notes (and related guarantees)
shall be issued under (i) the Indenture or (ii) an indenture
identical in all material respects to the Indenture and which, in either case,
has been qualified under the TIA or is exempt from such qualification and shall
provide that the Exchange Securities shall not be subject to the transfer
restrictions set forth in the Indenture. The Indenture or such indenture shall
provide that the Exchange Notes, the Private Exchange Notes and the Notes shall
vote and consent together on all matters as one class and that none of the
Exchange Notes, the Private Exchange Notes or the Notes will have the right to
vote or consent as a separate class on any matter.

 

(c)                                  If, (i) because of any change in law or
in currently prevailing interpretations of the staff of the SEC, the Issuer is
not permitted to effect the Exchange Offer, (ii) the Exchange Offer is not
consummated within 360 days of the Issue Date, (iii) any holder of Private
Exchange Notes so requests in writing to the Issuer at any time within 30 days
after the consummation of the Exchange Offer, or (iv) in the case of any
Holder that participates in the Exchange Offer, such Holder does not receive

 

7

 

Exchange
Securities on the date of the exchange that may be sold without restriction
under state and federal securities laws (other than due solely to the status of
such Holder as an affiliate of the Issuer within the meaning of the Securities
Act) and so notifies the Issuer within 30 days after such Holder first becomes
aware of such restrictions, in the case of each of clauses (i) to and including
(iv) of this sentence, then the Issuer shall promptly deliver to the Trustee
(to deliver to the Holders) written notice thereof (the “Shelf Notice”)
and shall file a Shelf Registration pursuant to Section 3 hereof.

 

3.                                       Shelf
Registration

 

If
at any time a Shelf Notice is delivered as contemplated by Section 2(c)
hereof, then:

 

(a)                                  Shelf
Registration. The Issuer shall promptly file with the SEC a
Registration Statement for an offering to be made on a continuous basis
pursuant to Rule 415 covering all of the Registrable Securities (the “Initial
Shelf Registration”). The Issuer shall use its reasonable best efforts to
file with the SEC the Initial Shelf Registration on or prior to the Filing Date.
The Initial Shelf Registration shall be on Form S-1 or another appropriate
form permitting registration of such Registrable Securities for resale by
Holders in the manner or manners designated by them (including, without
limitation, one or more underwritten offerings). The Issuer shall not permit
any securities other than the Registrable Securities and the Guarantees, the
Senior Subordinated Notes and the related guarantees and the Subordinated
Discount Notes and the related guarantees to be included in the Initial Shelf
Registration or any Subsequent Shelf Registration (as defined below).

 

The
Issuer shall use its respective reasonable best efforts to cause the Shelf
Registration to be declared effective under the Securities Act on or prior to
the Effectiveness Date and to keep the Initial Shelf Registration continuously
effective under the Securities Act until the earliest of (i) the date that is
two years from the Issue Date (ii) such shorter period ending when all
Registrable Securities covered by the Initial Shelf Registration have been sold
in the manner set forth and as contemplated in the Initial Shelf Registration
or, if applicable, a Subsequent Shelf Registration or (iii) the date upon which
all Registrable Securities become eligible for resale without regard to volume,
manner of sale or other restrictions contained in Rule 144(k) (the “Effectiveness
Period”); provided, however, that the Effectiveness Period in
respect of the Initial Shelf Registration shall be extended to the extent
required to permit dealers to comply with the applicable prospectus delivery
requirements of Rule 174 under the Securities Act and as otherwise provided
herein. Notwithstanding anything to the contrary in this Agreement, at any
time, the Issuer may delay the filing of any Initial Shelf Registration
Statement or delay or suspend the effectiveness thereof, for a reasonable
period of time, but not in excess of 60 consecutive days or more than three (3)
times during any calendar year (each, a “Shelf Suspension Period”), if
the Board of Directors of the Issuer determines reasonably and in good faith that
the filing of any such Initial Shelf Registration Statement or the continuing
effectiveness thereof would require the disclosure of non-public material
information that, in the reasonable judgment of the Board of Directors of the
Issuer, would be detrimental to the Issuer if so disclosed or would otherwise
materially adversely affect a financing, acquisition, disposition, merger or
other material transaction or such action is required by applicable law.

 

(b)                                 Withdrawal of
Stop Orders; Subsequent Shelf Registrations. If the Initial Shelf
Registration or any Subsequent Shelf Registration ceases to be effective for
any reason at any time during the Effectiveness Period (other than because of
the sale of all of the Securities registered thereunder), the Issuer shall use
its reasonable best efforts to obtain the prompt withdrawal of any order
suspending the

 

8

 

effectiveness thereof, and
in any event shall file an additional Shelf Registration Statement pursuant to
Rule 415 covering all of the Registrable Securities covered by and not sold
under the Initial Shelf Registration or an earlier Subsequent Shelf
Registration (each, a “Subsequent Shelf Registration”). If a Subsequent
Shelf Registration is filed, the Issuer shall use its reasonable best efforts
to cause the Subsequent Shelf Registration to be declared effective under the
Securities Act as soon as practicable after such filing and to keep such
subsequent Shelf Registration continuously effective for a period equal to the
number of days in the Effectiveness Period less the aggregate number of days
during which the Initial Shelf Registration or any Subsequent Shelf
Registration was previously continuously effective. As used herein the term “Shelf
Registration” means the Initial Shelf Registration and any Subsequent Shelf
Registration.

 

(c)                                  Supplements and
Amendments. The Issuer shall promptly supplement and amend the
Shelf Registration if required by the rules, regulations or instructions
applicable to the registration form used for such Shelf Registration, if
required by the Securities Act, or if reasonably requested by the Holders of a
majority in aggregate principal amount of the Registrable Securities (or their
counsel) covered by such Registration Statement with respect to the information
included therein with respect to one or more of such Holders, or, if reasonably
requested by any underwriter of such Registrable Securities, with respect to
the information included therein with respect to such underwriter.

 

4.                                       Additional
Interest

 

(a)                                  The Issuer and the Initial Purchasers agree
that the Holders will suffer damages if the Issuer fails to fulfill its
obligations under Section 2 or Section 3 hereof and that it would not
be feasible to ascertain the extent of such damages with precision. Accordingly,
the Issuer agrees to pay as liquidated damages, additional interest on the
Notes (“Additional Interest”) if (A) the Issuer has neither (i)
exchanged Exchange Securities for all Securities validly tendered in accordance
with the terms of the Exchange Offer nor (ii) had a Shelf Registration
Statement declared effective, in either case on or prior to the 360th day after
the Issue Date, (B) notwithstanding clause (A), the Issuer is required to file
a Shelf Registration Statement and such Shelf Registration Statement is not
declared effective on or prior to the 360th day after the date such Shelf
Registration Statement filing was requested or required or (C), if
applicable, a Shelf Registration has been declared effective and such Shelf
Registration ceases to be effective at any time during the Effectiveness Period
(other than because of the sale of all of the Securities registered
thereunder), and then Additional Interest shall accrue on the principal amount
of the Registrable Securities at a rate of 0.25% per annum (which rate will be
increased by an additional 0.25% per annum for each subsequent 90 day period
that such Additional Interest continues to accrue, provided that the rate at
which such Additional Interest accrues may in no event exceed 1.00% per annum)
(such Additional Interest to be calculated by the Issuer) commencing on the
(x) 361st day after the Issue Date, in the case of (A) above, (y) the
361st day after the date such Shelf Registration Statement filing was requested
or required in the case of (B) above or (z) the day such Shelf Registration
ceases to be effective in the case of (C) above; provided, however,
that upon the exchange of the Exchange Securities for all Securities
tendered (in the case of clause (A) of this Section 4), upon the
effectiveness of the applicable Shelf Registration Statement (in the case of
(B) of this Section 4), or upon the effectiveness of the applicable Shelf
Registration Statement which had ceased to remain effective (in the case of (C)
of this Section 4), Additional Interest on the Registrable Securities in
respect of which such events relate as a result of such clause (or the relevant
subclause thereof), as the case may be, shall cease to accrue. Notwithstanding
any other provisions of this Section 4, the Issuer shall not be obligated to
pay Additional Interest provided in Sections 4(a)(B) during a Shelf Suspension
Period permitted by Section 3(a) hereof.

 

9

 

(b)                                 The Issuer shall notify the Trustee within
one business day after each and every date on which an event occurs in respect
of which Additional Interest is required to be paid (an “Event Date”). Any
amounts of Additional Interest due pursuant to (a) of this Section 4 will
be payable in cash semiannually on each May 1 and November 1 (to the holders of
record on the April 15 and October 15 immediately preceding such dates),
commencing with the first such date occurring after any such Additional
Interest commences to accrue. The amount of Additional Interest will be
determined by the Issuer by multiplying the applicable Additional Interest rate
by the principal amount of the Registrable Securities, multiplied by a
fraction, the numerator of which is the number of days such Additional Interest
rate was applicable during such period (determined on the basis of a
360 day year comprised of twelve 30 day months and, in the case of a
partial month, the actual number of days elapsed), and the denominator of which
is 360.

 

5.                                       Registration
Procedures

 

In
connection with the filing of any Registration Statement pursuant to
Section 2 or 3 hereof, the Issuer shall effect such registrations to
permit the sale of the securities covered thereby in accordance with the
intended method or methods of disposition thereof, and pursuant thereto and in
connection with any Registration Statement filed by the Issuer hereunder the
Issuer shall:

 

(a)                                  Prepare and
file with the SEC (prior to the applicable Filing Date in the case of a Shelf
Registration), a Registration Statement or Registration Statements as
prescribed by Section 2 or 3 hereof, and use its reasonable best efforts
to cause each such Registration Statement to become effective and remain
effective as provided herein; provided, however, that if (1) such
filing is pursuant to Section 3 hereof or (2) a Prospectus contained
in the Exchange Offer Registration Statement filed pursuant to Section 2
hereof is required to be delivered under the Securities Act by any
Participating Broker-Dealer who seeks to sell Exchange Securities during the
Applicable Period relating thereto from whom the Issuer has received prior
written notice that it will be a Participating Broker-Dealer in the Exchange
Offer, before filing any Registration Statement or Prospectus or any amendments
or supplements thereto, the Issuer shall furnish to and afford counsel for the
Holders of the Registrable Securities covered by such Registration Statement
(with respect to a Registration Statement filed pursuant to Section 3
hereof) or counsel for such Participating Broker-Dealer (with respect to any
such Registration Statement), as the case may be, and counsel to the managing
underwriters, if any, a reasonable opportunity to review copies of all such
documents (including copies of any documents to be incorporated by reference
therein and all exhibits thereto) proposed to be filed (in each case at least
three Business Days prior to such filing). The Issuer shall not file any
Registration Statement or Prospectus or any amendments or supplements thereto
if the Holders of a majority in aggregate principal amount of the Registrable
Securities covered by such Registration Statement, their counsel, or the
managing underwriters, if any, shall reasonably object.

 

(b)                                 Prepare and
file with the SEC such amendments and post-effective amendments to each Shelf
Registration Statement or Exchange Offer Registration Statement, as the case
may be, as may be necessary to keep such Registration Statement continuously
effective for the Effectiveness Period, the Applicable Period or until
consummation of the Exchange Offer, as the case may be; cause the related
Prospectus to be supplemented by any Prospectus supplement required by
applicable law, and as so supplemented to be filed pursuant to Rule 424;
and comply with the provisions of the Securities Act and the Exchange Act
applicable to it with respect to the disposition of all securities covered by
such Registration Statement as so amended or in such Prospectus as so
supplemented and with respect to the subsequent

 

10

 

resale of any securities
being sold by an Participating Broker-Dealer covered by any such Prospectus in
all material respects. The Issuer shall be deemed not to have used its
reasonable best efforts to keep a Registration Statement effective if it
voluntarily takes any action that is reasonably expected to result in selling
Holders of the Registrable Securities covered thereby or Participating
Broker-Dealers seeking to sell Exchange Securities not being able to sell such
Registrable Securities or such Exchange Securities during that period unless
such action is required by applicable law or permitted by this Agreement.

 

(c)                                  If (1) a
Shelf Registration is filed pursuant to Section 3 hereof or (2) a
Prospectus contained in the Exchange Offer Registration Statement filed
pursuant to Section 2 hereof is required to be delivered under the
Securities Act by any Participating Broker-Dealer who seeks to sell Exchange
Securities during the Applicable Period relating thereto from whom the Issuer
has received written notice that it will be a Participating Broker-Dealer in
the Exchange Offer, notify the selling Holders of Registrable Securities (with
respect to a Registration Statement filed pursuant to Section 3 hereof),
or each such Participating Broker-Dealer (with respect to any such Registration
Statement), as the case may be, their counsel and the managing underwriters, if
any, promptly (but in any event within three Business Days), and confirm such
notice in writing, (i) when a Prospectus or any Prospectus supplement or
post-effective amendment has been filed, and, with respect to a Registration
Statement or any post-effective amendment, when the same has become effective
under the Securities Act (including in such notice a written statement that any
Holder may, upon request, obtain, at the sole expense of the Issuer, one
conformed copy of such Registration Statement or post-effective amendment
including financial statements and schedules, documents incorporated or deemed
to be incorporated by reference and exhibits), (ii) of the issuance by the
SEC of any stop order suspending the effectiveness of a Registration Statement
or of any order preventing or suspending the use of any preliminary prospectus
or the initiation of any proceedings for that purpose, (iii) if at any
time when a prospectus is required by the Securities Act to be delivered in
connection with sales of the Registrable Securities or resales of Exchange
Securities by Participating Broker-Dealers the representations and warranties
of the Issuer contained in any agreement (including any underwriting agreement)
contemplated by Section 5(m) hereof cease to be true and correct,
(iv) of the receipt by the Issuer of any notification with respect to the
suspension of the qualification or exemption from qualification of a
Registration Statement or any of the Registrable Securities or the Exchange
Securities to be sold by any Participating Broker-Dealer for offer or sale in
any jurisdiction, or the initiation or threatening of any proceeding for such
purpose, (v) of the happening of any event, the existence of any condition
or any information becoming known that makes any statement made in such
Registration Statement or related Prospectus or any document incorporated or
deemed to be incorporated therein by reference untrue in any material respect
or that requires the making of any changes in or amendments or supplements to
such Registration Statement, Prospectus or documents so that, in the case of
the Registration Statement, it will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading, and that in the
case of the Prospectus, it will not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, and (vi) of the Issuer’s
determination that a post-effective amendment to a Registration Statement would
be appropriate.

 

(d)                                 Use its
reasonable best efforts to prevent the issuance of any order suspending the
effectiveness of a Registration Statement or of any order preventing or suspending
the use of a Prospectus or suspending the qualification (or exemption from
qualification) of any of the Registrable Securities or the Exchange Securities
to be sold by any Participating Broker-Dealer, for sale in any jurisdiction.

 

11

 

(e)                                  If a Shelf
Registration is filed pursuant to Section 3 and if requested during the
Effectiveness Period by the managing underwriter or underwriters (if any) or
the Holders of a majority in aggregate principal amount of the Registrable
Securities being sold in connection with an underwritten offering, (i) as
promptly as practicable incorporate in a prospectus supplement or
post-effective amendment such information as the managing underwriter or
underwriters (if any), such Holders or counsel for either of them reasonably
request to be included therein, (ii) make all required filings of such
prospectus supplement or such post-effective amendment as soon as practicable
after the Issuer has received notification of the matters to be incorporated in
such prospectus supplement or post-effective amendment, and
(iii) supplement or make amendments to such Registration Statement.

 

(f)                                    If (1) a
Shelf Registration is filed pursuant to Section 3 hereof, or (2) a
Prospectus contained in the Exchange Offer Registration Statement filed
pursuant to Section 2 hereof is required to be delivered under the
Securities Act by any Participating Broker-Dealer who seeks to sell Exchange
Securities during the Applicable Period, furnish to each selling Holder of
Registrable Securities (with respect to a Registration Statement filed pursuant
to Section 3 hereof) and to each such Participating Broker-Dealer who so
requests (with respect to any such Registration Statement) and to their
respective counsel and each managing underwriter, if any, at the sole expense
of the Issuer, one conformed copy of the Registration Statement or Registration
Statements and each post-effective amendment thereto, including financial
statements and schedules, and, if requested, all documents incorporated or
deemed to be incorporated therein by reference and all exhibits.

 

(g)                                 If (1) a
Shelf Registration is filed pursuant to Section 3 hereof, or (2) a
Prospectus contained in the Exchange Offer Registration Statement filed pursuant
to Section 2 hereof is required to be delivered under the Securities Act
by any Participating Broker-Dealer who seeks to sell Exchange Securities during
the Applicable Period, deliver to each selling Holder of Registrable Securities
(with respect to a Registration Statement filed pursuant to Section 3
hereof), or each such Participating Broker-Dealer (with respect to any such
Registration Statement), as the case may be, their respective counsel, and the
underwriters, if any, at the sole expense of the Issuer, as many copies of the
Prospectus or Prospectuses (including each form of preliminary prospectus) and
each amendment or supplement thereto and any documents incorporated by
reference therein as such Persons may reasonably request; and, subject to the last
paragraph of this Section 5, the Issuer hereby consents to the use of such
Prospectus and each amendment or supplement thereto by each of the selling
Holders of Registrable Securities or each such Participating Broker-Dealer, as
the case may be, and the underwriters or agents, if any, and dealers, if any,
in connection with the offering and sale of the Registrable Securities covered
by, or the sale by Participating Broker-Dealers of the Exchange Securities
pursuant to, such Prospectus and any amendment or supplement thereto.

 

(h)                                 Prior to any
public offering of Registrable Securities or any delivery of a Prospectus
contained in the Exchange Offer Registration Statement by any Participating
Broker-Dealer who seeks to sell Exchange Securities during the Applicable
Period, use its reasonable best efforts to register or qualify, and to
cooperate with the selling Holders of Registrable Securities or each such
Participating Broker-Dealer, as the case may be, the managing underwriter or
underwriters, if any, and their respective counsel in connection with the
registration or qualification (or exemption from such registration or
qualification) of such Registrable Securities for offer and sale under the
securities or Blue Sky laws of such jurisdictions within the United States as
any selling Holder, Participating Broker-Dealer, or the managing underwriter or
underwriters reasonably request in writing; provided, however,
that where Exchange Securities

 

12

 

held by Participating
Broker-Dealers or Registrable Securities are offered other than through an
underwritten offering, the Issuer agrees to cause its counsel to perform Blue
Sky investigations and file registrations and qualifications required to be
filed pursuant to this Section 5(h), keep each such registration or
qualification (or exemption therefrom) effective during the period such
Registration Statement is required to be kept effective and do any and all
other acts or things necessary or advisable to enable the disposition in such
jurisdictions of the Exchange Securities held by Participating Broker-Dealers
or the Registrable Securities covered by the applicable Registration Statement;
provided, however, that the Issuer shall not be required to
(A) qualify generally to do business in any jurisdiction where it is not
then so qualified, (B) take any action that would subject it to general
service of process in any such jurisdiction where it is not then so subject or
(C) subject itself to taxation in excess of a nominal dollar amount in any
such jurisdiction where it is not then so subject.

 

(i)                                     If a Shelf
Registration is filed pursuant to Section 3 hereof, cooperate with the
selling Holders of Registrable Securities and the managing underwriter or
underwriters, if any, to facilitate the timely preparation and delivery of
certificates representing Registrable Securities to be sold, which certificates
shall not bear any restrictive legends and shall be in a form eligible for
deposit with The Depository Trust Company; and enable such Registrable
Securities to be in such denominations (subject to applicable requirements
contained in the Indenture) and registered in such names as the managing
underwriter or underwriters, if any, or Holders may request.

 

(j)                                     Use its
reasonable best efforts to cause the Registrable Securities covered by the
Registration Statement to be registered with or approved by such other U.S.
governmental agencies or authorities as may be necessary to enable the seller
or sellers thereof or the underwriter or underwriters, if any, to consummate
the disposition of such Registrable Securities, except as may be required
solely as a consequence of the nature of such selling Holder’s business, in
which case the Issuer will cooperate in all respects with the filing of such
Registration Statement and the granting of such approvals.

 

(k)                                  If (1) a
Shelf Registration is filed pursuant to Section 3 hereof, or (2) a
Prospectus contained in the Exchange Offer Registration Statement filed
pursuant to Section 2 hereof is required to be delivered under the
Securities Act by any Participating Broker-Dealer who seeks to sell Exchange
Securities during the Applicable Period, upon the occurrence of any event
contemplated by paragraph 5(c)(v) or 5(c)(vi) hereof, as promptly as practicable
prepare and (subject to Section 5(a) hereof) file with the SEC, at the
sole expense of the Issuer, a supplement or post-effective amendment to the
Registration Statement or a supplement to the related Prospectus or any
document incorporated therein by reference, or file any other required document
so that, as thereafter delivered to the purchasers of the Registrable
Securities being sold thereunder (with respect to a Registration Statement
filed pursuant to Section 3 hereof) or to the purchasers of the Exchange
Securities to whom such Prospectus will be delivered by a Participating
Broker-Dealer (with respect to any such Registration Statement), any such
Prospectus will not contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.

 

(l)                                     Prior to the
effective date of the first Registration Statement relating to the Registrable
Securities, (i) provide the Trustee with certificates for the Registrable
Securities in a form eligible for deposit with The Depository Trust Company and
(ii) provide a CUSIP number for the Registrable Securities.

 

13

 

(m)                               In connection
with any underwritten offering of Registrable Securities pursuant to a Shelf
Registration, enter into an underwriting agreement as is customary in
underwritten offerings of debt securities similar to the Securities (including,
without limitation, a customary condition to the obligations of the
underwriters that the underwriters shall have received “cold comfort” letters
and updates thereof in form, scope and substance reasonably satisfactory to the
managing underwriter or underwriters from the independent certified public
accountants of the Issuer (and, if necessary, any other independent certified
public accountants of the Issuer, or of any business acquired by the Issuer,
for which financial statements and financial data are, or are required to be,
included or incorporated by reference in the Registration Statement), addressed
to each of the underwriters, such letters to be in customary form and covering
matters of the type customarily covered in “cold comfort” letters in connection
with underwritten offerings of debt securities similar to the Securities), and
take all such other actions as are reasonably requested by the managing
underwriter or underwriters in order to expedite or facilitate the registration
or the disposition of such Registrable Securities and, in such connection,
(i) make such representations and warranties to, and covenants with, the
underwriters with respect to the business of the Issuer (including any acquired
business, properties or entity, if applicable), and the Registration Statement,
Prospectus and documents, if any, incorporated or deemed to be incorporated by
reference therein, in each case, as are customarily made by issuers to
underwriters in underwritten offerings of debt securities similar to the Securities,
and confirm the same in writing if and when requested; (ii) obtain the
written opinions of counsel to the Issuer, and written updates thereof in form,
scope and substance reasonably satisfactory to the managing underwriter or
underwriters, addressed to the underwriters covering the matters customarily
covered in opinions reasonably requested in underwritten offerings; and
(iii) if an underwriting agreement is entered into, the same shall contain
indemnification provisions and procedures no less favorable to the sellers and
underwriters, if any, than those set forth in Section 7 hereof (or such
other provisions and procedures reasonably acceptable to Holders of a majority
in aggregate principal amount of Registrable Securities covered by such Registration
Statement and the managing underwriter or underwriters or agents, if any). The
above shall be done at each closing under such underwriting agreement, or as
and to the extent required thereunder.

 

(n)                                 If (1) a
Shelf Registration is filed pursuant to Section 3 hereof, or (2) a
Prospectus contained in the Exchange Offer Registration Statement filed
pursuant to Section 2 hereof is required to be delivered under the
Securities Act by any Participating Broker-Dealer who seeks to sell Exchange
Securities during the Applicable Period, make available for inspection by any
Initial Purchaser, any selling Holder of such Registrable Securities being sold
(with respect to a Registration Statement filed pursuant to Section 3
hereof), or each such Participating Broker-Dealer, as the case may be, any
underwriter participating in any such disposition of Registrable Securities, if
any, and any attorney, accountant or other agent retained by any such selling
Holder or each such Participating Broker-Dealer (with respect to any such
Registration Statement), as the case may be, or underwriter (any such Initial
Purchasers, Holders, Participating Broker-Dealers, underwriters, attorneys,
accountants or agents, collectively, the “Inspectors”), upon written
request, at the offices where normally kept, during reasonable business hours,
all pertinent financial and other records, pertinent corporate documents and
instruments of the Issuer and subsidiaries of the Issuer (collectively, the “Records”),
as shall be reasonably necessary to enable them to exercise any applicable due
diligence responsibilities, and cause the officers, directors and employees of
the Issuer and any of its subsidiaries to supply all information (“Information”)
reasonably requested by any such Inspector in connection with such due
diligence responsibilities. Each Inspector shall agree in writing that it will
keep the Records and Information confidential, to use the Information only for
due diligence purposes, to abstain from using the Information as the basis for
any market transactions in

 

14

 

Securities of the Issuer and
that it will not disclose any of the Records or Information that the Issuer
determines, in good faith, to be confidential and notifies the Inspectors in
writing are confidential unless (i) the disclosure of such Records or
Information is necessary to avoid or correct a misstatement or omission in such
Registration Statement or Prospectus, (ii) the release of such Records or
Information is ordered pursuant to a subpoena or other order from a court of
competent jurisdiction, (iii) disclosure of such Records or Information is
necessary or advisable, in the opinion of counsel for any Inspector, in
connection with any action, claim, suit or proceeding, directly or indirectly,
involving or potentially involving such Inspector and arising out of, based
upon, relating to, or involving this Agreement or the Purchase Agreement, or
any transactions contemplated hereby or thereby or arising hereunder or thereunder,
or (iv) the information in such Records or Information has been made
generally available to the public other than by an Inspector or an “affiliate”
(as defined in Rule 405) thereof; provided, however, that
prior notice shall be provided as soon as practicable to the Issuer of the
potential disclosure of any information by such Inspector pursuant to
clauses (ii) or (iii) of this sentence to permit the Issuer to obtain a
protective order (or waive the provisions of this paragraph (n)) and that
such Inspector shall take such actions as are reasonably necessary to protect
the confidentiality of such information (if practicable) to the extent such
action is otherwise not inconsistent with, an impairment of or in derogation of
the rights and interests of the Holder or any Inspector.

 

(o)                                 Provide an
indenture trustee for the Registrable Securities or the Exchange Securities, as
the case may be, and cause the Indenture or the trust indenture provided for in
Section 2(a) hereof, as the case may be, to be qualified under the TIA not
later than the effective date of the first Registration Statement relating to
the Registrable Securities; and in connection therewith, cooperate with the
trustee under any such indenture and the Holders of the Registrable Securities,
to effect such changes (if any) to such indenture as may be required for such
indenture to be so qualified in accordance with the terms of the TIA; and
execute, and use its commercially reasonable best efforts to cause such trustee
to execute, all documents as may be required to effect such changes, and all
other forms and documents required to be filed with the SEC to enable such
indenture to be so qualified in a timely manner.

 

(p)                                 Comply in all
material respects with all applicable rules and regulations of the SEC and make
generally available to its securityholders with regard to any applicable
Registration Statement, a consolidated earning statement satisfying the
provisions of Section 11(a) of the Securities Act and Rule 158
thereunder (or any similar rule promulgated under the Securities Act) no later
than 45 days after the end of any fiscal quarter (or 90 days after
the end of any 12-month period if such period is a fiscal year)
(i) commencing at the end of any fiscal quarter in which Registrable
Securities are sold to underwriters in a firm commitment or best efforts
underwritten offering and (ii) if not sold to underwriters in such an
offering, commencing on the first day of the first fiscal quarter of the
Issuer, after the effective date of a Registration Statement, which statements
shall cover said 12-month periods; provided that this requirement shall be
deemed satisfied by the Issuer complying with Section 4.02 of the Indenture.

 

(q)                                 Upon
consummation of the Exchange Offer or a Private Exchange, obtain an opinion of
counsel to the Issuer, in a form customary for underwritten transactions,
addressed to the Trustee for the benefit of all Holders of Registrable
Securities participating in the Exchange Offer or the Private Exchange, as the
case may be, that the Exchange Securities or Private Exchange Notes, as the
case may be, the related guarantees and the related indenture constitute legal,
valid and binding obligations of the Issuer, enforceable against the Issuer in
accordance with their respective terms, subject to customary exceptions and
qualifications. If the Exchange Offer or a Private Exchange is to be
consummated, upon

 

15

 

delivery of the Registrable
Securities by Holders to the Issuer (or to such other Person as directed by the
Issuer), in exchange for the Exchange Securities or the Private Exchange Notes
(and the related guarantees), as the case may be, the Issuer shall mark, or
cause to be marked, on such Registrable Securities that such Registrable
Securities are being cancelled in exchange for the Exchange Securities or the
Private Exchange Notes (and the related guarantees), as the case may be; in no
event shall such Registrable Securities be marked as paid or otherwise
satisfied.

 

(r)                                    Use reasonable
efforts to cooperate with each seller of Registrable Securities covered by any
Registration Statement and each underwriter, if any, participating in the
disposition of such Registrable Securities and their respective counsel in
connection with any filings required to be made with the National Association
of Securities Dealers, Inc. (the “NASD”).

 

(s)                                  Use its
respective reasonable best efforts to take all other steps reasonably necessary
to effect the registration of the Exchange Securities and/or Registrable
Securities covered by a Registration Statement contemplated hereby.

 

The
Issuer may require each seller of Registrable Securities as to which any
registration is being effected to furnish to the Issuer such information
regarding such seller and the distribution of such Registrable Securities as
the Issuer may, from time to time, reasonably request. The Issuer may exclude
from such registration the Registrable Securities of any seller so long as such
seller fails to furnish such information within a reasonable time after
receiving such request. Each seller as to which any Shelf Registration is being
effected agrees to furnish promptly to the Issuer all information required to
be disclosed in order to make the information previously furnished to the Issuer
by such seller not materially misleading.

 

If
any such Registration Statement refers to any Holder by name or otherwise as
the holder of any securities of the Issuer, then such Holder shall have the
right to require (i) the insertion therein of language, in form and
substance reasonably satisfactory to such Holder, to the effect that the
holding by such Holder of such securities is not to be construed as a
recommendation by such Holder of the investment quality of the securities
covered thereby and that such holding does not imply that such Holder will
assist in meeting any future financial requirements of the Issuer, or
(ii) in the event that such reference to such Holder by name or otherwise
is not required by the Securities Act or any similar federal statute then in
force, the deletion of the reference to such Holder in any amendment or
supplement to the Registration Statement filed or prepared subsequent to the
time that such reference ceases to be required.

 

Each
Holder of Registrable Securities and each Participating Broker-Dealer agrees by
its acquisition of such Registrable Securities or Exchange Securities to be
sold by such Participating Broker-Dealer, as the case may be, that, upon actual
receipt of any notice from the Issuer of the happening of any event of the kind
described in Section 5(c)(ii), 5(c)(iv), 5(c)(v), or 5(c)(vi) hereof, such
Holder will forthwith discontinue disposition of such Registrable Securities
covered by such Registration Statement or Prospectus or Exchange Securities to
be sold by such Holder or Participating Broker-Dealer, as the case may be,
until such Holder’s or Participating Broker-Dealer’s receipt of the copies of
the supplemented or amended Prospectus contemplated by Section 5(k)
hereof, or until it is advised in writing (the “Advice”) by the Issuer
that the use of the applicable Prospectus may be resumed, and has received
copies of any amendments or supplements thereto. In the event that the Issuer
shall give any such notice, each of the Applicable Period and the Effectiveness
Period shall be extended by the number of days during such

 

16

 

periods
from and including the date of the giving of such notice to and including the
date when each seller of Registrable Securities covered by such Registration
Statement or Exchange Securities to be sold by such Participating
Broker-Dealer, as the case may be, shall have received (x) the copies of
the supplemented or amended Prospectus contemplated by Section 5(k) hereof
or (y) the Advice.

 

6.                                       Registration
Expenses

 

All
fees and expenses incident to the performance of or compliance with this
Agreement by the Issuer of its obligations under Sections 2, 3, 5 and 8 shall
be borne by the Issuer, whether or not the Exchange Offer Registration
Statement or any Shelf Registration Statement is filed or becomes effective or
the Exchange Offer is consummated, including, without limitation, (i) all
registration and filing fees (including, without limitation, (A) fees with
respect to filings required to be made with the NASD in connection with an
underwritten offering and (B) fees and expenses of compliance with state
securities or Blue Sky laws (including, without limitation, reasonable fees and
disbursements of counsel in connection with Blue Sky qualifications of the
Registrable Securities or Exchange Securities and determination of the
eligibility of the Registrable Securities or Exchange Securities for investment
under the laws of such jurisdictions in the United States (x) where the holders
of Registrable Securities are located, in the case of the Exchange Securities,
or (y) as provided in Section 5(h) hereof, in the case of Registrable
Securities or Exchange Securities to be sold by a Participating Broker-Dealer
during the Applicable Period)), (ii) printing expenses, including, without
limitation, printing prospectuses if the printing of prospectuses is requested
by the managing underwriter or underwriters, if any, by the Holders of a
majority in aggregate principal amount of the Registrable Securities included
in any Registration Statement or in respect of Registrable Securities or
Exchange Securities to be sold by any Participating Broker-Dealer during the
Applicable Period, as the case may be, (iii) fees and expenses of the
Trustee, any exchange agent and their counsel, (iv) fees and disbursements
of counsel for the Issuer and, in the case of a Shelf Registration, reasonable
fees and disbursements of one special counsel for all of the sellers of
Registrable Securities selected by the Holder of a majority in aggregate
principal amount of Registrable Securities covered by such Shelf Registration
(which counsel shall be reasonably satisfactory to the Issuer) exclusive of any
counsel retained pursuant to Section 7 hereof), (v) fees and disbursements
of all independent certified public accountants referred to in Section 5(m)
hereof (including, without limitation, the expenses of any “cold comfort”
letters required by or incident to such performance), (vi) rating agency
fees, if any, and any fees associated with making the Registrable Securities or
Exchange Securities eligible for trading through The Depository Trust Company,
(vii) Securities Act liability insurance, if the Issuer desires such
insurance, (viii) fees and expenses of all other Persons retained by the
Issuer, (ix) internal expenses of the Issuer (including, without
limitation, all salaries and expenses of officers and employees of the Issuer
performing legal or accounting duties), (x) the expense of any annual
audit, (xi) any fees and expenses incurred in connection with the listing
of the securities to be registered on any securities exchange, and the
obtaining of a rating of the securities, in each case, if applicable and
(xii) the expenses relating to printing, word processing and distributing
all Registration Statements, underwriting agreements, indentures and any other
documents necessary in order to comply with this Agreement.

 

7.                                       Indemnification
and Contribution.

 

(a)                                  The Issuer and the Guarantors jointly and
severally agree, to indemnify and hold harmless each Holder of Registrable
Securities and each Participating Broker-Dealer selling Exchange Securities
during the Applicable Period, and each Person, if any, who controls such Person
or its affiliates

 

17

 

within
the meaning of Section 15 of the Act or Section 20 of the Exchange Act (each, a
“Participant”) against any losses, claims,
damages or liabilities, joint or several, to which any Participant may become
subject under the Securities Act, the Exchange Act or otherwise, insofar as any
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon:

 

(i)                  any
untrue statement or alleged untrue statement of any material fact contained in
any Registration Statement (or any amendment thereto) or Prospectus (as amended
or supplemented if the Issuer shall have furnished any amendments or
supplements thereto) or any preliminary prospectus; or

 

(ii)               the
omission or alleged omission to state, in any Registration Statement (or any
amendment thereto) or Prospectus (as amended or supplemented if the Issuer
shall have furnished any amendments or supplements thereto) or any preliminary
prospectus or any other document or any amendment or supplement thereto, a
material fact required to be stated therein or necessary to make the statements
therein not misleading,

 

except,
in each case, insofar as such losses, claims, damages or liabilities are
arising out of or based upon any untrue statement or omission or alleged untrue
statement or omission made in reliance upon and in conformity with any
information relating to any Initial Purchaser or any Holder furnished to the
Issuer in writing through the Initial Purchasers or any selling Holder
expressly for use therein;

 

and
agree (subject to the limitations set forth in the proviso to this sentence) to
reimburse, as incurred, the Participant for any reasonable legal or other
expenses incurred by the Participant in connection with investigating,
defending against or appearing as a third-party witness in connection with any
such loss, claim, damage, liability or action; provided, however,
neither the Issuer nor the Guarantors will be liable in any such case to the
extent that any such loss, claim, damage, or liability arises out of or is
based upon any untrue statement or alleged untrue statement or omission or
alleged omission made in any Registration Statement (or any amendment thereto)
or Prospectus (as amended or supplemented if the Issuer shall have furnished
any amendments or supplements thereto) or any preliminary prospectus or any
amendment or supplement thereto in reliance upon and in conformity with written
information relating to any Participant furnished to the Issuer by such
Participant specifically for use therein. The indemnity provided for in this
Section 7 will be in addition to any liability that the Issuer may
otherwise have to the indemnified parties. The Issuer and the Guarantors shall
not be liable under this Section 7 to any indemnified party regarding any
settlement or compromise or consent to the entry of any judgment with respect
to any pending or threatened claim, action, suit or proceeding in respect of
which indemnification or contribution may be sought hereunder (whether or not
the indemnified parties are actual or potential parties to such claim or
action) unless such settlement, compromise or consent is consented to by the
Issuer and the Guarantors, which consent shall not be unreasonably withheld.

 

(b)                                 Each Participant, severally and not jointly,
agrees to indemnify and hold harmless the Issuer, the Guarantors, their
respective directors (or equivalent), their respective officers who sign any
Registration Statement and each person, if any, who controls the Issuer within
the meaning of Section 15 of the Act or Section 20 of the Exchange Act
against any losses, claims, damages or liabilities to which the Issuer, the
Guarantors or any such director, officer or controlling person may become
subject under the Act, the Exchange Act or otherwise, insofar as such losses,
claims, damages or liabilities (or

 

18

 

actions
in respect thereof) arise out of or are based upon (i) any untrue
statement or alleged untrue statement of any material fact contained in any Registration
Statement or Prospectus, any amendment or supplement thereto, or any
preliminary prospectus, or (ii) the omission or the alleged omission to
state therein a material fact necessary to make the statements therein 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 concerning
such Participant, furnished to the Issuer by or on behalf of such Participant,
specifically for use therein; and subject to the limitation set forth
immediately preceding this clause, will reimburse, as incurred, any reasonable
legal or other expenses incurred by the Issuer, the Guarantors or any such director,
officer or controlling person in connection with investigating or defending
against or appearing as a third party witness in connection with any such loss,
claim, damage, liability or action in respect thereof. The indemnity provided
for in this Section 7 will be in addition to any liability that the
Participants may otherwise have to the indemnified parties. The Participants
shall not be liable under this Section 7 to any indemnified party regarding any
settlement or compromise or consent to the entry of any judgment with respect
to any pending or threatened claim, action, suit or proceeding in respect of
which indemnification or contribution may be sought hereunder (whether or not
the indemnified parties are actual or potential parties to such claim or
action) unless such settlement, compromise or consent is consented to by the
Participants, which consent shall not be unreasonably withheld. The Issuer and
the Guarantors shall not, without the prior written consent of such
Participant, effect any settlement or compromise of any pending or threatened
proceeding in respect of which such Participant is or could have been a party,
or indemnity could have been sought hereunder by such Participant, unless such
settlement (A) includes an unconditional written release of such
Participant, in form and substance reasonably satisfactory to such Participant,
from all liability on claims that are the subject matter of such proceeding and
(B) does not include any statement as to an admission of fault, culpability or failure
to act by or on behalf of such Participant.

 

(c)                                  Promptly after receipt by an indemnified
party under this Section 7 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 this Section 7, notify the indemnifying
party of the commencement thereof in writing; but the omission to so notify the
indemnifying party (i) will not relieve it from any liability under
paragraph (a) or (b) above unless and to the extent it did not otherwise learn
of such action and such failure results in the forfeiture by the indemnifying
party of substantial rights and defenses and (ii) will not, in any event,
relieve the indemnifying party from any obligations to any indemnified party
other than the indemnification obligation provided in paragraphs (a) and (b)
above. The indemnifying party shall be entitled to appoint counsel (including
local counsel) of the indemnifying party’s choice at the indemnifying party’s
expense to represent the indemnified party in any action for which
indemnification is sought (in which case the indemnifying party shall not
thereafter be responsible for the fees and expenses of any separate counsel,
other than local counsel if not appointed by the indemnifying party, retained
by the indemnified party or parties except as set forth below); provided,
however, that such counsel shall be reasonably satisfactory to the
indemnified party. Notwithstanding the indemnifying party’s election to appoint
counsel (including local counsel) to represent the indemnified party in an
action, the indemnified party shall have the right to employ separate counsel
(including local counsel), and the indemnifying party shall bear the reasonable
fees, costs and expenses of such separate counsel if (i) the use of
counsel chosen by the indemnifying party to represent the indemnified party
would present such counsel with a conflict of interest (based on the advice of
counsel to the indemnified person); (ii) such action includes both the
indemnified party and the indemnifying party and the indemnified party shall
have reasonably concluded (based on the advice of counsel to the indemnified person)
that there may be legal

 

19

 

defenses
available to it and/or other indemnified parties that are different from or
additional to those available to the indemnifying party; (iii) the
indemnifying party shall not have employed counsel reasonably satisfactory to
the indemnified party to represent the indemnified party within a reasonable
time after notice of the institution of such action; or (iv) the
indemnifying party shall authorize the indemnified party to employ separate
counsel at the expense of the indemnifying party. It is understood and agreed that
the indemnifying person shall not, in connection with any proceeding or
separate but related or substantially similar proceedings in the same
jurisdiction arising out of the same general allegations or circumstances, be
liable for the reasonable fees and expenses of more than one separate firm (in
addition to any local counsel) representing the indemnified parties under
paragraph (a) or paragraph (b) of this Section 7, as the case may be, who are
parties to such action or actions. Any such separate firm for any Participants
shall be designated in writing by Participants who sold a majority in interest
of the Registrable Securities and Exchange Securities sold by all such
Participants in the case of paragraph (a) of this Section 7 or the Issuer in
the case of paragraph (b) of this Section 7. In the event that any Participants
are indemnified persons collectively entitled, in connection with a proceeding
or separate but related or substantially similar proceedings in a single
jurisdiction, to the payment of fees and expenses of a single separate firm
under this Section 7(c), and any such Participants cannot agree to a
mutually acceptable separate firm to act as counsel thereto, then such separate
firm for all such Indemnified Persons shall be designated in writing by
Participants who sold a majority in interest of the Registrable Securities and
Exchange Securities sold by all such Participants. An indemnifying party will
not, without the prior written consent of the indemnified parties, settle or
compromise or consent to the entry of any judgment with respect to any pending
or threatened claim, action, suit or proceeding in respect of which
indemnification or contribution may be sought hereunder (whether or not the
indemnified parties are actual or potential parties to such claim or action)
unless such settlement, compromise or consent includes an unconditional release
of each indemnified party from all liability arising out of such claim, action,
suit or proceeding and does not include any statement as to, or any admission
of, fault, culpability or failure to act by or on behalf of any indemnified
party. All fees and expenses reimbursed pursuant to this paragraph (c) shall be
reimbursed as they are incurred.

 

(d)                                 After notice from the indemnifying party to
such indemnified party of its election so to assume the defense thereof and
approval by such indemnified party of counsel appointed to defend such action,
the indemnifying party will not be liable to such indemnified party under this
Section 7 for any legal or other expenses, other than reasonable costs of
investigation, subsequently incurred by such indemnified party in connection
with the defense thereof, unless (i) the indemnified party shall have
employed separate counsel in accordance with the third sentence of paragraph
(c) of this Section 7 or (ii) the indemnifying party has authorized in writing
the employment of counsel for the indemnified party at the expense of the
indemnifying party. After such notice from the indemnifying party to such
indemnified party, the indemnifying party will not be liable for the costs and
expenses of any settlement of such action effected by such indemnified party
without the prior written consent of the indemnifying party (which consent
shall not be unreasonably withheld), unless such indemnified party waived in
writing its rights under this Section 7, in which case the indemnified
party may effect such a settlement without such consent.

 

(e)                                  In circumstances in which the indemnity
agreement provided for in the preceding paragraphs of this Section 7 is
unavailable to, or insufficient to hold harmless, an indemnified party in
respect of any losses, claims, damages or liabilities (or actions in respect
thereof) (other than by virtue of the failure of an indemnified party to notify
the indemnifying party of its right to indemnification pursuant

 

20

 

to
paragraph (a) or (b) of this Section 7, where such failure materially
prejudices the indemnifying party (through the forfeiture of substantial rights
or defenses)), each indemnifying party, in order to provide for just and
equitable contribution, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or liabilities
(or actions in respect thereof) in such proportion as is appropriate to reflect
(i) the relative benefits received by the indemnifying party or parties on the
one hand and the indemnified party on the other from the offering of the
Securities or (ii) if the allocation provided by the foregoing clause (i) is
not permitted by applicable law, not only such relative benefits but also the
relative fault of the indemnifying party or parties on the one hand and the
indemnified party on the other in connection with the statements or omissions
or alleged statements or omissions that resulted in such losses, claims,
damages or liabilities (or actions in respect thereof). The relative benefits
received by the Issuer and the Guarantors on the one hand and such Participant
on the other shall be deemed to be in the same proportion that the total net
proceeds from the offering (before deducting expenses) of the Securities
received by the Issuer bear to the total discounts and commissions received by
such Participant in connection with the sale of the Securities (or if such
Participant did not receive discounts or commissions, the value or receiving
the Securities). The relative fault of the parties 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 Issuer on the one hand, or
the Participants on the other, the parties’ relative intent, knowledge, access
to information and opportunity to correct or prevent such statement or omission
or alleged statement or omission, and any other equitable considerations
appropriate in the circumstances. The parties agree that it would not be
equitable if the amount of such contribution were determined by pro rata or per
capita allocation or by any other method of allocation that does not take into
account the equitable considerations referred to in the first sentence of this
paragraph (e). Notwithstanding any other provision of this paragraph (e), no
Participant shall be obligated to make contributions hereunder that in the
aggregate exceed the total discounts, commissions and other compensation or net
proceeds on the sale of Securities received by such Participant in connection
with the sale of the Securities, less the aggregate amount of any damages that
such Participant has otherwise been required to pay by reason of the untrue or
alleged untrue statements or the omissions or alleged omissions to state a
material fact, and no person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to contribution
from any person who was not guilty of such fraudulent misrepresentation. For
purposes of this paragraph (d), each person, if any, who controls a Participant
within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act shall have the same rights to contribution as the Participants,
and each director of the Issuer and the Guarantors, each officer of the Issuer
and the Guarantors and each person, if any, who controls the Issuer and the
Guarantors within the meaning of Section 15 of the Act or Section 20
of the Exchange Act, shall have the same rights to contribution as the Issuer.

 

8.                                       Rules 144 and
144A

 

The
Issuer covenants and agrees that it will use reasonable best efforts to file
the reports required to be filed by it under the Securities Act and the
Exchange Act and the rules and regulations adopted by the SEC thereunder in a
timely manner in accordance with the requirements of the Securities Act and the
Exchange Act and, if at any time the Issuer is not required to file such
reports, the Issuer will, upon the request of any Holder or beneficial owner of
Registrable Securities, make available such information necessary to permit
sales pursuant to Rule 144A. The Issuer further covenants and agrees, for
so long as any Registrable Securities remain outstanding that it will take such
further action as any Holder of Registrable Securities may reasonably request,
all to the extent required from time to time to enable such

 

21

 

holder
to sell Registrable Securities without registration under the Securities Act
within the limitation of the exemptions provided by Rule 144(k) under the
Securities Act and Rule 144A unless the Issuer is then subject to Section
13 or 15(d) of the Exchange Act and reports filed thereunder satisfy the
information requirements of Rule 144A then in effect.

 

9.                                       Underwritten
Registrations

 

The
Issuer shall not be required to assist in an underwritten offering unless
requested by the Holders of a majority in aggregate principal amount of the
Registrable Securities. If any of the Registrable Securities covered by any
Shelf Registration are to be sold in an underwritten offering, the investment
banker or investment bankers and manager or managers that will manage the
offering will be selected by the Holders of a majority in aggregate principal
amount of such Registrable Securities included in such offering and shall be
reasonably acceptable to the Issuer.

 

No
Holder of Registrable Securities may participate in any underwritten
registration hereunder unless such Holder (a) agrees to sell such Holder’s
Registrable Securities on the basis provided in any underwriting arrangements
approved by the Persons entitled hereunder to approve such arrangements and
(b) completes and executes all questionnaires, powers of attorney,
indemnities, underwriting agreements and other documents required under the
terms of such underwriting arrangements.

 

10.                                 Miscellaneous

 

(a)                                  No Inconsistent Agreements. The Issuer has not as of the date hereof,
and the Issuer shall not, after the date of this Agreement, enter into any
agreement with respect to any of its securities that is inconsistent with the
rights granted to the Holders of Registrable Securities in this Agreement or
otherwise conflicts with the provisions hereof. The rights granted to the
Holders hereunder do not in any way conflict with and are not inconsistent with
the rights granted to the holders of the Issuer other issued and outstanding
securities under any such agreements. The Issuer will not enter into any
agreement (other than the Registration Rights Agreements dated as of the date
hereof in respect of the Senior Subordinated Notes and the Subordinated
Discount Notes) with respect to any of its securities which will grant to any
Person piggy-back registration rights with respect to any Registration
Statement.

 

(b)                                 Adjustments Affecting Registrable Securities. The Issuer shall not, directly or
indirectly, take any action with respect to the Registrable Securities as a
class that would adversely affect the ability of the Holders of Registrable
Securities to include such Registrable Securities in a registration undertaken
pursuant to this Agreement.

 

(c)                                  Amendments and Waivers. The provisions of this Agreement may not be
amended, modified or supplemented, and waivers or consents to departures from
the provisions hereof may not be given, otherwise than with the prior written
consent of (I) the Issuer, and (II) (A) the Holders of not less
than a majority in aggregate principal amount of the then outstanding
Registrable Securities and (B) in circumstances that would adversely
affect the Participating Broker-Dealers, the Participating Broker-Dealers
holding not less than a majority in aggregate principal amount of the Exchange
Notes held by all Participating Broker-Dealers; provided, however,
that Section 7 and this Section 10(c) may not be amended, modified or
supplemented without the prior written consent of each Holder and each
Participating Broker-Dealer (including any person who was a Holder or
Participating Broker-Dealer of Registrable

 

22

 

Securities
or Exchange Securities, as the case may be, disposed of pursuant to any
Registration Statement) affected by any such amendment, modification or
supplement. Notwithstanding the foregoing, a waiver or consent to depart from
the provisions hereof with respect to a matter that relates exclusively to the
rights of Holders of Registrable Securities whose securities are being sold
pursuant to a Registration Statement and that does not directly or indirectly
affect, impair, limit or compromise the rights of other Holders of Registrable
Securities may be given by Holders of at least a majority in aggregate
principal amount of the Registrable Securities being sold pursuant to such
Registration Statement.

 

(d)                                 Notices. All notices and other communications (including, without limitation,
any notices or other communications to the Trustee) provided for or permitted
hereunder shall be made in writing by hand-delivery, registered first-class
mail, next-day air courier or facsimile:

 

(i)                                     if to a Holder of the Registrable Securities
or any Participating Broker-Dealer, at the most current address of such Holder
or Participating Broker-Dealer, as the case may be, set forth on the records of
the registrar under the Indenture, with a copy in like manner to the Initial
Purchasers as follows:

 

	
   

  	
   

  	
  Deutsche Bank Securities Inc.

  
	
   

  	
   

  	
  60 Wall Street

  
	
   

  	
   

  	
  New York, New York 10005

  
	
   

  	
   

  	
  Facsimile No.: (646) 324-7554

  
	
   

  	
   

  	
  Attention: Corporate Finance Department

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  with a copy to:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Cahill Gordon & Reindel LLP

  
	
   

  	
   

  	
  80 Pine Street

  
	
   

  	
   

  	
  New York, New York 10005

  
	
   

  	
   

  	
  Facsimile No.: (212) 269-5420

  
	
   

  	
   

  	
  Attention: William B. Gannett, Esq.

  
	
   

  	
   

  	
   

  
	
   

  	
  (ii)

  	
  if
  to the Initial Purchasers, at the address specified in Section 10(d)(i);

  
	
   

  	
   

  	
   

  
	
   

  	
  (iii)

  	
  if to the Issuer, at the address as follows:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Michaels Stores, Inc.

  
	
   

  	
   

  	
  8000 Bent Branch Drive

  
	
   

  	
   

  	
  Irving, Texas 75063

  
	
   

  	
   

  	
  Facsimile No.: (972) 409-1965

  
	
   

  	
   

  	
  Attention: General Counsel

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  with a copy to:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Ropes & Gray LLP

  
	
   

  	
   

  	
  One International Place

  

 

23

 

	
   

  	
   

  	
  Boston MA 02110

  
	
   

  	
   

  	
  Facsimile No.: (617) 951-7050

  
	
   

  	
   

  	
  Attention: Byung W. Choi, Esq.

  

 

All
such notices and communications shall be deemed to have been duly given:  when delivered by hand, if personally
delivered; five Business Days after being deposited in the mail, postage
prepaid, if mailed; one Business Day after being timely delivered to a next-day
air courier; and upon written confirmation, if sent by facsimile.

 

Copies
of all such notices, demands or other communications shall be concurrently
delivered by the Person giving the same to the Trustee at the address and in
the manner specified in such Indenture.

 

(e)                                  Successors and Assigns. This Agreement shall inure to the benefit
of and be binding upon the successors and assigns of each of the parties
hereto, the Holders and the Participating Broker-Dealers; provided, however,
that nothing herein shall be deemed to permit any assignment, transfer or other
disposition of Registrable Securities in violation of the terms of the Purchase
Agreement or the Indenture.

 

(f)                                    Counterparts. This Agreement may be executed in any
number of counterparts and by the parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement.

 

(g)                                 Headings. The headings in this Agreement are for convenience of reference only
and shall not limit or otherwise affect the meaning hereof.

 

(h)                                 Governing Law. THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK,
AS APPLIED TO CONTRACTS MADE AND PERFORMED ENTIRELY WITHIN THE STATE OF NEW
YORK. EACH OF THE PARTIES HEREBY WAIVE ANY RIGHT TO TRIAL BY JURY IN ANY
ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS
AGREEMENT.

 

(i)                                     Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction to
be invalid, illegal, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions set forth herein shall remain in full
force and effect and shall in no way be affected, impaired or invalidated, and
the parties hereto shall use their best efforts to find and employ an
alternative means to achieve the same or substantially the same result as that
contemplated by such term, provision, covenant or restriction. It is hereby
stipulated and declared to be the intention of the parties that they would have
executed the remaining terms, provisions, covenants and restrictions without
including any of such that may be hereafter declared invalid, illegal, void or
unenforceable.

 

(j)                                     Notes Held by the Issuer or Its Affiliates. Whenever the consent or approval of Holders
of a specified percentage of Registrable Securities is required hereunder,
Registrable Securities held by the Issuer or its affiliates (as such term is
defined in Rule 405 under the Securities Act) shall not

 

24

 

be
counted in determining whether such consent or approval was given by the
Holders of such required percentage.

 

(k)                                  Third-Party Beneficiaries. Holders of Registrable Securities and
Participating Broker-Dealers are intended third-party beneficiaries of this
Agreement, and this Agreement may be enforced by such Persons.

 

(l)                                     Entire Agreement. This Agreement, together with the Purchase
Agreement and the Indenture, is intended by the parties as a final and
exclusive statement of the agreement and understanding of the parties hereto in
respect of the subject matter contained herein and therein and any and all
prior oral or written agreements, representations, or warranties, contracts,
understandings, correspondence, conversations and memoranda between the Holders
on the one hand and the Issuer on the other, or between or among any agents,
representatives, parents, subsidiaries, affiliates, predecessors in interest or
successors in interest with respect to the subject matter hereof and thereof
are merged herein and replaced hereby.

 

25

 

IN
WITNESS WHEREOF, the parties have executed this Agreement as of the date first
written above.

 

 

	
   

  	
  MICHAELS
  STORES, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Lisa K. Klinger

  	
   

  
	
   

  	
   

  	
  Name:
  Lisa K. Klinger

  
	
   

  	
   

  	
  Title:
  Vice President – Treasurer
          and Investor Relations

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  AARON
  BROTHERS, INC.

  
	
   

  	
   

  	
  MICHAELS
  FINANCE COMPANY, INC.

  
	
   

  	
   

  	
  MICHAELS
  STORES PROCUREMENT

  
	
   

  	
   

  	
  COMPANY, INC.

  
	
   

  	
   

  	
  MICHAELS
  OF CANADA, ULC

  
	
   

  	
   

  	
  MICHAELS
  STORES CARD SERVICES, LLC

  
	
   

  	
   

  	
  ARTISTREE,
  INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Lisa K. Klinger

  	
   

  
	
   

  	
   

  	
  Name:
  Lisa K. Klinger

  
	
   

  	
   

  	
  Title:
  Vice President and Treasurer

  

 

 

Signature Page to Registration Rights Agreement

 

 

	
  The
  foregoing Agreement is hereby

  	
   

  
	
  confirmed
  and accepted as of the

  	
   

  
	
  date
  first above written.

  	
   

  
	
   

  	
   

  
	
  DEUTSCHE BANK SECURITIES INC.

  	
   

  
	
  J.P. MORGAN SECURITIES INC.

  	
   

  
	
  BANC OF AMERICA SECURITIES LLC

  	
   

  
	
  CREDIT
  SUISSE SECURITIES (USA) LLC

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:
   Deutsche Bank Securities Inc.

  	
   

  
	
   

  	
   

  
	
   

  
	
  By:

  	
  /s/
  Edwin Roland

  	
   

  
	
   

  	
  Name:
  Edwin Roland

  	
   

  
	
   

  	
  Title:
  Managing Director

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/
  Stephen R. Lapidus

  	
   

  
	
   

  	
  Name:
  Stephen R. Lapidus

  	
   

  
	
   

  	
  Title:
  Director

  	
   

  
				

 

For
itself and the other several Initial Purchasers.

 

 

Signature Page to Registration Rights
Agreement

 

 

SCHEDULE I

 

THE GUARANTORS

 

AARON
BROTHERS, INC.

MICHAELS
FINANCE COMPANY, INC.

MICHAELS
STORES PROCUREMENT COMPANY, INC.

MICHAELS
OF CANADA, ULC

MICHAELS
STORES CARD SERVICES, LLC

ARTISTREE,
INC.

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