Document:

<PAGE>
EXHIBIT 10.4

                     CUSTOMER INTERACTION SERVICE AGREEMENT

         THIS CUSTOMER INTERACTION SERVICE AGREEMENT is entered into as of the
"start date" contained in Item 2 of Appendix A, attached hereto, by and between
Customer Direct, L.L.C., with an address of 714 Spirit 40 Park Dr, Suite 100,
Chesterfield Missouri 63005 ("CD,LLC") and SIERRA MEDICINALS, INC. ("Client"),
with an address of 2029 CENTURY PARK EAST SUITE 1112 LOS ANGELES, CA 90067
whereby CD,LLC shall provide order taking services, customer services and/or
telephone answering services to Client, such services to be performed by the
employees or third-party contractors of CD,LLC. All such persons shall be
referred to herein as "Contractor," and such term shall include the plural.

         1. TERM; DUTIES; COMPENSATION.

                  (a) The term of this Agreement shall begin as specified
pursuant to Item 2 on Appendix A, attached hereto and continue until terminated
by either party, as set forth hereafter (the "Service Period"). This Agreement
may be terminated with or without cause, upon sixty (60) days prior written
notice. This Agreement may also be terminated by either party for cause (as
hereinafter defined), effective upon posting of written notice by registered or
certified mail to the terminated party. For purposes of this Agreement, cause is
defined to mean (i) a material breach of this Agreement which remains uncured
for a period of ten (10) days after written notice thereof, (ii) fraud, gross
negligence or illegal or intentional misconduct by a party, or (iii) failure to
pay amounts due to CD,LLC hereunder. Upon such termination, Client will promptly
pay any amounts due to CD,LLC, which amounts shall include fees incurred up to
and including the actual date of termination.

                  (b) (i) CD,LLC's scope of services are specified in Item 1 of
Appendix A, attached hereto. CD,LLC shall use its best efforts and skills in
performing its duties under this Agreement; provided that CD,LLC shall not
undertake any illegal or illegitimate activities on behalf of Client, which
activity shall be determined in CD,LLC's sole discretion. By signing this
Agreement, Client represents and warrants that its services comply with all
applicable local, state, and Federal laws and regulations.

                           (ii) Client shall be responsible for advising CD,LLC
of any changes to be made involving any information necessary to properly handle
the calls received by CD,LLC on behalf of Client.

                           (iii) CD,LLC reserves the right to maintain the
confidentiality of its Contractors.

                  (c) Client shall pay to CD,LLC the monthly sum contained in
Item 4 of Appendix A, attached hereto for the services rendered hereunder.

         2. PAYMENT TERMS. All payments owed by Client to CD,LLC shall be paid
directly to CD,LLC within fourteen (14) days after mailing of invoices. Client
agrees to pay a bookkeeping charge of one percent (1%) per month of the
outstanding balance on past due invoices or $15 per month, whichever is greater.

         3. CONFIDENTIALITY. CD,LLC shall, and shall take reasonable steps to
cause its Contractors to keep all messages, orders and information transmitted
through any calls it receives on behalf of Client, confidential.

         4. LIMITATIONS OF LIABILITY. Not withstanding anything contained herein
CD,LLC's non-performance hereunder shall be excused if caused by equipment
failure, acts of god, strikes, equipment or facilities shortages or other cause
beyond CD,LLC control. In addition the liability, if any, of CD, LLC for any
mistake, omission, interruption, delay, error, defect or other failure in its
operation or service furnished, or in transmission of information over the
facilities used in furnishing service, shall in no event exceed the amount of
CD, LLC prorated monthly charge to client for service during the period so
affected. In no event shall CD, LLC be liable to Client and/or its customers,
users or any other person for any amount arising out of or connected with this

<PAGE>

agreement (except as specifically set forth in the preceding sentence) or for
any cost, delay, incidental, general or consequential damages, including but not
limited to lost profits, property damage, personal injury or death. Client
agrees to indemnify and hold CD, LLC, its officers, employees, agents and
affiliates harmless from and against any and all acts, actions, claims or
demands made or brought by Client's customers, former customers, or any third
party arising out of or in connection with the activities contemplated by this
agreement, even if occasioned by the sole negligence of CD, LLC, and against all
legal fees, costs and expenses incurred by CD, LLC in defending same, including
legal fees and costs incurred to establish the applicability of this paragraph.

         5. FORUM SELECTION. This Agreement shall be governed by the laws of
Missouri (USA) and Client agrees to personal jurisdiction of federal and state
courts in Missouri (USA) and that service of process may be made upon Client at
the address set forth above or any successor address in any manner permitted by
the laws of the State of Missouri (USA).

         6. LOCATION OF CONTRACT FORMATION. Both Client and CD,LLC agree that
this Agreement is entered into and made between the parties in Chesterfield, MO
(USA).

         7. INDEPENDENT CONTRACTORS: Both Client and CD,LLC agree that CD,LLC
will act as an independent contractor in performing its duties under this
contract. CD,LLC shall have no power or authority to bind Client contractually
or to enter into any commitments for Client for any purpose whatsoever, unless
mutually agreed to in writing between the parties.

         8. MISCELLANEOUS.

                  (a) This Agreement may not be assigned by Client without the
written consent of CD,LLC. This Agreement shall be binding on the successors and
assigns of the parties.

                  (b) This Agreement shall be governed and construed and
enforced in accordance with and subject to the laws of the State of Missouri,
without respect to conflicts of laws principles. In any dispute arising under
this Agreement, the prevailing party will be entitled to recover from the other
party reasonable attorneys' fees and costs of suit, including those incurred
preparing for any such dispute.

                  (c) All notices or other communications provided for by this
Agreement shall be made in writing and shall be deemed properly delivered when
(i) delivered personally, or (ii) by the mailing of such notice by overnight,
registered or certified mail, postage prepaid, to the parties at the addresses
first set forth in this Agreement (or to such other address as one party
designates to the other in writing).

                  (d) This Agreement contains the entire agreement and
understanding between the parties as to the matters covered herein and
supersedes any prior or contemporaneous written or oral agreements as to any
such matter. Parol evidence shall be inadmissible to show an agreement between
the parties as to any term or condition that is contrary to or addition to the
terms and conditions contained herein. This Agreement may be amended only by a
writing signed by CD,LLC and a duly authorized representative of Client. No
waiver of any term, provision, or condition of this Agreement shall be deemed to
be, or shall constitute, a waiver of any other term, provision, or condition
herein, whether or not similar. No such waiver shall be binding unless in
writing and signed by the waiving party.

                  (e) No supplement, modification, or amendment of any term,
provision, or condition of this Agreement shall be binding or enforceable unless
evidenced in writing executed by the parties hereto.

<PAGE>

                  (f) If any provision of this Agreement is declared invalid by
any tribunal, then such provisions shall be deemed automatically adjusted to the
minimum extent necessary to conform to the requirements for validity as declared
at such time and, as so adjusted, shall be deemed a provision of this Agreement,
as though originally included herein. In the event that the provision
invalidated is of such a nature that it cannot be so adjusted, the provision
shall be deemed deleted from this Agreement as though such provision had never
been included herein. In either case, the remaining provisions of this Agreement
shall remain in effect.

                  (g) Unless changed by notice to CD,LLC, Client's designated
contact person for all communications in connection with this Agreement is
indicated in Item 5 of Appendix A. CD, LLC's contact person shall be the account
representative.

         IN WITNESS WHEREOF, the parties have executed this document (including
Appendix A, which is hereby incorporated by reference) as of the date first
above written.

               "CD,LLC"                                     "CLIENT"

CUSTOMER DIRECT, L.L.C.                        SIERRA MEDICINALS, INC.

                                               By:______________________________
By: _______________________________________
    Richard Becerra, V.P.- Sales & Marketing   Title:___________________________
                                               Date:___/___/___

<PAGE>

                                   APPENDIX A

         This Appendix A is hereby incorporated by reference into that certain
Telephone Service Agreement, by and between CD,LLC and Client.

1. SCOPE OF SERVICES:
     CUSTOMER INTERACTION SERVICES
     800 SERVICES
     UP TO 2 HOURS OF INITIAL PROGRAMMING  (ACCOUNT SET UP)

2. START DATE OF THE ASSIGNMENT:

3. SET UP FEES ACCOUNT                                 $500
4. MONTHLY PAYMENTS FOR SERVICES RENDERED PURSUANT TO THIS AGREEMENT:
     Base Rate (Includes 450 Minutes)                  $ 495
     Additional Rate Minute                            $ .85
     Additional Programming/Account Maintenance        $50 /hour (as requested)

5. CONTACT PERSON:  NAME: __________________________________

                    COMPANY: _______________________________

ORGANIZATION TYPE:        CORPORATION       PARTNERSHIP      SOLE PROPRIETORSHIP

                    TAX ID #:_______________

                    ADDRESS: ___________________________

                             ___________________________

                    PHONE:   (_______)___________________

                    FAX:     (_______)___________________

                    E-MAIL:  _________________@_________________________

TO SET UP SERVICE PLEASE RETURN CUSTOMER INTERACTION SERVICE AGREEMENT,
INFORMATION FORM, FIRST MONTH BASE RATE, LAST MONTH BASE RATE AND SET UP FEES
(TOTAL $1490)

PAYMENT BY CREDIT CARD:
     NAME AS IT APPEARS ON CARD: _______________________________

     CARD TYPE:                  VISA              MASTERCARD         AMEX

     CARD NUMBER:                _______________________________

     EXPIRATION DATE:            _______________________________

                           By signature below I hereby authorize Customer Direct
                           to Charge the Credit Card above for all account
                           initiating fees and monthly fees.

     SIGNATURE:            X____________________________________

<PAGE>

                   CUSTOMER DIRECT EXTENDED CREDIT APPLICATION
                   -------------------------------------------

The Undersigned Company is applying for credit with Customer Direct, and agrees
to abide by the standard terms and conditions of the service agreement as
executed.

  Company Name  _______________________________________________________

  DBA (if different)  _________________________________________________

  Contact Person   ____________________________________________________

  Address: ____________________________________________________________

  Phone  (  ) __________________        Fax (  ) ______________________

  Federal Tax ID or Social Security No.________________________________

  Type of Business_____________________________________________________

  No. of Employees _______

  Date Business Established ___________________________________________

Are you a (check one) :
__  Corporation

         State of Incorporation  ______________________________________

         Names, Titles and Addresses of Your Three Chief Corporate Officers
         _________________________________________________________
         _________________________________________________________
         _________________________________________________________

__  Partnership
         Names and Addresses of the Partners
         _________________________________________________________
         _________________________________________________________
         _________________________________________________________

__  LLC
         Names and Addresses of the Managing Member(s)
         _________________________________________________________
         _________________________________________________________
         _________________________________________________________

__  Sole Proprietorship

Are you sales tax exempt? Yes _______  No _______

TRADE REFERENCES

  Name: _______________________________________________
  Address: ____________________________________________
  Phone (  ) __________________

  Name: _______________________________________________
  Address: ____________________________________________
  Phone: (  )__________________

  Name: _______________________________________________
  Address: ____________________________________________
  Phone (  ) __________________

<PAGE>

BANK REFERENCES

  Account #: ________________________  Phone (  ) __________________
  Contact Person: __________________________________________
  Name of Bank: ____________________________________________
  Address: _________________________________________________

  Account #: ________________________  Phone (  ) __________________
  Contact Person: __________________________________________
  Name of Bank: ____________________________________________
  Address: _________________________________________________

I REPRESENT THAT THE ABOVE INFORMATION IS TRUE AND IS GIVEN TO INDUCE CUSTOMER
DIRECT TO EXTEND CREDIT TO THE APPLICANT. MY COMPANY AND I AUTHORIZE CUSTOMER
DIRECT TO MAKE SUCH CREDIT INVESTIGATION AS CUSTOMER DIRECT SEES FIT, INCLUDING
CONTACTING THE ABOVE TRADE REFERENCES AND BANKS AND OBTAINING CREDIT REPORTS. MY
COMPANY AND I AUTHORIZE ALL TRADE REFERENCES, BANKS AND CREDIT REPORTING
AGENCIES TO DISCLOSE TO CUSTOMER DIRECT ANY AND ALL INFORMATION CONCERNING THE
FINANCIAL AND CREDIT HISTORY OF MY COMPANY AND MYSELF.

I have read the terms and conditions stated above and on the executed "Service
Agreement" and agree to abide by all of those terms and conditions.

  Authorized Signature:  _________________________________________

  Printed Name: __________________________________________________

  Title: ______________________________________

  Date:_____________QuickLinks
 -- Click here to rapidly navigate through this document

 

CORNELL COMPANIES, INC.  

THE SUBSIDIARY GUARANTORS PARTIES HERETO,  

 AND  

JPMORGAN CHASE BANK,
  AS TRUSTEE  

 103/4% Senior Notes due 2012  

 INDENTURE  

Dated as of June 24, 2004  

 

  

 
 

Table of Contents    
    

	 
	 	 
	 	Page

	ARTICLE I

DEFINITIONS AND INCORPORATION BY REFERENCE
	
 SECTION 1.1.	
 	

Definitions.	
 	

1
	SECTION 1.2.	 	Other Definitions.	 	22
	SECTION 1.3.	 	Incorporation by Reference of Trust Indenture Act	 	23
	SECTION 1.4.	 	Rules of Construction	 	23
	
ARTICLE II

THE SECURITIES
	
 SECTION 2.1.	
 	

Form, Dating and Terms.	
 	

24
	SECTION 2.2.	 	Execution and Authentication	 	31
	SECTION 2.3.	 	Registrar and Paying Agent	 	32
	SECTION 2.4.	 	Paying Agent to Hold Money in Trust	 	33
	SECTION 2.5.	 	Securityholder Lists	 	33
	SECTION 2.6.	 	Transfer and Exchange.	 	33
	SECTION 2.7.	 	Form of Certificate to be Delivered in Connection with Transfers to Institutional Accredited Investors.	 	36
	SECTION 2.8.	 	Form of Certificate to be Delivered in Connection with Transfers Pursuant to Regulation S.	 	37
	SECTION 2.9.	 	Mutilated, Destroyed, Lost or Stolen Securities	 	38
	SECTION 2.10.	 	Outstanding Securities	 	39
	SECTION 2.11.	 	Temporary Securities	 	39
	SECTION 2.12.	 	Cancellation	 	39
	SECTION 2.13.	 	Payment of Interest; Defaulted Interest	 	40
	SECTION 2.14.	 	Computation of Interest	 	41
	SECTION 2.15.	 	CUSIP, Common Code and ISIN Numbers	 	41
	 	 	 	 	 

ii

 

	
ARTICLE III

COVENANTS
	
SECTION 3.1.	
 	

Payment of Securities	
 	

41
	SECTION 3.2.	 	Limitation on Indebtedness	 	41
	SECTION 3.3.	 	Limitation on Restricted Payments	 	45
	SECTION 3.4.	 	Limitation on Restrictions on Distributions from Restricted Subsidiaries	 	48
	SECTION 3.5.	 	Limitation on Sales of Assets and Subsidiary Stock	 	50
	SECTION 3.6.	 	Limitation on Liens	 	52
	SECTION 3.7.	 	Limitation on Sale/Leaseback Transactions	 	52
	SECTION 3.8.	 	Limitation on Affiliate Transactions	 	53
	SECTION 3.9.	 	Limitation on Sale of Capital Stock of Restricted Subsidiaries	 	54
	SECTION 3.10.	 	Change of Control	 	54
	SECTION 3.11.	 	SEC Reports	 	55
	SECTION 3.12.	 	Future Subsidiary Guarantors	 	56
	SECTION 3.13.	 	Maintenance of Office or Agency	 	56
	SECTION 3.14.	 	Corporate Existence	 	56
	SECTION 3.15.	 	Payment of Taxes and Other Claims	 	56
	SECTION 3.16.	 	Payments for Consent	 	57
	SECTION 3.17.	 	Compliance Certificate	 	57
	SECTION 3.18.	 	Further Instruments and Acts	 	57
	SECTION 3.19.	 	Limitation on Lines of Business	 	57
	SECTION 3.20.	 	Statement by Officers as to Default	 	57
	
ARTICLE IV

SUCCESSOR COMPANY
	
SECTION 4.1.	
 	

Merger and Consolidation	
 	

57
	
ARTICLE V

REDEMPTION OF SECURITIES
	
SECTION 5.1.	
 	

Redemption	
 	

58
	SECTION 5.2.	 	Applicability of Article	 	58
	SECTION 5.3.	 	Election to Redeem; Notice to Trustee	 	58
	SECTION 5.4.	 	Selection by Trustee of Securities to Be Redeemed	 	59
	SECTION 5.5.	 	Notice of Redemption	 	59
	SECTION 5.6.	 	Deposit of Redemption Price	 	60
	SECTION 5.7.	 	Securities Payable on Redemption Date	 	60
	SECTION 5.8.	 	Securities Redeemed in Part	 	60
	 	 	 	 	 

iii

 

	
ARTICLE VI

DEFAULTS AND REMEDIES
	
SECTION 6.1.	
 	

Events of Default	
 	

60
	SECTION 6.2.	 	Acceleration	 	63
	SECTION 6.3.	 	Other Remedies	 	63
	SECTION 6.4.	 	Waiver of Past Defaults	 	64
	SECTION 6.5.	 	Control by Majority	 	64
	SECTION 6.6.	 	Limitation on Suits	 	64
	SECTION 6.7.	 	Rights of Holders to Receive Payment	 	64
	SECTION 6.8.	 	Collection Suit by Trustee	 	65
	SECTION 6.9.	 	Trustee May File Proofs of Claim	 	65
	SECTION 6.10.	 	Priorities	 	65
	SECTION 6.11.	 	Undertaking for Costs	 	65
	
ARTICLE VII

TRUSTEE
	
SECTION 7.1.	
 	

Duties of Trustee	
 	

65
	SECTION 7.2.	 	Rights of Trustee	 	66
	SECTION 7.3.	 	Individual Rights of Trustee	 	68
	SECTION 7.4.	 	Trustee's Disclaimer	 	68
	SECTION 7.5.	 	Notice of Defaults	 	68
	SECTION 7.6.	 	Reports by Trustee to Holders	 	68
	SECTION 7.7.	 	Compensation and Indemnity	 	68
	SECTION 7.8.	 	Replacement of Trustee	 	69
	SECTION 7.9.	 	Successor Trustee by Merger	 	70
	SECTION 7.10.	 	Eligibility; Disqualification	 	70
	SECTION 7.11.	 	Preferential Collection of Claims Against the Company	 	70
	SECTION 7.12.	 	Trustee's Application for Instruction from the Company	 	70
	SECTION 7.13.	 	Paying Agents	 	71
	
ARTICLE VIII

DISCHARGE OF INDENTURE; DEFEASANCE
	
SECTION 8.1.	
 	

Discharge of Liability on Securities; Defeasance	
 	

71
	SECTION 8.2.	 	Conditions to Defeasance	 	72
	SECTION 8.3.	 	Application of Trust Money	 	73
	SECTION 8.4.	 	Repayment to the Company	 	73
	SECTION 8.5.	 	Indemnity for U.S. Government Obligations	 	73
	SECTION 8.6.	 	Reinstatement	 	73
	
ARTICLE IX

AMENDMENTS
	
SECTION 9.1.	
 	

Without Consent of Holders	
 	

74
	SECTION 9.2.	 	With Consent of Holders	 	74
	SECTION 9.3.	 	Compliance with Trust Indenture Act	 	75
	SECTION 9.4.	 	Revocation and Effect of Consents and Waivers	 	75
	SECTION 9.5.	 	Notation on or Exchange of Securities	 	76
	SECTION 9.6.	 	Trustee To Sign Amendments	 	76
	 	 	 	 	 

iv

 

	
ARTICLE X

SECURITIES GUARANTEE
	
SECTION 10.1.	
 	

Subsidiary Guarantee	
 	

76
	SECTION 10.2.	 	Limitation on Liability; Termination, Release and Discharge.	 	78
	SECTION 10.3.	 	Right of Contribution	 	79
	SECTION 10.4.	 	No Subrogation	 	79
	
ARTICLE XI

MISCELLANEOUS
	
SECTION 11.1.	
 	

Trust Indenture Act Controls	
 	

79
	SECTION 11.2.	 	Notices	 	79
	SECTION 11.3.	 	Communication by Holders with other Holders	 	80
	SECTION 11.4.	 	Certificate and Opinion as to Conditions Precedent	 	80
	SECTION 11.5.	 	Statements Required in Certificate or Opinion	 	80
	SECTION 11.6.	 	When Securities Disregarded	 	81
	SECTION 11.7.	 	Rules by Trustee, Paying Agent and Registrar	 	81
	SECTION 11.8.	 	Legal Holidays	 	81
	SECTION 11.9.	 	GOVERNING LAW	 	81
	SECTION 11.10.	 	No Recourse Against Others	 	81
	SECTION 11.11.	 	Successors	 	81
	SECTION 11.12.	 	Multiple Originals	 	81
	SECTION 11.13.	 	Qualification of Indenture	 	82
	SECTION 11.14.	 	Table of Contents; Headings	 	82
	

ANNEX 3.4	
 	

Documents Containing Permitted Encumbrances	
 	

 
	EXHIBIT A	 	Form of the Series A Note	 	 
	EXHIBIT B	 	Form of the Series B Note	 	 
	EXHIBIT C	 	Form of Indenture Supplement to Add Subsidiary Guarantors	 	 

v

 
 
 

CROSS-REFERENCE TABLE    
    

	TIA

Section
	 	Indenture

Section

	310(a)(1)	 	7.10
	(a)(2)	 	7.10
	(a)(3)	 	N.A.
	(a)(4)	 	N.A.
	(a)(5)	 	7.10
	(b)	 	7.8; 7.10
	(c)	 	N.A.
	311(a)	 	7.11
	(b)	 	7.11
	(c)	 	N.A.
	312(a)	 	2.5
	(b)	 	11.3
	(c)	 	11.3
	313(a)	 	7.6
	(b)(1)	 	N.A.
	(b)(2)	 	7.6
	(c)	 	7.6
	(d)	 	7.6
	314(a)	 	3.11; 3.17; 11.5
	(b)	 	N.A.
	(c)(1)	 	11.4
	(c)(2)	 	11.4
	(c)(3)	 	N.A.
	(d)	 	N.A.
	(e)	 	11.5
	315(a)	 	7.1
	(b)	 	7.5; 11.2
	(c)	 	7.1
	(d)	 	7.1
	(e)	 	6.11
	316(a)(last sentence)	 	11.6
	(a)(1)(A)	 	6.5
	(a)(1)(B)	 	6.4
	(a)(2)	 	N.A.
	(b)	 	6.7
	(c)	 	6.5
	317(a)(1)	 	6.8
	(a)(2)	 	6.9
	(b)	 	2.4
	318(a)	 	11.1

N.A.
means Not Applicable. 

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

vi

        INDENTURE dated as of June 24, 2004, among CORNELL COMPANIES, INC., a Delaware corporation (the "Company"), the SUBSIDIARY
GUARANTORS (as defined herein) and JPMORGAN CHASE BANK, a banking corporation organized under the laws of the State of New York (the "Trustee"), as
Trustee. 

        For
and in consideration of the premises and the purchase of the Securities by the Holders thereof, each party hereto covenants and agrees as follows for the benefit of the other parties
and for the equal and ratable benefit of all Holders of (i) the Company's 103/4% Senior Notes, Series A, due 2012, issued on the date hereof and the guarantees thereof by
certain of the Company's subsidiaries (the "Initial Securities"), (ii) if and when issued, an unlimited principal amount of additional
103/4% Senior Notes, Series A, due 2012 in a non-registered offering or 103/4% Senior Notes, Series B, due 2012 in a registered offering of the
Company, and the guarantees thereof by certain of the Company's subsidiaries, that may be offered from time to time subsequent to the Issue Date (the "Additional
Securities") and (iii) if and when issued, the Company's 103/4% Senior Notes, Series B, due 2012 and the guarantees thereof by certain of the
Company's subsidiaries that may be issued from time to time in exchange for Initial Securities or any Additional Securities in an offer registered under the Securities Act as provided in a
Registration Rights Agreement (as hereinafter defined, the "Exchange Securities," and together with the Initial Securities and Additional Securities,
the "Securities"). 

 
 

ARTICLE I    
    
    DEFINITIONS AND INCORPORATION BY REFERENCE    
    

        SECTION
1.1.    Definitions.    

        "Acquired Indebtedness" means Indebtedness (i) of a Person or any of its Subsidiaries existing at the time such Person becomes a
Restricted Subsidiary or (ii) assumed in connection with the acquisition of assets from such Person, in each case whether or not Incurred by such Person in connection with, or in anticipation
or contemplation of, such Person becoming a Restricted Subsidiary or such acquisition. Acquired Indebtedness shall be deemed to have been Incurred, with respect to clause (i) of the preceding
sentence, on the date such Person becomes a Restricted Subsidiary and, with respect to clause (ii) of the preceding sentence, on the date of consummation of such acquisition of assets. 

        "Additional Assets" means: 

	(1)
	any
property, plant or equipment, including improvements thereon, to be used by the Company or a Restricted Subsidiary in a Related Business;

	(2)
	the
Capital Stock of a Person that becomes a Restricted Subsidiary as a result of the acquisition of such Capital Stock by the Company or a Restricted Subsidiary; or

	(3)
	Capital
Stock constituting a minority interest in any Person that at such time is a Restricted Subsidiary; 

provided, however, that, in the case of clauses (2) and (3), such Restricted Subsidiary is primarily engaged in a Related Business. 

        "Additional Securities" has the meaning ascribed to it in the second introductory paragraph of this Indenture. 

        "Affiliate" of any specified Person means any other Person, directly or indirectly, controlling or controlled by or under direct or
indirect common control with such specified Person. For the purposes of this definition, "control" when used with respect to any Person means the power to direct the management and policies of such
Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing;  provided that beneficial ownership of 10% or more of the Voting Stock of a Person shall be deemed to be control.
 

 

        "Asset Disposition" means any direct or indirect sale, lease (other than an operating lease entered into in the ordinary course of
business), transfer, issuance or other disposition, or a series of related sales, leases, transfers, issuances or dispositions that are part of a common plan, of shares of Capital Stock of a
Subsidiary (other than directors' qualifying shares), property or other assets (each referred to for the purposes of this definition as a "disposition") by the Company or any of its Restricted
Subsidiaries, including any disposition by means of a merger, consolidation or similar transaction. 

        Notwithstanding
the preceding, the following items shall not be deemed to be Asset Dispositions: 

        (1)   a
disposition by a Restricted Subsidiary to the Company or by the Company or a Restricted Subsidiary to a Wholly-Owned Subsidiary;  provided, that in the case of a sale by a Restricted Subsidiary to
another Restricted Subsidiary, the Company directly or indirectly owns an equal or
greater percentage of the Common Stock of the transferee than of the transferor; 

        (2)   the
sale of Cash Equivalents in the ordinary course of business; 

        (3)   a
disposition of inventory in the ordinary course of business; 

        (4)   a
disposition of obsolete or worn out equipment or equipment that is no longer useful in the conduct of the business of the Company and its Restricted Subsidiaries and
that is disposed of in each case in the ordinary course of business; 

        (5)   transactions
permitted pursuant to Section 4.1; 

        (6)   an
issuance of Capital Stock by a Restricted Subsidiary to the Company or to a Wholly-Owned Subsidiary; 

        (7)   for
purposes of Section 3.5 only, the making of a Permitted Investment or a disposition subject to  Section 3.3; 

        (8)   an
Asset Swap effected in compliance with Section 3.5; 

        (9)   dispositions
of assets in a single transaction or series of related transactions with an aggregate fair market value in any calendar year of less than
$2.5 million (with unused amounts in any calendar year
being carried over to the next succeeding calendar year subject to a maximum of $5.0 million in such next succeeding fiscal year); 

        (10) dispositions
in connection with Permitted Liens; 

        (11) dispositions
of receivables in connection with the compromise, settlement or collection thereof in the ordinary course of business or in bankruptcy or similar
proceedings and exclusive of factoring or similar arrangements; 

        (12) the
licensing or sublicensing of intellectual property or other general intangibles and licenses, leases or subleases of other property in the ordinary course of
business which do not materially interfere with the business of the Company and its Restricted Subsidiaries; and 

        (13) foreclosure
on assets. 

        "Asset Swap" means concurrent purchase and sale or exchange of Related Business Assets between the Company or any of its Restricted
Subsidiaries and another Person; provided that any cash received must be applied in accordance with  Section 3.5. 

        "Attributable Indebtedness" in respect of a Sale/Leaseback Transaction means, as at the time of determination, the present value
(discounted at the interest rate equal to the rate of interest implicit in such transaction, determined in accordance with GAAP; provided, that if such
interest rate cannot be determined in accordance with GAAP, the present value shall be discounted at the interest rate that is borne by the Securities, compounded semi-annually) of the
total obligations of the lessee for rental 

2

 

payments
during the remaining term of the lease included in such Sale/Leaseback Transaction (including any period for which such lease has been extended). 

        "Average Life" means, as of the date of determination, with respect to any Indebtedness or Preferred Stock, the quotient obtained by
dividing (1) the sum of the products of the numbers of years from the date of determination to the dates of each successive scheduled principal payment of such Indebtedness or redemption or
similar payment with respect to such Preferred Stock multiplied by the amount of such payment by (2) the sum of all such payments. 

        "Bankruptcy Law" means Title 11 of the United States Code or any similar federal or state law for the relief of debtors. 

        "Board of Directors" means, as to any Person, the board of directors or managers, as applicable, of such Person or any duly authorized
committee thereof (or, if such Person is a limited partnership, the board of directors or managers, as applicable, of the general partner). 

        "Board Resolution" means a copy of a resolution certified by the Secretary or an Assistant Secretary of a Person to have been duly adopted
by the Board of Directors of such Person and to be in full force and effect on the date of such certification, and delivered to the Trustee. 

        "Business Day" means each day that is not a Saturday, Sunday or other day on which banking institutions in New York, New York or Houston,
Texas are authorized or required by law to close. 

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

        "Capitalized Lease Obligations" means an obligation that is required to be classified and accounted for as a capitalized lease for
financial reporting purposes in accordance with GAAP, and the amount of Indebtedness represented by such obligation will be the capitalized amount of such obligation at the time any determination
thereof is to be made as determined in accordance with GAAP, and the Stated Maturity thereof will be the date of the last payment of rent or any other amount due under such lease prior to the first
date such lease may be terminated without penalty. 

        "Cash Equivalents" means 

        (1)   securities
issued or directly and fully guaranteed or insured by the United States Government or any agency or instrumentality of the United States
(provided that the full faith and credit of the United States is pledged in support thereof), having maturities of not more than one year from the date
of acquisition; 

        (2)   marketable
general obligations issued by any state of the United States of America or any political subdivision of any such state or any public instrumentality thereof
maturing within one year from the date of acquisition thereof (provided that the full faith and credit of the United States is pledged in support
thereof) and, at the time of acquisition, having a credit rating of "A" or better from either Standard & Poor's Ratings Services or Moody's Investors Service, Inc.; 

        (3)   certificates
of deposit, time deposits, eurodollar time deposits, overnight bank deposits or bankers' acceptances having maturities of not more than one year from the
date of acquisition thereof issued by any commercial bank the long-term debt of which is rated at the time of acquisition thereof at least "A" or the equivalent thereof by
Standard & Poor's Ratings Services, or "A" or the equivalent thereof by Moody's Investors Service, Inc., and having combined capital and surplus in excess of $500 million; 

        (4)   repurchase
obligations with a term of not more than seven days for underlying securities of the types described in clauses (1), (2) and (3) entered into
with any bank meeting the qualifications specified in clause (3) above; 

3

 

        (5)   commercial
paper rated at the time of acquisition thereof at least "A-2" or the equivalent thereof by Standard & Poor's Ratings Services or
"P-2" or the equivalent thereof by Moody's Investors Service, Inc., or carrying an equivalent rating by a nationally recognized rating agency, if both of the two named rating
agencies cease publishing ratings of investments, and in any case maturing within one year after the date of acquisition thereof; and 

        (6)   interests
in any investment company or money market fund which invests 95% or more of its assets in instruments of the type specified in clauses (1) through
(5) above. 

        "Change of Control" means: 

        (1)   any
"person" or "group" of related persons (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act) is or becomes the beneficial owner (as defined in
Rules 13d-3 and 13d-5 under the Exchange Act, except that such person or group shall be deemed to have "beneficial ownership" of all shares that any such person or group
has the right to acquire, whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of more than 35% of the total voting power of the Voting Stock of
the Company (or its successor by merger, consolidation or purchase of all or substantially all of its assets) (for the purposes of this clause, such person or group shall be deemed to beneficially own
any Voting Stock of the Company held by a parent entity, if such person or group "beneficially owns" (as defined above), directly or indirectly, more than 35% of the voting power of the Voting Stock
of such parent entity); 

        (2)   the
first day on which a majority of the members of the Board of Directors of the Company are not Continuing Directors; 

        (3)   the
sale, lease, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or a series of related transactions, of all or
substantially all of the assets of the Company and its Restricted Subsidiaries taken as a whole to any "person" (as such term is used in Sections 13(d) and 14(d) of the Exchange Act); or 

        (4)   the
adoption by the stockholders of the Company of a plan or proposal for the liquidation or dissolution of the Company. 

        "Clearstream" means Clearstream Banking, société anonyme, or any successor securities clearing agency. 

        "Code" means the Internal Revenue Code of 1986, as amended. 

        "Common Stock" means with respect to any Person, any and all shares, interest or other participations in, and other equivalents (however
designated and whether voting or nonvoting) of such Person's common stock whether or not outstanding on the Issue Date, and includes, without limitation, all series and classes of such common stock. 

        "Company" means Cornell Companies, Inc. or its successors and assigns. 

        "Consolidated Coverage Ratio" means as of any date of determination, with respect to any Person, the ratio of (x) the aggregate
amount of Consolidated EBITDA of such Person for the period of the most recent four consecutive fiscal quarters ending prior to the date of such determination for which financial statements are in
existence to (y) Consolidated Interest Expense of such Person for such four fiscal quarters, provided, however, that: 

        (1)   if
the Company or any Restricted Subsidiary: 

        (a)   has
Incurred any Indebtedness since the beginning of such period that remains outstanding on such date of determination or if the transaction giving rise to the need to
calculate the Consolidated Coverage Ratio is an Incurrence of Indebtedness, Consolidated 

4

 

EBITDA
and Consolidated Interest Expense for such period will be calculated after giving effect on a pro forma basis to such Indebtedness as if such Indebtedness had been Incurred on the first day of
such period (except that in making such computation, the amount of Indebtedness under any revolving credit facility outstanding on the date of such calculation will be deemed to be (i) the
average daily balance of such Indebtedness during such four fiscal quarters or such shorter period for which such facility was outstanding or (ii) if such facility was created after the end of
such four fiscal quarters, the average daily balance of such Indebtedness during the period from the date of creation of such facility to the date of such calculation) and the discharge of any other
Indebtedness repaid, repurchased, defeased or otherwise discharged with the proceeds of such new Indebtedness as if such discharge had occurred on the first day of such period; or 

        (b)   has
repaid, repurchased, defeased or otherwise discharged any Indebtedness since the beginning of the period that is no longer outstanding on such date of determination
or if the transaction giving rise to the need to calculate the Consolidated Coverage Ratio involves a discharge of Indebtedness (in each case other than Indebtedness Incurred under any revolving
credit facility unless such Indebtedness has been permanently repaid and the related commitment terminated), Consolidated EBITDA and Consolidated Interest Expense for such period will be calculated
after giving effect on a pro forma basis to such discharge of such Indebtedness, including with the proceeds of such new Indebtedness, as if such discharge had occurred on the first day of such
period; 

        (2)   if
since the beginning of such period the Company or any Restricted Subsidiary will have made any Asset Disposition, including by way of Sale/Leaseback Transaction, or
disposed of any company, division, operating unit, segment, business, group of related assets or line of business or if the transaction giving rise to the need to calculate the Consolidated Coverage
Ratio is such an Asset Disposition: 

        (a)   the
Consolidated EBITDA for such period will be reduced by an amount equal to the Consolidated EBITDA (if positive) directly attributable to the assets which are the
subject of such Asset Disposition for such period or increased by an amount equal to the Consolidated EBITDA (if negative) directly attributable thereto for such period; and 

        (b)   Consolidated
Interest Expense for such period will be reduced by an amount equal to the Consolidated Interest Expense directly attributable to any Indebtedness of the
Company or any Restricted Subsidiary repaid, repurchased, defeased or otherwise discharged with respect to the Company and its continuing Restricted Subsidiaries in connection with such Asset
Disposition for such period (or, if the Capital Stock of any Restricted Subsidiary is sold, the Consolidated Interest Expense for such period directly attributable to the Indebtedness of such
Restricted Subsidiary to the extent the
Company and its continuing Restricted Subsidiaries are no longer liable for such Indebtedness after such sale); 

        (3)   if
since the beginning of such period the Company or any Restricted Subsidiary (by merger or otherwise) will have made an Investment in any Restricted Subsidiary (or any
Person which becomes a Restricted Subsidiary or is merged with or into the Company) or an acquisition of assets, including any acquisition of assets occurring in connection with a transaction causing
a calculation to be made hereunder, which constitutes all or substantially all of a company, division, operating unit, segment, business, group of related assets or line of business, Consolidated
EBITDA and Consolidated Interest Expense for such period will be calculated after giving pro forma effect thereto (including the Incurrence of any Indebtedness) as if such Investment or acquisition
occurred on the first day of such period; and 

        (4)   if
since the beginning of such period any Person (that subsequently became a Restricted Subsidiary or was merged with or into the Company or any Restricted Subsidiary
since the 

5

 

beginning
of such period) will have Incurred any Indebtedness or discharged any Indebtedness, made any Asset Disposition or any Investment or acquisition of assets that would have required an
adjustment pursuant to clause (2) or (3) above if made by the Company or a Restricted Subsidiary during such period, Consolidated EBITDA and Consolidated Interest Expense for such period
will be calculated after giving pro forma effect thereto as if such transaction occurred on the first day of such period. 

For
purposes of this definition, whenever pro forma effect is to be given to any calculation under this definition, the pro forma calculations will be determined in good faith by a responsible
financial or accounting officer of the Company (including pro forma expense and cost reductions calculated on a basis consistent with Regulation S-X under the Securities Act). If
any Indebtedness bears a floating rate of interest and is being given pro forma effect, the interest expense on such Indebtedness will be calculated as if the rate in effect on the date of
determination had been the applicable rate for the entire period (taking into account any Interest Rate Agreement applicable to such Indebtedness if such Interest Rate Agreement has a remaining term
in excess of 12 months). If any Indebtedness that is being given pro forma effect bears an interest rate at the option of the Company, the interest rate shall be calculated by applying such
optional rate chosen by the Company. 

        "Consolidated EBITDA" means, with respect to any Person, for any period, without duplication, Consolidated Net Income for such period,
plus the following to the extent deducted in calculating such Consolidated Net Income: 

        (1)   Consolidated
Interest Expense; 

        (2)   Consolidated
Income Taxes; 

        (3)   consolidated
depreciation expense; 

        (4)   consolidated
amortization expense or impairment charges recorded in connection with the application of Financial Accounting Standard No. 142 "Goodwill and Other
Intangibles"; and 

        (5)   other
non-cash charges reducing Consolidated Net Income (excluding any such non-cash charge to the extent it represents an accrual of or reserve
for cash charges in any future period or amortization of a prepaid cash expense that was paid in a prior period not included in the calculation); 

        minus

        (6)   non-cash
items increasing such Consolidated Net Income for such period, other than the accrual of revenue in the ordinary course of business. 

Notwithstanding
the preceding sentence, clauses (2) through (5) relating to amounts of a Restricted Subsidiary of a Person will be added to Consolidated Net Income to compute
Consolidated EBITDA of such Person only to the extent (and in the same proportion) that the net income (loss) of such Restricted Subsidiary was included in calculating the Consolidated Net Income of
such Person and, to the extent the amounts set forth in clauses (2) through (5) are in excess of those necessary to offset a net loss of such Restricted Subsidiary or if such Restricted
Subsidiary has net income for such period included in Consolidated Net Income, only if a corresponding amount would be permitted at the date of determination to be dividended to the Company by such
Restricted Subsidiary without prior approval (that has not been obtained), pursuant to the terms of its charter and all agreements, instruments, judgments, decrees, orders, statutes, rules and
governmental regulations applicable to that Restricted Subsidiary or its stockholders. 

6

   
        "Consolidated Income Taxes" means, with respect to any Person for any period, taxes imposed upon such Person or other payments required to
be made by such Person by any governmental authority which taxes or other payments are calculated by reference to the income or profits of such Person or such Person and its Restricted Subsidiaries
(to the extent such income or profits were included in computing Consolidated Net Income for such period), regardless of whether such taxes or payments are required to be remitted to any governmental
authority. 

        "Consolidated Interest Expense" means, for any period, the total interest expense of the Company and its consolidated Restricted
Subsidiaries, whether paid or accrued, plus, to the extent not included in such interest expense: 

        (1)   interest
expense attributable to Capitalized Lease Obligations and the interest portion of rent expense associated with Attributable Indebtedness or any Synthetic Lease
Obligations in respect of the relevant lease giving rise thereto, determined as if such lease were a capitalized lease in accordance with GAAP, and the interest component of any deferred payment
obligations; provided, that this clause (1) shall not apply to any rent expense in respect of the Company's obligations to Municipal Corrections
Finance under the Master Lease Agreement, dated as of August 14, 2001, between the Company and Municipal Corrections Finance; 

        (2)   amortization
of debt discount and debt issuance cost (provided that any amortization of bond premium will be credited to
reduce Consolidated Interest Expense unless, pursuant to GAAP, such amortization of bond premium has otherwise reduced Consolidated Interest Expense); 

        (3)   non-cash
interest expense; 

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

        (5)   an
amount equal to the interest expense of Indebtedness of Municipal Corrections Finance; 

        (6)   the
interest expense on Indebtedness of another Person that is Guaranteed by such Person or one of its Restricted Subsidiaries or secured by a Lien on assets of such
Person or one of its Restricted Subsidiaries; 

        (7)   costs
associated with Hedging Obligations (including amortization of fees) provided, however, that if Hedging Obligations
result in net benefits rather than costs, such benefits shall be credited to reduce Consolidated Interest Expense unless, pursuant to GAAP, such net benefits are otherwise reflected in Consolidated
Net Income; 

        (8)   the
consolidated interest expense of such Person and its Restricted Subsidiaries that was capitalized during such period; 

        (9)   the
product of (a) all dividends paid or payable, in cash, Cash Equivalents or Indebtedness or accrued during such period on any series of Disqualified Stock of
such Person or on Preferred Stock of its Restricted Subsidiaries payable to a party other than the Company or a Wholly-Owned Subsidiary, times (b) a fraction, the numerator of which is one and
the denominator of which is one minus the then current combined federal, state, provincial and local statutory tax rate of such Person, expressed as a decimal, in each case, on a consolidated basis
and in accordance with GAAP; 

        (10) Receivables
Fees; and 

        (11) the
cash contributions to any employee stock ownership plan or similar trust to the extent such contributions are used by such plan or trust to pay interest or fees to
any Person (other than the Company and its Restricted Subsidiaries) in connection with Indebtedness Incurred by such plan or trust. 

7

 

For
the purpose of calculating the Consolidated Coverage Ratio in connection with the Incurrence of any Indebtedness described in the final paragraph of the definition of "Indebtedness," the
calculation of Consolidated Interest Expense shall include all interest expense (including any amounts described in clauses (1) through (11) above) relating to any Indebtedness of the
Company or any Restricted Subsidiary described in the final paragraph of the definition of "Indebtedness." 

        For
purposes of the foregoing, total interest expense will be determined (i) after giving effect to any net payments made or received by the Company and its Subsidiaries with
respect to Interest Rate Agreements and (ii) exclusive of amounts classified as other comprehensive income in the balance sheet
of the Company. Notwithstanding anything to the contrary contained herein, commissions, discounts, yield and other fees and charges Incurred in connection with any transaction pursuant to which the
Company or its Restricted Subsidiaries may sell, convey or otherwise transfer or grant a security interest in any accounts receivable or related assets shall be included in Consolidated Interest
Expense. 

        "Consolidated Net Income" means, for any period, the net income (loss) of the Company, its consolidated Restricted Subsidiaries and
Municipal Corrections Finance, determined in accordance with GAAP; provided, however, that there will not be included in such Consolidated Net Income: 

        (1)   any
net income (loss) of any Person if such Person is not a Restricted Subsidiary (other than Municipal Corrections Finance), except that: 

        (a)   subject
to the limitations contained in clauses (3), (4) and (5) below, the Company's equity in the net income of any such Person for such period will be
included in such Consolidated Net Income up to the aggregate amount of cash actually distributed by such Person during such period to the Company or a Restricted Subsidiary as a dividend or other
distribution (subject, in the case of a dividend or other distribution to a Restricted Subsidiary, to the limitations contained in clause (2) below); and 

        (b)   the
Company's equity in a net loss of any such Person (other than an Unrestricted Subsidiary) for such period will be included in determining such Consolidated Net
Income to the extent such loss has been funded with cash from the Company or a Restricted Subsidiary; 

        (2)   any
net income (but not loss) of any Restricted Subsidiary if such Subsidiary is subject to restrictions, directly or indirectly, on the payment of dividends or the
making of distributions by such Restricted Subsidiary, directly or indirectly, to the Company, except that: 

        (a)   subject
to the limitations contained in clauses (3), (4) and (5) below, the Company's equity in the net income of any such Restricted Subsidiary for such
period will be included in such Consolidated Net Income up to the aggregate amount of cash that could have been distributed by such Restricted Subsidiary during such period to the Company or another
Restricted Subsidiary as a dividend (subject, in the case of a dividend to another Restricted Subsidiary, to the limitation contained in this clause); and 

        (b)   the
Company's equity in a net loss of any such Restricted Subsidiary for such period will be included in determining such Consolidated Net Income; 

        (3)   any
gain (loss) realized upon the sale or other disposition of any property, plant or equipment of the Company or its consolidated Restricted Subsidiaries (including
pursuant to any Sale/Leaseback
Transaction) which is not sold or otherwise disposed of in the ordinary course of business and any gain (loss) realized upon the sale or other disposition of any Capital Stock of any Person; 

        (4)   any
extraordinary gain or loss; and 

        (5)   the
cumulative effect of a change in accounting principles. 

8

 

        "Continuing Directors" means, as of any date of determination, any member of the Board of Directors of the Company who: (1) was a
member of such Board of Directors on the date of this Indenture; or (2) was nominated for election or elected to such Board of Directors with the approval of a majority of the Continuing
Directors who were members of such Board at the time of such nomination or election. 

        "Credit Facility" means, with respect to the Company or any Subsidiary Guarantor, one or more credit facilities (including, without
limitation, the Senior Secured Credit Agreement or commercial paper facilities with banks or other institutional lenders providing for revolving credit loans, term loans, receivables financing
(including through the sale of receivables to such lenders or to special purpose entities formed to borrow from such lenders against such receivables) or letters of credit, in each case, as amended,
restated, modified, renewed, refunded, replaced or refinanced in whole or in part from time to time (and whether or not with the original administrative agent and lenders or another administrative
agent or agents or other lenders and whether provided under the original Senior Secured Credit Agreement or any other credit or other agreement or indenture)). 

        "Currency Agreement" means in respect of a Person any foreign exchange contract, currency swap agreement, futures contract, option
contract or other similar agreement as to which such Person is a party or a beneficiary. 

        "Custodian" means any receiver, trustee, assignee, liquidator, custodian or similar official under any Bankruptcy Law. 

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

        "Definitive Securities" means certificated Securities. 

        "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 exchangeable) or upon the happening of any event: 

        (1)   matures
or is mandatorily redeemable pursuant to a sinking fund obligation or otherwise; 

        (2)   is
convertible or exchangeable for Indebtedness or Disqualified Stock (excluding Capital Stock which is convertible or exchangeable solely at the option of the Company
or a Restricted Subsidiary); or 

        (3)   is
redeemable at the option of the holder of the Capital Stock in whole or in part, 

in
each case on or prior to the date that is 91 days after the earlier of the date (a) of the Stated Maturity of the Securities or (b) on which there are no Securities
outstanding, provided that only the portion of Capital Stock which so matures or is mandatorily redeemable, is so convertible or exchangeable or is so
redeemable at the option of the holder thereof prior to such date will be deemed to be Disqualified Stock; provided,  further that any Capital Stock that
would constitute Disqualified Stock solely because the holders thereof have the right to require the Company to
repurchase such Capital Stock upon the occurrence of a change of control or asset sale (each defined in a substantially identical manner to the corresponding definitions in this Indenture) shall not
constitute Disqualified Stock if the terms of such Capital Stock (and all such securities into which it is convertible or for which it is ratable or exchangeable) provide that the Company may not
repurchase or redeem any such Capital Stock (and all such securities into which it is convertible or for which it is ratable or exchangeable) pursuant to such provision prior to compliance by the
Company with the provisions of this Indenture described under Section 3.5 and Section 3.10
and such repurchase or redemption complies with Section 3.3. 

9

 

        "DTC" means The Depository Trust Company, its nominees and their respective successors and assigns, or such other depository institution
hereinafter appointed by the Company. 

        "Euroclear" means Euroclear Bank S.A./N.V. or any successor securities clearing agency. 

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

        "Exchange Offer" shall have the meaning set forth in the Registration Rights Agreement. 

        "Exchange Securities" has the meaning ascribed to it in the second introductory paragraph of this Indenture. 

        "Fiscal Year" means the fiscal year of the Company ending on December 31 of each year. 

        "Foreign Subsidiary" means any Restricted Subsidiary that is not organized under the laws of the United States of America or any state
thereof or the District of Columbia. 

        "GAAP" means generally accepted accounting principles in the United States of America as in effect as of the date of this Indenture,
including those set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the
Financial Accounting Standards Board or in such other statements by such other entity as approved by a significant segment of the accounting profession. All ratios and computations based on GAAP
contained in this Indenture will be computed in conformity with GAAP. 

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

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

        (2)   entered
into for purposes of assuring in any other manner the obligee of such Indebtedness of the payment thereof or to protect such obligee against loss in respect
thereof (in whole or in part); provided, however, that the term "Guarantee" will not include endorsements for collection or deposit in the ordinary
course of business. The term "Guarantee" used as a verb has a corresponding meaning. 

        "Guarantor Subordinated Obligation" means, with respect to a Subsidiary Guarantor, any Indebtedness of such Subsidiary Guarantor (whether
outstanding on the Issue Date or thereafter Incurred) which is expressly subordinate in right of payment to the obligations of such Subsidiary Guarantor
under its Subsidiary Guarantee pursuant to a written agreement. 

        "Hedging Obligations" of any Person means the obligations of such Person pursuant to any Interest Rate Agreement or Currency Agreement. 

        "Holder" or "Securityholder" means a Person in whose name a Security is registered on the
Registrar's books. 

        "IAI" means an institutional "accredited investor" as described in Rule 501(a)(1), (2), (3) or (7) under the
Securities Act. 

        "Incur" means issue, create, assume, Guarantee, incur or otherwise become liable for; provided,
however, that any Indebtedness or Capital Stock of a Person existing at the time such Person becomes a Restricted Subsidiary (whether by merger, consolidation, acquisition or
otherwise) will be deemed to be 

10

 

Incurred
by such Restricted Subsidiary at the time it becomes a Restricted Subsidiary; and the terms "Incurred" and "Incurrence" have meanings correlative to the foregoing. 

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

        (1)   the
principal of and premium (if any) in respect of indebtedness of such Person for borrowed money; 

        (2)   the
principal of and premium (if any) in respect of obligations of such Person evidenced by bonds, debentures, notes or other similar instruments; 

        (3)   the
principal component of all obligations of such Person in respect of letters of credit, bankers' acceptances or other similar instruments (including reimbursement
obligations with respect, in either case, thereto except to the extent such reimbursement obligation relates to a trade payable and such obligation is satisfied within 30 days of Incurrence); 

        (4)   the
principal component of all obligations of such Person to pay the deferred and unpaid purchase price of property (except trade payables), which purchase price is due
more than six months after the date of placing such property in service or taking delivery and title thereto; 

        (5)   Capitalized
Lease Obligations, Synthetic Lease Obligations and all Attributable Indebtedness of such Person; 

        (6)   the
principal component or liquidation preference of all obligations of such Person with respect to the redemption, repayment or other repurchase of any Disqualified
Stock or, with respect to any Subsidiary that is not a Subsidiary Guarantor, any Preferred Stock; 

        (7)   the
principal component of all Indebtedness of other Persons secured by a Lien on any asset of such Person, whether or not such Indebtedness is assumed by such Person;  provided, however, that the amount of
such Indebtedness will be the lesser of (a) the fair market value of such asset at such date of
determination and (b) the amount of such Indebtedness of such other Persons; 

        (8)   the
principal component of Indebtedness of other Persons to the extent Guaranteed by such Person; and 

        (9)   to
the extent not otherwise included in this definition, net obligations of such Person under Currency Agreements and Interest Rate Agreements (the amount of any such
obligations to be equal at any time to the termination value of such agreement or arrangement giving rise to such obligation that would be payable by such Person at such time). 

The
amount of Indebtedness of any Person at any date will be the outstanding balance at such date of all unconditional obligations as described above and the maximum liability, upon the occurrence of
the contingency giving rise to the obligation, of any contingent obligations at such date. 

        In
addition, "Indebtedness" of any Person shall include Indebtedness described in the preceding paragraph that would not appear as a liability on the balance sheet of such Person if: 

        (1)   such
Indebtedness is the obligation of a partnership or joint venture to which the Company or any Restricted Subsidiary is a party that is not a Restricted Subsidiary (a
"Joint Venture"); 

        (2)   such
Person or a Restricted Subsidiary of such Person is a general partner of the Joint Venture (a "General Partner");
and 

11

  

        (3)   there
is recourse, by contract or operation of law, with respect to the payment of such Indebtedness to property or assets of such Person or a Restricted Subsidiary of
such Person; and then such Indebtedness shall be included in an amount not to exceed: 

        (a)   the
lesser of (i) the net assets of the General Partner and (ii) the amount of such obligations to the extent that there is recourse, by contract or
operation of law, to the property or assets of such Person or a Restricted Subsidiary of such Person; or 

        (b)   if
less than the amount determined pursuant to clause (a) immediately above, the actual amount of such Indebtedness that is recourse to such Person or a
Restricted Subsidiary of such Person, if the Indebtedness is evidenced by a writing and is for a determinable amount. 

        "Indenture" means this Indenture as amended or supplemented from time to time. 

        "Initial Purchasers" means, together, J.P. Morgan Securities Inc., Comerica Securities, Inc., Piper Jaffray & Co. and
Southtrust Securities, Inc., with respect to the Initial Securities. 

        "Initial Securities" has the meaning ascribed to it in the second introductory paragraph of this Indenture. 

        "Interest Rate Agreement" means with respect to any Person any interest rate protection agreement, interest rate future agreement,
interest rate option agreement, interest rate swap agreement, interest rate cap agreement, interest rate collar agreement, interest rate hedge agreement or other similar agreement or arrangement as to
which such Person is party or a beneficiary. 

        "Investment" means, with respect to any Person, all investments by such Person in other Persons (including Affiliates) in the form of any
direct or indirect advance, loan (other than advances or extensions of credit to customers in the ordinary course of business) or other extensions of credit (including by way of Guarantee or similar
arrangement, but excluding any debt or extension of credit represented by a bank deposit other than a time deposit) or capital contribution to (by means of any transfer of cash or other property to
others or any payment for property or services for the account or use of others), or any purchase or acquisition of Capital Stock, Indebtedness or other similar
instruments issued by, such Person and all other items that are or would be classified as investments on a balance sheet prepared in accordance with GAAP;  provided that none of the following will be
deemed to be an Investment: 

        (1)   Hedging
Obligations entered into in the ordinary course of business and in compliance with this Indenture; 

        (2)   endorsements
of negotiable instruments and documents in the ordinary course of business; and 

        (3)   an
acquisition of assets, Capital Stock or other securities by the Company or a Subsidiary for consideration to the extent such consideration consists of Common Stock of
the Company. 

        For
purposes of Section 3.3: 

        (1)   "Investment"
will include the portion (proportionate to the Company's equity interest in a Restricted Subsidiary to be designated as an Unrestricted Subsidiary) of the
fair market value of the net assets of such Restricted Subsidiary at the time that such Restricted Subsidiary is designated an Unrestricted Subsidiary; provided,
however, that upon a redesignation of such Subsidiary as a Restricted Subsidiary, the Company will be deemed to continue to have a permanent "Investment" in an Unrestricted
Subsidiary in an amount (if positive) equal to (a) the Company's "Investment" in such Subsidiary at the time of such redesignation less (b) the portion (proportionate to the Company's
equity interest in such Subsidiary) of the fair market value of the 

12

 

net
assets (as conclusively determined by the Board of Directors of the Company in good faith) of such Subsidiary at the time that such Subsidiary is so re-designated a Restricted
Subsidiary; and 

        (2)   any
property transferred to or from an Unrestricted Subsidiary will be valued at its fair market value at the time of such transfer, in each case as determined in good
faith by the Board of Directors of the Company. If the Company or any Restricted Subsidiary sells or otherwise disposes of any Voting Stock of any Restricted Subsidiary such that, after giving effect
to any such sale or disposition, such entity is no longer a Subsidiary of the Company, the Company shall be deemed to have made an Investment on the date of any such sale or disposition equal to the
fair market value (as conclusively determined by the Board of Directors of the Company in good faith) of the Capital Stock of such Subsidiary not sold or disposed of. 

        "Issue Date" means the closing date for the sale and issuance of the Initial Securities. 

        "Legal Holiday" has the meaning ascribed to it in Section 11.8. 

        "Lien" means any mortgage, pledge, security interest, encumbrance, lien or charge of any kind (including any conditional sale or other
title retention agreement or lease in the nature thereof). 

        "Municipal Corrections Finance" means Municipal Corrections Finance, L.P., an entity that is not a Subsidiary of the Company, but which
the Company is required to include in its consolidated financial statements in accordance with GAAP. 

        "Net Available Cash" from an Asset Disposition means cash payments received (including any cash payments received by way of deferred
payment of principal (but not interest) pursuant to a note or installment receivable or otherwise and net proceeds from the sale or other disposition of any securities received as consideration, but
only as and when received, but excluding any other consideration received in the form of assumption by the acquiring person of Indebtedness or other obligations relating to the properties or assets
that are the subject of such Asset Disposition or received in any other non-cash form) therefrom, in each case net of: 

        (1)   all
legal, accounting, investment banking, title and recording tax expenses, commissions and other fees and expenses Incurred, and all Federal, state, provincial,
foreign and local taxes required to be paid or accrued as a liability under GAAP (after taking into account any available tax credits or deductions and any tax sharing agreements), as a consequence of
such Asset Disposition; 

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

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

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

        "Net Cash Proceeds," with respect to any issuance or sale of Capital Stock, means the cash proceeds of such issuance or sale net of
attorneys' fees, accountants' fees, underwriters' or placement agents' fees, listing fees, discounts or commissions and brokerage, consultant and other fees and charges actually Incurred in connection
with such issuance or sale and net of taxes paid or payable as a result of such issuance or sale (after taking into account any available tax credit or deductions and any tax sharing arrangements). 

13

 

        "Non-Recourse Debt" means Indebtedness of a Person: 

        (1)   as
to which neither the Company nor any Restricted Subsidiary (a) provides any Guarantee or credit support of any kind (including any undertaking, guarantee,
indemnity, agreement or instrument that would constitute Indebtedness) or (b) is directly or indirectly liable (as a guarantor or otherwise); 

        (2)   no
default with respect to which (including any rights that the holders thereof may have to take enforcement action against an Unrestricted Subsidiary) would permit
(upon notice, lapse of time or both) any holder of any other Indebtedness of the Company or any Restricted Subsidiary to declare a default under such other Indebtedness or cause the payment thereof to
be accelerated or payable prior to its stated maturity; and 

        (3)   the
explicit terms of which provide there is no recourse against any of the assets of the Company or its Restricted Subsidiaries. 

        "Non-U.S. Person" means a Person who is not a U.S. Person (as defined in Regulation S). 

        "Officer" means the Chairman of the Board, the Chief Executive Officer, the President, the Chief Financial Officer, any Vice President,
the Treasurer or the Secretary of the Company. Officer of any Subsidiary Guarantor has a correlative meaning. 

        "Officers' Certificate" means a certificate signed by two Officers or by an Officer and either the Assistant Treasurer or the Assistant
Secretary of the Company. 

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

        "Pari Passu Indebtedness" means Indebtedness that ranks equally in right of payment to the Securities. 

        "Permitted Investment" means an Investment by the Company or any Restricted Subsidiary in: 

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

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

        (3)   cash
and Cash Equivalents; 

        (4)   receivables
owing to the Company or any Restricted Subsidiary created or acquired in the ordinary course of business and payable or dischargeable in accordance with
customary trade terms; provided, however, that such trade terms may include such concessionary trade terms as the Company or any such Restricted
Subsidiary deems reasonable under the circumstances; 

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

        (6)   loans
or advances to employees made in the ordinary course of business consistent with past practices of the Company or such Restricted Subsidiary;  provided, however, that the Company and its Subsidiaries will comply in all material respects with all
applicable provisions of the Sarbanes-Oxley Act and the rules and regulations promulgated in connection therewith relating to such loans and advances; 

14

 

        (7)   Capital
Stock, obligations or securities received in settlement of debts created in the ordinary course of business and owing to the Company or any Restricted Subsidiary
or in satisfaction of judgments or pursuant to any plan of reorganization or similar arrangement upon the bankruptcy or insolvency of a debtor; 

        (8)   Investments
made as a result of the receipt of non-cash consideration from an Asset Disposition that was made pursuant to and in compliance with  Section 3.5; 

        (9)   Investments
in existence on the Issue Date; 

        (10) Currency
Agreements, Interest Rate Agreements and related Hedging Obligations, which transactions or obligations are Incurred in compliance with  Section 3.2; 

        (11) Investments
by the Company or any of its Restricted Subsidiaries, together with all other Investments pursuant to this clause (11), in an aggregate amount at the
time of such Investment not to exceed $20.0 million outstanding at any one time (with the fair market value of such Investment being measured at the time made and without giving effect to
subsequent changes in value); 

        (12) Guarantees
issued in accordance with Section 3.2; and 

        (13) any
Asset Swap made in accordance with Section 3.5. 

        "Permitted Liens" means, with respect to any Person: 

        (1)   Liens
securing Indebtedness and other obligations under a Credit Facility and related Hedging Obligations and liens on assets of Restricted Subsidiaries securing
Guarantees of Indebtedness and other obligations of the Company under a Credit Facility permitted to be Incurred under this Indenture in an aggregate principal amount at any one time outstanding not
to exceed $100.0 million; 

        (2)   pledges
or deposits by such Person under workmen's compensation laws, unemployment insurance laws, 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 United States government bonds to secure surety or performance or appeal bonds to which such Person is a party, or
deposits as security for contested taxes or import or customs duties or for the payment of rent, in each case Incurred in the ordinary course of business; 

        (3)   Liens
imposed by law, including carriers', warehousemen's and mechanics' liens, in each case for sums not yet due or being contested in good faith by appropriate
proceedings if a reserve or other appropriate provisions, if any, as shall be required by GAAP shall have been made in respect thereof; 

        (4)   Liens
for taxes, assessments or other governmental charges not yet subject to penalties for non-payment or which are being contested in good faith by
appropriate proceedings provided appropriate reserves required pursuant to GAAP have been made in respect thereof; 

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

        (6)   encumbrances,
ground leases, easements or reservations of, or rights of others for, licenses, rights of way, sewers, electric lines, telegraph and telephone lines 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 

15

 

do
not in the aggregate materially adversely affect the value of said properties or materially impair their use in the operation of the business of such Person; 

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

        (8)   leases,
licenses, subleases and sublicenses of assets (including, without limitation, real property and intellectual property rights) which do not materially interfere
with the ordinary conduct of the business of the Company or any of its Restricted Subsidiaries; 

        (9)   judgment
Liens not giving rise to an Event of Default so long as such Lien is adequately bonded and any appropriate legal proceedings which may have been duly initiated
for the review of such judgment have not been finally terminated or the period within which such proceedings may be initiated has not expired; 

        (10) Liens
for the purpose of securing the payment of all or a part of the purchase price of, or Capitalized Lease Obligations, purchase money obligations or other payments
Incurred to finance the acquisition, improvement or construction of, assets or property acquired or constructed in the ordinary course of business;  provided that: 

        (a)   the
aggregate principal amount of Indebtedness secured by such Liens is otherwise permitted to be Incurred under this Indenture and does not exceed the cost of the
assets or property so acquired or constructed; and 

        (b)   such
Liens are created within 180 days of construction or acquisition of such assets or property and do not encumber any other assets or property of the Company
or any Restricted Subsidiary other than such assets or property and assets affixed or appurtenant thereto; 

        (11) Liens
arising solely by virtue of any statutory or common law provisions relating to banker's Liens, rights of set-off or similar rights and remedies as to
deposit accounts or other funds maintained with a depositary institution; provided that: 

        (a)   such
deposit account is not a dedicated cash collateral account and is not subject to restrictions against access by the Company in excess of those set forth by
regulations promulgated by the Federal Reserve Board; and 

        (b)   such
deposit account is not intended by the Company or any Restricted Subsidiary to provide collateral to the depository institution; 

        (12) Liens
arising from Uniform Commercial Code financing statement filings regarding operating leases entered into by the Company and its Restricted Subsidiaries in the
ordinary course of business; 

        (13) Liens
existing on the Issue Date; 

        (14) Liens
on property or shares of stock of a Person at the time such Person becomes a Restricted Subsidiary; provided,
however, that such Liens are not created, Incurred or assumed in connection with, or in contemplation of, such other Person becoming a Restricted Subsidiary;  provided further, however, that any such Lien may not extend to any other property owned by the Company or any Restricted Subsidiary; 

        (15) Liens
on property at the time the Company or a Restricted Subsidiary acquired the property, including any acquisition by means of a merger or consolidation with or into
the Company or any Restricted Subsidiary; provided, however, that such Liens are not created, Incurred or assumed in connection with, or in
contemplation of, such acquisition; provided further, however, 

16

 

that
such Liens may not extend to any other property owned by the Company or any Restricted Subsidiary; 

        (16) Liens
securing Indebtedness or other obligations of a Restricted Subsidiary owing to the Company or a Wholly-Owned Subsidiary; 

        (17) Liens
securing the Securities and Subsidiary Guarantees; 

        (18) Liens
securing Refinancing Indebtedness Incurred to refinance Indebtedness that was previously so secured, provided that
any such Lien is limited to all or part of the same property or assets (plus improvements, accessions, proceeds or dividends or distributions in respect thereof) that secured (or, under the written
arrangements under which the original Lien arose, could secure) the Indebtedness being refinanced or is in respect of property that is the security for a Permitted Lien hereunder; 

        (19) any
interest or title of a lessor under any Capitalized Lease Obligation or operating lease; and 

        (20) Liens
securing Indebtedness (other than Subordinated Obligations and Guarantor Subordinated Obligations) in an aggregate principal amount outstanding at any one time
not to exceed 10% of Total Tangible Assets at the time of determination. 

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

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

        "Public Equity Offering" means a public offering for cash by the Company of its Common Stock, or options, warrants or rights with respect
to its Common Stock made pursuant to a registration statement that has been declared effective by the SEC, other than public offerings with respect to the Company's Common Stock, or options, warrants
or rights, registered on Form S-4 or S-8. 

        A
"Public Market" exists at any time with respect to the Common Stock of the Company if: 

        (1)   the
Common Stock of the Company is then registered with the SEC pursuant to Section 12(b) or 12(g) of the Exchange Act and traded either on a national securities
exchange or in the National Association of Securities Dealers Automated Quotation System; and 

        (2)   at
least 15% of the total issued and outstanding Common Stock of the Company has been distributed prior to such time by means of an effective registration statement
under the Securities Act of 1933, as amended. 

        "QIB" means any "qualified institutional buyer" as such term is defined in Rule 144A. 

        "Receivable" means a right to receive payment arising from a sale or lease of goods or the performance of services by a Person pursuant to
an arrangement with another Person pursuant to which such other Person is obligated to pay for goods or services under terms that permit the purchase of such goods and services on credit and shall
include, in any event, any items of property that would be classified as an "account," "chattel paper," "payment intangible" or "instrument" under the Uniform Commercial Code as in effect in the State
of New York and any "supporting obligations" as so defined. 

17

   
        "Receivables Fees" means any fees or interest paid to purchasers or lenders providing the financing in connection with a factoring
agreement or other similar agreement, including any such amounts paid by discounting the face amount of Receivables or participations therein transferred in connection with a factoring agreement or
other similar arrangement, regardless of whether any such transaction is structured as on-balance sheet or off-balance sheet or through a Restricted Subsidiary or an
Unrestricted Subsidiary. 

        "Redemption Date" means, with respect to any redemption of Securities, the date of redemption with respect thereto. 

        "Refinancing Indebtedness" means Indebtedness that is Incurred to refund, refinance, replace, exchange, renew, repay or extend (including
pursuant to any defeasance or discharge mechanism) (collectively, "refinance," "refinances," and "refinanced" shall have a correlative meaning) any Indebtedness existing on the date of this Indenture
or Incurred in compliance with this Indenture (including Indebtedness of the Company that refinances Indebtedness of any Restricted Subsidiary and Indebtedness of any Restricted Subsidiary that
refinances Indebtedness of another Restricted Subsidiary) including Indebtedness that refinances Refinancing Indebtedness, provided, however, that: 

        (1)   (a)
if the Stated Maturity of the Indebtedness being refinanced is earlier than the Stated Maturity of the Securities, the Refinancing Indebtedness has a Stated Maturity
no earlier than the Stated Maturity of the Indebtedness being refinanced or (b) if the Stated Maturity of the Indebtedness being refinanced is later than the Stated Maturity of the Securities,
the Refinancing Indebtedness has a Stated Maturity at least 91 days later than the Stated Maturity of the Securities; 

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

        (3)   such
Refinancing Indebtedness is Incurred in an aggregate principal amount (or if issued with original issue discount, an aggregate issue price) that is equal to or less
than the sum of the aggregate principal amount (or if issued with original issue discount, the aggregate accreted value) then outstanding of the Indebtedness being refinanced (plus, without
duplication, any additional Indebtedness Incurred to pay interest or premiums required by the instruments governing such existing Indebtedness and fees Incurred in connection therewith); and 

        (4)   if
the Indebtedness being refinanced is subordinated in right of payment to the Securities or the Subsidiary Guarantee, such Refinancing Indebtedness is subordinated in
right of payment to the Securities or the Subsidiary Guarantee on terms at least as favorable to the holders as those contained in the documentation governing the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded. 

        "Registration Rights Agreement" means that certain registration rights agreement dated as of the date of this Indenture by and among the
Company, the Subsidiary Guarantors and J.P. Morgan Securities Inc. on behalf of itself and the other initial purchasers set forth therein; and, with respect to any Additional Securities, one or
more substantially similar registration rights agreements among the Company and the other parties thereto, as such agreement(s) may be amended from time to time. 

        "Regulation S" means Regulation S under the Securities Act. 

        "Related Business" means any business which is the same as or related, ancillary, incidental or complementary to any of the businesses of
the Company and its Restricted Subsidiaries on the date of this Indenture. 

        "Related Business Assets" means assets used or useful in a Related Business. 

18

 

        "Restricted Investment" means any Investment other than a Permitted Investment. 

        "Restricted Period", with respect to any Securities, means the period of 40 consecutive days beginning on and including the later of
(A) the day on which the Securities are first offered to Persons other than distributors (as defined in Regulation S), notice of which day shall be promptly given by the Company to the
Trustee, and (B) the issue date with respect to such Securities. 

        "Restricted Securities Legend" means the Private Placement Legend set forth in  Section 2.1(d)(A) or the Regulation S Legend set forth in Section 2.1(d)(B), as
applicable. 

        "Restricted Subsidiary" means any Subsidiary of the Company other than an Unrestricted Subsidiary. 

        "Rule 144A" means Rule 144A under the Securities Act. 

        "Sale/Leaseback Transaction" means an arrangement relating to property now owned or hereafter acquired whereby the Company or a Restricted
Subsidiary transfers such property to a Person and the Company or a Restricted Subsidiary leases it from such Person. 

        "SEC" means the United States Securities and Exchange Commission. 

        "Securities" has the meaning ascribed to it in the second introductory paragraph of this Indenture. 

        "Securities Act" means the Securities Act of 1933 (15 U.S.C.§§
77a-77aa), as amended, and the rules and regulations of the SEC promulgated thereunder. 

        "Securities Custodian" means the custodian with respect to the Global Securities (as appointed by DTC), or any successor Person thereto,
and shall initially be the Trustee. 

        "Securities Register" means the register of Securities, maintained by the Registrar, pursuant to  Section 2.3. 

        "Senior Secured Credit Agreement" means the Credit Facility to be entered into among the Company, JPMorgan Chase Bank, as Administrative
Agent, J.P. Morgan Securities Inc., as Sole Bookrunner and Sole Lead Manager, and the lenders parties thereto from time to time, as the same may be amended, supplemented or otherwise modified
from time to time. 

        "Shelf Registration Statement" shall have the meaning set forth in the Registration Rights Agreement. 

        "Significant Subsidiary" means any Restricted Subsidiary that would be a "Significant Subsidiary" of the Company within the meaning of
Rule 1-02 under Regulation S-X promulgated by the SEC. 

        "Stated Maturity" means, with respect to any security, the date specified in such security as the fixed date on which the payment of
principal of such security is due and payable, including pursuant to any
mandatory redemption provision, but shall not include any contingent obligations to repay, redeem or repurchase any such principal prior to the date originally scheduled for the payment thereof. 

        "Subordinated Obligation" means any Indebtedness of the Company (whether outstanding on the Issue Date or thereafter Incurred) which is
subordinate or junior in right of payment to the Securities pursuant to a written agreement. 

        "Subsidiary" of any Person means (a) 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 ordinary 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 (or persons performing similar functions) or (b) any partnership, joint venture, limited liability company or
similar entity of which more than 50% of the capital accounts, distribution rights, total equity and voting interests or general or limited partnership interests, as applicable, is, in the case of
clauses (a) and (b), 

19

 

at
the time owned or controlled, directly or indirectly, by (1) such Person, (2) such Person and one or more Subsidiaries of such Person or (3) one or more Subsidiaries of such
Person. Unless otherwise specified herein, each reference to a Subsidiary will refer to a Subsidiary of the Company. Municipal Corrections Finance is not a Subsidiary of the Company. 

        "Subsidiary Guarantee" means, individually, any Guarantee of payment of the Securities and Exchange Securities issued in a registered
exchange offer pursuant to the Registration Rights Agreement by a Subsidiary Guarantor pursuant to the terms of this Indenture and any supplemental indenture thereto (including pursuant to  Exhibit C hereto), and, collectively, all such Guarantees. Each such Subsidiary Guarantee will be in the form prescribed by this Indenture.
 

        "Subsidiary Guarantor" means each Subsidiary of the Company in existence on the Issue Date and any Restricted Subsidiary that is required
to provide a Subsidiary Guarantee in accordance with Section 3.12. 

        "Synthetic Lease Obligaiton" means an obligation under any lease, including but not limited to a synthetic lease or a similar agreement,
that is treated as an operating lease for purposes of accounting in accordance with GAAP, but not for tax purposes. 

        "TIA" or "Trust Indenture Act" means the Trust Indenture Act of 1939 (15  U.S.C. §§ 77aaa-77bbbb), as
in effect on the date of this Indenture. 

        "Total Tangible Assets" means cash and Cash Equivalents, accounts receivable and other receivables (net of allowance for doubtful
accounts) and property and equipment, net, of the Company and its Restricted Subsidiaries, as shown on the most recent balance sheet of the Company. 

        "Trustee" means the party named as such in this Indenture until a successor replaces it and, thereafter, means the successor. 

        "Trust Officer" shall mean, 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 secretary, 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. 

        "Unrestricted Subsidiary" means: 

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

        (2)   any
Subsidiary of an Unrestricted Subsidiary. 

The
Board of Directors of the Company may designate any Subsidiary of the Company (including any newly acquired or newly formed Subsidiary or a Person becoming a Subsidiary through merger or
consolidation or Investment therein) to be an Unrestricted Subsidiary only if: 

        (1)   such
Subsidiary or any of its Subsidiaries does not own any Capital Stock or Indebtedness of or have any Investment in, or own or hold any Lien on any property of, any
other Subsidiary of the Company which is not a Subsidiary of the Subsidiary to be so designated or otherwise an Unrestricted Subsidiary; 

        (2)   all
the Indebtedness of such Subsidiary and its Subsidiaries shall, at the date of designation, and will at all times thereafter, consist of Non-Recourse
Debt; 

20

 

        (3)   such
designation and the Investment of the Company in such Subsidiary complies with Section 3.3; 

        (4)   such
Subsidiary, either alone or in the aggregate with all other Unrestricted Subsidiaries, does not operate, directly or indirectly, all or substantially all of the
business of the Company and its Subsidiaries; 

        (5)   such
Subsidiary is a Person with respect to which neither the Company nor any of its Restricted Subsidiaries has any direct or indirect obligation: 

        (a)   to
subscribe for additional Capital Stock of such Person; or 

        (b)   to
maintain or preserve such Person's financial condition or to cause such Person to achieve any specified levels of operating results; and 

        (6)   on
the date such Subsidiary is designated an Unrestricted Subsidiary, such Subsidiary is not a party to any agreement, contract, arrangement or understanding with the
Company or any Restricted Subsidiary with terms substantially less favorable to the Company than those that might have been obtained from Persons who are not Affiliates of the Company. 

        Any
such designation by the Board of Directors of the Company shall be evidenced to the Trustee by filing with the Trustee a resolution of the Board of Directors of the Company giving
effect to such designation and an Officers' Certificate certifying that such designation complies with the foregoing conditions. If, at any time, any Unrestricted Subsidiary would fail to meet the
foregoing requirements as an Unrestricted Subsidiary, it shall thereafter cease to be an Unrestricted Subsidiary for purposes of this Indenture and any Indebtedness of such Subsidiary shall be deemed
to be Incurred as of such date. 

        The
Board of Directors of the Company may designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided that immediately
after giving effect to such designation, no Default or Event of Default shall have occurred and be continuing or would occur as a consequence thereof and the Company could Incur at least $1.00 of
additional Indebtedness under the first paragraph of Section 3.2 on a pro forma basis taking into account such designation. 

        "U.S. Government Obligations" means securities that are (a) direct obligations of the United States of America for the timely
payment of which its full faith and credit is pledged or (b) 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 of the United States of America, which, in either case, are not callable or redeemable at the option of
the issuer thereof, and shall also include a depositary receipt issued by a bank (as defined in Section 3(a)(2) of the Securities Act), as custodian with respect to any such U.S. Government
Obligations or a specific payment of principal of or interest on any such U.S. Government Obligations held by such custodian for the account of the holder of such depositary 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
depositary receipt from any amount received by the custodian in respect of the U.S. Government Obligations or the specific payment of principal of or interest on the U.S. Government Obligations
evidenced by such depositary receipt. 

        "Voting Stock" of a corporation means all classes of Capital Stock of such corporation then outstanding and normally entitled to vote in
the election of directors. 

        "Wholly-Owned Subsidiary" means a Restricted Subsidiary, all of the Capital Stock of which (other than directors' qualifying shares) is
owned by the Company or another Wholly-Owned Subsidiary. 

21

  

        SECTION 1.2.    Other Definitions.    

	Term
 
	 	Defined in

Section

	"Additional Restricted Securities"	 	2.1(b)
	

"Affiliate Transaction"	
 	

3.8
	

"Agent"	
 	

3.13
	

"Agent Members"	
 	

2.1(e)
	

"Asset Disposition Offer"	
 	

3.5
	

"Asset Disposition Offer Amount"	
 	

3.5
	

"Asset Disposition Purchase Date"	
 	

3.5
	

"Authenticating Agent"	
 	

2.2
	

"Certificate of Destruction"	
 	

2.12
	

"Change of Control Offer"	
 	

3.10
	

"Change of Control Payment"	
 	

3.10
	

"Change of Control Payment Date"	
 	

3.10
	

"Company Order"	
 	

2.2
	

"covenant defeasance option"	
 	

8.1
	

"cross acceleration provision"	
 	

6.1
	

"Defaulted Interest"	
 	

2.13
	

"Event of Default"	
 	

6.1
	

"Excess Proceeds"	
 	

3.5
	

"Exchange Global Note"	
 	

2.1(b)
	

"Guarantor Obligations"	
 	

10.1
	

"Global Securities"	
 	

2.1(b)
	

"Institutional Accredited Investor Global Note"	
 	

2.1(b)
	

"Institutional Accredited Investor Notes"	
 	

2.1(b)
	

"judgment default provision"	
 	

6.1
	

"legal defeasance option"	
 	

8.1
	

"Pari Passu Notes"	
 	

3.5
	

"payment default"	
 	

6.1
	

"Paying Agent"	
 	

2.3
	

"Private Placement Legend"	
 	

2.1(d)
	

"protected purchaser"	
 	

2.9
	

"Registrar"	
 	

2.3
	

"Regulation S Global Note"	
 	

2.1(b)
	 	 	 

22

 

	

"Regulation S Legend"	
 	

2.1(d)
	

"Regulation S Notes"	
 	

2.1(b)
	

"Resale Restriction Termination Date"	
 	

2.6(a)
	

"Restricted Payment"	
 	

3.3
	

"Restricted Securities"	
 	

2.1(a)
	

"Rule 144A Global Note"	
 	

2.1(b)
	

"Rule 144A Notes"	
 	

2.1(b)
	

"Special Interest Payment Date"	
 	

2.13(a)
	

"Special Record Date"	
 	

2.13(a)
	

"Successor Company"	
 	

4.1
	

"Treasury Rate"	
 	

6.1

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

        "Commission"
means the SEC. 

        "indenture
securities" means the Securities. 

        "indenture
security holder" means a Securityholder. 

        "indenture
to be qualified" means this Indenture. 

        "indenture
trustee" or "institutional trustee" means the Trustee. 

        "obligor"
on the indenture securities means the Company, and any other obligor on the indenture securities. 

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

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

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

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

        (3)   "or"
is not exclusive; 

        (4)   "including"
means including without limitation; 

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

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

23

 

        (7)   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; 

        (8)   all
amounts expressed in this Indenture or in any of the Securities in terms of money refer to the lawful currency of the United States of America; and 

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

 
 

ARTICLE II    
    
    THE SECURITIES    
    

        SECTION
2.1.    Form, Dating and Terms.    

        (a)   The
aggregate principal amount of Securities that may be authenticated and delivered under this Indenture is unlimited. The Initial Securities issued on the date hereof
will be in an aggregate principal amount of $112,000,000. In addition, the Company may issue, from time to time in accordance with the provisions of this Indenture, Additional Securities and Exchange
Securities. Furthermore, Securities may be authenticated and delivered upon registration or transfer, or in lieu of, other Securities pursuant to  Section 2.6, 2.9,
2.11 or 9.5 or in connection
with a Change of Control Offer pursuant to Section 3.10. 

        The
Initial Securities shall be known and designated as "103/4% Senior Notes, Series A, due 2012" of the Company. Additional Securities issued as securities bearing
one of the restrictive legends described in Section 2.1(d) ("Restricted Securities") shall be
known and designated as "103/4% Senior Notes, Series A, due 2012" of the Company. Additional Securities issued other than as Restricted Securities shall be known and designated
as "103/4% Senior Notes, Series B, due 2012" of the Company, and Exchange Securities shall be known and designated as "103/4% Senior Notes, Series B, due
2012" of the Company. 

        With
respect to any Additional Securities, the Company shall set forth in (a) a Board Resolution of the Company and (b) (i) an Officers' Certificate or (ii) one or
more indentures supplemental hereto, the following information: 

        (1)   the
aggregate principal amount of such Additional Securities to be authenticated and delivered pursuant to this Indenture; 

        (2)   the
issue price and the issue date of such Additional Securities, including the date from which interest shall accrue; and 

        (3)   whether
such Additional Securities shall be Restricted Securities issued in the form of Exhibit A hereto and/or
shall be issued in the form of Exhibit B hereto. 

        The
Initial Securities, the Additional Securities and the Exchange Securities shall be considered collectively as a single class for all purposes of this Indenture. Holders of the
Initial Securities, the Additional Securities and the Exchange Securities will vote and consent together on all matters to which such Holders are entitled to vote or consent as one class, and none of
the Holders of the Initial Securities, the Additional Securities or the Exchange Securities shall have the right to vote or consent as a separate class on any matter to which such Holders are entitled
to vote or consent. 

        If
any of the terms of any Additional Securities are established by action taken pursuant to Board Resolutions of the Company, a copy of an appropriate record of such action shall be
certified by the Secretary or any Assistant Secretary of the Company and delivered to the Trustee at or prior to the 

24

 

delivery
of the Officers' Certificate or the indenture supplemental hereto setting forth the terms of the Additional Securities. 

        (b)   The
Initial Securities are being offered and sold by the Company pursuant to a Purchase Agreement, dated June 17, 2004, among Cornell Companies, Inc., the
Subsidiary Guarantors and J.P. Morgan Securities Inc. as representative of the Initial Purchasers. The Initial Securities and any Additional Securities (if issued as Restricted Securities) (the
"Additional Restricted Securities") will be resold initially only to (A) QIBs in reliance on Rule 144A and (B) Non-U.S.
Persons in reliance on Regulation S. Such Initial Securities and Additional Restricted Securities may thereafter be transferred to, among others, QIBs, purchasers in reliance on
Regulation S and IAIs in accordance with Rule 501 of the Securities Act, in each case, in accordance with the procedure described herein. Additional Securities offered after the date
hereof may be offered and sold by the Company from time to time pursuant to one or more purchase agreements in accordance with applicable law. 

        Initial
Securities and Additional Restricted Securities offered and sold to QIBs in the United States of America in reliance on Rule 144A (the
"Rule 144A Notes") shall be issued in the form of a permanent global Security substantially in the form of  Exhibit A, which is hereby
incorporated by reference and made a part of this Indenture, including appropriate legends as set forth in
Section 2.1(d) (the "Rule 144A Global Note"), deposited with the Trustee, as custodian for
DTC, duly executed by the Company and authenticated by the Trustee as hereinafter provided. The Rule 144A Global Note may be represented by more than one certificate, if so required by DTC's
rules regarding the maximum principal amount to be represented by a single certificate. The aggregate principal amount of the Rule 144A Global Note may from time to time be increased or
decreased by adjustments made on the records of the Trustee, as custodian for DTC or its nominee, as hereinafter provided. 

        Initial
Securities and Additional Securities offered and sold outside the United States of America (the "Regulation S Notes") in
reliance on Regulation S shall be issued in the form of a permanent global Security, without interest coupons, substantially in the form of  Exhibit A including appropriate legends as set forth
in Section 2.1(d) (the
"Regulation S Global Note") upon delivery of the certification contemplated by  Section 2.8. Each Regulation S Global Note will be deposited
upon issuance with, or on behalf of, the Trustee as custodian for DTC in the
manner described in this Article II for credit to the respective accounts of the purchasers (or to such other accounts as they may direct) at
Euroclear or Clearstream. Prior to the 40th day after the later of the commencement of the offering of the Initial Securities and the Issue Date (such period through and including such 40th day, the
"Restricted Period"), interests in the Regulation S Global Note may only be held through Euroclear or Clearstream (as indirect participants in
DTC) unless exchanged for interests in a Global Security in accordance with the transfer and certification requirements described herein. 

        Investors
may hold their interests in the Regulation S Global Note directly through Euroclear or Clearstream, if they are participants in such systems, or indirectly through
organizations which are participants in such systems. After the expiration of the Restricted Period (but not earlier), investors may also hold such interests through organizations other than Euroclear
or Clearstream that are participants in DTC's system. Euroclear and Clearstream will hold such interests in the Regulation S Global Note on behalf of their participants through customers'
securities accounts in their respective names on the books of their respective depositaries. Such depositaries, in turn, will hold such interests in the applicable Regulation S Global Note in
customers' securities accounts in the depositaries' names on the books of DTC. 

25

   
        The Regulation S Global Note may be represented by more than one certificate, if so required by DTC's rules regarding the maximum principal amount to be represented by a single
certificate. The aggregate principal amount of the Regulation S Global Note may from time to time be increased or decreased by adjustments made on the records of the Trustee, as custodian for
DTC or its nominee, as hereinafter provided. 

        Initial
Securities and Additional Securities resold to IAIs (the "Institutional Accredited Investor Notes") in the United States of
America shall be issued in the form of a permanent global Security substantially in the form of Exhibit A including appropriate legends as set
forth in Section 2.1(d) (the "Institutional Accredited Investor Global Note") deposited with the
Trustee, as custodian for DTC, duly executed by the Company and authenticated by the Trustee as hereinafter provided. The Institutional Accredited Investor Global Note may be represented by more than
one certificate, if so required by DTC's rules regarding the maximum principal amount to be represented by a single certificate. The aggregate principal amount of the Institutional Accredited Investor
Global Note may from time to time be increased or decreased by adjustments made on the records of the Trustee, as custodian for DTC or its nominee, as hereinafter provided. 

        Exchange
Securities exchanged for interests in the Rule 144A Notes, the Regulation S Notes and the Institutional Accredited Investor Notes will be issued in the form of a
permanent global Security, substantially in the form of Exhibit B, which is hereby incorporated by reference and made a part of this Indenture,
deposited with the Trustee as hereinafter provided, including the appropriate legend set forth in Section 2.1(d) (the
"Exchange Global Note"). The Exchange Global Note will be deposited upon issuance with, or on behalf of, the Trustee as custodian for DTC, duly executed
by the Company and authenticated by the Trustee as hereinafter provided. The Exchange Global Note may be represented by more than one certificate, if so required by DTC's rules regarding the maximum
principal amount to be represented by a single certificate. 

        The
Rule 144A Global Note, the Regulation S Global Note, the Institutional Accredited Investor Global Note and the Exchange Global Note are sometimes collectively herein
referred to as the "Global Securities." 

        The
principal of (and premium, if any) and interest on the Securities shall be payable at the office or agency of the Company maintained for such purpose in the Borough of Manhattan, The
City of New York, State of New York, or at such other office or agency of the Company as may be maintained for such purpose pursuant to  Section 2.3; provided, however,
 that, at the option of the Company, each installment of interest
may be paid by (i) check mailed to addresses of the Persons entitled thereto as such addresses shall appear on the Securities Register or (ii) wire transfer to an account located in the
United States maintained by the payee. Payments in respect of Securities represented by a Global
Security (including principal, premium, if any, and interest) will be made by wire transfer of immediately available funds to the accounts specified by DTC. Payments in respect of Securities
represented by Definitive Securities (including principal, premium, if any, and interest) held by a Holder of at least $1,000,000 aggregate principal amount of Securities represented by Definitive
Securities will be made by wire transfer to a U.S. dollar account maintained by the payee with a bank in the United States if such Holder elects payment by wire transfer by giving written notice to
the Trustee or the Paying Agent to such effect designating such account no later than 15 days immediately preceding the relevant due date for payment (or such other date as the Trustee may
accept in its discretion). 

        The
Securities may have notations, legends or endorsements required by law, stock exchange rule or usage, in addition to those set forth on  Exhibit A and Exhibit B and in  Section 2.1(d). The Company and the Trustee shall approve the forms of the Securities and any notation, endorsement or legend on them. Each
Security shall be dated the date of its authentication. The terms of the Securities set forth in Exhibit A and  Exhibit B are part of the terms of
this Indenture and, to the extent applicable, the 

26

 

Company,
the Subsidiary Guarantors and the Trustee, by their execution and delivery of this Indenture, expressly agree to be bound by such terms. 

        (c)    Denominations.    The Securities shall be issuable only in fully registered form, without coupons, and only in
denominations of $1,000 and an integral multiple thereof. 

        (d)    Restrictive Legends.    Unless and until (i) an Initial Security is sold under an effective registration
statement or (ii) an Initial Security is exchanged for an Exchange Security in connection with an effective registration statement, in each case pursuant to the Registration Rights Agreement or
a similar agreement, 

        (A)  the
Rule 144A Global Note and the Institutional Accredited Investor Global Note shall bear the following legend (the "Private Placement
Legend") on the face thereof: 

THIS
SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION. NEITHER THIS SECURITY NOR ANY
INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT
FROM, OR NOT SUBJECT TO, SUCH REGISTRATION. THE HOLDER OF THIS SECURITY, BY ITS ACCEPTANCE HEREOF, AGREES ON ITS OWN BEHALF AND ON BEHALF OF ANY INVESTOR ACCOUNT FOR WHICH IT HAS PURCHASED SECURITIES,
TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE (THE "RESALE RESTRICTION TERMINATION DATE") THAT IS TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE
ON WHICH THE COMPANY OR ANY AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF SUCH SECURITY), ONLY (A) TO THE COMPANY, (B) PURSUANT TO A REGISTRATION
STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT, TO A PERSON IT
REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO
WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE
SECURITIES ACT, (E) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING OF RULE 501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT THAT IS AN INSTITUTIONAL ACCREDITED
INVESTOR ACQUIRING THE SECURITY FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL ACCREDITED INVESTOR, IN EACH CASE IN A MINIMUM PRINCIPAL AMOUNT OF THE SECURITIES OF $250,000, FOR
INVESTMENT PURPOSES AND NOT WITH A VIEW TO OR FOR OFFER OR SALE IN CONNECTION WITH ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, OR (F) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE COMPANY'S AND THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSES (D), (E) OR (F) TO REQUIRE
THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/ OR OTHER 

27

 

INFORMATION
SATISFACTORY TO EACH OF THEM. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE. 

BY
ITS ACQUISITION OF THIS SECURITY THE HOLDER HEREOF WILL BE DEEMED TO HAVE REPRESENTED AND WARRANTED THAT EITHER (I) NO PORTION OF THE ASSETS USED BY SUCH HOLDER TO ACQUIRE AND HOLD THIS
SECURITY CONSTITUTES THE ASSETS OF AN EMPLOYEE BENEFIT PLAN THAT IS SUBJECT TO TITLE I OF THE U.S. EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OF PLANS, INDIVIDUAL
RETIREMENT ACCOUNTS OR OTHER ARRANGEMENTS THAT ARE SUBJECT TO SECTION 4975 OF THE U.S. INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), OR PROVISIONS UNDER ANY FEDERAL, STATE, LOCAL,
NON-U.S. OR OTHER LAWS OR REGULATIONS THAT ARE SIMILAR TO
SUCH PROVISIONS OF ERISA OR THE CODE ("SIMILAR LAWS"), OR OF AN ENTITY WHOSE UNDERLYING ASSETS ARE CONSIDERED TO INCLUDE "PLAN ASSETS" OF SUCH PLANS, ACCOUNTS OR ARRANGEMENTS, OR (II) THE
PURCHASE AND HOLDING OF THIS SECURITY WILL NOT CONSTITUTE A NON-EXEMPT PROHIBITED TRANSACTION UNDER SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE OR A SIMILAR VIOLATION UNDER ANY
APPLICABLE SIMILAR LAWS. 

        (B)  the
Regulation S Global Note shall bear the following legend (the "Regulation S Legend") on the face
thereof: 

THIS
SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION. NEITHER THIS SECURITY NOR ANY
INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT
FROM, OR NOT SUBJECT TO, SUCH REGISTRATION. THE HOLDER OF THIS SECURITY, BY ITS ACCEPTANCE HEREOF, AGREES ON ITS OWN BEHALF AND ON BEHALF OF ANY INVESTOR ACCOUNT FOR WHICH IT HAS PURCHASED SECURITIES,
TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE (THE "RESALE RESTRICTION TERMINATION DATE") THAT IS 40 DAYS AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON
WHICH THE COMPANY OR ANY AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF SUCH SECURITY), ONLY (A) TO THE COMPANY, (B) PURSUANT TO A REGISTRATION STATEMENT
THAT HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT, TO A PERSON IT REASONABLY
BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE
IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES
ACT, (E) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE 

28

 

MEANING
OF RULE 501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT THAT IS AN INSTITUTIONAL ACCREDITED INVESTOR ACQUIRING THE SECURITY FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF SUCH AN
INSTITUTIONAL ACCREDITED INVESTOR, IN EACH CASE IN A MINIMUM PRINCIPAL AMOUNT OF THE SECURITIES OF $250,000, FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO OR FOR OFFER OR SALE IN CONNECTION WITH ANY
DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, OR (F) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE COMPANY'S AND THE
TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSES (D), (E) OR (F) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/ OR OTHER INFORMATION
SATISFACTORY TO EACH OF THEM. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE. BY ITS ACQUISITION HEREOF, THE HOLDER HEREOF REPRESENTS THAT IT
IS NOT A U.S. PERSON NOR IS IT PURCHASING FOR THE ACCOUNT OF A U.S. PERSON AND IS ACQUIRING THIS SECURITY IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH REGULATION S UNDER THE SECURITIES ACT. 

BY
ITS ACQUISITION OF THIS SECURITY THE HOLDER HEREOF WILL BE DEEMED TO HAVE REPRESENTED AND WARRANTED THAT EITHER (I) NO PORTION OF THE ASSETS USED BY SUCH HOLDER TO ACQUIRE AND HOLD THIS
SECURITY CONSTITUTES THE ASSETS OF AN EMPLOYEE BENEFIT PLAN THAT IS SUBJECT TO TITLE I OF THE U.S. EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OF
PLANS, INDIVIDUAL RETIREMENT ACCOUNTS OR OTHER ARRANGEMENTS THAT ARE SUBJECT TO SECTION 4975 OF THE U.S. INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), OR PROVISIONS UNDER ANY FEDERAL, STATE,
LOCAL, NON-U.S. OR OTHER LAWS OR REGULATIONS THAT ARE SIMILAR TO SUCH PROVISIONS OF ERISA OR THE CODE ("SIMILAR LAWS"), OR OF AN ENTITY WHOSE UNDERLYING ASSETS ARE CONSIDERED TO INCLUDE
"PLAN ASSETS" OF SUCH PLANS, ACCOUNTS OR ARRANGEMENTS, OR (II) THE PURCHASE AND HOLDING OF THIS SECURITY WILL NOT CONSTITUTE A NON-EXEMPT PROHIBITED TRANSACTION UNDER SECTION 406 OF
ERISA OR SECTION 4975 OF THE CODE OR A SIMILAR VIOLATION UNDER ANY APPLICABLE SIMILAR LAWS. 

        (C)  Each
Global Security, whether or not an Initial Security, shall bear the following legend on the face thereof: 

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

29

 

WRONGFUL
INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. 

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

        (e)    Book-Entry Provisions.    

          (i)  This
Section 2.1(e) shall apply only to Global Securities deposited with the Trustee, as custodian for DTC. 

         (ii)  Each
Global Security initially shall (x) be registered in the name of DTC or the nominee of DTC, (y) be delivered to the Trustee as custodian for DTC and
(z) bear legends as set forth in Section 2.1(d). 

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

        (iv)  In
connection with any transfer of a portion of the beneficial interest in a Global Security pursuant to subsection (f) of this  Section 2.1 to beneficial owners who are required to hold
Definitive Securities, the Securities Custodian shall reflect on its books and records
the date and a decrease in the principal amount of such Global Security in an amount equal to the principal amount of the beneficial interest in the Global Security to be transferred, and the Company
shall execute, and the Trustee shall authenticate and make available for delivery, one or more Definitive Securities of like tenor and amount. 

         (v)  In
connection with the transfer of an entire Global Security to beneficial owners pursuant to subsection (f) of this  Section 2.1, such Global Security shall be deemed to be surrendered to the
Trustee for cancellation, and the Company shall execute, and the
Trustee shall authenticate and make available for delivery, to each beneficial owner identified by DTC in exchange for its beneficial interest in such Global Security, an equal aggregate principal
amount of Definitive Securities of authorized denominations. 

        (vi)  The
registered Holder of a Global Security may grant proxies and otherwise authorize any person, including Agent Members and persons that may hold interests through
Agent Members, to take any action which a Holder is entitled to take under this Indenture or the Securities. 

       (vii)  Any
Holder of a Global Security shall, by acceptance of such Global Security, agree that transfers of beneficial interests in such Global Security may be effected only
through a book-entry system maintained by (a) the Holder of such Global Security (or its agent) or (b) any Holder of a beneficial interest in such Global Security, and that
ownership of a beneficial interest in such Global Security shall be required to be reflected in a book entry. 

30

 

        (f)    Definitive Securities.    (i) Except as provided below, owners of beneficial interests in Global
Securities will not be entitled to receive Definitive Securities. If required to do so pursuant to any applicable law or regulation, beneficial owners may obtain Definitive Securities in exchange for
their beneficial interests in a Global Security upon written request in accordance with DTC's and the Registrar's procedures. In addition, Definitive Securities shall be transferred to all beneficial
owners in exchange for their beneficial interests in a Global Security if (A) DTC notifies the Company that it is unwilling or unable to continue as depositary for such Global Security or DTC
ceases to be a clearing agency registered under the Exchange Act, at a time when DTC is required to be so registered in order to act as depositary, and in each case a successor depositary is not
appointed by the Company within 90 days of such notice or, (B) the Company in its sole discretion executes and delivers to the Trustee and Registrar an Officers' Certificate stating that
such Global Security shall be so exchangeable or (C) an Event of Default has occurred and is continuing and the Registrar has received a request from DTC. In the event of the occurrence of any
of the events specified in clause (A), (B) or (C) of the preceding sentence, the Company shall promptly make available to the Trustee a reasonable supply of Definitive Securities
in fully registered form without interest coupons. 

         (ii)  Any
Definitive Security delivered in exchange for an interest in a Global Security pursuant to Section 2.1(e)(iv)
or (v) shall, except as otherwise provided by Section 2.6(c), bear the applicable legend
regarding transfer restrictions applicable to the Definitive Security set forth in Section 2.1(d). 

        (iii)  In
connection with the exchange of a portion of a Definitive Security for a beneficial interest in a Global Security, the Trustee shall cancel such Definitive
Security, and the Company shall execute, and the Trustee shall authenticate and make available for delivery, to the transferring Holder a new Definitive Security representing the principal amount not
so transferred. 

        SECTION
2.2.    Execution and Authentication.    One Officer shall sign the Securities for the Company by manual or
facsimile signature. If an Officer whose signature is on a Security no longer holds that office at the time the Trustee authenticates the Security, the Security shall be valid nevertheless. 

        A
Security shall not be valid until an authorized signatory of the Trustee manually authenticates the Security. The signature of the Trustee on a Security shall be conclusive evidence
that such Security has been duly and validly authenticated and issued under this Indenture. A Security shall be dated the date of its authentication. 

        At
any time and from time to time after the execution and delivery of this Indenture, the Trustee shall authenticate and make available for delivery: (1) Initial Securities for
original issue on the Issue Date in an aggregate principal amount of $112,000,000 (2) subject to the terms of this Indenture, Additional Securities for original issue in an unlimited principal
amount and (3) Exchange Securities for issue only in an Exchange Offer or upon resale under an effective Shelf Registration Statement, and only in exchange for Initial Securities or Additional
Securities of an equal principal amount, in each case upon a written order of the Company signed by two Officers of the Company (the "Company Order").
Such Company Order shall specify whether the Securities will be in the form of Definitive Securities or Global Securities, the amount of the Securities to be authenticated and the date on which the
original
issue of Securities is to be authenticated and whether the Securities are to be Initial Securities, Additional Securities or Exchange Securities. 

        The
Trustee may appoint an agent (the "Authenticating Agent") reasonably acceptable to the Company to authenticate the Securities. Any
such appointment shall be evidenced by an instrument signed by a Trust Officer, a copy of which shall be furnished to the Company. Unless limited by the terms of such appointment, any such
Authenticating Agent may authenticate Securities whenever the Trustee may do so. Each reference in this Indenture to authentication by the Trustee includes 

31

 

authentication
by the Authenticating Agent. An Authenticating Agent has the same rights as any Registrar, Paying Agent or agent for service of notices and demands. 

        In
case the Company, pursuant to Article IV, shall be consolidated or merged with or into any other Person or shall convey,
transfer, lease or otherwise dispose of its properties and assets substantially as an entirety to any Person, and the successor Person resulting from such consolidation, or surviving such merger, or
into which the Company shall have been merged, or the Person which shall have received a conveyance, transfer, lease or other disposition as aforesaid, shall have executed an indenture supplemental
hereto with the Trustee pursuant to Article IV, any of the Securities authenticated or delivered prior to such consolidation, merger, conveyance,
transfer, lease or other disposition may, from time to time, at the request of the successor Person, be exchanged for other Securities executed in the name of the successor Person with such changes in
phraseology and form as may be appropriate, but otherwise in substance of like tenor as the Securities surrendered for such exchange and of like principal amount; and the Trustee, upon Company Order
of the successor Person, shall authenticate and make available for delivery Securities as specified in such order for the purpose of such exchange. If Securities shall at any time be authenticated and
delivered in any new name of a successor Person pursuant to this Section 2.2 in exchange or substitution for or upon registration of transfer of
any Securities, such successor Person, at the option of the Holders but without expense to them, shall provide for the exchange of all Securities at the time outstanding for Securities authenticated
and delivered in such new name. 

        SECTION
2.3.    Registrar and Paying Agent.    The Company shall maintain an office or agency where Securities may be
presented for registration of transfer or for exchange (the "Registrar") and an office or agency where Securities may be presented for payment (the
"Paying Agent"). The Company shall cause each of the Registrar and the Paying Agent to maintain an office or agency in New York, New York. The Registrar
shall keep a register of the Securities and of their transfer and exchange (the "Securities Register"). The Company may have one or more
co-registrars and one or more additional paying agents. The term "Paying Agent" includes any additional paying agent and the term "Registrar" includes any co-registrar. 

        The
Company shall enter into an appropriate agency agreement with any Registrar or Paying Agent not a party to this Indenture, which shall incorporate the terms of the TIA. The agreement
shall implement the provisions of this Indenture that relate to such agent. The Company shall notify the Trustee of the
name and address of each such agent. If the Company fails to maintain a Registrar or Paying Agent, the Trustee shall act as such and shall be entitled to appropriate compensation therefor pursuant to  Section 7.7. Any of the Company's Wholly-Owned Subsidiaries organized in the United States may act as Paying Agent, Registrar or transfer agent.
 

        The
Company initially appoints the Trustee as Registrar and Paying Agent for the Securities. The Company may remove any Registrar or Paying Agent upon written notice to such Registrar or
Paying Agent and to the Trustee; provided, however, that no such removal shall become effective until (i) acceptance of any appointment by a
successor as evidenced by an appropriate agreement entered into by the Company and such successor Registrar or Paying Agent, as the case may be, and delivered to the Trustee or
(ii) notification to the Trustee that the Trustee shall serve as Registrar or Paying Agent until the appointment of a successor in accordance with clause (i) above. The Registrar or
Paying Agent may resign at any time upon written notice to the Company and the Trustee. 

32

   
        SECTION 2.4.    Paying Agent to Hold Money in Trust.    By no later than 10:00 a.m. (New York City time) on
the
date on which any principal of, premium, if any, or interest on any Security is due and payable, the Company shall deposit with the Paying Agent a sum sufficient in immediately available funds to pay
such principal, premium, if any, or interest when due. The Company shall require each Paying Agent (other than the Trustee) to agree in writing that such Paying Agent shall hold in trust for the
benefit of Securityholders or the Trustee all money held by such Paying Agent for the payment of principal, premium, if any, of or interest on the Securities (whether such assets have been distributed
to it by the Company or other obligors on the Securities) and shall promptly notify the Trustee in writing of any default by the Company or any Subsidiary Guarantor in making any such payment. If a
Subsidiary of the Company acts as Paying Agent, it shall segregate the money held by them as Paying Agent and hold it as a separate trust fund. The Company at any time may require a Paying Agent
(other than the Trustee) to pay all money held by it to the Trustee and to account for any funds or assets disbursed by such Paying Agent. Upon complying with this Section, the Paying Agent (if other
than a Subsidiary of the Company) shall have no further liability for the money delivered to the Trustee. Upon any bankruptcy, reorganization or similar proceeding with respect to the Company, the
Trustee shall serve as Paying Agent for the Securities. 

        SECTION
2.5.    Securityholder Lists.    The Trustee shall preserve in as current a form as is reasonably practicable
the most recent list available to it of the names and addresses of Securityholders and shall otherwise comply with TIA § 312(a). If the Trustee is not the Registrar, or to the extent
otherwise required under the TIA, the Company, on its own behalf and on behalf of each of the Subsidiary Guarantors, shall furnish or cause the Registrar to furnish to the Trustee, in writing at least
five Business Days before each interest payment date and at such other times as the Trustee may request in writing, a list in such form and as of such date as the Trustee may reasonably require of the
names and addresses of Securityholders and the Company shall otherwise comply with TIA § 312(a). 

        SECTION
2.6.    Transfer and Exchange.    

        (a)   The
following provisions shall apply with respect to any proposed transfer of a Rule 144A Note or an Institutional Accredited Investor Note prior to the date
which is two years after the later of the date of its original issue and the last date on which the Company or any Affiliate of the Company was the owner of such Securities (or any predecessor
thereto) (the "Resale Restriction Termination Date"): 

          (i)  a
transfer of a Rule 144A Note or an Institutional Accredited Investor Note or a beneficial interest therein to a QIB shall be made upon the representation of
the transferee in the form as set forth on the reverse of the Security that it is purchasing for its own account or an account with respect to which it exercises sole investment discretion and that it
and any such account is a "qualified institutional
buyer" within the meaning of Rule 144A, and is aware that the sale to it is being made in reliance on Rule 144A and acknowledges that it has received such information regarding the
Company as the undersigned has requested pursuant to Rule 144A or has determined not to request such information and that it is aware that the transferor is relying upon its foregoing
representations in order to claim the exemption from registration provided by Rule 144A; 

         (ii)  a
transfer of a Rule 144A Note or an Institutional Accredited Investor Note or a beneficial interest therein to an IAI shall be made upon receipt by the Trustee
or its agent of a certificate substantially in the form set forth in Section 2.7 from the proposed transferee and, if requested by the Company or
the Trustee, the delivery of an opinion of counsel, certification and/or other information satisfactory to each of them; and 

        (iii)  a
transfer of a Rule 144A Note or an Institutional Accredited Investor Note or a beneficial interest therein to a Non-U.S. Person shall be made upon
receipt by the Trustee or its agent of a certificate substantially in the form set forth in Section 2.8 from the proposed transferor 

33

 

and,
if requested by the Company or the Trustee, the delivery of an opinion of counsel, certification and/or other information satisfactory to each of them. 

        (b)   The
following provisions shall apply with respect to any proposed transfer of a Regulation S Note prior to the expiration of the Restricted Period: 

          (i)  a
transfer of a Regulation S Note or a beneficial interest therein to a QIB shall be made upon the representation of the transferee, in the form of assignment on
the reverse of the certificate, that it is purchasing the Security for its own account or an account with respect to which it exercises sole investment discretion and that it and any such account is a
"qualified institutional buyer" within the meaning of Rule 144A, and is aware that the sale to it is being made in reliance on Rule 144A and acknowledges that it has received such
information regarding the Company as the undersigned has requested pursuant to Rule 144A or has determined not to request such information and that it is aware that the transferor is relying
upon its foregoing representations in order to claim the exemption from registration provided by Rule 144A; 

         (ii)  a
transfer of a Regulation S Note or a beneficial interest therein to an IAI shall be made upon receipt by the Trustee or its agent of a certificate
substantially in the form set forth in Section 2.7 from the proposed transferee and, if requested by the Company or the Trustee, the delivery of
an opinion of counsel, certification and/or other information satisfactory to each of them; and 

        (iii)  a
transfer of a Regulation S Note or a beneficial interest therein to a Non-U.S. Person shall be made upon receipt by the Trustee or its agent of a
certificate substantially in the form set forth in Section 2.8 hereof from the proposed transferor and, if requested by the Company or the
Trustee, receipt by the Trustee or its agent of an opinion of counsel, certification and/or other information satisfactory to each of them. 

        After
the expiration of the Restricted Period, interests in the Regulation S Note may be transferred in accordance with applicable law without requiring the certification set
forth in Section 2.8 or any additional certification. 

        (c)    Restricted Securities Legend.    Upon the transfer, exchange or replacement of Securities not bearing a
Restricted Securities Legend, the Registrar shall deliver Securities that do not bear a Restricted Securities Legend. Upon the transfer, exchange or replacement of Securities bearing a Restricted
Securities Legend, the Registrar shall deliver only Securities that bear a Restricted Securities Legend unless (i) Initial Securities are being exchanged for Exchange Securities in an Exchange
Offer in which case the Exchange Securities shall not bear a Restricted Securities Legend, (ii) an Initial Security is being transferred pursuant to the Shelf Registration Statement or other
effective registration statement or (iii) there is delivered to the Registrar an Opinion of Counsel reasonably satisfactory to the Company and the Trustee to the effect that neither such legend
nor the related restrictions on transfer are required in order to maintain compliance with the provisions of the Securities Act. Any Additional Securities sold in a registered offering shall not be
required to bear the Restricted Securities Legend. 

        (d)   The
Registrar shall retain copies of all letters, notices and other written communications received pursuant to  Section 2.1 or this Section 2.6. The
Company shall have the right to inspect and make
copies of all such letters, notices or other written communications at any reasonable time upon the giving of reasonable prior written notice to the Registrar. 

        (e)    Obligations with Respect to Transfers and Exchanges of Securities.    

          (i)  To
permit registrations of transfers and exchanges, the Company shall, subject to the other terms and conditions of this  Article II, execute and the Trustee shall authenticate Definitive Securities
and Global Securities at the Registrar's request. 

34

 

         (ii)  No
service charge shall be made to a Holder for any registration of transfer or exchange, but the Company may require the Holder to pay a sum sufficient to cover any
transfer tax, assessments, or similar governmental charge payable in connection therewith (other than any such transfer taxes,
assessments or similar governmental charges payable upon exchange or transfer pursuant to Sections 2.6 or  9.5). 

        (iii)  The
Company (and the Registrar) shall not be required to register the transfer of or exchange of any Security for a period beginning (1) 15 days before
the mailing of a notice of an offer to repurchase Securities or of a redemption of Securities and ending at the close of business on the day of such mailing or (2) 15 days before an
interest payment date and ending on such interest payment date. 

        (iv)  Prior
to the due presentation for registration of transfer of any Security, the Company, the Trustee, the Paying Agent or the Registrar may deem and treat the person in
whose name a Security is registered as the absolute owner of such Security for the purpose of receiving payment of principal of, premium, if any, and interest on such Security and for all other
purposes whatsoever, including without limitation the transfer or exchange of such Security, whether or not such Security is overdue, and none of the Company, the Trustee, the Paying Agent or the
Registrar shall be affected by notice to the contrary. 

         (v)  Any
Definitive Security delivered in exchange for an interest in a Global Security pursuant to Section 2.1(e)
shall, except as otherwise provided by Section 2.6(c), bear the applicable legend regarding transfer restrictions applicable to the Definitive
Security set forth in Section 2.1(d). 

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

        (f)    No Obligation of the Trustee.    

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

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

35

 

        SECTION 2.7.    Form of Certificate to be Delivered in Connection with Transfers to Institutional Accredited
Investors.    

[Date] 

Cornell
Companies, Inc.

c/o JPMorgan Chase Bank

600 Travis, Suite 1150

Houston, Texas 77002

Attention: Institutional Trust Services 

Ladies
and Gentlemen: 

        This
certificate is delivered to request a transfer of $[                        ] principal amount of the
103/4% Senior Notes due 2012 (the
"Securities") of Cornell Companies, Inc. (the "Company"). 

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

	 	 	Name:	 	 	 
	 	 	 	
	 	 
	 	 	 	 	 	 
	 	 	Address:	 	 	 
	 	 	 	
	 	 
	 	 	 	 	 	 
	 	 	Taxpayer ID

Number:	 	 	 
	 	 	 	
	 	 

        The
undersigned represents and warrants to you that: 

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

        2.     We
understand that the Securities have not been registered under the Securities Act and, unless so registered, may not be sold except as permitted in the following
sentence. We agree on our own behalf and on behalf of any investor account for which we are purchasing Securities to offer, sell or otherwise transfer such Securities prior to the date that is two
years after the later of the date of original issue and the last date on which the Company or any affiliate of the Company was the owner of such Securities (or any predecessor thereto) (the
"Resale Restriction Termination Date") only (a) to the Company, (b) pursuant to a registration statement which has been declared effective
under the Securities Act, (c) in a transaction complying with the requirements of Rule 144A under the Securities Act, to a person we reasonably believe is a "qualified institutional
buyer" under Rule 144A of the Securities Act (a "QIB") that is purchasing for its own account or for the account of a QIB and to whom notice is
given that the transfer is being made in reliance on Rule 144A, (d) pursuant to offers and sales that occur outside the United States within the meaning of Regulation S under the
Securities Act, (e) to an institutional "accredited investor" within the meaning of Rule 501(a)(1), (2), (3) or (7) under the Securities Act that is purchasing for its own
account or for the account of such an institutional "accredited investor," in each case 

36

 

in
a minimum principal amount of Securities of $250,000 for investment purposes and not with a view to or for offer or sale in connection with any distribution in violation of the Securities Act or
(f) pursuant to any other available exemption from the registration requirements of the Securities Act, subject in each of the foregoing cases to any requirement of law that the disposition of
our property or the property of such investor account or accounts be at all times within our or their control and in compliance with any applicable state securities laws. The foregoing restrictions on
resale will not apply subsequent to the Resale Restriction Termination Date. If any resale or other transfer of the Securities is proposed to be made pursuant to clause (e) above prior to the
Resale Restriction Termination Date, the transferor shall deliver a letter from the transferee substantially in the form of this letter to the Company and the Trustee, which shall provide, among other
things, that the transferee is an institutional "accredited investor" (within the meaning of Rule 501(a)(1), (2), (3) or (7) under the Securities Act) and that it is acquiring
such Securities for investment purposes and not for distribution in violation of the Securities Act. Each purchaser acknowledges that the Company and the Trustee reserve the right prior to any offer,
sale or other transfer prior to the Resale Restriction Termination Date of the Securities pursuant to clauses (d), (e) or (f) above to require the delivery of an opinion of counsel,
certifications and/or other information satisfactory to the Company and the Trustee. 

	 	 	TRANSFEREE:	 
	 	 	 	

	 	 	 	 
	 	 	BY:	 
	 	 	 	

        SECTION
2.8.    Form of Certificate to be Delivered in Connection with Transfers Pursuant to Regulation S.    

[Date]

Cornell
Companies, Inc.

c/o JPMorgan Chase Bank

600 Travis, Suite 1150

Houston, Texas 77002

Attention: Institutional Trust Services 

	Re:
	Cornell
Companies, Inc.
 103/4% Senior Notes due 2012 (the "Securities")

Ladies
and Gentlemen: 

        In
connection with our proposed sale of $[            ] aggregate principal amount of the Securities, we confirm that such sale has been effected pursuant to
and in accordance with Regulation S under the United States Securities Act of 1933, as amended (the "Securities Act"), and, accordingly, we
represent that: 

        (a)   the
offer of the Securities was not made to a person in the United States; 

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

        (c)   no
directed selling efforts have been made in the United States in contravention of the requirements of Rule 903(a)(2) or Rule 904(a)(2) of
Regulation S, as applicable; and 

37

 

        (d)   the
transaction is not part of a plan or scheme to evade the registration requirements of the Securities Act. 

        In
addition, if the sale is made during a restricted period and the provisions of Rule 903(b)(2) or Rule 904(b)(1) of Regulation S are applicable thereto, we confirm
that such sale has been made in accordance with the applicable provisions of Rule 903(b)(2) or Rule 904(b)(1), as the case may be. 

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

	 	 	Very truly yours,	 	 
	 	 	 	 	 	 	 
	 	 	[Name of Transferor]	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	By:	 	 	 	 
	 	 	 	 	
	 	 
	 	 	 	 	 	 	 
	 	 	 	 	
 Authorized Signature

	 	 

        SECTION
2.9.    Mutilated, Destroyed, Lost or Stolen Securities.    If a mutilated Security is surrendered to the
Registrar or if the Holder of a Security claims that the Security has been lost, destroyed or wrongfully taken, the Company shall issue and the Trustee shall authenticate a replacement Security if the
requirements of Section 8-405 of the Uniform Commercial Code are met, such that the Securityholder (a) satisfies the Company or the Trustee within a reasonable time after
such Securityholder has notice of such loss, destruction or wrongful taking and the Registrar has not registered a transfer prior to receiving such notification, (b) makes such request to the
Company or Trustee prior to the Security being acquired by a protected purchaser as defined in Section 8-303 of the Uniform Commercial Code (a "protected
purchaser") and (c) satisfies any other reasonable requirements of the Trustee. If required by the Trustee or the Company, such Holder shall furnish an indemnity bond
sufficient in the judgment of the Company and the Trustee to protect the Company, the Trustee, the Paying Agent and the Registrar from any loss which any of them may suffer if a Security is replaced,
and, in the absence of notice to the Company, any Subsidiary Guarantor or the Trustee that such Security has been acquired by a protected purchaser, the Company shall execute and upon receipt of a
Company Order the Trustee shall authenticate and make available for delivery, in exchange for any such mutilated Security or in lieu of any such destroyed, lost or stolen Security, a new Security of
like tenor and principal amount, bearing a number not contemporaneously outstanding. 

        In
case any such mutilated, destroyed, lost or stolen Security has become or is about to become due and payable, the Company in its discretion may, instead of issuing a new Security, pay
such Security. 

        Upon
the issuance of any new Security under this Section, the Company may require that such Holder pay a sum sufficient to cover any tax or other governmental charge that may be imposed
in relation thereto and any other expenses (including the fees and expenses of counsel and of the Trustee) in connection therewith. 

        Every
new Security issued pursuant to this Section in lieu of any mutilated, destroyed, lost or stolen Security shall constitute an original additional contractual obligation of the
Company, any Subsidiary Guarantor (if applicable) and any other obligor upon the Securities, whether or not the mutilated, destroyed, lost or stolen Security shall be at any time enforceable by
anyone, and shall be 

38

 

entitled
to all benefits of this Indenture equally and proportionately with any and all other Securities duly issued hereunder. 

        The
provisions of this Section are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed,
lost or stolen Securities. 

        SECTION
2.10.    Outstanding Securities.    Securities outstanding at any time are all Securities authenticated by the
Trustee except for those cancelled by it, those delivered to it for cancellation and those described in this Section as not outstanding. A Security does not cease to be outstanding in the event either
of the Company or an Affiliate of the Company holds the Security, provided, however, that (i) for purposes of determining which are outstanding
for consent or voting purposes hereunder, the provisions of Section 11.6 shall apply and (ii) in determining whether the Trustee shall be
protected in making a determination whether the Holders of the requisite principal amount of outstanding Securities are present at a meeting of Holders of Securities for quorum purposes or have
consented to or voted in favor of any request, demand, authorization, direction, notice, consent, waiver, amendment or modification hereunder, or relying upon any such quorum, consent or vote, only
Securities which a Trust Officer of the Trustee actually knows to be held by the Company or an Affiliate of the Company shall not be considered outstanding. 

        If
a Security is replaced pursuant to Section 2.9 (other than a mutilated Security surrendered for replacement), it ceases to be
outstanding unless the Trustee and the Company receive proof satisfactory to them that the replaced Security is held by a protected purchaser. A mutilated Security ceases to be outstanding upon
surrender of such Security and replacement pursuant to Section 2.9. 

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

        SECTION
2.11.    Temporary Securities.    In the event that Definitive Securities are to be issued under the terms of
this Indenture, until such Definitive Securities are ready for delivery, the Company may prepare and the Trustee shall authenticate temporary Securities. Temporary Securities shall be substantially in
the form, and shall carry all rights, of Definitive Securities but may have variations that the Company considers appropriate for temporary Securities. Without unreasonable delay, the Company shall
prepare and the Trustee shall authenticate Definitive Securities. After the preparation of Definitive Securities, the temporary Securities shall be exchangeable for Definitive Securities upon
surrender of the temporary Securities at any office or agency maintained by the Company for that purpose and such exchange shall be without charge to the Holder. Upon surrender for cancellation of any
one or more temporary Securities, the Company shall execute, and the Trustee shall authenticate and make available for delivery in exchange therefor, one or more Definitive Securities representing an
equal principal amount of Securities. Until so exchanged, the Holder of temporary Securities shall in all respects be entitled to the same benefits under this Indenture as a Holder of Definitive
Securities. 

        SECTION
2.12.    Cancellation.    The Company at any time may deliver Securities to the Trustee for cancellation. The
Registrar and the Paying Agent shall forward to the Trustee any Securities surrendered to them for registration of transfer, exchange or payment. The Trustee and no one else shall cancel all
Securities surrendered for registration of transfer, exchange, payment or cancellation and destroy such Securities in accordance with its internal policies and customary procedures including delivery
of a certificate (a "Certificate of Destruction") describing such Securities disposed (subject to the record retention requirements of the Exchange Act)
or deliver canceled Securities to the Company in either such case pursuant to written direction by an Officer of the Company. If the Company or any 

39

 

Subsidiary
Guarantor acquires any of the Securities, such acquisition shall not operate as a redemption or satisfaction of the Indebtedness represented by such Securities unless and until the same are
surrendered to the Trustee for cancellation pursuant to this Section 2.12. The Company may not issue new Securities to replace Securities it has
paid or delivered to the Trustee for cancellation for any reason other than in connection with a transfer or exchange. 

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

        SECTION
2.13.    Payment of Interest; Defaulted Interest.    Interest on any Security which is payable, and is
punctually paid or duly provided for, on any interest payment date shall be paid to the Person in whose name such Security (or one or more predecessor Securities) is registered at the close of
business on the regular record date for such payment at the office or agency of the Company maintained for such purpose pursuant to Section 2.3. 

        Any
interest on any Security which is payable, but is not paid when the same becomes due and payable and such nonpayment continues for a period of 30 days shall forthwith cease to
be payable to the Holder on the regular record date, and such defaulted interest and (to the extent lawful) interest on such defaulted interest at the rate borne by the Securities (such defaulted
interest and interest thereon herein collectively called "Defaulted Interest") shall be paid by the Company, at its election in each case, as provided
in clause (a) or (b) below: 

        (a)   The
Company may elect to make payment of any Defaulted Interest to the Persons in whose names the Securities (or their respective predecessor Securities) are registered
at the close of business on a Special Record Date (as defined below) for the payment of such Defaulted Interest, which shall be
fixed in the following manner. The Company shall notify the Trustee in writing of the amount of Defaulted Interest proposed to be paid on each Security and the date (not less than 30 days after
such notice) of the proposed payment (the "Special Interest Payment Date"), and at the same time the Company 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 in this clause provided. Thereupon the Trustee shall fix a record date (the
"Special Record Date") for the payment of such Defaulted Interest, which date shall be not more than 15 days and not less than 10 days
prior to the Special Interest Payment Date and not less than 10 days after the receipt by the Trustee of the notice of the proposed payment. The Trustee shall promptly notify the Company of
such Special Record Date, and in the name and at the expense of the Company, shall cause notice of the proposed payment of such Defaulted Interest and the Special Record Date and Special Interest
Payment Date therefor to be given in the manner provided for in Section 11.2, not less than 10 days prior to such Special Record Date.
Notice of the proposed payment of such Defaulted Interest and the Special Record Date and Special Interest Payment Date therefor having been so given, such Defaulted Interest shall be paid on the
Special Interest Payment Date to the Persons in whose names the Securities (or their respective predecessor Securities) are registered at the close of business on such Special Record Date and shall no
longer be payable pursuant to the following clause (b). 

40

  

        (b)   The
Company may make payment of any Defaulted Interest in any other lawful manner not inconsistent with the requirements of any securities exchange on which the
Securities may be listed, and upon such notice as may be required by such exchange, if, after notice given by the Company to the Trustee of the proposed payment pursuant to this clause, such manner of
payment shall be deemed practicable by the Trustee. 

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

        SECTION
2.14.    Computation of Interest.    Interest on the Securities shall be computed on the basis of a
360-day year of twelve 30-day months. 

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

 
 

ARTICLE III    
    
    COVENANTS    
    

        SECTION
3.1.    Payment of Securities.    The Company shall promptly pay the principal of, premium, if any, and
interest on the Securities on the dates and in the manner provided in the Securities and in this Indenture. Principal, premium, if any, and interest shall be considered paid on the date due if on such
date the Trustee or the Paying Agent holds in accordance with this Indenture immediately available funds sufficient to pay all principal, premium, if any, and interest then due and the Trustee or the
Paying Agent, as the case may be, is not prohibited from paying such money to the Securityholders on that date pursuant to the terms of this Indenture. 

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

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

        SECTION
3.2.    Limitation on Indebtedness.    The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, Incur any Indebtedness (including Acquired Indebtedness); provided, however, that the Company and the Subsidiary Guarantors may Incur
Indebtedness if on the date thereof: 

        (1)   the
Consolidated Coverage Ratio for the Company and its Restricted Subsidiaries is at least (a) 2.00 to 1.00, if such Indebtedness is Incurred on or prior to
September 30, 2006, and (b) 2.25 to 1.00, if such Indebtedness is Incurred thereafter; and 

        (2)   no
Default or Event of Default shall have occurred or be continuing or would occur as a consequence of Incurring the Indebtedness or transactions relating to such
Incurrence. 

41

 

The
first paragraph of this covenant shall not prohibit the Incurrence of the following Indebtedness: 

        (1)   Indebtedness
of the Company Incurred pursuant to a Credit Facility in an amount up to $100.0 million less the aggregate principal amount of repayments with
proceeds from Asset Dispositions utilized in accordance with clause (3)(a) of Section 3.5 that permanently reduce the commitments
thereunder; 

        (2)   Guarantees
by the Company or Subsidiary Guarantors of Indebtedness Incurred in accordance with the provisions of this Indenture;  provided that in the event such Indebtedness that is being Guaranteed is a
Subordinated Obligation or a Guarantor Subordinated Obligation, then the
related Guarantee shall
be subordinated in right of payment to the Securities or the applicable Subsidiary Guarantee, as applicable; 

        (3)   Indebtedness
of the Company owing to and held by any Wholly-Owned Subsidiary or Indebtedness of a Restricted Subsidiary owing to and held by the Company or any
Wholly-Owned Subsidiary; provided, however,

        (a)   if
the Company is the obligor on such Indebtedness, such Indebtedness is expressly subordinated to the prior payment in full in cash of all obligations with respect to
the Securities; 

        (b)   if
a Subsidiary Guarantor is the obligor on such Indebtedness and the Company or another Subsidiary Guarantor is not the obligee, such Indebtedness is subordinated in
right of payment to the Subsidiary Guarantee of such Subsidiary Guarantor; and 

        (c)   (i)
any subsequent issuance or transfer of Capital Stock or any other event which results in any such Indebtedness being beneficially held by a Person other than the
Company or a Wholly-Owned Subsidiary of the Company; and 

         (ii)  any
sale or other transfer of any such Indebtedness to a Person other than the Company or a Wholly-Owned Subsidiary of the Company; 

shall
be deemed, in each case, to constitute an Incurrence of such Indebtedness by the Company or such Subsidiary, as the case may be; 

        (4)   Indebtedness
represented by (a) the Securities issued on the Issue Date, the Subsidiary Guarantees and the Exchange Securities and exchange guarantees issued in
an Exchange Offer, (b) any Indebtedness (other than the Indebtedness described in clauses (1), (2), (3), (6), (8), (9) and (10)) outstanding on the Issue Date and (c) any
Refinancing Indebtedness Incurred in respect of any Indebtedness described in this clause (4) or clause (5) or Incurred pursuant to the first paragraph of this covenant; 

        (5)   Indebtedness
of a Subsidiary Guarantor Incurred and outstanding on the date on which such Subsidiary Guarantor was acquired by the Company (other than Indebtedness
Incurred (a) to provide all or any portion of the funds utilized to consummate the transaction or series of related transactions pursuant to which such Subsidiary Guarantor became a Restricted
Subsidiary or was otherwise acquired by the Company or (b) otherwise in connection with, or in contemplation of, such acquisition); provided,
however, that at the time such Subsidiary Guarantor is acquired by the Company, the Company would
have been able to Incur $1.00 of additional Indebtedness pursuant to the first paragraph of this covenant after giving effect to the Incurrence of such Indebtedness pursuant to this clause (5); 

        (6)   Indebtedness
under Currency Agreements and Interest Rate Agreements; provided, that in the case of Currency Agreements,
such Currency Agreements are related to business transactions of the Company or its Restricted Subsidiaries entered into in the ordinary course of business or in the case of Currency Agreements and
Interest Rate Agreements, such Currency 

42

 

Agreements
and Interest Rate Agreements are entered into for bona fide hedging purposes of the Company or its Restricted Subsidiaries (as determined in good faith by the Board of Directors or senior
management of the Company) and substantially correspond in terms of notional amount, duration, currencies and interest rates, as applicable, to Indebtedness of the Company or its Restricted
Subsidiaries Incurred without violation of this Indenture; 

        (7)   the
Incurrence by the Company or any of its Subsidiary Guarantors of Indebtedness represented by Capitalized Lease Obligations, mortgage financings or purchase money
obligations with respect to assets other than Capital Stock or other Investments, in each case Incurred for the purpose of financing all or any part of the purchase price or cost of construction or
improvements of property used in the business of the Company or such Subsidiary Guarantor, in an aggregate principal amount not to exceed $15.0 million at any time outstanding; 

        (8)   Indebtedness
Incurred in respect of workers' compensation claims, self-insurance obligations, performance, surety and similar bonds and completion guarantees
provided by the Company or a Restricted Subsidiary in the ordinary course of business; 

        (9)   Indebtedness
arising from agreements of the Company or a Restricted Subsidiary providing for indemnification, adjustment of purchase price or similar obligations, in
each case, Incurred or assumed in connection with the disposition of any business or assets of the Company or a Restricted Subsidiary, provided that the
maximum aggregate liability in respect of all such Indebtedness shall at no time exceed the gross proceeds actually received by the Company and its Restricted Subsidiaries in connection with such
disposition; 

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

        (11) in
addition to the items referred to in clauses (1) through (10) above, Indebtedness of the Company and its Subsidiary Guarantors in an aggregate
outstanding principal amount which, when taken together with the principal amount of all other Indebtedness Incurred pursuant to this clause (11) and then outstanding, will not exceed
$10.0 million at any time outstanding. 

        The
Company shall not Incur any Indebtedness under the preceding paragraph if the proceeds thereof are used, directly or indirectly, to refinance any Subordinated Obligations of the
Company unless such Indebtedness will be subordinated to the Securities to at least the same extent as such Subordinated Obligations. No Subsidiary Guarantor shall Incur any Indebtedness if the
proceeds thereof are used, directly or indirectly, to refinance any Guarantor Subordinated Obligations of such Subsidiary Guarantor unless such Indebtedness shall be subordinated to the obligations of
such Subsidiary Guarantor under its Subsidiary Guarantee to at least the same extent as such Guarantor Subordinated Obligations. No Restricted Subsidiary may Incur any Indebtedness if the proceeds are
used to refinance Indebtedness of the Company. 

        For
purposes of determining compliance with, and the outstanding principal amount of any particular Indebtedness Incurred pursuant to and in compliance with, this covenant: 

        (1)   in
the event that Indebtedness meets the criteria of more than one of the types of Indebtedness described in the first paragraph and the clauses of the second paragraph
of this covenant, the Company, in its sole discretion, shall classify such item of Indebtedness on the date of Incurrence and only be required to include the amount and type of such Indebtedness in
the first paragraph or any of the clauses of the second paragraph; 

        (2)   all
Indebtedness outstanding on the date of this Indenture under the Senior Secured Credit Agreement shall be deemed initially Incurred on the Issue Date under
clause (1) of the 

43

 

second
paragraph of this covenant and not the first paragraph or clause (4) of the second paragraph of this covenant; 

        (3)   Guarantees
of, or obligations in respect of letters of credit relating to, Indebtedness which is otherwise included in the determination of a particular amount of
Indebtedness shall not be included; 

        (4)   if
obligations in respect of letters of credit are Incurred pursuant to a Credit Facility and are being treated as Incurred pursuant to clause (1) of the second
paragraph above and the letters of credit relate to other Indebtedness, then such other Indebtedness shall not be included; 

        (5)   the
principal amount of any Disqualified Stock of the Company or a Restricted Subsidiary, or Preferred Stock of a Restricted Subsidiary that is not a Subsidiary
Guarantor, shall be equal to the greater of the maximum mandatory redemption or repurchase price (not including, in either case, any redemption or repurchase premium) or the liquidation preference
thereof; 

        (6)   Indebtedness
permitted by this covenant need not be permitted solely by reference to one provision permitting such Indebtedness but may be permitted in part by one such
provision and in part by one or more other provisions of this covenant permitting such Indebtedness; and 

        (7)   the
amount of Indebtedness issued at a price that is less than the principal amount thereof shall be equal to the amount of the liability in respect thereof determined
in accordance with GAAP. 

        Accrual
of interest, accrual of dividends, the accretion of accreted value, the payment of interest in the form of additional Indebtedness and the payment of dividends in the form of
additional shares of Preferred Stock or Disqualified Stock shall not be deemed to be an Incurrence of Indebtedness for purposes of this covenant. The amount of any Indebtedness outstanding as of any
date shall be (i) the accreted value thereof in the case of any Indebtedness issued with original issue discount and (ii) the principal amount or liquidation preference thereof, together
with any interest thereon that is more than 30 days past due, in the case of any other Indebtedness. 

        In
addition, the Company shall not permit any of its Unrestricted Subsidiaries to Incur any Indebtedness or issue any shares of Disqualified Stock, other than Non-Recourse
Debt. If at any time an Unrestricted Subsidiary becomes a Restricted Subsidiary, any Indebtedness of such Subsidiary shall be deemed to be Incurred by a Restricted Subsidiary as of such date (and, if
such Indebtedness is not permitted to be Incurred as of such date under this Section 3.2, the Company shall be in Default of this covenant). 

        For
purposes of determining compliance with any U.S. dollar-denominated restriction on the Incurrence of Indebtedness, the U.S. dollar-equivalent principal amount of Indebtedness
denominated in a foreign currency shall be calculated based on the relevant currency exchange rate in effect on the date such Indebtedness was Incurred, in the case of term Indebtedness, or first
committed, in the case of revolving credit Indebtedness; provided that if such Indebtedness is Incurred to refinance other Indebtedness denominated in a
foreign currency, and such refinancing would cause the applicable U.S. dollar-dominated restriction to be exceeded if calculated at the relevant currency exchange rate in effect on the date of such
refinancing, such U.S. dollar-dominated restriction shall be deemed not to have been exceeded so long as the principal amount of such refinancing Indebtedness does not exceed the principal amount of
such Indebtedness being refinanced. Notwithstanding any other provision of this covenant, the maximum amount of Indebtedness that the Company and the Subsidiary Guarantors may Incur pursuant to this
covenant shall not be deemed to be exceeded solely as a result of fluctuations in the exchange rate of currencies. 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 Refinancing Indebtedness is
denominated that is in effect on the date of such refinancing. 

44

 

        SECTION
3.3.    Limitation on Restricted Payments.    The Company shall not, and shall not permit any of its
Restricted Subsidiaries, directly or indirectly, to: 

        (1)   declare
or pay any dividend or make any distribution on or in respect of its Capital Stock (including any payment in connection with any merger or consolidation
involving the Company or any of its Restricted Subsidiaries) except: 

        (a)   dividends
or distributions payable in Capital Stock of the Company (other than Disqualified Stock) or in options, warrants or other rights to purchase such Capital Stock
of the Company; and 

        (b)   dividends
or distributions payable to the Company or a Restricted Subsidiary (and if such Restricted Subsidiary is not a Wholly-Owned Subsidiary, to its other holders of
common Capital Stock on a pro rata basis); 

        (2)   purchase,
redeem, retire or otherwise acquire for value any Capital Stock of the Company or any direct or indirect parent of the Company (including any payment in
connection with any merger or consolidation involving the Company or any of its Restricted Subsidiaries) held by Persons other than the Company or a Restricted Subsidiary (other than in exchange for
Capital Stock of the Company (other than Disqualified Stock)); 

        (3)   purchase,
repurchase, redeem, defease or otherwise acquire or retire for value, prior to scheduled maturity, scheduled repayment or scheduled sinking fund payment, any
Subordinated Obligations or Guarantor Subordinated Obligations (other than the purchase, repurchase, redemption, defeasance or other acquisition or retirement of Subordinated Obligations or Guarantor
Subordinated Obligations purchased in anticipation of satisfying a sinking fund obligation, principal installment or final maturity, in each case due within one year of the date of purchase,
repurchase, redemption, defeasance or other acquisition or retirement); or 

        (4)   make
any Restricted Investment in any Person; 

(any
such dividend, distribution, purchase, redemption, repurchase, defeasance, other acquisition, retirement or Restricted Investment referred to in clauses (1) through (4) shall be
referred to herein as a "Restricted Payment"), if at the time the Company or such Restricted Subsidiary makes such Restricted Payment: 

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

        (b)   the
Company is not able to Incur an additional $1.00 of Indebtedness pursuant to the first paragraph under  Section 3.2 after giving effect, on a pro forma basis, to such Restricted Payment; or

        (c)   the
aggregate amount of such Restricted Payment and all other Restricted Payments declared or made subsequent to the Issue Date would exceed the sum (without
duplication) of: 

          (i)  50%
of Consolidated Net Income for the period (treated as one accounting period) from the beginning of the first fiscal quarter commencing after the date of this
Indenture to the end of the most recent fiscal quarter ending prior to the date of such Restricted Payment for which financial statements are in existence (or, in case such Consolidated Net Income is
a deficit, minus 100% of such deficit); 

         (ii)  100%
of the aggregate Net Cash Proceeds received by the Company from the issue or sale of its Capital Stock (other than Disqualified Stock) or other capital
contributions subsequent to the Issue Date (other than Net Cash Proceeds received from an issuance or sale of such Capital Stock to a Subsidiary of the Company or an employee stock ownership plan,
option plan or similar trust to the extent such sale to an employee stock ownership plan or similar trust is financed by loans from or Guaranteed by the Company or any Restricted 

45

 

Subsidiary
unless such loans have been repaid with cash on or prior to the date of determination); 

        (iii)  the
amount by which Indebtedness of the Company or its Restricted Subsidiaries is reduced on the Company's balance sheet upon the conversion or exchange (other than by
a Subsidiary of the Company) subsequent to the Issue Date of any Indebtedness of the Company or its Restricted Subsidiaries convertible or exchangeable for Capital Stock (other than Disqualified
Stock) of the Company (less the amount of any cash, or the fair market value of any other property, distributed by the Company upon such conversion or exchange); and 

        (iv)  the
amount equal to the net reduction in Restricted Investments made by the Company or any of its Restricted Subsidiaries in any Person resulting from: 

        (A)  repurchases
or redemptions of such Restricted Investments by such Person, proceeds realized upon the sale of such Restricted Investment to an unaffiliated purchaser,
repayments of loans or advances or other transfers of assets (including by way of dividend or distribution) by such Person to the Company or any Restricted Subsidiary; or 

        (B)  the
redesignation of Unrestricted Subsidiaries as Restricted Subsidiaries (valued in each case as provided in the definition of "Investment") not to exceed, in the case
of any Unrestricted Subsidiary, the amount of Investments previously made by the Company or any Restricted Subsidiary in such Unrestricted Subsidiary, which amount in each case under this
clause (iv) was included in the calculation of the amount of Restricted Payments; provided, however, that no amount will be included under this
clause (iv) to the extent it is already included in Consolidated Net Income. 

        The
provisions of the preceding paragraph shall not prohibit: 

        (1)   any
purchase, repurchase, redemption, defeasance or other acquisition or retirement of Capital Stock, Disqualified Stock or Subordinated Obligations of the Company or
Guarantor Subordinated Obligations of any Subsidiary Guarantor made by exchange for, or out of the proceeds of the substantially concurrent sale of, Capital Stock of the Company (other than
Disqualified Stock and other than Capital Stock issued or sold to a Subsidiary or an employee stock ownership plan or similar trust
to the extent such sale to an employee stock ownership plan or similar trust is financed by loans from or Guaranteed by the Company or any Restricted Subsidiary unless such loans have been repaid with
cash on or prior to the date of determination); provided, however, that (a) such purchase, repurchase, redemption, defeasance, acquisition or
retirement will be excluded in subsequent calculations of the amount of Restricted Payments and (b) the Net Cash Proceeds from such sale of Capital Stock will be excluded from
clause (c)(ii) of the preceding paragraph; 

        (2)   any
purchase, repurchase, redemption, defeasance or other acquisition or retirement of Subordinated Obligations of the Company or Guarantor Subordinated Obligations of
any Subsidiary Guarantor made by exchange for, or out of the proceeds of the substantially concurrent sale of Subordinated Obligations of the Company or any purchase, repurchase, redemption,
defeasance or other acquisition or retirement of Guarantor Subordinated Obligations made by exchange for or out of the proceeds of the substantially concurrent sale of Guarantor Subordinated
Obligations that, in each case, is permitted to be Incurred pursuant to Section 3.2 and that in each case constitutes Refinancing Indebtedness;  provided, however,
 that such purchase, repurchase, redemption, defeasance, acquisition or retirement will be excluded in subsequent calculations of the
amount of Restricted Payments; 

46

  

        (3)   any
purchase, repurchase, redemption, defeasance or other acquisition or retirement of Disqualified Stock of the Company or a Restricted Subsidiary made by exchange for
or out of the proceeds of the substantially concurrent sale of Disqualified Stock of the Company or such Restricted Subsidiary, as the case may be, that, in each case, is permitted to be Incurred
pursuant to Section 3.2 and that in each case constitutes Refinancing Indebtedness; provided,
however, that such purchase, repurchase, redemption, defeasance, acquisition or retirement shall be excluded in subsequent calculations of the amount of Restricted Payments; 

        (4)   so
long as no Default or Event of Default has occurred and is continuing, any purchase or redemption of Subordinated Obligations or Guarantor Subordinated Obligations of
a Subsidiary Guarantor from Net Available Cash to the extent permitted under Section 3.5 below; provided,
however, that such purchase or redemption shall be excluded in subsequent calculations of the amount of Restricted Payments; 

        (5)   dividends
paid within 60 days after the date of declaration if at such date of declaration such dividend would have complied with this provision;  provided, however, that such dividends shall be included in
subsequent calculations of the amount of Restricted Payments; 

        (6)   so
long as no Default or Event of Default has occurred and is continuing, 

        (a)   the
purchase, redemption or other acquisition, cancellation or retirement for value of Capital Stock, or options, warrants, equity appreciation rights or other rights to
purchase or acquire Capital Stock of the Company or any Restricted Subsidiary or any parent of the Company held by any existing or former directors, employees or management of the Company or any
Subsidiary of the Company or their assigns, estates or heirs, in each case in connection with the repurchase provisions under employee stock option or stock purchase agreements or other agreements to
compensate directors, employees or management; provided, that such redemptions or repurchases pursuant to this clause shall not exceed
$1.0 million in the aggregate during any calendar year (with the unused amounts in any calendar year being carried over to the next succeeding calendar year;  provided, that the repurchases shall
not exceed $2.0 million in any calendar year); and 

        (b)   loans
or advances to employees or directors of the Company or any Restricted Subsidiary of the Company the proceeds of which are used to purchase Capital Stock of the
Company, in an aggregate amount not in excess of $1.0 million at any one time outstanding; provided, however, that the amount of such loans and
advances shall be included in subsequent calculations of the amount of Restricted Payments; provided, however, that the Company and its Subsidiaries
shall comply in all material respects
with all applicable provisions of the Sarbanes-Oxley Act and the rules and regulations promulgated in connection therewith relating to such loans and advances; 

        (7)   so
long as no Default or Event of Default has occurred and is continuing, the declaration and payment of dividends to holders of any class or series of Disqualified
Stock of the Company issued in accordance with the terms of this Indenture to the extent such dividends are included in the definition of "Consolidated Interest Expense";  provided that the payment of
such dividends shall be excluded from the calculation of Restricted Payments; 

        (8)   repurchases
of Capital Stock deemed to occur upon the exercise of stock options, warrants or other convertible securities if such Capital Stock represents a portion of
the exercise price thereof; provided, however, that such repurchases shall be excluded from subsequent calculations of the amount of Restricted
Payments; 

        (9)   the
purchase, repurchase, redemption, defeasance or other acquisition or retirement for value of any Subordinated Obligation (i) at a purchase price not greater
than 101% of the principal amount of such Subordinated Obligation in the event of a Change of Control in 

47

 

accordance
with provisions similar to Section 3.10 or (ii) at a purchase price not greater than 100% of the principal amount thereof in
accordance with provisions similar to Section 3.5; provided that, prior to or simultaneously with
such purchase, repurchase, redemption, defeasance or other acquisition or retirement, the Company has made the Change of Control Offer or Asset Disposition Offer, as applicable, as provided in such
covenant with respect to the Securities and has completed the repurchase or redemption of all Securities validly tendered for payment in connection with such Change of Control Offer or Asset
Disposition Offer; and 

        (10) Restricted
Payments in an amount not to exceed $5.0 million; provided, that the amount of such Restricted
Payments will be included in the calculation of the amount of Restricted Payments. 

        The
amount of all Restricted Payments (other than cash) shall be the fair market value on the date of such Restricted Payment of the asset(s) or securities proposed to be paid,
transferred or issued by the Company or such Restricted Subsidiary, as the case may be, pursuant to such Restricted Payment. The fair market value of any cash Restricted Payment shall be its face
amount and any non-cash Restricted Payment shall be determined conclusively by the Board of Directors of the Company acting in good faith whose resolution with respect thereto shall be
delivered to the Trustee, such determination to be based upon an opinion or appraisal issued by an accounting, appraisal or investment banking firm of national standing if such fair market value is
estimated in good faith by the Board of Directors of the Company to exceed $5.0 million. Not later than the date of making any Restricted Payment, the Company shall deliver to the Trustee an
Officers' Certificate stating that such Restricted Payment is permitted and setting forth the basis upon which the
calculations required by this Section 3.3 were computed, together with a copy of any fairness opinion or appraisal required by this Indenture. 

        SECTION
3.4.    Limitation on Restrictions on Distributions from Restricted Subsidiaries.    The Company shall not,
and shall not permit any Restricted Subsidiary to, create or otherwise cause or permit to exist or become effective any consensual encumbrance or consensual restriction on the ability of any
Restricted Subsidiary to: 

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

        (2)   make
any loans or advances to the Company or any Restricted Subsidiary (it being understood that the subordination of loans or advances made to the Company or any
Restricted Subsidiary to other Indebtedness Incurred by the Company or any Restricted Subsidiary shall not be deemed a restriction on the ability to make loans or advances); or 

        (3)   transfer
any of its property or assets to the Company or any Restricted Subsidiary. 

        The
preceding provisions shall not prohibit: 

	(i)
	any
encumbrance or restriction pursuant to an agreement in effect at or entered into on the date of this Indenture and identified in an annex to this Indenture, including, without
limitation, this Indenture and the Senior Secured Credit Agreement in effect on such date;

	(ii)
	any
encumbrance or restriction with respect to a Restricted Subsidiary pursuant to an agreement relating to any Capital Stock or Indebtedness Incurred by a Restricted Subsidiary on
or before the date on which such Restricted Subsidiary was acquired by the Company (other than Capital Stock or Indebtedness Incurred as consideration in, or to provide all or any portion of the funds
utilized to consummate, the transaction or series of related 

48

 

transactions
pursuant to which such Restricted Subsidiary became a Restricted Subsidiary or was acquired by the Company or in contemplation of the transaction) and outstanding on such date,  provided, that any such
encumbrance or restriction shall not extend to any assets or property of the Company or any other Restricted Subsidiary other
than the assets and property so acquired; 

	(iii)
	any
encumbrance or restriction with respect to a Restricted Subsidiary pursuant to an agreement effecting a refunding, replacement or refinancing of Indebtedness Incurred pursuant
to an agreement referred to in clause (i) or (ii) of this paragraph or this clause (iii) or contained in any amendment to an agreement referred to in clause (i) or
(ii) of this paragraph or this clause (iii); provided, however, that the encumbrances and restrictions with respect to such Restricted
Subsidiary contained in any such agreement are no less favorable in any material respect to the Holders of the Securities than the encumbrances and restrictions contained in such agreements referred
to in clauses (i) or (ii) of this paragraph on the Issue Date or the date such Restricted Subsidiary became a Restricted Subsidiary, whichever is applicable; 

        (iv)  in
the case of clause (3) of the first paragraph of this covenant, any encumbrance or restriction: 

        (a)   that
restricts in a customary manner the subletting, assignment or transfer of any property or asset that is subject to a lease, license or similar contract, or the
assignment or transfer of any such lease, license or other contract; 

        (b)   contained
in mortgages, pledges or other security agreements permitted under this Indenture securing Indebtedness of the Company or a Restricted Subsidiary to the extent
such encumbrances or restrictions restrict the transfer of the property subject to such mortgages, pledges or other security agreements; 

        (c)   pursuant
to customary provisions restricting dispositions of real property interests set forth in any reciprocal easement agreements of the Company or any Restricted
Subsidiary; or 

        (d)   contained
in any Permitted Lien; 

	(v)
	(a)
purchase money obligations for property acquired in the ordinary course of business and (b) Capitalized Lease Obligations permitted under this Indenture, in each case, that
impose encumbrances or restrictions of the nature described in clause (3) of the first paragraph of this covenant on the property so acquired;

	(vi)
	any
restriction with respect to a Restricted Subsidiary (or any of its property or assets) imposed pursuant to an agreement entered into for the direct or indirect sale or
disposition of all or substantially all the Capital Stock or assets of such Restricted Subsidiary (or the property or assets that are subject to such restriction) pending the closing of such sale or
disposition;

	(vii)
	customary
provisions in joint venture agreement and other similar agreements entered into by the Company or any Restricted Subsidiary in the ordinary course of business;

	(viii)
	net
worth provisions in leases and other agreements entered into by the Company or any Restricted Subsidiary in the ordinary course of business; and

	(ix)
	encumbrances
or restrictions arising or existing by reason of applicable law or any applicable rule, regulation or order. 

49

 

        SECTION
3.5.    Limitation on Sales of Assets and Subsidiary Stock.    The Company shall not, and shall not permit any
of its Restricted Subsidiaries to, make any Asset Disposition unless: 

        (1)   the
Company or such Restricted Subsidiary, as the case may be, receives consideration at least equal to the fair market value (such fair market value to be determined on
the date of contractually agreeing to such Asset Disposition), as determined in good faith by the Board of Directors of the Company (including as to the value of all non-cash
consideration), of the shares and assets subject to such Asset Disposition; 

        (2)   at
least 75% of the consideration from such Asset Disposition received by the Company or such Restricted Subsidiary, as the case may be, is in the form of cash or Cash
Equivalents; and 

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

        (a)   first, to the extent the Company or any Restricted Subsidiary, as the case may be, elects (or is required by the terms of
any Indebtedness), to prepay, repay or purchase secured Indebtedness of the Company (other than any Disqualified Stock or Subordinated Obligations) or secured Indebtedness of a Wholly-Owned Subsidiary
(other than any Disqualified Stock or Guarantor Subordinated Obligation of a Wholly-Owned Subsidiary that is a Subsidiary Guarantor) (in each case other than Indebtedness owed to the Company or an
Affiliate of the Company) within 360 days from the later of the date of such Asset Disposition or the receipt of such Net Available Cash; provided,
however, that, in connection with any prepayment, repayment or purchase of Indebtedness pursuant to this clause (a), the Company or such Restricted Subsidiary shall
retire such Indebtedness and shall cause the related commitment (if any) to be permanently reduced in an amount equal to the principal amount so prepaid, repaid or purchased; 

        (b)   second, to the extent of the balance of such Net Available Cash after application in accordance with clause (a),
to the extent the Company or such Restricted Subsidiary elects, to invest in Additional Assets within 360 days from the later of the date of such Asset Disposition or the receipt of such Net
Available Cash; 

        (c)   to
redeem Securities pursuant to the optional redemption provisions of this Indenture; and 

        (d)   any
combination of the foregoing; 

provided, that pending the final application of any such Net Available Cash in accordance with clause (a), (b), (c) or (d) above,
the Company and its Restricted Subsidiaries may temporarily reduce Indebtedness or otherwise invest such Net Available Cash in any manner not prohibited by this Indenture. 

        Any
Net Available Cash from Asset Dispositions that are not applied or invested as provided in the preceding paragraph shall be deemed to constitute "Excess
Proceeds." On the 361st day after an Asset Disposition, if the aggregate amount of Excess Proceeds exceeds $15.0 million, the Company shall be required to make an offer
("Asset Disposition Offer") to all Holders of Securities and to the extent required by the terms of other Pari Passu Indebtedness, to all holders of
other Pari Passu Indebtedness outstanding with similar provisions requiring the Company to make an offer to purchase such Pari Passu Indebtedness with the proceeds from any Asset Disposition
("Pari Passu Notes"), to purchase the maximum principal amount of Securities and any such Pari Passu Notes to which the Asset Disposition Offer applies
that may be purchased out of the Excess Proceeds, at an offer price in cash in an amount equal to 100% of the principal amount of the Securities and Pari Passu Notes plus accrued and unpaid interest
to the date of purchase, in accordance with the procedures set forth in this Indenture or the agreements governing the Pari Passu Notes, as applicable, in each case in integral 

50

 

multiples
of $1,000. To the extent that the aggregate amount of Securities and Pari Passu Notes so validly tendered and not properly withdrawn pursuant to an Asset Disposition Offer is less than the
Excess Proceeds, the Company may use any remaining Excess Proceeds for general corporate purposes, subject to the other covenants contained in this Indenture. If the aggregate principal amount of
Securities surrendered by Holders thereof and other Pari Passu Notes surrendered by holders or lenders, collectively, exceeds the amount of Excess Proceeds, the Trustee shall select the Securities and
Pari Passu Notes to be purchased on a pro rata basis on the basis of the aggregate principal amount of tendered Securities and Pari Passu Notes. Upon completion of such Asset Disposition Offer, the
amount of Excess Proceeds shall be reset at zero. 

        The
Asset Disposition Offer shall remain open for a period of 20 Business Days following its commencement, except to the extent that a longer period is required by applicable law (the
"Asset Disposition Offer Period"). No later than five Business Days after the termination of the Asset Disposition Offer Period (the
"Asset Disposition Purchase Date"), the Company shall purchase the principal amount of Securities and Pari Passu Notes required to be purchased pursuant
to this covenant (the "Asset Disposition Offer Amount") or, if less than the Asset Disposition Offer Amount has been so validly tendered, all Securities
and Pari Passu Notes validly tendered in response to the Asset Disposition Offer. 

        If
the Asset Disposition Purchase Date is on or after an interest record date and on or before the related interest payment date, any accrued and unpaid interest shall be paid to the
Person in whose name a Security is registered at the close of business on such record date, and no additional interest shall be payable to Holders who tender Securities pursuant to the Asset
Disposition Offer. 

        On
or before the Asset Disposition Purchase Date, the Company shall, to the extent lawful, accept for payment, on a pro rata basis to the extent necessary, the Asset Disposition Offer
Amount of Securities and Pari Passu Notes or portions of Securities and Pari Passu Notes so validly tendered and not properly withdrawn pursuant to the Asset Disposition Offer, or if less than the
Asset Disposition Offer Amount has been validly tendered and not properly withdrawn, all Securities and Pari Passu Notes so validly tendered and not properly withdrawn, in each case in integral
multiples of $1,000. The Company shall deliver to the Trustee an Officers' Certificate stating that such Securities or portions thereof were
accepted for payment by the Company in accordance with the terms of this covenant and, in addition, the Company shall deliver all certificates and notes required, if any, by the agreements governing
the Pari Passu Notes. The Company or the Paying Agent, as the case may be, shall promptly (but in any case not later than five Business Days after termination of the Asset Disposition Offer Period)
mail or deliver to each tendering Holder of Securities or holder or lender of Pari Passu Notes, as the case may be, an amount equal to the purchase price of the Securities or Pari Passu Notes so
validly tendered and not properly withdrawn by such holder or lender, as the case may be, and accepted by the Company for purchase, and the Company will promptly issue a new Security, and the Trustee,
upon delivery of an Officers' Certificate from the Company, shall authenticate and mail or deliver such new Security to such Holder, in a principal amount equal to any unpurchased portion of the
Security surrendered; provided that each such new Security shall be in a principal amount of $1,000 or an integral multiple of $1,000. In addition, the
Company shall take any and all other actions required by the agreements governing the Pari Passu Notes. Any Security not so accepted shall be promptly mailed or delivered by the Company to the Holder
thereof. The Company shall publicly announce the results of the Asset Disposition Offer on the Asset Disposition Purchase Date. 

        For
the purposes of this covenant, the following shall be deemed to be cash: 

        (1)   the
assumption by the transferee of Indebtedness (other than Subordinated Obligations or Disqualified Stock) of the Company or Indebtedness of a Wholly-Owned Subsidiary
(other than Guarantor Subordinated Obligations or Disqualified Stock of any Wholly-Owned Subsidiary that is a Subsidiary Guarantor) and the release of the Company or such Restricted Subsidiary from
all liability on such Indebtedness in connection with such Asset Disposition (in which case the Company will, without further action, be deemed to have applied such deemed cash to Indebtedness in
accordance with clause (a) above); and 

51

  

        (2)   securities,
notes or other obligations received by the Company or any Restricted Subsidiary from the transferee that are converted by the Company or such Restricted
Subsidiary into cash within 45 days following the closing of such Asset Disposition. 

        The
Company shall not, and shall not permit any Restricted Subsidiary to, engage in any Asset Swaps, unless: 

        (1)   at
the time of entering into such Asset Swap and immediately after giving effect to such Asset Swap, no Default or Event of Default shall have occurred and be continuing
or would occur as a consequence thereof; 

        (2)   in
the event such Asset Swap involves the transfer by the Company or any Restricted Subsidiary of assets having an aggregate fair market value, as determined by the
Board of Directors of the Company in good faith, in excess of $5.0 million, the terms of such Asset Swap have been approved by a majority of the members of the Board of Directors of the
Company; and 

        (3)   in
the event such Asset Swap involves the transfer by the Company or any Restricted Subsidiary of assets having an aggregate fair market value, as determined by the
Board of Directors of the Company in good faith, in excess of $10.0 million, the Company has received a written opinion from an independent investment banking firm of nationally recognized
standing that such Asset Swap is fair to the Company or such Restricted Subsidiary, as the case may be, from a financial point of view. 

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

        SECTION 3.6.    Limitation on Liens.    The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create, Incur or suffer to exist any Lien (other than Permitted Liens) upon any of its property or assets (including Capital Stock of Restricted Subsidiaries),
whether owned on the date of this Indenture or acquired after that date, which Lien is securing any Indebtedness, unless contemporaneously with the Incurrence of such Liens effective provision is made
to secure the Indebtedness due under this Indenture and the Securities for so long as such Indebtedness is so secured or, in respect of Liens on any Subsidiary Guarantor's property or assets, any
Subsidiary Guarantee of such Subsidiary Guarantor, equally and ratably with (or prior to in the case of Liens with respect to Subordinated Obligations or Guarantor Subordinated Obligations, as the
case may be) the Indebtedness secured by such Lien for so long as such Indebtedness is so secured. 

        SECTION 3.7.    Limitation on Sale/Leaseback Transactions.    The Company shall not, and shall not permit any
of its Restricted Subsidiaries to, enter into any Sale/Leaseback Transaction unless: 

        (1)   the
Company or such Restricted Subsidiary, as the case may be, receives consideration at the time of such Sale/Leaseback Transaction at least equal to the fair market
value (as evidenced by a resolution of the Board of Directors of the Company) of the property subject to such transaction; 

        (2)   the
Company or such Restricted Subsidiary could have Incurred Indebtedness in an amount equal to the Attributable Indebtedness in respect of such Sale/Leaseback
Transaction pursuant to Section 3.2; 

        (3)   the
Company or such Restricted Subsidiary would be permitted to create a Lien on the property subject to such Sale/Leaseback Transaction without securing the Securities
pursuant to Section 3.6; and 

52

 

        (4)   the
Sale/Leaseback Transaction is treated as an Asset Disposition and all of the conditions of this Indenture described in  Section 3.5 (including the provisions concerning the application of Net
Available Cash) are satisfied with respect to such Sale/Leaseback
Transaction, treating all of the consideration received in such Sale/Leaseback Transaction as Net Available Cash for purposes of such covenant. 

        SECTION 3.8.    Limitation on Affiliate Transactions.    The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, directly or indirectly, enter into or conduct any transaction (including the purchase, sale, lease or exchange of any property or the rendering of any service) with any
Affiliate of the Company (an "Affiliate Transaction") unless: 

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

        (2)   in
the event such Affiliate Transaction involves an aggregate consideration in excess of $5.0 million, the terms of such transaction have been approved by a
majority of the members of the Board of Directors of the Company and by a majority of the members of such Board of Directors having no personal stake in such transaction, if any (and such majority or
majorities, as the case may be, determines that such Affiliate Transaction satisfies the criteria in clause (1) above); and 

        (3)   in
the event such Affiliate Transaction involves an aggregate consideration in excess of $10.0 million, the Company has received a written opinion from an
independent investment banking, accounting or appraisal firm of nationally recognized standing that such Affiliate Transaction is not materially less favorable than those that might reasonably have
been obtained in a comparable transaction at such time on an arm's-length basis from a Person that is not an Affiliate. 

        The
preceding paragraph shall not apply to: 

        (1)   any
Restricted Payment (other than a Restricted Investment) permitted to be made pursuant to Section 3.3; 

        (2)   any
issuance of securities, or other payments, awards or grants in cash, securities or otherwise pursuant to, or the funding of, employment agreements and other
compensation arrangements, options to purchase Capital Stock of the Company, restricted stock plans, long-term incentive plans, stock appreciation rights plans, participation plans or
similar employee benefits plans and/or indemnity provided on behalf of officers and employees approved by the Board of Directors of the Company; 

        (3)   any
transaction between the Company and a Restricted Subsidiary or between Restricted Subsidiaries and Guarantees issued by the Company or a Restricted Subsidiary for
the benefit of the Company or a Restricted Subsidiary, as the case may be, in accordance with Section 3.2; 

        (4)   the
payment of reasonable and customary fees paid to, and indemnity provided on behalf of, directors of the Company or any Restricted Subsidiary; 

        (5)   the
performance of obligations of the Company or any of its Restricted Subsidiaries under the terms of any agreement to which the Company or any of its Restricted
Subsidiaries is a party as of or on the Issue Date and identified on a schedule to this Indenture on the Issue Date, as these agreements may be amended, modified, supplemented, extended or renewed
from time to time; provided, however, that any future amendment, modification, supplement, extension or renewal entered into after the Issue Date shall
be permitted to the extent that its terms are not 

53

 

more
disadvantageous to the Holders of the Securities than the terms of the agreements in effect on the Issue Date; and 

        (6)   loans
and advances made to employees in accordance with clause (6) of the definition of "Permitted Investment". 

        SECTION 3.9.    Limitation on Sale of Capital Stock of Restricted Subsidiaries.    The Company shall not, and
shall not permit any Restricted Subsidiary to, transfer, convey, sell, lease or otherwise dispose of any Voting Stock of any Restricted Subsidiary or to issue any of the Voting Stock of a Restricted
Subsidiary (other than, if necessary, shares of its Voting Stock constituting directors' qualifying shares) to any Person except: 

        (1)   to
the Company or a Wholly-Owned Subsidiary; or 

        (2)   in
compliance with Section 3.5 and immediately after giving effect to such issuance or sale, such Restricted
Subsidiary would continue to be a Restricted Subsidiary. 

        Notwithstanding
the preceding paragraph, the Company or any Restricted Subsidiary may sell all the Voting Stock of a Restricted Subsidiary as long as the Company or such Restricted
Subsidiary complies with the terms of Section 3.5. 

        SECTION 3.10.    Change of Control.    Upon the occurrence of a Change of Control, unless the Company has
exercised its right to redeem all of the Securities pursuant to Article V, each Holder of Securities shall have the right to require the Company
to repurchase all or any part (equal to $1,000 or an integral multiple thereof) of such Holder's Securities at a purchase price in cash equal to 101% of the principal amount of the Securities plus
accrued and unpaid interest, if any, to the date of purchase (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date). 

        Within
30 days following any Change of Control, unless the Company has exercised its right to redeem all of the Securities pursuant to  Article V, the Company shall mail a notice (the "Change of Control Offer") to each Holder, with a
copy to the Trustee, stating: 

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

        (2)   the
repurchase date (which shall be no earlier than 30 days nor later than 60 days from the date such notice is mailed) (the
"Change of Control Payment Date"); and 

        (3)   the
procedures determined by the Company, consistent with this Indenture, that a Holder must follow in order to have its Securities repurchased. 

On
the Change of Control Payment Date, the Company shall, to the extent lawful: 

        (1)   accept
for payment all Securities or portions of Securities (in integral multiples of $1,000) properly tendered pursuant to the Change of Control Offer; 

        (2)   deposit
with the paying agent an amount equal to the Change of Control Payment in respect of all Securities or portions of Securities so tendered; and 

        (3)   deliver
or cause to be delivered to the Trustee the Securities so accepted together with an Officers' Certificate stating the aggregate principal amount of Securities or
portions of Securities being purchased by the Company. 

54

 

The
Paying Agent shall promptly mail to each Holder of Securities so tendered the Change of Control Payment for such Securities, and the Trustee shall promptly authenticate and mail (or cause to be
transferred by book entry) to each Holder a new Security equal in principal amount to any unpurchased portion of the Securities surrendered, if any;  provided that each such new Security shall be in a
principal amount of $1,000 or an integral multiple thereof. 

        If
the Change of Control Payment Date is on or after an interest record date and on or before the related interest payment date, any accrued and unpaid interest, if any, shall be paid to
the Person in whose name a Security is registered at the close of business on such record date, and no additional interest shall be payable to Holders who tender pursuant to the Change of Control
Offer. 

        Prior
to mailing a Change of Control Offer, and as a condition to such mailing (i) the requisite holders of each issue of Indebtedness issued under an indenture or other agreement
that may be violated by such payment shall have consented to such Change of Control Offer being made and waived the event of default, if any, caused by the Change of Control or (ii) the Company
shall repay all outstanding Indebtedness issued under an indenture or other agreement that may be violated by a payment to the Holders of Securities under a Change of Control Offer or the Company must
offer to repay all such Indebtedness, and make payment to the holders of such Indebtedness that accept such offer, and obtain waivers of any event of default from the remaining holders of such
Indebtedness. The Company covenants to effect such repayment or obtain such consent within 30 days following any Change of Control, it being a default of the Change of Control provisions of
this Indenture if the Company fails to comply with such covenant. 

        The
Company shall not be required to make a Change of Control Offer upon a Change of Control if a third party makes the Change of Control Offer in the manner, at the times and otherwise
in compliance with the requirements set forth in this Indenture applicable to a Change of Control Offer made by the Company and purchases all Securities validly tendered and not withdrawn under such
Change of Control Offer. 

        The
Company shall comply, to the extent applicable, with the requirements of Section 14(e) of the Exchange Act and any other securities laws or regulations in connection with the
repurchase of Securities pursuant to this covenant. To the extent that the provisions of any securities laws or regulations conflict with provisions of this Indenture, the Company 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 of the conflict. 

        SECTION 3.11.    SEC Reports.    Notwithstanding that the Company may not be subject to the reporting
requirements of Section 13 or 15(d) of the Exchange Act, to the extent permitted by the Exchange Act, the Company shall file with the SEC, and make available to the Trustee and the registered
Holders of the Securities, the annual reports and the information, documents and other reports (or copies of such portions of any of the foregoing as the SEC may by rules and regulations prescribe)
that are specified in Sections 13 and 15(d) of the Exchange Act within the time periods specified therein. In the event that the Company is not permitted to file such reports, documents and
information with the SEC pursuant to the Exchange Act, the Company shall nevertheless make available such Exchange Act information to the Trustee and the Holders of the Securities as if the Company
were subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act within the time periods specified therein. 

        If
the Company has designated any of its Subsidiaries as Unrestricted Subsidiaries, then the quarterly and annual financial information required by the preceding paragraph shall include
a reasonably detailed presentation, either on the face of the financial statements or in the footnotes to the financial statements and in Management's Discussion and Analysis of Results of Operations
and Financial Condition, of the financial condition and results of operations of the Company and its Restricted Subsidiaries. 

55

 

        SECTION 3.12.    Future Subsidiary Guarantors.    After the Issue Date, the Company shall cause each Restricted
Subsidiary that is not a Subsidiary Guarantor, other than a Foreign Subsidiary, that Guarantees any Indebtedness of the Company or any of its Subsidiary Guarantors to execute and deliver to the
Trustee a supplemental indenture substantially in the form of Exhibit C hereto pursuant to which such Restricted Subsidiary will unconditionally
Guarantee, on a joint and several basis, the full and prompt payment of the principal of, premium, if any and interest on the Securities on a senior basis and all other obligations under this
Indenture. Notwithstanding the foregoing, in the event the Subsidiary Guarantor is released and discharged in full from all of its obligations under Guarantees of (1) any Credit Facility and
(2) all other Indebtedness of the Company and its Restricted Subsidiaries, then the Subsidiary Guarantee of such Subsidiary Guarantor shall be automatically and unconditionally released or
discharged; provided, that such Restricted Subsidiary has not Incurred any Indebtedness in reliance on its status as a Subsidiary Guarantor pursuant to  Section 3.2 unless such Subsidiary Guarantor's obligations under such Indebtedness so Incurred are satisfied in full and discharged. 

        SECTION 3.13.    Maintenance of Office or Agency.    The Company shall maintain an office or agency where the
Securities may be presented or surrendered for payment, where, if applicable, the Securities may be surrendered for registration of transfer or exchange and where notices and demands to or upon the
Company in respect of the Securities and this Indenture may be served. The agency of JPMorgan Chase Bank (the "Agent") currently located at JPMorgan
Chase Bank, 4 New York Plaza, Floor 15, New York, New York 10004 (Attn: Institutional Trust Services) shall be such office or agency of the Company, unless the Company shall designate and maintain
some other office or agency for one or more of such purposes. The Company shall give prompt written notice to the Trustee of any change in the location of any such office or agency. If at any time the
Company shall fail to maintain any such required office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or
served at the Agent of the Trustee, and the Company hereby appoints the Trustee as its agent to receive all such presentations, surrenders, notices and demands. 

        The
Company may also from time to time designate one or more other offices or agencies where the Securities may be presented or surrendered for any or all such purposes and may from time
to time rescind any such designation. The Company shall give prompt written notice to the Trustee of any such designation or rescission and any change in the location of any such other office or
agency. 

        SECTION 3.14.    Corporate Existence.    Except as otherwise provided in this  Article III, Article IV and  Section 10.2(b), the Company 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, limited liability company or other existence of each Subsidiary Guarantor in accordance with their respective organizational documents (as the same may be
amended from time to time) and the rights (charter and statutory), licenses and franchises of the Company and each such Subsidiary Guarantor; provided,
however, that the Company shall not be required to preserve any such right, license or franchise or the corporate, partnership, limited liability company or other existence of
any Subsidiary Guarantor if the Board of Directors of the Company shall determine that the preservation thereof is no longer desirable in the conduct of the business of the Company and each of its
Restricted Subsidiaries, taken as a whole, and that the loss thereof is not, and will not be, disadvantageous in any material respect to the Holders; provided,
further, that the foregoing shall not prohibit a sale, transfer, or conveyance of a Restricted Subsidiary or any of its assets in compliance with the terms of this Indenture. 

        SECTION 3.15.    Payment of Taxes and Other Claims.    The Company shall pay or discharge or cause to be paid
or discharged, before the same shall become delinquent, (i) all material taxes, assessments and governmental charges levied or imposed upon the Company or any Subsidiary or upon the income,
profits or property of the Company or any Subsidiary and (ii) all lawful claims for labor, materials and supplies, which, if unpaid, might by law become a material liability or lien upon the
property of the Company or any Subsidiary; provided, however, that the Company shall not be required 

56

 

to
pay or discharge or cause to be paid or discharged any such tax, assessment, charge or claim the amount, applicability or validity of which is being contested in good faith by appropriate
proceedings and for which appropriate reserves, if necessary (in the good faith judgment of management of the Company), are being maintained in accordance with GAAP or where the failure to effect such
payment will not be disadvantageous to the Holders. 

        SECTION 3.16.    Payments for Consent.    Neither the Company nor any of its Restricted Subsidiaries shall,
directly or indirectly, pay or cause to be paid any consideration, whether by way of interest, fees or otherwise, to any Holder of any Securities for or as an inducement to any consent, waiver or
amendment of any of the terms or provisions of this Indenture or the Securities unless such consideration is offered to be paid or is paid to all Holders of the Securities that consent, waive or agree
to amend in the time frame set forth in the solicitation documents relating to such consent, waiver or amendment. 

        SECTION 3.17.    Compliance Certificate.    The Company shall deliver to the Trustee within 120 days
after the end of each Fiscal Year of the Company an Officers' Certificate stating that in the course of the performance by the signers of their duties as Officers of the Company they would normally
have knowledge of any Default or Event of Default and whether or not the signers know of any Default or Event of Default that occurred during the previous Fiscal Year. If they do, the certificate
shall describe the Default or Event of Default, its status and the action the Company is taking or proposes to take with respect thereto. The Company also shall comply with
TIA § 314(a)(4). 

        SECTION 3.18.    Further Instruments and Acts.    Upon request of the Trustee, the Company shall execute and
deliver such further instruments and do such further acts as may be reasonably necessary or proper to carry out more effectively the purpose of this Indenture. 

        SECTION 3.19.    Limitation on Lines of Business.    The Company shall not, and shall not permit any Restricted
Subsidiary to, engage in any business other than a Related Business, except to such extent as would not be material to the Company and its Restricted Subsidiaries as a whole. 

        SECTION
3.20.    Statement by Officers as to Default.    The Company shall deliver to the Trustee, as soon as possible
and in any event within 10 days after the Company becomes aware of the occurrence of any Event of Default or an event which, with notice or the lapse of time or both, would constitute an Event
of Default, an Officers' Certificate setting forth the details of such Event of Default or Default, its status and the actions which the Company is taking or proposes to take with respect thereto. 

 
 

ARTICLE IV    
    
    SUCCESSOR COMPANY    
    

        SECTION
4.1.    Merger and Consolidation.    The Company shall not consolidate with or merge with or into, or convey,
transfer or lease all or substantially all its assets to, any Person, unless: 

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

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

57

  

        (3)   immediately
after giving effect to such transaction, the Successor Company would be able to Incur at least an additional $1.00 of Indebtedness pursuant to the first
paragraph of Section 3.2; 

        (4)   each
Subsidiary Guarantor (unless it is the other party to the transactions above, in which case clause (1) shall apply) shall have by supplemental indenture
confirmed that its Subsidiary Guarantee shall apply to such Person's obligations in respect of this Indenture and the Securities and its obligations under the Registration Rights Agreement shall
continue to be in effect; and 

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

For
purposes of this Section 4.1, the sale, lease, conveyance, assignment, transfer or other disposition of all or substantially all of the
properties and assets of one or more Subsidiaries of the Company, which properties and assets, if held by the Company instead of such Subsidiaries, would constitute all or substantially all of the
properties and assets of the Company on a consolidated basis, shall be deemed to be the transfer of all or substantially all of the properties and assets of the Company. 

        The
Successor Company shall succeed to, and be substituted for, and may exercise every right and power of, the Company under this Indenture, and the predecessor company will be released
from the obligations to pay principal of and interest on the Securities; provided, however, that in the
case of a lease of all or substantially all its assets, the predecessor Company shall not be released from the obligation to pay the principal of and interest on the Securities. 

        Notwithstanding
the preceding clause (3), (x) any Restricted Subsidiary may consolidate with, merge into or transfer all or part of its properties and assets to the Company
and (y) the Company may merge with an Affiliate incorporated solely for the purpose of reincorporating the Company in another jurisdiction to realize tax benefits;  provided that, in the case of a
Restricted Subsidiary that merges into the Company, the Company will not be required to comply with the preceding
clause (5). 

 
 

ARTICLE V    
    
    REDEMPTION OF SECURITIES    
    

        SECTION
5.1.    Redemption.    The Securities may be redeemed, as a whole or from time to time in part, subject to the
conditions and at the redemption prices specified in paragraph 5 of the form of Securities set forth in Exhibit A and  Exhibit B hereto,
which are hereby incorporated by reference and made a part of this Indenture, together with accrued and unpaid interest to the
Redemption Date. 

        SECTION
5.2.    Applicability of Article.    Redemption of Securities at the election of the Company or otherwise, as
permitted or required by any provision of this Indenture, shall be made in accordance with such provision and this Article. 

        SECTION
5.3.    Election to Redeem; Notice to Trustee.    The election of the Company to redeem any Securities
pursuant to Section 5.1 shall be evidenced by a Board Resolution of the Company. In case of any redemption at the election of the Company, the
Company shall, upon not later than the earlier of the date that is 45 days prior to the Redemption Date fixed by the Company or the date on which notice is given to the Holders (except as
provided in Section 5.5 or unless a shorter notice shall be satisfactory to the Trustee), notify the Trustee of such Redemption Date and of the
principal amount of Securities to be redeemed and shall deliver to the Trustee such documentation and records as shall enable the Trustee to select the Securities to be redeemed pursuant to  Section 5.4. Any such notice may be cancelled at any time prior to notice of such redemption being mailed to any Holder and shall thereby be void
and of no effect. 

58

 

        SECTION
5.4.    Selection by Trustee of Securities to Be Redeemed.    If less than all the Securities are to be
redeemed at any time pursuant to an optional redemption, the particular Securities to be redeemed shall be selected not more than 60 days prior to the Redemption Date by the Trustee, from the
outstanding Securities not previously called for redemption, in compliance with the requirements of the principal securities exchange, if any, on which such Securities are listed, or, if such
Securities are not so listed, on a pro rata basis among the classes of Securities, by lot or by such other method as the Trustee shall deem fair and
appropriate (and in such manner as complies with applicable legal requirements) and which may provide for the selection for redemption of portions of the principal of the Securities;  provided, however,
that no such partial redemption shall reduce the portion of the principal amount of a Security not redeemed to less than $1,000. 

        The
Trustee shall promptly notify the Company in writing of the Securities selected for redemption and, in the case of any Securities selected for partial redemption, the method it has
chosen for the selection of Securities and the principal amount thereof to be redeemed. 

        For
all purposes of this Indenture, unless the context otherwise requires, all provisions relating to redemption of Securities shall relate, in the case of any Security redeemed or to be
redeemed only in part, to the portion of the principal amount of such Security which has been or is to be redeemed. 

        SECTION
5.5.    Notice of Redemption.    Notice of redemption shall be given in the manner provided for in  Section 11.2 not less than 30 nor more than 60 days prior to the Redemption Date, to each Holder of Securities to be redeemed. At the
Company's request, the Trustee shall give notice of redemption in the Company's name and at the Company's expense; provided, however, that the Company
shall deliver to the Trustee, at least 45 days prior to the Redemption Date, an Officers' Certificate requesting that the Trustee give such notice at the Company's expense and the form of
notice that shall include the following items. 

        All
notices of redemption shall state: 

        (1)   the
Redemption Date, 

        (2)   the
redemption price and the amount of accrued interest to the Redemption Date payable as provided in Section 5.7,
if any, 

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

        (4)   in
case any Security is to be redeemed in part only, the notice which relates to such Security shall state that on and after the Redemption Date, upon surrender of such
Security, the Holder will receive, without charge, a new Security or Securities of authorized denominations for the principal amount thereof remaining unredeemed, 

        (5)   that
on the Redemption Date the redemption price (and accrued interest, if any, to the Redemption Date payable as provided in  Section 5.7) will become due and payable upon each such Security, or the
portion thereof, to be redeemed, and, unless the Company defaults in
making the redemption payment, that interest on Securities called for redemption (or the portion thereof) will cease to accrue on and after said date, 

        (6)   the
place or places where such Securities are to be surrendered for payment of the redemption price and accrued interest, if any, 

        (7)   the
name and address of the Paying Agent, 

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

59

 

        (9)   the
CUSIP, Common Code and ISIN numbers, if applicable, and that no representation is made as to the accuracy or correctness of the CUSIP, Common Code and ISIN numbers,
if applicable, if any, listed in such notice or printed on the Securities, and 

        (10) the
paragraph of the Securities pursuant to which the Securities are to be redeemed. 

        SECTION
5.6.    Deposit of Redemption Price.    Prior to 10:00 a.m., New York City time, on any Redemption
Date, the Company shall deposit with the Trustee or with a Paying Agent (or, if the Company or any of the Company's Subsidiaries is acting as its own Paying Agent, segregate and hold in trust as
provided in Section 2.4) an amount of money sufficient to pay the redemption price of, and accrued interest on, all the Securities which are to
be redeemed on that date, other than Securities or portions of Securities called for redemption that are beneficially owned by the Company and have been delivered by the Company to the Trustee for
cancellation. 

        SECTION
5.7.    Securities Payable on Redemption Date.    Notice of redemption having been given as aforesaid, the
Securities or portions of Securities so to be redeemed shall, on the Redemption Date, become due and payable at the redemption price therein specified (together with accrued interest, if any, to the
Redemption Date), and on and after such date (unless the Company shall default in the payment of the redemption price and accrued interest) such Securities shall cease to bear interest and the only
right of the Holders thereof will be to receive payment of the redemption price and, subject to the next sentence, unpaid interest on such Securities to the Redemption Date. Upon surrender of any
such Security for redemption in accordance with said notice, such Security shall be paid by the Company at the redemption price, together with accrued interest, if any, to the Redemption Date (subject
to the rights of Holders of record on the relevant record date to receive interest due on the relevant interest payment date). 

        If
any Security called for redemption shall not be so paid upon surrender thereof for redemption, the unpaid principal (and premium, if any) shall, until paid, bear interest from the
Redemption Date at the rate borne by the Securities. 

        SECTION
5.8.    Securities Redeemed in Part.    Any Security which is to be redeemed only in part (pursuant to the
provisions of this Article) shall be surrendered at the office or agency of the Company maintained for such purpose pursuant to Section 3.13
(with, if the Company or the Trustee so require, due endorsement by, or a written instrument of transfer in form satisfactory to the Company and the Trustee duly executed by, the Holder thereof or
such Holder's attorney duly authorized in writing), and the Company shall execute, and the Trustee shall authenticate and make available for delivery to the Holder of such Security at the expense of
the Company, a new Security or Securities, of any authorized denomination as requested by such Holder, in an aggregate principal amount equal to and in exchange for the unredeemed portion of the
principal of the Security so surrendered, provided, that each such new Security will be in a principal amount of $1,000 or integral multiple thereof. 

 
 

ARTICLE VI    
    
    DEFAULTS AND REMEDIES    
    

        SECTION
6.1.    Events of Default.    Each of the following constitutes an "Event of
Default": 

        (1)   default
in any payment of interest or additional interest (as required by the Registration Rights Agreement) on any Security when due, continued for 30 days; 

        (2)   default
in the payment of principal of or premium, if any, on any Security when due at its Stated Maturity, upon optional redemption, upon required repurchase, upon
declaration or otherwise; 

60

 

        (3)   failure
by the Company or any Subsidiary Guarantor to comply with its obligations under Section 4.1 or
clause (b) of Section 10.2, respectively; 

        (4)   failure
by the Company or any Subsidiary Guarantor to comply for 30 days after notice with any of its obligations pursuant to  Section 3.2 through Section 3.12 inclusive,  Section 3.16 and Section 3.19 (in each case, other than a failure to purchase
Securities
which will constitute an Event of Default under clause (2) above); 

        (5)   the
Company or a Subsidiary Guarantor defaults in the performance of or a breach by the Company or a Subsidiary Guarantor of any other covenant or agreement in this
Indenture or under the Securities (other than those referred to in (1), (2), (3) or (4) above) and such default continues for 60 days after the notice specified below; 

        (6)   default
under any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any Indebtedness for money borrowed by
the Company or any of its Restricted Subsidiaries (or the payment of which is guaranteed by the Company or any of its Restricted Subsidiaries), other than Indebtedness owed to the Company or a
Restricted Subsidiary, whether such Indebtedness or guarantee now exists, or is created after the date of this Indenture, which default: 

        (a)   is
caused by a failure to pay principal of, or interest or premium, if any, on such Indebtedness within the grace period provided in such Indebtedness
("payment default"); or 

        (b)   results
in the acceleration of such Indebtedness prior to its maturity (the "cross acceleration provision"); 

and,
in each case, the principal amount of any such Indebtedness, together with the principal amount of any other such Indebtedness under which there has been a payment default or the maturity of
which has been so accelerated, aggregates $10.0 million or more; 

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

          (i)  commences
a voluntary case or proceeding; 

         (ii)  consents
to the entry of judgment, decree or order for relief against it in an involuntary case or proceeding; 

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

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

         (v)  consents
to or acquiesces in the institution of a bankruptcy or an insolvency proceeding against it; 

        (vi)  takes
any corporate action to authorize or effect any of the foregoing; or 

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

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

          (i)  is
for relief in an involuntary case against the Company or a Significant Subsidiary or group of Restricted Subsidiaries that, taken together (as of the latest audited
consolidated financial statements for the Company and its Restricted Subsidiaries), would constitute a Significant Subsidiary pursuant to or within the meaning of any Bankruptcy Law; 

61

 

         (ii)  appoints
a Custodian for all or substantially all of the property of the Company or a Significant Subsidiary or group of Restricted Subsidiaries that, taken together
(as of the latest audited consolidated
financial statements for the Company and its Restricted Subsidiaries), would constitute a Significant Subsidiary pursuant to or within the meaning of any Bankruptcy Law; or 

        (iii)  orders
the winding up or liquidation of the Company or a Significant Subsidiary or group of Restricted Subsidiaries that, taken together (as of the latest audited
consolidated financial statements for the Company and its Restricted Subsidiaries), would constitute a Significant Subsidiary pursuant to or within the meaning of any Bankruptcy Law; and 

        (iv)  in
each case the order, decree or relief remains unstayed and in effect for 60 days; 

        (8)   failure
by the Company or any Significant Subsidiary or group of Restricted Subsidiaries that, taken together (as of the latest audited consolidated financial statements
for the Company and its Restricted Subsidiaries), would constitute a Significant Subsidiary to pay final judgments aggregating in excess of $10.0 million (net of any amounts that a reputable
and creditworthy insurance company has acknowledged liability for in writing), which judgments are not paid, discharged or stayed for a period of 60 days (the "judgment
default provision"); or 

        (9)   any
Subsidiary Guarantee of a Significant Subsidiary or group of Restricted Subsidiaries that, taken together (as of the latest audited consolidated financial statements
for the Company and its Restricted Subsidiaries), would constitute a Significant Subsidiary ceases to be in full force and effect (except as contemplated by the terms of this Indenture) or is declared
null and void in a judicial proceeding or any Subsidiary Guarantor that is a Significant Subsidiary or group of Restricted Subsidiaries that, taken together (as of the latest audited consolidated
financial statements for the Company and its Restricted Subsidiaries), would constitute a Significant Subsidiary denies or disaffirms its obligations under this Indenture or its Subsidiary Guarantee. 

        However,
a default under clauses (4) and (5) of this paragraph shall not constitute an Event of Default until the Trustee or the Holders of 25% in principal amount of the
outstanding Securities notify the Company of the default and the Company does not cure such default within the time specified in clauses (4) and (5) of this paragraph after receipt of
such notice. 

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

        In
the case of any Event of Default occurring by reason of any willful action (or inaction) taken (or not taken) by or on behalf of the Company or any Subsidiary Guarantor with the
intention of avoiding payment of the premium that the Company would have had to pay if the Company then had elected to redeem the Securities pursuant to the optional redemption provisions of this
Indenture or was required to repurchase the Securities, an equivalent premium shall also become and be immediately due and payable to the extent permitted by law upon the acceleration of the
Securities. If an Event of Default occurs prior to July 1, 2008 by reason of any willful action (or inaction) taken (or not taken) by or on behalf of the Company or any Subsidiary Guarantor
with the intention of avoiding the prohibition on redemption of the Securities prior to July 1, 2008, a make-whole premium, equal to the greater of (i) 1.0% of the principal
amount of such Security and (ii) the excess of (A) the present value at such time of (1) the redemption price of such Security at July 1, 2008 (such redemption price being
described in paragraph 5 of the Securities) plus (2) all required interest payments due on such Security through July 1, 2008, computed using a discount rate equal to the Treasury
Rate plus 50 basis points, over (B) the principal amount of such Security, shall also become immediately due and payable to the extent permitted by law upon the acceleration of the Securities.
For purposes of this provision, 

62

 

"Treasury Rate" means the yield to maturity at the time of computation of United States Treasury securities with a constant maturity (as compiled and
published in the most recent Federal Reserve Statistical Release H.15 (519) which has become publicly available at least two Business Days prior to the date of the Event of Default (or, if such
Statistical Release is no longer published, any publicly available source or similar market data)) most nearly equal to the period from the date of the Event of Default to July 1, 2008;  provided, however, that if the period from the date of the Event of Default to July 1, 2008 is not equal to the constant maturity of a United
States Treasury security for which a weekly average yield is given, the Treasury Rate shall be obtained by linear interpolation (calculated to the nearest one-twelfth of a year) from the
weekly average yields of United States Treasury securities for which such yields are given, except that if the period from the date of the Event of Default to July 1, 2008 is less than one
year, the weekly average yield on actually traded United States Treasury securities adjusted to a constant maturity of one year shall be used. 

        SECTION
6.2.    Acceleration.    If an Event of Default (other than an Event of Default described in clause (7)
of Section 6.1) occurs and is continuing, the Trustee by notice to the Company, or the Holders of at least 25% in principal amount of the
outstanding Securities by notice to the Company and the Trustee, may, and the Trustee at the request of such Holders shall, declare the principal of, premium, if any, and accrued and unpaid interest,
if any, on all the Securities to be due and payable. Upon such a declaration, such principal, premium and accrued and unpaid interest shall be due and payable immediately. 

        In
the event of a declaration of acceleration of the Securities because an Event of Default described in clause (6) of  Section 6.1 has occurred and is continuing, the declaration of acceleration
of the Securities shall be automatically annulled if the event of
default or payment default triggering such Event of Default pursuant to clause (6) of Section 6.1 shall be remedied or cured by the
Company or a Restricted Subsidiary or waived by the holders of the relevant Indebtedness within 20 days after the declaration of acceleration with respect thereto and if (1) the
annulment of the acceleration of the Securities would not conflict with any judgment or decree of a court of competent jurisdiction and (2) all existing Events of Default, except nonpayment of
principal, premium or interest on the Securities that became due solely because of the acceleration of the Securities, have been cured or waived. 

        If
an Event of Default described in clause (7) of Section 6.1 occurs and is continuing, the principal of, premium, if any,
and accrued and unpaid interest on all the Securities shall become and be immediately due and payable without any declaration or other act on the part of the Trustee or any Holders. 

        SECTION
6.3.    Other Remedies.    If an Event of Default occurs and is continuing, the Trustee may pursue any
available remedy by proceeding at law or in equity to collect the payment of principal of (or premium, if any) or interest on the Securities or to enforce the performance of any provision of the
Securities or this Indenture. 

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

63

  

        SECTION 6.4.    Waiver of Past Defaults.    The Holders of a majority in principal amount of the outstanding
Securities by notice to the Trustee may (a) waive, by their consent (including, without limitation consents obtained in connection with a purchase of, or tender offer or exchange offer for,
Securities), an existing Default or Event of Default and its consequences except a Default or Event of Default in the payment of the principal of, or premium, if any, or interest on a Security and
(b) rescind any such acceleration with respect to the Securities and its consequences if (1) rescission would not conflict with any judgment or decree of a court of competent
jurisdiction and (2) all existing Events of Default, other than the nonpayment of the principal of, premium, if any, and interest on the Securities that have become due solely by such
declaration of acceleration, have been cured or waived. When a Default or Event of Default is waived, it is deemed cured, but no such waiver shall extend to any subsequent or other Default or Event of
Default or impair any consequent right. 

        SECTION
6.5.    Control by Majority.    The Holders of a majority in principal amount of the outstanding Securities
may direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or of exercising any trust or power conferred on the Trustee. However, the Trustee may refuse
to follow any direction that conflicts with law or this Indenture or, subject to Sections 7.1 and 7.2,
that the Trustee determines is unduly prejudicial to the rights of other Securityholders or would involve the Trustee in personal liability; provided,
however, that the Trustee may take any other action deemed proper by the Trustee that is not inconsistent with such direction. Prior to taking any action hereunder, the Trustee
shall be entitled to indemnification satisfactory to it in its sole discretion against all losses and expenses caused by taking or not taking such action. 

        SECTION
6.6.    Limitation on Suits.    Subject to the provisions of this Indenture relating to the duties of the
Trustee, if an Event of Default occurs and is continuing, the Trustee shall be under no obligation to exercise any of the rights or powers under this Indenture at the request or direction of any of
the Holders unless such Holders have offered to the Trustee reasonable indemnity or security against any loss, liability or expense. Except to enforce the right to receive payment of principal,
premium, if any, or interest when due, no Holder may pursue any remedy with respect to this Indenture or the Securities unless: 

        (1)   such
Holder has previously given the Trustee notice that an Event of Default is continuing; 

        (2)   Holders
of at least 25% in principal amount of the outstanding Securities have requested the Trustee to pursue the remedy; 

        (3)   such
Holders have offered the Trustee reasonable security or indemnity against any loss, liability or expense; 

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

        (5)   the
Holders of a majority in principal amount of the outstanding Securities have not given the Trustee a direction that, in the opinion of the Trustee, is inconsistent
with such request within such 60-day period. 

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

        SECTION
6.7.    Rights of Holders to Receive Payment.    Notwithstanding any other provision of this Indenture
(including, without limitation, Section 6.6), the right of any Holder to receive payment of principal of, premium, if any, or interest on the
Securities held by such Holder, on or after the respective due dates expressed in the Securities, or to bring suit for the enforcement of any such payment on or after such respective dates, shall not
be impaired or affected without the consent of such Holder. 

64

 

        SECTION
6.8.    Collection Suit by Trustee.    If an Event of Default specified in clauses (1) or (2) of  Section 6.1 occurs and is continuing, the Trustee may recover judgment in its own name and as trustee of an express trust against the Company for
the whole amount then due and owing (together with interest on any unpaid interest to the extent lawful) and the amounts provided for in  Section 7.7. 

        SECTION
6.9.    Trustee May File Proofs of Claim.    The Trustee may file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for the reasonable compensation, expenses, disbursements and advances of the Trustee, its
agents and counsel) and the Securityholders allowed in any judicial proceedings relative to the Company, its Subsidiaries or its or their respective creditors or properties and, unless prohibited by
law or applicable regulations, may be entitled and empowered to participate as a member of any official committee of creditors appointed in such matter and may vote on behalf of the Holders in any
election of a trustee in bankruptcy or other Person performing similar functions, and any Custodian in any such judicial proceeding is hereby authorized by each Holder to make payments to the Trustee
and, in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due it for the reasonable compensation, expenses,
disbursements and
advances of the Trustee, its agents and its counsel, and any other amounts due the Trustee under Section 7.7. 

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

        FIRST:
to the Trustee for amounts due under Section 7.7; 

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

        THIRD:
to the Company or, to the extent the Trustee collects any amount for any Subsidiary Guarantor, to such Subsidiary Guarantor. 

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

        SECTION
6.11.    Undertaking for Costs.    In any suit for the enforcement of any right or remedy under this Indenture
or in any suit against the Trustee for any action taken or omitted by it as Trustee, a court in its discretion may require the filing by any party litigant in the suit of an undertaking to pay the
costs of the suit, and the court in its discretion may assess reasonable costs, including reasonable attorneys' fees, against any party litigant in the suit, having due regard to the merits and good
faith of the claims or defenses made by the party litigant. This Section does not apply to a suit by the Trustee, a suit by the Company, a suit by a Holder pursuant to  Section 6.7 or a suit by
Holders of more than 10% in outstanding principal amount of the Securities. 

 
 

ARTICLE VII    
    
    TRUSTEE    
    

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

65

 

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

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

        (2)   in
the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon
certificates, opinions or orders 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 provisions hereof
are specifically required to be furnished to the Trustee, the Trustee shall examine such 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 liability for its own negligent action, its own negligent failure to act or its own willful misconduct, except that: 

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

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

        (3)   the
Trustee shall not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction received by it pursuant to  Section 6.5. 

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

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

        (f)    No
provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur financial liability in the performance of any of its duties
hereunder or in the exercise of any of its rights or powers, if it shall have reasonable grounds to believe that repayment of such funds or adequate indemnity against such risk or liability is not
reasonably assured to it. 

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

        (h)   Unless
otherwise specifically provided in this Indenture, any demand, request, direction or notice from the Company shall be sufficient if signed by an Officer of the
Company. 

        (i)    The
Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Holders unless
such Holders shall have offered to the Trustee reasonable security or indemnity satisfactory to it against the costs, expenses (including reasonable attorneys' fees and expenses) and liabilities that
might be incurred by it in compliance with such request or direction. 

        SECTION
7.2.    Rights of Trustee.    Subject to Section 7.1: 

        (a)   The
Trustee may conclusively rely on any document (whether in its original or facsimile form) reasonably 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. The Trustee shall receive and retain financial reports and statements of the Company as
provided herein, but shall have no duty to review or analyze such reports or statements to determine compliance under covenants or other obligations of the Company. 

66

 

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

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

        (d)   The
Trustee shall not be liable for any action it takes or omits to take in good faith which it believes to be authorized or within its rights or powers, unless the
Trustee's conduct constitutes willful misconduct or negligence. 

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

        (f)    The
Trustee shall not be deemed to have notice of any Default or Event of Default unless a Trust Officer of the Trustee has actual knowledge thereof or unless written
notice of any event which is in fact such a default is received by the Trustee at the corporate trust office of the Trustee specified in  Section 11.2, and such notice references the Securities and
this Indenture. 

        (g)   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 to each agent, custodian and other Person employed to act hereunder. 

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

        (i)    The
Trustee shall not be deemed to have knowledge of any fact or matter unless such fact or matter is known to a Trust Officer of the Trustee. 

        (j)    Whenever
in the administration of this Indenture the Trustee shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any
action hereunder, the Trustee (unless other evidence be herein specifically prescribed) may request, and in the absence of bad faith or willful misconduct on its part, rely upon an Officers'
Certificate and an Opinion of Counsel. 

        (k)   The
Trustee may request that the Company deliver an Officers' Certificate setting forth the names of individuals and/or titles of officers authorized at such times to
take specified actions pursuant to this
Indenture, which Officers' Certificate may be signed by any person specified as so authorized in any such certificate previously delivered and not superceded. 

        (l)    In
the event that the Company is required to pay interest at an increased rate pursuant to the provisions of paragraph 1 of the Securities issued in the form of  Exhibit A hereto, the Company will
provide written notice to the Trustee of its obligation to pay the increased interest rate no later than
15 days prior to the next interest payment date, which notice shall set forth the amount of the increased interest to be paid by the Company on such interest payment date. The Trustee shall not
at any time be under any duty or responsibility to any Holders to determine the increased interest rate, or with respect to the nature, extent or calculation of the amount of such increased interest
owed, or with respect to the method employed in its calculations. 

67

 

        SECTION
7.3.    Individual Rights of Trustee.    The Trustee in its individual or any other capacity may become the
owner or pledgee of Securities and may otherwise deal with the Company, Subsidiary Guarantors or their Affiliates with the same rights it would have if it were not Trustee. Any Paying Agent,
Registrar, co-registrar or co-paying agent may do the same with like rights. However, the Trustee must comply with Sections 7.10
and 7.11. In addition, the Trustee shall be permitted to engage in transactions with the Company; provided,
however, that if the Trustee acquires any conflicting interest the Trustee must (i) eliminate such conflict within 90 days of acquiring such conflicting interest,
(ii) apply to the SEC for permission to continue acting as Trustee or (iii) resign. 

        SECTION
7.4.    Trustee's Disclaimer.    The Trustee shall not be responsible for and makes no representation as to
the validity or adequacy of this Indenture or the Securities, shall not be accountable for the Company's use of the proceeds from the sale of the Securities, shall not be responsible for the use or
application of any money received by any Paying Agent other than the Trustee or any money paid to the Company pursuant to the terms of this Indenture and shall not be responsible for any statement of
the Company in this Indenture or in any document issued in connection with the sale of the Securities or in the Securities other than the Trustee's certificate of authentication. 

        SECTION
7.5.    Notice of Defaults.    If a Default or Event of Default occurs and is continuing and if a Trust
Officer has actual knowledge thereof, the Trustee shall mail by first class mail to each Securityholder at the address set forth in the Securities Register notice of the Default or Event of Default
within 90 days after it occurs. Except in the case of a Default or Event of Default in payment of principal of, premium, if any, or interest on any Security (including payments pursuant to the
optional redemption or required repurchase provisions of such Security, if any), the Trustee may withhold the notice if and so long as its board of directors, a committee of its board of directors or
a committee of its Trust Officers in good faith determines that withholding the notice is in the interests of Securityholders. 

        SECTION
7.6.    Reports by Trustee to Holders.    As promptly as practicable after each May 15 beginning
May 15, 2005 following the date of this Indenture, and in any event prior to July 15 in each year, the Trustee shall mail to each Securityholder a brief report dated as of such
July 15 that complies with TIA § 313(a) if and to the extent required thereby. The Trustee also shall comply with TIA § 313(b) and
TIA § 313(c). 

        A
copy of each report at the time of its mailing to Securityholders shall be filed with the SEC and each stock exchange (if any) on which the Securities are listed. The Company agrees to
notify promptly the Trustee whenever the Securities become listed on any stock exchange and of any delisting thereof and the Trustee shall comply with TIA § 313(d). 

        SECTION
7.7.    Compensation and Indemnity.    The Company and the Subsidiary Guarantors shall be jointly and
severally liable for paying to the Trustee from time to time reasonable compensation for its acceptance of this Indenture and services hereunder as the Company and the Trustee shall from time to time
agree in writing. The Trustee's compensation shall not be limited by any law on compensation of a trustee of an express trust. The Company and the Subsidiary Guarantors shall be jointly and severally
liable for reimbursing the Trustee upon request for all reasonable out-of-pocket expenses incurred or made by it, including costs of collection, costs of preparing and
reviewing reports, certificates and other documents, costs of preparation and mailing of notices to Securityholders and reasonable costs of counsel retained by the Trustee in connection with the
delivery of an Opinion of Counsel or otherwise, in addition to the compensation for its services. Such expenses shall include the reasonable compensation and expenses, disbursements and advances of
the Trustee's agents, counsel, accountants and experts. The Company and each Subsidiary Guarantor, jointly and severally, shall indemnify the Trustee against any and all loss, liability, damages,
claims or expense (including reasonable attorneys' fees and expenses) incurred by it without negligence, bad faith or willful 

68

 

misconduct
on its part in connection with the administration of this trust and the performance of its duties hereunder, including the costs and expenses of enforcing this Indenture (including this  Section 7.7) and of defending itself against any claims (whether asserted by any Securityholder, the Company, any Subsidiary Guarantor or
otherwise). The Trustee shall notify the Company promptly of any claim for which it may seek indemnity. Failure by the Trustee to so notify the Company shall not relieve the Company or any Subsidiary
Guarantor of its obligations hereunder. The Company shall defend the claim and shall have the authority to settle the claim, and the Trustee shall provide reasonable cooperation at the Company's
expense in the defense. The Trustee may have separate counsel and the Company and the Subsidiary Guarantors, as applicable, shall pay the fees and expenses of such counsel,  provided that the Company
shall not be required to pay such fees and expenses if it assumes the Trustee's defense, and, in the reasonable judgment of
outside counsel to the Trustee, there is no conflict of interest between the Company and the Subsidiary Guarantors, as applicable and the Trustee in connection with such defense. Notwithstanding the
foregoing, the Company and the Subsidiary Guarantors need not reimburse any expense or indemnify against any loss, liability or expense which is finally determined by a court of competent jurisdiction
to have been incurred by the Trustee through the Trustee's own willful misconduct, negligence or bad faith. 

        To
secure the Company's and the Subsidiary Guarantors' payment obligations in this Section, the Trustee shall have a lien prior to the Securities on all money or property held or
collected by the Trustee other than money or property held in trust to pay principal of and interest on particular Securities. Such lien shall survive the satisfaction and discharge of this Indenture.
The Trustee's right to receive payment of any amounts due under this Section 7.7 shall not be subordinate to any other liability or Indebtedness
of the Company or any Subsidiary Guarantor. 

        The
Company's and the Subsidiary Guarantors' payment obligations pursuant to this Section shall survive the discharge of this Indenture. When the Trustee incurs expenses after the
occurrence of a Default specified in clause (7) or clause (8) of Section 6.1 with respect to the Company, the expenses are intended
to constitute expenses of administration under any Bankruptcy Law. 

        SECTION
7.8.    Replacement of Trustee.    The Trustee may resign at any time by so notifying the Company in writing.
The Holders of a majority in principal amount of the Securities may remove the Trustee by so notifying the removed Trustee in writing and may appoint a successor Trustee with the Company's written
consent, which consent will not be unreasonably withheld. The Company shall remove the Trustee if: 

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

        (2)   the
Trustee is adjudged bankrupt or insolvent; 

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

        (4)   the
Trustee otherwise becomes incapable of acting. 

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

        A
successor Trustee shall deliver a written acceptance of its appointment to the retiring Trustee and to the Company. Thereupon the resignation or removal of the retiring Trustee shall
become effective, and the successor Trustee shall have all the rights, powers and duties of the Trustee under this Indenture. The successor Trustee shall mail a notice of its succession to
Securityholders. The retiring Trustee shall promptly transfer all property held by it as Trustee to the successor Trustee, subject to the lien provided for in  Section 7.7. 

69

  

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

        If
the Trustee fails to comply with Section 7.10, unless the Trustee's duty to resign is stayed as provided in TIA §
310(b), any Securityholder, who has been a bona fide holder of a Security for at least six months, may petition any court of competent jurisdiction for the removal of the Trustee and the appointment
of a successor Trustee. 

        Notwithstanding
the replacement of the Trustee pursuant to this Section, the Company's and the Subsidiary Guarantors' obligations under  Section 7.7 shall continue for the benefit of the retiring Trustee.

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

        In
case at the time such successor or successors by merger, conversion or consolidation to the Trustee shall succeed to the trusts created by this Indenture, any of the Securities shall
have been authenticated but not delivered, any such successor to the Trustee may adopt the certificate of authentication of any predecessor trustee, and deliver such Securities so authenticated; and
in case at that time any of the Securities shall not have been authenticated, any successor to the Trustee may authenticate such Securities either in the name of any predecessor hereunder or in the
name of the successor to the Trustee; provided that the right to adopt the certificate of authentication of any predecessor Trustee or authenticate
Securities in the name of any predecessor Trustee shall only apply to its successor or successors by merger, consolidation or conversion. 

        SECTION
7.10.    Eligibility; Disqualification.    This Indenture shall always have a Trustee that satisfies the
requirements of TIA § 310(a)(1), (2) and (5) in every respect. The Trustee shall have a combined capital and surplus of at least $100 million as set
forth in its most recent published annual report of condition. The Trustee shall comply with TIA § 310(b); provided, however,
that there shall be excluded from the operation of TIA § 310(b)(1) any indenture or indentures under which other securities or certificates of interest or participation in
other securities of
the Company are outstanding if the requirements for such exclusion set forth in TIA § 310(b)(1) are met. 

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

        SECTION
7.12.    Trustee's Application for Instruction from the Company.    Any application by the Trustee for written
instructions from the Company may, at the option of the Trustee, set forth in writing any action proposed to be taken or omitted by the Trustee under this Indenture and the date on and/or after which
such action shall be taken or such omission shall be effective. The Trustee shall not be liable for any action taken by, or omission of, the Trustee in accordance with a proposal included in such
application on or after the date specified in such application (which date shall not be less than three Business Days after the date any officer of the Company actually receives such application,
unless any such officer shall have consented in writing to any earlier date) unless prior to taking any such action (or the effective date in the case of an omission), the Trustee shall have received
written instructions in response to such application specifying the action to be taken or omitted. 

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        SECTION
7.13.    Paying Agents.    The Company shall cause each Paying Agent other than the Trustee to execute and
deliver to it and the Trustee an instrument in which such agent shall agree with the Trustee, subject to the provisions of this Section 7.13: 

        (1)   that
it will hold all sums held by it as agent for the payment of principal of, or premium, if any, or interest on, the Securities (whether such sums have been paid to
it by the Company or by any obligor on the Securities) in trust for the benefit of Holders of the Securities or the Trustee; 

        (2)   that
it will at any time during the continuance of any Event of Default, upon written request from the Trustee, deliver to the Trustee all sums so held in trust by it
together with a full accounting thereof; and 

        (3)   that
it will give the Trustee written notice within three Business Days of any failure of the Company (or by any obligor on the Securities) in the payment of any
installment of the principal of, premium, if any, or interest on, the Securities when the same shall be due and payable. 

 
 

ARTICLE VIII    
    
    DISCHARGE OF INDENTURE; DEFEASANCE    
    

        SECTION
8.1.    Discharge of Liability on Securities; Defeasance.    (a) Subject to  Section 8.1(c), this
Indenture shall be discharged and shall cease to be of further effect as to all outstanding Securities, and upon request of
the Company the Trustee shall acknowledge in writing the discharge of those obligations, when: (i) either (x) all the Securities theretofore authenticated and delivered (other than
Securities replaced pursuant to Section 2.9 and Securities for whose payment money has theretofore been deposited in trust or segregated and held
in trust by the Company and thereafter repaid to the Company or discharged from such trust) have been delivered to the Trustee for cancellation or (y) all of the Securities (1) have
become due and payable, (2) will become due and payable at their stated maturity within one year or (3) if redeemable at the option of the Company, are to be called for redemption within
one year under arrangements satisfactory to the Trustee for the giving of notice of redemption pursuant to Article V hereof in the name, and at
the expense, of the Company, and the Company has irrevocably deposited or caused to be deposited with the Trustee funds in an amount in U.S. dollars, U.S. Government Obligations or a combination
thereof sufficient in the written opinion of a firm of independent public accountants delivered to the Trustee (which delivery shall only be required if U.S. Government Obligations have been so
deposited) to pay and discharge the entire Indebtedness on the Securities not theretofore delivered to the Trustee for cancellation, for principal of, premium, if any, and interest on the Securities
to the date of deposit together with irrevocable instructions from the Company directing the Trustee to apply such funds to the payment thereof at maturity or redemption, as the case may be;
(ii) the Company and/or the Subsidiary Guarantors have paid all other sums payable under the Indenture; and (iii) the Company has delivered to the Trustee an Officers' Certificate and an
Opinion of Counsel stating that all conditions precedent under the Indenture relating to the satisfaction and discharge of the Indenture have been complied with. 

        (b)   Subject
to Sections 8.1(c) and 8.2, the Company at any time may terminate
(i) all its obligations under the Securities and this Indenture ("legal defeasance option"), and after giving effect to such legal defeasance,
any omission to comply with such obligations shall no longer constitute a Default or Event of Default or (ii) their obligations under  Section 3.2, Section 3.3,  Section 3.4, Section 3.5,  Section 3.6,
Section 3.7,  Section 3.8, Section 3.9,
Section 3.10, Section 3.11,  Section 3.12, Section 3.16,  Section 3.19 and Section 4.1(3), and the Company may omit to comply with and shall have no
liability in respect of any term, condition or limitation set forth in any such covenant, whether directly or indirectly, by reason of any reference elsewhere herein to any such covenant or by reason
of any reference in any such covenant to any other provision herein or in any other document and such 

71

 

omission
to comply with such covenants shall no longer constitute a Default or an Event of Default under Section 6.1(3) (only with respect to  Section 4.1(3)), Section 6.1(4),  Section 6.1(6), Section 6.1(7) (with respect to Significant
Subsidiaries),  Section 6.1(8) (with respect only to Significant Subsidiaries) and Section 6.1(9), and the
events specified in such Sections shall no longer constitute an Event of Default (clause (ii) being referred to as the "covenant defeasance
option"), but except as specified above, the remainder of this Indenture and the Securities shall be unaffected thereby. The Company may exercise its legal defeasance option
notwithstanding its prior exercise of the covenant defeasance option. If the Company exercises its covenant defeasance option, the Company may elect to have any Subsidiary Guarantees in effect at such
time terminate. 

        If
the Company exercises its legal defeasance option, payment of the Securities may not be accelerated because of an Event of Default. If the Company exercises its covenant defeasance
option, payment of the Securities may not be accelerated because of an Event of Default specified in Section 6.1(3) (only with respect to  Section 4.1(3)), Section 6.1(4),  Section 6.1(6), Section 6.1(7) (with respect only to Significant
Subsidiaries),  Section 6.1(8) (with respect only to Significant Subsidiaries) or Section 6.1(9). 

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

        (c)   Notwithstanding
the provisions of Sections 8.1(a) and (b), the Company's
obligations in Sections 2.2, 2.3, 2.4,  2.5, 2.6, 2.9,  2.10, 2.11, 2.12,
 3.1, 3.13, 3.14,  3.15, 3.17, 3.18,
3.20, 6.7, 7.7 and  7.8 and in this Article VIII shall survive until the Securities have been paid in full.
Thereafter, the Company's obligations in Sections 7.7, 8.4 and  8.5 shall survive. 

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

        (1)   the
Company irrevocably deposits in trust with the Trustee for the benefit of the Holders money in U.S. dollars or U.S. Government Obligations or a combination thereof,
the principal of, premium, if any, and interest (without reinvestment) on which will be sufficient, or a combination thereof sufficient,
for the payment of principal, premium, if any, and interest on the Securities to maturity or redemption, as the case may be; 

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

        (3)   no
Default or Event of Default shall have occurred and be continuing on the date of such deposit or, with respect to certain bankruptcy or insolvency Events of Default,
on the later of (i) the 91st day after such date of deposit or (ii) the day ending on the day following the expiration of the longest preference period under any bankruptcy law
applicable to the Company in respect of such deposit; 

        (4)   such
legal defeasance or covenant defeasance shall not result in a breach or violation of, or constitute a Default under, this Indenture or any other agreement or
instrument to which the Company or any of its Subsidiaries is a party or by which the Company or any of its Subsidiaries is bound; 

        (5)   the
Company shall have delivered to the Trustee an Opinion of Counsel (subject to customary assumptions and exclusions) to the effect that (A) the Securities and
(B) assuming no intervening bankruptcy of the Company between the date of deposit and the 91st day following the 

72

 

deposit
and that no Holder of the Securities is an insider of the Company, after the 91st day following the deposit, the trust funds, will not be subject to the effect of any applicable bankruptcy,
insolvency, reorganization or similar laws affecting creditors' right generally; 

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

        (7)   in
the case of the legal defeasance option, the Company shall have delivered to the Trustee an Opinion of Counsel (subject to customary assumptions and exclusions) in
the United States stating that (i) the Company has received from, or there has been published by, the Internal Revenue Service a ruling, or (ii) since the date of this Indenture there
has been a change in the applicable federal income tax law, in either case to the effect that, and based thereon such Opinion of Counsel shall confirm that, the Securityholders will not recognize
income, gain or loss for federal income tax purposes as a result of such defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would
have been the case if such legal defeasance had not occurred; 

        (8)   in
the case of the covenant defeasance option, the Company shall have delivered to the Trustee an Opinion of Counsel (subject to customary assumptions and exclusions) in
the United States to the effect that the Securityholders will not recognize income, gain or loss for federal income tax purposes as a result of such deposit and covenant defeasance and will be subject
to federal income tax on the same amount, in the same manner and at the same times as would have been the case if such deposit and covenant defeasance had not occurred; and 

        (9)   the
Company delivers to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that all conditions precedent provided for relating to either the
legal defeasance or covenant defeasance, as the case may be, as contemplated by this Article VIII have been complied with. 

        SECTION
8.3.    Application of Trust Money.    The Trustee shall hold in trust all money or U.S. Government
Obligations (including proceeds thereof) deposited with it pursuant to this Article VIII. It shall apply the deposited money and the money from
U.S. Government Obligations through the Paying Agent and in accordance with this Indenture and the Securities to the Holders of the Securities of all sums due in respect of the payment of principal
of, premium, if any, and accrued interest on the Securities. 

        SECTION
8.4.    Repayment to the Company.    The Trustee and the Paying Agent shall promptly turn over to the Company
upon request any excess money, U.S. Government Obligations or securities held by them upon payment of all the obligations under this Indenture. 

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

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

        SECTION
8.6.    Reinstatement.    If the Trustee or Paying Agent is unable to apply any money or U.S. Government
Obligations in accordance with this Article VIII by reason of any legal proceeding or 

73

 

by
reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, the obligations of the Company and each Subsidiary Guarantor
under this Indenture and the Securities shall be revived and reinstated as though no deposit had occurred pursuant to this Article VIII until
such time as the Trustee or Paying Agent is permitted to apply all such money or U.S. Government Obligations in accordance with this  Article VIII; provided, however,
 that, if the Company or the Subsidiary Guarantors have made any
payment of principal, premium, if any, interest on or principal of any Securities because of the reinstatement of its obligations, the Company or Subsidiary Guarantors, as the case may be, shall be
subrogated to the rights of the Holders of such Securities to receive such payment from the money or U.S. Government Obligations held by the Trustee or Paying Agent. 

        The
Trustee's rights under this Article VIII shall survive termination of this Indenture. 

 
 

ARTICLE IX    
    
    AMENDMENTS    
    

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

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

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

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

        (4)   to
add Guarantees with respect to the Securities or release a Subsidiary Guarantor upon its designation as an Unrestricted Subsidiary; provided,
however, that the designation is in accord with the applicable provisions of this Indenture; 

        (5)   to
secure the Securities; 

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

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

        (8)   to
comply with any requirement of the SEC in connection with the qualification of this Indenture under the TIA; or 

        (9)   to
provide for the issuance of the Exchange Securities which will have terms substantially identical in all respects to the Securities (except that the transfer
restrictions contained in the Securities shall be modified or eliminated, as appropriate) and which shall be treated, together with any outstanding Securities, as a single class of securities. 

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

        SECTION
9.2.    With Consent of Holders.    The Company, the Subsidiary Guarantors and the Trustee may amend or
supplement this Indenture or the Securities without notice to any Securityholder 

74

 

but
with the written consent of the Holders of at least a majority in principal amount of the Securities then outstanding (including, without limitation, consents obtained in connection with a
purchase of, or tender offer or exchange offer for, Securities). Any past default or compliance with any provision of this Indenture or the Securities may be waived with the written consent of the
Holders of a majority in principal amount of the Securities then outstanding (including, without limitation, consents obtained in connection with a purchase of, or tender offer or exchange offer for,
Securities). However, without the consent of each Securityholder affected, an amendment, supplement or waiver may not (with respect to any Securities held by a non-consenting Holder of
Securities): 

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

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

        (3)   reduce
the principal of or extend the Stated Maturity of any Security; 

        (4)   reduce
the premium payable upon the redemption or repurchase of any Security or change the time at which any Security may or shall be redeemed or repurchased as
described under Section 3.5, Section 3.10 (including an amendment to the definition of
"Change of Control") or Article V or any similar provision, whether through an amendment or waiver of  Section 3.5, Section 3.10 or  Article V, definitions or otherwise; 

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

        (6)   impair
the right of any Holder to receive payment of premium, if any, principal of and interest on such Holder's Securities on or after the due dates therefor or to
institute suit for the enforcement of any payment on or with respect to such Holder's Securities; 

        (7)   make
any change to the amendment provisions which require each Holder's consent or to the waiver provisions; or 

        (8)   modify
the Subsidiary Guarantees in any manner adverse to the Holders. 

        It
shall not be necessary for the consent of the Holders under this Section to approve the particular form of any proposed amendment, supplement or waiver, but it shall be sufficient if
such consent approves the substance thereof. A consent to any amendment, supplement or waiver under this Indenture by any Holder of the Securities given in connection with a tender or exchange of such
Holder's Securities will not be rendered invalid by such tender or exchange. 

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

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

        SECTION
9.4.    Revocation and Effect of Consents and Waivers.    A consent to an amendment, supplement or a waiver by
a Holder of a Security shall bind the Holder and every subsequent Holder of that Security or portion of the Security that evidences the same debt as the consenting Holder's Security, even if notation
of the consent or waiver is not made on the Security. Any such Holder or subsequent Holder may revoke the consent or waiver as to such Holder's Security or portion of the Security if the Trustee
receives the notice of revocation before the date the amendment, supplement or waiver becomes effective or otherwise in accordance with any related solicitation documents. After an amendment,
supplement or waiver becomes effective, it shall bind every Securityholder unless it makes a change described in any of clauses (1) through (8) of  Section 9.2, in which case the amendment,
 

75

 

supplement,
waiver or other action shall bind each Securityholder who has consented to it and every subsequent Holder of that Security or portion of the Security that evidences the same debt as the
consenting Holder's Securities. An amendment, supplement or waiver shall become effective upon receipt by the Trustee of the requisite number of written consents under  Section 9.1 or 9.2 as applicable. 

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

        SECTION
9.5.    Notation on or Exchange of Securities.    If an amendment, supplement or waiver changes the terms of a
Security, the Trustee may require the Holder of the Security to deliver it to the Trustee. The Trustee may place an appropriate notation on the Security regarding the changed terms and return it to
the Holder. Alternatively, if the Company or the Trustee so determine, the Company in exchange for the Security shall issue and the Trustee shall authenticate a new Security that reflects the changed
terms. Failure to make the appropriate notation or to issue a new Security shall not affect the validity of such amendment. 

        SECTION
9.6.    Trustee To Sign Amendments.    The Trustee shall sign any amendment, supplement or waiver authorized
pursuant to this Article IX if the amendment, supplement or waiver does not adversely affect the rights, duties, liabilities or immunities of the
Trustee. If it does, the Trustee may but need not sign it. In signing such amendment, supplement or waiver the Trustee shall be entitled to receive indemnity reasonably satisfactory to it and to
receive, and (subject to Sections 7.1 and 7.2) shall be fully protected in relying upon an Officers'
Certificate and an Opinion of Counsel stating that such amendment, supplement or waiver is authorized or permitted by this Indenture and that such amendment, supplement or waiver is the legal, valid
and binding obligation of the Company and any Subsidiary Guarantors, enforceable against them in accordance with its terms, subject to customary exceptions, and complies with the provisions hereof
(including Section 9.3). 

 
 

ARTICLE X    
    
    SUBSIDIARY GUARANTEE    
    

        SECTION
10.1.    Subsidiary Guarantee.    Subject to the provisions of this  Article X, each Subsidiary Guarantor
hereby fully, unconditionally and irrevocably guarantees, as primary obligor and not merely as surety,
jointly and severally with each other Subsidiary Guarantor, to the extent lawful, to each Holder of the Securities, and the Trustee the full and punctual payment when due, whether at maturity, by
acceleration, by redemption or otherwise, of the principal of, premium, if any, and interest on the Securities and all other obligations and liabilities of the Company under this Indenture (including
without limitation interest accruing after the filing of any petition in bankruptcy, or the commencement of any insolvency, reorganization or like proceeding, relating to the Company or any Subsidiary
Guarantor whether or not a claim for post-filing or post-petition interest is allowed in such proceeding and the obligations under  Section 7.7) (all the foregoing being hereinafter collectively
called the "Guarantor
Obligations"). Each Subsidiary Guarantor agrees that the Guarantor Obligations will rank equally in right of payment with other Indebtedness of such Subsidiary Guarantor,
except to the extent such other Indebtedness is subordinate to the Guarantor Obligations. Each Subsidiary Guarantor further agrees (to the extent permitted by law) that the Guarantor Obligations may
be extended or renewed, in whole or in part, without notice or further assent from it, and that it will remain bound under this Article X
notwithstanding any extension or renewal of any Guarantor Obligation. 

76

  

        Each Subsidiary Guarantor waives presentation to, demand of payment from and protest to the Company of any of the Guarantor Obligations and also waives notice of protest for nonpayment.
Each Subsidiary Guarantor waives notice of any default under the Securities or the Guarantor Obligations. 

        Each
Subsidiary Guarantor further agrees that its Subsidiary Guarantee herein constitutes a Guarantee of payment when due (and not a Guarantee of collection) and waives any right to
require that any resort be had by any Holder to any security held for payment of the Guarantor Obligations. 

        Except
as set forth in Section 10.2, the obligations of each Subsidiary Guarantor hereunder shall not be subject to any reduction,
limitation, impairment or termination for any reason (other than payment of the Guarantor Obligations in full), including any claim of waiver, release, surrender, alteration or compromise, and shall
not be subject to any defense of setoff, counterclaim, recoupment or termination whatsoever or by reason of the invalidity, illegality or unenforceability of the Guarantor Obligations or otherwise.
Without limiting the generality of the foregoing, to the extent lawful, the obligations of each Subsidiary Guarantor herein shall not be discharged or impaired or otherwise affected by (a) the
failure of any Holder to assert any claim or demand or to enforce any right or remedy against the Company or any other person under this Indenture, the Securities or any other agreement or otherwise;
(b) any extension or renewal of any thereof; (c) any rescission, waiver, amendment or modification of any of the terms or provisions of this Indenture, the Securities or any other
agreement; (d) the release of any security held by any Holder or the Trustee for the Guarantor Obligations or any of them; (e) the failure of any Holder to exercise any right or remedy
against any other Subsidiary Guarantor; (f) any change in the ownership of the Company; (g) by any default, failure or delay, willful or otherwise, in the performance of the Guarantor
Obligations, or (h) by any other act or thing or omission or delay to do any other act or thing which may or might in any manner or to any extent vary the risk of any Subsidiary Guarantor or
would otherwise operate as a discharge of such Subsidiary Guarantor as a matter of law or equity. 

        Subject
to the provisions of Section 3.12, each Subsidiary Guarantor agrees that its Subsidiary Guarantee herein shall remain in
full force and effect until payment in full of all the Guarantor Obligations or such Subsidiary Guarantor is released from its Subsidiary Guarantee upon the merger or the sale of all the Capital Stock
or assets of the Subsidiary Guarantor in compliance with Section 10.2. Each Subsidiary Guarantor further agrees that its Subsidiary Guarantee
herein shall continue to be effective or be reinstated, as the case may be, if at any time payment, or any part thereof, of principal of or interest on any of the Guarantor Obligations is rescinded or
must otherwise be restored by any Holder upon the bankruptcy or reorganization of the Company or otherwise. 

        In
furtherance of the foregoing and not in limitation of any other right which any Holder has at law or in equity against any Subsidiary Guarantor by virtue hereof, upon the failure of
the Company to pay
any of the Guarantor Obligations when and as the same shall become due, whether at maturity, by acceleration, by redemption or otherwise, each Subsidiary Guarantor hereby promises to and will, upon
receipt of written demand by the Trustee, forthwith pay, or cause to be paid, in cash, to the Holders an amount equal to the sum of (i) the unpaid amount of such Guarantor Obligations then due
and owing and (ii) accrued and unpaid interest on such Guarantor Obligations then due and owing (but only to the extent not prohibited by law). 

        Each
Subsidiary Guarantor further agrees that, as between such Subsidiary Guarantor, on the one hand, and the Holders, on the other hand, (x) the maturity of the Guarantor
Obligations guaranteed hereby may be accelerated as provided in this Indenture for the purposes of its Subsidiary Guarantee herein, notwithstanding any stay, injunction or other prohibition preventing
such acceleration in respect of the Guarantor Obligations guaranteed hereby and (y) in the event of any such declaration of acceleration of such Guarantor Obligations, such Guarantor
Obligations (whether or not due and payable) shall forthwith become due and payable by the Subsidiary Guarantor for the purposes of this Subsidiary Guarantee. 

77

 

        Each
Subsidiary Guarantor also agrees to pay any and all costs and expenses (including reasonable attorneys' fees and expenses) incurred by the Trustee or the Holders in enforcing any
rights under this Section. 

        SECTION
10.2.    Limitation on Liability; Termination, Release and Discharge.    

        (a)   Any
term or provision of this Indenture to the contrary notwithstanding, the obligations of each Subsidiary Guarantor hereunder will be limited to the maximum amount as
will, after giving effect to all other contingent and fixed liabilities of such Subsidiary Guarantor (including, without limitation, any guarantees under the Senior Secured Credit Agreement) and after
giving effect to any collections from or payments made by or on behalf of any other Subsidiary Guarantor in respect of the obligations of such other Subsidiary Guarantor under its Subsidiary Guarantee
or pursuant to its contribution obligations under this Indenture, result in the obligations of such Subsidiary Guarantor under its Subsidiary Guarantee not constituting a fraudulent conveyance or
fraudulent transfer under federal or state law and not otherwise being void or voidable under any similar laws affecting the rights of creditors generally. 

        (b)   In
addition, the Company shall not permit any Subsidiary Guarantor to consolidate with, merge with or into any person (other than (i) the Company (as permitted in  Section 4.1) or (ii)
 another Subsidiary Guarantor) and shall not permit the conveyance, transfer or lease of substantially all of the
assets of any Subsidiary Guarantor unless: 

        (1)   (x) the
resulting, surviving or transferee Person shall be a corporation, partnership, trust or limited liability company organized and existing under the laws of
the United States of America, any State of the United States or the District of Columbia and such Person (if not such Subsidiary Guarantor) shall expressly assume, by supplemental indenture, executed
and delivered to the Trustee, all the obligations of such Subsidiary Guarantor under its Subsidiary Guarantee; (y) immediately after giving effect to such transaction (and treating any
Indebtedness that becomes an obligation of the resulting, surviving or transferee Person or any Restricted Subsidiary as a result of such transaction as having been Incurred by such Person or such
Restricted Subsidiary at the time of such transaction), no Default or Event of Default shall have occurred and be continuing; and (z) the Company shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that such consolidation, merger or transfer and such supplemental indenture (if any) comply with this Indenture; or 

        (2)   the
transaction is made in compliance with Section 3.5. 

        Upon
the sale or disposition of a Subsidiary Guarantor (by merger, consolidation, the sale of its Capital Stock or the sale of all of its assets) and whether or not the Subsidiary
Guarantor is the surviving corporation in such transaction, to a Person which is not the Company or a Subsidiary Guarantor, which sale or disposition is otherwise in compliance with this Indenture,
such Subsidiary Guarantor will be automatically released from all its obligations under this Indenture and its Subsidiary Guarantee and the Registration Rights Agreement and such Subsidiary Guarantee
will terminate; provided, however, that (x) the sale or other disposition is in compliance with this Indenture, including  Section 3.5,
Section 3.9 and  Section 4.1 and (y) all the obligations of such Subsidiary Guarantor under all Credit Facilities and related documentation
and any other
agreements relating to any other Indebtedness of the Company or its Restricted Subsidiaries terminate upon consummation of such transaction. 

        (c)   Each
Subsidiary Guarantor shall be deemed released from all its obligations under this Indenture, its Subsidiary Guarantee and the Registration Rights Agreement and such
Subsidiary Guarantee will terminate upon the legal defeasance or covenant defeasance of the Securities pursuant to the provisions of Article VIII
hereof. 

78

 

        (d)   Each
Subsidiary Guarantor shall be released from its obligations under this Indenture and its Subsidiary Guarantee if the Company designates such Subsidiary Guarantor as
an Unrestricted Subsidiary and such designation complies with the other applicable provisions of this Indenture. 

        SECTION
10.3.    Right of Contribution.    Each Subsidiary Guarantor hereby agrees that to the extent that any
Subsidiary Guarantor shall have paid more than its proportionate share of any payment made on the obligations under the Subsidiary Guarantees, such Subsidiary Guarantor shall be entitled to seek and
receive contribution from and against the Company, or any other Subsidiary Guarantor who has
not paid its proportionate share of such payment. The provisions of this Section 10.3 shall in no respect limit the obligations and liabilities
of each Subsidiary Guarantor to the Trustee and the Holders and each Subsidiary Guarantor shall remain liable to the Trustee and the Holders for the full amount guaranteed by such Subsidiary Guarantor
hereunder. 

        SECTION
10.4.    No Subrogation.    Notwithstanding any payment or payments made by each Subsidiary Guarantor
hereunder, no Subsidiary Guarantor shall be entitled to be subrogated to any of the rights of the Trustee or any Holder against the Company or any other Subsidiary Guarantor or any collateral security
or guarantee or right of offset held by the Trustee or any Holder for the payment of the Guarantor Obligations, nor shall any Subsidiary Guarantor seek or be entitled to seek any contribution or
reimbursement from the Company or any other Subsidiary Guarantor in respect of payments made by such Subsidiary Guarantor hereunder, until all amounts owing to the Trustee and the Holders by the
Company on account of the Guarantor Obligations are paid in full. If any amount shall be paid to any Subsidiary Guarantor on account of such subrogation rights at any time when all of the Guarantor
Obligations shall not have been paid in full, such amount shall be held by such Subsidiary Guarantor in trust for the Trustee and the Holders, segregated from other funds of such Subsidiary Guarantor,
and shall, forthwith upon receipt by such Subsidiary Guarantor, be turned over to the Trustee in the exact form received by such Subsidiary Guarantor (duly indorsed by such Subsidiary Guarantor to the
Trustee, if required), to be applied against the Guarantor Obligations. 

 
 

ARTICLE XI    
    
    MISCELLANEOUS    
    

        SECTION
11.1.    Trust Indenture Act Controls.    If and to the extent that any provision of this Indenture limits,
qualifies or conflicts with another provision which is required to be included in this Indenture by the TIA, the provision required by the TIA shall control. Each Subsidiary Guarantor in addition to
performing its obligations under its Subsidiary Guarantee shall perform such other obligations as may be imposed upon it with respect to this Indenture under the TIA. 

        SECTION
11.2.    Notices.    Any notice or communication shall be in writing and delivered in person, sent by
facsimile, delivered by commercial courier service or mailed by first-class mail, postage prepaid, addressed as follows: 

if
to the Company: 

Cornell
Companies, Inc.

1700 West Loop South, Suite 1500

Houston, Texas 77027, 

Attention:    John
L. Hendrix

                    Executive Vice President, Chief

                    Financial Officer and Assistant

                    Secretary 

with
copies to: 

Locke
Liddell & Sapp LLP

600 Travis Street, Suite 3400

Houston, Texas 77002 

79

 

Attention:
David F. Taylor, Esq. 

if
to the Trustee: 

JPMorgan
Chase Bank

600 Travis, Suite 1150

Houston, Texas 77002 

Attention:
Institutional Trust Services 

with
copies to: 

Winston &
Strawn LLP

200 Park Avenue

New York, New York 10166 

Attention:
Jeffrey H. Elkin, Esq. 

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

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

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

        Failure
to mail a notice or communication to a Securityholder or any defect in it shall not affect its sufficiency with respect to other Securityholders. If a notice or communication is
mailed in the manner provided above, it is duly given, whether or not the addressee receives it, except that notices to the Trustee shall be effective only upon receipt. 

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

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

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

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

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

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

80

 

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

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

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

        In
giving such Opinion of Counsel, counsel may rely as to factual matters on an Officers' Certificate or on certificates of public officials. 

        SECTION
11.6.    When Securities Disregarded.    In determining whether the Holders of the required aggregate
principal amount of Securities have concurred in any direction, waiver or consent, Securities owned by the Company, any Subsidiary Guarantor or any Affiliate of them shall be disregarded and deemed
not to be outstanding, except that, for the purpose of determining whether the Trustee shall be protected in relying on any such direction, waiver or consent, only Securities which the Trustee
actually knows are so owned shall be so disregarded. Also, subject to the foregoing, only Securities outstanding at the time shall be considered in any such determination. 

        SECTION
11.7.    Rules by Trustee, Paying Agent and Registrar.    The Trustee may make reasonable rules for action by,
or at meetings of, Securityholders. The Registrar and the Paying Agent may make reasonable rules for their functions. 

        SECTION
11.8.    Legal Holidays.    A "Legal Holiday" is a Saturday, a
Sunday or other day on which commercial banking institutions are authorized or required to be closed in New York, New York or Houston, Texas. If a payment date is a Legal Holiday, payment shall be
made on the next succeeding day that is not a Legal Holiday, and no interest shall accrue for the intervening period. If a regular record date is a Legal Holiday, the record date shall not be
affected. 

        SECTION
11.9.    GOVERNING LAW.    THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK. EACH OF THE PARTIES HERETO AGREES TO SUBMIT TO THE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING
TO THIS INDENTURE, THE SECURITIES OR THE SUBSIDIARY GUARANTEES. 

        SECTION
11.10.    No Recourse Against Others.    No director, officer, employee or incorporator of the Company or any
Restricted Subsidiary or any stockholder of the Company, as such, shall have any liability for any obligations of the Company or such Subsidiary Guarantor under the Securities, this Indenture or a
Subsidiary Guarantee or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder of Securities by accepting a Security waives and releases all such
liability to the extent permitted by applicable law. The waiver and release are part of the consideration for issuance of the Securities. Such waiver may not be effective to waive liabilities under
the federal securities laws and it is the view of the SEC that such a waiver is against public policy. 

        SECTION
11.11.    Successors.    All agreements of the Company and each Subsidiary Guarantor in this Indenture and the
Securities shall bind their respective successors. All agreements of the Trustee in this Indenture shall bind its successors. 

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

81

 

        SECTION
11.13.    Qualification of Indenture.    The Company shall qualify this Indenture under the TIA 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 Company, the Trustee and the Holders)
incurred in connection therewith, including, but not limited to, costs and expenses of qualification of this Indenture and the Securities and printing this Indenture and the Securities. The Trustee
shall be entitled to receive from the Company any such Officers' Certificates, Opinions of Counsel or other documentation as it may reasonably request in connection with any such qualification of this
Indenture under the TIA. 

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

82

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

	 	 	CORNELL COMPANIES, INC.
	

 	
 	

By:	
 	

/s/  JOHN L. HENDRIX      

	 	 	 	 	Name:	 	John L. Hendrix
	 	 	 	 	Title:	 	Executive Vice President, Chief Financial Officer and Assistant Secretary
	

 	
 	

CCG I CORPORATION
	

 	
 	

By:	
 	

/s/  JOHN L. HENDRIX      

	 	 	 	 	Name:	 	John L. Hendrix
	 	 	 	 	Title:	 	Executive Vice President, Chief Financial Officer and Assistant Secretary
	

 	
 	

CORNELL ABRAXAS GROUP, INC.
	

 	
 	

By:	
 	

/s/  JOHN L. HENDRIX      

	 	 	 	 	Name:	 	John L. Hendrix
	 	 	 	 	Title:	 	Senior Vice President and Chief Financial Officer
	

 	
 	

CORNELL COMPANIES ADMINISTRATION, LLC
	

 	
 	

By:	
 	

/s/  JOHN L. HENDRIX      

	 	 	 	 	Name:	 	John L. Hendrix
	 	 	 	 	Title:	 	Sole Manager
	

 	
 	

CORNELL COMPANIES MANAGEMENT, LP
	

 	
 	

By:	
 	

Cornell Companies Administration, LLC,

its general partner
	

 	
 	

 	
 	

By:	
 	

/s/  JOHN L. HENDRIX      

	 	 	 	 	 	 	Name:	 	John L. Hendrix
	 	 	 	 	 	 	Title:	 	Sole Manager
	

 	
 	

CORNELL COMPANIES MANAGEMENT HOLDINGS, LLC
	

 	
 	

By:	
 	

/s/  JOHN L. HENDRIX      

	 	 	 	 	Name:	 	John L. Hendrix
	 	 	 	 	Title:	 	Sole Manager
	 	 	 	 	 	 	 	 	 	 	 

	

 	
 	

CORNELL COMPANIES MANAGEMENT SERVICES, LIMITED PARTNERSHIP
	

 	
 	

By:	
 	

Cornell Companies Management, LP,

its general partner
	

 	
 	

 	
 	

By:	
 	

Cornell Companies Administration, LLC,

its general partner
	

 	
 	

 	
 	

 	
 	

By:	
 	

/s/  JOHN L. HENDRIX      

	 	 	 	 	 	 	 	 	Name:	 	John L. Hendrix
	 	 	 	 	 	 	 	 	Title:	 	Sole Manager
	

 	
 	

CORNELL CORRECTIONS MANAGEMENT, INC.
	

 	
 	

By:	
 	

/s/  JOHN L. HENDRIX      

	 	 	 	 	Name:	 	John L. Hendrix
	 	 	 	 	Title:	 	Executive Vice President, Chief Financial Officer and Assistant Secretary
	

 	
 	

CORNELL CORRECTIONS OF ALASKA, INC.
	

 	
 	

By:	
 	

/s/  JOHN L. HENDRIX      

	 	 	 	 	Name:	 	John L. Hendrix
	 	 	 	 	Title:	 	Executive Vice President, Chief Financial Officer and Assistant Secretary
	

 	
 	

CORNELL CORRECTIONS OF CALIFORNIA, INC.
	

 	
 	

By:	
 	

/s/  JOHN L. HENDRIX      

	 	 	 	 	Name:	 	John L. Hendrix
	 	 	 	 	Title:	 	Executive Vice President, Chief Financial Officer and Assistant Secretary
	

 	
 	

CORNELL CORRECTIONS OF RHODE ISLAND, INC.
	

 	
 	

By:	
 	

/s/  JOHN L. HENDRIX      

	 	 	 	 	Name:	 	John L. Hendrix
	 	 	 	 	Title:	 	Executive Vice President, Chief Financial Officer and Assistant Secretary
	 	 	 	 	 	 	 	 	 	 	 

	

 	
 	

CORNELL CORRECTIONS OF TEXAS, INC.
	

 	
 	

By:	
 	

/s/  JOHN L. HENDRIX      

	 	 	 	 	Name:	 	John L. Hendrix
	 	 	 	 	Title:	 	Executive Vice President, Chief Financial Officer and Assistant Secretary
	

 	
 	

CORNELL INTERNATIONAL, INC.
	

 	
 	

By:	
 	

/s/  JOHN L. HENDRIX      

	 	 	 	 	Name:	 	John L. Hendrix
	 	 	 	 	Title:	 	Executive Vice President, Chief Financial Officer and Assistant Secretary
	

 	
 	

CORNELL INTERVENTIONS, INC.
	

 	
 	

By:	
 	

/s/  JOHN L. HENDRIX      

	 	 	 	 	Name:	 	John L. Hendrix
	 	 	 	 	Title:	 	Senior Vice President and Chief Financial Officer
	

 	
 	

WBP LEASING, INC.
	

 	
 	

By:	
 	

/s/  JOHN L. HENDRIX      

	 	 	 	 	Name:	 	John L. Hendrix
	 	 	 	 	Title:	 	Executive Vice President, Chief Financial Officer and Assistant Secretary
	

 	
 	

JPMORGAN CHASE BANK,

as Trustee
	

 	
 	

By:	
 	

/s/  FRANK W. MCCREARY      

	 	 	 	 	Name:	 	Frank W. McCreary
	 	 	 	 	Title:	 	Trust Officer

ANNEX 3.4  

DOCUMENTS CONTAINING PERMITTED ENCUMBRANCES  

The
Indenture 

Credit
Agreement, dated as of June 24, 2004, among Cornell Companies, Inc., each of the subsidiaries of the borrower identified under the caption "Subsidiaries" on the signature pages
thereto, the lenders party thereto and JPMorgan Chase Bank, as administrative agent. 

   EXHIBIT A  

[FORM
OF FACE OF SERIES A NOTE] 

[Applicable
Restricted Securities Legend]

[Depository Legend, if applicable] 

	No. [    ]	 	Principal Amount $[                        ], as revised by the Schedule of Increases and Decreases in
Global Security attached hereto
	 	 	CUSIP NO.	 	[144A: 219141AB4];

[REGS: U20807AA8]

[IAI: 219141AC2]
	 	 	ISIN:	 	[144A: US219141AB45];

[REGS: USU20807AA87];

[IAI: US219141AC28]

CORNELL COMPANIES, INC.  

 103/4% Senior Note, Series A, due 2012  

        Cornell Companies, Inc., a Delaware corporation, promises to pay to Cede & Co., or its registered assigns, the principal sum of
[                        ] Dollars, as revised by the Schedule of Increases and Decreases in Global Security attached hereto, on
July 1, 2012. 

        Interest
Payment Dates: January 1 and July 1, commencing on January 1, 2005 

        Record
Dates: December 15 and June 15 

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

	 	 	CORNELL COMPANIES, INC.
	

 	
 	

By:	

 
	 	 	 	

	TRUSTEE'S CERTIFICATE OF AUTHENTICATION	 
	

JPMORGAN CHASE BANK,

as Trustee, certifies that this is one of the Securities referred to in the Indenture.	

 
	

By	
 	

 	

 
	 	 	
 Authorized Signatory	Date:                        , 20    

A-1

 
[FORM OF REVERSE SIDE OF SERIES A NOTE]  

 CORNELL COMPANIES, INC.  

 103/4% Senior Note, Series A, due 2012  

1.     Interest  

        Cornell Companies, Inc., a Delaware corporation (such corporation, and its successors and assigns under the Indenture hereinafter referred to, being herein
called the "Company"), promises to pay interest on the principal amount of this Security at the rate per annum shown above. 

        The
Company will pay interest semi-annually on January 1 and July 1, commencing on January 1, 2005. Interest on the Securities will accrue from the most
recent date to which interest has been paid on the Securities or, if no interest has been paid, from June 24, 2004. The Company shall pay interest on overdue principal, and on overdue premium,
if any (plus interest on such interest to the extent lawful), at the rate borne by the Securities to the extent lawful. Interest will be computed on the basis of a 360-day year of twelve
30-day months. 

        If
an exchange offer (the "Exchange Offer") registered under the Securities Act is not consummated or a shelf registration statement (the
"Shelf Registration Statement") under the Securities Act with respect to resales of the Securities is not declared effective by the SEC on or before the
date that is 180 days after the Issue Date (the "Target Registration Date") in accordance with the terms of the Registration Rights Agreement
dated June 24, 2004 among the Company, the Subsidiary Guarantors and J.P. Morgan Securities Inc. on behalf of itself and the other Initial Purchasers, the annual interest rate borne by
the Securities shall be increased from the rate shown above by (i) 0.25% per annum for the first 90-day period immediately following the Target Registration Date and (ii) an
additional 0.25% per annum with respect to each subsequent 90-day period, in each case until the Exchange Offer is completed or the Shelf Registration Statement, if required hereby, is
declared effective by the Securities and Exchange Commission or the Securities become freely tradable under the Securities Act, up to a maximum of 1.00% per annum of additional interest. The Holder of
this Security is entitled to the benefits of such Registration Rights Agreement. 

2.     Method of Payment  

        By no later than 10:00 a.m. (New York City time) on the date on which any principal of, premium, if any, or interest on any Security is due and payable,
the Company shall irrevocably deposit with the Trustee or the Paying Agent money sufficient to pay such principal, premium, if any, and/or interest. The Company will pay interest (except Defaulted
Interest) to the Persons who are registered Holders of Securities at the close of business on the December 15 or June 15 next preceding the interest payment date even if Securities are
cancelled, repurchased or redeemed after the record date and on or before the interest payment date. Holders must surrender Securities to a Paying Agent to collect principal payments. The Company will
pay principal, premium, if any, and interest in money of the United States that at the time of payment is legal tender for payment of public and private debts. Payments in respect of Securities
represented by a Global Security (including principal, premium, if any, and interest) will be made by the transfer of immediately available funds to the accounts specified by The Depository Trust
Company or any successor depository. The Company will make all payments in respect of a Definitive Security (including principal, premium, if any, and interest) by mailing a check to the registered
address of each Holder thereof; provided, however, that payments on the Securities may also be made, in the case of a Holder of at least $1,000,000
aggregate principal amount of Securities, by wire transfer to a U.S. dollar account maintained by the payee with a bank in the United States if such Holder elects payment by wire transfer by giving
written notice to the Trustee or 

A-2

 

the
Paying Agent to such effect designating such account no later than 15 days immediately preceding the relevant due date for payment (or such other date as the Trustee may accept in its
discretion). 

3.     Paying Agent and Registrar  

        Initially, JPMorgan Chase Bank (the "Trustee") will act as Trustee, Paying Agent and Registrar. The Company may
appoint and change any Paying Agent, Registrar or co-registrar without notice to any Securityholder. Any of the domestically organized Wholly-Owned Subsidiaries may act as Paying Agent,
Registrar or co-registrar. 

4.     Indenture  

        The Company issued the Securities under an Indenture dated as of June 24, 2004 (as it may be amended or supplemented from time to time in accordance with
the terms thereof, the "Indenture"), among the Company, the Subsidiary Guarantors and the Trustee. The terms of the Securities include those stated in
the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C. §§
77aaa-77bbbb) as in effect on the date of the Indenture (the "Act"). Capitalized terms used herein and not defined herein have the meanings
ascribed thereto in the Indenture. The Securities are subject to all terms and provisions of the Indenture, and Securityholders are referred to the Indenture and the Act for a statement of those
terms. 

        The
Securities are general unsecured, senior obligations of the Company. The aggregate principal amount of securities that may be authenticated and delivered under the Indenture is
unlimited. This Security is one of the 103/4% Senior Notes, Series A, due 2012 referred to in the Indenture. The Securities include (i) $112,000,000 aggregate principal
amount of the Company's 103/4% Senior Notes, Series A, due 2012 issued under the Indenture on June 24, 2004 (herein called "Initial
Securities"), (ii) if and when issued, additional 103/4% Senior Notes, Series A, due 2012 or 103/4% Senior Notes, Series B,
due 2012 of the Company that may be issued from time to time under the Indenture subsequent to June 24, 2004 (herein called "Additional
Securities") and (iii) if and when issued, the Company's 103/4% Senior Notes, Series B, due 2012 that may be issued from time to time under the
Indenture in exchange for Initial Securities or Additional Securities in an offer registered under the Securities Act as provided in the Registration Rights Agreement (herein called
"Exchange Securities"). The Initial Securities, Additional Securities and Exchange Securities are treated as a single class of securities under the
Indenture. The Indenture imposes certain limitations on the incurrence of indebtedness, the making of restricted payments, the sale of assets and subsidiary stock, the incurrence of certain liens,
sale-leaseback transactions, the sale of capital stock of restricted subsidiaries, the making of payments for consents, the entering into of agreements that restrict distribution from
restricted subsidiaries and the consummation of mergers and consolidations. The Indenture also imposes requirements with respect to the provision of financial information and the provision of
guarantees of the Securities by certain subsidiaries. 

        To
guarantee the due and punctual payment of the principal, premium, if any, and interest (including post-filing or post-petition interest) on the Securities and
all other amounts payable by the Company under the Indenture and the Securities when and as the same shall be due and payable, whether at maturity, by acceleration or otherwise, according to the terms
of the Securities and the Indenture, the Subsidiary Guarantors have unconditionally guaranteed (and future guarantors, together with the Subsidiary Guarantors, will unconditionally Guarantee), jointly
and severally, such obligations on a senior basis pursuant to the terms of the Indenture. 

5.     Redemption  

        Except as set forth below, the Securities will not be redeemable at the option of the Company prior to July 1, 2008. On and after such date, the Securities
will be redeemable, at the Company's 

A-3

 

option,
in whole or in part, at any time upon not less than 30 nor more than 60 days prior notice mailed by first class mail to each Holder's registered address, at the following redemption
prices (expressed in percentages of principal amount), plus accrued and unpaid interest, if any, to the applicable redemption date (subject to the right of Holders of record on the relevant record
date to receive interest due on the relevant interest payment date), if redeemed during the 12-month period commencing on July 1 of the years set forth below: 

	Period
 
	 	Redemption Price
	 
	2008	 	105.375	%
	2009	 	102.688	%
	2010 and thereafter	 	100.000	%

        In
addition, at any time and from time to time prior to July 1, 2007, the Company may redeem in the aggregate up to 35% of the original principal amount of the Securities
(calculated after giving effect to any issuance of Additional Securities) with the Net Cash Proceeds of one or more Public Equity Offerings at a redemption price (expressed as a percentage of
principal amount) of 110.75% plus accrued and unpaid interest, if any, to the redemption date (subject to the right of Holders of record on the relevant record date to receive interest due on the
relevant interest payment date); provided, that there is a Public Market at the time of each such redemption;  provided, further, that at least 65% of the original principal amount of the Securities (after giving
effect to any future issuance of Additional Securities) must remain outstanding after each such redemption; and provided further, that each such
redemption occurs within 60 days of the date of closing of such Public Equity Offering. 

        If
the optional redemption date is on or after an interest record date and on or before the related interest payment date, the accrued and unpaid interest, if any, will be paid to the
Person in whose name the Security is registered at the close of business on such record date, and no additional interest will be payable to Holders whose Securities will be subject to redemption by
the Company. 

        In
the case of any partial redemption, selection of the Securities for redemption will be made by the Trustee in compliance with the requirements of the principal national securities
exchange, if any, on which the Securities are listed or, if the Securities are not listed, then on a pro rata basis, by lot or by such other method as the Trustee in its sole discretion shall deem to
be fair and appropriate, although no Securities of $1,000 in original principal amount or less will be redeemed in part. Any such notice to the Trustee may be cancelled at any time prior to notice of
such redemption being mailed to any Holder and shall thereby be void and of no effect. If any Security is to be redeemed in part only, the notice of redemption relating to such Security shall state
the portion of the principal amount thereof to be redeemed. A new Security in principal amount equal to the unredeemed portion thereof will be issued in the name of the Holder thereof upon
cancellation of the original Security. On and after the redemption date, interest will cease to accrue on Securities or portions thereof called for redemption as long as the Company has deposited with
the Paying Agent funds in satisfaction of the applicable redemption price pursuant to the Indenture. 

6.     Repurchase Provisions  

        If a Change of Control occurs, unless the Company has exercised its right to redeem all of the Securities as described under paragraph 5 of the Securities,
then such Change of Control shall constitute a triggering event which shall trigger the obligation of the Company to offer to repurchase from each Holder all or any part (equal to $1,000 or an
integral multiple thereof) of such Holder's Securities at a purchase price in cash equal to 101% of the principal amount thereof, plus accrued and unpaid interest, if any, to the date of repurchase
(subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date) as provided in, and subject to the terms of, the Indenture. 

A-4

 

7.     Denominations; Transfer; Exchange  

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

8.     Persons Deemed Owners  

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

9.     Unclaimed Money  

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

10.   Defeasance  

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

11.   Amendment, Supplement, Waiver  

        Subject to certain exceptions set forth in the Indenture, (i) the Indenture or the Securities may be amended or supplemented by the Company, the Subsidiary
Guarantors and the Trustee with the written consent of the Holders of at least a majority in principal amount of the then outstanding Securities and (ii) any default (other than with respect to
nonpayment or in respect of a provision that cannot be amended without the written consent of each Securityholder affected) or noncompliance with any provision may be waived with the written consent
of the Holders of a majority in principal amount of the then outstanding Securities. Subject to certain exceptions set forth in the Indenture, without the consent of any Securityholder, the Company,
the Subsidiary Guarantors and the Trustee may amend or supplement the Indenture or the Securities to cure any ambiguity, omission, defect or inconsistency, to provide for uncertificated Securities in
addition to or in place of certificated Securities, to comply with Article IV or Article X
in respect of the assumption by a Successor Company of an obligation of the Company or any Subsidiary Guarantor under this Indenture, to add Guarantees with respect to the Securities or release a
Subsidiary Guarantor upon its designation as an Unrestricted Subsidiary or otherwise in accordance with the Indenture, to secure the Securities, to make any change that would provide any additional
rights or benefits to the Holders of the Securities or that does not materially adversely affect the legal rights under the Indenture of any such Holder; to comply with any requirement of the SEC in
order to effect or maintain the qualification of this Indenture under the TIA, or to provide for the issuance of the Exchange Securities. 

A-5

   12.   Defaults and Remedies  

        Under the Indenture, Events of Default include (each of which is more specifically described in the Indenture) (i) default for 30 days in payment of
interest when due on the Securities; (ii) default in payment of principal or premium, if any, on the Securities at Stated Maturity, upon required repurchase or upon optional redemption pursuant
to paragraph 5 of the Securities, upon declaration or otherwise; (iii) the failure by the Company or any Subsidiary Guarantor to comply with its obligations under Section 4.1 or
clause (b) of Section 10.2 of the Indenture, respectively, (iv) failure by the Company or any Subsidiary Guarantor to comply for 30 days after written notice with any of
their obligations under the covenants described under Sections 3.2 through 3.12 inclusive, Section 3.16 and Section 3.19 of the Indenture (in each case, other than a failure to purchase
Securities when required under the Indenture, which failure shall constitute an Event of Default under clause (ii) above); (v) the failure by the Company or any Subsidiary Guarantor to
comply for 60 days after written notice with their other agreements contained in the Indenture or under the Securities (other than those referred to in (i), (ii), (iii) or
(iv) above); (vi) default under any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any Indebtedness for money borrowed by
the Company or any of its Restricted Subsidiaries (or the payment of which is guaranteed by the Company or any of its Restricted Subsidiaries or is recourse to the Company or its Restricted
Subsidiaries, by contract or operation of law), other than Indebtedness owed to the Company or a Restricted Subsidiary, whether such Indebtedness or guarantee now exists, or is created after the date
of the Indenture, which default (a) is caused by a failure to pay any Indebtedness at maturity prior to the expiration of the grace period provided in such Indebtedness
("payment default") or (b) results in the acceleration of such Indebtedness prior to its final maturity (the "cross
acceleration provision") and, in each case, the principal amount of any such Indebtedness, together with the principal amount of any other such Indebtedness under which there
has been a payment default or the maturity of which has been so accelerated, aggregates $10.0 million or more; (vii) certain events of bankruptcy, insolvency or reorganization of the
Company or a Significant Subsidiary or group of Restricted Subsidiaries that, taken together (as of the latest audited consolidated financial statements for the Company and its Restricted
Subsidiaries), would constitute a Significant Subsidiary pursuant to or within the meaning of any Bankruptcy Law (the "bankruptcy provisions");
(viii) failure by the Company or any Significant Subsidiary or group of Restricted Subsidiaries that, taken together (as of the latest audited consolidated financial statements for the Company
and its Restricted Subsidiaries), would constitute a Significant Subsidiary to pay final judgments aggregating in excess of $10.0 million (net of any amounts that a reputable and creditworthy
insurance company has acknowledged liability for in writing), which judgments are not paid, discharged, waived or stayed for a period of 60 days (the "judgment default
provision"); or (ix) any Subsidiary Guarantee of a Significant Subsidiary or group of Restricted Subsidiaries that taken together as of the latest audited consolidated
financial statements for the Company and its Restricted Subsidiaries would constitute a Significant Subsidiary ceases to be in full force and effect (except as contemplated by the terms of the
Indenture) or is declared null and void in a judicial proceeding or any Significant Subsidiary or group of Restricted Subsidiaries that taken together as of the latest audited consolidated financial
statements for the Company and its Restricted Subsidiaries would constitute a Significant Subsidiary denies or disaffirms its obligations under the Indenture or its Subsidiary Guarantee. However, a
default under clauses (iv) and (v) above will not
constitute an Event of Default until the Trustee or the Holders of at least 25% in principal amount of the outstanding Securities notify the Company of the default and the Company does not cure such
default within the time specified in clauses (iv) and (v) hereof after receipt of such notice. 

        If
an Event of Default (other than an Event of Default described in (vii) hereof) occurs and is continuing, the Trustee by notice to the Company or the Holders of at least 25% in
principal amount of the outstanding Securities may declare all the Securities to be due and payable immediately. If an Event of Default described in (vii) hereof occurs and is continuing, the
principal of, premium, if any, 

A-6

 

and
accrued and unpaid interest on all the Securities will become and be immediately due and payable without any declaration or other act on the part of the Trustee or any Holders. 

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

13.   Trustee Dealings with the Company  

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

14.   No Recourse Against Others  

        No director, officer, employee, incorporator or stockholder of the Company or a Subsidiary Guarantor, as such, shall have any liability for any obligations of the
Company or such Subsidiary Guarantor under the Securities, this Indenture or a Subsidiary Guarantee or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each
Holder of Securities by accepting a Security waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Securities. Such waiver may not be
effective to waive liabilities under the federal securities laws and it is the view of the SEC that such a waiver is against public policy. 

15.   Authentication  

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

16.   Abbreviations  

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

17.   CUSIP, Common Code and ISIN Numbers  

        The Company has caused CUSIP, Common Code and ISIN numbers, if applicable, to be printed on the Securities and has directed the Trustee to use CUSIP, Common Code
and ISIN numbers, if applicable, in notices of redemption as a convenience to Securityholders. No representation is made as to the accuracy of such numbers either as printed on the Securities or as
contained in any notice of redemption and reliance may be placed only on the other identification numbers placed thereon. 

18.   Governing Law  

        This Security shall be governed by, and construed in accordance with, the laws of the State of New York. 

A-7

 

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

Cornell
Companies, Inc.

1700 West Loop South, Suite 1500,

Houston, Texas 77027,

Attention: John L. Hendrix 

A-8

 
ASSIGNMENT FORM  

        To assign this Security, fill in the form below: 

        I
or we assign and transfer this Security to: 

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

    
 (Insert assignee's social security or tax I.D. No.)
	 	
 and irrevocably appoint                        agent to transfer this Security on
the books of the Company. The agent may substitute another to act for him.
	

    

	Date:	 	 	 	Your Signature:	 	 
	 	 	
	 	 	 	

	Signature Guarantee:	 	 
	 	 	
 (Signature must be guaranteed)
	

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

The
signature(s) should be guaranteed by an eligible guarantor institution (banks, stockbrokers, savings and loan associations and credit unions with membership in an approved signature guarantee
medallion program), pursuant to S.E.C. Rule 17Ad-15. 

        In
connection with any transfer or exchange of any of the Securities evidenced by this certificate occurring prior to the date that is two years after the later of the date of original
issuance of such Securities and the last date, if any, on which such Securities were owned by the Company, or any Affiliate of the Company, the undersigned confirms that such Securities are being: 

CHECK
ONE BOX BELOW: 

	1o
	acquired
for the undersigned's own account, without transfer; or

	2o
	transferred
to the Company; or

	3o
	transferred
pursuant to and in compliance with Rule 144A under the Securities Act of 1933, as amended (the
"Securities Act"); or

	4o
	transferred
pursuant to an effective registration statement under the Securities Act; or

	5o
	transferred
pursuant to and in compliance with Regulation S under the Securities Act; or

	6o
	transferred
to an institutional "accredited investor" (as defined in Rule 501(a)(1), (2), (3) or
(7) under the Securities Act), that has furnished to the Trustee a signed letter containing certain representations and agreements (the form of which letter appears as Section 2.7 of the
Indenture); or

	7o
	transferred
pursuant to another available exemption from the registration requirements of the Securities Act of 1933, as
amended. 

Unless one of the boxes is checked, the Trustee will refuse to register any of the Securities evidenced by this certificate in the name of any person other than the registered
Holder thereof; provided, however, that if box (5), (6) or (7) is checked, the Trustee or the Company may require, prior to registering
any such transfer of the Securities, in its sole discretion, such legal opinions, certifications and other information as the Trustee or the Company may reasonably request to confirm that such 

A-9

 

transfer
is being made pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act of 1933, as amended, such as the exemption provided by
Rule 144 under such Act. 

	 	 	    
 Signature
	Signature Guarantee:	 	 
	

    
 (Signature must be guaranteed)	
 	

    
 Signature

The
signature(s) should be guaranteed by an eligible guarantor institution (banks, stockbrokers, savings and loan associations and credit unions with membership in an approved signature guarantee
medallion program), pursuant to S.E.C. Rule 17Ad-15. 

TO
BE COMPLETED BY PURCHASER IF (1) OR (3) ABOVE IS CHECKED. 

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

	

 	

    
 Dated:

A-10

 
[TO BE ATTACHED TO GLOBAL SECURITIES]  

 SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY  

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

	Date of

Exchange
	 	Amount of decrease in

Principal Amount of this

Global Security
	 	Amount of increase in

Principal Amount of this

Global Security
	 	Principal Amount of this

Global Security following

such decrease or increase
	 	Signature of authorized

signatory of Trustee or

Securities Custodian

	            	 	            	 	            	 	            	 	            

A-11

 
OPTION OF HOLDER TO ELECT PURCHASE  

        If you elect to have this Security purchased by the Company pursuant to Section 3.5 or 3.10 of the Indenture, check either box: 

o            o

3.5        3.10 

        If you want to elect to have only part of this Security purchased by the Company pursuant to Section 3.5 or Section 3.10 of the Indenture, state the
amount in principal amount (must be integral multiple of $1,000): $                  

	Date:	 	 	 	Your Signature	 
	 	 	
	 	 	
 (Sign exactly as your name appears on the other side of the Security)

	Signature Guarantee:	 
	 	
 (Signature must be guaranteed)

The
signature(s) should be guaranteed by an eligible guarantor institution (banks, stockbrokers, savings and loan associations and credit unions with membership in an approved signature guarantee
medallion program), pursuant to S.E.C. Rule 17Ad-15. 

A-12

   EXHIBIT B  

        [FORM OF FACE OF SERIES B NOTE] 

[Depository
Legend, if applicable] 

	No. [    ]	Principal Amount $[                        ], as

revised by the Schedule of Increases and

Decreases in Global Security attached hereto

CUSIP NO. 219141AD0

ISIN: US219141AD01

CORNELL COMPANIES, INC. 

103/4%
Senior Note, Series B, due 2012 

        Cornell
Companies, Inc., a Delaware corporation, promises to pay to Cede & Co., or its registered assigns, the principal sum of
[                        ]
Dollars, as revised by the Schedule of Increases and Decreases in Global Security attached hereto, on July 1, 2012. 

        Interest
Payment Dates: January 1 and July 1, commencing on    •    , 2004 

        Record
Dates: December 15 and June 15 

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

	 	 	 	 	CORNELL COMPANIES, INC.
	

 	
 	

 	
 	
By:	

 
	 	 	 	 	 	

	

TRUSTEE'S CERTIFICATE OF AUTHENTICATION	
 	

 	

 
	

JPMORGAN CHASE BANK,

as Trustee, certifies

that this is one of

the Securities referred

to in the Indenture.	
 	

 	

 
	

By	
 	

 	
 	

 	

 
	 	 	
 Authorized Signatory	 	 	Date:                , 20            

B-1

 
[FORM
OF REVERSE SIDE OF SERIES B NOTE] 

CORNELL
COMPANIES, INC. 

103/4%
Senior Note, Series B, due 2012 

1.     Interest  

        Cornell Companies, Inc., a Delaware corporation (such corporation, and its successors and assigns under the Indenture hereinafter referred to, being herein
called the "Company"), promises to pay interest on the principal amount of this Security at the rate per annum shown above. 

        The
Company will pay interest semi-annually on January 1 and July 1, commencing on January 1, 2005. Interest on the Securities will accrue from the most
recent date to which interest has been paid on the Securities or, if no interest has been paid, from June 24, 2004. The Company shall pay interest on overdue principal, and on overdue premium,
if any (plus interest on such interest to the extent lawful), at the rate borne by the Securities to the extent lawful. Interest will be computed on the basis of a 360-day year of twelve
30-day months. 

2.     Method of Payment  

        By no later than 10:00 a.m. (New York City time) on the date on which any principal of, premium, if any, or interest on any Security is due and payable,
the Company shall irrevocably deposit with the Trustee or the Paying Agent money sufficient to pay such principal, premium, if any, and/or interest. The Company will pay interest (except Defaulted
Interest) to the Persons who are registered Holders of Securities at the close of business on the December 15 or June 15 next preceding the interest payment date even if Securities are
cancelled, repurchased or redeemed after the record date and on or before the interest payment date. Holders must surrender Securities to a Paying Agent to collect principal payments. The Company will
pay principal, premium, if any, and interest in money of the United States that at the time of payment is legal tender for payment of public and private debts. Payments in respect of Securities
represented by a Global Security (including principal, premium, if any, and interest) will be made by the transfer of immediately available funds to the accounts specified by The Depository Trust
Company or any successor depository. The Company will make all payments in respect of a Definitive Security (including principal, premium, if any, and interest) by mailing a check to the registered
address of each Holder thereof; provided, however, that payments on the Securities may also be made, in the case of a Holder of at least $1,000,000
aggregate principal amount of Securities, by wire transfer to a U.S. dollar account maintained by the payee with a bank in the United States if such Holder elects payment by wire transfer by giving
written notice to the Trustee or the Paying Agent to such effect designating such account no later than 15 days immediately preceding the relevant due date for payment (or such other date as
the Trustee may accept in its discretion). 

3.     Paying Agent and Registrar  

        Initially, JPMorgan Chase Bank (the "Trustee") will act as Trustee, Paying Agent and Registrar. The Company may
appoint and change any Paying Agent, Registrar or co-registrar without notice to any Securityholder. Any of the domestically organized Wholly-Owned Subsidiaries may act as Paying Agent,
Registrar or co-registrar. 

4.     Indenture  

        The Company issued the Securities under an Indenture dated as of June 24, 2004 (as it may be amended or supplemented from time to time in accordance with
the terms thereof, the "Indenture"), among the Company, the Subsidiary Guarantors and the Trustee. The terms of the Securities include those stated in
the Indenture and those made part of the Indenture by reference to the Trust Indenture 

B-2

 

Act
of 1939 (15 U.S.C. §§ 77aaa-77bbbb) as in effect on the date of the Indenture (the
"Act"). Capitalized terms used herein and not defined herein have the meanings ascribed thereto in the Indenture. The Securities are subject to all
terms and provisions of the Indenture, and Securityholders are referred to the Indenture and the Act for a statement of those terms. 

        The
Securities are general unsecured, senior obligations of the Company. The aggregate principal amount of securities that may be authenticated and delivered under the Indenture is
unlimited. This Security is one of the 103/4% Senior Notes, Series B, due 2012 referred to in the Indenture. The Securities include (i) $112,000,000 aggregate principal
amount of the Company's 103/4% Senior Notes, Series A, due 2012 issued under the Indenture on June 24, 2004 (herein called "Initial
Securities"), (ii) if and when issued, additional 103/4% Senior Notes, Series A, due 2012 or 103/4% Senior Notes, Series B,
due 2012 of the Company that may be issued from time to time under the Indenture subsequent to June 24, 2004 (herein called "Additional
Securities") and (iii) if and when issued, the Company's 103/4% Senior Notes, Series B, due 2012 that may be issued from time to time under the
Indenture in exchange for Initial Securities or Additional Securities in an offer registered under the Securities Act as provided in the Registration Rights Agreement (herein called
"Exchange Securities"). The Initial Securities, Additional Securities and Exchange Securities are treated as a single class of securities under the
Indenture. The Indenture imposes certain limitations on the incurrence of indebtedness, the making of restricted payments, the sale of assets and subsidiary stock, the incurrence of certain liens,
sale-leaseback transactions, the sale of capital stock of restricted subsidiaries, the making of payments for consents, the entering into of agreements that restrict distribution from
restricted subsidiaries and the consummation of mergers and consolidations. The Indenture also imposes requirements with respect to the provision of financial information and the provision of
guarantees of the Securities by certain subsidiaries. 

        To
guarantee the due and punctual payment of the principal, premium, if any, and interest (including post-filing or post-petition interest) on the Securities and
all other
amounts payable by the Company under the Indenture and the Securities when and as the same shall be due and payable, whether at maturity, by acceleration or otherwise, according to the terms of the
Securities and the Indenture, the Subsidiary Guarantors have unconditionally guaranteed (and future guarantors, together with the Subsidiary Guarantors, will unconditionally Guarantee), jointly and
severally, such obligations on a senior basis pursuant to the terms of the Indenture. 

5.     Redemption  

        Except as set forth below, the Securities will not be redeemable at the option of the Company prior to July 1, 2008. On and after such date, the Securities
will be redeemable, at the Company's option, in whole or in part, at any time upon not less than 30 nor more than 60 days prior notice mailed by first class mail to each Holder's registered
address, at the following redemption prices (expressed in percentages of principal amount), plus accrued and unpaid interest, if any, to the applicable redemption date (subject to the right of Holders
of record on the relevant record date to receive interest due on the relevant interest payment date), if redeemed during the 12-month period commencing on July 1 of the years set
forth below: 

	Period
 
	 	Redemption Price
	 
	2008	 	105.375	%
	2009	 	102.688	%
	2010 and thereafter	 	100.000	%

        In
addition, at any time and from time to time prior to July 1, 2007, the Company may redeem in the aggregate up to 35% of the original principal amount of the Securities
(calculated after giving effect to any issuance of Additional Securities) with the Net Cash Proceeds of one or more Public Equity Offerings at a redemption price (expressed as a percentage of
principal amount) of 110.75% 

B-3

 

plus
accrued and unpaid interest, if any, to the redemption date (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date);  provided, that there is a Public Market at the time of each such redemption; provided,  further, that at least 65% of the original principal amount of the
Securities (after giving effect to any future issuance of Additional Securities) must
remain outstanding after each such redemption; and provided further, that each such redemption occurs within 60 days of the date of closing of
such Public Equity Offering. 

        If
the optional redemption date is on or after an interest record date and on or before the related interest payment date, the accrued and unpaid interest, if any, will be paid to the
Person in whose name the Security is registered at the close of business on such record date, and no additional interest will be payable to Holders whose Securities will be subject to redemption by
the Company. 

        In
the case of any partial redemption, selection of the Securities for redemption will be made by the Trustee in compliance with the requirements of the principal national securities
exchange, if any, on which the Securities are listed or, if the Securities are not listed, then on a pro rata basis, by lot or by such other method as the Trustee in its sole discretion shall deem to
be fair and appropriate, although no Securities of $1,000 in original principal amount or less will be redeemed in part. Any such notice to the Trustee may be cancelled at any time prior to notice of
such redemption being mailed to any Holder and shall thereby be void and of no effect. If any Security is to be redeemed in part only, the notice of redemption relating to such Security shall state
the portion of the principal amount thereof to be redeemed. A new Security in principal amount equal to the unredeemed portion thereof will be issued in the name of the Holder thereof upon
cancellation of the original Security. On and after the redemption date, interest will cease to accrue on Securities or portions thereof called for redemption as long as the Company has deposited with
the Paying Agent funds in satisfaction of the applicable redemption price pursuant to the Indenture. 

6.     Repurchase Provisions  

        If a Change of Control occurs, unless the Company has exercised its right to redeem all of the Securities as described under paragraph 5 of the Securities,
then such Change of Control shall constitute a triggering event which shall trigger the obligation of the Company to offer to repurchase from each Holder all or any part (equal to $1,000 or an
integral multiple thereof) of such Holder's Securities at a purchase price in cash equal to 101% of the principal amount thereof, plus accrued and unpaid interest, if any, to the date of repurchase
(subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date) as provided in, and subject to the terms of, the Indenture. 

7.     Denominations; Transfer; Exchange  

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

8.     Persons Deemed Owners  

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

B-4

 

9.     Unclaimed Money  

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

10.   Defeasance  

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

11.   Amendment, Supplement, Waiver  

        Subject to certain exceptions set forth in the Indenture, (i) the Indenture or the Securities may be amended or supplemented by the Company, the Subsidiary
Guarantors and the Trustee with the written consent of the Holders of at least a majority in principal amount of the then outstanding Securities and (ii) any default (other than with respect to
nonpayment or in respect of a provision that cannot be amended without the written consent of each Securityholder affected) or noncompliance with any provision may be waived with the written consent
of the Holders of a majority in principal amount of the then outstanding Securities. Subject to certain exceptions set forth in the Indenture, without the consent of any Securityholder, the Company,
the Subsidiary Guarantors and the Trustee may amend or supplement the Indenture or the Securities to cure any ambiguity, omission, defect or inconsistency, to provide for uncertificated Securities in
addition to or in place of certificated Securities, to comply with Article IV or Article X
in respect of the assumption by a Successor Company of an obligation of the Company or any Subsidiary Guarantor under this Indenture, to add Guarantees with respect to the Securities or release a
Subsidiary Guarantor upon its designation as an Unrestricted Subsidiary or otherwise in accordance with the Indenture, to secure the Securities, to make any change that would provide any additional
rights or benefits to the Holders of the Securities or that does not materially adversely affect the legal rights under the Indenture of any such Holder; to comply with any requirement of the SEC in
order to effect or maintain the qualification of this Indenture under the TIA, or to provide for the issuance of the Exchange Securities. 

12.   Defaults and Remedies  

        Under the Indenture, Events of Default include (each of which is more specifically described in the Indenture) (i) default for 30 days in payment of
interest when due on the Securities; (ii) default in payment of principal or premium, if any, on the Securities at Stated Maturity, upon required repurchase or upon optional redemption pursuant
to paragraph 5 of the Securities, upon declaration or otherwise; (iii) the failure by the Company or any Subsidiary Guarantor to comply with its obligations under Section 4.1 or
clause (b) of Section 10.2 of the Indenture, respectively, (iv) failure by the Company or any Subsidiary Guarantor to comply for 30 days after written notice with any of
their obligations under the covenants described under Sections 3.2 through 3.12 inclusive, Section 3.16 and Section 3.19 of the Indenture (in each case, other than a failure to purchase
Securities when required under the Indenture, which failure shall constitute an Event of Default under clause (ii) above); (v) the failure by the Company or any Subsidiary Guarantor to
comply for 60 days after written notice with their other agreements contained in the Indenture or under the Securities (other than those referred to in (i), (ii), (iii) or
(iv) above); (vi) default under any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any Indebtedness for money borrowed by
the Company or any of its Restricted Subsidiaries (or the payment of which is guaranteed 

B-5

 

by
the Company or any of its Restricted Subsidiaries or is recourse to the Company or its Restricted Subsidiaries, by contract or operation of law), other than Indebtedness owed to the Company or a
Restricted Subsidiary, whether such Indebtedness or guarantee now exists, or is created after the date of the Indenture, which default (a) is caused by a failure to pay any Indebtedness at
maturity prior to the expiration of the grace period provided in such Indebtedness ("payment default") or (b) results in the acceleration of such
Indebtedness prior to its final maturity (the "cross acceleration provision") and, in each case, the principal amount of any such Indebtedness, together
with the principal amount of any other such Indebtedness under which there has been a payment default or the maturity of which has been so accelerated, aggregates $10.0 million or more;
(vii) certain events of bankruptcy, insolvency or reorganization of the Company or a Significant Subsidiary or group of Restricted Subsidiaries that, taken together (as of the latest audited
consolidated financial statements for the Company and its Restricted Subsidiaries), would constitute a Significant Subsidiary pursuant to or within the meaning of any Bankruptcy Law (the
"bankruptcy provisions"); (viii) failure by the Company or any Significant Subsidiary or group of Restricted Subsidiaries that, taken together
(as of the latest audited consolidated financial statements for the Company and its Restricted Subsidiaries), would constitute a Significant Subsidiary to pay final judgments aggregating in excess of
$10.0 million (net of any amounts that a reputable and creditworthy insurance company has acknowledged liability for in writing), which judgments are not paid, discharged, waived or stayed for
a period of 60 days (the "judgment default provision"); or (ix) any Subsidiary Guarantee of a Significant Subsidiary or group of
Restricted Subsidiaries that taken together as of the latest audited consolidated financial statements for the Company and its Restricted Subsidiaries would constitute a Significant Subsidiary ceases
to be in full force and effect (except as contemplated by the terms of the Indenture) or is declared null and void in a judicial proceeding or any Significant Subsidiary or group of Restricted
Subsidiaries that taken together as of the latest audited consolidated financial statements for the Company and its Restricted Subsidiaries would constitute a Significant Subsidiary denies or
disaffirms its obligations under the Indenture or its Subsidiary Guarantee. However, a default under clauses (iv) and (v) above will not constitute an Event of Default until the Trustee
or the Holders of at least 25% in principal amount of the outstanding Securities notify the Company of the default and the Company does not cure such default within the time specified in clauses
(iv) and (v) hereof after receipt of such notice. 

        If
an Event of Default (other than an Event of Default described in (vii) hereof) occurs and is continuing, the Trustee by notice to the Company or the Holders of at least 25% in
principal amount
of the outstanding Securities may declare all the Securities to be due and payable immediately. If an Event of Default described in (vii) hereof occurs and is continuing, the principal of,
premium, if any, and accrued and unpaid interest on all the Securities will become and be immediately due and payable without any declaration or other act on the part of the Trustee or any Holders. 

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

B-6

  

13.   Trustee Dealings with the Company  

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

14.   No Recourse Against Others  

        An incorporator, director, officer, employee, Affiliate or stockholder, of the Company, or any Subsidiary Guarantor, solely by reason of this status, shall not
have any liability for any obligations of the Company or any Subsidiary Guarantor under the Securities, the Indenture or any Subsidiary Guarantees or for any claim based on, in respect of or by reason
of such obligations or their creation. By accepting a Security, each Securityholder waives and releases all such liability. The waiver and release are part of the consideration for the issue of the
Securities. 

15.   Authentication  

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

16.   Abbreviations  

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

17.   CUSIP, Common Code and ISIN Numbers  

        The Company has caused CUSIP, Common Code and ISIN numbers, if applicable, to be printed on the Securities and has directed the Trustee to use CUSIP, Common Code
and ISIN numbers, if applicable, in notices of redemption as a convenience to Securityholders. No representation is made as to the accuracy of such numbers either as printed on the Securities or as
contained in any notice of redemption and reliance may be placed only on the other identification numbers placed thereon. 

18.   Governing Law  

        This Security shall be governed by, and construed in accordance with, the laws of the State of New York. 

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

Cornell
Companies, Inc.

1700 West Loop South, Suite 1500,

Houston, Texas 77027,

Attention: John L. Hendrix 

B-7

 
 
 

ASSIGNMENT FORM    
    

        To assign this Security, fill in the form below: 

        I
or we assign and transfer this Security to: 

	

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

 
	
 (Insert assignee's social security or tax I.D. No.)

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

	 	 	 	 	 	 	 
	Date:	 	 	 	Your Signature	 	 
	 	 	
	 	 	 	

	 	 	 
	Signature Guarantee:	 	 
	 	 	
 (Signature must be guaranteed)
	 	 	 
	
 Sign exactly as your name appears on the other side of this Security.

The
signature(s) should be guaranteed by an eligible guarantor institution (banks, stockbrokers, savings and loan associations and credit unions with membership in an approved signature guarantee
medallion program), pursuant to S.E.C. Rule 17Ad-15. 

B-8

 
[TO
BE ATTACHED TO GLOBAL SECURITIES] 

SCHEDULE
OF INCREASES OR DECREASES IN GLOBAL SECURITY 

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

	Date of

Exchange
	 	Amount of decrease in Principal Amount of this Global Security
	 	Amount of increase in Principal Amount of this Global Security
	 	Principal Amount of this Global Security following such decrease or increase
	 	Signature of authorized signatory of Trustee or Securities Custodian

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 

B-9

 
 
 

OPTION OF HOLDER TO ELECT PURCHASE    
    

        If you elect to have this Security purchased by the Company Pursuant to Section 3.5 or 3.10 of the Indenture, check either
box:

	 	 	 	 	 	 	 
	 	 	o

3.5	 	o

3.10	 	 

        If
you want to elect to have only part of this Security purchased by the Company pursuant to Section 3.5 or Section 3.10 of the Indenture, state the amount in principal
amount (must be integral multiple of $1,000): $                  

	 	 	 	 	 	 	 
	Date:	 	 	 	Your Signature:	 	 
	 	 	
	 	 	 	
(Sign exactly as your name appears on the other side of the Security)

	Signature Guarantee:	 	 
	 	 	
 (Signature must be guaranteed)

The
signature(s) should be guaranteed by an eligible guarantor institution (banks, stockbrokers, savings and loan associations and credit unions with membership in an approved signature guarantee
medallion program), pursuant to S.E.C. Rule 17Ad-15. 

B-10

EXHIBIT C  

 
 

FORM OF INDENTURE SUPPLEMENT TO ADD SUBSIDIARY GUARANTORS    
    

        This Supplemental Indenture, dated as of
[                          ], 20    (this
"Supplemental Indenture" or "Guarantee"), among [name of future
Subsidiary Guarantor] (the "Guarantor"), Cornell Companies, Inc. (together with its successors and assigns,
the "Company"), each other then existing Subsidiary Guarantor under the Indenture referred to below, and JPMorgan Chase Bank, as Trustee under the
Indenture referred to below. 

 
 

W  I  T  N  E  S  S  E  T  H:    
    

        WHEREAS, the Company, the Subsidiary Guarantors and the Trustee have heretofore executed and delivered an Indenture, dated as of June 24, 2004 (as amended,
supplemented, waived or otherwise modified, the "Indenture"), providing for the issuance of an aggregate principal amount of $112,000,000 of
103/4% Senior Notes due 2012 of the Company (the "Securities"); 

        WHEREAS,
Section 3.12 of the Indenture provides that the Company is required to cause each Restricted Subsidiary that Guarantees
any Indebtedness of the Company or any of its Subsidiary Guarantors to execute and deliver to the Trustee a supplemental indenture pursuant to which such Restricted Subsidiary will unconditionally
Guarantee, on a joint and several basis with the other Subsidiary Guarantors, the full and prompt payment of the principal of, premium, if any, and interest on the Securities on a senior basis; and 

        WHEREAS,
pursuant to Section 9.1 of the Indenture, the Trustee and the Company are authorized to execute and deliver this
Supplemental Indenture to amend or supplement the Indenture, without the consent of any Securityholder; 

        NOW,
THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the Guarantor, the Company, the other
Subsidiary
Guarantors and the Trustee mutually covenant and agree for the equal and ratable benefit of the Holders of the Securities as follows: 

 
 

ARTICLE I    
    
    Definitions    
    

        SECTION
1.1    Defined Terms.    As used in this Supplemental Indenture, terms defined in the Indenture or in the
preamble or recital hereto are used herein as therein defined, except that the term "Holders" in this Guarantee shall refer to the term
"Holders" as defined in the Indenture and the Trustee acting on behalf or for the benefit of such Holders. The words "herein," "hereof" and "hereby" and
other words of similar import used in this Supplemental Indenture refer to this Supplemental Indenture as a whole and not to any particular section hereof. 

 
 

ARTICLE II    
    
    Agreement to be Bound; Guarantee    
    

        SECTION
2.1    Agreement to be Bound.    The Guarantor hereby becomes a party to the Indenture as a Subsidiary
Guarantor and as such will have all of the rights and be subject to all of the obligations and agreements of a Subsidary Guarantor under the Indenture. The Guarantor agrees to be bound by all of the
provisions of the Indenture applicable to a Subsidiary Guarantor and to perform all of the obligations and agreements of a Subsidiary Guarantor under the Indenture. 

        SECTION
2.2    Guarantee.    The Guarantor agrees, on a joint and several basis with all the existing Subsidiary
Guarantors, to fully, unconditionally and irrevocably Guarantee to each Holder of the Securities and the Trustee the Guarantor Obligations pursuant to  Article X of the Indenture on a senior basis.

 

 
 

ARTICLE III    
    
    Miscellaneous    
    

        SECTION
3.1    Notices.    All notices and other communications to the Guarantor shall be given as provided in the
Indenture to the Guarantor, at its address set forth below, with a copy to the Company as provided in the Indenture for notices to the Company. 

        SECTION
3.2    Parties.    Nothing expressed or mentioned herein is intended or shall be construed to give any Person,
firm or corporation, other than the Holders and the Trustee, any legal or equitable right, remedy or claim under or in respect of this Supplemental Indenture or the Indenture or any provision herein
or therein contained. 

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

        SECTION
3.4    Severability Clause.    In case any provision in this Supplemental Indenture 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 and such provision shall be ineffective only to the extent
of such invalidity, illegality or unenforceability. 

        SECTION
3.5    Ratification of Indenture; Supplemental Indentures Part of Indenture.    Except as expressly amended
hereby, the Indenture is in all respects ratified and confirmed and all the terms, conditions and provisions thereof shall remain in full force and effect. This Supplemental Indenture shall form a
part of the Indenture for all purposes, and every Holder of Securities heretofore or hereafter authenticated and delivered shall be bound hereby. The Trustee makes no representation or warranty as to
the validity or sufficiency of this Supplemental Indenture. 

        SECTION
3.6    Counterparts.    The parties hereto may sign one or more copies of this Supplemental Indenture in
counterparts, all of which together shall constitute one and the same agreement. 

        SECTION
3.7    Headings.    The headings of the Articles and the sections in this Guarantee are for convenience of
reference only and shall not be deemed to alter or affect the meaning or interpretation of any provisions hereof. 

C-2

 

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

	 	 	[SUBSIDIARY GUARANTOR],

as a Guarantor
	

 	
 	

By:	
 	

	 	 	 	 	Name:

Title:

[Address]
	

 	
 	

JPMORGAN CHASE BANK,

as Trustee
	

 	
 	

By:	
 	

	 	 	 	 	Name:

Title:
	

 	
 	

CORNELL COMPANIES, INC.
	

 	
 	

By:	
 	

	 	 	 	 	Name:

Title:
	

 	
 	

[OTHER SUBSIDIARY GUARANTORS]
	

 	
 	

By:	
 	

	 	 	 	 	Name:

Title:

C-3

QuickLinks

Table of Contents

CROSS-REFERENCE TABLE

ARTICLE I DEFINITIONS AND INCORPORATION BY REFERENCE

ARTICLE II THE SECURITIES

ARTICLE III COVENANTS

ARTICLE IV SUCCESSOR COMPANY

ARTICLE V REDEMPTION OF SECURITIES

ARTICLE VI DEFAULTS AND REMEDIES

ARTICLE VII TRUSTEE

ARTICLE VIII DISCHARGE OF INDENTURE; DEFEASANCE

ARTICLE IX AMENDMENTS

ARTICLE X SUBSIDIARY GUARANTEE

ARTICLE XI MISCELLANEOUS

ASSIGNMENT FORM

OPTION OF HOLDER TO ELECT PURCHASE

FORM OF INDENTURE SUPPLEMENT TO ADD SUBSIDIARY GUARANTORS

W I T N E S S E T H

ARTICLE I Definitions

ARTICLE II Agreement to be Bound; Guarantee

ARTICLE III Miscellaneous

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