Document:

Loan No. 07-0004350

THIRD AMENDED AND RESTATED CREDIT AGREEMENT

Dated as of September 20, 2013

among

THE PARTIES LISTED ON SCHEDULE 1.01 ATTACHED HERETO

as Borrowers,

GENERAL ELECTRIC CAPITAL CORPORATION,

as Administrative Agent, a Lender and Swingline Lender,

and

THE OTHER FINANCIAL INSTITUTIONS WHO ARE OR HEREAFTER

BECOME PARTIES TO THIS CREDIT AGREEMENT,

as Lenders

                                

  

TABLE OF CONTENTS

	
Article and Section

	
Page

	
ARTICLE I

	
DEFINITIONS AND ACCOUNTING TERMS

	
3

	
1.01

		
Defined Terms

	
3

	
1.02

		
Interpretive Provisions

	
37

	
1.03

		
Accounting Terms

	
37

	
1.04

		
Rounding

	
38

	
1.05

		
References to Agreements and Laws

	
38

	
1.06

		
Times of Day

	
38

	
ARTICLE II

	
COMMITMENTS AND ADVANCES

	
38

	
2.01

		
Revolving Loan Commitments

	
38

	
2.02

		
Advances of the Revolving Loan

	
40

	
2.03

		
Calculation of Availability Amount

	
41

	
2.04

		
Repayment of the Revolving Loan

	
41

	
2.05

		
Swing Loans

	
41

	
2.06

		
Prepayments

	
43

	
2.07

		
Interest

	
43

	
2.08

		
Fees and Expenses

	
45

	
2.09

		
Computation of Interest

	
45

	
2.10

		
Payments Generally

	
45

	
2.11

		
Sharing of Payments

	
47

	
2.12

		
Evidence of Debt

	
48

	
2.13

		
Joint and Several Liability of the Borrowers

	
48

	
2.14

		
Appointment of Parent as Legal Representative for Credit Parties

	
52

	
2.15

		
Establishment of Impounds

	
53

	
2.16

		
Defaulting Lenders

	
55

	
ARTICLE III

	
TAXES, YIELD PROTECTION AND ILLEGALITY

	
56

	
3.01

		
Taxes

	
56

	
3.02

		
Illegality

	
57

	
3.03

		
Inability to Determine Rates

	
57

	
3.04

		
Increased Cost and Reduced Return; Capital Adequacy; Reserves

	
58

	
3.05

		
Funding Losses

	
59

	
3.06

		
Matters Applicable to all Requests for Compensation

	
59

	
3.07

		
Survival

	
60

	
ARTICLE IV

	
CONDITIONS PRECEDENT TO ADVANCES

	
60

	
4.01

		
Conditions to Initial Advance

	
60

	
4.02

		
Conditions to Advances and Swing Loans

	
64

	
ARTICLE V

	
REPRESENTATIONS AND WARRANTIES

	
64

	
5.01

		
Financial Statements; No Material Adverse Effect; No Internal Control

	
 

	
 

	
Event

	
64

	
5.02

		
Corporate Existence and Power

	
65

Page i

  

	
5.03

		
Corporate and Governmental Authorization; No Contravention

	
65

	
5.04

		
Binding Effect

	
65

	
5.05

		
Litigation

	
66

	
5.06

		
Compliance with ERISA

	
66

	
5.07

		
Environmental Matters

	
67

	
5.08

		
Margin Regulations; Investment Company Act

	
67

	
5.09

		
Compliance with Laws

	
68

	
5.10

		
Ownership of Property; Liens

	
68

	
5.11

		
Corporate Structure; Capital Stock, Etc

	
68

	
5.12

		
Real Property Assets; Leases

	
69

	
5.13

		
Material Contracts; Additional Contractual Obligations

	
70

	
5.14

		
Investments

	
70

	
5.15

		
Solvency

	
70

	
5.16

		
Taxes

	
70

	
5.17

		
Reserved

	
71

	
5.18

		
Insurance

	
71

	
5.19

		
Healthcare; Facility Representations and Warranties

	
71

	
5.20

		
Disclosure

	
72

	
5.21

		
Collateral Documents

	
72

	
ARTICLE VI

	
AFFIRMATIVE COVENANTS

	
73

	
6.01

		
Financial Statements

	
73

	
6.02

		
Certificates; Other Information

	
74

	
6.03

		
Preservation of Existence and Franchises

	
76

	
6.04

		
Books and Records

	
76

	
6.05

		
Compliance with Law

	
76

	
6.06

		
Payment of Taxes and Other Indebtedness

	
76

	
6.07

		
Insurance

	
77

	
6.08

		
Maintenance of Property

	
77

	
6.09

		
Performance of Obligations

	
77

	
6.10

		
Visits and Inspections

	
77

	
6.11

		
Use of Proceeds/Purpose of Loan

	
78

	
6.12

		
Financial Covenants

	
78

	
6.13

		
Environmental Matters

	
78

	
6.14

		
Single Purpose Entity/Separateness

	
79

	
6.15

		
New Borrowers

	
81

	
6.16

		
Pledged Assets

	
82

	
6.17

		
Appraisals

	
82

	
6.18

		
Anti-Terrorism Laws

	
83

	
6.19

		
Compliance With Material Contracts

	
83

	
6.20

		
Health Care Covenants

	
83

	
6.21

		
Public Company Status

	
84

	
6.22

		
Use and Application of Insurance Proceeds

	
84

	
6.23

		
Condemnation Awards

	
86

	
6.24

		
Cash Management System

	
86

	
6.25

		
Keepwell

	
87

 

Page ii

  

	
ARTICLE VII

	
NEGATIVE COVENANTS

	
87

	
7.01

		
Liens

	
87

	
7.02

		
Indebtedness

	
88

	
7.03

		
Fundamental Changes

	
88

	
7.04

		
Dispositions; Acquisitions

	
88

	
7.05

		
Business Activities

	
89

	
7.06

		
Transactions with Affiliates and Insiders

	
89

	
7.07

		
Organization Documents; Fiscal Year

	
89

	
7.08

		
Modifications to Other Documents

	
89

	
7.09

		
Ownership of Subsidiaries

	
90

	
7.10

		
No Further Negative Pledges

	
90

	
7.11

		
Limitation on Restricted Actions

	
90

	
7.12

		
Addition/Replacement of Borrowing Base Assets

	
91

	
7.13

		
Limitation of Borrowing Base Assets in Metropolitan Statistical Area

	
92

	
 

	
 

	
 

	
ARTICLE VIII

	
EVENTS OF DEFAULT AND REMEDIES

	
92

	
8.01

		
Events of Default

	
92

	
8.02

		
Remedies Upon Event of Default

	
95

	
8.03

		
Application of Funds

	
95

	
8.04

		
Administrative Agent's Right to Perform the Obligations

	
96

	
8.05

		
Special Cure Right

	
96

	
 

	
 

	
 

	
ARTICLE IX

	
ADMINISTRATIVE AGENT

	
97

	
9.01

		
Appointment and Authorization of Administrative Agent

	
97

	
9.02

		
Delegation of Duties

	
97

	
9.03

		
Liability of Administrative Agent

	
98

	
9.04

		
Reliance by Administrative Agent

	
98

	
9.05

		
Notice of Default

	
99

	
9.06

		
Credit Decision; Disclosure of Confidential Information by

	
 

	
 

		
Administrative Agent

	
99

	
9.07

		
Indemnification of Administrative Agent

	
100

	
9.08

		
Administrative Agent in its Individual Capacity

	
100

	
9.09

		
Successor Administrative Agent

	
100

	
9.10

		
Administrative Agent May File Proofs of Claim

	
101

	
 

	
 

	
 

	
ARTICLE X

	
MISCELLANEOUS

	
102

	
10.01

		
Amendments, Etc

	
102

	
10.02

		
Notices and Other Communications; Facsimile Copies

	
103

	
10.03

		
No Waiver; Cumulative Remedies

	
104

	
10.04

		
Attorney Costs, Expenses and Taxes

	
105

	
10.05

		
Indemnification by the Borrowers

	
106

	
10.06

		
Payments Set Aside

	
107

	
10.07

		
Successors and Assigns

	
107

	
10.08

		
Confidentiality

	
110

	
10.09

		
Set‐off

	
111

	
10.10

		
Interest Rate Limitation

	
111

	
10.11

		
Counterparts

	
112

Page iii

  

	
10.12

		
Integration

	
112

	
10.13

		
Survival of Representations and Warranties

	
112

	
10.14

		
Severability

	
112

	
10.15

		
Tax Forms

	
113

	
10.16

		
Replacement of Lenders

	
114

	
10.17

		
No Advisory or Fiduciary Responsibility

	
115

	
10.18

		
Source of Funds

	
115

	
10.19

		
GOVERNING LAW

	
116

	
10.20

		
WAIVER OF RIGHT TO TRIAL BY JURY

	
116

	
10.21

		
No Conflict

	
117

	
10.22

		
USA Patriot Act Notice

	
117

	
10.23

		
Entire Agreement

	
117

	
10.24

		
California Real Property Assets

	
117

Page iv

 

 

SCHEDULES

	
1.01

	
List of Borrowers

	
2.01

	
Lenders and Commitments

	
2.12

	
Allocable Amounts of Loan

	
5.11

	
Corporate Structure; Capital Stock

	
5.12

	
Real Property Asset Matters

			
Part I

	
Borrowing Base Assets

	
 

	
 

	
Part II

	
Management Agreements and Property Managers

	
 

	
 

	
Part III

	
Defaulting Tenants

	
 

	
 

	
Part IV

	
Facility Operating Leases and Operating Tenants

	
 

	
 

	
Part V

	
Material Subleases

	
5.13

	
Material Contracts; Contracts Subject to Assignment of Claims Act

	
5.18

	
Insurance Certificates

	
5.19

	
Covered Entities Under HIPAA

	
7.02

	
Borrower's Indebtedness

	
10.02

	
Notice Addresses

EXHIBITS

	
A

	
Form of Loan Borrowing Notice

	
 

	
 

	
A-1

	
Form of Swing Loan Request

	
 

	
 

	
A-2

	
Form of Swingline Note

	
 

	
 

	
B

	
Form of Revolving Note

	
 

	
 

	
C-1

	
Form of Compliance Certificate

	
 

	
 

	
C-2

	
Borrowing Base Certificate

	
 

	
 

	
D

	
Form of Assignment and Assumption

	
 

	
 

	
E

	
Form of Borrower Joinder Agreement

	
 

	
 

	
F

	
Form of Lender Joinder Agreement

	
 

	
 

	
G

	
Form of Guaranty

	
 

	
 

	
H

	
Form of Security Agreement

	
 

	
 

	
I

	
Form of Partial Release Letter

	
 

	
 

 

 

Page v

 

THIRD AMENDED AND RESTATED CREDIT AGREEMENT

This THIRD AMENDED AND RESTATED CREDIT AGREEMENT (as amended, modified, restated or supplemented from time to time, this "Credit Agreement" or this "Agreement") is entered into as of September 20, 2013 by and among GENERAL ELECTRIC CAPITAL CORPORATION, a Delaware corporation (in its individual capacity, "GECC" and in its capacity as agent for the Lenders, together with its successors, "Administrative Agent"), the financial institutions other than GECC who are or hereafter become parties to this Agreement (together with GECC, individually, a "Lender", and collectively, the "Lenders", as the context may require), and THE PARTIES LISTED ON SCHEDULE 1.01 ATTACHED HERETO (each of the foregoing entities and each of the entities from time to time executing a Joinder Agreement pursuant to Section 6.15 hereof shall be hereinafter referred to individually as "Borrower" and collectively as the "Borrowers").

RECITALS:

A.            Certain of the Lenders (the "Original Lenders") agreed, subject to the terms and conditions of that certain Credit Agreement dated as of February 23, 2010, by and among certain of the entities identified on Schedule 1.01 attached hereto (collectively, the "Original Borrowers"), Administrative Agent and the Original Lenders thereto, as amended by that certain First Amendment to Credit Agreement and Other Credit Documents, dated as of May 5, 2010 (as amended, the "2010 Credit Agreement") to make a revolving credit facility to Original Borrowers in the maximum principal amount of $120,000,000.00 (the "Original Loan").

 

B.            BKD Kansas Properties, LLC, a Delaware limited liability company ("BKD"), became a Borrower under the 2010 Credit Agreement pursuant to that certain Joinder Agreement dated as of March 5, 2010.  BLC Wellington-Cleveland, LLC, BLC Wellington-Colonial Heights, LLC, BLC Wellington-Gardens, LLC, AHC Southland-Ormond Beach, LLC, AHC Monroe Township, LLC, BLC Adrian-GC, LLC, BLC Las Vegas-GC, LLC, BLC Belleville-GC, LLC, and BLC Findlay-GC, LLC, each a Delaware limited liability company, became Borrowers under the 2010 Credit Agreement pursuant to that certain Joinder Agreement dated June 24, 2010 (together with BKD, collectively, the "Joined Borrowers").  BLC Wellington-Johnson City, LLC and BLC Wellington-Kingston, LLC, each a Delaware limited liability company, became Borrowers under the 2010 Credit Agreement pursuant to that certain Joinder Agreement dated as of September 16, 2010 (together with Original Borrowers [other than FIT Ramsey, LLC, which was released pursuant to the terms of the 2010 Credit Agreement] and Joined Borrowers, the "2011 Borrowers").

 

C.            Certain of the Lenders (the "2011 Lenders") and the 2011 Borrowers executed that certain Amended and Restated Credit Agreement (the "2011 Original Credit Agreement") dated as of January 31, 2011, pursuant to which the 2011 Lenders and 2011 Borrowers agreed to extend the maturity date and increase the revolving credit facility under the 2010 Credit Agreement as more fully set forth therein (as increased and extended, the "2011 Credit Facility") for the purposes of refinancing certain existing debt, which 2011 Credit Agreement amended, restated and consolidated in its entirety the 2010 Credit Agreement and was executed in full replacement of the 2010 Credit Agreement.

Page 1

 

D.            BLC Southerland Place-Midlothian, LLC, BLC Southerland Place-Germantown, LLC, BLC Windsor Place, LLC, BLC Emerald Crossings, LLC, BKD Sterling House of Duncan, LLC, BKD Sterling House of Edmond, LLC, BKD Sterling House of Enid, LLC, BKD Sterling House of Midwest City, LLC, BKD Sterling House of Oklahoma City North, LLC, BKD Sterling House of Oklahoma City South, LLC, BKD Sterling House of Ponca City, LLC, BKD Sterling House of Cedar Hill, LLC, BKD Sterling House of Palestine, LLC, BKD Sterling House of Waxahachie, LLC, BKD Wynwood of Madison West Real Estate, LLC ("Madison") and BKD Brookdale Place of Brookfield, LLC ("Brookfield"), each a Delaware limited liability company (collectively, the "2011 Additional Borrowers") became "Borrowers" under the 2011 Original Credit Agreement pursuant to that certain Joinder Agreement dated as of March 4, 2011 among Administrative Agent and 2011 Additional Borrowers.

 

E.            Lake Seminole Square Management Company, Inc., and ARC Galleria Woods, Inc., each a Tennessee corporation, became "Borrowers" under the 2011 Original Credit Agreement pursuant to that certain Joinder Agreement dated October 27, 2011 (collectively, the "2011 Joined Borrowers").

 

F.            The 2011 Original Credit Agreement was amended by (i) First Amendment to Amended and Restated Credit Agreement and Other Credit Documents dated as of February 23, 2011, (b) Second Amendment to Amended and Restated Credit Agreement and Other Credit Documents dated as of October 27, 2011 and (c) Third Amendment to Amended and Restated Credit Agreement and Other Credit Documents dated as of December 17, 2012 (the 2011 Original Credit Agreement, as so amended, herein called the "2011 Credit Agreement").

 

G.            The 2011 Borrowers, the 2011 Additional Borrowers (other than Madison and Brookfield) and the 2011 Joined Borrowers (collectively, the "2012 Borrowers"), Administrative Agent and Lenders executed that certain Second Amended and Restated Credit Agreement dated as of March 28, 2013 pursuant to which the parties agreed to, among other things, extend the maturity date of the revolving credit facility under the 2011 Credit Agreement and to grant the 2012 Borrowers the right upon satisfaction of certain conditions to increase the amount of the revolving credit facility for the purposes of refinancing certain existing debt and for the purposes hereinafter set forth (the "March 2013 Credit Agreement").

 

H.            By Joinder Agreement dated as of July 12, 2013 (the "July 2013 Joinder Agreement"),  BKD Sterling House Of Bowling Green, LLC, BKD Sterling House Of Mansfield, LLC, AHC Southland-Ormond Beach, LLC, Brookdale Place at Fall Creek, LLC, Brookdale Place at Willow Lake, LLC, Brookdale Place of West Hartford, LLC and Brookdale Place at Kenwood, LLC,  each a Delaware limited liability company, became "Borrowers" under the March 2013 Credit Agreement  (collectively, the "2013 Joined Borrowers").

 

I.            The Borrowers have requested Lenders to incorporate a swingline feature to the credit facility (as amended, the "Credit Facility") and to execute and deliver this Credit Agreement pursuant to which the March 2013 Credit Agreement will be amended, restated and consolidated in its entirety in full replacement of the March 2013 Credit Agreement.

Page 2

  

J.            Lenders have agreed to provide the Credit Facility to the Borrowers, and amend and restate the March 2013 Credit Agreement in its entirety, subject to the terms and conditions set forth herein.

 

NOW, THEREFORE, in consideration of these premises and the mutual covenants and agreements contained herein, the receipt and sufficiency of which are hereby acknowledged, the parties hereto covenant and agree the March 2013 Credit Agreement is amended and restated in its entirety as follows:

ARTICLE I  

DEFINITIONS AND ACCOUNTING TERMS

1.01  Defined Terms.

 

As used in this Credit Agreement, the following terms have the meanings set forth below:

"Administrative Agent" means General Electric Capital Corporation in its capacity as administrative agent for the Lenders under any of the Credit Documents, or any successor administrative agent.

"Administrative Agent's Office" means the Administrative Agent's address and, as appropriate, account as set forth on Schedule 10.02, or such other address or account as the Administrative Agent may from time to time notify the Borrowers and the Lenders.

"Adjusted Expenses" means actual operating expenses related to the Borrowing Base Assets, excluding any rent and interest paid by Operating Tenants and depreciation recorded by the Operating Tenants or Borrowers on a stabilized accrual basis for the previous twelve (12) month period (as reasonably adjusted by Administrative Agent), including: (i) recurring expenses (e.g., tenant improvements, leasing commissions, carpeting replacement, appliance and drapery replacement and such others as determined by Administrative Agent), (ii) real estate taxes, (iii) management fees (whether paid or not) in an amount not less than five percent (5%) of effective gross income (or the actual management fee paid, if higher), and (iv) a replacement reserve (whether reserved or not) of not less than Three Hundred Fifty and No/100 Dollars ($350.00) per Senior Housing Unit.

"Adjusted Net Operating Income" or "ANOI" means annualized Adjusted Revenue less Adjusted Expenses, based upon the financial reports provided by Borrowers under Section 6.01 and approved by Administrative Agent in its reasonable discretion; provided, however, if the actual Occupancy Rate of any Borrowing Base Asset exceeds 95%, ANOI for such Borrowing Base Asset shall be proportionately reduced assuming an Occupancy Rate of 95%.

"Adjusted Revenue" means revenues (excluding revenues from therapy and home health services to independent and assisted living residents of the Borrowing Base Assets, other than the Included Therapy Revenue) from the Borrowing Base Assets for the period in question (and if none specified, then for the most current twelve (12) months), as determined under GAAP, as adjusted based upon definitive changes (federal or state) in the Medicare and/or Medicaid reimbursement rates, but excluding (a) nonrecurring income and non-property related income (as determined by Administrative Agent in its sole discretion) and income from tenants and/or

Page 3

 

residents that is classified as "bad debt" under generally accepted accounting principles, and (b) other revenue for such period not to exceed ten percent (10%) of the amounts included in clause (a) above for laundry, vending, parking and other occupancy payments (but excluding late fees and interest income) based upon collections for such period.

"Administrative Questionnaire" means an Administrative Questionnaire in a form supplied by the Administrative Agent.

"Advance" or "Advances" have the meanings provided in Section 2.01(a).

"Affiliate" means, with respect to any Person, another Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified.

"Agent-Related Persons" means the Administrative Agent, together with its Affiliates, and the officers, directors, employees, agents and attorneys-in-fact of such Persons and Affiliates.

"Aggregate Commitments" means the Commitments of all the Lenders.

"Aggregate Committed Amount" has the meaning provided in Section 2.01(a), as increased pursuant to Section 2.01(b).

"Agreement" has the meaning provided in the introductory paragraph hereof.

"Allocable Amount" has the meaning provided in Section 2.13(i).

"Applicable Percentage" means each of the following percentages per annum, as applicable, based upon the Outstanding Amount Percentage:

	
Outstanding Amount

 Percentage

	
Applicable Percentage

	
≤25%

	
3.25%

	
>25%, but ≤50%

	
3.75%

	
>50, but ≤100%

	
4.25%

Any increase or decrease in the Applicable Percentage resulting from a change in the Outstanding Amount Percentage shall become effective as of the first Business Day immediately following the change in the Outstanding Amount Percentage.

Page 4

 

"Approved Fund" means any Fund that is administered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a Lender.

"Arizona Facility" has the meaning provided in Section 5.13(b).

"Assignee Group" means two or more Eligible Assignees that are Affiliates of one another or two or more Approved Funds managed by the same investment advisor.

"Assignment and Assumption" means an assignment and assumption entered into by a Lender and an Eligible Assignee (with the consent of any party whose consent is required by Section 10.07(b)), and accepted by the Administrative Agent, in substantially the form of Exhibit D or any other form approved by the Administrative Agent and, if such assignment and assumption requires their consent, the Borrowers.

"Assignment of Leases" means an assignment of leases, rents and profits to the Administrative Agent with respect to the applicable Borrower's interests in a Borrowing Base Asset (which assignment may be contained within the related Mortgage Instrument); provided that each such Assignment of Leases shall, subject to the terms and conditions of the applicable underlying lease, directly assign to the Administrative Agent the following: (a) all existing and future leases, subleases, tenancies, licenses, occupancy agreements or agreements to lease all or any portion of such Borrowing Base Asset (including, without limitation, any applicable Facility Operating Lease), whether written or oral or for a definite period or month-to-month, together with any extensions, renewals, amendments, modifications or replacements thereof, and any options, rights of first refusal, pledges, security agreements and guarantees of any tenant's obligations under any lease or sublease now or hereafter in effect with respect to the Borrowing Base Asset (individually, for the purposes of this definition, a "Lease" and collectively, the "Leases"); and (b) all rents (including, without limitation, base rents, minimum rents, additional rents, percentage rents, parking, maintenance and deficiency rents and payments which are characterized under the terms of the applicable Lease as payments of interest and/or principal with respect to the applicable Borrowing Base Asset), security deposits (in whatever form, including cash and letters of credit), tenant escrows, income, receipts, revenues, reserves, issues and profits of the Borrowing Base Asset from time to time accruing, including, without limitation, (i) all rights to receive payments arising under, derived from or relating to any Lease, (ii) all lump sum payments for the cancellation or termination of any Lease, the waiver of any term thereof, or the exercise of any right of first refusal, call option, put option or option to purchase, and (iii) the return of any insurance premiums or ad valorem tax payments made in advance and subsequently refunded.  In furtherance (and not limitation) of the foregoing, each Assignment of Leases shall assign to the Administrative Agent any and all of the applicable Borrower's rights to collect or receive any payments with respect to the applicable Borrowing Base Asset.  Finally, each Assignment of Leases shall, in any case, be in form and substance satisfactory to the Administrative Agent in its discretion and suitable for recording in the applicable jurisdiction; and "Assignments of Leases" means a collective reference to all such Assignments of Leases.

"Attorney Costs" means and includes all reasonable and documented fees, expenses and disbursements of any law firm or other external counsel and, without duplication, the allocated

Page 5

 

reasonable and documented cost of internal legal services and all expenses and disbursements of internal counsel.

"Attributable Principal Amount" means (a) in the case of Capital Leases, the amount of capital lease obligations determined in accordance with GAAP, (b) in the case of Synthetic Leases, an amount determined by capitalization of the remaining lease payments thereunder as if it were a capital lease determined in accordance with GAAP, (c) in the case of Securitization Transactions, the outstanding principal amount of such financing, after taking into account reserve amounts and making appropriate adjustments, determined by the Administrative Agent in its reasonable judgment and (d) in the case of Sale and Leaseback Transactions, the present value (discounted in accordance with GAAP at the debt rate implied in the applicable lease) of the obligations of the lessee for rental payments during the term of such lease.

"Audited Financial Statements" means the audited consolidated balance sheet of the Parent and its consolidated Subsidiaries for the fiscal year ended December 31, 2012, and the related consolidated statements of earnings, shareholders' equity and cash flows for such fiscal year of the Parent and its consolidated Subsidiaries, including the notes thereto.

"Availability Amount" means, as of any Determination Date, the sum of the following amounts:  (a) the annualized ANOI (based on the trailing six (6) month period prior to the Determination Date) for the Performing Assets that are not skilled nursing facilities or Entrance Fee Facilities, divided by 12.5%, (b) the annualized ANOI (based on the trailing six (6) month period prior to the Determination Date) for the Performing Assets that are skilled nursing facilities, but not Entrance Fee Facilities, divided by 13.5%, and (c) the sum of (i) annualized ANOI (based on the trailing six (6) month period prior to the Determination Date) for Performing Assets that are Entrance Fee Facilities, divided by 11.75% and (ii) the amount of any Net Entrance Fees recorded or earned during the trailing 12-month period prior to the Determination Date, times 5.0, provided in no event may the Availability Amount derived from Entrance Fee Facilities exceed thirty percent (30%) of the total Availability Amount.

"Award" has the meaning provided in Section 6.23.

"Bankruptcy Event" means, with respect to any Person, the occurrence of any of the following: (a) the entry of a decree or order for relief by a court or governmental agency in an involuntary case under any applicable Debtor Relief Law or any other bankruptcy, insolvency or other similar law now or hereafter in effect, or the appointment by a court or governmental agency of a receiver, liquidator, assignee, custodian, trustee, sequestrator (or similar official) of such Person or for any substantial part of its Property or the ordering of the winding up or liquidation of its affairs by a court or governmental agency and such decree, order or appointment is not vacated or discharged within sixty (60) days of its filing (or, if such order cannot be reasonably vacated or discharged within such period, ninety (90) days, so long as the applicable Person has diligently commenced the actions necessary to discharge or vacate such order and is diligently pursuing completion thereof); or (b) the commencement against such Person of an involuntary case under any applicable Debtor Relief Law or any other bankruptcy, insolvency or other similar law now or hereafter in effect, or of any case, proceeding or other action for the appointment of a receiver, liquidator, assignee, custodian, trustee, sequestrator (or similar official) of such Person or for any substantial part of its Property or for the winding up or

Page 6

 

liquidation of its affairs, and such involuntary case or other case, proceeding or other action shall remain undismissed for a period of sixty (60) consecutive days (or, if such proceeding cannot be reasonably dismissed within such period, ninety (90) consecutive days, so long as the applicable Person has diligently commenced the actions necessary to obtain such dismissal and is diligently pursuing completion thereof), or the repossession or seizure by a creditor of such Person of a substantial part of its Property; or (c) such Person shall commence a voluntary case under any applicable Debtor Relief Law or any other bankruptcy, insolvency or other similar law now or hereafter in effect, or consent to the entry of an order for relief in an involuntary case under any such law, or consent to the appointment of or the taking possession by a receiver, liquidator, assignee, creditor in possession, custodian, trustee, sequestrator (or similar official) of such Person or for any substantial part of its Property or make any general assignment for the benefit of creditors; or (d) the filing of a petition by such Person seeking to take advantage of any Debtor Relief Law or any other applicable Law, domestic or foreign, relating to bankruptcy, insolvency, reorganization, winding‐up, or composition or adjustment of debts, or (e) such Person shall fail to contest in a timely and appropriate manner (and if not dismissed within sixty (60) days (unless such dismissal cannot be reasonably obtained within such period, ninety (90) days, so long as the applicable Person has diligently commenced the actions necessary to dismiss such filing and is diligently pursuing completion thereof)) or shall consent to any petition filed against it in an involuntary case under such bankruptcy laws or other applicable Law or consent to any proceeding or action relating to any bankruptcy, insolvency, reorganization, winding‐up, or composition or adjustment of debts with respect to its assets or existence, or (f) such Person shall admit in writing, or such Person's financial statements shall reflect, an inability to pay its debts generally as they become due.

"Base Rate" means for any day a fluctuating rate per annum equal to the rate of interest in effect for such day as publicly announced from time to time by the Base Rate Bank as its "prime rate,"  The "prime rate" is a rate set by the Base Rate Bank based upon various factors including Base Rate Bank's costs and desired return, general economic conditions and other factors, and is used as a reference point for pricing some loans, which may be priced at, above, or below such announced rate.  Any change in the prime rate announced by Base Rate Bank shall take effect at the opening of business on the day specified in the public announcement of such change.

"Base Rate Bank" means Bank of America, N.A.

"Blocked Account Agreements" means, collectively, the Amended and Restated Deposit Account Control Agreement executed with respect to the Portfolio General Receivables Account and the Amended and Restated Collection Account Agreement executed with respect to the Third Party Payor Receivables Accounts, in each case executed by Borrower Representative, as agent for Borrowers, Administrative Agent and the bank named therein (the "Blocked Account Bank").

"Borrower" and "Borrowers" shall have the meanings given to such terms in the introductory paragraph hereof.

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"Borrower Joinder Agreement" means a joinder agreement in the form of Exhibit E hereto, to be executed by each new Person who becomes a Borrower in accordance with Section 6.15 hereof.

"Borrower Representative" has the meaning provided in Section 2.14 hereof.

"Borrowing" means a borrowing hereunder consisting of (a) Advances under the Revolving Loan and/or (b) the Swing Loans, each made to or for the benefit of Borrowers by Lenders pursuant to Article 2 of this Agreement.

"Borrowing Base Amount" means, as of any Determination Date, an amount equal to the lesser of: (a) the Availability Amount as of such date and (b) the aggregate Collateral Value Amount as of such date for the Performing Assets.

"Borrowing Base Asset" means a Real Property Asset which, as of any date of determination, satisfies all of the following requirements:  (a) such Real Property Asset is 100% owned by a Borrower in fee simple or pursuant to the terms of an Eligible Ground Lease; (b) the Administrative Agent, on behalf of the Lenders, shall have received each of the Borrowing Base Asset Deliverables with respect to such Real Property Asset, in each case in form and substance acceptable to the Administrative Agent in its discretion; (c) such Real Property Asset is not subject to any Lien (other than a Permitted Lien) or any Negative Pledge; (d) such Real Property Asset is free of all material mechanical and structural defects, environmental conditions (as evidenced by environmental reports acceptable to Administrative Agent) or other adverse matters except for defects, conditions or matters individually or collectively which are not material to the profitable operation of such Real Property Asset and the most recently‐delivered FIRREA‐compliant MAI appraisal with respect to such Real Property Asset is acceptable to the Administrative Agent in its discretion; (e) such Real Property Asset has been fully developed for use as a skilled nursing facility, domestic assisted living facility, independent living facility, rehabilitation hospital or other healthcare facility acceptable to the Administrative Agent and Required Lenders; (f) such Real Property Asset is leased to and operated by an Eligible Tenant pursuant to a Facility Operating Lease reasonably acceptable to the Administrative Agent; (g) no required rental payment, principal or interest payment, payments of real property taxes or payments of premiums on insurance policies payable to the applicable Borrower-owner with respect to such Real Property Asset is past due beyond the earlier of the applicable grace period with respect thereto, if any, and sixty (60) days; (h) no event of default has occurred and is then continuing under any Material Contract applicable to such Borrowing Base Asset; (i) no Material Contract applicable to such Borrowing Base Asset shall have been terminated without the prior written consent of the Required Lenders; (j) no condemnation or condemnation proceeding shall have been instituted (and remain undismissed for a period of ninety (90) consecutive days), in each case, with respect to a material portion of the Real Property Asset; (k) no material casualty event shall have occurred with respect to the improvements located on such Real Property Asset which is not able to be fully remediated with available insurance proceeds; and (l) no Hazardous Substances are located on or under such Real Property Asset and no other environmental conditions exist in connection with such Real Property Asset which constitute a violation of any Environmental Law.  

"Borrowing Base Assets" means a collective reference to all Borrowing Base Assets in existence at any given time.

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"Borrowing Base Asset Deliverables" means, with respect to any Real Property Asset which is proposed for qualification as a "Borrowing Base Asset" hereunder, a collective reference to each of the following (with each such item to be in form and substance acceptable to the Administrative Agent):

(a)            a fully executed and notarized Mortgage Instrument and Assignments of Leases with respect to such Real Property Asset and a related legal opinion from special local counsel to the Borrowers opining as to the propriety of the form of such documents for recording in the applicable jurisdiction and such other matters as may be required by the Administrative Agent;

 

(b)            a fully executed copy of any Facility Operating Lease applicable to such Real Property Asset, together with an estoppel certificate from the applicable Eligible Tenant and a subordination, non‐disturbance and attornment agreement with respect to such Facility Operating Lease (the "Facility Operating Lease SNDA");

 

(c)            in the case of a Real Property Asset which constitutes a leasehold interest, evidence that the applicable lease, a memorandum of lease with respect thereto, or other evidence of such lease in form and substance reasonably satisfactory to the Administrative Agent, has been properly recorded in all places to the extent necessary or desirable, in the reasonable judgment of the Administrative Agent, so as to enable the Mortgage Instrument encumbering such leasehold interest to effectively create a valid and enforceable first priority lien (subject to Permitted Liens and required landlord consents) on such leasehold interest in favor of the Administrative Agent (or such other Person as may be required or desired under local law) for the benefit of Lenders and that such lease qualifies as an Eligible Ground Lease hereunder, together with such estoppels, waivers and/or consents from the lessor under such Eligible Ground Lease as are required by the terms thereof or otherwise reasonably requested by the Administrative Agent;

 

(d)            maps or plats of an as‐built survey of the site constituting the Real Property Asset sufficient in all cases to delete the standard survey exception from the applicable Mortgage Policy;

 

(e)            a FIRREA‐compliant MAI appraisal, commissioned, reviewed and approved by the Administrative Agent (or otherwise acceptable to the Administrative Agent, in its discretion) with respect to such Real Property Asset;

 

(f)            evidence as to the compliance of such Real Property Asset and the improvements related thereto with applicable zoning and use requirements;

 

(g)            an ALTA mortgagee title insurance policy (or its equivalent in non-ALTA jurisdictions) with respect to the applicable Real Property Asset (each, a "Mortgage Policy" and collectively, the "Mortgage Policies"), assuring the Lender that the Mortgage Instrument creates a valid and enforceable first priority mortgage lien on the applicable Real Property Asset, free and clear of all defects and encumbrances except Permitted Liens, which Mortgage Policy shall (i) be in an amount acceptable to the Administrative Agent, (ii) be issued by an insurance company reasonably acceptable to the Administrative Agent, (iii) include such available

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endorsements and reinsurance as the Administrative Agent may reasonably require and (iv) otherwise satisfy the reasonable title insurance requirements of the Administrative Agent;

(h)            evidence as to whether the applicable Real Property Asset is in an area designated by the Federal Emergency Management Agency as having special flood or mud slide hazards (a "Flood Hazard Property") and if such Real Property Asset is a Flood Hazard Property, (i) the applicable Borrower's written acknowledgment of receipt of written notification from the Administrative Agent (A) as to the fact that such Real Property Asset is a Flood Hazard Property and (B) as to whether the community in which each such Flood Hazard Property is located is participating in the National Flood Insurance Program and (ii) copies of insurance policies or certificates of insurance evidencing flood insurance satisfactory to the Administrative Agent and naming the Administrative Agent as sole loss payee on behalf of the Lenders under a standard mortgagee endorsement;

 

(i)            copies of any material subleases which would be required to be disclosed on Part V of Schedule 5.12 hereof with respect to such Real Property Asset if approved as a Borrowing Base Asset;

 

(j)            evidence that the Operating Tenant under the applicable Facility Operating Lease is an Eligible Tenant;

 

(k)            a Phase I environmental assessment from an environmental consultant acceptable to the Administrative Agent, dated as of a date acceptable to the Administrative Agent and indicating that, as of such date, no Hazardous Substances or other conditions on, under or with respect to the applicable Real Property Asset constitute a violation of any Environmental Laws and that, in any case, no commercially unreasonable amount of any Hazardous Substances are located on or under such Real Property Asset; and

 

(l)            evidence of insurance coverage with respect to such Real Property Asset meeting the requirements set forth herein and establishing the Administrative Agent as loss payee, as required pursuant to the terms hereof.

 

"Borrowing Base Certificate" means a certificate substantially in the form of Exhibit C‐2 hereto delivered to the Administrative Agent pursuant to Section 6.02(b) or more frequently at the option of the Borrower Representative and (a) setting forth each Real Property Asset of the Borrowers, identifying which such Real Property Assets are Borrowing Base Assets, and certifying the Collateral Value Amount with respect to each such Borrowing Base Asset, (b) certifying (based upon its own information and the information made available to the Parent by the applicable Operating Tenants, which information the Parent believes in good faith to be true and correct in all material respects) (i) as to the calculation of the Borrowing Base Amount as of the date of such certificate and (ii) that each Real Property Asset used in the calculation of the Borrowing Base Amount meets each of the criteria for qualification as a Borrowing Base Asset and (c) providing such other information with respect to the Real Property Assets and/or Borrowing Base Assets as the Administrative Agent may reasonably require.

"Business" or "Businesses" means, at any time, a collective reference to the businesses operated by the respective Borrowers or Parent, as applicable, at such time.

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"Business Day" means any day other than a Saturday, Sunday or other day on which commercial banks are authorized to close under the Laws of, or are in fact closed in, the State of Illinois or the state where the Administrative Agent's Office is located and, if such day relates to determining the Eurodollar Rate hereunder, means any such day on which dealings in Dollar deposits are conducted by and between banks in the London interbank Eurodollar market.

"Capitalized Loan Fees" means, with respect to the Parent and its Subsidiaries, and with respect to any period, (a) any up-front, closing or similar fees paid by such Person in connection with the incurrence or refinancing of Indebtedness during such period and (b) all other costs incurred in connection with the incurrence or refinancing of Indebtedness during such period, including, without limitation, appraisal fees paid to lenders, costs and expenses incurred in connection with Swap Contracts, engineering reports, phase I environmental report and other report review fees paid to lenders and legal fees, in each of the foregoing cases, that are capitalized on the balance sheet of such Person in accordance with GAAP and amortized over the term of such Indebtedness.

"Capital Lease" means a lease that would be capitalized on a balance sheet of the lessee prepared in accordance with GAAP.

"Capital Lease Obligation" means, with respect to a Capital Lease, the amount of rental and other obligations of the lessee thereunder which would, in accordance with GAAP, appear on a balance sheet of such lessee in respect of such Capital Lease.

"Capital Stock" means (a) in the case of a corporation, capital stock, (b) in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of capital stock, (c) in the case of a partnership, partnership interests (whether general or limited), (d) in the case of a limited liability company, membership interests and (e) any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person.

"Cash Equivalents" means (a) securities issued or directly and fully guaranteed or insured by (i) the United States or any agency or instrumentality thereof (provided that the full faith and credit of the United States is pledged in support thereof) having maturities of not more than twelve months from the date of acquisition, (b) time deposits and certificates of deposit of (i) any Lender, (ii) any domestic commercial bank of recognized standing having capital and surplus in excess of $500,000,000 or (iii) any bank whose short‐term commercial paper rating from S&P is at least A‐1 or the equivalent thereof or from Moody's is at least P‐1 or the equivalent thereof (each an "Approved Bank"), in each case with maturities of not more than two hundred seventy (270) days from the date of acquisition, (c) commercial paper and variable or fixed rate notes issued by any Approved Bank (or by the parent company thereof) or any variable rate notes issued by, or guaranteed by, any domestic corporation rated A‐1 (or the equivalent thereof) or better by S&P or P‐1 (or the equivalent thereof) or better by Moody's and maturing within six months of the date of acquisition, (d) repurchase agreements entered into by any Person with a bank or trust company (including any of the Lenders) or recognized securities dealer having capital and surplus in excess of $500,000,000 for direct obligations issued by or fully guaranteed by the United States in which such Person shall have a perfected first priority security interest (subject to no other Liens) and having, on the date of purchase thereof, a fair market value of at

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least 100% of the amount of the repurchase obligations and (e) Investments (classified in accordance with GAAP as current assets) in money market investment programs registered under the Investment Company Act of 1940, as amended, that are administered by reputable financial institutions having capital of at least $500,000,000 and the portfolios of which are limited to Investments of the character described in the foregoing subclauses hereof.

"Cash Lease Expense" means for any period, the aggregate amount of fixed and contingent rentals payable (on a cash basis) by the Parent and its Subsidiaries for such period with respect to leases of real and personal property, determined on a consolidated basis, provided that payments in respect of Capital Lease Obligations shall not constitute Cash Lease Expense.

"Cash Management Agreement" means any agreement existing as of the date hereof, including the Blocked Account Agreement, or from time to time during the term of the Loan among Administrative Agent, Borrowers, Borrower Representative on behalf of the Borrowers and/or Operators and a bank approved by Administrative Agent regarding the establishment and operation of a lockbox account, blocked account or similar account into which rents and other revenue are to be deposited.

"Casualty" has the meaning specified in Section 6.22.

"Change of Control" means the occurrence of any of the following events:  (a) any Person or two or more Persons acting in concert, other than the Permitted Investors, shall have acquired beneficial ownership, directly or indirectly, of, or shall have acquired by contract or otherwise, control over, voting stock of the Parent (or other securities convertible into such voting stock) representing forty-nine percent (49%) or more of the combined voting power of all voting stock of the Parent, (b) during any period of up to twenty-four (24) consecutive months, commencing after the Closing Date, individuals who at the beginning of such twenty-four (24) month period were directors of the Parent (together with any new director whose election by the Parent's Board of Directors or whose nomination for election by the Parent's shareholders was approved by a vote of at least fifty percent (50%) of the directors then still in office who either were directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the directors of the Parent then in office, or (c) the Parent shall fail to own (directly or indirectly) 100% of the Capital Stock of the Borrowers.  As used herein, "beneficial ownership" shall have the meaning provided in Rule 13d‐3 of the Securities and Exchange Commission under the Securities Exchange Act of 1934.

"Closing Date" means the date hereof.

"CMS" means the Centers for Medicare & Medicaid Services, the federal agency responsible for administering the Medicare, Medicaid, SCHIP (State Children's Health Insurance), HIPAA, CLIA (Clinical Laboratory Improvement Amendments), and any other federal health-related programs affecting the operation of the Borrowing Base Assets.

"Collateral" means a collective reference to all real and personal Property (including without limitation, the Borrowing Base Assets) with respect to which Liens in favor of the Administrative Agent are either executed, identified or purported to be granted pursuant to and in

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accordance with the terms of the Collateral Documents but excluding (a) revenues from therapy and home health services to independent and assisted living residents of the Borrowing Base Assets until such time as all or a portion of such revenue is deposited to an account subject to a Cash Management Agreement and (b) any other personal property specifically excluded pursuant to the terms of another Loan Document.

"Collateral Documents" means a collective reference to the Mortgage Instruments, the Security Agreement, the Assignments of Leases and any UCC financing statements securing payment hereunder, or any other documents securing the Obligations under this Credit Agreement or any other Credit Document.

"Collateral Value" means, with respect to any Borrowing Base Asset or Real Property Asset, an amount equal to the "as‐is" appraised value of such Real Property Asset (on an individual, as opposed to portfolio values, basis), as determined by the most recently delivered FIRREA‐compliant MAI appraisals commissioned, reviewed and approved by the Administrative Agent or otherwise acceptable to the Administrative Agent in its discretion.

"Collateral Value Amount" means an amount equal to (a) seventy percent (70%) multiplied by (b) the Collateral Value as of such date for each Borrowing Base Asset.

"Commitment" means, with respect to each Lender, the commitment of such Lender to make Advances under the Loan and to share in the Obligations hereunder up to such Lender's Commitment Percentage thereof.

"Commitment Percentage" means, at any time for each Lender, a fraction (expressed as a percentage carried to the ninth decimal place), the numerator of which is such Lender's Committed Amount and the denominator of which is the Aggregate Committed Amount.  The initial Commitment Percentages are set forth on Schedule 2.01.

"Commitment Period" means the period from and including the Closing Date to the earlier of (a) the Maturity Date or (b) the date on which the Commitments shall have been terminated as provided herein.

"Committed Amount" means, with respect to each Lender, the amount of such Lender's Commitment.  The initial Committed Amounts are set forth on Schedule 2.01.

"Commodity Exchange Act" means the Commodity Exchange Act (7 U.S.C. § 1 et seq.).

"Compensation Period" has the meaning provided in Section 2.10(c).

"Compliance Certificate" means a certificate substantially in the form of Exhibit C‐1; provided, that each such Compliance Certificate shall, in any case, include (without limitation): (a) a Borrowing Base Certificate in the form of Exhibit C‐2; (b) an updated version of Schedules 5.11, 5.12, 5.13 and 5.18, along with a summary of changes made to such schedules since the previous delivery thereof; provided, further, that upon the delivery of such updated schedules, then Schedule 5.11, Schedule 5.12, Schedule 5.13 and Schedule 5.18 shall each be deemed to have been amended and restated to read in accordance with the applicable updated schedule and the representations and warranties with respect thereto shall apply to such amended

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and restated schedules and (c) supporting documents and materials reasonably required by the Administrative Agent for the evidencing of the calculations and certifications made in connection therewith.

"CON" has the meaning provided in Section 6.20.

"Condemnation" has the meaning provided in Section 6.23.

"Confidential Information" has the meaning provided in Section 10.08.

"Consolidated EBITDA" means, for any period, for any Person, net income of such Person and its Subsidiaries for such period plus, without duplication and to the extent reflected as a charge in the statement of such consolidated net income for such period, the sum of (a) income tax expense, (b) interest expense of such Person and its Subsidiaries, amortization or write-off of debt discount and debt issuance costs and commissions, discounts and other fees and charges associated with Indebtedness whether paid, accrued or capitalized and including, without limitation, the interest component of Capital Lease Obligations, (c) depreciation and amortization expense, (d) net entrance fees received, (e) non-cash compensation expense, (f) amortization of intangibles (including, but not limited to, goodwill) and organization costs, (g) any extraordinary, unusual or non-recurring expenses or losses (including, whether or not otherwise includable as a separate item in the statement of such consolidated net income for such period, losses on sales of assets outside of the ordinary course of business), (h) such Person's share of distributions from Unconsolidated Joint Ventures and (i) any other non-cash charges (such as loss on extinguishment of debt, equity in loss of unconsolidated ventures, change in fair value of derivatives and amortization, straight line rent, etc.), and minus, to the extent included in the statement of such Consolidated Net Income for such period, the sum of (a) any extraordinary, unusual or non-recurring income or gains (including, whether or not otherwise includable as a separate item in the statement of such consolidated net income for such period, gains on the sales of assets outside of the ordinary course of business), (b) any other non-cash income and (c) any cash payments made during such period in respect of items described in clause (e) above subsequent to the fiscal quarter in which the relevant non-cash expenses or losses were reflected as a charge in the statement of Consolidated Net Income, all as determined on a consolidated basis.

"Consolidated EBITDAR" means for any period, Consolidated EBITDA of the Parent and its Subsidiaries for such period plus Cash Lease Expense of the Parent and its Subsidiaries for such period.

"Consolidated Fixed Charge Coverage Ratio" means for any period, the ratio of (a) Consolidated EBITDAR of the Parent and its Subsidiaries for such period to (b) Consolidated Fixed Charges for such period plus Cash Lease Expense for such period provided:

	
 

	
          (i)     the Consolidated EBITDA of any Person acquired by the Parent or its Subsidiaries during the last quarter of such four quarter period shall be included on a pro forma basis (assuming the consummation of such acquisition and the incurrence or assumption of any Indebtedness in connection therewith occurred on the first day of such quarter) determined on an annualized basis based on the most recent fiscal quarter of such

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Person for which financial statements are available if the consolidated balance sheet of such acquired Person and its consolidated Subsidiaries as at the end of the period preceding the acquisition of such Person and the related consolidated statements of income and stockholders' equity and of cash flows for the period, in each case, to the extent available, in respect of which Consolidated EBITDA is to be calculated (x) have been previously provided to the Administrative Agent and the Lenders and (y) either (1) have been reported on without a qualification arising out of the scope of the audit by independent certified public accountants of nationally recognized standing or (2) have been found reasonably acceptable by the Administrative Agent;

	
 

	
          (ii)     the Consolidated EBITDA of any Person acquired during the first, second or third quarters of such four quarter period shall be deemed to be equal to Consolidated EBITDA of such Person for the number of fiscal quarters elapsed since the date of acquisition (after giving effect to any pro forma adjustment made pursuant to clause (i) above) multiplied by 4, 2 and 4/3, respectively; and

	
 

	
          (iii)     the Consolidated EBITDA of any Person Disposed of by the Parent or its Subsidiaries during such period shall be excluded for such four quarter period (assuming the consummation of such Disposition and the repayment of any Indebtedness in connection therewith occurred on the first day of such period).

"Consolidated Fixed Charges" means for any period, the sum (without duplication) of (a) Consolidated Interest Expense of the Parent and its Subsidiaries for such period, (b) cash income taxes actually paid by the Parent or any of its Subsidiaries on a consolidated basis during such period, (c) scheduled payments made during such period on account of principal of Indebtedness of the Parent or any of its Subsidiaries, (d) dividends accrued (whether or not declared or payable) on the preferred stock of the Parent and its Subsidiaries during such period, (e) the Parent's and its Subsidiaries' pro rata share of all expenses and payments referred to in the preceding clauses (a) and (b) of any unconsolidated Person in which they have an equity interest and (f) maintenance capital expenditures in an amount equal to the product of (i) $575 per Senior Living Unit per annum, and (ii) the number of Senior Living Units owned or leased by the Parent and its Subsidiaries during such period measured at the end of the most recent calendar quarter ending prior to such date of determination.

"Consolidated Interest Expense" means with respect to any Person for any period, total cash interest expense (including that attributable to Capital Lease Obligations) of such Person and its Subsidiaries for such period with respect to all outstanding Indebtedness of such Person and its Subsidiaries (including, without limitation, all commissions, discounts and other fees and charges owed by such Person with respect to letters of credit and bankers' acceptance financing and net costs of such Person under Swap Contracts (but only to the extent included in interest expense in such Person's financial statement and to the extent actually paid) in respect of interest rates to the extent such net costs are allocable to such period in accordance with GAAP).

"Consolidated Net Income" means, with respect to any Person for any period, the consolidated net income (or loss) of such Person and its Subsidiaries for such period, determined on a consolidated basis in accordance with GAAP; provided, that in calculating Consolidated Net Income of the Parent and its Consolidated Subsidiaries for any period, there shall be excluded

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(a) the income (or deficit) of any Person accrued prior to the date it becomes a Subsidiary of the Parent or is merged into or consolidated with the Parent or any of its Subsidiaries, (b) the income (or deficit) of any Person (other than a Subsidiary of the Parent) in which the Parent or any of its Subsidiaries has an ownership interest, except to the extent that any such income is actually received by the Parent or such Subsidiary in the form of dividends or similar distributions and (c) the undistributed earnings of any Subsidiary of the Parent to the extent that the declaration or payment of dividends or similar distributions by such Subsidiary is not at the time permitted by the terms of any Contractual Obligations (other than under any Credit Document) or requirement of Law applicable to such Subsidiary.

"Consolidated Parties" means the Parent and its Consolidated Subsidiaries, as determined in accordance with GAAP.

"Consolidated Subsidiary" means at any date any Subsidiary or other entity the accounts of which would be consolidated with those of the Parent in its consolidated financial statements if such statements were prepared as of such date.

"Consolidated Tangible Net Worth" means (i) Stockholders' Equity plus (ii) Minority Interests plus (iii) cumulative net additions of Depreciation and Amortization Expense deducted in determining income for all fiscal quarters ending after the date of Parent's formation plus (iv) non-cash deferred gains from sale-leaseback transactions and deferred entrance fee revenue, minus (v) Intangible Assets, in each case, for the most recent fiscal quarter ending prior to such date for which financial statements are available.

"Contract Rate" means (a) the Eurodollar Rate plus the Applicable Percentage or (b) if the provisions of Section 3.02 or Section 3.03 apply and Borrowers elect to request Borrowings using the Base Rate, in which event it shall mean the Base Rate plus the Applicable Percentage; provided that in no event would use of the Base Rate plus Applicable Percentage increase or decrease the Lender's rate of return over what it would have received at the Eurodollar Rate plus the Applicable Percentage.

"Contractual Obligation" means, as to any Person, any provision of any security issued by such Person or of any agreement, instrument or other undertaking to which such Person is a party or by which it or any of its property is bound.

"Control" means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise.  "Controlling" and "Controlled" have meanings correlative thereto.  Without limiting the generality of the foregoing, a Person shall be deemed to be Controlled by another Person if such other Person possesses, directly or indirectly, power to vote twenty-five percent (25%) or more of the securities having ordinary voting power for the election of directors, managing general partners or the equivalent.

"Control Investment Affiliates" means, as to any Person that (a) directly or indirectly, is in control of, is controlled by, or is under common control with, such Person and (b) is organized by such Person primarily for the purpose of making equity or debt investments in one or more companies.  For purposes of this definition, "control" of a Person means the power, directly or

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indirectly, to direct or cause the direction of the management and policies of such Person, whether by contract or otherwise.

"COSO" means the Committee of Sponsoring Organizations of the Treadway Commission.

"Credit Agreement" has the meaning given to such term in the introductory paragraph hereof.

"Credit Documents" means this Credit Agreement, the Collateral Documents, the Notes, the Guaranty, the Proposal, the Lender Joinder Agreements, the Borrower Joinder Agreements, the Borrowing Base Certificates, the Hazardous Materials Indemnity Agreement and the Compliance Certificates.

"Credit Party" means, as of any date, the Borrowers or Guarantor; and "Credit Parties" means a collective reference to each of them.

"Daily Unused Fee" means, for any day during the Commitment Period, an amount equal to (a) one-half of one percent (0.50%) multiplied by (b) the amount by which the Aggregate Commitments exceed the sum of the Outstanding Amount of Obligations (including Swing Loans) as of the beginning of such day, (c) divided by 365.

"Debtor Relief Laws" means the Bankruptcy Code of the United States, and all other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief Laws of the United States or other applicable jurisdictions from time to time in effect and affecting the rights of creditors generally.

"Debt Yield" means the ratio, expressed as a percentage, as of the date of determination of (a) Adjusted Net Operating Income from Performing Assets as determined by the Administrative Agent for a particular period, to (b) the outstanding principal balance of the Loan as of such date.

"Default" means any event, act or condition that, with notice, the passage of time, or both, would constitute an Event of Default.

"Default Rate" means an interest rate equal to the Contract Rate plus five percent (5%) per annum.

"Defaulting Lender" means any Lender that (a) has failed to fund any portion of the Advances required to be funded by it hereunder within one Business Day of the date required to be funded by it hereunder and has not cured such failure prior to the date of determination, (b) has notified the Borrowers, the Administrative Agent or any Lender that it does not intend to comply with its funding obligations or has made a public statement to that effect with respect to its funding obligations hereunder or under other agreements in which it commits to extend credit, (c) has failed, within three Business Days after request by the Administrative Agent, to confirm in a manner satisfactory to the Administrative Agent that it will comply with its funding obligations, (d) has otherwise failed to pay over to the Administrative Agent or any other Lender

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any other amount required to be paid by it hereunder within one Business Day of the date when due, unless the subject of a good faith dispute, and has not cured such failure prior to the date of determination, or (e) has, or has a direct or indirect parent company that has, (i) become the subject of a proceeding under any Debtor Relief Law, (ii) had a receiver, conservator, trustee, administrator, assignee for the benefit of creditors or similar Person charged with reorganization or liquidation of its business or a custodian appointed for it, or (iii) taken any action in furtherance of, or indicated its consent to, approval of or acquiescence in any such proceeding or appointment; provided that a Lender shall not be a Defaulting Lender solely by virtue of the ownership or acquisition of any equity interest in that Lender or any direct or indirect parent company thereof by a Governmental Authority.

"Depreciation and Amortization Expense" means for any period, without duplication, the sum for such period of (i) total depreciation and amortization expense, whether paid or accrued, of the Parent and its Subsidiaries during such period, plus (ii) the Parent's and its Subsidiaries' pro rata share of depreciation and amortization expenses of Unconsolidated Joint Ventures for such period.  For purposes of this definition, the Parent's and its Subsidiaries' pro rata share of depreciation and amortization expense of any Unconsolidated Joint Venture shall be deemed equal to the product of (i) the depreciation and amortization expense of such Unconsolidated Joint Venture, multiplied by (ii) the percentage of the total outstanding Equity Interests of such Unconsolidated Joint Venture held by the Parent or such Subsidiary, expressed as a decimal.

"Determination Date" has the meaning specified in Section 2.03.

"Disposition" or "Dispose" means the sale, transfer, license, lease or other disposition (including any Sale and Leaseback Transaction) of any property by any Person, including any sale, assignment, transfer or other disposal, with or without recourse, of any notes or accounts receivable or any rights and claims associated therewith.

"Disqualified Stock" means any capital stock, warrants, options or other rights to acquire capital stock (but excluding any debt security which is convertible, or exchangeable, for capital stock), which, by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable), or upon the happening of any event, matures or is mandatorily redeemable prior to the Maturity Date, pursuant to a sinking fund obligation or otherwise, or is or may be redeemable at the option of the holder thereof, in whole or in part, prior to the Maturity Date.

"Dollar" or "$" means the lawful currency of the United States.

"Eligible Assignee" means (a) a Lender; (b) an Affiliate of a Lender; (c) an Approved Fund; (d) a Permitted Investor; and (e) any other Person (other than a natural person) approved by the Administrative Agent (such approval not to be unreasonably withheld), (such approval not to be unreasonably withheld or delayed); provided that notwithstanding the foregoing, "Eligible Assignee" shall not include the Parent or any of the Parent's Affiliates or Subsidiaries other than Permitted Investors.

"Eligible Ground Lease" means, at any time, a ground lease (a) under which a Borrower is the lessee or holds equivalent rights and is the fee owner of the improvements located thereon,

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(b) that has a remaining term of not less than thirty (30) years, (c) under which any required rental payment, principal or interest payment or other payment due under such lease from such Borrower to the ground lessor is not more than sixty (60) days past due and any required rental payment, principal or interest payment or other payment due to such Borrower under any sublease of the applicable real property lessor is not more than sixty (60) days past due, (d) where no party to such lease is subject to a then‐continuing Bankruptcy Event, (e) such ground lease (or a related document executed by the applicable ground lessor) contains customary provisions protective of any lender to the lessee and (f) where the Borrower's interest in the underlying Real Property Asset or the lease is not subject to (i) any Lien other than Permitted Liens and other encumbrances acceptable to the Administrative Agent and the Required Lenders, in their discretion, or (ii) any Negative Pledge.

"Eligible Tenant" means an Operating Tenant which (a) is not in arrears on any required rental payment, principal or interest payment, payments of real property taxes or payments of premiums on insurance policies with respect to its lease or sublease beyond the later of (i) the applicable grace period with respect thereto, if any, and (ii) forty-five (45) days; (b) is not subject to a then‐continuing Bankruptcy Event; and (c) is reasonably acceptable in all material respects to the Administrative Agent and the Required Lenders (it being understood that for purposes of this clause (c), each Operating Tenant set forth on Schedule 5.12 hereto on the Closing Date (as updated pursuant to any Borrower Joinder Agreement),  is deemed acceptable).

"Entrance Fee Facilities" means the two Borrowing Base Assets known as "Lake Seminole Square" located in  Seminole, Pinellas County, Florida and "Galleria Woods" located in Birmingham, Jefferson County, Alabama, and such other Borrowing Base Assets that are approved by Administrative Agent from time to time to be included in the Collateral that provide for the payment of entrance payments and/or fees.

"Environmental Laws" means any and all federal, state, local, and foreign statutes, laws, regulations, ordinances, rules, judgments, orders, decrees, permits, concessions, grants, franchises, licenses, agreements or governmental restrictions relating to pollution and the protection of the environment or the release of any materials into the environment, including those related to hazardous substances or wastes, air emissions and discharges to waste or public systems.

"Equity Interests" means, with respect to any Person, all of the shares of capital stock of (or other ownership or profit interests in) such Person, all of the warrants, options or other rights for the purchase or acquisition from such Person of shares of capital stock of (or other ownership or profit interests in) such Person, all of the securities convertible into or exchangeable for shares of capital stock of (or other ownership or profit interests in) such Person or warrants, rights or options for the purchase or acquisition from such Person of such shares (or such other interests), and all of the other ownership or profit interests in such Person (including partnership, member or trust interests therein), whether voting or nonvoting, and whether or not such shares, warrants, options, rights or other interests are outstanding on any date of determination.

"ERISA" means the Employee Retirement Income Security Act of 1974.

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"ERISA Affiliate" means any trade or business (whether or not incorporated) under common control with the Parent within the meaning of Section 414(b) or (c) of the Internal Revenue Code (and Sections 414(m) and (o) of the Internal Revenue Code for purposes of provisions relating to Section 412 of the Internal Revenue Code).

"ERISA Event" means (a) a Reportable Event with respect to a Pension Plan; (b) a withdrawal by the Parent or any ERISA Affiliate from a Pension Plan subject to Section 4063 of ERISA during a plan year in which it was a substantial employer (as defined in Section 4001(a)(2) of ERISA) or a cessation of operations that is treated as such a withdrawal under Section 4062(e) of ERISA; (c) a complete or partial withdrawal by the Parent or any ERISA Affiliate from a Multiemployer Plan or notification that a Multiemployer Plan is in reorganization; (d) the filing of a notice of intent to terminate, the treatment of a Plan amendment as a termination under Sections 4041 or 4041A of ERISA, or the commencement of proceedings by the PBGC to terminate a Pension Plan or Multiemployer Plan; (e) an event or condition that could reasonably be expected to constitute grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan or Multiemployer Plan; or (f) the imposition of any liability under Title IV of ERISA, other than for PBGC premiums due but not delinquent under Section 4007 of ERISA, upon the Parent or any ERISA Affiliate.

"Eurodollar Base Rate" means:

(a)            For any Interest Period, the rate determined by the Administrative Agent to be the offered rate for deposits of Dollars for the applicable Interest Period that appears on Reuters Screen LIBOR01 Page as of 11:00 a.m. (London, England time) on the second full Business Day next preceding the first day of each Interest Period.  In the event that such rate does not appear on the Reuters Screen LIBOR01 page at such time, the "Eurodollar Base Rate" shall be determined by reference to such other comparable publicly available service for displaying the offered rate for deposit in Dollars in the London interbank market as may be selected by the Administrative Agent and, in the absence of availability, such other method to determine such offered rate as may be selected by the Administrative Agent in its sole discretion.

 

(b)            Notwithstanding the foregoing, for purposes of this Agreement, the Eurodollar Base Rate shall in no event be less than 0.5% per annum at any time.

 

"Eurodollar Rate" means for any Interest Period, a rate per annum determined by the Administrative Agent pursuant to the following formula:

	
Eurodollar Rate  =

	
Eurodollar Base Rate

1.00 ‐ Eurodollar Reserve Percentage

"Eurodollar Reserve Percentage" means, for any day during any Interest Period, the reserve percentage (expressed as a decimal, carried out to five decimal places) in effect on such day, whether or not applicable to any Lender, under regulations issued from time to time by the FRB for determining the maximum reserve requirement (including any emergency, supplemental or other marginal reserve requirement) with respect to Eurocurrency funding (currently referred

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to as "Eurocurrency liabilities").  The Eurodollar Rate shall be adjusted automatically as of the effective date of any change in the Eurodollar Reserve Percentage.

"Event of Acceleration" means any of the events or conditions set forth in Sections 8.01(f), (g) or (j) with respect to the Parent or any Borrower.

"Event of Default" has the meaning provided in Section 8.01.

"Excluded Rate Contract Obligation" means, with respect to any Guarantor, any guarantee of any Swap Obligations under a Secured Rate Contract if, and only to the extent that and for so long as, all or a portion of the guarantee of such Guarantor of, or the grant by such Guarantor of a security interest to secure, such Swap Obligations under a Secured Rate Contract (or any guarantee thereof) is or becomes illegal under the Commodity Exchange Act or any rule regulation or order of the Commodity Futures Trading Commission (or the application or official interpretation of any thereof) by virtue of such Guarantor's failure for any reason to constitute an "eligible contract participant" as defined in the Commodity Exchange Act at the time the guarantee of such Guarantor or the grant of such security interest becomes effective with respect to such Swap Obligation under a Secured Rate Contract.  If a Swap Obligation under a Secured Rate Contract arises under a master agreement governing more than one swap, such exclusion shall apply only to the portion of such Swap Obligation under a Secured Rate Contract that is attributable to swaps for which such guarantee or security interest is or becomes illegal.

"Extension of Credit" means with respect to (a) any Lender, collectively, all Advances made by such Lender pursuant to this Agreement, and (b) the Swingline Lender, collectively, all Swing Loans made by Swingline Lender pursuant to this Agreement.

"Facility Operating Lease SNDA" shall have the meaning provided in the definition of "Borrowing Base Asset Deliverables" contained in this Section 1.01.

"Facility Operating Leases" means each lease or master lease with respect to any Borrowing Base Asset from the applicable Borrower as lessor, to an Eligible Tenant, which, in the reasonable judgment of the Administrative Agent, is a triple net lease such that such Eligible Tenant is required to pay all taxes, utilities, insurance, maintenance, casualty insurance payments and other expenses with respect to the subject Borrowing Base Asset (whether in the form of reimbursements or additional rent) in addition to the base rental payments required thereunder such that net operating income for such Borrowing Base Asset (before non-cash items) equals the base rent paid thereunder; provided, that each such lease or master lease shall be in form and substance reasonably satisfactory to the Administrative Agent; as the foregoing may be amended and extended from time to time after the Closing Date in accordance with and subject to the terms of this Agreement and the Facility Operating Lease SNDA applicable thereto.

"Federal Funds Rate" means, for any day, the rate per annum equal to the weighted average of the rates on overnight federal funds transactions with members of the Federal Reserve System arranged by federal funds brokers on such day, as published by the Federal Reserve Bank of New York on the Business Day immediately succeeding such day; provided that (a) if such day is not a Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the immediately preceding Business Day as so published on the immediately

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succeeding Business Day, and (b) if no such rate is so published on such immediately succeeding Business Day, the Federal Funds Rate for such day shall be the average rate (rounded upward, if necessary, to the next 1/100th of 1%) charged to Bank of America on such day on such transactions as determined by the Administrative Agent.

"FIG" means Fortess Investment Group LLC.

"FIRREA" means the Financial Institutions Reform, Recovery and Enforcement Act and the regulations promulgated pursuant to such act.

"Flood Hazard Property" has the meaning provided in the definition of "Borrowing Base Asset Deliverables" contained in this Section 1.01.

"Foreign Lender" has the meaning provided in Section 10.15(a)(i).

"FRB" means the Board of Governors of the Federal Reserve System of the United States.

"Fund" means any Person (other than a natural person) engaged in making, purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in the ordinary course of its business.

"Funded Debt" means, as to any Person (or consolidated group of Persons) at a particular time, without duplication, all of the following, whether or not included as indebtedness or liabilities in accordance with GAAP:

(a)            all obligations for borrowed money, whether current or long‐term (including the Obligations hereunder), and all obligations evidenced by bonds, debentures, notes, loan agreements or other similar instruments;

 

(b)            all purchase money indebtedness (including indebtedness and obligations in respect of conditional sales and title retention arrangements, except for customary conditional sales and title retention arrangements with suppliers that are entered into in the ordinary course of business) and all indebtedness and obligations in respect of the deferred purchase price of property or services (other than trade accounts payable incurred in the ordinary course of business and payable on customary trade terms);

 

(c)            all direct obligations under letters of credit (including standby and commercial), bankers' acceptances and similar instruments (including bank guaranties, surety bonds, comfort letters, keep‐well agreements and capital maintenance agreements) to the extent such instruments or agreements support financial, rather than performance, obligations;

 

(d)            the Attributable Principal Amount of Capital Leases and Synthetic Leases;

 

(e)            the Attributable Principal Amount of Securitization Transactions;

 

(f)            all preferred stock and comparable equity interests providing for mandatory redemption, sinking fund or other like payments;

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(g)            Support Obligations in respect of Funded Debt of another Person (other than Persons in such group, if applicable); and

 

(h)            Funded Debt of any partnership or joint venture or other similar entity in which such Person is a general partner or joint venturer, and, as such, has personal liability for such obligations, but only to the extent there is recourse to such Person (or, if applicable, any Person in such consolidated group) for payment thereof.

 

For purposes hereof, the amount of Funded Debt shall be determined based on (i) the outstanding principal amount in the case of borrowed money indebtedness under clause (a), (ii) the outstanding purchase money indebtedness and the deferred purchase obligations under clause (b), (iii) the maximum amount available to be drawn in the case of letter of credit obligations and the other obligations under clause (c), and (iv) the amount of Funded Debt that is the subject of the Support Obligations in the case of Support Obligations under clause (g).  For purposes of clarification, "Funded Debt" of Persons constituting a consolidated group shall not include inter‐company indebtedness of such Persons, general accounts payable of such Persons which arise in the ordinary course of business, accrued expenses of such Persons incurred in the ordinary course of business or minority interests in joint ventures or limited partnerships (except to the extent set forth in clause (h) above).

"GAAP" means generally accepted accounting principles in effect in the United States as set forth in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board from time to time applied on a consistent basis, subject to the provisions of Section 1.03.

"Governmental Authority" means any nation or government, any state or other political subdivision thereof, and any agency, authority, instrumentality, regulatory body, court, administrative tribunal, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government.

"Guarantor" means the Parent.

"Guaranty" means the Amended and Restated Guaranty in the form of Exhibit G dated as of the date hereof executed by the Parent, as amended, supplemented or otherwise modified from time to time.

"Hazardous Materials Indemnity Agreement" means the Second Amended and Restated Hazardous Materials Indemnity Agreement dated as of the date hereof executed by the Parent, as amended, supplemented or otherwise modified from time to time.

"Hazardous Substance" means any toxic or hazardous substance, including petroleum and its derivatives regulated under the Environmental Laws.

"Healthcare Facilities" means any skilled nursing facilities, mentally retarded and developmentally disabled facilities, rehab hospitals, long term acute care facilities, intermediate care facilities for the mentally disabled, medical office buildings, domestic assisted living

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facilities, independent living facilities or Alzheimer's care facilities and any ancillary businesses that are incidental to the foregoing.

"Healthcare Laws" has the meaning provided in Section 5.19(a).

"HIPAA" means the Health Insurance Portability and Accountability Act of 1996 and the related regulations set forth at 45 CFR Parts 160 and 164.

"HMO" means any health maintenance organization, managed care organization, any Person doing business as a health maintenance organization or managed care organization, or any Person required to qualify or be licensed as a health maintenance organization or managed care organization under applicable federal or state law (including, without limitation, HMO Regulations).

"Included Therapy Revenue" means revenues from therapy and home health services to independent and assisted living residents of the Borrowing Base Assets which are deposited to an account subject to a Cash Management Agreement.

"Increase Option" has the meaning provided in Section 2.01(b).

"Indebtedness" means, as to any Person at a particular time, without duplication, all of the following, whether or not included as indebtedness or liabilities in accordance with GAAP:

(a)            all Funded Debt;

 

(b)            all contingent obligations under letters of credit (including standby and commercial), bankers' acceptances and similar instruments (including bank guaranties, surety bonds, comfort letters, keep‐well agreements and capital maintenance agreements) to the extent such instruments or agreements support financial, rather than performance, obligations;

 

(c)            net obligations under any Swap Contract;

 

(d)            Support Obligations in respect of Indebtedness of another Person; and

 

(e)            Indebtedness of any partnership or joint venture or other similar entity in which such Person is a general partner or joint venturer, and, as such, has personal liability for such obligations, but only to the extent there is recourse to such Person for payment thereof.

 

For purposes hereof, the amount of Indebtedness shall be determined based on Swap Termination Value in the case of net obligations under Swap Contracts under clause (c) and based on the outstanding principal amount of the Indebtedness that is the subject of the Support Obligations in the case of Support Obligations under clause (d).

"Indemnified Liabilities" has the meaning provided in Section 10.05.

"Indemnitees" has the meaning provided in Section 10.05.

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"Intangible Assets" means assets that are considered intangible assets under GAAP, including customer lists, goodwill, computer software, copyrights, trade names, trademarks, patents and Capitalized Loan Fees.

"Interest Period" means each period commencing on the first day of a calendar month and ending on the date three months thereafter, provided that:

(a)            any Interest Period that would otherwise end on a day that is not a Business Day shall be extended to the immediately succeeding Business Day unless such Business Day falls in another calendar month, in which case such Interest Period shall end on the immediately preceding Business Day;

 

(b)            any Interest Period that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of the calendar month at the end of such Interest Period; and

 

(c)            no Interest Period shall extend beyond the Maturity Date.

 

"Internal Control Event" means a material weakness in, or fraud that involves management or other employees who have a significant role in, the Borrower's internal controls over financial reporting, in each case as described in the Securities Laws.

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

"Investment" means, as to any Person, any direct or indirect acquisition or investment by such Person, whether by means of (a) the purchase or other acquisition of Capital Stock of another Person, (b) a loan, advance or capital contribution to, guaranty or assumption of debt of, or purchase or other acquisition of any other debt or equity participation or interest in, another Person, including any partnership or joint venture interest in such other Person, or (c) the purchase or other acquisition (in one transaction or a series of transactions) of assets of another Person that constitute a business unit.  For purposes of covenant compliance, the amount of any Investment shall be the amount actually invested, without adjustment for subsequent increases or decreases in the value of such Investment.

"IRS" means the United States Internal Revenue Service.

"Joint Commission" has the meaning given to such term in Section 5.19(b).

"Laws" means, collectively, all international, foreign, federal, state and local statutes, treaties, rules, guidelines, regulations, ordinances, codes and administrative or judicial precedents or authorities, including the interpretation or administration thereof by any Governmental Authority charged with the enforcement, interpretation or administration thereof, and all applicable administrative orders, directed duties, requests, licenses, authorizations and permits of, and agreements with, any Governmental Authority, in each case whether or not having the force of law.

Page 25

 

"Lender" means each of the Persons identified as a "Lender" on the signature pages hereto and each Person who joins as a Lender pursuant to the terms hereof, together with their respective successors and assigns.

"Lender Joinder Agreement" means a joinder agreement in the form of Exhibit F, executed and delivered in accordance with the provisions of Section 2.01(b).

"Lending Office" means, as to any Lender, the office or offices of such Lender set forth in such Lender's Administrative Questionnaire or such other office or offices as a Lender may from time to time notify the Borrowers and the Administrative Agent.

"Licenses" has the meaning provided in Section 5.19(b)(i).

"Lien" means any mortgage, deed of trust, deed to secured debt, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or other), charge, or preference, priority or other security interest or preferential arrangement of any kind or nature whatsoever (including any conditional sale or other title retention agreement, and any financing lease having substantially the same economic effect as any of the foregoing).

"Loan" means, collectively, the Revolving Loan and any Swing Loan to be made pursuant to the terms of this Credit Agreement.

"Loan Borrowing Notice" means a notice of a Borrowing, which, if in writing, shall be substantially in the form of Exhibit A.

"Management Agreements" means, collectively, those certain agreements between Borrowers and the Property Managers or between Operating Tenants and the Property Managers for the management of certain of the Borrowing Base Assets, and as described on Part II of Schedule 5.12.

"Material Action" means to file any insolvency, or reorganization case or proceeding, to institute proceedings to have any Borrower or any Credit Party be adjudicated bankrupt or insolvent, to institute proceedings under any applicable insolvency law, to seek any relief under any law relating to relief from debts or the protection of debtors, to consent to the filing or institution of bankruptcy or insolvency proceedings against any Borrower or any Credit Party, to file a petition seeking, or consent to, reorganization or relief with respect to any Borrower or any Credit Party under any applicable federal or state law relating to bankruptcy or insolvency, to seek or consent to the appointment of a receiver, liquidator, assignee, trustee, sequestrator, custodian, or any similar official of or for any Borrower or any Credit Party or a substantial part of its respective property, to make any assignment for the benefit of creditors of any Borrower or any Credit Party, the admission in writing by any Borrower or any Credit Party of such Person's inability to pay its debts generally as they become due, or to take action in furtherance of any of the foregoing.

"Material Adverse Effect" means a material adverse effect on (i) the condition (financial or otherwise), operations, business, assets, liabilities or prospects of (A) the Parent and its Consolidated Subsidiaries taken as a whole or (B) the Borrowers taken as a whole, (ii) the ability of the Parent or the Borrowers to perform any material obligation under the Credit Documents,

Page 26

 

or (iii) the rights and remedies of the Administrative Agent and the Lenders under the Credit Documents.

"Material Contract" means, collectively, any Facility Operating Lease, any property management agreement, any cash management agreement, or any similar agreement with respect to any Borrowing Base Asset.

"Maturity Date" means, as applicable, the earlier of (a) March 31, 2018, or (b) any earlier date on which the all of the Obligations are required to be paid in full, by acceleration or otherwise, under this Agreement or any of the other Credit Documents.

"Maximum Rate" has the meaning provided in Section 10.10.

"Medicaid" means the medical assistance programs administered by state agencies and approved by CMS pursuant to the terms of Title XIX of the Social Security Act, codified at 42 U.S.C. 1396 et seq.

"Medical Services" means medical and health care services provided to a Person, including, but not limited to, medical and health care services provided to a Person which are covered by a policy of insurance, and includes physician services, nurse and therapist services, dental services, hospital services, skilled nursing facility services, comprehensive outpatient rehabilitation services, home health care services, residential and out-patient behavioral healthcare services, and medicine or health care equipment provided to a Person for a necessary or specifically requested valid and proper medical or health purpose.

"Medicare" means the program of health benefits for the aged and disabled administered by CMS pursuant to the terms of Title XVIII of the Social Security Act, codified at 42 U.S.C. 1395 et seq.

"Minority Interests" means that portion of "minority interests" as set forth in the Parent's financial statements which is attributable to the ownership interest in the Parent of Persons other than the Permitted Investors.

"Moody's" means Moody's Investors Service, Inc.  and any successor thereto.

"Mortgage Instrument" means, for any Real Property Asset, a first lien priority mortgage, deed of trust or deed to secure debt in favor of the Administrative Agent (for the benefit of the Lenders) with respect to such Real Property Asset.  Each Mortgage Instrument shall be in form and substance satisfactory to the Administrative Agent and suitable for recording in the applicable jurisdiction.

"Mortgage Policies" shall have the meaning assigned to such term in the definition of "Borrowing Base Asset Deliverables" contained in this Section 1.01.

"Multiemployer Plan" means any employee benefit plan of the type described in Section 4001(a)(3) of ERISA, to which the Parent or any ERISA Affiliate makes or is obligated to make contributions, or during the preceding five plan years, has made or been obligated to make contributions.

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"Negative Pledge" means any agreement (other than this Credit Agreement or any other Credit Document) that in whole or in part prohibits the creation of any Lien on any assets of a Person; provided, however, that an agreement that establishes a maximum ratio of unsecured debt to unencumbered assets, or of secured debt to total assets, or that otherwise conditions a Person's ability to encumber its assets upon the maintenance of one or more specified ratios that limit such Person's ability to encumber its assets but that do not generally prohibit the encumbrance of its assets, or the encumbrance of specific assets, shall not constitute a "Negative Pledge" for purposes of this Credit Agreement.

"Net Entrance Fees" means the entrance fee sales at the Entrance Fee Facilities, less any refunds paid, during the period in question.

"Notes" or "Notes" means (a) the note or notes in the form of Exhibit B attached hereto given to the Lenders to evidence the Revolving Loan, as amended, restated, modified, supplemented, extended, renewed or replaced and (b) the Swingline Notes.

"Obligations" means, without duplication, all advances to, and debts, liabilities, obligations, covenants and duties of, any Credit Party arising under any Credit Document or otherwise with respect to the Loan, whether direct or indirect (including those acquired by assumption), absolute or contingent, due or to become due, now existing or hereafter arising and including interest and fees that accrue after the commencement by or against any Credit Party or any Affiliate thereof of any proceeding under any Debtor Relief Laws naming such Person as the debtor in such proceeding, regardless of whether such interest and fees are allowed claims in such proceeding.

"Occupancy Rate" means, with respect to any Real Property Asset, the percentage of (a) total patient days relating to such Real Property Asset for any reporting period divided by (b) the product of (i) total number of  in-service beds  (as determined as of the date such Real Property Asset qualifies as a Borrowing Base Asset) at such Real Property Asset and (ii) the total days in such reporting period.

"Operating Tenant" means any Person who is a lessee with respect to the Facility Operating Leases or any other lease of an entire Borrowing Base Asset held by any Borrower as lessor or as an assignee of the lessor thereunder.

"Operator", individually, and "Operators", collectively, means the applicable Property Manager, Operating Tenant and any successor to such Operator approved by Administrative Agent.  If there exists a Property Manager, Operating Tenant, or any combination thereof, with respect to any Borrowing Base Asset, then "Operator" shall refer to all such entities, collectively and individually as applicable and as the context may require.

"Organization Documents" means, (a) with respect to any corporation, the certificate or articles of incorporation and the bylaws (or equivalent or comparable constitutive documents with respect to any non‐U.S. jurisdiction); (b) with respect to any limited liability company, the certificate or articles of formation or organization and operating agreement; and (c) with respect to any partnership, joint venture, trust or other form of business entity, the partnership, joint venture or other applicable agreement of formation or organization and any agreement,

Page 28

 

instrument, filing or notice with respect thereto filed in connection with its formation or organization with the applicable Governmental Authority in the jurisdiction of its formation or organization and, if applicable, any certificate or articles of formation or organization of such entity.

"Original Closing Date" means January 31, 2011.

"Other Taxes" has the meaning provided in Section 3.01.

"Outstanding Amount" means the aggregate outstanding principal amount of the Loan after giving effect to any Borrowings and prepayments or repayments of the Loan, as the case may be, occurring on such date.

"Outstanding Amount Percentage" means a fraction, stated as a percentage, the numerator of which is the Outstanding Amount and the denominator of which is the Aggregate Committed Amount.

"Overpaying Borrower" has the meaning provided in Section 2.13(j).

"Overpayment Amount" has the meaning provided in Section 2.13(j).

"Parent" means Brookdale Senior Living Inc., a Delaware corporation.

"Parent Cash Management System" has the meaning provided in Section 6.24.

"Parent Sweep Account" means the account established at Bank of America, N.A., or another national bank or other financial institution approved by Administrative Agent into which deposits from the Portfolio General Receivables Account will be swept on a daily basis, all as more fully described in Section 6.24.

"Participant" has the meaning provided in Section 10.07(d).

"Patriot Act" means the USA Patriot Act, Pub. L. No. 107-56 et seq.

"Payment Date" has the meaning provided in Section 2.04(a)(ii), and is the date that a regularly scheduled payment of interest is due.

"PBGC" means the Pension Benefit Guaranty Corporation.

"Pension Plan" means any "employee pension benefit plan" (as such term is defined in Section 3(2) of ERISA), other than a Multiemployer Plan, that is subject to Title IV of ERISA and is sponsored or maintained by the Parent or any ERISA Affiliate or to which the Parent or any ERISA Affiliate contributes or has an obligation to contribute, or in the case of a multiple employer or other plan described in Section 4064(a) of ERISA, has made contributions at any time during the immediately preceding five plan years.

"Performing Assets" means Borrowing Base Assets that as of any Determination Date have positive ANOI.

Page 29

 

"Permitted Investors" means, collectively, FIG and its Control Investment Affiliates, provided that, the definition of "Permitted Investors" shall not include any Control Investment Affiliate whose primary purpose is the operation of an on-going business (excluding any business whose primary purpose is the investment of capital or assets).

"Permitted Liens" means, as to any Person: (a) Liens securing taxes, assessments and other charges or levies imposed by any Governmental Authority (excluding any Lien imposed pursuant to any of the provisions of ERISA), in each case, which are not yet due and payable; (b) Liens evidencing the claims of materialmen, mechanics, carders, warehousemen or landlords for labor, materials, supplies or rentals, in each case, incurred in the ordinary course of business and which are not at the time required to be paid or discharged; provided, that with respect to any Borrowing Base Asset, no exception is taken therefor in the related Mortgage Policy or such Mortgage Policy otherwise affirmatively insures over such Liens in form and substance satisfactory to the Administrative Agent; (c) Liens consisting of deposits or pledges made, in the ordinary course of business, in connection with, or to secure payment of, obligations under workmen's compensation, unemployment insurance or similar applicable Laws; (d) zoning restrictions, easements, rights‐of‐way, covenants, reservations and other rights, restrictions or encumbrances of record on the use of Real Property Assets, which do not materially detract from the value of such property or materially impair the use thereof for the business of such Person; (e) Liens described on Schedule 7.01 and, with respect to the Borrowing Base Assets, as set forth on the Mortgage Policies (or updates thereto) delivered in connection herewith; and (f) Liens, if any, in favor of the Administrative Agent for the benefit of the Lenders.

"Person" means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, Governmental Authority or other entity.

"Plan" means any "employee benefit plan" (as such term is defined in Section 3(3) of ERISA) established by the Parent or, with respect to any such plan that is subject to Section 412 of the Internal Revenue Code or Title IV of ERISA, any ERISA Affiliate.

"Portfolio General Receivables Account" means an account established at Wells Fargo Bank, National Association, or another national bank or other financial institution approved by Administrative Agent into which the Borrowers will deposit, or cause to be deposited, all general receivables and other income generated from the operations of the Borrowing Base Assets and proceeds of the Third Party Payor Receivables Accounts, and which account will be (a) in the name of Borrower Representative, as agent for all Borrowers, and (b) subject to a Blocked Account Agreement in form satisfactory to Administrative Agent.

"Principal Obligations" has the meaning provided in Section 2.06(b).

"Prohibited Person" means any Person (i) listed in the annex to, or who is otherwise subject to the provisions of, Executive Order No. 13224 on Terrorist Financing, effective September 24, 2001, and relating to Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism (the "Executive Order"); (ii) that is owned or controlled by, or acting for or on behalf of, any person or entity that is listed in the annex to, or is otherwise subject to the provisions, of the Executive Order; (iii) with whom a Person is prohibited from dealing or otherwise engaging in any transaction by any terrorism or

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money laundering Law, including the Executive Order; (iv) who commits, threatens or conspires to commit or supports "terrorism" as defined in the Executive Order; (v) that is named as a "specially designated national and blocked person" on the most current list published by the U.S. Treasury Department Office of Foreign Assets Control at its official website or at any replacement website or other replacement official publication of such list; or who is an Affiliate of a Person listed in clauses (i) - (v) above.

"Property Manager" means any manager under the Management Agreements listed on Part II of Schedule 5.12 and any successor property manager approved by Administrative Agent.

"Proposal" means the Proposal from GECC to the Parent, dated February 22, 2013, and accepted by the Parent on February 22, 2013 with respect to the 2011 Credit Agreement and this Credit Agreement.

"Qualified ECP Guarantor" means, in respect of any Swap Obligation under a Secured Rate Contract, each Credit Party that has total assets exceeding $10,000,000 at the time the relevant guarantee or grant of the relevant security interest becomes effective with respect to such Swap Obligation under a Secured Rate Contract or such other person as constitutes an "eligible contract participant" under the Commodity Exchange Act and can cause another person to qualify as an "eligible contract participant" at such time by entering into a keepwell under Section 1a(18)(A)(v)(II) of the Commodity Exchange Act.

"Real Estate Taxes" means any real estate taxes and assessments, franchise taxes and charges, and other governmental charges that may become a Lien upon the Borrowing Base Assets or become payable during the term of the Loan.

"Real Property Asset" means, a parcel of real property, together with all improvements (if any) thereon, owned in fee simple or leased pursuant to an Eligible Ground Lease by any Person; "Real Property Assets" means a collective reference to all Real Property Assets.

"Reduction Fee" means an amount calculated using the following formula: two-fifths of  (.50% x A x B) divided by 365, where A is the amount by which the Aggregate Commitments are reduced pursuant to Section 2.01(c) and B is the number of days remaining in the term of the Loan as of the date of the reduction.

"Register" has the meaning provided in Section 10.07(c).

"Registered Public Accounting Firm" has the meaning specified in the Securities Laws and shall be independent of the Borrowers as prescribed by the Securities Laws.

"Regulation T" means Regulation T of the Board of Governors of the Federal Reserve System, as in effect from time to time.

"Regulation U" means Regulation U of the Board of Governors of the Federal Reserve System, as in effect from time to time.

"Regulation X" means Regulation X of the Board of Governors of the Federal Reserve System, as in effect from time to time.

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"Related Parties" means, with respect to any Person, such Person's Affiliates and the partners, directors, officers, employees, agents and advisors of such Person and of such Person's Affiliates.

"Release Price" has the meaning provided in Section 7.12.

"Replacement Escrow Fund" has the meaning provided in Section 2.15(b).

"Reportable Event" means any of the events set forth in Section 4043(c) of ERISA, other than events for which the thirty‐day notice period has been waived.

"Required Lenders" means, as of any date of determination, three or more Lenders (except to the extent less than three Lenders exists as of such date in which event it shall mean two Lenders) having at least (i) 66‐2/3% of the Aggregate Commitments or, (ii) if the commitments of each Lender to make Advances have been terminated pursuant to Article VIII, Lenders holding in the aggregate at least 66‐2/3% of the Obligations (other than the Swing Loans); provided that the Commitment of, and the portion of the Obligations held or deemed held by, any Defaulting Lender shall be excluded for purposes of making a determination of Required Lenders.

"Responsible Officer" means the chief executive officer, the president, a co-president, an executive vice-president, the chief operating officer and the chief financial officer of any Credit Party.  Any document delivered hereunder that is signed by a Responsible Officer of a Credit Party shall be conclusively presumed to have been authorized by all necessary corporate, partnership and/or other action on the part of such Credit Party and such Responsible Officer shall be conclusively presumed to have acted on behalf of such Credit Party.

"Restoration Threshold" means on a per Borrowing Base Asset basis, the lesser of (a) $1,000,000 or (b) an amount equal to 20% times the pre-casualty value of the affected Borrowing Base Asset, as determined by Administrative Agent.

"Revolving Lenders" means all Lenders other than the Swingline Lender.

"Revolving Loan" means the Advances to be made by the Lenders from time to time pursuant to the terms of Section 2.01.

"S&P" means Standard & Poor's Ratings Services, a division of The McGraw‐Hill Companies, Inc.  and any successor thereto.

"Sale and Leaseback Transaction" means, with respect to the Parent or any Subsidiary, any arrangement, directly or indirectly, with any person whereby the Parent or such Subsidiary shall sell or transfer any property, real or personal, used or useful in its business, whether now owned or hereafter acquired, and thereafter rent or lease such property or other property that it intends to use for substantially the same purpose or purposes as the property being sold or transferred.

"Sarbanes‐Oxley" means the Sarbanes‐Oxley Act of 2002.

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"SEC" means the Securities and Exchange Commission, or any Governmental Authority succeeding to any of its principal functions.

"Secured Rate Contract"  means any Swap Contract between the Borrowers and the counterparty thereto, which (i) has been provided or arranged by GECC or any Lender hereunder or an Affiliate of GECC or any Lender, or (ii) Administrative Agent has acknowledged in writing constitutes a "Secured Rate Contract" hereunder.

"Securities Laws" means the Securities Act of 1933, the Securities Exchange Act of 1934, Sarbanes‐Oxley and the applicable accounting and auditing principles, rules, standards and practices promulgated, approved or incorporated by the SEC or the Public Company Accounting Oversight Board, as each of the foregoing may be amended and in effect on any applicable date hereunder.

"Securitization Transaction" means any financing or factoring or similar transaction (or series of such transactions) entered by any member of the Consolidated Parties pursuant to which such member of the Consolidated Parties may sell, convey or otherwise transfer, or grant a security interest in, accounts, payments, receivables, rights to future lease payments or residuals or similar rights to payment (the "Securitization Receivables") to a special purpose subsidiary or affiliate (a "Securitization Subsidiary") or any other Person.

"Security Agreement" means the Second Amended and Restated Security Agreement dated as of March 28, 2013 in the form of Exhibit H, as amended, supplemented, restated or otherwise modified from time to time.

"Senior Housing Units" means, collectively, each skilled nursing bed, assisted living unit, memory care unit and independent living unit located on and comprising the Borrowing Base Assets.

"Solvent" means, with respect to any person on a particular date, that on such date (a) the fair value of the property of such Person is greater than the total amount of liabilities, including, without limitation, contingent liabilities, of such Person, (b) the present fair saleable value of the assets of such Person is not less than the amount that will be required to pay the probable liability of such Person on its debts as they become absolute and matured, (c) such Person is able to realize upon its assets and pay its debts and other liabilities, contingent obligations and other commitments as they mature, (d) such Person does not intend to, and does not believe that it will, incur debts or liabilities beyond such Person's ability to pay as such debts and liabilities mature, and (e) such Person is not engaged in a business or a transaction, and is not about to engage in a business or a transaction, for which such Person's property would constitute unreasonably small capital after giving due consideration to the prevailing practice in the industry in which such Person is engaged.  In computing the amount of contingent liabilities at any time, it is intended that such liabilities will be computed at the amount which, in light of all the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability.

"State Regulator" means the applicable state department of health or other applicable state regulatory agency with jurisdiction over the Borrowers, the Operators or the Real Property

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Assets with respect to the Healthcare Laws affecting the maintenance, use or operation of the Real Property Assets or the provision of services to the occupants of the Real Property Assets.

"Stockholders' Equity" means, as of any date of determination, the consolidated Stockholders' Equity of the Parent as at such date determined in accordance with GAAP and shown in the financial consolidated statements of the Parent and its Subsidiaries, provided that, there shall be excluded from Stockholders' Equity any amount attributable to Disqualified Stock.

"Subsidiary" of a Person means a corporation, partnership, joint venture, limited liability company or other business entity of which a majority of the shares of securities or other interests having ordinary voting power for the election of directors or other governing body (other than securities or interests having such power only by reason of the happening of a contingency) are at the time beneficially owned, or the management of which is otherwise controlled, directly, or indirectly through one or more intermediaries, or both, by such Person.  Unless otherwise provided, "Subsidiary" shall refer to a Subsidiary of the Parent and shall include all of the Borrowers.

"Support Obligations" means, as to any Person, (a) any obligation, contingent or otherwise, of such Person guaranteeing or having the economic effect of guaranteeing any Indebtedness or other obligation payable or performable by another Person (the "primary obligor") in any manner, whether directly or indirectly, and including any obligation of such Person, direct or indirect, (i) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation, (ii) to purchase or lease property, securities or services for the purpose of assuring the obligee in respect of such Indebtedness or other obligation of the payment or performance of such Indebtedness or other obligation, (iii) to maintain working capital, equity capital or any other financial statement condition or liquidity or level of income or cash flow of the primary obligor so as to enable the primary obligor to pay such Indebtedness or other obligation, or (iv) entered into for the purpose of assuring in any other manner the obligee in respect of such Indebtedness or other obligation of the payment or performance thereof or to protect such obligee against loss in respect thereof (in whole or in part), or (b) any Lien on any assets of such Person securing any Indebtedness or other obligation of any other Person, whether or not such Indebtedness or other obligation is assumed by such Person.  The amount of any Support Obligations shall be deemed to be an amount equal to the stated or determinable amount of the related primary obligation, or portion thereof, in respect of which such Support Obligation is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof as determined by the guaranteeing Person in good faith.

"Swap Contract" means (a) any and all rate swap transactions, basis swaps, credit derivative transactions, forward rate transactions, commodity swaps, commodity options, forward commodity contracts, equity or equity index swaps or options, bond or bond price or bond index swaps or options or forward bond or forward bond price or forward bond index transactions, interest rate options, forward foreign exchange transactions, cap transactions, floor transactions, collar transactions, currency swap transactions, cross‐currency rate swap transactions, currency options, spot contracts, or any other similar transactions or any combination of any of the foregoing (including any options to enter into any of the foregoing), whether or not any such transaction is governed by or subject to any master agreement, and

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(b) any and all transactions of any kind, and the related confirmations, that are subject to the terms and conditions of, or governed by, any form of master agreement published by the International Swaps and Derivatives Association, Inc., any International Foreign Exchange Master Agreement, or any other master agreement (any such master agreement, together with any related schedules, a "Master Agreement"), including any such obligations or liabilities under any Master Agreement.

"Swap Obligation" means, with respect to any Guarantor, any obligation to pay or perform under any agreement, contract or transaction that constitutes a "swap" within the meaning of Section 1a(47) of the Commodity Exchange Act.

"Swap Termination Value" means, in respect of any one or more Swap Contracts, after taking into account the effect of any legally enforceable netting agreement relating to such Swap Contracts, (a) for any date on or after the date such Swap Contracts have been closed out and termination values determined in accordance therewith, such termination values, and (b) for any date prior to the date referenced in clause (a), the amounts determined as the mark‐to‐market values for such Swap Contracts, as determined based upon one or more mid‐market or other readily available quotations provided by any recognized dealer in such Swap Contracts (which may include a Lender or any Affiliate of a Lender).

"Swing Loan" has the meaning provided in Section 2.05.

"Swingline Commitment" means the amount of up to $25,000,000.00.

"Swingline Lender" means, each in its capacity as Swingline Lender hereunder, GECC or, upon the resignation of GECC as Administrative Agent hereunder, any Lender (or Affiliate or Approved Fund of any Lender) that agrees, with the approval of Administrative Agent (or, if there is no such successor Administrative Agent, the Required Lenders) and the Borrowers, to act as the Swingline Lender hereunder.

"Swingline Notes" means the note or notes executed by Borrowers and payable to the Swingline Lender, in substantially the form of Exhibit B-1 hereto, evidencing the Indebtedness of the Borrowers to the Swingline Lender under the Swing Loans.

"Swingline Request" has the meaning provided in Section 2.05.

"Synthetic Lease" means any synthetic lease, tax retention operating lease, off‐balance sheet loan or similar off‐balance sheet financing arrangement that is considered borrowed money indebtedness for tax purposes but is classified as an operating lease under GAAP.

"Tax Impound" has the meaning provided in Section 2.15(a).

"Taxes" has the meaning provided in Section 3.01.

"Third Party Payor Programs" means any participation or provider agreement with any third-party payor, including Medicare, Medicaid, Blue Cross and/or Blue Shield, Tricare and any other private commercial insurance managed care and employee assistance program.

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"Third Party Payor Receivables Accounts" means the accounts established at Wells Fargo Bank, National Association, or another national bank or other financial institution approved by Administrative Agent for each Borrowing Base Asset that is a skilled nursing facility and into which the Borrowers will deposit, or cause to be deposited, all Medicaid, Medicare and Tricare receivables generated from the operations at such Borrowing Base Assets, and which accounts will be (a) in the name of the Borrower Representative, as agent for Borrowers, to which such receivables are payable and (b) subject to a Blocked Account Agreement in form satisfactory to Administrative Agent.

"Threshold Amount" means (a) for any provision relating to the Borrowers as a whole, the Parent or the Consolidated Parties as a whole, $10,000,000 and (b) for any Borrower, individually, $500,000.

"Treasury Rate" means, as of any date of determination, (a) the yield reported, as of 10:00 a.m. (New York City time) on such date (or to the extent such date is not a Business Day, the Business Day immediately preceding such date) on the display designated as page "PX‐1" of the Bloomberg Financial Markets Services Screen (or such other display as may replace page "PX‐1" of the Bloomberg Financial Markets Services Screen) for actively traded U.S. Treasury securities having a ten (10) year maturity as of such date, or (b) if such yields are not reported as of such time or the yields reported as of such time are not ascertainable, the Treasury Constant Maturity Series Yields reported, for the latest day for which such yields have been so reported as of such day in Federal Reserve Statistical Release H.15(519) (or any comparable successor publication) for actively traded U.S.  Treasury securities having a constant maturity equal to ten (10) years.

"Tricare" means the health care program of the United States Department of Defense Military Health System.

"Unconsolidated Joint Venture" means any Joint Venture of the Parent or any of its Subsidiaries in which the parent or such Subsidiary holds any Equity Interest but which would not be combined with the Parent in the consolidated financial statements of the Parent in accordance with GAAP.

"Unfunded Pension Liability" means the excess of a Pension Plan's benefit liabilities under Section 4001(a)(16) of ERISA, over the current value of that Pension Plan's assets, determined in accordance with the assumptions used for funding the Pension Plan pursuant to Section 412 of the Internal Revenue Code for the applicable plan year.

"United States" or "U.S." means the United States of America.

"Unused Fee" shall have the meaning provided in Section 2.08(a).

"Wholly Owned" means, with respect to any direct or indirect Subsidiary of any Person, that 100% of the Capital Stock with ordinary voting power issued by such Subsidiary (other than directors' qualifying shares and investments by foreign nationals mandated by applicable Law) is beneficially owned, directly or indirectly, by such Person.

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1.02     Interpretive Provisions.

 

With reference to this Credit Agreement and each other Credit Document, unless otherwise provided herein or in such other Credit Document:

(a)            The meanings of defined terms are equally applicable to the singular and plural forms of the defined terms.

 

(b)            (i)            The words "herein," "hereto," "hereof" and "hereunder" and words of similar import when used in any Credit Document shall refer to such Credit Document as a whole and not to any particular provision thereof.

 

		
          (ii)      Unless otherwise provided or required by context, Article, Section, Exhibit and Schedule references are to the Credit Document in which such reference appears.

		
           (iii)     The term "including" is by way of example and not limitation.

		
          (iv)     The term "documents" includes any and all instruments, documents, agreements, certificates, notices, reports, financial statements and other writings, however evidenced, whether in physical or electronic form.

(c)            In the computation of periods of time from a specified date to a later specified date, the word "from" means "from and including"; the words "to" and "until" each mean "to but excluding"; and the word "through" means "to and including."

 

(d)            Section headings herein and in the other Credit Documents are included for convenience of reference only and shall not affect the interpretation of this Credit Agreement or any other Credit Document.

 

1.03     Accounting Terms.

 

(a)            All accounting terms not specifically or completely defined herein shall be construed in conformity with, and all financial data (including financial ratios and other financial calculations) required to be submitted pursuant to this Credit Agreement shall be prepared in conformity with, GAAP applied on a consistent basis, as in effect from time to time, applied in a manner consistent with that used in preparing the audited financial statements for the fiscal year ended December 31, 2012, except as otherwise specifically prescribed herein.

 

(b)            The Parent will provide a written summary of material changes in GAAP or in the consistent application thereof with each annual and quarterly Compliance Certificate delivered in accordance with Section 6.02(a).  If at any time any change in GAAP or in the consistent application thereof would affect the computation of any financial ratio or requirement set forth in any Credit Document, and either the Parent or the Required Lenders shall object in writing to determining compliance based on such change, then such computations shall continue to be made on a basis consistent with the most recent financial statements delivered pursuant to Section 6.01(a) or (b) as to which no such objection has been made.

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1.04     Rounding.

 

Any financial ratios required to be maintained by the Parent pursuant to this Credit Agreement shall be calculated by dividing the appropriate component by the other component, carrying the result to one place more than the number of places by which such ratio is expressed herein and rounding the result up or down to the nearest number (with a rounding‐up if there is no nearest number).

1.05     References to Agreements and Laws.

 

Unless otherwise expressly provided herein, (a) references to Organization Documents, agreements (including the Credit Documents) and other contractual instruments shall be deemed to include all subsequent amendments, restatements, extensions, supplements and other modifications thereto, but only to the extent that such amendments, restatements, extensions, supplements and other modifications are not prohibited by any Credit Document; and (b) references to any Law shall include all statutory and regulatory provisions consolidating, amending, replacing, supplementing or interpreting such Law.

1.06     Times of Day.

 

Unless otherwise provided, all references herein to times of day shall be references to Central time (daylight or standard, as applicable).

ARTICLE II  

COMMITMENTS AND ADVANCES

2.01     Revolving Loan Commitments.  Subject to the terms and conditions set forth herein:

 

(a)            Loan Advances.  During the Commitment Period, each Lender severally agrees to make revolving credit advances (each an "Advance" and collectively, the "Advances") to the Borrower Representative on any Business Day; provided that after giving effect to any such Advance, (i) with regard to the Lenders collectively, the aggregate outstanding principal amount of the Obligations shall not exceed the lesser of (x) Two Hundred Fifty Million Dollars ($250,000,000), (the "Aggregate Committed Amount") and (y) the Borrowing Base Amount and (ii) with regard to each Lender individually, such Lender's Commitment Percentage of Obligations shall not exceed its respective Committed Amount.  The Loan may be repaid and reborrowed in accordance with the provisions hereof.

 

(b)            Increase in Commitments.  Subject to the terms and conditions set forth herein, the Borrower Representative shall have the one-time right, to be exercised at any time prior to the earlier of (i) March 28, 2016, or (ii) the exercise of its option to decrease the Aggregate Committed Amount under Section 2.01(c) below, to cause an increase in the Aggregate Committed Amount by up to One Hundred Million Dollars ($100,000,000) (to an aggregate amount of not more than Three Hundred Fifty Million Dollars ($350,000,000) (the "Increase Option").  The exercise of the Increase Option shall be conditioned and effective upon the satisfaction of the following conditions:

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(1)            the Borrowers shall obtain commitments for the amount of the Increase Option exercised from existing Lenders or other commercial banks or financial institutions reasonably acceptable to the Administrative Agent, which other commercial banks and financial institutions shall join in this Credit Agreement as Lenders by a Lender Joinder Agreement substantially in the form of Exhibit F attached hereto or other arrangement reasonably acceptable to the Administrative Agent (it being understood that  in no case shall any Lender be required to increase its Commitment without its written consent);

(2)            if any Advances are outstanding at the time of any such increase, the Borrowers shall make such payments and adjustments on the Advances (including payment of any break‐funding amounts owing under Section 3.05) as may be necessary to give effect to the revised commitment percentages and commitment amounts;

(3)            the Borrowers shall have executed any new or amended and restated Notes (to the extent requested by the Lenders) to reflect the revised commitment amounts;

(4)            the conditions to the making of an Advance set forth in Section 4.02 shall be satisfied; and

(5)            Guarantor shall provide a resolution of its Board of Directors authorizing the increase of the Loan contemplated by the Increase Option and upon Administrative Agent's request, Guarantor shall execute a confirmation of the Guaranty.

In connection with any such increase in the Commitments, Schedule 2.01 shall be revised to reflect the modified Commitments and Commitment Percentages of the Lenders, and the Borrowers shall provide supporting corporate resolutions, legal opinions, promissory notes and other items as may be reasonably requested by the Administrative Agent and the Lenders in connection therewith.

(c)            Reduction of Commitments.  Subject to the terms and conditions set forth herein, the Borrower Representative shall have the one-time right, at any time during the term hereof, upon written notice to the Administrative Agent, to permanently reduce the Aggregate Committed Amount.  Once decreased, the Aggregate Committed Amount may no longer be increased under Section 2.01(b).  Any such decrease shall be conditioned and effective upon the satisfaction of each of the following conditions:

 

		
          (i)     any such notice thereof must be received by 11:00 a.m. at least five (5) Business Days prior to the date of reduction. The Administrative Agent will give prompt notice to the Lenders of any such reduction of the Credit Facility and Commitments.

		
          (ii)     the Commitments may not be reduced to an amount less than the Obligations then outstanding.  Any reduction of the Aggregate Commitments shall be applied to the Commitment of each Lender according to its Commitment Percentage thereof.  All commitment or other fees accrued until the effective date of any reduction of the Aggregate Commitments shall be paid on the effective date of such reduction.

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          (iii)     effective upon such reduction, the Collateral Value Amount shall not be less than the reduced Aggregate Committed Amount.

		
          (iv)     If the right to reduce the Credit Facility and Commitments is exercised prior to March 28, 2016, Borrowers shall pay to Administrative Agent at the time of the reduction, for the account of the Lenders, the Reduction Fee.

In connection with any such decrease in the Commitments, Schedule 2.01 shall be revised to reflect the modified Commitments and Commitment Percentages of the Lenders, and the Borrowers shall provide supporting corporate resolutions, legal opinions, promissory notes and other items as may be reasonably requested by the Administrative Agent and the Lenders in connection therewith.

(d)            Special Right to Terminate Credit Facility and Commitments.  Subject to the terms and conditions set forth herein, the Borrower Representative shall have the one-time right, at any time during the term hereof, upon written notice to the Administrative Agent, to terminate the Credit Facility and the Commitments.  Any such termination shall be conditioned and effective upon the satisfaction of the following conditions:

 

		
          (i)     any such notice of termination must be received by 11:00 a.m. at least thirty (30) days prior to the effective date of termination (the "Termination Date").  The Administrative Agent will give prompt notice to the Lenders of any such termination of the Credit Facility and Commitments.

		
          (ii)     Borrowers shall pay to Administrative Agent on the Termination Date all amounts outstanding under this Agreement, including all commitment or other fees accrued through and including the Termination Date.

		
          (iii)     If the right to terminate the Credit Facility and Commitments is exercised prior to March 28, 2016, Borrowers shall pay to Administrative Agent on the Termination Date, for the account of the Lenders, a termination fee in an amount equal to two-fifths (2/5) of the Unused Fee that would have been payable for the remainder of the Loan term based on the outstanding Aggregate Commitment Amount and the Outstanding Amount of Obligations as of the day immediately preceding the Termination Date.

2.02  Advances of the Revolving Loan.

 

(a)            Each Advance of the Revolving Loan shall be made upon the Borrower Representative's irrevocable Loan Borrowing Notice to the Administrative Agent, which may be given by telephone.  Each such notice must be received by the Administrative Agent not later than 2:00 p.m., on the date that is two (2) Business Days prior to the requested date of any Advance.  Each telephonic notice pursuant to this Section 2.02(a) must be confirmed promptly by delivery to the Administrative Agent of a written Loan Borrowing Notice, appropriately completed and signed by a Responsible Officer of the Parent.  Each Borrowing shall be in a principal amount of not less than $500,000.  Each Loan Borrowing Notice (whether telephonic or written) shall specify (i) the requested date of such Borrowing (which shall be a Business Day) and (ii) the principal amount of Advances to be borrowed.

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(b)            Following receipt of a Loan Borrowing Notice, the Administrative Agent shall promptly notify each Lender of the amount of its Commitment Percentage of the applicable Advance.  Each Lender shall make the amount of its Advance available to the Administrative Agent in immediately available funds at the Administrative Agent's Office not later than 2:00 p.m. on the Business Day specified in the applicable Loan Borrowing Notice.  Upon satisfaction of the applicable conditions set forth in Section 4.02 (and, if such Borrowing is the initial Advance, Section 4.01), the Administrative Agent shall make all funds so received available to the party referenced in the applicable Loan Borrowing Notice in like funds as received by the Administrative Agent either by (i) crediting the account of the applicable party on the books of the Administrative Agent with the amount of such funds or (ii) wire transfer of such funds, in each case in accordance with instructions provided to (and reasonably acceptable to) the Administrative Agent by the Borrower Representative.

 

2.03  Calculation of Availability Amount.

 

(a)            The Availability Amount shall be calculated as of (a) the end of each calendar quarter, and (b) one (1) Business Day immediately following the release or addition of a Borrowing Base Asset pursuant to the terms hereof (the "Determination Date").

 

(b)            If (i) the Availability Amount is less than the Collateral Value Amount for two (2) consecutive calendar quarters, the provisions of Section 2.05(b)(i) shall apply and (b) if the Debt Yield is less than ten percent (10%) for any calendar quarter, (ii) the provisions of Section 2.05(b)(ii) shall apply.

 

2.04  Repayment of the Revolving Loan.

 

The Revolving Loan shall be payable as follows:

(a)            Interest Payments.   Commencing on October 1, 2013, and continuing on the first (1st) day of each calendar month thereafter (each such date a "Payment Date"), the Borrowers shall pay interest only in arrears computed at the Contract Rate on the outstanding principal balance of the Revolving Loan.

 

(b)            Maturity.  On the Maturity Date, the Borrower shall pay to the Lender all outstanding principal, accrued and unpaid interest, default interest, late charges and any and all other Obligations due under the Credit Documents.

 

2.05  Swing Loans.

 

(a)            Availability.  Subject to the terms and conditions of this Agreement and in reliance upon the representations and warranties of the Credit Parties contained herein, the Swingline Lender may, in its sole discretion, make loans (each a "Swing Loan") available to the Borrowers under the Swingline Commitment from time to time on any Business Day during the period from the Closing Date through the end of the Commitment Period in an aggregate principal amount at any time outstanding not to exceed the Swingline Commitment; provided, however, that the Swingline Lender may not make any Swing Loan (x) to the extent that after giving effect to such Swing Loan, the aggregate principal amount of the Swing Loan and all Revolving Loans would exceed the Borrowing Base Amount and (y) during the period

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commencing on the first Business Day after it receives notice from Administrative Agent or the Required Revolving Lenders that one or more of the conditions precedent set forth in Section 4.02 have not been satisfied or duly waived.  In connection with the making of any Swing Loan, the Swingline Lender may but shall not be required to determine that, or take notice whether, the conditions precedent set forth in Section 4.02 have been satisfied or waived.  Each Swing Loan must be repaid as provided herein, but in any event must be repaid in full on the last day of the Commitment Period.  Within the limits set forth in the first sentence of this clause (a), amounts of Swing Loans repaid may be reborrowed under this clause (a).

(b)            Borrowing Procedures.  In order to request a Swing Loan, the Borrower Representative shall give to Administrative Agent a notice to be received not later than 11:00 a.m. (Chicago time) on the day of the proposed Borrowing, which shall be made in a writing substantially in the form of Exhibit A-1  or in a writing in any other form acceptable to Administrative Agent duly completed (a "Swingline Request").  Administrative Agent shall promptly notify the Swingline Lender of the details of the requested Swing Loan.  Upon receipt of such notice and subject to the terms of this Agreement, the Swingline Lender may make a Swing Loan available to the Borrower Representative by making the proceeds thereof available to Administrative Agent and, in turn, Administrative Agent shall make such proceeds available to the Borrowers on the date set forth in the relevant Swingline Request.

 

(c)            Refinancing Swing Loans.

 

		
          (i)     The Swingline Lender may at any time after making a Swing Loan forward a demand to Administrative Agent (which Administrative Agent shall, upon receipt, forward to each Revolving Lender) that each Revolving Lender pay to Administrative Agent, for the account of the Swingline Lender, such Revolving Lender's Commitment Percentage of the outstanding Swing Loans.

		
          (ii)     Each Revolving Lender shall pay the amount owing by it to Administrative Agent for the account of the Swingline Lender on the Second Business Day following receipt of the notice or demand therefor.  Payments received by Administrative Agent after 1:00 p.m. (Chicago time) may, in Administrative Agent's discretion, be deemed to be received on the next Business Day.  Upon receipt by Administrative Agent of such payment (other than during the continuation of any Event of Default), such Revolving Lender shall be deemed to have made a Revolving Loan to the Borrowers, which, upon receipt of such payment by the Swingline Lender from Administrative Agent, the Borrowers shall be deemed to have used in whole to refinance such Swing Loan.  In addition, regardless of whether any such demand is made, upon the occurrence of any Event of Default, each Revolving Lender shall be deemed to have acquired, without recourse or warranty, an undivided interest and participation in each Swing Loan in an amount equal to such Revolving Lender's Commitment Percentage of such Swing Loan.  If any payment made by any Revolving Lender as a result of any such demand is not deemed a Revolving Loan, such payment shall be deemed a funding by such Revolving Lender of such participation.  Such participation shall not be otherwise required to be funded.  Upon receipt by the Swingline Lender of any payment from any Revolving Lender pursuant to this clause (c) with respect to any portion of any Swing Loan, the Swingline Lender shall promptly pay over to such Revolving Lender all

Page 42

 

payments of principal (to the extent received after such payment by such Lender) and interest (to the extent received after such payment by such Lender) and interest (to the extent accrued with respect to the periods after such payment) on account of such Swing Loan received by the Swingline Lender with respect to such portion.

(d)            Obligation to Fund Absolute.  Each Revolving Lender's obligations pursuant to clause (c) above shall be absolute, unconditional and irrevocable and shall be performed strictly in accordance with the terms of this Agreement under any and all circumstances whatsoever, including (A) the existence of any setoff, claim, abatement, recoupment, defense or other right that such Revolving Lender, Administrative Agent, any other Revolving Lender or any other Person may have against the Swingline Lender, Agent, any other Lender or any other Person, (B) the failure of any condition precedent set forth in Section 4.02 to be satisfied or the failure of the Borrowers to deliver a Swingline Request (each of which requirements the Revolving Lenders hereby irrevocably waive), and (C) any adverse change in the condition (financial or otherwise) of any Credit Party.

 

2.06  Prepayments.

 

(a)            Voluntary Prepayments.  The Loan may be repaid in whole or in part without premium or penalty (except amounts payable pursuant to Section 3.05); provided that notice thereof must be received by 11:00 a.m. by the Administrative Agent at least three (3) Business Days prior to the date of prepayment.  Each such notice of voluntary prepayment hereunder shall be irrevocable and shall specify the date and amount of prepayment.  The Administrative Agent will give prompt notice to the applicable Lenders of any prepayment on the Loan and the Lender's interest therein.  Prepayments hereunder shall be accompanied by accrued interest thereon and breakage amounts, if any, under Section 3.05.

 

(b)            Mandatory Prepayments.

 

		
          (i)     If at any Determination Date, the aggregate principal amount of the Obligations (the "Principal Obligations") shall exceed the lesser of (x) the Aggregate Committed Amount and (y) the Borrowing Base Amount for such date, Borrowers shall within thirty (30) days after such determination, make a prepayment on the Loan in an amount equal to such excess.

		
          (ii)     If at any Determination Date, the Debt Yield is less than ten percent (10%), Borrowers shall, within thirty (30) days following the Determination  Date, reduce the Principal Obligations by an amount necessary to achieve a Debt Yield of not less than 10.0%.

(c)            Application.  Prepayments on the Obligations will be paid by the Administrative Agent to the Lenders ratably in accordance with their respective interests therein.

 

2.07  Interest.

 

(a)            Subject to the provisions of subsection (b) below, the Loan and all Advances thereunder shall bear interest on the outstanding principal amount thereof at a rate per annum equal to the Contract Rate.

Page 43

 

(b)            If any amount payable by the Borrowers under any Credit Document is not paid when due (without regard to any applicable grace periods), whether at stated maturity, by acceleration or otherwise, such amount shall thereafter bear interest at a fluctuating interest rate per annum at all times equal to the Default Rate to the fullest extent permitted by applicable Law.  Furthermore, upon the written request of the Required Lenders, while any Event of Default exists, the Borrowers shall pay interest on the principal amount of all outstanding Obligations hereunder at a fluctuating interest rate per annum at all times equal to the Default Rate to the fullest extent permitted by applicable Law.  Accrued and unpaid interest on past due amounts (including interest on past due interest) shall be due and payable upon demand.

 

(c)            In addition to the application of the Default Rate of interest to past due amounts hereunder, if Borrowers fail to pay any installment of interest or principal within five (5) days after the date on which the same is due, Borrowers shall pay to Administrative Agent a late charge on such past due amount, as liquidated damages and not as a penalty, equal to five percent (5%) of such amount, but not in excess of the maximum amount of interest allowed by applicable Law.  The foregoing late charge is intended to compensate Administrative Agent and Lenders for the expenses incident to handling any such delinquent payment and for the losses incurred by Administrative Agent and Lenders as a result of such delinquent payment.  Borrowers agree that, considering all of the circumstances existing on the date this Agreement is executed, the late charge represents a reasonable estimate of the costs and losses Administrative Agent and Lenders will incur by reason of late payment.  Borrowers, Administrative Agent and Lenders further agree that proof of actual losses would be costly, inconvenient, impracticable and extremely difficult to fix.  Acceptance of the late charge shall not constitute a waiver of the Default or Event of Default arising from the past due installment, and shall not prevent Administrative Agent from exercising any other rights or remedies available to Administrative Agent with respect to such Default or Event of Default.

 

(d)            Interest hereunder shall be due and payable in accordance with the terms hereof before and after judgment, and before and after the commencement of any proceeding under any Debtor Relief Law.

 

(e)            Anything herein to the contrary notwithstanding, the obligations of the Borrowers  hereunder shall be subject to the limitation that payments of interest shall not be required, for any period for which interest is computed hereunder, to the extent (but only to the extent) that contracting for or receiving such payment by the respective Lender would be contrary to the provisions of any law applicable to such Lender limiting the highest rate of interest which may be lawfully contracted for, charged or received by such Lender, and in such event the Borrowers shall pay such Lender interest at the highest rate permitted by applicable law ("Maximum Lawful Rate"); provided, however, that if at any time thereafter the rate of interest payable hereunder is less than the Maximum Lawful Rate, the Borrowers shall continue to pay interest hereunder at the Maximum Lawful Rate until such time as the total interest received by Administrative Agent, on behalf of Lenders is equal to the total interest that would have been received had the interest payable hereunder been (but for the operation of this paragraph) the interest rate payable since the Closing Date as otherwise provided in this Agreement.

Page 44

 

2.08  Fees and Expenses.

 

(a)            Unused Fee.  During the term of the Loan, the Borrowers agree to pay the Administrative Agent for the ratable benefit of the Lenders an unused fee (the "Unused Fee") for each calendar quarter (or portion thereof) in an amount equal to the sum of the Daily Unused Fees incurred during such period.  The Unused Fee shall accrue at all times during the Commitment Period (and thereafter so long as Obligations shall remain outstanding), including periods during which the conditions to Advances in Section 4.02 may not be met, and shall be payable quarterly in arrears on the last day of each March, June, September and December, commencing with the first such date to occur after the Closing Date, and on the Maturity Date (and, if applicable, thereafter on demand); provided, that (i) no Unused Fee shall accrue on the Commitment of a Defaulting Lender so long as such Lender shall be a Defaulting Lender and (ii) any Unused Fee accrued with respect to the Commitment of a Defaulting Lender during the period prior to the time such Lender became a Defaulting Lender and unpaid at such time shall not be payable by the Borrower so long as such Lender shall be a Defaulting Lender.  The Administrative Agent shall distribute the Unused Fee to the Lenders (other than Defaulting Lenders) pro rata in accordance with the respective Commitments of the Lenders.

 

(b)            Annual Administrative Fee.  During the term of the Loan, the Borrowers agree to pay Administrative Agent, for its sole benefit, an annual administrative agent fee in the amount of $100,000.00.  Such fee shall be payable in twelve (12) equal installments of $8,333.303 each, which installments shall be due and payable on each Payment Date.

 

(c)            Commitment Fee.  On the exercise of the Increase Option, the Borrowers shall pay to the Administrative Agent, for the benefit and account of those Lenders committing to fund all or any portion of the Increase Option so exercised, a commitment fee equal to twenty-five hundredths of one percent (0.25%) times the difference between the Aggregate Committed Amount after the exercise of the Increase Option and the Aggregate Committed Amount prior to the exercise of the Increase Option.

 

(d)            Collateral Monitoring Fee.  The Borrowers shall pay to the Administrative Agent on the first (1st) day of each month during the term of the Loan, in addition to all other amounts due under the Credit Documents, the sum of One Hundred Fifty and No/100 Dollars ($150.00) per Borrowing Base Asset as a collateral monitoring fee.

 

2.09  Computation of Interest.

 

All computations of fees and interest shall be made on the basis of a 360‐day year and actual days elapsed (which results in more fees or interest, as applicable, being paid than if computed on the basis of a 365‐day year).

2.10  Payments Generally.

 

(a)            All payments to be made by the Borrowers shall be made without condition or deduction for any counterclaim, defense, recoupment or setoff.  Except as otherwise expressly provided herein, all payments by the Borrowers hereunder shall be made to the Administrative Agent, for the account of the Lenders to which such payment is owed, at the Administrative Agent's Office in Dollars and in immediately available funds not later than 2:00 p.m. on the date

Page 45

 

specified herein.  The Administrative Agent will promptly distribute to each Lender its Commitment Percentage (or other applicable share as provided herein) of such payment in like funds as received by wire transfer to such Lender's Lending Office.  All payments received by the Administrative Agent after 2:00 p.m. shall be deemed received on the immediately succeeding Business Day and any applicable interest or fee shall continue to accrue.

(b)            Subject to the definition of "Interest Period," if any payment to be made by the Borrowers shall come due on a day other than a Business Day, payment shall be made on the next following Business Day, and such extension of time shall be reflected in computing interest or fees, as the case may be.

 

(c)            Unless the Borrowers or any Lender has notified the Administrative Agent, prior to the date any payment is required to be made by it to the Administrative Agent hereunder, that the Borrowers or such Lender, as the case may be, will not make such payment, the Administrative Agent may assume that the Borrowers or such Lender, as the case may be, has timely made such payment and may (but shall not be so required to), in reliance thereon, make available a corresponding amount to the Person entitled thereto.  If and to the extent that such payment was not in fact made to the Administrative Agent in immediately available funds, then:

 

		
          (i)     if the Borrowers fail to make such payment, each Lender shall forthwith on demand repay to the Administrative Agent the portion of such assumed payment that was made available to such Lender in immediately available funds, together with interest thereon in respect of each day from and including the date such amount was made available by the Administrative Agent to such Lender to the date such amount is repaid to the Administrative Agent in immediately available funds at the Federal Funds Rate from time to time in effect; and

		
          (ii)     if any Lender failed to make such payment, such Lender shall forthwith on demand pay to the Administrative Agent the amount thereof in immediately available funds, together with interest thereon for the period from the date such amount was made available by the Administrative Agent to the Borrowers to the date such amount is recovered by the Administrative Agent (the "Compensation Period") at a rate per annum equal to the Federal Funds Rate from time to time in effect.  If such Lender pays such amount to the Administrative Agent, then such amount shall constitute such Lender's Advance included in the applicable Borrowing.  If such Lender does not pay such amount forthwith upon the Administrative Agent's demand therefor, the Administrative Agent may make a demand therefor upon the Borrowers, and the Borrowers shall pay such amount to the Administrative Agent, together with interest thereon for the Compensation Period at a rate per annum equal to the rate of interest applicable to the applicable Borrowing.  Nothing herein shall be deemed to relieve any Lender from its obligation to fulfill its Commitment or to prejudice any rights that the Administrative Agent or the Borrowers may have against any Lender as a result of any default by such Lender hereunder.

A notice of the Administrative Agent to any Lender or the Borrowers with respect to any amount owing under this subsection (c) shall be conclusive, absent manifest error.

Page 46

 

(d)            If any Lender makes available to the Administrative Agent funds for any Advance to be made by such Lender as provided in the foregoing provisions of this Article II, and such funds are not made available to the Borrowers by the Administrative Agent because the conditions to the applicable Advance set forth in Section 4.02 are not satisfied or waived in accordance with the terms hereof or for any other reason, the Administrative Agent shall return such funds (in like funds as received from such Lender) to such Lender, without interest.

 

(e)            The obligations of the Lenders hereunder to make Advances are several and not joint.  The failure of any Lender to make any Advance or to fund any such participation on any date required hereunder shall not relieve any other Lender of its corresponding obligation to do so on such date, nor relieve Borrowers from any obligations hereunder to the Lenders which fulfill such obligations and no Lender shall be responsible for the failure of any other Lender to so make its Loan or purchase its participation.

 

(f)            Nothing herein shall be deemed to obligate any Lender to obtain the funds for any Advance in any particular place or manner or to constitute a representation by any Lender that it has obtained or will obtain the funds for any Advance in any particular place or manner.

 

(g)            If at any time insufficient funds are received by or are available to the Administrative Agent to pay fully all amounts of principal, interest and fees then due hereunder, such funds shall be applied (i) first, toward costs and expenses (including Attorney Costs and amounts payable under Article III) incurred by the Administrative Agent and each Lender, (ii) second, toward repayment of interest and fees then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of interest and fees then due to such parties, and (iii) third, toward repayment of principal then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of principal then due to such parties.

 

2.11  Sharing of Payments.

 

If any Lender shall obtain on account of the Advances made by it, any payment (whether voluntary, involuntary, through the exercise of any right of set‐off, or otherwise, but excluding any payments made to a Lender in error by the Administrative Agent (which such payments shall be returned by the Lender to the Administrative Agent immediately upon such Lender's obtaining knowledge that such payment was made in error)) in excess of its ratable share (or other share contemplated hereunder) thereof, such Lender shall immediately (a) notify the Administrative Agent of such fact, and (b) purchase from the other Lenders such participations in the Advances made by them as shall be necessary to cause such purchasing Lender to share the excess payment in respect of such Advances or such participations, as the case may be, pro rata with each of them; provided, however, that if all or any portion of such excess payment is thereafter recovered from the purchasing Lender under any of the circumstances described in Section 10.06 (including pursuant to any settlement entered into by the purchasing Lender in its discretion), such purchase shall to that extent be rescinded and each other Lender shall repay to the purchasing Lender the purchase price paid therefor, together with an amount equal to such paying Lender's ratable share (according to the proportion of (i) the amount of such paying Lender's required repayment to (ii) the total amount so recovered from the purchasing Lender) of any interest or other amount paid or payable by the purchasing Lender in respect of the total amount so recovered, without further interest thereon.  The Borrowers agree that any Lender so

Page 47

 

purchasing a participation from another Lender may, to the fullest extent permitted by law, exercise all its rights of payment (including the right of set‐off, but subject to Section 10.09) with respect to such participation as fully as if such Lender were the direct creditor of the Borrowers in the amount of such participation.  The Administrative Agent will keep records (which shall be conclusive and binding in the absence of manifest error) of participations purchased under this Section and will in each case notify the Lenders following any such purchases or repayments.  Each Lender that purchases a participation pursuant to this Section shall from and after such purchase have the right to give all notices, requests, demands, directions and other communications under this Credit Agreement with respect to the portion of the Obligations purchased to the same extent as though the purchasing Lender were the original owner of the Obligations purchased.

2.12  Evidence of Debt.

 

The Loan made by each Lender shall be evidenced by one or more accounts or records maintained by such Lender and by the Administrative Agent in the ordinary course of business.  The accounts or records maintained by the Administrative Agent and each Lender shall be conclusive absent manifest error of the amount of the Advances made by the Lenders to the Borrowers and the interest and payments thereon.  Any failure to so record or any error in doing so shall not, however, limit or otherwise affect the obligation of the Borrowers hereunder to pay any amount owing with respect to the Obligations.  In the event of any conflict between the accounts and records maintained by any Lender and the accounts and records of the Administrative Agent in respect of such matters, the accounts and records of the Administrative Agent shall control in the absence of manifest error.  The Borrowers shall execute and deliver to the Administrative Agent a Note for each Lender requesting a Note, which Note shall evidence the Advance made by any such Lender under its Commitment and/or the Swing Loan made by Swingline Lender under its Swingline Commitment, in addition to such accounts or records.  Each Lender may attach schedules to its Note and endorse thereon the date, amount and maturity of its Extension of Credit and payments with respect thereto.

2.13  Joint and Several Liability of the Borrowers.

 

(a)            Each of the Borrowers is accepting joint and several liability hereunder in consideration of the financial accommodation to be provided by the Lenders under this Credit Agreement, for the mutual benefit, directly and indirectly, of each of the Borrowers and in consideration of the undertakings of each of the Borrowers to accept joint and several liability for the obligations of each of them.

 

(b)            Each Borrower hereby agrees such Borrower is, and each such Borrower's heirs, personal representatives, successors and assigns are, jointly and severally liable for, and hereby absolutely and unconditionally guarantees to Administrative Agent and Lenders and their respective successors and assigns, the full and prompt payment (whether at stated maturity, by acceleration or otherwise) and performance of, all of the Obligations arising under this Credit Agreement and the other Credit Documents, it being the intention of the parties hereto that all the Obligations shall be the joint and several obligations of each of the Borrowers without preferences or distinction among them.  Each Borrower agrees that its guaranty obligation hereunder is a continuing guaranty of payment and performance and not of collection, that its

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obligations under this Section 2.13 shall not be discharged until payment and performance, in full, of the Obligations has occurred, and that its obligations under this Section 2.13 shall be absolute and unconditional.

(c)            If and to the extent that any of the Borrowers shall fail to make any payment with respect to any of the Obligations hereunder as and when due or to perform any of such Obligations in accordance with the terms thereof, then in each such event, the other Borrowers will make such payment with respect to, or perform, such Obligation.

 

(d)            The guaranty obligations of each Borrower under the provisions of this Section 2.13 constitute full recourse obligations of such Borrower, enforceable against it to the full extent of its properties and assets, irrespective of the validity, regularity or enforceability of this Credit Agreement or any other circumstances whatsoever, including without limitation, the following:

 

		
          (i)         the genuineness, validity, regularity, enforceability or any future amendment of, or change in, this Credit Agreement, any other Credit Document or any other agreement, document or instrument to which any other Borrower is or may become a party;

		
          (ii)        the absence of any action to enforce this Credit Agreement (including this Section 2.13) or any other Credit Document or the waiver or consent by Administrative Agent and Lenders with respect to any of the provisions thereof;

		
          (iii)       the existence, value or condition of, or failure to perfect any Lien or any security for the Obligations or any action, or the absence of any action, by Administrative Agent and Lenders in respect thereof (including the release of any such security);

		
          (iv)        the insolvency of any other Borrower;

		
          (v)        the institution of any proceeding under the Federal Bankruptcy Code, or any similar proceeding, by or against a Borrower or Administrative Agent's election in any such proceeding of the application of Section 1111(b)(2) of the Federal Bankruptcy Code;

		
          (vi)       any borrowing or grant of a security interest by any Borrower as debtor-in-possession, under Section 364 of the Federal Bankruptcy Code;

		
          (vii)      the disallowance, under Section 502 of the Federal Bankruptcy Code, of all or any portion of Administrative Agent's claim(s) for repayment of any of the Obligations; or

		
          (viii)     any other action or circumstances that might otherwise constitute a legal or equitable discharge or defense of a surety or guarantor other than the payment and performance, in full, of the Obligations.

Each Borrower shall be regarded, and shall be in the same position, as principal debtor with respect to the Obligations guaranteed hereunder.

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(e)            Except as otherwise expressly provided herein, each Borrower hereby waives notice of acceptance of its joint and several liability, notice of occurrence of any Default or Event of Default (except to the extent notice is expressly required to be given pursuant to the terms of this Credit Agreement), or of any demand for any payment under this Credit Agreement (except to the extent demand is expressly required to be given pursuant to the terms of this Credit Agreement), notice of any action at any time taken or omitted by the Administrative Agent or any Lender under or in respect of any of the Obligations hereunder, any requirement of diligence and, generally, all demands, notices and other formalities of every kind in connection with this Credit Agreement.  Each Borrower hereby assents to, and waives notice of, any extension or postponement of the time for the payment of any of the Obligations hereunder, the acceptance of any partial payment thereon, any waiver, consent or other action or acquiescence by the Lenders at any time or times in respect of any default by any Borrower in the performance or satisfaction of any term, covenant, condition or provision of this Credit Agreement, any and all other indulgences whatsoever by the Lenders in respect of any of the Obligations hereunder, and the taking, addition, substitution or release, in whole or in part, at any time or times, of any security for any of such Obligations or the addition, substitution or release, in whole or in part, of any Borrower.  Without limiting the generality of the foregoing, each Borrower assents to any other action or delay in acting or any failure to act on the part of the Lender, including, without limitation, any failure strictly or diligently to assert any right or to pursue any remedy or to comply fully with applicable laws or regulations thereunder which might, but for the provisions of this Section 2.13, afford grounds for terminating, discharging or relieving such Borrower, in whole or in part, from any of its obligations under this Section 2.13, it being the intention of each Borrower that, so long as any of the Obligations hereunder remain unsatisfied, the obligations of such Borrower under this Section 2.13 shall not be discharged except by performance and then only to the extent of such performance.  The obligations of each Borrower under this Section 2.13 shall not be diminished or rendered unenforceable by any winding up, reorganization, arrangement, liquidation, reconstruction or similar proceeding with respect to any Borrower or any Lender.  The joint and several liability of the Borrowers hereunder shall continue in full force and effect notwithstanding any absorption, merger, amalgamation or any other change whatsoever in the name, membership, constitution or place of formation of any Borrower or any Lender.

 

(f)            Notwithstanding anything to the contrary in this Agreement or in any other Credit Document, and except as set forth in Section 2.13(j), each Borrower hereby expressly and irrevocably subordinates to payment of the Obligations any and all rights at law or in equity to subrogation, reimbursement, exoneration, contribution, indemnification or set off and any and all defenses available to a surety, guarantor or accommodation co-obligor until the Obligations are indefeasibly paid in full in cash.  Each Borrower acknowledges and agrees that this subordination is intended to benefit Administrative Agent and Lenders and shall not limit or otherwise affect such Borrower's liability hereunder or the enforceability of this Section 2.13, and that Administrative Agent, Lenders and their respective successors and assigns are intended third party beneficiaries of the waivers and agreements set forth in this Section 2.13.

 

(g)            If Administrative Agent or any Lender may, under applicable Law, proceed to realize its benefits under any of the Credit Documents giving Administrative Agent or such Lender a Lien upon any Collateral, whether owned by any Borrower or by any other Person, either by judicial foreclosure or by non-judicial sale or enforcement, Administrative Agent or

Page 50

 

any Lender may, at its sole option, determine which of its remedies or rights it may pursue without affecting any of its rights and remedies under this Section 2.13.  If, in the exercise of any of its rights and remedies, Administrative Agent or any Lender shall forfeit any of its rights or remedies, including its right to enter a deficiency judgment against any Borrower or any other Person, whether because of any applicable Laws pertaining to "election of remedies" or the like, each Borrower hereby consents to such action by Administrative Agent or such Lender and waives any claim based upon such action, even if such action by Administrative Agent or such Lender shall result in a full or partial loss of any rights of subrogation that each Borrower might otherwise have had but for such action by Administrative Agent or such Lender.  Any election of remedies that results in the denial or impairment of the right of Administrative Agent or any Lender to seek a deficiency judgment against any Borrower shall not impair any other Borrower's obligation to pay the full amount of the Obligations.  In the event Administrative Agent or any Lender shall bid at any foreclosure or trustee's sale or at any private sale permitted by law or the Credit Documents, Administrative Agent or such Lender may bid all or less than the amount of the Obligations and the amount of such bid need not be paid by Administrative Agent or such Lender but shall be credited against the Obligations.  The amount of the successful bid at any such sale, whether Administrative Agent, Lender or any other party is the successful bidder, shall be conclusively deemed to be the fair market value of the Collateral and the difference between such bid amount and the remaining balance of the Obligations shall be conclusively deemed to be the amount of the Obligations guaranteed under this Section 2.13, notwithstanding that any present or future law or court decision or ruling may have the effect of reducing the amount of any deficiency claim to which Administrative Agent or any Lenders might otherwise be entitled but for such bidding at any such sale.

(h)            The provisions of this Section 2.13 are made for the benefit of the Administrative Agent, the Lenders and their respective successors and assigns, and may be enforced by any such Person from time to time against any of the Borrowers as often as occasion therefor may arise and without requirement on the part of any Lender first to marshal any of its claims or to exercise any of its rights against any of the other Borrowers or to exhaust any remedies available to it against any of the other Borrowers or to resort to any other source or means of obtaining payment of any of the Obligations or to elect any other remedy.  The provisions of this Section 2.13 shall remain in effect until all the Obligations hereunder shall have been paid in full or otherwise fully satisfied.  If at any time, any payment, or any part thereof, made in respect of any of the Obligations, is rescinded or must otherwise be restored or returned by the Lenders upon the insolvency, bankruptcy or reorganization of any of the Borrowers, or otherwise, the provisions of this Section 2.13 will forthwith be reinstated and in effect as though such payment had not been made.

 

(i)            Each Borrower's liability under this Section 2.13 shall be limited to an amount not to exceed as of any date of determination the greater of the following:

 

		
          (i)     the amount of the Loan allocated to each Borrower as set forth on Schedule 2.13 hereto (the "Allocable Amount"); and

		
          (ii)     the amount that could be claimed by Administrative Agent and any Lender from such Borrower under this Section 2.13 without rendering such claim voidable or avoidable under Section 548 of Chapter 11 of the Bankruptcy Code or under any

Page 51

 

applicable state Uniform Fraudulent Transfer Act, Uniform Fraudulent Conveyance Act or similar statute or common law after taking into account, among other things, such Borrower's right of contribution and indemnification from each other Borrower under Section 2.13(j) below.

(j)            Contribution with Respect to Guaranty Obligations.

 

		
          (i)        To the extent that any Borrower (the "Overpaying Borrower") incurs (i) any payment in excess of its Allocable Amount, or (ii) a loss of its Collateral due to the foreclosure (or other realization by lenders) of, or the delivery of deeds in lieu of foreclosure relating to its Collateral, and the value of such Collateral exceeded its Allocable Share (the "Overpayment Amount"), then such Overpaying Borrower shall be entitled, after indefeasible payment in full and the satisfaction of all Obligations to Lenders under the Credit Agreement, to contribution from each of the benefited Borrowers, on a pro rata basis, for the amounts so paid, advanced or benefited, in an amount equal to the difference between the Overpayment Amount and such benefited Borrower's then current Allocable Amount.  Any such contribution payments shall be made within ten (10) Business Days after demand therefor.

		
          (ii)       This Section 2.13(j) is intended only to define the relative rights of Borrowers and nothing set forth in this Section 2.13(j) is intended to or shall impair the obligations of Borrowers, jointly and severally, to pay any amounts as and when the same shall become due and payable in accordance with the terms of this Agreement, including Section 2.13(a) above.  Nothing contained in this Section 2.13(j) shall limit the liability of any Borrower to pay all or any part of the Loan made directly or indirectly to that Borrower and accrued interest, fees and expenses with respect thereto for which such Borrower shall be primarily liable.

		
          (iii)      The parties hereto acknowledge that the rights of contribution and indemnification hereunder shall constitute assets of the Borrower to which such contribution and indemnification is owing.

		
          (iv)     The rights of the indemnifying Borrowers against other Borrowers under this Section 2.13(j) shall be exercisable only upon the full and indefeasible payment of the Obligations.

(k)            The liability of Borrowers under this Section 2.13 is in addition to and shall be cumulative with all liabilities of each Borrower to Agent and Lender under this Agreement and the other Credit Documents to which such Borrower is a party or in respect of any Obligations or obligation of the other Borrower, without any limitation as to amount, unless the instrument or agreement evidencing or creating such other liability specifically provides to the contrary.

 

2.14  Appointment of Parent as Legal Representative for Credit Parties.

 

Each of the Credit Parties hereby appoints the Parent to act as its exclusive legal representative for all purposes under this Credit Agreement and the other Credit Documents (including, without limitation, with respect to all matters related to Borrowings and the repayment of the Loan as described in Article II and Article III hereof) (in such capacity, the

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"Borrower Representative").  Each of the Credit Parties acknowledges and agrees that (a) the Borrower Representative may execute such documents on behalf of all the Credit Parties (whether as Borrowers or Guarantor) as the Borrower Representative deems appropriate in its reasonable discretion and each Credit Party shall be bound by and obligated by all of the terms of any such document executed by the Borrower Representative on its behalf, (b) any notice or other communication delivered by the Administrative Agent or any Lender hereunder to the Borrower Representative shall be deemed to have been delivered to each of the Credit Parties and (c) the Administrative Agent and each of the Lenders shall accept (and shall be permitted to rely on) any document or agreement executed by the Borrower Representative on behalf of the Credit Parties (or any of them).  The Borrowers must act through the Borrower Representative for all purposes under this Credit Agreement and the other Credit Documents.  Notwithstanding anything contained herein to the contrary, to the extent any provision in this Credit Agreement requires any Credit Party to interact in any manner with the Administrative Agent or the Lenders, such Credit Party shall do so through the Borrower Representative.

2.15  Establishment of Impounds.

 

(a)            Real Estate Tax Impounds.  Borrowers shall deposit with Administrative Agent, monthly on each Payment Date, a sum of money (the "Tax Impound") equal to one-twelfth (1/12th) of the annual Real Estate Taxes.  At or before the initial Advance of the Loan, Borrowers shall deposit with Administrative Agent a sum of money which together with the monthly installments will be sufficient to make each of such payments thirty (30) days prior to the date any delinquency or penalty becomes due with respect to such payments.  Deposits shall be made on the basis of Administrative Agent's estimate from time to time of the Real Estate Taxes for the current year (after giving effect to any reassessment or, at Administrative Agent's election, on the basis of the Real Estate Taxes for the prior year, with adjustments when the Real Estate Taxes are fixed for the then current year).  All funds so deposited shall be held by Administrative Agent or its servicer. So long as no Default or Event of Default exists hereunder, Administrative Agent shall credit for Borrowers' account interest at the interest rate actually available to Administrative Agent's or its servicer on the funds held in such account, as determined by Administrative Agent in its sole discretion.  These sums may be commingled with Administrative Agent's general funds and shall not be deemed to be held in trust for the benefit of Borrowers.  Borrowers hereby grant to Administrative Agent for the benefit of the Lenders a security interest in all funds so deposited with Administrative Agent for the purpose of securing the Loan.  Until an Event of Default exists, Administrative Agent shall apply the funds deposited to pay the Real Estate Taxes as provided herein.  While an Event of Default exists, the funds deposited may be applied in payment of the charges for which such funds have been deposited, or to the payment of the Loan or any other charges affecting the security of Lenders, as Administrative Agent may elect, but no such application shall be deemed to have been made by operation of law or otherwise until actually made by Administrative Agent.  Borrowers shall furnish Administrative Agent with bills for the Real Estate Taxes for which such deposits are required at least thirty (30) days prior to the date on which the Real Estate Taxes first become payable.  If at any time the amount on deposit with Administrative Agent, together with amounts to be deposited by Borrowers before such Real Estate Taxes are payable, is insufficient to pay such Real Estate Taxes, Borrowers shall deposit any deficiency with Administrative Agent immediately upon demand.  Administrative Agent shall pay such Real Estate Taxes when the amount on deposit with Administrative Agent is sufficient to pay such Real Estate Taxes and

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Administrative Agent has received a bill for such Real Estate Taxes.  The obligation of Borrowers to pay the Real Estate Taxes, as set forth in the Credit Documents, is not affected or modified by the provision of this paragraph; provided, however, that Borrowers shall not be in default under the Loan for failure to pay Real Estate Taxes if and to the extent there are sufficient funds on deposit in the Tax Impound to timely pay such Real Estate Taxes.  On the Maturity Date, the monies then remaining on deposit with Administrative Agent under this Section 2.15(a) shall, at Administrative Agent's option, be applied against the Obligations or if no Event of Default exists hereunder, returned to Borrowers.

(b)            Replacement Reserve.  Borrowers shall deposit with Administrative Agent on each Payment Date the product of Twenty-Five Dollars ($25.00) multiplied by the number of Senior Housing Units in the Borrowing Base Assets, which shall be held by Administrative Agent or its servicer for replacements and repairs required to be made to the Borrowing Base Assets during the term of the Loan (the "Replacement Escrow Fund").  So long as no Default or Event of Default exists hereunder, Administrative Agent shall credit for Borrowers' account interest at the interest rate actually available to Administrative Agent's servicer on the funds held in such account, as determined by Administrative Agent in its sole discretion.  Borrowers hereby pledge to Administrative Agent for the benefit of the Lenders, and grant a security interest in, any and all monies now or hereafter deposited in the Replacement Escrow Fund as additional security for the payment of the Loan.  Administrative Agent may reasonably reassess its estimate of the amount necessary for the Replacement Escrow Fund from time to time and may adjust the monthly amounts required to be deposited into the Replacement Escrow Fund upon thirty (30) days' notice to Borrowers.  Administrative Agent shall make disbursements from the Replacement Escrow Fund as requested by Borrowers, and approved by Administrative Agent in its reasonable discretion, on a quarterly basis in increments of no less than $5,000.00 upon delivery by Borrowers of Administrative Agent's standard form of draw request accompanied by copies of paid invoices for the amounts requested and, if required by Administrative Agent for any draw request for an invoice exceeding $15,000.00, lien waivers and releases from all parties furnishing materials and/or services in connection with the requested payment.  Administrative Agent may require an inspection of the Borrowing Base Assets at Borrowers' expense prior to making a quarterly disbursement in order to verify completion of replacements and repairs for which reimbursement is sought.  The Replacement Escrow Fund shall be held without interest in Administrative Agent's name and may be commingled with Administrative Agent's general funds at financial institutions selected by Administrative Agent in its reasonable discretion.  Upon the occurrence of an Event of Default, Administrative Agent may apply any sums then present in the Replacement Escrow Fund to the payment of the Loan in any order in its reasonable discretion.  Until expended or applied as above provided, the Replacement Escrow Fund shall constitute additional security for the Loan.  Administrative Agent shall have no obligation to release any of the Replacement Escrow Fund while any Event of Default or Default exists.  All costs and expenses incurred by Administrative Agent in the disbursement of any of the Replacement Escrow Fund shall be paid by Borrowers promptly upon demand or, at Administrative Agent's sole discretion, deducted from the Replacement Escrow Fund.

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2.16  Defaulting Lenders.

 

(a)            Adjustments.  Notwithstanding anything to the contrary contained in this Agreement, if any Lender becomes a Defaulting Lender, then, until such time as that Lender is no longer a Defaulting Lender, to the extent permitted by applicable Law:

 

		
          (i)     Waivers and Amendments.  That Defaulting Lender's right to approve or disapprove any amendment, waiver or consent with respect to this Agreement shall be restricted as set forth in Section 10.01.

		
          (ii)     Reallocation of Payments.  Any payment of principal, interest, fees or other amounts received by the Administrative Agent for the account of that Defaulting Lender (whether voluntary or mandatory, at maturity, pursuant to Article VIII or otherwise, and including any amounts made available to the Administrative Agent by that Defaulting Lender pursuant to Section 10.06), shall be applied at such time or times as may be determined by the Administrative Agent as follows: first, to the payment of any amounts owing by that Defaulting Lender to the Administrative Agent hereunder; second, as the Borrower Representative may request (so long as no Default or Event of Default exists), to the funding of any Loan in respect of which that Defaulting Lender has failed to fund its portion thereof as required by this Agreement, as determined by the Administrative Agent; third, if so determined by the Administrative Agent and the Borrower Representative, to be held in a non-interest bearing deposit account and released in order to satisfy obligations of that Defaulting Lender to fund Loans under this Agreement; fourth, to the payment of any amounts owing to the Lenders, as a result of any judgment of a court of competent jurisdiction obtained by any Lender against that Defaulting Lender as a result of that Defaulting Lender's breach of its obligations under this Agreement; fifth, so long as no Default or Event of Default exists, to the payment of any amounts owing to the Borrowers as a result of any judgment of a court of competent jurisdiction obtained by the Borrowers against that Defaulting Lender as a result of that Defaulting Lender's breach of its obligations under this Agreement; and sixth, to that Defaulting Lender or as otherwise directed by a court of competent jurisdiction; provided that if (x) such payment is a payment of the principal amount of any Advances in respect of which that Defaulting Lender has not fully funded its appropriate share and (y) such Advances were made at a time when the conditions set forth in Section 4.02 were satisfied or waived, such payment shall be applied solely to pay the Advances all non-Defaulting Lenders on a pro rata basis prior to being applied to the payment of any Advances owed to that Defaulting Lender.  Any payments, prepayments or other amounts paid or payable to a Defaulting Lender that are applied (or held) to pay amounts owed by a Defaulting Lender or to post Cash Collateral pursuant to this Section 2.15(a)(ii) shall be deemed paid to and redirected by that Defaulting Lender, and each Lender irrevocably consents hereto.  

(b)            Defaulting Lender Cure.  If the Borrowers and the Administrative Agent agree in writing in their sole discretion that a Defaulting Lender should no longer be deemed to be a Defaulting Lender, the Administrative Agent will so notify the parties hereto, whereupon as of the effective date specified in such notice and subject to any conditions set forth therein, that Lender will, to the extent applicable, purchase that portion of outstanding Advances of the other

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Lenders or take such other actions as the Administrative Agent may determine to be necessary to cause the Advances (in the aggregate) to be held on a pro rata basis by the Lenders in accordance with their applicable Commitment Percentages, whereupon that Lender will cease to be a Defaulting Lender; provided that no adjustments will be made retroactively with respect to fees accrued or payments made by or on behalf of the Borrowers while that Lender was a Defaulting Lender; and provided, further, that except to the extent otherwise expressly agreed by the affected parties, no change hereunder from Defaulting Lender to Lender will constitute a waiver or release of any claim of any party hereunder arising from that Lender's having been a Defaulting Lender.

ARTICLE III  

TAXES, YIELD PROTECTION AND ILLEGALITY

3.01  Taxes.

 

(a)            Any and all payments by any Credit Party to or for the account of the Administrative Agent or any Lender under any Credit Document shall be made free and clear of and without deduction for any and all present or future taxes, duties, levies, imposts, deductions, assessments, fees, withholdings or similar charges, and all liabilities with respect thereto, excluding, in the case of the Administrative Agent and each Lender, taxes imposed on or measured by its overall net income, and franchise and excise taxes imposed on it (in lieu of net income taxes), as a result of a present or former connection between the Administrative Agent or such Lender and the jurisdiction of the Governmental Authority imposing such tax or any political subdivision or taxing authority thereof or therein (other than any such connection arising solely from the Administrative Agent's or such Lender's having executed, delivered or performed its obligations or received a payment under, or enforced, this Credit Agreement or any other Credit Document) (all such non‐excluded taxes, duties, levies, imposts, deductions, assessments, fees, withholdings or similar charges, and liabilities being hereinafter referred to as "Taxes").  If any Credit Party shall be required by any Laws to deduct any Taxes from or in respect of any sum payable under any Credit Document to the Administrative Agent or any Lender, (i) the sum payable shall be increased as necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section), each of the Administrative Agent and such Lender receives an amount equal to the sum it would have received had no such deductions been made, (ii) such Credit Party shall make such deductions, (iii) such Credit Party shall pay the full amount deducted to the relevant taxation authority or other authority in accordance with applicable Laws, and (iv) within thirty (30) days after the date of such payment, such Credit Party shall furnish to the Administrative Agent (which shall forward the same to such Lender) the original or a certified copy of a receipt evidencing payment thereof.

 

(b)            In addition, the Borrowers agree to pay any and all present or future stamp, court or documentary taxes or charges or similar levies which arise from any payment made under any Credit Document or from the execution, delivery, performance, enforcement or registration of, or otherwise with respect to, any Credit Document (hereinafter referred to as "Other Taxes").  For the avoidance of doubt, "Other Taxes" shall not include any taxes assessed on the net or gross income of a taxpayer, regardless of whether such taxes are designated excise or property taxes.

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(c)            If the Borrowers shall be required to deduct or pay any Taxes or Other Taxes from or in respect of any sum payable under any Credit Document to the Administrative Agent or any Lender, the Borrowers shall also pay to the Administrative Agent or to such Lender, as the case may be, at the time interest is paid, such additional amount that the Administrative Agent or such Lender specifies is necessary to preserve the after‐tax yield (after factoring in all taxes, including taxes imposed on or measured by net income) that the Administrative Agent or such Lender would have received if such Taxes or Other Taxes had not been imposed.

 

(d)            The Borrowers agree to indemnify the Administrative Agent and each Lender for (i) the full amount of Taxes and Other Taxes (including any Taxes or Other Taxes imposed or asserted by any jurisdiction on amounts payable under this Section) that are paid by the Administrative Agent and such Lender and that are the responsibility of the Borrowers, (ii) amounts payable under Section 3.01(c) and (iii) any liability (including additions to tax, penalties, interest and expenses) arising therefrom or with respect thereto, in each case whether or not such Taxes or Other Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority.  Payment under this subsection (d) shall be made within thirty (30) days after the date the Lender or the Administrative Agent makes a written demand therefor.

 

3.02  Illegality.

 

If any Lender determines that any Law has made it unlawful, or that any Governmental Authority has asserted that it is unlawful, for any Lender or its applicable Lending Office to make, maintain or fund its Extension of Credit using the Eurodollar Rate, or to determine or charge interest rates based upon the Eurodollar Rate, then, on notice thereof by such Lender to the Borrowers through the Administrative Agent, any obligation of such Lender to continue its Extension of Credit or make Advances at the Eurodollar Rate shall be suspended until such Lender notifies the Administrative Agent and the Borrowers that the circumstances giving rise to such determination no longer exist.  Upon receipt of such notice, the Borrowers shall either (a) agree to substitute the Base Rate for the Eurodollar Base Rate on the outstanding Extension of Credit or (b) upon demand from such Lender (with a copy to the Administrative Agent), prepay such Lender's Extension of Credit on the last day of the Interest Period therefor, if such Lender may lawfully continue to maintain its Extension of Credit to such day, or immediately, if such Lender may not lawfully continue to maintain its Extension of Credit.  Upon any such prepayment or substitution of the Base Rate, the Borrowers shall also pay accrued interest on the amount so prepaid or converted.  Each Lender agrees to designate a different Lending Office if such designation will avoid the need for such notice and will not, in the good faith judgment of such Lender, otherwise be materially disadvantageous to such Lender.

3.03  Inability to Determine Rates.

 

If the Required Lenders determine that for any reason adequate and reasonable means do not exist for determining the Eurodollar Rate with respect to a proposed Advance under the Loan, or that the Eurodollar Rate for any requested proposed Advance does not adequately and fairly reflect the cost to such Lenders of funding such Advance, the Administrative Agent will promptly so notify the Parent and each Lender.  Thereafter, the obligation of the Lenders to make further Advances or maintain the Extensions of Credit using the Eurodollar Rate shall be suspended until the Administrative Agent (upon the instruction of the Required Lenders) revokes

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such notice.  Upon receipt of such notice, the Borrowers may revoke any pending request for a Borrowing at the Eurodollar Rate or may substitute a request for a Borrowing using the Base Rate.

3.04  Increased Cost and Reduced Return; Capital Adequacy; Reserves.

 

(a)            If any Lender determines that as a result of the introduction of or any change in or in the interpretation of any Law, or such Lender's compliance therewith, there shall be any increase in the cost to such Lender of agreeing to make or making, funding or maintaining the Loan, or a reduction in the amount received or receivable by such Lender in connection with any of the foregoing (excluding for purposes of this subsection (a) any such increased costs or reduction in amount resulting from (i) Taxes or Other Taxes (as to which Section 3.01 shall govern), (ii) changes in the basis of taxation of overall net income or overall gross income by the United States or any foreign jurisdiction or any political subdivision of either thereof under the Laws of which such Lender is organized or has its Lending Office, and (iii) reserve requirements contemplated by Section 3.04(c)), then from time to time upon demand of such Lender (with a copy of such demand to the Administrative Agent), the Borrowers shall pay to such Lender such additional amounts as will compensate such Lender for such increased cost or reduction; provided that notwithstanding anything herein to the contrary, the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith shall be deemed to be a change in a requirement of Law, regardless of the date enacted, adopted or issued.

 

(b)            If any Lender determines that the introduction of any Law regarding capital adequacy or any change therein or in the interpretation thereof, or compliance by such Lender (or its Lending Office) therewith, has the effect of reducing the rate of return on the capital of such Lender or any corporation controlling such Lender as a consequence of such Lender's obligations hereunder (taking into consideration its policies with respect to capital adequacy and such Lender's desired return on capital), then from time to time upon demand of such Lender (with a copy of such demand to the Administrative Agent), the Borrowers shall pay to such Lender such additional amounts as will compensate such Lender for such reduction; provided that notwithstanding anything herein to the contrary, the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith shall be deemed to be a change in a requirement of Law, regardless of the date enacted, adopted or issued.

 

(c)            The Borrowers shall pay to each Lender, as long as such Lender shall be required to maintain reserves with respect to liabilities or assets consisting of or including Eurocurrency funds or deposits (currently known as "Eurocurrency liabilities"), additional interest on the unpaid principal amount of the Advances made by such Lender under the Loan equal to the actual costs of such reserves allocated to such portion of the Loan by such Lender (as determined by such Lender in good faith, which determination shall be conclusive), which shall be due and payable on each date on which interest is payable on the Loan, provided the Borrowers shall have received at least fifteen (15) days' prior written notice (with a copy to the Administrative Agent) of such additional interest from such Lender.  If a Lender fails to give notice fifteen (15) days prior to the relevant Payment Date, such additional interest shall be due and payable fifteen (15) days from receipt of such notice.

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(d)            Notwithstanding anything herein to the contrary, the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith shall be deemed to be a change in a requirement of Law under subsection (a) above and/or a change in capital adequacy requirements under subsection (b) above, as applicable, regardless of the date enacted, adopted or issued.

 

3.05  Funding Losses.

 

Upon demand of any Lender (with a copy to the Administrative Agent) from time to time, the Borrowers shall promptly compensate such Lender for and hold such Lender harmless from any loss, cost or expense incurred by it as a result of:

(a)            any payment or prepayment of all or any portion of the Loan on a day other than the last day of the Interest Period for the Loan or portion thereof (whether voluntary, mandatory, automatic, by reason of acceleration, or otherwise);

 

(b)            any failure by the Borrowers (for a reason other than the failure of such Lender to make an Advance) to prepay or borrow any Advance on the date or in the amount notified by the Borrowers; or

 

(c)            any assignment of any portion of the Loan on a day other than the last day of the Interest Period therefor as a result of a request by the Borrowers pursuant to Section 10.16;

 

including any loss of anticipated profits and any loss or expense arising from the liquidation or reemployment of funds obtained by it to maintain the Loan or portion thereof or from fees payable to terminate the deposits from which such funds were obtained.  The Borrowers shall also pay any customary administrative fees charged by such Lender in connection with the foregoing.

For purposes of calculating amounts payable by the Borrowers to the Lenders under this Section 3.05, each Lender shall be deemed to have funded each Advance made by it at the Eurodollar Base Rate used in determining the Eurodollar Rate for such Advance by a matching deposit or other borrowing in the London interbank Eurodollar market for a comparable amount and for a comparable period, whether or not such Advance was in fact so funded.

3.06  Matters Applicable to all Requests for Compensation.

 

(a)            A certificate of the Administrative Agent or any Lender claiming compensation under this Article III and setting forth the additional amount or amounts to be paid to it hereunder shall be conclusive in the absence of manifest error.  In determining such amount, the Administrative Agent or such Lender may use any reasonable averaging and attribution methods.

 

(b)            Upon any Lender's making a claim for compensation under Section 3.01 or 3.04, the Borrowers may replace such Lender in accordance with Section 10.16.

 

(c)            Failure or delay on the part of any Lender to demand compensation pursuant to the foregoing provisions of this Article III shall not constitute a waiver of such Lender's right to demand such compensation, provided that the Borrowers shall not be required to compensate a

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Lender pursuant to the foregoing provisions of this Article III for any increased costs incurred or reductions suffered more than nine (9) months prior to the date that such Lender notifies the Borrowers of the change in Law or other matter giving rise to such increased costs or reductions and of such Lender's intention to claim compensation therefore (except that, if the change in Law giving rise to such increased costs or reductions is retroactive, then the nine-month period referred to above shall be extended to include the period of retroactive effect thereof).

3.07  Survival.

 

All of the Borrowers' obligations under this Article III shall survive termination of the Aggregate Commitments and repayment of all other Obligations hereunder.

ARTICLE IV  

CONDITIONS PRECEDENT TO ADVANCES

The obligation of each Lender to make Advances hereunder is subject to satisfaction of the following conditions precedent:

4.01  Conditions to Initial Advance.

 

The obligation of the Lenders to make the initial Advance hereunder is subject to the satisfaction of such of the following conditions in all material respects on or prior to the Closing Date to the extent not previously satisfied in connection with the 2011 Credit Agreement, the March 2013 Credit Agreement or the July 2013 Joinder Agreement, or expressly waived in writing by the Administrative Agent and Lenders.

(a)            Credit Documents, Organization Documents, Etc.  The Administrative Agent's receipt of the following, each of which shall be originals or facsimiles (followed promptly by originals) unless otherwise specified, each properly executed by a Responsible Officer of the signing Credit Party, each dated the Closing Date (or, in the case of certificates of governmental officials, a recent date before the Closing Date) and each in form and substance satisfactory to the Administrative Agent and its legal counsel:

 

		
          (i)       executed counterparts of this Credit Agreement and the other Credit Documents;

		
          (iii)     a Note executed by the Borrowers in favor of each Lender requesting a Note;

		
          (iii)    copies of the Organization Documents of the Parent and each Borrower certified to be true and complete as of a recent date by the appropriate Governmental Authority of the state or other jurisdiction of its incorporation or organization, where applicable, and certified by a secretary or assistant secretary of Parent and Borrowers to be true and correct as of the Closing Date;

		
          (iv)     such certificates of resolutions or other action, incumbency certificates and/or other certificates of Responsible Officers of each Credit Party as the Administrative Agent may require evidencing the identity, authority and capacity of each

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Responsible Officer thereof authorized to act as a Responsible Officer in connection with this Credit Agreement and the other Credit Documents to which such Credit Party is a party; and

		
          (v)      such documents and certifications as the Administrative Agent may reasonably require to evidence that the Parent and Borrowers are duly organized or formed, and are validly existing, in good standing and qualified to engage in business in (A) the jurisdiction of their incorporation or organization and (B) each jurisdiction where their ownership, lease or operation of properties or the conduct of their business requires such qualification.

(b)            Opinions of Counsel.  The Administrative Agent shall have received, in each case dated as of the Closing Date and in form and substance reasonably satisfactory to the Administrative Agent:

 

		
          (i)     a legal opinion of counsel for the Credit Parties;

		
          (ii)     a legal opinion of special local counsel for the Borrowers for the states in which each Borrowing Base Asset is located with respect to licensing matters and local real estate finance matters and for any other state in which the Parent or any Borrower is organized, in each case addressed to the Administrative Agent, its counsel and the Lenders, but excluding those Borrowing Base Assets for which such legal opinions have been previously delivered to Administrative Agent in connection with the 2011 Credit Agreement.

(c)            Personal Property Collateral.  The Administrative Agent shall have received (in each case in form and substance reasonably satisfactory to the Administrative Agent):

 

		
          (i)     searches of Uniform Commercial Code filings in the state of organization of each Borrower or where a filing would need to be made in order to perfect the Administrative Agent's security interest in the tangible personal property Collateral, copies of the financing statements on file in such jurisdictions and evidence that no Liens exist other than Permitted Liens;

		
          (ii)     UCC financing statements for each appropriate jurisdiction as is necessary, in the Administrative Agent's sole discretion, to perfect the Administrative Agent's security interest in the Collateral;

		
          (iii)     duly executed notices of grant of security interest as are necessary, in the Administrative Agent's sole discretion, to perfect the Administrative Agent's security interest in the Collateral;

		
          (iv)     all instruments and chattel paper in the possession of any of the Borrowers, together with allonges or assignments as may be necessary or appropriate to perfect the Administrative Agent's security interest in the Collateral;

		
          (v)     duly executed consents as are necessary, in the Administrative Agent's sole discretion, to perfect the Administrative Agent's security interest in the Collateral;

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          (vi)     in the case of any tangible personal property Collateral located at a premises leased by a Borrower, such estoppel letters, consents and waivers from the landlords on such real property as may be required by the Administrative Agent; and

		
          (vii)     a copy of each Material Contract.

(d)            Real Property Collateral (Borrowing Base Assets).  The Administrative Agent shall have received, in form and substance reasonably satisfactory to the Administrative Agent and the Lenders, each of the Borrowing Base Asset Deliverables with respect to each Real Property Asset set forth on Schedule 5.12 attached hereto and shall have approved each such Real Property Asset as a Borrowing Base Asset hereunder.

 

(e)            Property and Liability Insurance.  The Administrative Agent shall have received copies of all insurance policies held by (or for the benefit of) the Parent, Borrowers and Operators with respect to the Real Property Assets of the Borrowers, each such policy shall name the Administrative Agent (on behalf of the Lenders) as an additional insured or sole loss payee under a standard mortgagee endorsement, as applicable and each provider of any such insurance shall agree, by endorsement upon the policy or policies issued by it or by independent instruments furnished to the Administrative Agent, that it will give the Administrative Agent (i) thirty (30) days prior written notice before any such policy or policies shall be canceled and (ii) fifteen (15) days prior written notice before any such policy or policies shall be altered.

 

(f)            Officer's Certificates.  The Administrative Agent shall have received a certificate or certificates executed by a Responsible Officer of the Parent as of the Closing Date, in a form satisfactory to the Administrative Agent, stating that (i) each Borrower is in compliance with all existing financial obligations (whether pursuant to the terms and conditions of this Credit Agreement or otherwise) and Parent is in compliance with all financial obligations except when the failure to so comply would not reasonably be expected to have a Material Adverse Effect, (ii) all governmental, shareholder and third party consents and approvals, if any, with respect to the Credit Documents and the transactions contemplated thereby have been obtained, (iii) no action, suit, investigation or proceeding is pending or threatened in any court or before any arbitrator or governmental instrumentality that purports to affect any Consolidated Party or any transaction contemplated by the Credit Documents, if such action, suit, investigation or proceeding could reasonably be expected to have a Material Adverse Effect, (iv) immediately prior to and following the transactions contemplated herein, each of the Credit Parties shall be Solvent, and (v) immediately after the execution of this Credit Agreement and the other Credit Documents, (A) no Default or Event of Default exists and (B) all representations and warranties contained herein and in the other Credit Documents are true and correct in all material respects.

 

(g)            Opening Borrowing Base Certificate.  Receipt by the Administrative Agent of a Borrowing Base Certificate as of the Closing Date, substantially in the form of Exhibit C-2, duly completed and executed by a Responsible Officer of the Parent.

 

(h)            Financial Statements.  Receipt by the Administrative Agent and the Lenders of (i) pro forma projections of financial statements (balance sheet, income and cash flows) for each of the fiscal years of the Consolidated Parties through December 31, 2012 and (ii) such other information relating to the Consolidated Parties as the Administrative Agent may reasonably

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require in connection with the structuring and syndication of credit facilities of the type described herein.

(i)            Opening Compliance Certificate.  Receipt by the Administrative Agent of a Compliance Certificate as of the Closing Date signed by a Responsible Officer of the Parent and including (i) calculations for the fourth fiscal quarter of 2012, taking into account any Advances made or requested hereunder as of the Closing Date and (ii) pro forma calculations of all financial covenants contained herein for each of the following four (4) fiscal quarters (based on the projections set forth in the materials delivered pursuant to clause (h) of this Section 4.01).

 

(j)            Consents/Approvals.  The Credit Parties shall have received all approvals, consents and waivers, and shall have made or given all necessary filings and notices as shall be required to consummate the transactions contemplated hereby without the occurrence of any default under, conflict with or violation of (i) any applicable Law or (ii) any agreement, document or instrument to which any Credit Party is a party or by which any of them or their respective properties is bound, except for such approvals, consents, waivers, filings and notices the receipt, making or giving of which would not reasonably be likely to (A) have a Material Adverse Effect, or (B) restrain or enjoin, impose materially burdensome conditions on, or otherwise materially and adversely affect the ability of any Borrower or any other Credit Party to fulfill its respective obligations under the Credit Documents to which it is a party.

 

(k)            Material Adverse Change.  No material adverse change shall have occurred since December 31, 2012 in the condition (financial or otherwise), business, assets, operations, management or prospects of (i) the Parent, (ii) the Parent and its Consolidated Subsidiaries taken as a whole, or (iii) the Borrowers taken as a whole.

 

(l)            Litigation.  There shall not exist any pending or threatened action, suit, investigation or proceeding against any Credit Party that could reasonably be expected to have a Material Adverse Effect or could otherwise materially and adversely effect the transactions set forth herein or contemplated hereby.

 

(m)            Fees and Expenses.  Payment by the Credit Parties to the Administrative Agent of all fees and expenses relating to the preparation, execution and delivery of this Credit Agreement and the other Credit Documents which are due and payable on the Closing Date, including, without limitation, payment to the Administrative Agent of the fees set forth in the Proposal not previously paid, and reasonable and documented Attorney Costs, consultants' fees, travel expenses and all fees and expenses associated with the due diligence done in connection with and the preparation of documentation with respect to the Borrowing Base Assets or other Collateral.

 

(n)        Other.  Receipt by the Lenders or the Administrative Agent of such other documents, instruments, agreements or information as reasonably requested by any Lender or the Administrative Agent, including, but not limited to, additional legal opinions, contribution agreements, corporate resolutions, indemnifications, information regarding litigation, tax, accounting, labor, insurance, pension liabilities (actual or contingent), real estate leases, material contracts, debt agreements, property ownership and contingent liabilities of the Credit Parties.

 

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4.02  Conditions to Advances and Swing Loans.

 

The obligation of any Lender to make any Advance under the Revolving Loan after the initial Advance and the Swingline Lender to make any Swing Loan, as applicable hereunder, is subject to the satisfaction of such of the following conditions on or prior to the proposed date of the making of such Advance or Swing Loan, as applicable:

(a)            The Administrative Agent shall receive the applicable Loan Borrowing Notice and the conditions set forth in Section 4.01 for the initial Advance shall have been met as of the Closing Date or the Original Closing Date, as applicable;

 

(b)            No Default or Event of Default shall have occurred and be continuing immediately before the making of such Advance and no Default or Event of Default shall exist immediately thereafter;

 

(c)            The representations and warranties of the Borrowers made in or pursuant to the Credit Documents shall be true in all material respects on and as of the date of such Extension of Credit, except for those (i) which expressly relate to an earlier date and (ii) relating to a Real Property Asset or a Borrower or an Operator of a Real Property Asset that is no longer qualified as a Borrowing Base Asset and is not included in the Borrowing Base Amount; and

 

(d)            Immediately following the making of such Advance the sum of the outstanding principal balance of the Obligations shall not exceed the lesser of (i) the Aggregate Committed Amount and (ii) the Borrowing Base Amount.

 

The making of such Advance hereunder shall be deemed to be a representation and warranty by the Borrowers on the date thereof as to the facts specified in clauses (b), (c), and (d) of this Section.

ARTICLE V  

REPRESENTATIONS AND WARRANTIES

The Borrowers hereby represent and warrant (on behalf of themselves, the Parent or the Credit Parties as a whole, as applicable) that:

5.01  Financial Statements; No Material Adverse Effect; No Internal Control Event.

 

(a)            The Audited Financial Statements (i) were prepared in accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein; (ii) fairly present the financial condition of the Consolidated Parties as of the date thereof and their results of operations for the period covered thereby in accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein; and (iii) show all material indebtedness and other liabilities, direct or contingent, of the Consolidated Parties as of the date thereof, including liabilities for taxes, material commitments and Indebtedness.

 

(b)            During the period from December 31, 2012, to and including the Closing Date, there has been no sale, transfer or other disposition by any Consolidated Party of any material

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part of the business or Property of the Consolidated Parties, taken as a whole, and no purchase or other acquisition by any of them of any business or property (including any Capital Stock of any other Person) material in relation to the consolidated financial condition of the Consolidated Parties, taken as a whole, in each case, which is not reflected in the foregoing financial statements or in the notes thereto and has not otherwise been disclosed in writing to the Lenders on or prior to the Closing Date.

(c)            The financial statements delivered pursuant to Section 6.01(a) and (b) have been prepared in accordance with GAAP (except as may otherwise be permitted under Section 6.01(a) and (b)) and present fairly (on the basis disclosed in the footnotes to such financial statements) the consolidated financial condition, results of operations and cash flows of the Consolidated Parties as of such date and for such periods.

 

(d)            Since the date of the Audited Financial Statements, there has been no event or circumstance, either individually or in the aggregate, that has had or could reasonably be expected to have a Material Adverse Effect.

 

(e)            Since the date of the Audited Financial Statements, no Internal Control Event has occurred.

 

5.02  Corporate Existence and Power.

 

Each of the Credit Parties is a corporation, partnership or limited liability company duly organized or formed, validly existing and in good standing under the laws of its jurisdiction of incorporation or organization, has all organizational powers and all material governmental licenses, authorizations, consents and approvals required to carry on its business as now conducted and is duly qualified as a foreign entity and in good standing under the laws of each jurisdiction where its ownership, lease or operation of property or the conduct of its business requires such qualification.

5.03  Corporate and Governmental Authorization; No Contravention.

 

The execution, delivery and performance by each Credit Party of each Credit Document to which such Person is party, have been duly authorized by all necessary corporate or other organizational action, and do not and will not (a) contravene the terms of any of such Person's Organization Documents; (b) conflict with or result in any breach or contravention of, or the creation of any Lien under, (i) any Contractual Obligation to which such Person is a party or (ii) any order, injunction, writ or decree of any Governmental Authority or any arbitral award to which such Person or its property is subject; or (c) violate any Law (including Regulation U or Regulation X issued by the FRB).

5.04  Binding Effect.

 

This Credit Agreement has been, and each other Credit Document, when delivered hereunder, will have been, duly executed and delivered by each Credit Party that is a party thereto.  This Credit Agreement constitutes, and each other Credit Document when so delivered will constitute, a legal, valid and binding obligation of such Credit Party, enforceable against each Credit Party that is a party thereto in accordance with its terms except as enforceability may

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be limited by applicable Debtor Relief Laws and by general equitable principles (whether enforcement is sought by proceedings in equity or at law).

5.05  Litigation.

 

There are no actions, suits, proceedings, claims or disputes pending or, to the knowledge of the Responsible Officers of the Credit Parties, threatened at law, in equity, in arbitration or before any Governmental Authority, by or against any Credit Party or against any of its properties or revenues that (a) purport to affect or pertain to this Credit Agreement or any other Credit Document, or any of the transactions contemplated hereby or (b) either individually or in the aggregate, if determined adversely, would reasonably be expected to have a Material Adverse Effect.

5.06  Compliance with ERISA.

 

(a)            Each Plan is in compliance in all material respects with the applicable provisions of ERISA, the Code and other Federal or state Laws.  Each Plan that is intended to qualify under Section 401(a) of the Code has received a favorable determination letter from the IRS or an application for such a letter is currently being processed by the IRS with respect thereto and, to the knowledge of the Responsible Officers of the Credit Parties, nothing has occurred which would prevent, or cause the loss of, such qualification.  The Parent and each ERISA Affiliate have made all required contributions to each Plan subject to Section 412 of the Code, and no application for a funding waiver or an extension of any amortization period pursuant to Section 412 of the Code has been made with respect to any Plan.

 

(b)            There are no pending or, to the knowledge of the Responsible Officers of the Credit Parties, threatened claims (other than routine claims for benefits), actions or lawsuits, or action by any Governmental Authority, with respect to any Plan that could reasonably be expected to have a Material Adverse Effect.  Neither the Parent nor any ERISA Affiliate or, to the knowledge of the Responsible Officers of the Credit Parties, any other Person has engaged in any prohibited transaction or violation of the fiduciary responsibility rules under ERISA or the Code with respect to any Plan that has resulted or could reasonably be expected to result in a Material Adverse Effect.

 

(c)            No ERISA Event has occurred or is reasonably expected to occur; (ii) no Pension Plan has any Unfunded Pension Liability except any such that would not reasonably be expected to have a Material Adverse Effect; (iii) neither the Parent nor any ERISA Affiliate has incurred, or reasonably expects to incur, any liability under Title IV of ERISA with respect to any Pension Plan (other than premiums due and not delinquent under Section 4007 of ERISA); (iv) neither the Parent nor any ERISA Affiliate has incurred, or reasonably expects to incur, any liability (and no event has occurred which, with the giving of notice under Section 4219 of ERISA, would result in such liability) under Sections 4201 or 4243 of ERISA with respect to a Multiemployer Plan; and (v) the Parent nor any ERISA Affiliate has engaged in a transaction that could be subject to Sections 4069 or 4212(c) of ERISA.

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5.07  Environmental Matters.

 

(a)            Each of the Borrowing Base Assets and all operations with respect to each of the Borrowing Base Assets and the Real Property Assets owned by the Borrowers are in compliance with all applicable Environmental Laws in all material respects and there are no conditions relating to the Borrowing Base Assets, the other Real Property Assets owned by the Borrowers or the Businesses of the Borrowers that are likely to give rise to liability under any applicable Environmental Laws.

 

(b)            None of the Borrowing Base Assets or other Real Property Assets owned by the Borrowers contains, or, to the knowledge of the Responsible Officers of the Parent and the Borrowers, has previously contained, any Hazardous Substances at, on or under such property in amounts or concentrations that constitute a violation of, or could give rise to liability under, applicable Environmental Laws.

 

(c)            Neither the Parent nor any Borrower has received any written or verbal notice of, or inquiry from any Governmental Authority regarding, any violation, alleged violation, non‐compliance, liability or potential liability regarding environmental matters or compliance with Environmental Laws with regard to any of the Borrowing Base Assets, any of the other Real Property Assets owned by the Borrowers or the Businesses of the Borrowers, nor does any Responsible Officer of the Parent or any Borrower have knowledge or reason to believe that any such notice will be received or is being threatened.

 

(d)            Neither the Parent nor any Borrower has generated, treated, stored or disposed of Hazardous Substances at, on or under any of the Borrowing Base Assets or any of the other Real Property Assets owned by the Borrowers in violation of, or in a manner that could give rise to liability under, any applicable Environmental Law.  No Hazardous Substances have been transported or disposed of from the Borrowing Base Assets or the other Real Property Assets owned by the Borrowers, in each case by or on behalf of any Borrower, in violation of, or in a manner that is likely to give rise to liability under, any applicable Environmental Law.

 

(e)            No judicial proceeding or governmental or administrative action is pending or, to the knowledge of the Responsible Officers of the Parent and the Borrowers, threatened, under any Environmental Law to which any Borrower is or will be named as a party, nor are there any consent decrees or other decrees, consent orders, administrative orders or other orders, or other administrative or judicial requirements outstanding under any Environmental Law with respect to the Borrowers, the Borrowing Base Assets, the other Real Property Assets owned by the Borrowers or the Businesses of the Borrowers.

 

5.08  Margin Regulations; Investment Company Act.

 

(a)            No Credit Party is engaged or will engage, principally or as one of its important activities, in the business of purchasing or carrying margin stock (within the meaning of Regulation U issued by the FRB), or extending credit for the purpose of purchasing or carrying margin stock and no part of the proceeds of the Loan will be used, directly or indirectly, for the purpose of purchasing or carrying any margin stock.

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(b)            None of the Parent or any Borrower (i) is or is required to be registered as an "investment company" under the Investment Company Act of 1940 or (ii) is subject to regulation under any other Law which limits its ability to incur the Obligations.

 

5.09  Compliance with Laws.

 

(a)            Each Credit Party is in compliance in all material respects with the requirements of all Laws and all orders, writs, injunctions and decrees applicable to it or to its properties, except in such instances in which such requirement of Law or order, writ, injunction or decree is being contested in good faith by appropriate proceedings diligently conducted.

 

(b)            Each of the Borrowing Base Assets, and the uses of the Borrowing Base Assets, are in compliance in all material respects with the requirements of all Laws and all orders, writs, injunctions and decrees applicable to the Borrowing Base Assets (including, without limitation, building and zoning laws and Healthcare Laws), except in such instances in which such requirement of Law or order, writ, injunction or decree is being contested in good faith by appropriate proceedings diligently conducted.

 

5.10  Ownership of Property; Liens.

 

Each Borrower has good record and marketable title in fee simple to, or valid leasehold interests in, all real property necessary or used in the ordinary conduct of its business (including, in any case, each of the Borrowing Base Assets).  Each Borrowing Base Asset is subject to no Liens, other than Permitted Liens.  No Borrower owns any material intellectual property.

5.11  Corporate Structure; Capital Stock, Etc.

 

As of the Closing Date and as of each date on which such schedule is subsequently updated pursuant to the terms hereof through the delivery of a Compliance Certificate, Schedule 5.11 correctly sets forth the corporate structure of Parent and the entity and ownership structure of the Borrowers and the correct legal name and the jurisdiction of formation of the Parent and each of the Borrowers.  Also included on Schedule 5.11 is a listing of the number of shares of each class of Capital Stock outstanding with respect to each Borrower, the Persons holding equity interests in such Borrowers, their percentage equity or voting interest in the Borrowers and the number and effect, if exercised, of all outstanding options, warrants, rights of conversion or purchase and all other similar rights with respect thereto.  Except as set forth on Schedule 5.11, as of the Closing Date: (i) no Borrower has issued to any third party any securities convertible into any equity interest in such Borrower, or any options, warrants or other rights to acquire any securities convertible into any such equity interest, and (ii) the outstanding Capital Stock of each Borrower is owned by the Persons indicated on Schedule 5.11, is validly issued, fully paid and non‐assessable, and is free and clear of all Liens, warrants, options and rights of others of any kind whatsoever.  Each Borrower is a Wholly Owned Subsidiary of the Parent.  No Borrower holds or otherwise has any interest in any Capital Stock of any other Person.

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5.12  Real Property Assets; Leases.

 

(a)            Part I of Schedule 5.12 (as updated pursuant to the terms hereof through the delivery of a Compliance Certificate) is a true and complete list as of the Closing Date of (i) the street address of each Borrowing Base Asset, (ii) the Borrower which owns each such Borrowing Base Asset, (iii) the facility type of each such Borrowing Base Asset, (iv) the number of Senior Housing Units at such Borrowing Base Asset, (v) the Facility Operating Leases to which each such Borrowing Base Asset is subject, and (vi) the name and address of the applicable Operating Tenant.  The applicable Borrower has a fee simple title to or holds a ground lease interest pursuant to an Eligible Ground Lease in each Borrowing Base Asset listed on Schedule 5.12 hereto and such schedule correctly sets forth the type of interest (fee or leasehold) held by each Borrower in each Borrowing Base Asset.  Each parcel of real property identified on Part I of Schedule 5.12 is a Real Property Asset that qualifies as a Borrowing Base Asset pursuant to the terms hereof and which is subject to a first priority lien (subject to Permitted Liens) in favor of the Administrative Agent (for the benefit of the Lenders) pursuant to a properly‐recorded Mortgage Instrument and Assignment of Leases.

 

(b)            Part II of Schedule 5.12 (as updated pursuant to the terms hereof through the delivery of a Compliance Certificate) properly sets forth all Management Agreements in existence as of the date hereof with respect to the Borrowing Base Assets, together with the applicable Property Manager.  There are no other Management Agreements affecting the Borrowing Base Assets.

 

(c)            Part III of Schedule 5.12 (as updated pursuant to the terms hereof through the delivery of a Compliance Certificate) properly sets forth the names and addresses of all Operating Tenants with respect to the Real Property Assets who are (i) delinquent in paying any franchise, business, intangible, personal property taxes or real estate taxes due beyond the later of the applicable grace period with respect thereto, if any, and forty five (45) days and/or (ii) the subject of any Bankruptcy Event.

 

(d)            Part IV of Schedule 5.12 (as updated pursuant to the terms hereof through the delivery of a Compliance Certificate) properly identifies all Facility Operating Leases in existence as of the date hereof with respect to the Borrowing Base Assets, together with the applicable Operating Tenant and the remaining term of each such Facility Operating Lease.  There are no other Facility Operating Leases affecting the Borrowing Base Assets.

 

(e)            Part V of Schedule 5.12 (as updated pursuant to the terms hereof through the delivery of a Compliance Certificate) properly sets forth all subleases relating to any of the Borrowing Base Assets, the termination of which could result in a Material Adverse Effect on the operation of the Borrowing Base Assets, together with the applicable subtenant with respect thereto, the remaining term of such sublease and whether or not such subtenant is current on payments due thereunder.  There are no other subleases the termination of which could result in a Material Adverse Effect on the operation of the Borrowing Base Assets affecting the Borrowing Base Assets.

 

(f)            Each of the facilities located on the Borrowing Base Assets owned by the Borrowers is currently in good repair, working order and condition without any material

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structural or engineering defects or conditions.  No Condemnation has been instituted and remained undismissed for a period in excess of ninety (90) consecutive days, in each case, with respect to a material portion of any Real Property Asset listed as a Borrowing Base Asset on Part I of Schedule 5.12.  No material casualty event has occurred with respect to the improvements located on any Real Property Asset listed as a Borrowing Base Asset on Part I of Schedule 5.12 which has not been (or, if applicable, will not be able to be) fully remediated with available insurance proceeds.

(g)            No required rental payment, principal or interest payment, payments of real property taxes or payments of premiums on insurance policies payable to the Borrowers with respect to each Real Property Asset is past due beyond the earlier of the applicable grace period with respect thereto, if any, and sixty (60) days.

 

5.13  Material Contracts; Additional Contractual Obligations.

 

(a)            Schedule 5.13 (as updated pursuant to the terms hereof through the delivery of a Compliance Certificate) is a true, correct and complete listing of all Material Contracts with respect to the Borrowing Base Assets (other than those set forth on Part V of Schedule 5.12).  No event of default, or event or condition which with the giving of notice, the lapse of time, a determination of materiality, the satisfaction of any other condition or any combination of the foregoing, would constitute such an event of default, exists with respect to any such Material Contract.  Except as set forth on Schedule 5.13, no Borrower is a party to any contract or agreement that is subject to the Federal Assignment of Claims Act, as amended (31 U.S.C. Section 3727) or any similar state or local law.

 

(b)            With respect to the Borrowing Base Asset located in Peoria, Arizona (the "Arizona Facility"), residents of the independent living facility located adjacent to the Arizona Facility have the right to receive services at the Arizona Facility at discounted rates.  The existence of this program does not, and will not during the term of this Credit Agreement, result in a Material Adverse Effect on the operations of the Arizona Facility.

 

5.14  Investments.

 

All Investments of each Borrower are Investments permitted pursuant to Section 7.04(b).

5.15  Solvency.

 

The Credit Parties are Solvent on a consolidated basis.

5.16  Taxes.

 

The Credit Parties have filed all Federal, state and other material tax returns and reports required to be filed, and have paid all Federal, state and other material taxes, assessments, fees and other material governmental charges levied or imposed upon them or their properties (including all Real Property Assets), income or assets otherwise due and payable, except those which are being contested in good faith by appropriate proceedings diligently conducted and for which adequate reserves have been established in accordance with GAAP.  To the knowledge of

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the Responsible Officers of the Parent and the Borrowers, there is no proposed tax assessment against any Credit Party that would, if made, have a Material Adverse Effect.

5.17  Reserved.

 

5.18  Insurance.

 

All insurance coverage of the Borrowers and all insurance coverage of the Operators with respect to the Borrowing Base Assets, in each case, as in existence as of the Closing Date and as of each date on which such schedule is subsequently updated pursuant to the terms hereof through the delivery of a Compliance Certificate, is in compliance with the requirements set forth on Schedule 5.18.

5.19  Healthcare; Facility Representations and Warranties.

 

(a)            Compliance With Healthcare Laws.  Without limiting the generality of Section 5.09 hereof or any other representation or warranty made herein, no Borrower and no Operator with respect to a Borrowing Base Asset is in material violation of any applicable statutes, laws, ordinances, rules and regulations of any Governmental Authority governing patient healthcare or the operation of any Healthcare Facility (including without limitation Section 1128B(b) of the Social Security Act, as amended, 42 U.S.C. Section 1320a‐7(b) (Criminal Penalties Involving Medicare or State Health Care Programs), commonly referred to as the "Federal Anti-Kickback Statute," and the Social Security Act, as amended, Section 1877, 42 U.S.C. Section 1395nn (Prohibition Against Certain Referrals), commonly referred to as "Stark Statute" (collectively, "Healthcare Laws").  Each of the Borrowers (if applicable) and each of the Operators, comply in all material respects with the applicable requirements of the Joint Commission, the Food and Drug Administration, Drug Enforcement Agency and State Boards of Pharmacy and the federal and state Medicare and Medicaid programs as required by the Healthcare Laws and there are no notices of material violations of the Healthcare Laws with respect to the Borrowers, any of the Borrowing Base Assets or the Operators, in their capacity as an operator of a Borrowing Base Asset.

 

(b)            Licenses, Permits, and Certifications.

 

		
          (i)     Each Borrower and/or Operator has such permits, licenses, franchises, certificates and other approvals or authorizations (collectively, the "Licenses") of Governmental Authorities as are necessary under applicable law or regulations to own its properties and to conduct its business.  Each Borrower and each Operator which owns or operates a Borrowing Base Asset that is a skilled nursing facility has such Licenses as are necessary under applicable law or regulations to provide any Medical Services offered at the Borrowing Base Asset and receive reimbursement under Medicare, Tricare (if applicable) and Medicaid (including without limitation such permits as are required under such federal, state and other health care laws, and under such HMO or similar licensure laws and such insurance laws and regulations, as are applicable thereto).

		
          (ii)     Each Borrower and/or each Operator which owns or operates a Borrowing Base Asset that is a skilled nursing facility has all Medicare, Tricare (if applicable), Medicaid and related provider or supplier billing number(s) and related documentation

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necessary to submit reimbursement claims to Medicare, Tricare and/or Medicaid for any Medical Service furnished by such Person in any jurisdiction where it conducts business.  No such Borrower or Operator is currently subject to suspension, revocation, renewal or denial of its Medicare, Tricare and/or Medicaid certification, supplier billing number(s), or Medicare, Tricare and/or Medicaid participation agreement(s).

		
          (iii)     Each of the facilities located on the Borrowing Base Assets is currently accredited by The Joint Commission (the "Joint Commission") or certified by any required Governmental Authority and is duly licensed to operate in the manner currently operated, as required under applicable Laws.  In addition, each such facility is in compliance in all material respects with the applicable provisions of every Law of any Governmental Authority having jurisdiction over the operation thereof, including, without limitation, Healthcare Laws and fire safety codes.

(c)            Covered Entities.  Each of the Borrowers listed on Schedule 5.19 is a "covered entity" within the meaning of HIPAA.

 

(d)            No Investigations or Proceedings.  Neither the Parent nor any Borrower nor any Operator is the subject of any civil or criminal penalty, process, claim, action or proceeding, investigation or any administrative or other regulatory review, survey, process or proceeding with respect to a Borrowing Base Asset (other than routine surveys or reviews conducted by any government health plan or other accreditation entity) that if determined adversely would reasonably be expected to have a Material Adverse Effect.

 

5.20  Disclosure.

 

Each Credit Party has disclosed to the Administrative Agent and the Lenders all agreements, instruments and corporate or other restrictions to which it or any of its Subsidiaries is subject, and all other matters known to it, that, individually or in the aggregate, could reasonably be expected to result in a Material Adverse Effect.  No report, financial statement, certificate or other information furnished (whether in writing or orally) by or on behalf of any Credit Party to the Administrative Agent or any Lender in connection with the transactions contemplated hereby and the negotiation of this Agreement or delivered hereunder or under any other Credit Document (in each case, as modified or supplemented by other information so furnished) contains any material misstatement of fact or omits to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading.

5.21  Collateral Documents.

 

The Collateral Documents create valid security interests in, and Liens on, the Collateral purported to be covered thereby, which security interests and Liens are currently perfected security interests and Liens, prior to all other Liens other than Permitted Liens which by operation of law or contract would have priority over the Liens securing the Obligations.

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ARTICLE VI  

AFFIRMATIVE COVENANTS

The Borrowers hereby covenant and agree (on their own behalf and on behalf of the Parent, as applicable) that until the Obligations, together with interest, fees and other obligations hereunder, have been paid in full and the Commitments hereunder shall have terminated:

6.01  Financial Statements.

 

The Borrowers shall deliver to the Administrative Agent (and the Administrative Agent shall disseminate such information pursuant to the terms of Section 6.02 hereof), in form and detail reasonably satisfactory to the Administrative Agent and the Required Lenders:

(a)            as soon as available, but in any event within ninety (90) days after the end of each fiscal year of the Parent (or if earlier, the date that is five (5) days after the reporting date for such information required by the SEC), a consolidated balance sheet of the Consolidated Parties as at the end of such fiscal year, and the related consolidated statements of earnings, shareholders' equity and cash flows for such fiscal year, setting forth in each case in comparative form the figures for the previous fiscal year, all in reasonable detail and prepared in accordance with GAAP, audited and accompanied by (i) a report and opinion of a Registered Public Accounting Firm of nationally recognized standing reasonably acceptable to the Required Lenders, which report and opinion shall be prepared in accordance with generally accepted auditing standards and applicable Securities Laws and shall not be subject to any "going concern" or like qualification or exception or any qualification or exception as to the scope of such audit and (ii) an attestation report of such Registered Public Accounting Firm as to the Borrower's internal controls pursuant to Section 404 of Sarbanes‐Oxley expressing a conclusion that the Parent has maintained effective internal controls over financial reporting based on COSO criteria; provided, that the Administrative Agent hereby agrees that a Form 10-K of the Parent in form similar to that delivered as part of the Audited Financial Statements shall satisfy the requirements of this Section 6.01(a); and

 

(b)            as soon as available, but in any event within forty-five (45) days after the end of each of the first three (3) fiscal quarters of each fiscal year of the Parent (or if earlier, the date that is five (5) days after the reporting date for such information required by the SEC), a consolidated balance sheet of the Consolidated Parties as at the end of such fiscal quarter, and the related consolidated statements of earnings, shareholders' equity and cash flows for such fiscal quarter and for the portion of the Parent's fiscal year then ended, setting forth in each case in comparative form the figures for the corresponding fiscal quarter of the previous fiscal year and the corresponding portion of the previous fiscal year, all in reasonable detail and certified by a Responsible Officer of the Parent as fairly presenting the financial condition, results of operations, shareholders' equity and cash flows of the Consolidated Parties in accordance with GAAP, subject only to normal year‐end audit adjustments and the absence of footnotes; provided, that the Administrative Agent hereby agrees that a Form 10-Q of the Parent in form similar to that delivered to the SEC shall satisfy the requirements of this Section 6.01(b).

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6.02  Certificates; Other Information.

 

The Borrowers shall deliver to the Administrative Agent (and the Administrative Agent shall disseminate such information pursuant to the terms of this Section 6.02), in form and detail reasonably satisfactory to the Administrative Agent and the Required Lenders:

(a)            concurrently with the delivery of the financial statements referred to in Sections 6.01(a) and (b), a duly completed Compliance Certificate signed by a Responsible Officer of the Parent;

 

(b)            within thirty (30) days after the end of each fiscal quarter, a Borrowing Base Certificate calculated as of the end of the immediately prior fiscal quarter, duly completed and executed by a Responsible Officer of the Parent; provided, however, the Borrower Representative may, at its option, provide an updated Borrowing Base Certificate more frequently than quarterly;

 

(c)            within thirty (30) days after the end of each calendar month for each Borrowing Base Asset, (A) a detailed operating statement (showing monthly activity and year-to-date) stating operating revenues, operating expenses and operating income for the calendar month just ended and year-to-date and (B) a current revenue journal which includes a schedule showing pay or mix in respect of Third Party Payor Programs and the calculation of the Occupancy Rate;

 

(d)            within thirty (30) days after the end of each calendar quarter, internally prepared quarterly income statements prepared for the Borrowers with respect to the Borrowing Base Assets on a consolidated basis which fairly present the financial condition for the Borrowers with respect to the Borrowing Base Assets on a consolidated basis for such period and year-to-date;

 

(e)            within thirty (30) days after the end of each fiscal year of the Parent, beginning with the fiscal year ending December 31, 2012, an annual operating forecast of the Parent containing, among other things, pro forma financial statements for the then current fiscal year and updated versions of the pro forma financial projections delivered in connection with Section 4.01(h) hereof;

 

(f)            promptly after any request by the Administrative Agent, copies of any detailed audit reports, management letters or recommendations submitted to the board of directors by the independent accountants of the Parent (or the audit committee of the board of directors of the Parent) in respect of the Parent (and, to the extent any such reports, letters or recommendations are prepared separately for any one or more of the Borrowers, such Borrower(s)) by independent accountants in connection with the accounts or books of the Parent (or such Borrower(s)) or any audit of the Parent (or such Borrower(s));

 

(g)            promptly after the same are available, (i) copies of each annual report, proxy or financial statement or other report or communication sent to the stockholders of the Parent, and copies of all annual, regular, periodic and special reports and registration statements which the Parent may file or be required to file with the SEC under Section 13 or 15(d) of the Securities Exchange Act of 1934 or to a holder of any Indebtedness owed by the Parent in its capacity as such holder and not otherwise required to be delivered to the Administrative Agent pursuant hereto and (ii) upon the request of the Administrative Agent, all reports and written information

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to and from the United States Environmental Protection Agency, or any state or local agency responsible for environmental matters, the United States Occupational Health and Safety Administration, or any state or local agency responsible for health and safety matters, or any successor agencies or authorities concerning environmental, health or safety matters;

(h)            promptly upon receipt thereof, a copy of any other report or "management letter" submitted by independent accountants to the Parent or any Borrower in connection with any annual, interim or special audit of the books of the Parent (or any such Borrower(s));

 

(i)            promptly upon any Responsible Officer of the Parent or the Borrowers becoming aware thereof, notice of (i) the existence of any contemplated offering, placement or arrangement which has resulted or could reasonably be expected to result in an Event of Default under the terms of Section 8.01(k), (ii) any matter that has resulted or could reasonably be expected to result in a Material Adverse Effect, (iii) the occurrence of any Internal Control Event and (iv) any other Default or Event of Default;

 

(j)            within ten (10) days upon any Responsible Officer of the Parent or the Borrowers becoming aware thereof, reports detailing income or expenses of any assets directly owned or operated, or which will be included on the balance sheet for purposes of FIN 46, other than as previously disclosed in the Parent's Form 10-K, 10-Q or any other publicly available information;

 

(k)            promptly, such additional information regarding the business, financial or corporate affairs of the Borrowers, or compliance with the terms of the Credit Documents, as the Administrative Agent or any Lender (through the Administrative Agent) may from time to time reasonably request; and

 

(l)            promptly after receipt, copies of all financial statements and other reports and information required to be delivered by (i) the Operating Tenants under the Facility Operating Leases and (ii) the Property Managers under the Management Agreements.

 

Documents required to be delivered pursuant to Section 6.01(a) or (b) or Section 6.02(b), (c), (d), or (e) may be delivered electronically and if so delivered, shall be deemed to have been delivered on the date (i) on which the Parent or the Borrowers post such documents, or provides a link thereto on the Parent's website on the Internet at the website address listed on Schedule 10.02; or (ii) on which such documents are posted by the Administrative Agent (on the Borrowers' behalf) on IntraLinks/IntraAgency or another relevant website, if any, to which each Lender and the Administrative Agent have access (whether a commercial, third‐party website or whether sponsored by the Administrative Agent); provided that: (A) the Borrowers shall deliver paper copies of such documents to the Administrative Agent or any Lender (through the Administrative Agent) that requests the Borrowers to deliver such paper copies until a written request to cease delivering paper copies is given by the Administrative Agent or such Lender (through the Administrative Agent) and (B) the Borrowers shall notify (which may be by facsimile or electronic mail) the Administrative Agent and each Lender (through the Administrative Agent) of the posting of any such documents (each Lender to which delivery of such documents shall be made by posting to any such website shall have been given access to such website on or prior to the date of such posting) and provide to the Administrative Agent by

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electronic mail electronic versions (i.e., soft copies) of such documents.  Notwithstanding anything contained herein, in every instance the Parent shall be required to provide paper copies of the Compliance Certificates required by Section 6.02(a) to the Administrative Agent and each of the Lenders (through the Administrative Agent).  Except for such Compliance Certificates, the Administrative Agent shall have no obligation to request the delivery or to maintain copies of the documents referred to above, and in any event shall have no responsibility to monitor compliance by the Parent or the Borrowers with any such request for delivery, and each Lender shall be solely responsible for requesting delivery to it or maintaining its copies of such documents.

6.03  Preservation of Existence and Franchises.

 

Each Credit Party will do all things necessary to preserve and keep in full force and effect its existence, rights, franchises and authority.  Each Credit Party shall remain qualified and in good standing in each jurisdiction in which it is required to so qualify.

6.04  Books and Records.

 

Each Credit Party will keep complete and accurate books and records of its transactions in accordance with good accounting practices on the basis of GAAP.

6.05  Compliance with Law.

 

Each Borrower will comply with, and cause the Operators to comply in all material respects with, all Laws, rules, regulations and orders, and all applicable restrictions imposed by all Governmental Authorities (including, without limitation, building and zoning laws and all Healthcare Laws), applicable to each Borrowing Base Asset.  Each Borrower will comply in all material respects with all terms and conditions of all Material Contracts to which it is a party.

6.06  Payment of Taxes and Other Indebtedness.

 

Each Credit Party will pay and discharge (or cause to be paid or discharged) (a) all taxes (including, without limitation, any corporate or franchise taxes), assessments and governmental charges or levies imposed upon it, or upon its income or profits, or upon any of its properties (including, without limitation, each Borrowing Base Asset), before they shall become delinquent, (b) all lawful claims (including claims for labor, materials and supplies) which, if unpaid, might give rise to a Lien (other than a Permitted Lien) upon any of its properties, and (c) except as prohibited hereunder, all of its other Indebtedness as it shall become due; provided, however, that (i) no Borrower shall be required to pay any such tax, assessment, charge, levy, claim or Indebtedness which is being contested in good faith by appropriate proceedings and as to which adequate reserves therefor have been established in accordance with GAAP, unless the failure to make any such payment (1) could give rise to an immediate right to foreclose on a Lien securing such amounts in respect of any Borrowing Base Assets or (2) could be reasonably expected to have a Material Adverse Effect and (ii) Parent shall not be required to pay such tax, assessment, charge, levy, claim or Indebtedness unless failure to do so could be reasonably expected to have a Material Adverse Effect.

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6.07  Insurance.

 

In addition to the requirements of any of the other Credit Documents, the Parent and the Borrowers shall maintain, or with respect to any Borrowing Base Asset leased by a Borrower to an Eligible Tenant, cause the applicable Eligible Tenant, to maintain, insurance policies and coverages described on Schedule 5.18 attached hereto, subject to changes in policies and coverages based on the availability of insurance for Persons engaged in ownership and operation of similar types of properties in the applicable location, in each case as approved by the Administrative Agent in its reasonable discretion.  The Borrowers will deliver to the Administrative Agent (a) within ten (10) days of receipt of notice from any insurer a copy of any notice of cancellation or material change in coverage from that existing on the date hereof or with respect to the Borrowing Base Assets and (b) promptly upon receipt, notice of any cancellation or nonrenewal of coverage by the Parent or any Borrower thereof.  The Administrative Agent shall be named as loss payee or mortgagee, as its interest may appear, and/or additional insured with respect to any insurance procured with respect to the Borrowing Base Assets and each provider of any such insurance shall agree, by endorsement upon the policy or policies issued by it or by independent instruments furnished to the Administrative Agent, that it will give the Administrative Agent (i) thirty (30) days prior written notice before any such policy or policies shall be canceled and (ii) fifteen (15) days prior written notice before any policy or policies shall be altered.

6.08  Maintenance of Property.

 

In addition to the requirements of any of the other Credit Documents, the Borrowers shall (a) protect and preserve, or cause to be protected and preserved all Borrowing Base Assets and maintain, or cause to be maintained, in good repair, working order and condition all Borrowing Base Assets, ordinary wear and tear excepted, and (b) from time to time make, or cause to be made, all needed and appropriate repairs, renewals, replacements and additions to such Borrowing Base Assets, so that the business carried on in connection therewith may be properly and advantageously conducted at all times.

6.09  Performance of Obligations.

 

The Credit Parties will pay and discharge at or before maturity, or prior to expiration of applicable notice, grace and curative periods, all their respective material obligations and liabilities, except where the same may be contested in good faith by appropriate proceedings, and will maintain, in accordance with GAAP, appropriate reserves for the accrual of any of the same.

6.10  Visits and Inspections.

 

The Borrowers (subject to applicable Facility Operating Leases and privacy rights of residents), shall permit representatives or agents of any Lender or the Administrative Agent, from time to time, and, if no Event of Default shall have occurred and be continuing, after reasonable prior notice, but not more than twice annually and only during normal business hours to: (a) visit and inspect all Borrowing Base Assets to the extent any such right to visit or inspect is within the control of such Person; (b) inspect and make extracts from their respective books and records, including but not limited to management letters prepared by independent

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accountants but excluding any private records of residents; and (c) discuss with its principal officers, and its independent accountants, its business, properties, condition (financial or otherwise), results of operations and performance.  If requested by the Administrative Agent, the Parent or the Borrowers, as applicable, shall execute an authorization letter addressed to its accountants authorizing the Administrative Agent or any Lender to discuss the financial affairs of the Parent or any Borrower with its accountants.

6.11  Use of Proceeds/Purpose of Loan.

 

The Borrowers shall use the proceeds of the Loan only for the following purposes:  (i) to refinance existing Indebtedness of the Borrowers and (ii) to finance general corporate working capital (including asset acquisitions and capital expenditures) or other corporate purposes of the Borrowers and the other Credit Parties (to the extent not inconsistent with the Credit Parties' covenants and obligations under this Credit Agreement and the other Credit Documents).  The proceeds of Loan will only be used for commercial purposes and no portion of the proceeds will be used for consumer purposes.

6.12  Financial Covenants.

 

(a)            Consolidated Fixed Charge Coverage Ratio.  The Borrowers shall cause the Consolidated Fixed Charge Coverage Ratio for any period of four consecutive calendar quarters ending on the last day of any calendar quarter, to be equal to or greater than 1.20 to 1.00.

 

(b)            Consolidated Tangible Net Worth.  The Borrowers shall cause the Consolidated Tangible Net Worth as of the end of any calendar quarter to be equal to or greater than $800,000,000.

 

6.13  Environmental Matters.

 

(a)            The Borrowers shall comply, and cause the Operators to comply, with all Environmental Laws in respect of the Borrowing Base Assets.  The Borrowers shall promptly take, or cause the Operators to take, all actions necessary to prevent the imposition of any Liens on any of the Borrowing Base Assets arising out of or related to any Environmental Laws.

(b)            In respect of any Borrowing Base Asset, if any of the Parent or any Borrower shall (a) receive notice that any violation of any Environmental Law may have been committed or is about to be committed by such Person, (b) receive notice that any administrative or judicial complaint or order has been filed or is about to be filed against the Parent or any Borrower alleging violations of any Environmental Law or requiring any such Person to take any action in connection with the release of any Hazardous Substance or (c) receive any notice from a Governmental Authority or private party alleging that any such Person may be liable or responsible for costs associated with a response to or cleanup of a release of a Hazardous Substance or any damages caused thereby, the Parent or the applicable Borrower shall provide the Administrative Agent with a copy of such notice within ten (10) Business Days after the receipt thereof by the Parent or any Borrower.  To the extent requested by the Administrative Agent, any Borrower owning any Borrowing Base Asset or any Real Property Asset which is proposed for qualification as such shall execute and deliver to the Administrative Agent an

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environmental indemnity agreement with respect to thereto in form and substance acceptable to the Administrative Agent.

6.14  Single Purpose Entity/Separateness.

 

Each Borrower represents, warrants and covenants as follows:

(a)            Limited Purpose.  The sole purpose conducted or promoted by each Borrower is to engage in the following activities:

 

		
          (i)        to acquire, own, hold, lease, operate, manage, maintain, develop and improve the Borrowing Base Asset owned or leased by it (or an undivided interest therein) and to contract for the operation, maintenance, management and development of such Borrowing Base Asset;

		
          (ii)       to enter into and perform its obligations under the Credit Documents;

		
          (iii)      to sell, transfer, service, convey, dispose of, pledge, assign, borrow money against, finance, refinance or otherwise deal with the Borrowing Base Assets to the extent permitted under the Credit Documents; and

		
          (iv)      to engage in any lawful act or activity and to exercise any powers permitted to limited liability companies, limited partnerships or corporations organized under the laws of the state in which the applicable Borrower was formed that are related or incidental to and necessary, convenient or advisable for the accomplishment of the above mentioned purposes.

(b)            Limitations on Indebtedness, Actions.  Notwithstanding anything to the contrary in the Credit Documents or in any other document governing the formation, management or operation of each Borrower, each Borrower shall not:

 

		
          (i)       other than with respect to the Indebtedness permitted under Section 7.02(d) and the pledge of its assets to secure the Indebtedness of the other Borrowers hereunder, guarantee any obligation of any Person, including any Affiliate, or become obligated for the debts of any other Person or hold out its credit as being available to pay the obligations of any other Person;

		
          (ii)       engage, directly or indirectly, in any business other than as required or permitted to be performed under this Section;

		
          (iii)     incur, create or assume any Indebtedness other than (A) the Loan and (B) unsecured trade payables incurred in the ordinary course of its business that are related to the ownership and operation of the Borrowing Base Assets and which shall (1) not be evidenced by a note, and (2) be paid within sixty (60) days, and (C) Indebtedness described in Section 7.02.

		
          (iv)     make or permit to remain outstanding any loan or advance to, or own or acquire any stock or securities of, any Person, other than (A) those investments permitted

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under the Credit Documents and (B) the amounts reflected as "due from Parent" on accounting records in connection with the operation of the Parent Cash Management System;

		
          (v)        to the fullest extent permitted by law, engage in any dissolution, liquidation, consolidation, merger, sale or other transfer of any of its assets outside the ordinary course of each Borrower's business, except as permitted under Section 7.03.

		
          (vi)        buy or hold evidence of indebtedness issued by any other Person (other than cash or investment-grade securities);

		
          (vii)      form, acquire or hold any subsidiary (whether corporate, partnership, limited liability company or other) or own any equity interest in any other entity;

		
          (viii)     own any asset or property other than the Borrowing Base Assets (or an undivided interest therein) and incidental personal property necessary for the ownership or operation of the Borrowing Base Assets; or

		
          (ix)        take any Material Action without the unanimous written approval of all members or partners of each Borrower.

(c)            Separateness Covenants.  In order to maintain its status as a separate entity and to avoid any confusion or potential consolidation with any Affiliate, each Borrower covenants that it will observe the following covenants:

 

		
          (i)         maintain books and records separate from those of any other Person;

		
          (ii)        maintain its assets in such a manner that it is not costly or difficult to segregate, identify or ascertain such assets;

		
          (iii)       comply with all organizational formalities necessary to maintain its separate existence;

		
          (iv)        hold itself out to creditors and the public as a legal entity separate and distinct from any other entity;

		
          (v)         maintain separate financial statements, showing its assets and liabilities separate and apart from those of any other Person;

		
          (vi)        other than with respect to the consolidated tax returns of its Affiliates, prepare and file its own tax returns separate from those of any Person to the extent required by applicable law, and pay any taxes required to be paid by applicable law;

		
          (vii)       allocate and charge fairly and reasonably any common employee or overhead shared with Affiliates;

		
          (viii)     not enter into any transaction with Affiliates except as permitted under Section 7.06 and under the Parent Cash Management System and except on an arm's-

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length basis on terms which are intrinsically fair and no less favorable than would be available for unaffiliated third parties, and pursuant to written, enforceable agreements;

		
          (ix)        conduct business in its own name;

		
          (x)         not commingle its assets or funds with those of any other Person, other than as (A) permitted or required by this Agreement and (B) contemplated by the Parent Cash Management System;

		
          (xi)       not assume, guarantee or pay the debts or obligations of any other Person, other than with respect to the pledge of its assets to secure the indebtedness of the other Borrowers hereunder and as described in Section 7.02(d).

		
          (xii)       correct any known misunderstanding as to its separate identity;

		
           (xiii)    not permit any Affiliate to guarantee or pay its obligations (other than limited guarantees, indemnities and pledge of assets set forth in the Credit Documents and in the Hazardous Materials Indemnity Agreement) and as permitted under Section 7.06;

		
          (xiv)      not make loans or advances to any other Person except as contemplated by the Parent Cash Management System;

		
          (xv)       pay its liabilities and expenses out of and to the extent of its own funds or from advances permitted under Section 7.06;

		
          (xvi)      maintain a sufficient number of employees in light of its contemplated business purpose and pay the salaries of its own employees, if any, only from its own funds or from advances permitted under Section 7.06;

		
          (xvii)     maintain adequate capital in light of its contemplated business purpose, transactions and liabilities; provided, however, that the foregoing shall not require any equity owner to make additional capital contributions to any Borrower; and

		
          (xviii)   cause the managers, officers, employees, agents and other representatives of each Borrower to act at all times with respect to such Borrower consistently and in furtherance of the foregoing and in the best interests of such Borrower.

Failure of any Borrower to comply with any of the foregoing covenants or any other covenants contained in this Agreement shall not affect the status of such Borrower as a separate legal entity.

6.15  New Borrowers.

 

Upon the acquisition, incorporation or other creation of any direct or indirect Subsidiary of the Parent which owns or is to own a Borrowing Base Asset or the determination that any Real Property Asset owned by a Subsidiary is to become a Borrowing Base Asset, the Borrowers shall (i) cause such Subsidiary to become a Borrower hereunder through the execution and delivery to

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the Administrative Agent of a Borrower Joinder Agreement on or before the earlier of (A) the date on which a Real Property Asset owned by such Subsidiary is included in any calculation (pro forma or otherwise) of the Borrowing Base Amount and (B) the deadline for the delivery of the next Compliance Certificate pursuant to Section 6.02(a), and (ii) cause such Subsidiary to deliver such other documentation as the Administrative Agent may reasonably request in connection with the foregoing, including, without limitation, certified resolutions and other organizational and authorizing documents of such Subsidiary, favorable opinions of counsel to such Subsidiary (which shall cover, among other things, the legality, validity, binding effect and enforceability of the documentation referred to above), all in form, content and scope reasonably satisfactory to the Administrative Agent.

6.16  Pledged Assets.

 

The Borrowers shall at all times subject all Borrowing Base Assets and all of their respective personal property to first priority Liens (subject in any case to Permitted Liens which by operation of law or contract would have priority over the Liens securing the Obligations) in favor of the Administrative Agent to secure the Obligations pursuant to the terms and conditions of the Credit Documents and such other additional security documents as the Administrative Agent shall reasonably request, and deliver all Borrowing Base Asset Deliverables (and any updates to any of the information or materials delivered as a portion thereof) and such other documentation as the Administrative Agent may reasonably request in connection with the foregoing, all in form, content and scope reasonably satisfactory to the Administrative Agent.  In furtherance of the Borrowers' obligations under this Section 6.16, the Borrowers hereby agree that they shall, from time to time, at their own expense, promptly execute, deliver, file and/or record all further instruments and documents, and take all further action, that may be necessary or desirable, or that the Administrative Agent may reasonably request (including, without limitation, the procurement of landlord consents with respect to the assignment of the applicable Borrower's interests in any Borrowing Base Assets), in order to (a) properly evidence the Borrowers' Obligations hereunder or under any Credit Document or (b) perfect, continue and protect the Liens and security interests granted or purported to be granted by any Collateral Documents and to enable the Administrative Agent to exercise and enforce its rights and remedies hereunder and under any other Credit Document with respect to any Collateral.  The applicable Borrower(s) shall promptly deliver to the Administrative Agent a copy of each such instrument and evidence of its proper filing or recording, as necessary or desirable.

6.17  Appraisals.

 

(a)            The Borrowers agree that the Administrative Agent shall have the right, once prior to the Maturity Date (but to the extent no Default or Event of Default has occurred and is continuing, not during the six (6) month period immediately prior to the Maturity Date), to request new or updated appraisals with respect to the Borrowing Base Assets, that the Administrative Agent shall engage all appraisers with respect to such appraisals and that the Borrowers shall pay or reimburse to the Administrative Agent one-half of all reasonable and documented costs and expenses associated therewith to the extent required by and subject to the provisions of Section 10.04 hereof.  Administrative Agent shall have the right to adjust the Collateral Values of the Projects based on the then current as-is fair market value of the Projects stated in such updated appraisals.

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(b)            From time to time, any Lender may request Borrowers to furnish to Administrative Agent appraisal reports or updates to appraisals (as directed by Administrative Agent) in form and substance and from appraisers reasonably satisfactory to Administrative Agent stating the then current fair market value of each Project within thirty (30) days following the request therefor from Administrative Agent; provided, however, that Borrowers shall not be required to pay for any such appraisal more frequently than once during the term of the Loan, unless a Potential Default or Event of Default exists.

 

(c)            From time to time, Borrowers shall have the right to provide to Administrative Agent appraisal reports or updates to appraisals in form and substance and from appraisers reasonably satisfactory to Administrative Agent stating the then current as-is fair market value of one or more of the Projects for the purposes of establishing an updated Collateral Value for such Project, provided that such right may be exercised only one time with respect to any Project during the term of the Loan.  Borrowers shall bear the full cost of any such appraisal or updated appraisal.

6.18  Anti-Terrorism Laws.

 

None of the Credit Parties nor any of their respective Consolidated Subsidiaries (i) will conduct any business or will engage in any transaction or dealing with any Prohibited Person, including making or receiving any contribution of funds, goods or services to or for the benefit of any Prohibited Person, (ii) will deal in, or will engage in any transaction relating to, any property or interests in property blocked pursuant to the Executive Order; or (iii) will engage in or will conspire to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any of the prohibitions set forth in the Executive Order or the Patriot Act.  Each Borrower covenants and agrees to execute and/or deliver to Administrative Agent any certification or other evidence requested from time to time by Administrative Agent in its sole discretion, confirming such Borrower's compliance with this Section including, without limitation, any documentation which is necessary for ongoing compliance with any anti-money laundering Laws applicable to any Lender.

6.19  Compliance With Material Contracts.

 

Each Credit Party shall perform and observe all the material terms and provisions of each Material Contract to be performed or observed by it, maintain each such Material Contract in full force and effect, enforce each such Material Contract in accordance with its terms, take all such action to such end as may be from time to time reasonably requested by the Administrative Agent and, upon the reasonable request of the Administrative Agent, make to each other party to each such Material Contract such demands and requests for information and reports or for action as any Credit Party is entitled to make under such Material Contract.

6.20  Health Care Covenants.

 

Without limiting the generality of the provisions of Section 6.05, each Borrower hereby represents, covenants and agrees as follows:

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(a)            If and to the extent required under applicable Laws, each Borrower shall, and shall cause each Operator to, maintain in full force and effect a valid certificate of need ("CON") or similar certificate, license, or approval issued by the State Regulator for the requisite number of Senior Housing Units (other than the independent living units) in the Borrowing Base Assets, and a provider agreement or other required documentation of approved provider status for each provider payment or reimbursement program, if applicable.  Each Borrower shall, and shall cause each Operator to, operate the Borrowing Base Assets in a manner such that the Licenses shall remain in full force and effect.  True and complete copies of the Licenses have been delivered to Lender.

 

(b)            The Licenses:

 

		
           (i)     Are not now and will not be (A) transferred to any location other than the applicable Borrowing Base Asset or (B) pledged as collateral security for any loan or indebtedness, other than the Loan; and

		
          (ii)     Shall continue in full force and effect throughout the term of the Credit Facility and will remain free from restrictions or known conflicts, and shall not be provisional, probationary or restricted in any manner which would materially impair the use or operation of the applicable Borrowing Base Asset as a skilled nursing facility, assisted living facility, memory care facility, or senior independent living facility, as applicable.

(c)            The Borrowers shall not do, and shall not permit any Operator to do (or suffer to be done), any of the following with respect to the Borrowing Base Assets:

 

		
           (i)     Rescind, withdraw, revoke, or amend the number of Senior Housing Units permitted under the Licenses or otherwise amend the Licenses in such a manner that results in a Material Adverse Effect on the rates charged or otherwise diminish or impair the nature, tenor or scope of the Licenses or which could in any way be reasonably expected to materially impair the use or operation of the applicable Borrowing Base Asset as a skilled nursing facility, assisted living facility, memory care facility, or senior independent living facility, as applicable;

		
           (ii)     Replace or transfer all or any part of any Borrowing Base Asset's licensed beds or CON to another site or location other than another Borrowing Base Asset;

6.21  Public Company Status.

 

The Parent shall, at all times during the term hereof, maintain its status as a publicly traded company whose shares are or are intended to be listed on the New York Stock Exchange or such other nationally recognized stock exchange.

6.22  Use and Application of Insurance Proceeds.

 

(a)            Notice; Repair Obligation.  If any Borrowing Base Asset shall be damaged or destroyed, in whole or in part, by fire or other casualty (a "Casualty"), the Borrowers shall give prompt notice thereof to the Administrative Agent.  Following the occurrence of a Casualty, the

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Borrowers, regardless of whether insurance proceeds are available, shall promptly proceed to restore, repair, replace or rebuild the same to be of at least equal value and of substantially the same character as prior to such damage or destruction, all to be effected in accordance with applicable law.

(b)            Application of Insurance Proceeds.  The Administrative Agent shall apply insurance proceeds to costs of restoring the applicable Borrowing Base Asset or to the payment of the Loan as follows:

 

		
            (i)      if the loss is less than or equal to the Restoration Threshold, the Administrative Agent shall apply the insurance proceeds to restoration provided (A) no Event of Default exists, and (B) the applicable Borrower who owns the affected Borrowing Base Asset promptly commences and is diligently pursuing restoration of the applicable Borrowing Base Asset;

		
          (ii)     if the loss exceeds the Restoration Threshold, the Administrative Agent shall apply the insurance proceeds to restoration provided that (A) at all times during such restoration no Event of Default exists; (B) the Administrative Agent determines throughout the restoration that there are sufficient funds available to restore and repair the affected Borrowing Base Asset to a condition approved by the Administrative Agent; (C) the Administrative Agent determines that the revenues from the affected Borrowing Base Asset and the other Borrowing Base Assets during restoration, taking into account rent loss or business interruption insurance, will be sufficient to pay debt service on the Loan; (D) the Administrative Agent determines that the ratio of the outstanding principal balance of the Loan to appraised value of the affected Borrowing Base Asset and other Borrowing Base Assets after restoration will not exceed the loan-to-value ratio that existed on the Closing Date; (E) the Administrative Agent determines that restoration and repair of the affected Borrowing Base Asset to a condition approved by the Administrative Agent will be completed within nine (9) months after the date of loss or casualty and in any event at least ninety (90) days prior to the Maturity Date; (F) the applicable Borrower promptly commences and is diligently pursuing restoration of the Borrowing Base Asset; and (G) the affected Borrowing Base Asset after the restoration will be in compliance with and permitted under all applicable Laws, including zoning, building and land use laws, rules, regulations and ordinances; and

		
          (iii)     if the conditions set forth in (i) and (ii) above are not satisfied, in the Administrative Agent's reasonable discretion, the Administrative Agent may apply any insurance proceeds it may receive to Obligations owing under the Credit Documents in such order and manner as the Administrative Agent in its sole discretion determines, or allow all or a portion of such proceeds to be used for the restoration of the affected Borrowing Base Asset.

(c)            Disbursement of Insurance Proceeds.  Insurance proceeds applied to restoration will be disbursed by the Administrative Agent on receipt of reasonably satisfactory plans and specifications, contracts and subcontracts, schedules, budgets, lien waivers and architects' certificates, and otherwise in accordance with prudent commercial construction lending practices

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for construction loan advances (including appropriate retainages to ensure that all work is completed in a workmanlike manner).

6.23  Condemnation Awards.

 

The Borrowers shall promptly give the Administrative Agent written notice of the actual or threatened commencement of any condemnation or eminent domain proceeding affecting any Borrowing Base Asset (a "Condemnation") and shall deliver to the Administrative Agent copies of any and all papers served in connection with such Condemnation.  Following the occurrence of a Condemnation, the Borrower that owns the affected Borrowing Base Asset, regardless of whether any award or compensation (an "Award") is available, shall promptly proceed to restore, repair, replace or rebuild the same to the extent practicable to be of at least equal value and of substantially the same character as prior to such Condemnation, all to be effected in accordance with applicable Law.  The Administrative Agent may participate in any such proceeding and the Borrowers will deliver to the Administrative Agent all instruments necessary or required by the Administrative Agent to permit such participation.  Without the Administrative Agent's prior consent, the Borrowers (a) shall not agree to any Award, and (b) shall not take any action or fail to take any action which would cause the Award to be determined.  All Awards for the taking or purchase in lieu of condemnation of any Borrowing Base Asset or any part thereof are hereby assigned to and shall be paid to the Administrative Agent.  The Administrative Agent is hereby irrevocably appointed as each Borrower's attorney-in-fact, coupled with an interest, with exclusive power to collect, receive and retain any Award and to make any compromise or settlement in connection with any such Condemnation and to give proper receipts and acquittances therefor, and in the Administrative Agent's sole discretion to apply the same toward the payment of the Loan, notwithstanding that the Loan may not then be due and payable, or to the restoration of the affected Borrowing Base Asset; provided, however, if the Award is less than or equal to $100,000 and the Borrowers request that such proceeds be used for non-structural site improvements (such as landscape, driveway, walkway and parking area repairs) required to be made as a result of such Condemnation, the Administrative Agent will apply the Award to such restoration in accordance with disbursement procedures applicable to insurance proceeds provided there exists no Default or Event of Default.  The Borrowers, upon request by the Administrative Agent, shall execute all instruments requested to confirm the assignment of the Award to the Administrative Agent, free and clear of all liens, charges or encumbrances.  Anything herein to the contrary notwithstanding, if a Default or an Event of Default exists, the Administrative Agent is authorized to adjust such Award without the consent of the Borrowers and to collect such Award in the name of the Administrative Agent and the Borrowers.

6.24  Cash Management System.

 

(a)            Borrowers covenant and agree that all revenue from the operations of the Borrowing Base Assets will be deposited on a daily basis into either the Portfolio General Receivables Account or one of the Third Party Payor Receivables Accounts, all of which accounts will be subject to a Blocked Account Agreement. Funds in the Third Party Payor Receivables Accounts will be swept on a daily basis into the Portfolio General Receivables Account, and all funds in the Portfolio General Receivables Account will then be swept on a daily basis into the Parent Sweep Account.  All expenses of each Borrowing Base Asset will be paid directly from Parent Sweep Account or other Parent accounts.  All cash swept to the Parent

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Sweep Account from a Borrowing Base Asset and remaining after payment of expenses of such Borrowing Base Asset shall be reflected in the accounting records of Parent and its Subsidiaries with respect to such Borrowing Base Asset as "due from Parent", and all amounts by which expenses paid with respect to a Borrowing Base Asset exceed cash swept to the Parent Sweep Account from such Borrowing Base Asset shall be reflected in the accounting records of Parent and its Subsidiaries with respect to such Borrowing Base Asset as "due to Parent."  Borrowers will not modify the cash management system described in this Section 6.24 ("Parent Cash Management System") without the prior written consent of Administrative Agent.

(b)            During the existence of an Event of Default, all amounts in the Portfolio General Receivables Account will be under the sole control and domain of Administrative Agent and the Deposit Account Bank shall disburse all such funds to Administrative Agent.  Administrative Agent shall disburse such funds to Borrowers on a daily basis up to the budgeted amount of operating expenses of the Projects contained in an operating budget approved by Administrative Agent, or for such other or additional operating expenses as may be approved by Administrative Agent.  Administrative Agent shall apply the balance remaining in the Portfolio General Receivables Account as of the end of each month to the Obligations, in such order as Administrative Agent, in its sole discretion, may elect.

 

6.25  Keepwell.  Each Qualified ECP Guarantor hereby jointly and severally absolutely, unconditionally and irrevocably undertakes to provide such funds or other support as may be needed from time to time by each other Credit Party to honor all of its obligations under the Guaranty in respect of Swap Obligations under any Secured Rate Contract (provided, however, that each Qualified ECP Guarantor shall only be liable under this Section 6.25 for the maximum amount of such liability that can be hereby incurred without rendering its obligations under this Section 6.25, or otherwise under the Guaranty and Security Agreement, voidable under applicable Requirements of Law relating to fraudulent conveyance or fraudulent transfer, and not for any greater amount). The obligations of each Qualified ECP Guarantor under this Section 6.25 shall remain in full force and effect until the guarantees in respect of Swap Obligations under each Secured Rate Contract have been discharged, or otherwise released or terminated in accordance with the terms of this Agreement. Each Qualified ECP Guarantor intends that this Section 6.25 constitute, and this Section 6.25 shall be deemed to constitute, a "keepwell, support, or other agreement" for the benefit of each other Credit Party for all purposes of Section 1a(18)(A)(v)(II) of the Commodity Exchange Act.

 

ARTICLE VII  

NEGATIVE COVENANTS

The Borrowers hereby covenant and agree (on their own behalf and on behalf of the Parent, as applicable) that until the Obligations, together with interest, fees and other obligations hereunder, have been paid in full and the Commitments hereunder shall have terminated:

7.01  Liens.

 

No Borrower shall, at any time, create, incur, assume or suffer to exist any Lien upon any of its assets or revenues, whether now owned or hereafter acquired, other than Permitted Liens.

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The Parent shall not create, or permit the creation of, any Lien upon the Capital Stock of any Borrower.

7.02  Indebtedness.

 

No Borrower shall create, incur, assume or suffer to exist any Indebtedness, except:

(a)            Indebtedness under the Credit Documents;

 

(b)            Indebtedness of the Borrowers set forth in Schedule 7.02 (and renewals, refinancings and extensions thereof in amounts no greater, and on terms and conditions no less favorable to such Person than such existing Indebtedness);

 

(c)            unsecured intercompany Indebtedness of any Borrower to any Credit Party; provided, that such Indebtedness shall be expressly subordinate in all respects to the Obligations on terms reasonably acceptable to the Administrative Agent; and

 

(d)            Indebtedness of the Borrowers under equipment leasing or financing arrangements for use at the Borrowing Base Assets, provided such Indebtedness shall not exceed (i) $100,000 for any Borrowing Base Asset with fewer than 150 units and (ii) $200,000 for any Borrowing Base Asset with 150 or more units.

 

7.03  Fundamental Changes.

 

No Borrower shall merge, dissolve, liquidate, consolidate with or into another Person, provided, that, notwithstanding the foregoing provisions of this Section 7.03, any Consolidated Party which is not a Borrower may be merged or consolidated with or into any Borrower provided that such Borrower shall be the continuing or surviving entity and such Borrower must continue to satisfy the requirements of Section 6.14.

7.04  Dispositions; Acquisitions.

 

(a)            The Borrowers shall not make any sale, lease, transfer or other Disposition of (i) any Borrowing Base Asset, except to the extent permitted pursuant to Section 7.12 hereof; or (ii) any material assets of the Borrowers unless (A) such sale, lease, transfer or other Disposition is performed in the ordinary course of the Borrowers' Businesses or (B) the consideration paid in connection with such material assets (1) is in cash or Cash Equivalents, (2) is in an amount not less than the fair market value of the Property disposed of and (3) does not exceed, in the aggregate during any calendar year (for the all Borrowers and all such sales, leases, transfers or other Dispositions) $1,000,000.  The Parent shall not, in any case, transfer, sell, lease, pledge or otherwise Dispose of the Capital Stock of the Borrowers held by it without the prior written consent of the Administrative Agent (which consent may be granted or withheld in the sole discretion of the Administrative Agent).

 

(b)            The Borrowers shall not, without the prior written consent of the Administrative Agent (which consent may be granted or withheld in the sole discretion of the Administrative Agent), make any Investments or otherwise acquire any material real or personal property other than: (i) acquisitions of personal property in the ordinary course of business to the extent

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required to continue to operate the Borrowers' Businesses in the manner in which they are currently being operated, (ii) investments in cash or Cash Equivalents, (iii) investments in Borrowing Base Assets and (iv) the amounts reflected as "due from Parent" on accounting records in connection with the operation of the Parent Cash Management System.

7.05  Business Activities.

 

No Borrower shall engage in any business activities other than owning, holding, leasing, operating, developing, managing, improving and providing secured financing for real and personal property and similar interests in leasehold properties which are owned by or net leased to healthcare operators for use as Healthcare Facilities and activities incidental thereto.

7.06  Transactions with Affiliates and Insiders.

 

No Borrower shall, at any time, enter into or permit to exist any transaction or series of transactions with any officer, director or Affiliate of such Borrower other than (a) advances by such Person of working capital to any such Borrower, (b) transfer of assets to any Borrower, provided such transfer is made without obligation on the receiving Borrower to return the assets transferred, (c) intercompany transactions expressly permitted by Section 7.02, Section 7.03 or Section 7.04 and under the Parent Cash Management System, (d) normal compensation and reimbursement of expenses of officers and directors and (e) except as otherwise specifically limited in this Credit Agreement, other transactions which are entered into in the ordinary course of such Borrower's business on terms and conditions substantially as favorable to such Borrower as would be obtainable by it in a comparable arms‐length transaction with a Person other than an officer, director or Affiliate.

7.07  Organization Documents; Fiscal Year.

 

No Credit Party shall (a) amend, modify or change its organization documents in a manner adverse to the Lenders or (b) change its fiscal year.

7.08  Modifications to Other Documents.

 

The Borrowers shall not, without the prior written consent of the Required Lenders enter into any material amendment or modification or cancel or terminate any Material Contract (subject to the provisions of this Section 7.08 with respect to Facility Operating Leases) prior to its stated maturity.  Notwithstanding the foregoing, with respect to any Facility Operating Lease, the Borrowers may amend or modify or permit the amendment or modification of any Facility Operating Lease without the Required Lenders' prior written consent, except to the extent such amendment or modification:  (a) decreases the rent or any other monetary obligations under any Facility Operating Lease (except as set forth in the proviso to this sentence); (b) shortens the term of any Facility Operating Lease; (c) releases or limits the liability of any guarantor under any Facility Operating Lease; (d) releases any security deposits or letters of credit or any other security or collateral under any Facility Operating Lease or under any guaranty of or pledge or security agreement in respect of any Facility Operating Lease; (e) consents to the assignment, delegation or other transfer of rights and obligations under any Facility Operating Lease; (f) changes the terms of any purchase option under any Facility Operating Lease, including the purchase price or the time during which such option may be exercised; or (g) makes any other

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material change to the terms and conditions of any Facility Operating Lease or increases in any material respect the obligations or liabilities of the applicable Borrower thereunder; provided, however, that to the extent such amendment, modification or restructuring of a Facility Operating Lease involves the replacement of an Operating Tenant, (A) the Borrowers shall have delivered to the Lenders and the Administrative Agent (1) the identity of such proposed new tenant (the "New Tenant"), (2) the proposed lease with such New Tenant (the "New Lease") and (3) such other information as reasonably requested and (B) provided that (1) such New Tenant is an Eligible Tenant, (2) the New Lease provides for rent payments in each year which are at least eighty percent (80%) of the rent payments in each year due under the lease being amended, modified or replaced (the "Existing Facility Operating Lease") and (3) the New Lease is otherwise substantially similar in all material respects to the Existing Facility Operating Lease, then within twenty (20) Business Days after receiving the foregoing information from the Borrowers, with a request that the Required Lenders approve the New Tenant and New Lease and which prominently states on the face of the request that it will be deemed approved if not approved or disapproved within twenty (20) Business Days after receipt by Administrative Agent, if the Required Lenders have not either approved or disapproved such proposal, the Required Lenders shall be deemed to have approved such proposal.

7.09  Ownership of Subsidiaries.

 

Notwithstanding any other provisions of this Credit Agreement to the contrary, (a) no Borrower shall own any Capital Stock of any other entity; (b) no Person other than the Parent or its Wholly Owned Subsidiaries shall own any Capital Stock of any Borrower; and (c) no Borrower shall permit the creation, incurrence, assumption or existence of any Lien on any Capital Stock of any Borrower.

7.10  No Further Negative Pledges.

 

No Borrower will enter into, assume or become subject to any Negative Pledges or agreement prohibiting or otherwise restricting the existence of any Lien upon any of its property in favor of the Administrative Agent (for the benefit of the Lenders) for the purpose of securing the Obligations, whether now owned or hereafter acquired, or requiring the grant of any security for any obligation if such property is given as security for the Obligations, except (a) in connection with any Permitted Lien or any document or instrument governing any Permitted Lien, provided that any such restriction contained therein relates only to the asset or assets subject to such Permitted Lien, and (b) pursuant to customary restrictions and conditions contained in any agreement relating to the sale of any property permitted under Section 7.04, pending the consummation of such sale.

7.11  Limitation on Restricted Actions.

 

The Borrowers will not directly or indirectly, create or otherwise cause or suffer to exist or become effective any encumbrance or restriction on the ability of any such Person to (a) pay dividends or make any other distributions to the Parent on its Capital Stock or with respect to any other interest or participation in, or measured by, its profits, (b) pay any Indebtedness or other obligation owed to any Credit Party, (c) make loans or advances to any Credit Party, (d) sell, lease or transfer any of its properties or assets to any Credit Party, or (e) act as a Borrower and

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pledge its assets pursuant to the Credit Documents or any renewals, refinancings, exchanges, refundings or extension thereof, except (in respect of any of the matters referred to in clauses (a)‐(d) above) for such encumbrances or restrictions existing under or by reason of (i) this Credit Agreement and the other Credit Documents, (ii) applicable Law, or (iii) any Lien or any documentation or instrument governing any Lien permitted under Section 7.01 provided that any such restriction contained therein relates only to the asset or assets subject to such Lien.

7.12  Addition/Replacement of Borrowing Base Assets.

 

(a)            The Borrowers shall not request a release of any Borrowing Base Assets from the Liens established pursuant to the applicable Mortgage Instrument and Assignment of Leases with respect thereto or add any Real Property Assets as Borrowing Base Assets hereunder except in accordance with the following:

 

		
           (i)     The Borrowers may at any time include additional Real Property Assets (which satisfy the requirements set forth in the definition of Borrowing Base Assets, including, without limitation, delivery of each of the Borrowing Base Asset Deliverables with respect thereto) as Borrowing Base Assets with the written approval of the Administrative Agent.

		
          (ii)     The Borrowers may obtain releases of Borrowing Base Assets from the Liens and security interests of the Administrative Agent hereunder and under the Collateral Documents relating thereto and the termination of the Borrowers who own such Borrowing Base Assets as Borrowers under this Credit Agreement through satisfaction of each of the following conditions:  (A) the applicable Borrower shall deliver to the Administrative Agent, not less than thirty (30) days prior to the date of such requested release a written request for release of the applicable Borrower and Borrowing Base Asset, (B) the applicable Borrower shall deliver, together with such request for release, a pro forma Compliance Certificate showing that, on a pro forma basis, after giving effect to such release, (1) all financial covenants contained herein shall be satisfied and (2) the outstanding principal amount of Obligations shall not exceed the lesser of the Aggregate Committed Amount and the Borrowing Base Amount (after giving effect to the removal of such Borrowing Base Asset from the calculation of the Borrowing Base Amount or Borrowers shall pay to Administrative Agent an amount necessary to make such statement true (the "Release Price")), (C) a Responsible Officer of the Borrowers shall certify in writing to the Administrative Agent that no Default or Event of Default shall exist immediately after giving effect to the applicable release and (D) the Administrative Agent shall have received evidence, acceptable to it in its discretion that the matters set forth in such request, Compliance Certificate and certification are true and correct in all material respects.  To the extent all such conditions to release are satisfied, including the payment of the Release Price, the Administrative Agent will, at the Borrowers' expense, deliver to the applicable Borrower a partial release letter in the form of Exhibit I attached hereto.

(b)            The Borrowers shall not otherwise actively cause or willfully fail to take any commercially reasonable action that causes any Borrowing Base Asset to fail to qualify as such during the term of this Credit Agreement.

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(c)            Immediately upon a Responsible Officer of any Borrower obtaining knowledge that a Borrowing Base Asset fails to qualify as such, Borrowers shall deliver a pro forma Borrowing Base Certificate (which certificate shall include an update to the information set forth on Schedule 5.12) demonstrating that, upon giving effect to the removal of the Collateral Value or Availability Amount attributable to such former Borrowing Base Asset from the calculation of the Borrowing Base Amount, the Borrowers shall be in compliance with Section 2.01(a) hereof.

 

(d)            The Borrowers shall not include any Real Property Asset as a Borrowing Base Asset on any schedule, Borrowing Base Certificate or Compliance Certificate delivered in connection with this Credit Agreement unless (i) such Real Property Asset meets the definition of Borrowing Base Asset and Borrowers have otherwise satisfied the requirements set forth in this Agreement and (ii) such Real Property Asset continues to qualify as a Borrowing Base Asset as of the date of such inclusion.

 

7.13  Limitation of Borrowing Base Assets in Metropolitan Statistical Area.

 

Anything herein to the contrary notwithstanding, at no time shall the Collateral Value of the Borrowing Base Assets in any Metropolitan Statistical Area exceed twenty percent (20%) of the total Collateral Value of all Borrowing Base Assets, except those that exist as of the Closing Date and any that may be otherwise approved by the Required Lenders.

ARTICLE VIII  

EVENTS OF DEFAULT AND REMEDIES

8.01  Events of Default.

 

The occurrence and continuation of any of the following shall constitute an Event of Default:

(a)            Non‐Payment.  The Borrowers or any other Credit Party fails to pay when and as required to be paid herein (i) any amount of principal of the Loan when due, (ii) within five (5) days after the same becomes due, any interest on the Loan or any Unused Fee, (iii) within ten (10) Business Days after the earlier of (A) a Responsible Officer of the Parent or any Borrower becoming aware that the same has become due or (B) written notice from the Administrative Agent to the Borrowers, any other fee payable herein or any other amount payable herein or under any other Credit Document becomes due, or (iv) the Obligations at the Maturity Date, whether by acceleration or otherwise; or

 

(b)            Specific Covenants.  The Borrowers fail to perform or observe any term, covenant or agreement contained in (i) any of Sections 6.01 6.02 or 6.10 within ten (10) Business Days after the same becomes due or required or (ii) any of Sections 6.07, 6.11, 6.12, 6.14, 6.15 or Sections 7.02, 7.03, 7.05, 7.07, 7.09 through 7.12; or

 

(c)            Other Defaults.  Any Credit Party fails to perform or observe any other covenant or agreement (not specified in subsection (a) or (b) above) contained in any Credit Document on its part to be performed or observed and such failure continues for thirty (30) days after the earlier of (i) a Responsible Officer of the Parent or any Borrower becoming aware of such default or (ii) written notice thereof by the Administrative Agent to the Borrowers (or, if such

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failure cannot be reasonably cured within such period, sixty (60) days, so long as the applicable Credit Party has diligently commenced such cure and is diligently pursuing completion thereof); or

(d)            Representations and Warranties.  Any representation, warranty, certification or statement of fact made or deemed made by the Borrowers on behalf of the Borrowers, the Parent or any other Credit Party and contained in this Credit Agreement, in any other Credit Document, or in any document delivered in connection herewith or therewith shall be incorrect or misleading in any material respect when made or deemed made; or

 

(e)            Cross‐Default.  (i) Any Borrower (A) fails to perform or observe (beyond the applicable grace or cure period with respect thereto, if any) any Contractual Obligation, (B) fails to make any payment when due (whether by scheduled maturity, required prepayment, acceleration, demand, or otherwise and beyond the applicable grace or cure period with respect thereto, if any) in respect of any Indebtedness (other than Indebtedness hereunder) or otherwise fails to observe or perform any other agreement or condition relating to any such Indebtedness or contained in any instrument or agreement evidencing, securing or relating thereto, or any other event occurs, the effect of which event of default is to cause, or to permit the holder or holders of such Indebtedness (or a trustee or agent on behalf of such holder or holders) to cause, with the giving of notice if required, such Indebtedness to be demanded or to become due or to be repurchased, prepaid, defeased or redeemed (automatically or otherwise), or an offer to repurchase, prepay, defease or redeem such Indebtedness to be made, prior to its stated maturity, or cash collateral in respect thereof to be demanded, in each case to the extent such Contractual Obligation or Indebtedness or other obligation is in an amount (including undrawn committed or available amounts and including amounts owing to all creditors under any combined or syndicated credit arrangement) of more than the Threshold Amount or (ii) there occurs a "default" or an "event of default" (as such terms are defined in the Facility Operating Leases) under any Facility Operating Lease; or

 

(f)            Insolvency Proceedings, Etc.  The Parent, any Borrower or any Operator institutes or consents to the institution of any proceeding under any Debtor Relief Law, or makes an assignment for the benefit of creditors; or applies for or consents to the appointment of any receiver, trustee, custodian, conservator, liquidator, rehabilitator or similar officer for it or for all or any material part of its properties; or any receiver, trustee, custodian, conservator, liquidator, rehabilitator or similar officer is appointed without the application or consent of the Parent, such Borrower or such Operator and the appointment continues undischarged or unstayed for sixty (60) days (or, if such appointment or proceeding cannot be reasonably discharged or stayed within such period, ninety (90) days, so long as the applicable party has diligently commenced the actions necessary to obtain such discharge or stay and is diligently pursuing completion thereof); or any proceeding under any Debtor Relief Law relating to the Parent, any Borrower or any Operator or to all or any material part of its property is instituted without the consent of the Parent, such Borrower or such Operator, as the case may be, and continues undismissed or unstayed for sixty (60) days (or, if such proceeding cannot be reasonably dismissed or stayed within such period, ninety (90) days, so long as the applicable party has diligently commenced the actions necessary to obtain such dismissal or stay and is diligently pursuing completion thereof), or an order for relief is entered in any such proceeding; or

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(g)            Inability to Pay Debts; Attachment.  (i) The Parent or any Borrower becomes unable or admits in writing its inability or fails generally to pay its debts as they become due, or (ii) any writ or warrant of attachment or execution or similar process in an amount in excess of the Threshold Amount is issued or levied against all or any material part of the properties of the Parent or any Borrower and is not released, vacated or fully bonded within sixty (60) days after its issue or levy; or

 

(h)            Judgments.  There is entered against the Parent or any Borrower (i) any one or more final judgments or orders for the payment of money in an aggregate amount exceeding the Threshold Amount (to the extent not covered by independent third‐party insurance as to which the insurer does not dispute coverage or not otherwise paid in full), or (ii) any one or more non‐monetary final judgments that have, or could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect and, in either case, (A) enforcement proceedings are commenced by any creditor upon such judgment or order, or (B) there is a period of ten (10) consecutive days during which a stay of enforcement of such judgment, by reason of a pending appeal or otherwise, is not in effect; or

 

(i)            ERISA.  (i) An ERISA Event occurs with respect to a Pension Plan or Multiemployer Plan which has resulted or could reasonably be expected to result in liability of a Borrower under Title IV of ERISA to the Pension Plan, Multiemployer Plan or the PBGC in an aggregate amount in excess of the Threshold Amount, or (ii) a Borrower or any ERISA Affiliate fails to pay when due, after the expiration of any applicable grace period, any installment payment with respect to its withdrawal liability under Section 4201 of ERISA under a Multiemployer Plan in an aggregate amount in excess of the Threshold Amount; or

 

(j)            Invalidity of Credit Documents; Guaranty.  (i) Any Credit Document, at any time after its execution and delivery and for any reason other than as expressly permitted hereunder or as a result of satisfaction in full of all the Obligations or as a result of the Administrative Agent's failure to record and/or file where and/or when appropriate any Collateral Documents or any continuation statements, ceases to be in full force and effect; or any Credit Party contests in any manner the validity or enforceability of any Credit Document; or any Credit Party denies that it has any or further liability or obligation under any Credit Document, or purports to revoke, terminate or rescind any Credit Document; (ii) the Guaranty or the Hazardous Materials Indemnity Agreement shall cease to be in full force and effect, or the Guarantor shall deny or disaffirm its obligations under such Guaranty or Hazardous Materials Indemnity Agreement, or any Guarantor shall default in the due performance or observance of any term, covenant or agreement on its part to be performed or observed pursuant to the Guaranty or Hazardous Materials Indemnity Agreement; or (iii) any Facility Operating Lease shall cease to be in full force and effect, or the Operating Tenant shall deny or disaffirm such Operating Tenant's obligations under such Facility Operating Lease; or (iv) any of the Eligible Ground Leases shall be terminated by the ground lessor thereunder or otherwise cease to be in full force and effect by action of the ground lessor thereunder; or

 

(k)            Change of Control.  There occurs any Change of Control.

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8.02  Remedies Upon Event of Default.

 

If any Event of Default occurs and is continuing, the Administrative Agent shall, at the request of, or may, with the consent of, the Required Lenders, upon written notice to the Borrowers in any instance, take any or all of the following actions:

(a)            declare the commitment of each Lender to make Advances to be terminated, whereupon such commitments and obligation shall be terminated;

 

(b)            declare the unpaid principal amount of the Loan, all interest accrued and unpaid thereon, and all other amounts owing or payable hereunder or under any other Credit Document to be immediately due and payable, without presentment, demand, protest or additional notice of any kind, all of which are hereby expressly waived by the Borrowers; and

 

(c)            exercise on behalf of itself and the Lenders all rights and remedies available to it and the Lenders under the Credit Documents or applicable law;

 

provided, however, that upon the occurrence of an Event of Acceleration, the obligation of each Lender to make Advances shall automatically terminate, the unpaid principal amount of the Loan and all interest and other amounts as aforesaid shall automatically become due and payable without further act of the Administrative Agent or any Lender.

8.03  Application of Funds.

 

(a)            After the exercise of remedies in accordance with the provisions of Section 8.02 (or after the Loan has automatically become immediately due and payable as set forth in the proviso to Section 8.02), any amounts received on account of the Obligations shall be applied by the Administrative Agent in the following order:

 

First, to payment of that portion of the Obligations constituting fees, indemnities, expenses and other amounts (including Attorney Costs and amounts payable under Article III) payable to the Administrative Agent in its capacity as such or incurred by Administrative Agent in the exercise of its rights and remedies under this Agreement;

Second, to payment of that portion of the Obligations constituting fees, indemnities and other amounts (other than principal and interest) payable to the Lenders (including Attorney Costs and amounts payable under Article III), ratably among the Lenders in proportion to the amounts described in this clause Second payable to them;

Third, to payment of that portion of the Obligations constituting accrued and unpaid interest on the Loan, ratably among the Lenders in proportion to the respective amounts described in this clause Third payable to them;

Fourth, to payment of that portion of the Obligations constituting unpaid principal of the Loan, ratably among such parties in proportion to the respective amounts described in this clause Fourth held by them; and

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Last, the balance, if any, after all of the Obligations have been indefeasibly paid in full, to the Borrowers or as otherwise required by Law.

(b)            Excluded Rate Contract Obligations with respect to any Guarantor shall not be paid with amounts received from such Guarantor or its assets, but appropriate adjustments shall be made with respect to payments from other Credit Parties to preserve the allocation to the Obligations otherwise set forth above in Section 8.03(a).

 

8.04  Administrative Agent's Right to Perform the Obligations.

 

Upon the occurrence of an Event of Default and during continuation thereof, then, without waiving or releasing any other right, remedy or recourse the Administrative Agent or Lenders may have because of such Event of Default, the Administrative Agent may (but shall not be obligated to) make such payment or perform any act required of the Borrowers under this Agreement for the account of and at the expense of the Borrowers, and shall have the right to enter upon the Borrowing Base Assets for such purpose and to take all such action thereon and with respect to the Borrowing Base Assets as it may deem necessary or appropriate.  The Borrowers shall indemnify, defend and hold the Administrative Agent and Lenders harmless from and against any and all losses, liabilities, claims, damages, expenses, obligations, penalties, actions, judgments, suits, costs, or disbursements of any kind or nature whatsoever, including reasonable attorneys' fees, incurred or accruing by reason of any acts performed by the Administrative Agent pursuant to the provisions of this Section  8.04, including those arising from the joint, concurrent, or comparative negligence of the Administrative Agent, except as a result of the Administrative Agent's and/or Lenders' gross negligence or willful misconduct.  All sums paid by the Administrative Agent pursuant to this Section 8.04, and all other sums expended by the Administrative Agent to which it shall be entitled to be indemnified pursuant to this Section 8.04, together with interest thereon at the Default Rate from the date of such payment or expenditure until paid, shall constitute additions to the Obligations, shall be secured by the Credit Documents and shall be paid by the Borrowers to the Administrative Agent upon demand.

8.05  Special Cure Right.

 

Notwithstanding anything contained in this Article 8 to the contrary, if there occurs an Event of Default with respect to a particular Borrowing Base Asset  (the "Defaulting Asset") or the Borrower which owns such Defaulting Asset (the "Defaulting Borrower"), then absent any other continuing Event of Default hereunder, such Event of Default with respect to the Defaulting Asset shall not constitute an "Event of Default" hereunder subject to satisfaction of each of the following:

(a)            Borrowers shall within five (5) days following such Event of Default deliver to Administrative Agent a pro forma Compliance Certificate showing, on a pro forma basis (after giving effect to the removal of the Defaulting Asset(s) from such calculation) (i) the Borrowing Base Amount, and (ii) the Debt Yield.

 

(b)            If the calculation of the Debt Yield is below 10%, Borrowers shall (i) within ten (10) days following the occurrence of such Event of Default, pay to the Administrative Agent a

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prepayment of principal in an amount necessary to achieve a Debt Yield of not less than 10.0% and (ii) within thirty (30) days following the occurrence of such Event of Default, cure the Event of Default to the satisfaction of Administrative Agent or pay to the Administrative Agent a prepayment of principal in an amount necessary to reduce the Principal Obligations to an amount that does not exceed the Borrowing Base Amount (excluding for purposes of such calculation, the Defaulting Asset(s)).

(c)            If the calculation of the Debt Yield is above 10%, Borrowers shall within thirty (30) days following the occurrence of such Event of Default, cure the Event of Default to the satisfaction of Administrative Agent or pay to the Administrative Agent a prepayment of principal in an amount necessary to reduce the Principal Obligations to amount that does not exceed the Borrowing Base Amount (excluding for purposes of such calculation, the Defaulting Asset(s)).

 

ARTICLE IX  

ADMINISTRATIVE AGENT

9.01  Appointment and Authorization of Administrative Agent.

 

Each Lender hereby irrevocably appoints, designates and authorizes the Administrative Agent to take such action on its behalf under the provisions of this Credit Agreement and each other Credit Document and to exercise such powers and perform such duties as are expressly delegated to it by the terms of this Credit Agreement or any other Credit Document, together with such powers as are reasonably incidental thereto.  Notwithstanding any provision to the contrary contained elsewhere herein or in any other Credit Document, the Administrative Agent shall not have any duties or responsibilities, except those expressly set forth herein, nor shall the Administrative Agent have or be deemed to have any fiduciary relationship with any Lender or participant, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Credit Agreement or any other Credit Document or otherwise exist against the Administrative Agent.  Without limiting the generality of the foregoing sentence, the use of the term "agent" herein and in the other Credit Documents with reference to the Administrative Agent is not intended to connote any fiduciary or other implied (or express) obligations arising under agency doctrine of any applicable Law.  Instead, such term is used merely as a matter of market custom, and is intended to create or reflect only an administrative relationship between independent contracting parties.

9.02  Delegation of Duties.

 

The Administrative Agent may execute any of its duties under this Credit Agreement or any other Credit Document by or through agents, employees or attorneys‐in‐fact and shall be entitled to advice of counsel and other consultants or experts concerning all matters pertaining to such duties.  The Administrative Agent shall not be responsible for the negligence or misconduct of any agent or attorney‐in‐fact that it selects in the absence of gross negligence or willful misconduct.

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9.03  Liability of Administrative Agent.

 

No Agent‐Related Person shall (a) be liable for any action taken or omitted to be taken by any of them under or in connection with this Credit Agreement or any other Credit Document or the transactions contemplated hereby (except for its own gross negligence or willful misconduct in connection with its duties expressly set forth herein), or (b) be responsible in any manner to any Lender or participant for any recital, statement, representation or warranty made by any Credit Party or any officer thereof, contained herein or in any other Credit Document, or in any certificate, report, statement or other document referred to or provided for in, or received by the Administrative Agent under or in connection with, this Credit Agreement or any other Credit Document, or the validity, effectiveness, genuineness, enforceability or sufficiency of this Credit Agreement or any other Credit Document, or for any failure of any Credit Party or any other party to any Credit Document to perform its obligations hereunder or thereunder.  No Agent‐Related Person shall be under any obligation to any Lender or participant to ascertain or to inquire as to the observance or performance of any of the agreements contained in, or conditions of, this Credit Agreement or any other Credit Document, or to inspect the properties, books or records of any Credit Party or any Affiliate thereof.

9.04  Reliance by Administrative Agent.

 

(a)            The Administrative Agent shall be entitled to rely, and shall be fully protected in relying, upon any writing, communication, signature, resolution, representation, notice, consent, certificate, affidavit, letter, telegram, facsimile, telex or telephone message, electronic mail message, statement or other document or conversation believed by it to be genuine and correct and to have been signed, sent or made by the proper Person or Persons, and upon advice and statements of legal counsel (including counsel to any Credit Party), independent accountants and other experts selected by the Administrative Agent.  The Administrative Agent shall be fully justified in failing or refusing to take any action under any Credit Document unless it shall first receive such advice or concurrence of the Required Lenders as it deems appropriate and, if it so requests, it shall first be indemnified to its satisfaction by the Lenders against any and all liability and expense that may be incurred by it by reason of taking or continuing to take any such action.  The Administrative Agent shall in all cases be fully protected in acting, or in refraining from acting, under this Credit Agreement or any other Credit Document in accordance with a request or consent of the Required Lenders (or such greater number of Lenders as may be expressly required hereby in any instance) and such request and any action taken or failure to act pursuant thereto shall be binding upon all the Lenders.

 

(b)            For purposes of determining compliance with the conditions specified in Section 4.01, each Lender that has signed this Credit Agreement shall be deemed to have consented to, approved or accepted or to be satisfied with, each document or other matter required thereunder to be consented to or approved by or acceptable or satisfactory to a Lender unless the Administrative Agent shall have received notice from such Lender prior to the proposed Closing Date specifying its objection thereto.

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9.05  Notice of Default.

 

The Administrative Agent shall not be deemed to have knowledge or notice of the occurrence of any Default or Event of Default, except with respect to defaults in the payment of principal, interest and fees required to be paid to the Administrative Agent for the account of the Lenders, unless the Administrative Agent shall have received written notice from a Lender or any Borrower referring to this Credit Agreement, describing such Default or Event of Default and stating that such notice is a "notice of default."  The Administrative Agent will notify the Lenders of its receipt of any such notice.  The Administrative Agent shall take such action with respect to such Default or Event of Default as may be directed by the requisite Lenders in accordance herewith; provided, however, that unless and until the Administrative Agent has received any such direction, the Administrative Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Default or Event of Default as it shall deem advisable or in the best interest of the Lenders.

9.06  Credit Decision; Disclosure of Confidential Information by Administrative Agent.

 

Each Lender acknowledges that no Agent‐Related Person has made any representation or warranty to it, and that no act by the Administrative Agent hereafter taken, including any consent to and acceptance of any assignment or review of the affairs of any Credit Party or any Affiliate thereof, shall be deemed to constitute any representation or warranty by any Agent‐Related Person to any Lender as to any matter, including whether Agent‐Related Persons have disclosed material information in their possession (in each case, except to the extent the Administrative Agent has confirmed to any Lender in writing the satisfaction of conditions to funding as of the Closing Date).  Each Lender represents to the Administrative Agent that it has, independently and without reliance upon any Agent‐Related Person and based on such documents and information as it has deemed appropriate, made its own appraisal of and investigation into the business, prospects, operations, property, financial and other condition and creditworthiness of the Credit Parties and their respective Subsidiaries, and all applicable bank or other regulatory Laws relating to the transactions contemplated hereby, and made its own decision to enter into this Credit Agreement and to extend credit to the Borrowers and the other Credit Parties hereunder.  Each Lender also represents that it will, independently and without reliance upon any Agent‐Related Person and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit analysis, appraisals and decisions in taking or not taking action under this Credit Agreement and the other Credit Documents, and to make such investigations as it deems necessary to inform itself as to the business, prospects, operations, property, financial and other condition and creditworthiness of the Borrowers and the other Credit Parties.  Except for notices, reports and other documents expressly required to be furnished to the Lenders by the Administrative Agent herein, the Administrative Agent shall not have any duty or responsibility to provide any Lender with any credit or other information concerning the business, prospects, operations, property, financial and other condition or creditworthiness of any of the Credit Parties or any of their respective Affiliates that may come into the possession of any Agent‐Related Person.

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9.07  Indemnification of Administrative Agent.

 

Whether or not the transactions contemplated hereby are consummated, the Lenders shall indemnify upon demand each Agent‐Related Person (to the extent not reimbursed by or on behalf of any Credit Party and without limiting the obligation of any Credit Party to do so), pro rata, and hold harmless each Agent‐Related Person from and against any and all Indemnified Liabilities incurred by it; provided, however, that no Lender shall be liable for the payment to any Agent‐Related Person of any portion of such Indemnified Liabilities to the extent determined in a final, nonappealable judgment by a court of competent jurisdiction to have resulted from such Agent‐Related Person's own gross negligence or willful misconduct; provided, however, that no action taken in accordance with the directions of the Required Lenders shall be deemed to constitute gross negligence or willful misconduct for purposes of this Section.  Without limitation of the foregoing, each Lender shall reimburse the Administrative Agent upon demand for its ratable share of any costs or out‐of‐pocket expenses (including Attorney Costs) incurred by the Administrative Agent in connection with the preparation, execution, delivery, administration, modification, amendment or enforcement (whether through negotiations, legal proceedings or otherwise) of, or legal advice in respect of rights or responsibilities under, this Credit Agreement, any other Credit Document, or any document contemplated by or referred to herein, to the extent that the Administrative Agent is not reimbursed for such expenses by or on behalf of the Borrowers.  The undertaking in this Section shall survive termination of the Aggregate Commitments, the payment of all other Obligations and the resignation of the Administrative Agent.

9.08  Administrative Agent in its Individual Capacity.

 

GECC and its Affiliates may make loans to, issue letters of credit for the account of, accept deposits from, acquire equity interests in and generally engage in any kind of banking, trust, financial advisory, underwriting or other business with each of the Credit Parties and their respective Affiliates as though GECC were not the Administrative Agent hereunder and without notice to or consent of the Lenders.  The Lenders acknowledge that, pursuant to such activities, GECC or its Affiliates may receive information regarding any Credit Party or its Affiliates (including information that may be subject to confidentiality obligations in favor of such Credit Party or such Affiliate) and acknowledge that the Administrative Agent shall be under no obligation to provide such information to them.  With respect to its Extension of Credit, GECC shall have the same rights and powers under this Credit Agreement as any other Lender and may exercise such rights and powers as though it were not the Administrative Agent, and the terms "Lender" and "Lenders" include GECC in its individual capacity.

9.09  Successor Administrative Agent.

 

The Administrative Agent may resign as Administrative Agent upon thirty (30) days' notice to the Lenders.  If the Administrative Agent resigns under this Credit Agreement, the Required Lenders shall appoint from among the Lenders a successor administrative agent for the Lenders, which successor administrative agent shall be consented to by the Borrower Representative at all times other than during the existence of an Event of Default (which consent of the Borrower Representative shall not be unreasonably withheld or delayed).  If no successor administrative agent is appointed prior to the effective date of the resignation of the

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Administrative Agent, the Administrative Agent may appoint, after consulting with the Lenders and the Borrower Representative, a successor administrative agent from among the Lenders.  Upon the acceptance of its appointment as successor administrative agent hereunder, the Person acting as such successor administrative agent shall succeed to all the rights, powers and duties of the retiring Administrative Agent and the term "Administrative Agent" thereafter shall mean such successor administrative agent and the retiring Administrative Agent's appointment, powers and duties as Administrative Agent shall be terminated without any other or further act or deed on the part of such retiring Administrative Agent or any other Lender.  After any retiring Administrative Agent's resignation hereunder as Administrative Agent, the provisions of this Article IX and Sections 10.04 and 10.05 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Administrative Agent under this Credit Agreement.  If no successor administrative agent has accepted appointment as Administrative Agent by the date thirty (30) days following a retiring Administrative Agent's notice of resignation, the retiring Administrative Agent's resignation shall nevertheless thereupon become effective and the Lenders shall perform all of the duties of the Administrative Agent hereunder until such time, if any, as the Required Lenders appoint a successor agent as provided for above.

9.10  Administrative Agent May File Proofs of Claim.

 

In case of the pendency of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or other judicial proceeding relative to any Credit Party, the Administrative Agent (irrespective of whether the principal of the Loan shall then be due and payable as herein expressed or by declaration or otherwise and irrespective of whether the Administrative Agent shall have made any demand on the Borrowers) shall be entitled and empowered, by intervention in such proceeding or otherwise:

(a)            to file and prove a claim for the whole amount of the principal and interest owing and unpaid in respect of the Loan and all other Obligations that are owing and unpaid and to file such other documents as may be necessary or advisable in order to have the claims of the Lenders and the Administrative Agent (including any claim for the reasonable compensation, expenses, disbursements and advances of the Lenders and the Administrative Agent and their respective agents and counsel and all other amounts due the Lenders and the Administrative Agent under Section 2.07 and 10.04) allowed in such judicial proceeding; and

 

(b)            to collect and receive any monies or other property payable or deliverable on any such claims and to distribute the same;

 

and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Lender to make such payments to the Administrative Agent and, in the event that the Administrative Agent shall consent to the making of such payments directly to the Lenders, to pay to the Administrative Agent any amount due for the reasonable compensation, expenses, disbursements and advances of the Administrative Agent and its agents and counsel, and any other amounts due the Administrative Agent under Sections 2.07 and 10.04.

Nothing contained herein shall be deemed to authorize the Administrative Agent to authorize or consent to or accept or adopt on behalf of any Lender any plan of reorganization, arrangement,

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adjustment or composition affecting the Obligations or the rights of any Lender or to authorize the Administrative Agent to vote in respect of the claim of any Lender in any such proceeding.

ARTICLE X  

MISCELLANEOUS

10.01  Amendments, Etc.

 

No amendment or waiver of, or any consent to deviation from, any provision of this Credit Agreement or any other Credit Document shall be effective unless in writing and signed by the Borrowers, the Guarantor (if applicable) and the Required Lenders and acknowledged by the Administrative Agent, and each such amendment, waiver or consent shall be effective only in the specific instance and for the specific purpose for which it is given; provided, however, that:

(a)            unless also signed by each Lender directly affected thereby, no such amendment, waiver or consent shall:

 

		
           (i)     extend or increase the Commitment of any Lender (or reinstate any Commitment terminated pursuant to Section 8.02), it being understood that the amendment or waiver of an Event of Default or a mandatory reduction or a mandatory prepayment in Commitments shall not be considered an increase in Commitments,

		
          (ii)     waive non‐payment or postpone any date fixed by this Credit Agreement or any other Credit Document for any payment of principal, interest, fees or other amounts due to any Lender hereunder or under any other Credit Document,

		
          (iii)     reduce the principal of, or the rate of interest specified herein on the Loan, or any fees or other amounts payable hereunder or under any other Credit Document; provided, however, that only the consent of the Required Lenders shall be necessary (A) to amend the definition of "Default Rate" or to waive any obligation of the Borrowers to pay interest at the Default Rate or (B) to amend any financial covenant hereunder (or any defined term used therein) even if the effect of such amendment would be to reduce the rate of interest on the Loan or to reduce any fee payable hereunder,

		
          (iv)     change any provision of this Credit Agreement regarding pro rata sharing or pro rata funding with respect to (A) the making of advances (including participations), (B) the manner of application of payments or prepayments of principal, interest, or fees, or (C) the manner of reduction of commitments and committed amounts,

		
          (v)     change any provision of this Section 10.01(a) or the definition of "Required Lenders" or any other provision hereof specifying the number or percentage of Lenders required to amend, waive or otherwise modify any rights hereunder or make any determination or grant any consent hereunder, or

		
          (vi)     release the Parent from its obligations hereunder or under any other Credit Document (other than as provided herein or as appropriate in connection with transactions permitted hereunder);

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(b)            unless also signed by the Administrative Agent, no such amendment, waiver or consent shall affect the rights or duties of the Administrative Agent under this Credit Agreement or any other Credit Document;

 

provided, however, that notwithstanding anything to the contrary contained herein, (i) no Defaulting Lender shall have any right to approve or disapprove any amendment, waiver or consent hereunder, except that the Commitment of such Lender may not be increased or extended without the consent of such Lender, (ii) each Lender is entitled to vote as such Lender sees fit on any bankruptcy or insolvency reorganization plan that affects the Loan (iii) each Lender acknowledges that the provisions of Section 1126(c) of the Bankruptcy Code supersedes the unanimous consent provisions set forth herein, and (iv) the Required Lenders may consent to allow a Credit Party to use cash collateral in the context of a bankruptcy or insolvency proceeding.

10.02  Notices and Other Communications; Facsimile Copies.

 

(a)            General.  Unless otherwise expressly provided herein, all notices and other communications provided for hereunder shall be in writing (including by facsimile transmission).  All such written notices shall be mailed certified or registered mail, faxed or delivered to the applicable address, facsimile number or (subject to subsection (c) below) electronic mail address, and all notices and other communications expressly permitted hereunder to be given by telephone shall be made to the applicable telephone number, as follows:

 

(i)            if to any Borrower or the Administrative Agent, to the address, facsimile number, electronic mail address or telephone number specified for such Person on Schedule 10.02 or to such other address, facsimile number, electronic mail address or telephone number as shall be designated by such party in a notice to the other parties; and

(ii)            if to any other Lender, to the address, facsimile number, electronic mail address or telephone number specified in its Administrative Questionnaire or to such other address, facsimile number, electronic mail address or telephone number as shall be designated by such party in a notice to any Borrower and the Administrative Agent.

Notices sent by hand or overnight courier service, or mailed by certified or registered mail, shall be deemed to have been given when received; notices sent by facsimile shall be deemed to have been given when sent (except that, if not given during normal business hours for the recipient, shall be deemed to have been given at the opening of business on the next business day for the recipient).  Notices delivered through electronic communications to the extent provided in subsection (b) below, shall be effective as provided in such subsection (b).

(b)            Electronic Communications.  Notices and other communications to the Lenders hereunder may be delivered or furnished by electronic communication (including e‐mail and Internet or intranet websites) pursuant to procedures approved by the Administrative Agent, provided that the foregoing shall not apply to notices to any Lender pursuant to Article II if such Lender has notified the Administrative Agent that it is incapable of receiving notices under such Article by electronic communication.  The Administrative Agent or the Borrower Representative may, in its respective discretion, agree to accept notices and other communications to it

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hereunder by electronic communications pursuant to procedures approved by it, provided that approval of such procedures may be limited to particular notices or communications.

 

(c)            Effectiveness of Facsimile Documents and Signatures.  Credit Documents may be transmitted and/or signed by facsimile.  The effectiveness of any such documents and signatures shall, subject to applicable Law, have the same force and effect as manually‐signed originals and shall be binding on all Loan Parties, the Administrative Agent and the Lenders.  The Administrative Agent may also require that any such documents and signatures be confirmed by a manually‐signed original thereof; provided, however, that the failure to request or deliver the same shall not limit the effectiveness of any facsimile document or signature.

 

(d)            Reliance by Administrative Agent and Lenders.  The Administrative Agent and the Lenders shall be entitled to rely and act upon any notices (including telephonic Committed Loan Notices) purportedly given by or on behalf of the Borrowers even if (i) such notices were not made in a manner specified herein, were incomplete or were not preceded or followed by any other form of notice specified herein, or (ii) the terms thereof, as understood by the recipient, varied from any confirmation thereof.  The Borrowers shall indemnify each Agent‐Related Person and each Lender from all losses, costs, expenses and liabilities resulting from the reliance by such Person on each notice purportedly given by or on behalf of the Borrowers.  All telephonic notices to and other communications with the Administrative Agent may be recorded by the Administrative Agent, and each of the parties hereto hereby consents to such recording.

 

(e)            Change of Address, Etc.  Each of the Borrowers and the Administrative Agent may change its address, telecopier or telephone number for notices and other communications hereunder by notice to the other parties hereto.  Each other Lender may change its address, telecopier or telephone number for notices and other communications hereunder by notice to the Borrowers and the Administrative Agent.  In addition, each Lender agrees to notify the Administrative Agent from time to time to ensure that the Administrative Agent has on record (i) an effective address, contact name, telephone number, telecopier number and electronic mail address to which notices and other communications may be sent and (ii) accurate wire instructions for such Lender.

 

10.03  No Waiver; Cumulative Remedies.

 

No failure by any Lender or the Administrative Agent to exercise, and no delay by any such Person in exercising, any right, remedy, power or privilege hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege.  The rights, remedies, powers and privileges herein provided are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law.

Notwithstanding anything to the contrary contained herein or in any other Credit Document, the authority to enforce rights and remedies hereunder and under the other Credit Documents against the Credit Parties or any of them shall be vested exclusively in, and all actions and proceedings at law in connection with such enforcement shall be instituted and maintained exclusively by, the Administrative Agent in accordance with Section 8.02 for the benefit of all the Lenders; provided, however, that the foregoing shall not prohibit (a) the

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Administrative Agent from exercising on its own behalf the rights and remedies that inure to its benefit (solely in its capacity as Administrative Agent) hereunder and under the other Credit Documents, (b) any Lender from exercising setoff rights in accordance with Section 10.09 (subject to the terms of Section 2.10), or (c) any Lender from filing proofs of claim or appearing and filing pleadings on its own behalf during the pendency of a proceeding relative to any Credit Party under any Debtor Relief Law; and provided, further, that if at any time there is no Person acting as Administrative Agent hereunder and under the other Credit Documents, then (i) the Required Lenders shall have the rights otherwise ascribed to the Administrative Agent pursuant to Section 8.02 and (ii) in addition to the matters set forth in clauses (b) and (c) of the preceding proviso and subject to Section 2.10, any Lender may, with the consent of the Required Lenders, enforce any rights and remedies available to it and as authorized by the Required Lenders.

10.04  Attorney Costs, Expenses and Taxes.

 

The Borrowers agree (a) to pay directly to the provider thereof or to pay or reimburse the Administrative Agent for all reasonable and documented costs and expenses incurred in connection with the development, preparation, negotiation and execution of this Credit Agreement and the other Credit Documents, the preservation of any rights or remedies under this Credit Agreement and the other Credit Documents, and any amendment, waiver, consent or other modification of the provisions hereof and thereof (whether or not the transactions contemplated hereby or thereby are consummated), and the consummation and administration of the transactions contemplated hereby and thereby, including all Attorney Costs; (b) to pay or reimburse the Administrative Agent and each Lender for all reasonable costs and expenses incurred following an Event of Default in connection with the enforcement, attempted enforcement, or preservation of any rights or remedies under this Credit Agreement or the other Credit Documents (including all such costs and expenses incurred during any "workout" or restructuring in respect of the Obligations and during any legal proceeding, including any proceeding under any Debtor Relief Law), including all Attorney Costs; (c) up to one-half of all reasonable and documented appraisal costs incurred by the Administrative Agent in connection with the Administrative Agent's procurement of FIRREA‐compliant MAI appraisals with respect to any Borrowing Base Asset or any other Real Property Asset owned by any Borrower, to the extent any such appraisal is requested by the Administrative Agent (provided, that if no Event of Default exists hereunder, the Borrowers shall be required to pay such portion of the costs and expenses associated with any Administrative Agent‐requested appraisal not more than once during the term of the Loan with respect to any Borrowing Base Asset; provided further, however, that if an Event of Default exists hereunder, the Borrowers shall be required to pay all of the costs and expenses associated with any such appraisal and the one-time limit shall no longer be applicable);  and (d) any re‐appraisals requested by any Borrower.  The foregoing costs and expenses shall include all search, filing, recording, title insurance and appraisal charges and fees and taxes related thereto, and other reasonable and documented out‐of‐pocket expenses incurred by the Administrative Agent and the reasonable and documented cost of independent public accountants and other outside experts retained by the Administrative Agent or any Lender.  All amounts due under this Section 10.04 shall be payable within twenty (20) Business Days after written invoice therefor is received by the Borrowers.  The agreements in this Section shall survive the termination of the Aggregate Commitments and repayment of all other Obligations.

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10.05  Indemnification by the Borrowers.

 

The Borrowers shall indemnify and hold harmless each Agent‐Related Person, each Lender and their respective Affiliates, directors, officers, employees, counsel, agents, trustees, advisors and attorneys‐in‐fact (collectively the "Indemnitees") from and against any and all liabilities, obligations, losses, damages, penalties, claims, litigation, investigation, proceeding, demands, actions, judgments, suits, costs, expenses and disbursements (including Attorney Costs) of any kind or nature whatsoever (subject to the provisions of Section 3.01 with respect to Taxes and Other Taxes) that may at any time be imposed on, incurred by or asserted against any such Indemnitee (whether by a Credit Party or any other party) in any way relating to or arising out of or in connection with (a) the execution, delivery, enforcement, performance or administration of any Credit Document or any other agreement, letter or instrument delivered in connection with the transactions contemplated thereby or the consummation of the transactions contemplated thereby, or, in the case of the Administrative Agent (and any sub-agent thereof) and its Related Parties only, the administration of this Agreement and the other Credit Documents, (b) any Commitment, Loan or the use or proposed use of the proceeds therefrom, (c) performance of any labor or services or the furnishing of any materials or other property in respect of any Real Property Asset or any part thereof, (d) violation by any Person of any Healthcare Laws, (e) the Facility Operating Leases, (f) the failure of any Person to file timely with the Internal Revenue Service an accurate Form 1099-B, Statement for Recipients of Proceeds from Real Estate, Broker and Barter Exchange Transactions, which may be required in connection with this Agreement, or to supply a copy thereof in a timely fashion to the recipient of the proceeds of the transaction in connection with which this Agreement is made, or (g) any actual or threatened claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory (including any investigation of, preparation for, or defense of any pending or threatened claim, investigation, litigation or proceeding) and regardless of whether any Indemnitee is a party thereto (all the foregoing, collectively, the "Indemnified Liabilities"); provided, that such indemnification shall not, as to any Indemnitee, be available to the extent that such liabilities, obligations, losses, damages, penalties, claims, litigation, investigation, proceeding, demands, actions, judgments, suits, costs, expenses or disbursements (x) are determined to have resulted from the gross negligence or willful misconduct of any Indemnitee or (y) result from a claim brought by any Credit Party against an Indemnitee for breach in bad faith of such Indemnitee's obligations hereunder or under any other Credit Document, if such Credit Party has obtained a final and nonappealable judgment in its favor on such claim as determined by a court of competent jurisdiction.  No Indemnitee shall be liable for any damages arising from the use by others of any information or other materials obtained through IntraLinks or other similar information transmission systems in connection with this Credit Agreement, and no Indemnitee shall have any liability for any indirect or consequential damages relating to this Credit Agreement or any other Credit Document or arising out of its activities in connection herewith or therewith (whether before or after the Closing Date).  All amounts that may become due under this Section 10.05 shall be payable within twenty (20) Business Days after written invoice therefor is received by the Borrowers.  The agreements in this Section 10.05 shall survive the resignation of the Administrative Agent, the assignment by any Lender of any of its interests hereunder, the replacement of any Lender, the termination of the Aggregate Commitments and the repayment, satisfaction or discharge of all the other Obligations.

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10.06  Payments Set Aside.

 

To the extent that any payment by or on behalf of the Borrowers is made to the Administrative Agent or any Lender, or the Administrative Agent or any Lender exercises its right of set‐off, and such payment or the proceeds of such set‐off or any part thereof is subsequently invalidated, declared to be fraudulent or preferential, set aside or required (including pursuant to any settlement entered into by the Administrative Agent or such Lender in its discretion) to be repaid to a trustee, receiver or any other party, in connection with any proceeding under any Debtor Relief Law or otherwise, then (a) to the extent of such recovery, the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such set‐off had not occurred, and (b) each Lender severally agrees to pay to the Administrative Agent upon demand its applicable share of any amount so recovered from or repaid by the Administrative Agent, plus interest thereon from the date of such demand to the date such payment is made at a rate per annum equal to the Federal Funds Rate from time to time in effect.

10.07  Successors and Assigns.

 

(a)            The provisions of this Credit Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby, except that no Borrower may assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of each Lender and no Lender may assign or otherwise transfer any of its rights or obligations hereunder except (i) to an Eligible Assignee in accordance with the provisions of subsection (b) of this Section, (ii) by way of participation in accordance with the provisions of subsection (d) of this Section, or (iii) by way of pledge or assignment of a security interest subject to the restrictions of subsection (f) or (i) of this Section (and any other attempted assignment or transfer by any party hereto shall be null and void).  Nothing in this Credit Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby, Participants to the extent provided in subsection (d) of this Section and, to the extent expressly contemplated hereby, the Indemnitees) any legal or equitable right, remedy or claim under or by reason of this Credit Agreement.

 

(b)            Any Lender may at any time assign to one or more Eligible Assignees all or a portion of its rights and obligations under this Credit Agreement (including all or a portion of its Commitment and Extension of Credit at the time owing to it); provided that (i) except in the case of an assignment of the entire remaining amount of the assigning Lender's Commitment and Extension of Credit at the time owing to it or in the case of an assignment to a Lender or an Affiliate of a Lender or an Approved Fund with respect to a Lender, the aggregate amount of the Commitment (which for this purpose includes the Extension of Credit outstanding thereunder) subject to each such assignment, determined as of the date the Assignment and Assumption with respect to such assignment is delivered to the Administrative Agent or, if "Trade Date" is specified in the Assignment and Assumption, as of the Trade Date, shall not be less than $1,000,000 unless each of the Administrative Agent and, so long as no Event of Default has occurred and is continuing, the Borrower Representative otherwise consents (each such consent not to be unreasonably withheld or delayed) provided, however, that concurrent assignments to members of an Assignee Group and concurrent assignments from members of an Assignee

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Group to a single Eligible Assignee (or to an Eligible Assignee and members of its Assignee Group) will be treated as a single assignment for purposes of determining whether such minimum amount has been met; (ii) each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender's rights and obligations under this Credit Agreement with respect to the Extension of Credit or the Commitment assigned; (iii) any assignment of a Commitment must be approved by the Administrative Agent, unless the Person that is the proposed assignee is itself a Lender (whether or not the proposed assignee would otherwise qualify as an Eligible Assignee); and (iv) the parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Assumption, together with a processing and recordation fee in the amount of $3,500; provided, however, that the Administrative Agent may, in its sole discretion, elect to waive such processing and recordation fee in the case of any assignment.  Subject to acceptance and recording thereof by the Administrative Agent pursuant to subsection (c) of this Section, from and after the effective date specified in each Assignment and Assumption, the Eligible Assignee thereunder shall be a party to this Credit Agreement and, to the extent of the interest assigned by such Assignment and Assumption, have the rights and obligations of a Lender under this Credit Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption, be released from its obligations under this Credit Agreement (and, in the case of an Assignment and Assumption covering all of the assigning Lender's rights and obligations under this Credit Agreement, such Lender shall cease to be a party hereto but shall continue to be entitled to the benefits of Sections 3.01, 3.04, 3.05, 10.04 and 10.05 with respect to facts and circumstances occurring prior to the effective date of such assignment).  Upon request, the Borrowers (at their expense) shall execute and deliver a Note to the assignee Lender and, if the assignor Lender retains a portion of the Loan, a Note to the assignor Lender.  Any assignment or transfer by a Lender of rights or obligations under this Credit Agreement that does not comply with this subsection shall be treated for purposes of this Credit Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with subsection (d) of this Section.

(c)            The Administrative Agent, acting solely for this purpose as an agent of the Borrowers, shall maintain at the Administrative Agent's Office a copy of each Assignment and Assumption delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitments of, and principal amounts of the Extension of Credit owing to each Lender pursuant to the terms hereof from time to time (the "Register").  The entries in the Register shall be conclusive, and the Borrowers, the Administrative Agent and the Lenders may treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary.  The Register shall be available for inspection by the Borrower Representative at any reasonable time and from time to time upon reasonable prior notice.  In addition, at any time that a request for a consent for a material or other substantive change to the Credit Documents is pending, any Lender wishing to consult with other Lenders in connection therewith may request and receive from the Administrative Agent a copy of the Register.

 

(d)            Any Lender may at any time, without the consent of, or notice to, the Borrowers or the Administrative Agent, sell participations to any Person (other than a natural person or the Borrowers or any of the Borrowers' Affiliates or Subsidiaries) (each, a "Participant") in all or a portion of such Lender's rights and/or obligations under this Credit Agreement (including all or a

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portion of its Commitment and/or the Extension of Credit owing to it); provided that (i) such Lender's obligations under this Credit Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations and (iii) the Borrowers, the Administrative Agent and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender's rights and obligations under this Credit Agreement.  Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Credit Agreement and to approve any amendment, modification or waiver of any  provision of this Credit Agreement; provided that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, waiver or other modification that extends the time for, reduces the amount or alters the application of proceeds with respect to such obligations and payments required therein that directly affects such Participant.  Subject to subsection (e) of this Section, the Borrowers agree that each Participant shall be entitled to the benefits of Sections 3.01, 3.04 and 3.05 to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to subsection (b) of this Section.  To the extent permitted by law, each Participant also shall be entitled to the benefits of Section 10.09 as though it were a Lender, provided such Participant agrees to be subject to Section 2.11 as though it were a Lender.

(e)            A Participant shall not be entitled to receive any greater payment under Section 3.01 or 3.04 than the applicable Lender would have been entitled to receive with respect to the participation sold to such Participant.  A Participant that would be a Foreign Lender if it were a Lender shall not be entitled to the benefits of Section 3.01 unless the Borrower Representative is notified of the participation sold to such Participant and such Participant agrees, for the benefit of the Borrowers, to comply with Section 10.15 as though it were a Lender.

 

(f)            Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Credit Agreement (including under its Note, if any) to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank; provided that no such pledge or assignment shall release such Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto.

 

(g)            Notwithstanding anything to the contrary contained herein, any Lender that is a Fund may (without notice to or the consent of any of the parties hereto) create a security interest in all or any portion of the Extension of Credit owing to it and the Note evidencing such Extension of Credit, if any, held by it to the trustee for holders of obligations owed, or securities issued, by such Fund as security for such obligations or securities, provided that unless and until such trustee actually becomes a Lender in compliance with the other provisions of this Section 10.07, (i) no such pledge shall release the pledging Lender from any of its obligations under the Credit Documents and (ii) such trustee shall not be entitled to exercise any of the rights of a Lender under the Credit Documents even though such trustee may have acquired ownership rights with respect to the pledged interest through foreclosure or otherwise.

 

(h)            Anything herein to the contrary notwithstanding, with respect to any assignment by a Lender to a Permitted Investor under this Section 10.07 or if any Permitted Investor

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becomes a Lender hereunder pursuant to Section 10.16 or otherwise, the following shall apply:  (i) in no event may Permitted Investors own in the aggregate more than a thirty percent (30%) interest in the Loan; (ii) if as a result of any such transfer or series of transfers, Permitted Investors and GECC are the only Lenders hereunder, actions to be taken by Administrative Agent under this Credit Agreement or the other Credit Documents on behalf of the Lenders that require the consent of (A) all Lenders will not require the consent of the Permitted Investors and (B) the Required Lenders will not require the consent of the Permitted Investors; and (iii) if any action to be taken by Administrative Agent under this Agreement requires the consent of the Required Lenders, and the consent of the Permitted Investor causes the 66 2/3% percentage requirement set forth in the definition of "Required Investors" to be met, such action will nonetheless require the consent of one additional Lender hereunder. The execution by a Permitted Investor of an Assignment and Assumption Agreement and/or Lender Joinder Agreement will be sufficient to evidence such Permitted Investor's agreement to the terms of this Section 10.06(h), provided the Permitted Investor will execute any additional documents required by Administrative Agent to evidence the agreements contained in this Section 10.06(h).

10.08  Confidentiality.

 

Each of the Administrative Agent and the Lenders agrees to maintain the confidentiality of Confidential Information, except that Confidential Information may be disclosed (a) to its and its Affiliates' directors, officers, employees and agents, including accountants, legal counsel and other advisors (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Confidential Information and instructed to keep such Confidential Information confidential); (b) to the extent requested by any regulatory authority; (c) to the extent  required by applicable Law or regulations or by any subpoena or similar legal process; (d) to any other party to this Credit Agreement; (e) in connection with the exercise of any remedies hereunder or any suit, action or proceeding relating to this Credit Agreement or the enforcement of rights hereunder (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Confidential Information and instructed to keep such Confidential Information confidential); (f) subject to an agreement containing provisions substantially the same as those of this Section, to (i) any Eligible Assignee of or Participant in, or any prospective Eligible Assignee of or Participant in, any of its rights or obligations under this Credit Agreement or (ii) any direct or indirect contractual counterparty or prospective counterparty (or such contractual counterparty's or prospective counterparty's professional advisor) to any credit derivative transaction relating to obligations of the Credit Parties; (g) with the consent of the Borrower Representative; (h) to the extent such Confidential Information (i) becomes publicly available other than as a result of a breach of this Section or (ii) becomes available to the Administrative Agent or any Lender on a nonconfidential basis from a source other than the Borrowers; (i) to the National Association of Insurance Commissioners or any other similar organization (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Confidential Information and instructed to keep such Confidential Information confidential); or (j) to any nationally recognized rating agency that requires access to a Lender's or an Affiliate's investment portfolio in connection with ratings issued with respect to such Lender or Affiliate.  In addition, the Administrative Agent and the Lenders may disclose the existence of this Credit Agreement and information about this Credit Agreement to market data collectors, similar service providers to the lending industry, and service providers to the Administrative Agent and

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the Lenders in connection with the administration and management of this Credit Agreement, the other Credit Documents, the Commitments, and the Extensions of Credit.  Any Person required to maintain the confidentiality of Confidential Information as provided in this Section shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Confidential Information as such Person would accord to its own confidential information.  For the purposes of this Section, "Confidential Information" means all information received from any Credit Party relating to any Credit Party, any of the other Consolidated Parties, or its or their business, other than any such information that is available to the Administrative Agent or any Lender on a nonconfidential basis prior to disclosure by any Credit Party; provided, that, in the case of information received from a Credit Party after the date hereof, such information is clearly identified in writing at the time of delivery as confidential.

Each of the Administrative Agent and the Lenders acknowledges that (a) the Confidential Information may include material non‐public information concerning the Borrowers or a Subsidiary, as the case may be, (b) it has developed compliance procedures regarding the use of material non‐public information and (c) it will handle such material non‐public information in accordance with applicable Law, including Federal and state securities Laws.

10.09  Set‐off.

 

In addition to any rights and remedies of the Lenders provided by law, upon the occurrence and during the continuance of any Event of Default, each Lender and each of its Affiliates are authorized at any time and from time to time, without prior notice to the Borrowers or any other Credit Party, any such notice being waived by the Borrowers (on their own behalf and on behalf of each Credit Party) to the fullest extent permitted by law, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held by, and other indebtedness at any time owing by, such Lender or Affiliate to or for the credit or the account of the respective Credit Parties against any and all Obligations owing to such Lender hereunder or under any other Credit Document (subject to Section 2.11), now or hereafter existing, irrespective of whether or not the Administrative Agent or such Lender shall have made demand under this Credit Agreement or any other Credit Document and although such Obligations may be contingent or unmatured or denominated in a currency different from that of the applicable deposit or indebtedness.  Each Lender agrees promptly to notify the Borrowers and the Administrative Agent after any such set‐off and application made by such Lender; provided, however, that the failure to give such notice shall not affect the validity of such set‐off and application.

10.10  Interest Rate Limitation.

 

Notwithstanding anything to the contrary contained in any Credit Document, the interest paid or agreed to be paid under the Credit Documents shall not exceed the maximum rate of non‐usurious interest permitted by applicable Law (the "Maximum Rate").  If the Administrative Agent or any Lender shall receive interest in an amount that exceeds the Maximum Rate, the excess interest shall be applied to the principal of the Loan or, if it exceeds such unpaid principal, refunded to the Borrowers.  In determining whether the interest contracted for, charged, or received by the Administrative Agent or a Lender exceeds the Maximum Rate, such

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Person may, to the extent permitted by applicable Law, (a) characterize any payment that is not principal as an expense, fee, or premium rather than interest, (b) exclude voluntary prepayments and the effects thereof, and (c) amortize, prorate, allocate, and spread in equal or unequal parts the total amount of interest throughout the contemplated term of the Obligations hereunder.

10.11  Counterparts.

 

This Credit Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

10.12  Integration.

 

This Credit Agreement, together with the other Credit Documents, comprises the complete and integrated agreement of the parties on the subject matter hereof and thereof and supersedes all prior agreements, written or oral, on such subject matter.  In the event of any conflict between the provisions of this Credit Agreement and those of any other Credit Document, the provisions of this Credit Agreement shall control; provided that the inclusion of specific supplemental rights or remedies in favor of the Administrative Agent or the Lenders in any other Credit Document shall not be deemed a conflict with this Credit Agreement.  Each Credit Document was drafted with the joint participation of the respective parties thereto and shall be construed neither against nor in favor of any party, but rather in accordance with the fair meaning thereof.

10.13  Survival of Representations and Warranties.

 

All representations and warranties made hereunder and in any other Credit Document or other document delivered pursuant hereto or thereto or in connection herewith or therewith shall survive the execution and delivery hereof and thereof.  Such representations and warranties have been or will be relied upon by the Administrative Agent and each Lender, regardless of any investigation made by the Administrative Agent or any Lender or on their behalf and notwithstanding that the Administrative Agent or any Lender may have had notice or knowledge of any Default or Event of Default at the time of any Extension of Credit, and shall continue in full force and effect as long as the Loan or any other Obligation hereunder shall remain unpaid or unsatisfied.

10.14  Severability.

 

If any provision of this Credit Agreement or the other Credit Documents is held to be illegal, invalid or unenforceable, (a) the legality, validity and enforceability of the remaining provisions of this Credit Agreement and the other Credit Documents shall not be affected or impaired thereby and (b) the parties shall endeavor in good faith negotiations to replace the illegal, invalid or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the illegal, invalid or unenforceable provisions.  The invalidity of a provision in a particular jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

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10.15  Tax Forms.

 

(a)            (i) Each Lender that is not a "United States person" within the meaning of Section 7701(a)(30) of the Internal Revenue Code (a "Foreign Lender") shall deliver to the Administrative Agent, prior to receipt of any payment subject to withholding under the Internal Revenue Code (or upon accepting an assignment of an interest herein), two duly signed completed copies of either IRS Form W‐8BEN or any successor thereto (relating to such Foreign Lender and entitling it to an exemption from, or reduction of, withholding tax on all payments to be made to such Foreign Lender by the Borrowers pursuant to this Credit Agreement) or IRS Form W‐8ECI or any successor thereto (relating to all payments to be made to such Foreign Lender by the Borrowers pursuant to this Credit Agreement) or such other evidence satisfactory to the Borrowers and the Administrative Agent that such Foreign Lender is entitled to an exemption from, or reduction of, U.S.  withholding tax, including any exemption pursuant to Section 881(c) of the Internal Revenue Code.  Thereafter and from time to time, each such Foreign Lender shall (A) promptly submit to the Administrative Agent such additional duly completed and signed copies of one of such forms (or such successor forms as shall be adopted from time to time by the relevant United States taxing authorities) as may then be available under then current United States laws and regulations to avoid, or such evidence as is satisfactory to the Borrowers and the Administrative Agent of any available exemption from or reduction of, United States withholding taxes in respect of all payments to be made to such Foreign Lender by the Borrowers pursuant to this Credit Agreement, (B) promptly notify the Administrative Agent of any change in circumstances that would modify or render invalid any claimed exemption or reduction, and (C) take such steps as shall not be materially disadvantageous to it, in the reasonable judgment of such Lender, and as may be reasonably necessary (including the re‐designation of its Lending Office) to avoid any requirement of applicable Law that the Borrowers make any deduction or withholding for taxes from amounts payable to such Foreign Lender.

 

(ii)            Each Foreign Lender, to the extent it does not act or ceases to act for its own account with respect to any portion of any sums paid or payable to such Lender under any of the Credit Documents (for example, in the case of a typical participation by such Lender), shall deliver to the Administrative Agent on the date when such Foreign Lender ceases to act for its own account with respect to any portion of any such sums paid or payable, and at such other times as may be necessary in the determination of the Administrative Agent (in the reasonable exercise of its discretion), (A) two duly signed completed copies of the forms or statements required to be provided by such Lender as set forth above, to establish the portion of any such sums paid or payable with respect to which such Lender acts for its own account that is not subject to U.S.  withholding tax, and (B) two duly signed completed copies of IRS Form W‐8IMY (or any successor thereto), together with any information such Lender chooses to transmit with such form, and any other certificate or statement of exemption required under the Internal Revenue Code, to establish that such Lender is not acting for its own account with respect to a portion of any such sums payable to such Lender.

(iii)            The Borrowers shall not be required to pay any additional amount to any Foreign Lender under Section 3.01 (A) with respect to any Taxes required to be deducted or withheld on the basis of the information, certificates or statements of exemption such

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Lender transmits with an IRS Form W‐8IMY pursuant to this Section 10.15(a) or (B) if such Lender shall have failed to satisfy the foregoing provisions of this Section 10.15(a); provided that if such Lender shall have satisfied the requirement of this Section 10.15(a) on the date such Lender became a Lender or ceased to act for its own account with respect to any payment under any of the Credit Documents, nothing in this Section 10.15(a) shall relieve the Borrowers of their obligation to pay any amounts pursuant to Section 3.01 in the event that, as a result of any change in any applicable Law, treaty or governmental rule, regulation or order, or any change in the interpretation, administration or application thereof, such Lender is no longer properly entitled to deliver forms, certificates or other evidence at a subsequent date establishing the fact that such Lender or other Person for the account of which such Lender receives any sums payable under any of the Credit Documents is not subject to withholding or is subject to withholding at a reduced rate.

(iv)            The Administrative Agent may, without reduction, withhold any Taxes required to be deducted and withheld from any payment under any of the Credit Documents with respect to which the Borrowers are not required to pay additional amounts under this Section 10.15(a).

(b)            Upon the request of the Administrative Agent, each Lender that is a "United States person" within the meaning of Section 7701(a)(30) of the Internal Revenue Code shall deliver to the Administrative Agent two duly signed completed copies of IRS Form W‐9.  If such Lender fails to deliver such forms, then the Administrative Agent may withhold from any interest payment to such Lender an amount equivalent to the applicable back‐up withholding tax imposed by the Internal Revenue Code, without reduction.

 

(c)            If any Governmental Authority asserts that the Administrative Agent did not properly withhold or backup withhold, as the case may be, any tax or other amount from payments made to or for the account of any Lender, such Lender shall indemnify the Administrative Agent therefor, including all penalties and interest, any taxes imposed by any jurisdiction on the amounts payable to the Administrative Agent under this Section, and costs and expenses (including Attorney Costs) of the Administrative Agent.  The obligation of the Lenders under this Section shall survive the termination of the Aggregate Commitments, repayment of all other Obligations hereunder and the resignation of the Administrative Agent.

 

10.16  Replacement of Lenders.

 

To the extent that Section 3.06(b) provides that the Borrowers shall have the right to replace a Lender as a party to this Credit Agreement, the Borrowers may, upon notice to such Lender and the Administrative Agent, replace such Lender by causing such Lender to assign its Commitment (with the related assignment fee to be paid by the Borrowers) pursuant to Section 10.07(b) to one or more Eligible Assignees procured by the Borrowers; provided, however, that if the Borrowers elect to exercise such right with respect to any Lender pursuant to such Section 3.06(b), they shall be obligated to replace all Lenders that have made similar requests for compensation pursuant to Section 3.01 or 3.04.  The Borrowers shall pay in full all principal, interest, fees and other amounts owing to such Lender through the date of replacement (including any amounts payable pursuant to Section 3.05).  Any Lender being replaced shall

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execute and deliver an Assignment and Assumption with respect to such Lender's Commitment and outstanding Extension of Credit.

10.17  No Advisory or Fiduciary Responsibility.

 

In connection with all aspects of each transaction contemplated hereby, the Borrowers each acknowledge and agree, and acknowledge their respective Affiliates' understanding, that: (a) the credit facility provided for hereunder and any related arranging or other services in connection therewith (including in connection with any amendment, waiver or other modification hereof or of any other Credit Document) are an arm's-length commercial transaction between the Borrowers and their respective Affiliates, on the one hand, and the Administrative Agent, on the other hand, and each Borrower is capable of evaluating and understanding and understands and accepts the terms, risks and conditions of the transactions contemplated hereby and by the other Credit Documents (including any amendment, waiver or other modification hereof or thereof); (b) in connection with the process leading to such transaction, the Administrative Agent is and has been acting solely as a principal and is not the financial advisor, agent or fiduciary, for the Borrowers or any of their respective Affiliates, stockholders, creditors or employees or any other Person; (c) the Administrative Agent has not assumed or will assume an advisory, agency or fiduciary responsibility in favor of the Borrowers with respect to any of the transactions contemplated hereby or the process leading thereto, including with respect to any amendment, waiver or other modification hereof or of any other Credit Document (irrespective of whether the Administrative Agent has advised or is currently advising the Borrowers or any of their respective Affiliates on other matters) and the Administrative Agent has no obligation to the Borrowers or any of their respective Affiliates with respect to the transactions contemplated hereby except those obligations expressly set forth herein and in the other Credit Documents; (d) the Administrative Agent and its Affiliates may be engaged in a broad range of transactions that involve interests that differ from those of the Borrowers and their respective Affiliates, and the Administrative Agent has no obligation to disclose any of such interests by virtue of any advisory, agency or fiduciary relationship; and (e) the Administrative Agent has not provided and will not provide any legal, accounting, regulatory or tax advice with respect to any of the transactions contemplated hereby (including any amendment, waiver or other modification hereof or of any other Credit Document) and each Borrower has consulted its own legal, accounting, regulatory and tax advisors to the extent it has deemed appropriate.  Each Borrower hereby waives and releases, to the fullest extent permitted by law, any claims that it may have against the Administrative Agent with respect to any breach or alleged breach of agency or fiduciary duty.

10.18  Source of Funds.

 

Each of the Lenders hereby represents and warrants to the Borrowers that at least one of the following statements is an accurate representation as to the source of funds to be used by such Lender in connection with the financing hereunder:

(a)            no part of such funds constitutes assets allocated to any separate account maintained by such Lender in which any employee benefit plan (or its related trust) has any interest;

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(b)            to the extent that any part of such funds constitutes assets allocated to any separate account maintained by such Lender, such Lender has disclosed to the Borrowers the name of each employee benefit plan whose assets in such account exceed ten percent (10%) of the total assets of such account as of the date of such purchase (and, for purposes of this subsection (b), all employee benefit plans maintained by the same employer or employee organization are deemed to be a single plan);

 

(c)            to the extent that any part of such funds constitutes assets of an insurance company's general account, such insurance company has complied with all of the requirements of the regulations issued under Section 401(c)(1)(A) of ERISA; or

 

(d)            such funds constitute assets of one or more specific benefit plans that such Lender has identified in writing to the Borrowers.

 

As used in this Section, the terms "employee benefit plan" and "separate account" shall have the respective meanings provided in Section 3 of ERISA.

10.19  GOVERNING LAW.

 

(a)            THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF ILLINOIS APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE, WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES; PROVIDED THAT THE ADMINISTRATIVE AGENT AND EACH LENDER SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.

 

(b)            ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF ILLINOIS SITTING IN CHICAGO OR OF THE UNITED STATES FOR THE NORTHERN DISTRICT OF SUCH STATE, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, THE BORROWERS, THE ADMINISTRATIVE AGENT AND EACH LENDER CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON‐EXCLUSIVE JURISDICTION OF THOSE COURTS.  THE BORROWERS, THE ADMINISTRATIVE AGENT AND EACH LENDER IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF ANY CREDIT DOCUMENT OR OTHER DOCUMENT RELATED THERETO. THE BORROWERS, THE ADMINISTRATIVE AGENT AND EACH LENDER WAIVES PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY THE LAW OF SUCH STATE.

 

10.20  WAIVER OF RIGHT TO TRIAL BY JURY.

 

EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER ANY CREDIT DOCUMENT OR IN ANY WAY CONNECTED

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WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO ANY CREDIT DOCUMENT, OR THE TRANSACTIONS RELATED THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER FOUNDED IN CONTRACT OR TORT OR OTHERWISE; AND EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE SIGNATORIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

10.21  No Conflict.

 

To the extent there is any conflict or inconsistency between the provisions hereof and the provisions of any other Credit Document, this Credit Agreement shall control.

10.22  USA Patriot Act Notice.

 

Each Lender and the Administrative Agent (for itself and not on behalf of any Lender) hereby notifies the Borrowers that pursuant to the requirements of the USA Patriot Act (Title III of Pub. L. 107‐56 (signed into law October 26, 2001)) (the "Act"), it is required to obtain, verify and record information that identifies the Borrowers (and to the extent applicable, the Parent), which information includes the name and address of the respective Borrowers (and to the extent applicable, the Parent) and other information that will allow such Lender or the Administrative Agent, as applicable, to identify the Borrowers (and to the extent applicable, the Parent) in accordance with the Act.  The Borrowers shall, promptly following a request by the Administrative Agent or any Lender, provide all documentation and other information that the Administrative Agent or such Lender reasonably requests in order to comply with its ongoing obligations under applicable "know your customer" and anti-money laundering rules and regulations, including the Act.

10.23  Entire Agreement.

 

THIS CREDIT AGREEMENT AND THE OTHER CREDIT DOCUMENTS REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.  THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.

10.24  California Real Property Assets.

 

NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED HEREIN, AT ANY TIME THAT ANY OF THE OBLIGATIONS SHALL BE SECURED BY REAL PROPERTY ASSETS LOCATED IN CALIFORNIA, NO LENDER SHALL EXERCISE A RIGHT OF SETOFF, LENDER'S LIEN OR COUNTERCLAIM OR TAKE ANY COURT OR ADMINISTRATIVE ACTION OR INSTITUTE ANY PROCEEDING TO ENFORCE ANY PROVISION OF THIS AGREEMENT OR ANY CREDIT DOCUMENT UNLESS IT IS TAKEN WITH THE CONSENT OF THE REQUIRED LENDERS, IF SUCH SETOFF OR

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ACTION OR PROCEEDING WOULD OR MIGHT (PURSUANT TO SECTIONS 580a, 580b, 580d AND 726 OF THE CALIFORNIA CODE OF CIVIL PROCEDURE OR SECTION 2924 OF THE CALIFORNIA CIVIL CODE, IF APPLICABLE, OR OTHERWISE) AFFECT OR IMPAIR THE VALIDITY, PRIORITY, OR ENFORCEABILITY OF THE LIENS GRANTED TO THE ADMINISTRATIVE AGENT PURSUANT TO THE COLLATERAL DOCUMENTS OR THE ENFORCEABILITY OF THE OBLIGATIONS HEREUNDER, AND ANY ATTEMPTED EXERCISE BY ANY LENDER OR ANY SUCH RIGHT WITHOUT OBTAINING SUCH CONSENT OF THE PARTIES AS REQUIRED ABOVE, SHALL BE NULL AND VOID.  THIS SECTION 10.24 SHALL BE SOLELY FOR THE BENEFIT OF EACH OF THE LENDERS.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK -

SIGNATURE PAGES AND SCHEDULES AND EXHIBITS TO FOLLOW]

 

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

	
BORROWERS:

	
BLC ATRIUM-JACKSONVILLE SNF, LLC,

	
 

	
BLC WESTWOOD, LLC,

	
 

	
BLC JACKSON OAKS, LLC,

	
 

	
AHC STERLING HOUSE OF HARBISON,

	
 

	
LLC,

	
 

	
BROOKDALE PLACE OF BATH, LLC,

	
 

	
BKD KANSAS PROPERTIES, LLC,

	
 

	
BLC WELLINGTON-CLEVELAND, LLC,

	
 

	
BLC WELLINGTON-COLONIAL HEIGHTS,

	
 

	
LLC,

	
 

	
BLC WELLINGTON-GARDENS, LLC,

	
 

	
AHC SOUTHLAND-ORMOND BEACH, LLC,

	
 

	
AHC MONROE TOWNSHIP, LLC,

	
 

	
BLC ADRIAN-GC, LLC,

	
 

	
BLC FINDLAY-GC, LLC,

	
 

	
BLC WELLINGTON-KINGSTON, LLC,

	
 

	
BLC WELLINGTON-JOHNSON CITY, LLC,

	
 

	
BLC SOUTHERLAND PLACE-MIDLOTHIAN,

	
 

	
LLC,

	
 

	
BLC SOUTHERLAND PLACE-GERMANTOWN,

	
 

	
LLC,

	
 

	
BLC WINDSOR PLACE, LLC,

	
 

	
BLC EMERALD CROSSINGS, LLC,

	
 

	
BKD STERLING HOUSE OF DUNCAN, LLC,

	
 

	
BKD STERLING HOUSE OF EDMOND, LLC,

	
 

	
BKD STERLING HOUSE OF ENID, LLC,

	
 

	
BKD STERLING HOUSE OF MIDWEST CITY,

	
 

	
LLC,

	
 

	
each a Delaware limited liability company

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
By:

	
/s/ George T. Hicks

	
 

	
 

	
Name:

	
George T. Hicks

	
 

	
 

	
Title:

	
Executive Vice President

	
 

	
 

	
 

	
 

	
 

	
AHC PROPERTIES, INC., a Delaware

	
 

	
 

	
corporation

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
By:

	
/s/ George T. Hicks

	
 

	
 

	
Name:

	
George T. Hicks

	
 

	
 

	
Title:

	
Executive Vice President

	
 

 

[Signatures Continued on Next Page]

Signature Page

	
BORROWERS (CONT'D):

	
BKD STERLING HOUSE OF OKLAHOMA CITY

	
 

	
NORTH, LLC,

	
 

	
BKD STERLING HOUSE OF OKLAHOMA CITY

	
 

	
SOUTH, LLC,

	
 

	
BKD STERLING HOUSE OF PONCA CITY, LLC,

	
 

	
BKD STERLING HOUSE OF CEDAR HILL, LLC,

	
 

	
BKD STERLING HOUSE OF PALESTINE, LLC,

	
 

	
BKD STERLING HOUSE OF BOWLING GREEN,

	
 

	
LLC

	
 

	
BKD STERLING HOUSE OF MANSFIELD, LLC,

	
 

	
BROOKDALE PLACE AT FALL CREEK, LLC,

	
 

	
BROOKDALE PLACE AT WILLOW LAKE, LLC,

	
 

	
BROOKDALE PLACE OF WEST HARTFORD, 

	
 

	
LLC,

	
 

	
BROOKDALE PLACE AT KENWOOD, LLC,

	
 

	
each a Delaware limited liability company

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
By:

	
/s/ George T. Hicks

	
 

	
 

	
Name:

	
George T. Hicks

	
 

	
 

	
Title:

	
Executive Vice President

	
	
 

	
 

	
 

	
 

	
 

	
ARC HDV, LLC, a Tennessee limited

	
 

	
liability company

	
 

	
ARC GALLERIA WOODS, INC., a Tennessee

	
 

	
corporation

	
 

	
LAKE SEMINOLE SQUARE MANAGEMENT

	
 

	
COMPANY, INC., a Tennessee corporation

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
By:

	
/s/ George T. Hicks

	
 

	
 

	
Name:

	
George T. Hicks

	
 

	
 

	
Title:

	
Executive Vice President

	
 

[Signatures Continued on Next Page]

Signature Page

 

	
ADMINISTRATIVE AGENT:

	
GENERAL ELECTRIC CAPITAL

	
 

	
CORPORATION, as Administrative Agent

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
By:

	
/s/ Jeffry W. Bothwell

	
 

	
 

	
Name:

	
Jeffry W. Bothwell

	
 

	
 

	
Title:

	
SVP & Authorized Signatory

	
 

[Signatures Continued on Next Page]

Signature Page

	
LENDERS:

	
GENERAL ELECTRIC CAPITAL

	
 

	
CORPORATION, as a Lender and Swingline Lender

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
By:

	
/s/ Daniel Reilly

	
 

	
 

	
Name:

	
Daniel Reilly

	
 

	
 

	
Title:

	
Duly Authorized Signatory

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
FIFTEENTH INVESTMENT HFS LIMITED

		By: General Electric Capital Corporation, its agent and servicer
	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
By:

	
/s/ Daniel Reilly

	
 

	
 

	
Name:

	
Daniel Reilly

	
 

	
 

	
Title:

	
Duly Authorized Signatory

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
BANK OF AMERICA, N.A.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
By:

	
/s/ Zubin R. Shroff

	
 

	
 

	
Name:

	
Zubin R. Shroff

	
 

	
 

	
Title:

	
Director

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
ROYAL BANK OF CANADA

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
By:

	
/s/ Dan LePage

	
 

	
 

	
Name:

	
Dan LePage

	
 

	
 

	
Title:

	
Authorized Signatory

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
PNC BANK, NATIONAL ASSOCIATION

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
By:

	
/s/ Jason Schreibe

	
 

	
 

	
Name:

	
Jason Schreibe

	
 

	
 

	
Title:

	
Senior Vice President

	
 

Signature Page

JOINDER OF GUARANTOR

Guarantor joins in the execution of this Agreement to evidence its agreement to be bound by the terms of Section 6.25.

	
 

	
GUARANTOR:

	
 

	
 

	
 

	
BROOKDALE SENIOR LIVING INC.,

	
 

	
a Delaware corporation

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
By:

	
/s/ George T. Hicks

	
 

	
 

	
Name:

	
George T. Hicks

	
 

	
 

	
Title:

	
Executive Vice President

	
 

Signature PageEx 4.16 Indenture Agreement

EXHIBIT 4.16
______________________________________________________________________________________________________

HARLAND CLARKE HOLDINGS CORP.
and each of the co-issuers and Guarantors PARTY HERETO
9.750% SENIOR SECURED NOTES DUE 2018
__________________________________

INDENTURE
Dated as of July 24, 2012
__________________________________

WELLS FARGO BANK, NATIONAL ASSOCIATION
Trustee

______________________________________________________________________________________________________

1

TABLE OF CONTENTS
Page
ARTICLE 1
DEFINITIONS AND INCORPORATION
BY REFERENCE
	
				
	Section 1.01
	Definitions
	1
	

	Section 1.02
	Other Definitions
	40
	

	Section 1.03
	Rules of Construction
	40
	

ARTICLE 2
THE NOTES
	
				
	Section 2.01
	Form and Dating
	41
	

	Section 2.02
	Execution and Authentication
	41
	

	Section 2.03
	Registrar and Paying Agent
	42
	

	Section 2.04
	Paying Agent to Hold Money in Trust
	42
	

	Section 2.05
	Holder Lists
	42
	

	Section 2.06
	Transfer and Exchange
	42
	

	Section 2.07
	Replacement Notes
	51
	

	Section 2.08
	Outstanding Note
	51
	

	Section 2.09
	Treasury Notes
	52
	

	Section 2.10
	Temporary Notes
	52
	

	Section 2.11
	Cancellation
	52
	

	Section 2.12
	Defaulted Interest
	52
	

	Section 2.13
	CUSIP Numbers
	52
	

ARTICLE 3
REDEMPTION AND PREPAYMENT
	
				
	Section 3.01
	Notices to Trustee
	52
	

	Section 3.02
	Selection of Notes to Be Redeemed or Purchased
	53
	

	Section 3.03
	Notice of Redemption
	53
	

	Section 3.04
	Effect of Notice of Redemption
	54
	

	Section 3.05
	Deposit of Redemption or Purchase Price
	54
	

	Section 3.06
	Notes Redeemed or Purchased in Part
	54
	

	Section 3.07
	Optional Redemption
	55
	

	Section 3.08
	Mandatory Redemption
	55
	

	Section 3.09
	Offer to Purchase by Application of Excess Proceeds
	56
	

i

ARTICLE 4
COVENANTS
	
				
	Section 4.01
	Payment of Notes
	57
	

	Section 4.02
	Maintenance of Office or Agency
	57
	

	Section 4.03
	Reports
	58
	

	Section 4.04
	Compliance Certificate
	60
	

	Section 4.05
	Taxes
	60
	

	Section 4.06
	Stay, Extension and Usury Laws
	60
	

	Section 4.07
	Restricted Payments
	60
	

	Section 4.08
	Dividend and Other Payment Restrictions Affecting Restricted Subsidiaries
	66
	

	Section 4.09
	Incurrence of Indebtedness and Issuance of Preferred Stock and Disqualified Stock
	68
	

	Section 4.10
	Asset Sales
	73
	

	Section 4.11
	Transactions with Affiliates
	75
	

	Section 4.12
	Liens
	77
	

	Section 4.13
	Business Activities
	78
	

	Section 4.14
	Corporate Existence
	78
	

	Section 4.15
	Offer to Repurchase Upon Change of Control
	78
	

	Section 4.16
	Limitation on Sale and Lease-Back Transactions
	80
	

	Section 4.17
	Limitations on Guarantees of Indebtedness by Restricted Subsidiaries
	80
	

	Section 4.18
	Creation and Perfection of Certain Security Interests Post-Closing
	80
	

	Section 4.19
	Excess Cash Flow Offer
	81
	

ARTICLE 5
SUCCESSORS
	
				
	Section 5.01
	Merger, Consolidation, or Sale of Assets
	82
	

	Section 5.02
	Successor Corporation Substituted
	84
	

ARTICLE 6
DEFAULTS AND REMEDIES
	
				
	Section 6.01
	Events of Default and Remedies
	84
	

	Section 6.02
	Acceleration
	86
	

	Section 6.03
	Other Remedies
	86
	

	Section 6.04
	Waiver of Past Defaults
	87
	

	Section 6.05
	Control by Majority
	87
	

	Section 6.06
	Limitation on Suits
	87
	

	Section 6.07
	Rights of Holders of Notes to Receive Payment
	88
	

	Section 6.08
	Collection Suit by Trustee
	88
	

	Section 6.09
	Trustee May File Proofs of Claim
	88
	

	Section 6.10
	Priorities
	88
	

	Section 6.11
	Undertaking for Costs
	89
	

ii

ARTICLE 7
TRUSTEE
	
				
	Section 7.01
	Duties of Trustee
	89
	

	Section 7.02
	Rights of Trustee
	90
	

	Section 7.03
	Individual Rights of Trustee
	91
	

	Section 7.04
	Trustee's Disclaimer
	91
	

	Section 7.05
	Notice of Defaults
	91
	

	Section 7.06
	[Intentionally Omitted]
	91
	

	Section 7.07
	Compensation and Indemnity
	91
	

	Section 7.08
	Replacement of Trustee
	92
	

	Section 7.09
	Successor Trustee by Merger, etc.
	93
	

	Section 7.10
	Eligibility; Disqualification
	93
	

	Section 7.11
	Agency Capacities
	93
	

ARTICLE 8
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
	
				
	Section 8.01
	Option to Effect Legal Defeasance or Covenant Defeasance
	93
	

	Section 8.02
	Legal Defeasance and Discharge
	93
	

	Section 8.03
	Covenant Defeasance
	94
	

	Section 8.04
	Conditions to Legal or Covenant Defeasance
	94
	

	Section 8.05
	Deposited Money and Government Securities to be Held in Trust; Other Miscellaneous Provisions
	95
	

	Section 8.06
	Repayment to Company
	96
	

	Section 8.07
	Reinstatement
	96
	

ARTICLE 9
AMENDMENT, SUPPLEMENT AND WAIVER
	
				
	Section 9.01
	Without Consent of Holders of Notes
	96
	

	Section 9.02
	With Consent of Holders of Notes
	97
	

	Section 9.03
	[Intentionally Omitted]
	98
	

	Section 9.04
	Revocation and Effect of Consents
	98
	

	Section 9.05
	Notation on or Exchange of Notes
	99
	

	Section 9.06
	Trustee to Sign Amendments, etc.
	99
	

ARTICLE 10
GUARANTEES
	
				
	Section 10.01
	Guarantee
	99
	

	Section 10.02
	Limitation on Guarantor Liability
	100
	

	Section 10.03
	Execution and Delivery of Guarantee
	100
	

	Section 10.04
	Releases
	100
	

iii

ARTICLE 11
SATISFACTION AND DISCHARGE
	
				
	Section 11.01
	Satisfaction and Discharge
	101
	

	Section 11.02
	Application of Trust Money
	102
	

ARTICLE 12
COLLATERAL AND SECURITY
	
				
	Section 12.01
	Security Interest
	103
	

	Section 12.02
	[Intentionally Omitted]
	103
	

	Section 12.03
	Release of Liens on Collateral
	103
	

	Section 12.04
	Release of Liens in Respect of Notes
	103
	

	Section 12.05
	Amendment of Security Documents
	103
	

	Section 12.06
	Equal and Ratable Sharing of Collateral by Holders of Parity Lien Debt
	103
	

	Section 12.07
	Ranking of Priority Liens in Current Asset Collateral
	104
	

	Section 12.08
	Ranking of Priority Liens in Fixed Asset Collateral
	105
	

	Section 12.09
	Ranking of Junior Liens Relative to Parity Liens
	106
	

	Section 12.10
	Ranking of Junior Liens Relative to Priority Liens
	106
	

	Section 12.11
	Relative Rights
	107
	

	Section 12.12
	Designations
	107
	

	Section 12.13
	Further Assurances
	108
	

ARTICLE 13
MISCELLANEOUS
	
				
	Section 13.01
	No Trust Indenture Act Provisions
	110
	

	Section 13.02
	Notices
	110
	

	Section 13.03
	[Intentionally Omitted]
	111
	

	Section 13.04
	Certificate and Opinion as to Conditions Precedent
	111
	

	Section 13.05
	Statements Required in Certificate or Opinion
	111
	

	Section 13.06
	Rules by Trustee and Agents
	111
	

	Section 13.07
	No Personal Liability of Directors, Officers, Employees, Stockholders or Controlling Persons
	112
	

	Section 13.08
	Governing Law, Jury Trial Waiver
	112
	

	Section 13.09
	No Adverse Interpretation of Other Agreements
	112
	

	Section 13.10
	Successors
	112
	

	Section 13.11
	Severability
	112
	

	Section 13.12
	Counterpart Originals
	112
	

	Section 13.13
	Table of Contents, Headings, etc.
	112
	

	Section 13.14
	Force Majeure
	113
	

	Section 13.15
	Patriot Act
	113
	

iv

EXHIBITS
		
	Exhibit A
	FORM OF NOTE

		
	Exhibit B
	FORM OF CERTIFICATE OF TRANSFER

		
	Exhibit C
	FORM OF CERTIFICATE OF EXCHANGE

		
	Exhibit D
	FORM OF CERTIFICATE OF ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR 

		
	Exhibit E
	FORM OF NOTATION OF GUARANTEE 

		
	Exhibit F
	FORM OF SUPPLEMENTAL INDENTURE

v

INDENTURE dated as of July 24, 2012 among Harland Clarke Holdings Corp., a Delaware corporation, the Co-Issuers (as defined), the Guarantors (as defined) and Wells Fargo Bank, National Association, as trustee.
The Company (as defined), the Co-Issuers, the Guarantors and the Trustee (as defined) agree as follows for the benefit of each other and for the equal and ratable benefit of the Holders (as defined) of the 9.750% Senior Secured Notes due 2018 (the “Notes”):

ARTICLE I
DEFINITIONS AND INCORPORATION
BY REFERENCE

Section 1.01    Definitions.
“144A Global Note” means a Global Note substantially in the form of Exhibit A hereto bearing the Global Note Legend and the Private Placement Legend and deposited with or on behalf of, and registered in the name of, the Depositary or its nominee that will be issued in a denomination equal to the outstanding principal amount of the Notes sold in reliance on Rule 144A.
“ABL Intercreditor Agreement” has the meaning set forth in the Collateral Trust Agreement. 
“Acquired Debt” means, with respect to any specified Person:
(1)Indebtedness of any other Person existing at the time such other Person is merged with or into or became a Restricted Subsidiary of such specified Person, whether or not such Indebtedness is incurred in connection with, or in contemplation of, such other Person merging with or into, or becoming a Restricted Subsidiary of, such specified Person; and
(2)Indebtedness secured by a Lien encumbering any asset acquired by such specified Person.
“Additional Notes” means the additional Notes (other than the Initial Notes) issued under this Indenture in accordance with Sections 2.02 and 4.09 hereof, as part of the same series as the Initial Notes (except that Notes that bear the legend required by Section 2.06(f)(3) will be treated where necessary as separate series as contemplated by Section 2.06(h)(9)).  
“Affiliate” of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person.  For purposes of this definition, “control” (including, with correlative meanings, the terms “controlling,” “controlled by” and “under common control with”), as used with respect to any Person, shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise.
“Agent” means any Registrar, co-registrar, Paying Agent or additional paying agent.
“Applicable Credit Agreement” means the Existing Credit Agreement and, on or after the Discharge of Credit Agreement Obligations with respect to the Existing Credit Agreement, any other Credit Agreement that has been designated as a successor to the prior Applicable Credit Agreement for the purposes of the Collateral Trust Agreement in writing to each Parity Lien Representative and Junior Lien Representative; provided that in no event will more than one Applicable Credit Agreement exist at any time. 

1

“Applicable Premium” means, with respect to any Note on any redemption date, the greater of:
(1)    1.0% of the principal amount of the Note; or 
(2)    the excess of: 
(a)    the present value at such redemption date of (i) the redemption price of such Note at August 1, 2015, as the case may be (each such redemption price being set forth in the tables appearing in Section 3.07), plus (ii) all required interest payments due on such Note through August 1, 2015, as the case may be, excluding accrued but unpaid interest to the redemption date, computed using a discount rate equal to the Treasury Rate as of such redemption date plus 50 basis points; over 
(b)    the principal amount of the Note on such redemption date.
“Applicable Procedures” means, with respect to any transfer or exchange of or for beneficial interests in any Global Note, the rules and procedures of the Depositary, Euroclear and Clearstream that apply to such transfer or exchange.
“Asset Sale” means: 
(1)    the sale, conveyance, transfer or other disposition, whether in a single transaction or a series of related transactions, of property or assets (including by way of a Sale and Lease-Back Transaction) of the Company or any Restricted Subsidiary (each referred to in this definition as a “disposition”); and
(2)    the issuance or sale of Equity Interests of any Restricted Subsidiary (other than directors' qualifying shares), whether in a single transaction or a series of related transactions.
Notwithstanding the preceding, none of the following items will be deemed to be an Asset Sale:
(a)    a disposition of cash, Cash Equivalents or Investment Grade Securities or obsolete or worn out equipment, vehicles or other similar assets in the ordinary course of business or any disposition of inventory or goods held for sale in the ordinary course of business or any disposition of assets no longer used or useful or necessary in the conduct of the business of the Company and its Restricted Subsidiaries;
(b)    the disposition of all or substantially all of the assets of the Company or a Guarantor in a manner permitted pursuant to Section 5.01 hereof or any disposition that constitutes a Change of Control pursuant to this Indenture;
(c)    the making of any Permitted Investment or the making of any Restricted Payment that is not prohibited by Section 4.07 hereof;
(d)    any disposition of assets or issuance or sale of Equity Interests of any Restricted Subsidiary in any transaction or series of transactions with an aggregate Fair Market Value of less than $7.5 million;
(e)    any disposition of property or assets or issuance or transfer of securities by a Restricted Subsidiary to the Company or by the Company or a Restricted Subsidiary to a Restricted Subsidiary;
(f)    to the extent allowable under Section 1031 of the Internal Revenue Code of 1986, any exchange of like property (excluding any boot thereon) for use in a Similar Business;
(g)    the lease, assignment or sub-lease of any real or personal property in the ordinary course of business;
(h)    any issuance or sale of Equity Interests in, or Indebtedness or other securities of, an Unrestricted Subsidiary;
(i)    foreclosures on assets;
(j)    sales of accounts receivable, payment intangibles and related assets, or participations 

2

therein, in connection with any Receivables Facility;
(k)    the unwinding of any Hedging Obligations;
(l)    the sale or grant of licenses or sub-licenses of intellectual property entered into in the ordinary course of business;
(m)    creation or realization of Liens that are permitted to be incurred by this Indenture;
(n)    any transfer of property or assets that is a surrender or waiver of a contract right or a settlement, surrender or release of a contract or tort claim;
(o)    dispositions in connection with Sale and Lease-Back Transactions permitted by Section 4.16 hereof; and
(p)    dispositions of Investments in joint ventures to the extent required by, or made pursuant to customary buy/sell arrangements between, the joint venture parties set forth in joint venture agreements and similar binding agreements.
“Attributable Debt” in respect of a Sale and Lease-Back Transaction means, at the time of determination, the present value (discounted at the interest rate implicit in such transaction, determined in accordance with GAAP) of the total obligations of the lessee for rental payments during the remaining term of the lease included in such Sale and Lease-Back Transaction (including any period for which such lease has been extended); provided, however, that if such Sale and Lease-Back Transaction results in a Capitalized Lease Obligation, the amount of Indebtedness represented thereby will be determined in accordance with the definition of Capitalized Lease Obligation.
“Attributable Receivables Facility Debt” means, at any time, the principal amount of any Receivables Facility outstanding at such time; provided that in the case of a multi-seller Receivables Facility, the amount of Attributable Receivables Facility Debt shall be the portion of the principal amount of such Receivables Facility attributable (as determined in good faith by the Company) to any receivables or payment intangibles transferred by the Company or any Restricted Subsidiary in support of such Receivables Facility at or prior to such time and still outstanding.
“Bankruptcy Code” means Title 11 of the United States Code, as amended. 
“Beneficial Owner” has the meaning assigned to such term in Rule 13d-3 and Rule 13d-5 under the Exchange Act, except that in calculating the beneficial ownership of any particular “person” (as that term is used in Section 13(d)(3) of the Exchange Act), such “person” will be deemed to have beneficial ownership of all securities that such “person” has the right to acquire by conversion or exercise of other securities, whether such right is currently exercisable or is exercisable only after the passage of time.  The terms “Beneficially Owns” and “Beneficially Owned” have corresponding meanings.
“Board of Directors” means:
(1)with respect to a corporation, the board of directors of the corporation or any committee thereof;
(2)with respect to a partnership the general partner of which is a corporation, the board of directors of the general partner of the partnership or any committee thereof; 
(3)with respect to a limited liability company, any managing member thereof or, if managed by managers, the board of managers or any committee thereof; and
(4)with respect to any other Person, the board or committee of such Person (or such Person's general partner, manager or equivalent) serving a similar function.
“Board Resolution” means, with respect to the Company, a duly adopted resolution of the Board of Directors of the Company or any committee thereof.

3

“Business Day” means each day that is not a Legal Holiday.
“Capital Expenditures” means, for any period, the aggregate of (a) all expenditures (whether paid in cash or accrued as liabilities) by the Company and the Restricted Subsidiaries during such period that, in conformity with GAAP, are or are required to be included as additions during such period to property, plant or equipment reflected in the consolidated balance sheet of the Company and the Restricted Subsidiaries and (b) the value of all assets under Capitalized Lease Obligations incurred by the Company and its Restricted Subsidiaries during such period; provided that the term “Capital Expenditures” shall not include: 
(1)    expenditures made in connection with the replacement, substitution, restoration or repair of assets to the extent financed with (x) insurance proceeds paid on account of the loss of or damage to the assets being replaced, restored or repaired or (y) awards of compensation arising from the taking by eminent domain or condemnation of the assets being replaced;
(2)    the purchase price of equipment that is purchased simultaneously with the trade-in of existing equipment to the extent that the gross amount of such purchase price is reduced by the credit granted by the seller of such equipment for the equipment being traded in at such time;
(3)    the purchase of plant, property or equipment to the extent financed with the proceeds of Asset Sales that are not applied to prepay the Notes pursuant to Section 4.10;
(4)    expenditures that constitute Consolidated Lease Expense,
(5)    expenditures that are accounted for as capital expenditures by the Company or any Restricted Subsidiary and that actually are paid for by a Person other than the Company or any Restricted Subsidiary and for which neither the Company nor any Restricted Subsidiary has provided or is required to provide or incur, directly or indirectly, any consideration or obligation to such Person or any other Person (whether before, during or after such period);
(6)    the book value of any asset owned by the Company or any Restricted Subsidiary prior to or during such period to the extent that such book value is included as a capital expenditure during such period as a result of such Person reusing or beginning to reuse such asset during such period without a corresponding expenditure actually having been made in such period, provided that (x) any expenditure necessary in order to permit such asset to be reused shall be included as a Capital Expenditure during the period in which such expenditure actually is made and (y) such book value shall have been included in Capital Expenditures when such asset was originally acquired;
(7)    expenditures that constitute acquisitions of Persons or business units permitted under the Indenture; or
(8)    capitalized pre-paid incentive payments.
“Capital Stock” means:
(1)    in the case of a corporation, corporate stock;
(2)    in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock;
(3)    in the case of a partnership or limited liability company, partnership or membership interests (whether general or limited); and
(4)    any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person. 

4

“Capitalized Lease Obligation” means, at the time any determination thereof is to be made, the amount of the liability in respect of a capital lease that would at such time be required to be capitalized and reflected as a liability on a balance sheet (excluding the footnotes thereto) in accordance with GAAP.
“Cash Equivalents” means:
(1)    United States dollars, Canadian dollars, Japanese yen, pounds sterling, euro or, in the case of any Foreign Subsidiary that is a Restricted Subsidiary, such local currencies held by it from time to time in the ordinary course of business;
(2)    securities issued or directly and fully and unconditionally guaranteed or insured by the government of the United States of America or any agency or instrumentality thereof the securities of which are unconditionally guaranteed as a full faith and credit obligation of such government with maturities of 24 months or less from the date of acquisition;
(3)certificates of deposit, time deposits and eurodollar time deposits with maturities of one year or less from the date of acquisition, bankers' acceptances with maturities not exceeding one year and overnight bank deposits, in each case with any lender party to the Credit Agreement or with any domestic commercial bank having capital and surplus in excess of $250.0 million;
(4)repurchase obligations for underlying securities of the types described in clauses (2) and (3) above entered into with any financial institution meeting the qualifications specified in clause (3) above;
(5)commercial paper having at least P-1 by Moody's or at least A-1 by S&P and in each case maturing within 12 months after the date of issuance thereof;
(6)investment funds investing at least 95% of their assets in securities of the types described in clauses (1) through (5) above;
(7)readily marketable direct obligations issued by any state of the United States of America or any political subdivision thereof having one of the two highest rating categories obtainable from either Moody's or S&P with maturities of 24 months or less from the date of acquisition; and
(8)Indebtedness or Preferred Stock issued by Persons with a rating of “A” or higher from S&P or “A2” or higher from Moody's with maturities of 12 months or less from the date of acquisition.
In the case of Investments by any Foreign Subsidiary that is a Restricted Subsidiary or Investments made in a country outside of the United States of America, Cash Equivalents shall also include (i) investments of the type and maturity described in clauses (1) through (8) above of foreign obligors, which Investments or obligors (or the parents of such obligors) have ratings described in such clauses (or reasonably equivalent ratings from comparable foreign rating agencies) and (ii) other short-term investments used by Foreign Subsidiaries that are Restricted Subsidiaries in accordance with normal investment practices for cash management in investments reasonably analogous to the foregoing investments described in clauses (1) through (8) above and in this paragraph. 
“Cash Management Obligations” means any obligations of the Company or any of its Restricted Subsidiaries in respect of any arrangement for treasury, depositary, overdraft, credit or debit card, purchase card or other cash management services provided to the Company or any of its Restricted Subsidiaries in connection with any transfer or disbursement of funds through an automated clearinghouse or on a same day or immediate or accelerated availability basis or other electronic funds transfer.
“Change of Control” means the occurrence of any of the following:
(1)    the sale, lease or transfer, in one or a series of related transactions, of all or substantially all of the assets of Holdings, the Company and its Subsidiaries, taken as a whole, to any Person other than a 

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Permitted Holder;
(2)    the Company becoming aware of (by way of a report or any other filing pursuant to Section 13(d) of the Exchange Act, proxy, vote, written notice or otherwise) the acquisition by any Person or group (within the meaning of Section 13(d)(3) or Section 14(d)(2) of the Exchange Act, or any successor provision), including any group acting for the purpose of acquiring, holding or disposing of securities (within the meaning of Rule 13d-5(b)(1) under the Exchange Act, or any successor provision), other than any of the Permitted Holders, in a single transaction or in a series of related transactions, by way of merger, consolidation or other business combination or purchase of beneficial ownership (within the meaning of Rule 13d-3 under the Exchange Act, or any successor provision) of 50% or more of the total voting power of the Voting Stock of the Company; or
(3)    the Board of Directors of the Company ceasing to consist of a majority of Continuing Directors.
Notwithstanding the foregoing, (1) a transaction in which the Company or any direct or indirect parent of the Company becomes a Subsidiary of another Person (other than a Person that is an individual, such Person that is not an individual, the “New Parent”) shall not constitute a Change of Control if (a) the shareholders of the Company or such direct or indirect parent immediately prior to such transaction “beneficially own” (as such term is defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act), directly or indirectly through one or more intermediaries, at least a majority of the voting power of the outstanding voting stock of the New Parent immediately following the consummation of such transaction or (b) immediately following the consummation of such transaction, no “person” (as such term is defined above), other than a Permitted Holder and the New Parent, “beneficially owns” (as such term is defined above), directly or indirectly through one or more intermediaries, more than 50% of the voting power of the outstanding Voting Stock of the Company or the New Parent; (2) any holding company whose only significant asset is Capital Stock of , New Parent or any direct or indirect parent of the Company shall not itself be considered a “person” or “group” for purposes of this definition; (3) the transfer of assets between or among the Restricted Subsidiaries and the Company in accordance with the terms of the indenture shall not itself constitute a Change of Control; (4) a “person” or “group” shall not be deemed to have beneficial ownership of securities (or “beneficially own” (as such term is defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act)) subject to a stock purchase agreement, merger agreement or similar agreement (or voting or option agreement related thereto) until the consummation of the transactions contemplated by such agreement; (5) any change in the relative beneficial ownership of the Permitted Holders that does not alter the overall beneficial ownership of the Permitted Holders shall not constitute a Change of Control; and (6) the term “Change of Control” shall not include a merger or consolidation of the Company with or the sale, assignment, conveyance, transfer, lease or other disposition of all or substantially all of the Company's assets to, an Affiliate incorporated or organized solely for the purpose of reincorporating or reorganizing the Company in another jurisdiction and/or for the sole purpose of forming or collapsing a holding company structure. 
“Clearstream” means Clearstream Banking, S.A.
“Collateral ” means the Current Asset Collateral and the Fixed Asset Collateral, other than Excluded Assets. 
“Collateral Trust Agreement” means that certain Collateral Trust Agreement dated the date of this Indenture, by and among the Company, the Guarantors, the Credit Agreement Collateral Agent, the Collateral Trustee and the Trustee, as it may be amended, restated, supplemented or otherwise modified from time to time in accordance with its terms. 
“Collateral Trust Obligations” means Junior Lien Obligations and Collateral Trust Parity Lien Obligations.
“Collateral Trust Parity Lien Debt” means Parity Lien Debt other than Credit Agreement Debt. 
“Collateral Trust Parity Lien Documents” means, collectively, the Note Documents and the indenture, credit agreement or other agreement governing each other Series of Collateral Trust Parity Lien Debt and the Collateral Trust Security Documents (other than any Collateral Trust Security Documents that do not secure Collateral Trust Parity Lien Obligations). 
“Collateral Trust Parity Lien Obligations” means Parity Lien Obligations other than Credit Agreement Obligations. 

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“Collateral Trust Parity Lien Representative” means (1) the Trustee, in the case of the Notes and (2) in the case of any other Series of Collateral Trust Parity Lien Debt, the trustee, agent or representative of the holders of such Series of Collateral Trust Parity Lien Debt who is appointed as a representative of such Series of Collateral Trust Parity Lien Debt (for purposes related to the administration of the applicable security documents related thereto) pursuant to the indenture, credit agreement or other agreement governing such Series of Collateral Trust Parity Lien Debt. 
“Collateral Trust Representative” means each Junior Lien Representative and each Collateral Trust Parity Lien Representative. 
“Collateral Trust Security Documents” means all security agreements, pledge agreements, collateral assignments, mortgages, deeds of trust, collateral agency or trust agreements, control agreements or other grants or transfers for security executed and delivered by the Company or any Guarantor creating (or purporting to create) a Lien upon Collateral in favor of the Collateral Trustee, for the benefit of any of the Collateral Trust Obligations, in each case, as amended, modified, renewed, restated or replaced, in whole or in part, from time to time, in accordance with its terms and the Collateral Trust Agreement. 
“Collateral Trustee” means Wells Fargo Bank, National Association, in its capacity as collateral trustee under the Collateral Trust Agreement, together with its successors in such capacity. 
“Co-Issuer” means each of:
(1)    Harland Clarke Corp., a Delaware corporation, Harland Financial Solutions, Inc., an Oregon corporation, Scantron Corporation, a Delaware corporation and Checks in the Mail, Inc., a Delaware corporation; and
(2)    any other Subsidiary of the Company that becomes a Co-Issuer in accordance with the provisions of this Indenture;
and their respective successors and assigns, in each case, until such Co-Issuer has been released in accordance with the provisions of this Indenture.
“Company” means Harland Clarke Holdings Corp., and any and all successors thereto; provided that when used in the context of determining the fair market value of an asset or liability under this Indenture, “Company” shall, unless otherwise expressly stated, be deemed to mean the Board of Directors of Harland Clarke Holdings Corp. when the fair market value of such asset or liability is equal to or in excess of $30.0 million.
“consolidated” means, with respect to any Person, such person consolidated with its Subsidiaries, excluding from such consolidation any Receivables Subsidiary and any Unrestricted Subsidiary as if such Receivables Subsidiary or Unrestricted Subsidiary were not an Affiliate of such Person, unless otherwise specifically indicated.
“Consolidated Depreciation and Amortization Expense” means with respect to any Person for any period, the sum of (i) the total amount of depreciation and amortization expense, including the amortization of deferred financing fees and other related noncash charges of such Person and its Restricted Subsidiaries for such period on a consolidated basis and otherwise determined in accordance with GAAP and (ii) to the extent not included in clause (i), the amount of amortization expense related to capitalized pre-paid incentive payments (which pre-paid incentive payments may also be recorded as “upfront contract acquisition costs”).
“Consolidated Interest Expense” means, with respect to any Person for any period, the sum, without duplication, of: 
(1)    consolidated interest expense of such Person and its Restricted Subsidiaries for such period, to the extent such expense was deducted in computing Consolidated Net Income (including (a) amortization of original issue discount resulting from the issuance of Indebtedness at less than par, (b) all commissions, discounts and other fees and charges owed with respect to letters of credit or bankers' acceptances, (c) noncash interest payments (but excluding any noncash interest expense attributable to the movement in the mark-to-

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market valuation of Hedging Obligations or other derivative instruments pursuant to GAAP), (d) the interest component of Capitalized Lease Obligations and (e) net payments, if any, pursuant to interest rate Hedging Obligations with respect to Indebtedness, and excluding (i) amortization of deferred financing fees, debt issuance costs, commissions, fees and expenses, (ii) any expensing of bridge, commitment and other financing fees, (iii) commissions, discounts, yield and other fees and charges (including any interest expense) related to any Receivables Facility and (iv) any redemption premiums, prepayment fees, other charges or penalties incurred in connection with the Transactions (in each case of (i) through (iv), to the extent included in any of the foregoing items (a) through (e))), plus 
(2)    consolidated capitalized interest of such Person and its Restricted Subsidiaries for such period, whether paid or accrued, less 
(3)    interest income for such period and net receipts, if any, pursuant to interest rate Hedging Obligations with respect to Indebtedness. 
For purposes of this definition, interest on a Capitalized Lease Obligation shall be deemed to accrue at an interest rate reasonably determined by such Person to be the rate of interest implicit in such Capitalized Lease Obligation in accordance with GAAP. 
“Consolidated Lease Expense” means for any period, all rental expenses of the Company and its Restricted Subsidiaries during such period under operating leases for real or personal property (including in connection with Sale and Lease-Back Transactions permitted by the Indenture), excluding real estate taxes, insurance costs and common area maintenance charges and net of sublease income, other than (a) obligations under vehicle leases entered into in the ordinary course of business, (b) all such rental expenses associated with assets acquired pursuant to an acquisition of a Person or business unit to the extent such rental expenses relate to operating leases in effect at the time of (and immediately prior to) such acquisition and related to periods prior to such acquisition and (c) all Capitalized Lease Obligations, all as determined on a consolidated basis in accordance with GAAP.
“Consolidated Leverage Ratio” means, with respect to any Person as of any date of determination, the ratio of (x) the excess of (i) Consolidated Total Indebtedness of such Person as of the end of the most recent fiscal quarter for which internal financial statements are available immediately preceding the date on which such event for which such calculation is being made shall occur over (ii) an amount equal to the lesser of (a) the amount of cash and Cash Equivalents of the Company and its Restricted Subsidiaries on such date and (b) $40.0 million to (y) the aggregate amount of EBITDA of such Person for the period of the most recently ended four full consecutive fiscal quarters for which internal financial statements are available immediately preceding the date on which such event for which such calculation is being made shall occur, in each case with such pro forma adjustments to Consolidated Total Indebtedness and EBITDA as are appropriate and consistent with the pro forma adjustment provisions set forth in the definition of “Fixed Charge Coverage Ratio”. 
“Consolidated Net Income” means, with respect to any Person for any period, the aggregate of the Net Income of such Person and its Restricted Subsidiaries for such period, on a consolidated basis, and otherwise determined in accordance with GAAP; provided that, without duplication, 
(1)    any net after-tax restructuring expense or extraordinary, non-recurring or unusual gains or losses (less all fees and expenses relating thereto) or expenses (including relating to severance, relocation and one-time compensation charges) shall be excluded, 
(2)    the Net Income for such period shall not include the cumulative effect of a change in accounting principles during such period, whether effected through a cumulative effect adjustment or a retroactive application in each case in accordance with GAAP, 
(3)    any net after-tax income (loss) from disposed or discontinued operations and any net after-tax gains or losses on disposal of disposed or discontinued operations shall be excluded, 

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(4)    any net after-tax gains or losses (less all fees and expenses relating thereto) attributable to asset dispositions or the sale or other disposition of any Capital Stock of any Person other than in the ordinary course of business, as determined in good faith by the Company, shall be excluded, 
(5)    the Net Income for such period of any Person that is not a Subsidiary, or is an Unrestricted Subsidiary or a Receivables Subsidiary, or that is accounted for by the equity method of accounting, shall be excluded; provided that Consolidated Net Income of the Company shall be increased by the amount of dividends or distributions or other payments that are actually paid in cash (or to the extent converted into cash) to the referent Person or a Restricted Subsidiary thereof in respect of such period, 
(6)    solely for the purpose of determining the amount available for Restricted Payments under Section 4.07(a)(iii)(1), the Net Income for such period of any Restricted Subsidiary (other than any Subsidiary Guarantor) shall be excluded if the declaration or payment of dividends or similar distributions by that Restricted Subsidiary of its Net Income is not at the date of determination wholly permitted without any prior governmental approval (which has not been obtained) or, directly or indirectly, by the operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule, or governmental regulation applicable to that Restricted Subsidiary or its stockholders, unless such restriction with respect to the payment of dividends or similar distributions has been legally waived; provided that Consolidated Net Income of the Company will be increased by the amount of dividends or other distributions or other payments actually paid in cash (or to the extent converted into cash) to the Company or a Restricted Subsidiary thereof in respect of such period, to the extent not already included therein, 
(7)    any increase in amortization or depreciation or other noncash charges (including, without limitation, any non-cash fair value adjustment of inventory) resulting from the application of purchase accounting in relation to any acquisition that is consummated after the Issue Date, net of taxes, shall be excluded, 
(8)    any net after-tax income (loss) from (i) Hedging Obligations or Cash Management Obligations, (ii) the application of FASB ASC Topic 815, (iii) other derivative instruments or (iv) the extinguishment of Indebtedness shall be excluded, 
(9)    any net after-tax impairment charge or asset write-off, in each case pursuant to GAAP, and the amortization of intangibles arising pursuant to GAAP shall be excluded, 
(10)    any net after-tax noncash compensation expense recorded from grants of stock appreciation or similar rights, stock options, restricted stock or other rights to officers, directors, employees, managers or consultants shall be excluded, 
(11)    any non-cash cost related to the termination of any employee pension benefit plan, together with any related provision for taxes on any such termination (or the tax effect of any such termination) shall be excluded, 
(12)    any deferred financing costs amortized or written off, and premiums and prepayment penalties paid in connection with any acquisition or disposition that is consummated after the Issue Date shall be excluded, 
(13)    any net gain or loss resulting in such period from currency translation gains or losses related to currency remeasurements of Indebtedness shall be excluded, and 
(14)    any charges resulting from the application of FASB ASC Topic 805 “Business Combinations”, FASB ASC Topic 350 “Goodwill and Other Intangible Assets”, FASB ASC Topic 360 “Accounting for the Impairment or Disposal of Long-Lived Assets”, FASB ASC Topic 480 “Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity”, FASB ASC Topic 820 “Fair Value Measurements and Disclosures” and FASB ASC Topic 470-20 “Debt-Debt with Conversion Options-Recognition” shall be excluded. 

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Notwithstanding the foregoing, for the purpose of Section 4.07 only (other than Section 4.07(a)(iii)(4)), there shall be excluded from Consolidated Net Income any income arising from any sale or other disposition of Restricted Investments made by the Company and the Restricted Subsidiaries, any repurchases and redemptions of Restricted Investments from the Company and the Restricted Subsidiaries, any repayments of loans and advances that constitute Restricted Investments by the Company or any Restricted Subsidiary, any sale of the stock of an Unrestricted Subsidiary or any distribution or dividend from an Unrestricted Subsidiary, in each case only to the extent such amounts increase the amount of Restricted Payments permitted under Section 4.07(a)(iii)(4). 
“Consolidated Secured Debt Ratio” as of any date of determination means the ratio of (x) the excess of (i) Consolidated Total Indebtedness of the Company and the Restricted Subsidiaries that is secured by Liens described in the definition of “Permitted Liens” under clauses (1), (2) and (3) thereof as of the end of the most recent fiscal quarter for which internal financial statements are available immediately preceding the date on which such event for which such calculation is being made shall occur over (ii) an amount equal to the lesser of (a) the amount of cash and Cash Equivalents of the Company and its Restricted Subsidiaries on such date and (b) $40.0 million to (y) the aggregate amount of EBITDA of the Company and the Restricted Subsidiaries for the period of the most recently ended consecutive four full fiscal quarters for which internal financial statements are available immediately preceding the date on which such event for which such calculation is being made shall occur, in each case with such pro forma adjustments to Consolidated Total Indebtedness and EBITDA as are appropriate and consistent with the pro forma adjustment provisions set forth in the definition of Fixed Charge Coverage Ratio. 
“Consolidated Total Indebtedness” means, as at any date of determination, an amount equal to the sum, without duplication, of (1) the aggregate amount of all outstanding Indebtedness of the Company and the Restricted Subsidiaries on a consolidated basis consisting of Indebtedness for borrowed money, Obligations in respect of Capitalized Lease Obligations, Attributable Debt in respect of Sale and Lease-Back Transactions and debt obligations evidenced by bonds, notes, debentures or similar instruments or letters of credit or bankers' acceptances (and excluding any undrawn letters of credit issued in the ordinary course of business and all obligations relating to any Receivables Facility) and (2) the aggregate amount of all outstanding Disqualified Stock of the Company and all Disqualified Stock and Preferred Stock of the Restricted Subsidiaries (excluding items eliminated in consolidation), with the amount of such Disqualified Stock and Preferred Stock equal to the greater of their respective voluntary or involuntary liquidation preferences and Maximum Fixed Repurchase Prices, in each case determined on a consolidated basis in accordance with GAAP.
For purposes hereof, the “Maximum Fixed Repurchase Price” of any Disqualified Stock or Preferred Stock that does not have a fixed repurchase price shall be calculated in accordance with the terms of such Disqualified Stock or Preferred Stock as if such Disqualified Stock or Preferred Stock were purchased on any date on which Consolidated Total Indebtedness shall be required to be determined pursuant to this Indenture, and if such price is based upon, or measured by, the fair market value of such Disqualified Stock or Preferred Stock, such fair market value shall be determined in good faith by the Company.
“Consolidated Working Capital” means, at any date, the excess of (a) the sum of all amounts (other than cash and Cash Equivalents) that would, in conformity with GAAP, be set forth opposite the caption “total current assets” (or any like caption) on a consolidated balance sheet of the Company and its Restricted Subsidiaries at such date over (b) the sum of all amounts that would, in conformity with GAAP, be set forth opposite the caption “total current liabilities” (or any like caption) on a consolidated balance sheet of the Company and its Restricted Subsidiaries on such date, including deferred revenue but excluding, without duplication, the current portion of any Funded Debt.
“Contingent Obligations” means, with respect to any Person, any obligation of such Person guaranteeing any leases, dividends or other obligations (the “primary obligations”) that do not constitute Indebtedness of any other Person (the “primary obligor”) in any manner, whether directly or indirectly, including any obligation of such Person, whether or not contingent,
(1)    to purchase any such primary obligations or any property constituting direct or indirect security therefor,
(2)    to advance or supply funds
(a)    for the purchase or payment of any such primary obligations or

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(b)    to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency of the primary obligor, or
(3)    to purchase property, securities or services primarily for the purpose of assuring the owner of any such primary obligations of the ability of the primary obligor to make payment of such primary obligation against loss in respect thereof.
“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 Issue Date; 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 of Directors at the time of such nomination or election.
“Corporate Trust Office of the Trustee” will be at the address of the Trustee specified in Section 13.02 hereof or such other address as to which the Trustee may give notice to the Company.
“Credit Agreement” means that certain Credit Agreement, dated as of April 4, 2007, as amended on May 10, 2012, by and among the Company, the guarantors party thereto, Credit Suisse, as administrative agent, and the lenders party thereto, providing for revolving credit and term loan borrowings, including any related notes, guarantees, collateral documents, instruments and agreements executed in connection therewith, in each case as such Credit Agreement, in whole or in part, in one or more instances, may be amended, renewed, extended, substituted, refinanced, restructured, replaced, supplemented or otherwise modified from time to time (including, without limitation, any successive renewals, extensions, substitutions, refinancings, restructurings, replacements, supplementations or other modifications of the foregoing and including, without limitation, any amendment increasing the amount of Indebtedness incurred or available to be borrowed thereunder, extending the maturity of any Indebtedness incurred thereunder or contemplated thereby or deleting, adding or substituting one or more parties thereto (whether or not such added or substituted parties are banks or other institutional lenders)), including into one or more debt facilities, commercial paper facilities or other debt instruments, indentures or agreements (including by means of sales of debt securities (including Additional Notes) to institutional investors), providing for revolving credit loans, term loans, letters of credit or other debt obligations, whether any such extension, replacement or refinancing (1) occurs simultaneously or not with the termination or repayment of a prior Credit Agreement or (2) occurs on one or more separate occasions.
“Credit Agreement Collateral Agent” means Credit Suisse AG, Cayman Islands Branch, as collateral agent under the Applicable Credit Agreement and its successors and permitted assigns thereunder. 
“Credit Agreement Debt” means Indebtedness (including letters of credit and reimbursement obligations with respect thereto) incurred by the Company or any of the Guarantors under the Applicable Credit Agreement. 
“Credit Agreement Obligations” means Credit Agreement Debt and all other Obligations in respect thereof. 
“Credit Facilities” means, one or more debt facilities (including, without limitation, the Credit Agreement but not including any Future ABL Facility) or commercial paper facilities, in each case, with banks or other institutional or other lenders providing for revolving credit loans, term loans, debt securities, 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 such Credit Facility, in whole or in part, in one or more instances, may be amended, renewed, extended,  substituted, refinanced, restructured, replaced, supplemented or otherwise modified from time to time (including, without limitation, any successive renewals, extensions, substitutions, refinancings, restructurings, replacements, supplementations or other modifications of the foregoing and including, without limitation, any amendment increasing the amount of Indebtedness incurred or available to be borrowed thereunder, extending the maturity of any Indebtedness incurred thereunder or contemplated thereby or deleting, adding or substituting one or more parties thereto (whether or not such added or substituted parties are banks or other institutional 

11

lenders)), including into one or more debt facilities, commercial paper facilities or other debt instruments, indentures or agreements (including by means of sales of debt securities (including Additional Notes) to institutional investors), providing for revolving credit loans, term loans, letters of credit or other debt obligations, whether any such extension, replacement or refinancing (1) occurs simultaneously or not with the termination or repayment of a prior Credit Facility or (2) occurs on one or more separate occasions.
“Current Asset Collateral” means assets owned or acquired by the Company or any Guarantor consisting of accounts receivable, payment intangibles, inventory and other current assets and all proceeds thereof, and all cash, cash equivalents, instruments, chattel paper, general intangibles (excluding, for the avoidance of doubt, trademarks, tradenames and other intellectual property, other than any such intellectual property embedded in or necessary or advisable for the use of Current Asset Collateral), deposit accounts, documents, books and records, supporting obligations, letters of credit, insurance proceeds and investment property in each case arising from any such accounts receivable, payment intangibles, inventory and other current assets, and other assets of a similar nature or reasonably related thereto (including business interruption insurance), in each case, excluding Excluded Assets and identifiable proceeds of Fixed Asset Collateral. 
“Custodian” means the Trustee, as custodian with respect to the Notes in global form, or any successor entity thereto.
“Default” means any event that is, or with the passage of time or the giving of notice or both would be, an Event of Default.
“Definitive Note” means a certificated Note registered in the name of the Holder thereof and issued in accordance with Section 2.06 hereof, substantially in the form of Exhibit A hereto, except that such Note shall not bear the Global Note Legend and shall not have the “Schedule of Exchanges of Interests in the Global Note” attached thereto.
“Depositary” means, with respect to the Notes issuable or issued in whole or in part in global form, the Person specified in Section 2.03 hereof as the Depositary with respect to the Notes, and any and all successors thereto appointed as Depositary hereunder and having become such pursuant to the applicable provision of this Indenture.
“Designated Asset Sale” means the sale, conveyance, transfer or other disposition, whether in a single transaction or a series of related transactions, of Designated Assets (including by way of a Sale and Lease-Back Transaction and including the disposition of Capital Stock of any Subsidiary) of the Company or any Subsidiary.
“Designated Assets” means any property or assets (including Capital Stock of any Subsidiary) other than (i) property or assets of the Printed Products Business, (ii) Capital Stock of the Company and (iii) Capital Stock of any Restricted Subsidiary conducting any material portion of the Printed Products Business at the time of such Designated Asset Sale or Restricted Payment (as the case may be).
“Designated Noncash Consideration” means the fair market value of noncash consideration received by the Company or a Restricted Subsidiary in connection with an Asset Sale that is so designated as Designated Noncash Consideration pursuant to an Officer's Certificate, setting forth the basis of such valuation, less the amount of cash or Cash Equivalents received in connection with a subsequent sale of such Designated Noncash Consideration.
“Designated Preferred Stock” means Preferred Stock of the Company or any parent company thereof (in each case other than Disqualified Stock) that is issued for cash (other than to a Restricted Subsidiary) and is so designated as Designated Preferred Stock pursuant to an Officer's Certificate, as the case may be, on the issuance date thereof.
“Discharge of Collateral Trust Parity Lien Obligations” has the meaning set forth in the Collateral Trust Agreement.
“Discharge of Credit Agreement Obligations” has the meaning set forth in the Collateral Trust Agreement. 
“Discharge of Priority Lien Obligations” has the meaning set forth in the Collateral Trust Agreement.

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“Disqualified Stock” means, with respect to any Person, any Capital Stock of such Person which, by its terms, or by the terms of any security into which it is convertible or for which it is putable or exchangeable, or upon the happening of any event, matures or is mandatorily redeemable (other than solely for Capital Stock that is not Disqualified Stock), other than as a result of a change of control or asset sale, pursuant to a sinking fund obligation or otherwise, or is redeemable at the option of the holder thereof, other than as a result of a change of control or asset sale, in whole or in part, in each case prior to the date that is 91 days after the earlier of the maturity date of the Notes and the date the Notes are no longer outstanding; provided that if such Capital Stock is issued to any plan for the benefit of employees of the Company or its Subsidiaries or by any such plan to such employees, such Capital Stock shall not constitute Disqualified Stock solely because it may be required to be repurchased by the Company or its Subsidiaries in order to satisfy applicable statutory or regulatory obligation; provided, further, that any Capital Stock held by any future, present or former employee, director, officer, manager or consultant (or their estates, spouses or former spouses) of the Company, any of its Subsidiaries or any of its direct or indirect parent companies pursuant to any stockholders agreement, management equity plan or stock option plan or any other management or employee benefit plan or agreement shall not constitute Disqualified Stock solely because it may be required to be repurchased by the Company or its Subsidiaries following the termination of employment of such employee, director, officer, manager or consultant with the Company or any of its Subsidiaries.
“Domestic Subsidiary” means, with respect to any Person, any Restricted Subsidiary of such Person other than a Foreign Subsidiary, but, in each case, including any subsidiary that guarantees or otherwise provides direct credit support for any Indebtedness of the Company.
“EBITDA” means, with respect to any Person for any period, the Consolidated Net Income of such Person for such period,
(1)    increased by (without duplication):
(a)    provision for taxes based on income or profits, plus franchise or similar taxes, of such Person for such period deducted in computing Consolidated Net Income, plus
(b)    consolidated Fixed Charges of such Person for such period to the extent the same was deducted in calculating Consolidated Net Income, plus
(c)    Consolidated Depreciation and Amortization Expense of such Person for such period to the extent such depreciation and amortization were deducted in computing Consolidated Net Income, plus
(d)    any expenses or charges related to any equity offering, permitted acquisition or other Investment, permitted disposition, recapitalization or the incurrence of Indebtedness permitted to be incurred under this Indenture including a refinancing thereof (in each case, whether or not successful) and any amendment or modification to the terms of any such transactions, including such fees, expenses or charges related to the Transactions deducted in computing Consolidated Net Income for such period, plus
(e)    the amount of any restructuring charge, redemption premium, prepayment penalty, premium and other related fee or reserve deducted in such period in computing Consolidated Net Income, including any one-time costs incurred in connection with (A) acquisitions after the Issue Date or (B) the closing or consolidation of production or other operating facilities, plus
(f)    any write offs, write downs or other noncash charges reducing Consolidated Net Income for such period, excluding any such charge that represents an accrual or reserve for a cash expenditure for a future period, plus
(g)    the amount of any minority interest expense deducted in calculating Consolidated Net Income for such period, plus

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(h)    the amount of management, monitoring, consulting and advisory fees and related expenses paid (or any accruals related to such fees or related expenses) (including by means of a dividend) during such period to the Parents to the extent permitted under Section 4.11 hereof, plus
(i)     the amount of collected fees and payments from customers received by the Company and its Restricted Subsidiaries during such period that is not recognized as revenue during such period (or any prior period) in accordance with GAAP because (x) the Company or a Restricted Subsidiary, as applicable, has not yet obtained vendor specific objective evidence in respect thereof or (y) in the case of the education-related businesses of the Company and its Restricted Subsidiaries, any such business is subject to other GAAP revenue recognition rules; plus 
(j)    any costs or expenses incurred by the Company or a Restricted Subsidiary pursuant to any management equity plan, stock option plan, phantom equity plan or any other management or employee benefit plan or agreement or any stock subscription or stockholders agreement, to the extent that such costs or expenses are funded with cash proceeds contributed to the capital of the Company or net cash proceeds of issuance of Equity Interests of the Company (other than Disqualified Stock that is Preferred Stock); plus 
(k)    the amount of cost savings, operational expense improvements and synergies projected by the Company in good faith to be realized as a result of actions taken during such period or expected to be taken (calculated on a pro forma basis as though such cost savings, operational improvements and synergies had been realized on the first day of such period), net of the amount of actual benefits realized during such period from such actions; provided that (x) such cost savings, operational expense improvements and synergies are reasonably identifiable and factually supportable, (y) such cost savings, operational expense improvements and synergies are expected to be realized within 12 months of the date thereof in connection with such actions and (z) the aggregate amount of cost savings added pursuant to this clause (k) shall not exceed 5% of EBITDA (giving effect to pro forma adjustments made pursuant to the second paragraph of the definition of “Fixed Charge Coverage Ratio”) on a consolidated basis for the Company's and its Restricted Subsidiaries' most recently ended four full fiscal quarters for which internal financial statements are available immediately preceding the date of determination (calculated excluding such cost savings, operational expense improvements and synergies to be added pursuant to this clause (k)), which adjustments pursuant to this clause (k) may be incremental to pro forma adjustments made pursuant to the second paragraph of the definition of “Fixed Charge Coverage Ratio”; 
(2)    decreased by (without duplication) noncash gains increasing Consolidated Net Income of such Person for such period, excluding any gains that represent the reversal of any accrual of, or cash reserve for, anticipated cash charges in any prior period (other than such cash charges that have been added back to Consolidated Net Income in calculating EBITDA in accordance with this definition); and
(3)    increased or decreased, as applicable, by (without duplication) (a) any net gain or loss resulting in such period from Hedging Obligations and the application of FASB ASC Topic 815, (b) any net gain or loss resulting in such period from currency translation gains or losses related to currency remeasurements of Indebtedness and (c) the amount of gain or loss resulting in such period from a sale of receivables, payment intangibles and related assets to a Receivables Subsidiary in connection with a Receivables Facility.
“Equity Interests” means Capital Stock and all warrants, options or other rights to acquire Capital Stock (but excluding any debt security that is convertible into, or exchangeable for, Capital Stock).
“Equity Offering” means any public or private offer and sale of Capital Stock (other than Disqualified Stock) other than:
(1)    public offerings with respect to the Company's or any direct or indirect parent company's common stock registered on Form S-4 or Form S-8;

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(2)    any such public or private sale that constitutes an Excluded Contribution; and
(3)    an issuance to any Subsidiary of the Company.
“euro” means the single currency of participating member states of the economic and monetary union contemplated by the Treaty of the European Union.
“Euroclear” means Euroclear Bank, S.A./N.V., as operator of the Euroclear system.
“Excess Cash Flow” means, for any Excess Cash Flow Period, an amount equal to the excess of:
(1)    the sum, without duplication, of:
(a)    Consolidated Net Income of the Company and the Restricted Subsidiaries for such Excess Cash Flow Period,
(b)    an amount equal to the amount of all non-cash charges to the extent deducted in computing such Consolidated Net Income,
(c)    decreases in Consolidated Working Capital and long-term account receivables for such Excess Cash Flow Period (other than any such decreases arising from acquisitions by the Company and its Restricted Subsidiaries completed during such Excess Cash Flow Period), and 
(d)    an amount equal to the aggregate net non-cash loss on the sale, lease, transfer or other disposition of assets by the Company and its Restricted Subsidiaries during such Excess Cash Flow Period (other than sales in the ordinary course of business) to the extent deducted in arriving at such Consolidated Net Income; over
(2)    the sum, without duplication, of:
(a)    an amount equal to the amount of all non-cash credits included in arriving at such Consolidated Net Income and cash charges included in clauses (1) through (14) of the definition of Consolidated Net Income, 
(b)    without duplication of amounts deducted pursuant to clause (k) below in prior Excess Cash Flow Periods, the amount of Capital Expenditures made in cash during such Excess Cash Flow Period, except to the extent that such Capital Expenditures were financed with the proceeds of Indebtedness of the Company or its Restricted Subsidiaries, 
(c)    the aggregate amount of all principal payments of Indebtedness of the Company and its Restricted Subsidiaries (including the principal component of payments in respect of Capitalized Lease Obligations) during such Excess Cash Flow Period, except for (1) payments financed with the proceeds of other Indebtedness of the Company or its Restricted Subsidiaries, (2) voluntary prepayments or retirements of the notes, (3) prepayments or retirements of the Notes pursuant to Section 4.10, (4) voluntary prepayments or retirements of Indebtedness under Credit Facilities, (5) any mandatory prepayments or retirements made with respect to Indebtedness under Credit Facilities from excess cash flow (or similar mandatory prepayments) during such Excess Cash Flow Period and (6) any mandatory prepayments or retirements of the notes during such Excess Cash Flow Period pursuant to Section 4.19, 
(d)    an amount equal to the aggregate net non-cash gain on the sale, lease, transfer or other disposition of assets by the Company and its Restricted Subsidiaries during such period (other than sales in the ordinary course of business) to the extent included in arriving at such Consolidated Net Income, 
(e)    increases in Consolidated Working Capital and long-term account receivables for 

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such Excess Cash Flow Period (other than any such increases arising from acquisitions of a Person or business unit by the Company and its Restricted Subsidiaries during such Excess Cash Flow Period), 
(f)    cash payments by the Company and its Restricted Subsidiaries during such Excess Cash Flow Period in respect of long-term liabilities of the Company and its Restricted Subsidiaries other than Indebtedness, 
(g)    without duplication of amounts deducted pursuant to clause (k) below in prior Excess Cash Flow Periods, the amount of Investments and acquisitions made during such Excess Cash Flow Period to the extent permitted under Section 4.07, to the extent that such Investments and acquisitions were financed with internally generated cash flow of the Company and its Restricted Subsidiaries, 
(h)    the amount of Restricted Payments made during such Excess Cash Flow Period to the extent permitted under Section 4.07(b)(16), to the extent that such Restricted Payments were financed with internally generated cash flow of the Company and its Restricted Subsidiaries, 
(i)    the aggregate amount of expenditures actually made by the Company and the Restricted Subsidiaries in cash during such Excess Cash Flow Period (including expenditures for the payment of financing fees) to the extent that such expenditures are not expensed during such Excess Cash Flow Period, 
(j)    the aggregate amount of any premium, make-whole or penalty payments actually paid in cash by the Company and the Restricted Subsidiaries during such Excess Cash Flow Period that are required to be made in connection with any prepayment of Indebtedness, 
(k)    without duplication of amounts deducted from Excess Cash Flow in prior Excess Cash Flow Periods, the aggregate consideration required to be paid in cash by the Company or any of its Restricted Subsidiaries pursuant to binding contracts (the “Contract Consideration”) entered into prior to or during such period relating to acquisitions or Capital Expenditures to be consummated or made during the period of four consecutive fiscal quarters of the Company following the end of such period, provided that to the extent the aggregate amount of internally generated cash actually utilized to finance such acquisitions or Capital Expenditures during such period of four consecutive fiscal quarters is less than the Contract Consideration, the amount of such shortfall shall be added to the calculation of Excess Cash Flow at the end of such period of four consecutive fiscal quarters, 
(l)    the amount of cash taxes paid in such Excess Cash Flow Period to the extent they exceed the amount of tax expense deducted in determining Consolidated Net Income for such Excess Cash Flow Period, and 
(m)    payments in respect of pre-paid incentives to customers;
provided that notwithstanding anything to the contrary contained in the foregoing, no amount paid during such period pursuant to clause (b)(9)(c), (d) or (e) of Section 4.07 shall be included in calculating the sum of clauses (2)(a) through (2)(m) above for such period.
“Excess Cash Flow Offer Amount” means, with respect to any Excess Cash Flow Period, the greater of (1) $15.0 million and (2) the amount equal to the excess (if any) of (a) 50% of the Excess Cash Flow for such Excess Cash Flow Period over (b) the sum of (i) the amount of all mandatory and permanent prepayments required under Credit Facilities from excess cash flow (or similar mandatory prepayments) in respect of such Excess Cash Flow Period (assuming all lenders thereunder accept such prepayments), plus (ii) the aggregate principal amount of notes voluntarily and permanently prepaid or retired during such Excess Cash Flow Period plus (iii) the aggregate principal amount of all Indebtedness under Credit Facilities that has been voluntarily and permanently prepaid or retired during such Excess Cash Flow Period.

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“Excess Cash Flow Offer Trigger Date” means the date on which audited consolidated financial statements of the Company are provided under Section 4.03, beginning with the audited consolidated financial statements in respect of the fiscal year ending December 31, 2013.
“Excess Cash Flow Period” means, with respect to any Excess Cash Flow Offer Trigger Date, the immediately preceding fiscal year of the Company, beginning with the fiscal year ending December 31, 2013.
“Excess Designated Proceeds” means, with respect to any Designated Asset Sale, 
(1)    100% of the Net Proceeds from such Designated Asset Sale if after giving pro forma effect thereto, but before applying any portion of the Net Proceeds thereof to prepay, purchase or retire any Indebtedness the Consolidated Leverage Ratio of the Company and its Restricted Subsidiaries is no greater than 3.50 to 1.00 and is no greater than the Consolidated Leverage Ratio of the Company and its Restricted Subsidiaries in effect immediately prior to such Designated Asset Sale, or 
(2)    that portion of the Net Proceeds of such Designated Asset Sale that remains after giving effect to the prepayment, purchase or other retirement of Indebtedness of the type permitted to be prepaid, purchased or otherwise retired under Section 4.10 hereof in an amount sufficient such that the Consolidated Leverage Ratio of the Company and its Restricted Subsidiaries after giving effect to the Designated Asset Sale and such prepayment, purchase or other retirement is no greater than 3.50 to 1.00 and is no greater than the Consolidated Leverage Ratio of the Company and its Restricted Subsidiaries in effect immediately prior to such Designated Asset Sale and application of Net Proceeds and 
(3)    in either case of (1) or (2), any non-cash proceeds of any Designated Asset Sale. 
For the avoidance of doubt, for purposes of Section 4.07(b)(8), any Designated Assets used to make a Restricted Payment in kind shall be deemed to be Excess Designated Proceeds if the Consolidated Leverage Ratio of the Company and its Restricted Subsidiaries, after giving pro forma effect to such Restricted Payment and the prepayment, purchase or other retirement (if any) of any Indebtedness in connection with the making of such Restricted Payment, is no greater than either (x) the Consolidated Leverage Ratio of the Company and its Restricted Subsidiaries immediately prior to such transactions or (y) 3.50 to 1.00.
“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations of the SEC promulgated thereunder.
“Excluded Assets” means each of the following: 
(1)    any permit, lease, license, contract, property right or agreement to which the Company or any Guarantor is a party or any of its rights or interests thereunder if and only for so long as the grant of a security interest under any of the Note Documents shall constitute or result in a breach, termination or default under any such permit, lease, license, contract, property right or agreement (other than to the extent that any such term would be rendered ineffective pursuant to Sections 9-406, 9-407, 9-408 or 9-409 of the Uniform Commercial Code of any relevant jurisdiction or any other applicable law or principles of equity); provided, however, that such security interest shall attach immediately to any portion of such permit, lease, license, contract, property rights or agreement that does not result in any of the consequences specified above; 
(2)    Letter of Credit Rights; 
(3)    any vehicle covered by a certificate of title or ownership; 
(4)    any real property held by the Company or any Guarantor as a lessee under a lease and any real property located outside the United States, or that is not owned in fee by the Company or any Guarantor, or which has a fair market value at the time of the acquisition thereof of less than $3,000,000 (or is otherwise not required pursuant to Section 12.13). 

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(5)    assets owned by the Company or any Guarantor on the date hereof or hereafter acquired that are subject to a Lien permitted to be incurred pursuant to clauses (11), (12), (19), (20) (with respect to any Liens described in this clause (5)) or (21) of the definition of “Permitted Liens” if the contract or other agreement in which such Lien is granted (or the documentation providing for the obligations subject to such Lien) validly prohibits the creation of the Lien created under the Collateral Trust Security Documents on such assets; 
(6)    “intent-to-use” applications for Trademarks filed pursuant to Section 1(b) of the Lanham Act, unless and until an Amendment to Allege Use or a Statement of Use under Sections 1(c) and 1(d) of the Lanham Act has been filed, to the extent that any assignment of an “intent-to-use” application prior to such filing would violate the Lanham Act or cause the Trademark that is the subject thereof to be invalidated or abandoned; 
(7)    Equity Interests in (i) any Immaterial Subsidiary (unless it is required to be a party to the Indenture in accordance with Section 12.13), (ii) any Unrestricted Subsidiary and (iii) any Receivables Subsidiary; 
(8)    voting Equity Interests in any Foreign Subsidiary in excess of 65% of the total outstanding amount thereof; and 
(9)    any asset with respect to which the Credit Agreement Collateral Agent or the agent under any Future ABL Facility or, with respect to determinations made after the Discharge of Credit Agreement Obligations and Discharge of Priority Lien Obligations, the Collateral Trustee (in each case, in consultation with the Company) has determined that the burden or cost of attaching a security interest thereto is excessive in relation to the benefits to be obtained by such a security interest. 
The Excluded Assets shall not include any proceeds (as defined in the Uniform Commercial Code), substitutions or replacements of Excluded Assets (unless such proceeds, substitutions or replacements would otherwise constitute Excluded Assets). 
“Excluded Contribution” means net cash proceeds, marketable securities or Qualified Proceeds received by the Company from (a) contributions to its common equity capital, and (b) the sale (other than to a Subsidiary of the Company or to any management equity plan or stock option plan or any other management or employee benefit plan or agreement of the Company) of Capital Stock (other than Disqualified Stock and Designated Preferred Stock) of the Company, in each case designated as Excluded Contributions pursuant to an Officer's Certificate on the date such capital contributions are made or the date such Equity Interests are sold, as the case may be. 
“Existing Credit Agreement” means the Credit Agreement in effect as of the Issue Date, as the same may be amended, renewed, extended, supplemented or otherwise modified from time to time (including, without limitation, any successive renewals, extensions, supplementations or other modifications of the foregoing and including, without limitation, any amendment increasing the amount of Indebtedness incurred or available to be borrowed thereunder, extending the maturity of any Indebtedness incurred thereunder or contemplated thereby or deleting, adding or substituting one or more parties thereto). 
“Existing Indebtedness” means Indebtedness of the Company and its Subsidiaries (other than Indebtedness under the Credit Agreement) in existence on the Issue Date plus interest accruing thereon, until such amounts are repaid.
“Fair Market Value” means the value that would be paid by a willing buyer to an unaffiliated willing seller in a transaction not involving distress or necessity of either party, determined in good faith by the chief executive officer, chief financial officer, chief accounting officer, controller or Board of Directors of the Company or the Restricted Subsidiary, as applicable (unless otherwise provided in this Indenture).
“FASB ASC” means the Financial Accounting Standards Board Accounting Standards Codification. 
“Financial Officer” means the chief financial officer, treasurer or controller of the Company.

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“Fixed Asset Collateral” means all of the tangible and intangible properties and assets at any time owned or acquired by the Company or any Guarantor, except Current Asset Collateral and Excluded Assets. 
“Fixed Charge Coverage Ratio” means, with respect to any Person for any period, the ratio of EBITDA of such Person for such period to the Fixed Charges of such Person for such period. In the event that the Company or any Restricted Subsidiary incurs, assumes, guarantees, redeems, retires or extinguishes any Indebtedness (other than Indebtedness incurred under any revolving credit facility that has been permanently repaid and has not been replaced) or issues or redeems Disqualified Stock or Preferred Stock subsequent to the commencement of the period for which the Fixed Charge Coverage Ratio is being calculated but prior to or simultaneously with the event for which the calculation of the Fixed Charge Coverage Ratio is made (the “Calculation Date”), then the Fixed Charge Coverage Ratio shall be calculated giving pro forma effect to such incurrence, assumption, guarantee, redemption, retirement or extinguishing of Indebtedness, or such issuance or redemption of Disqualified Stock or Preferred Stock, as if the same had occurred at the beginning of the applicable four-quarter period (the “reference period”).
For purposes of making the computation referred to above, Investments, acquisitions, dispositions, mergers, consolidations and disposed operations (as determined in accordance with GAAP) that have been made by the Company or any Restricted Subsidiary during the four-quarter reference period or subsequent to such reference period and on or prior to or simultaneously with the Calculation Date shall be calculated on a pro forma basis assuming that all such Investments, acquisitions, dispositions, mergers, consolidations and disposed operations (and the change in any associated fixed charges and the change in EBITDA resulting therefrom) had occurred on the first day of the reference period; provided that no such pro forma adjustment to EBITDA shall be required in respect of any such transaction to the extent the aggregate consideration in connection therewith was less than $10.0 million for the reference period. 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 beginning of such period) shall have made any Investment, acquisition, disposition, merger, consolidation or disposed operation that would have required adjustment pursuant to this definition, then the Fixed Charge Coverage Ratio shall be calculated giving pro forma effect thereto for such period as if such Investment, acquisition, disposition, merger, consolidation or disposed operation had occurred at the beginning of the reference period (subject to the threshold specified in the previous sentence).
For purposes of this definition, whenever pro forma effect is to be given to an Investment, acquisition, merger or consolidation or any other transaction, the pro forma calculations shall be made in good faith by a Financial Officer of the Company (including, but not limited to, adjustments in accordance 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 on such Indebtedness shall be calculated as if the rate in effect on the Calculation Date had been the applicable rate for the entire period (taking into account any Hedging Obligations applicable to such Indebtedness). Interest on a Capitalized Lease Obligation shall be deemed to accrue at an interest rate reasonably determined by a Financial Officer of the Company to be the rate of interest implicit in such Capitalized Lease Obligation in accordance with GAAP. For purposes of making the computation referred to above, interest on any Indebtedness under a revolving credit facility computed on a pro forma basis shall be computed based upon the average daily balance of such Indebtedness during the applicable period. Interest on Indebtedness that may optionally be determined at an interest rate based upon a factor of a prime or similar rate, a eurocurrency interbank offered rate, or other rate, shall be deemed to have been based upon the rate actually chosen, or, if none, then based upon such optional rate chosen as the Company may designate. 
“Fixed Charges” means, with respect to any specified Person for any period, the sum, without duplication, of:
(1)    Consolidated Interest Expense of such Person for such period, and
(2)    all cash dividend payments (excluding items eliminated in consolidation) on any series of Disqualified Stock made during such period.
Notwithstanding the foregoing, any charges arising from (i) the application of Accounting Standards Codification Topic 480-10-25-4 “Distinguishing Liabilities from Equity-Overall-Recognition” to any series of preferred stock other than Disqualified Stock, (ii) the application of Accounting Standards Codification Topic 470-20 “Debt-Debt with Conversion Options-Recognition,” or (iii) the amortization of any fair value adjustment to the carrying value of Indebtedness, in each case, shall be disregarded in the calculation of Fixed Charges. 

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“Foreign Subsidiary” means, with respect to any Person, any Restricted Subsidiary of such Person that is not organized or existing under the laws of the United States of America, any state thereof, the District of Columbia, or any territory thereof and any Subsidiary of a Foreign Subsidiary.
“Foreign Subsidiary Total Assets” means the total amount of all assets of Foreign Subsidiaries of the Company and the Restricted Subsidiaries, determined on a consolidated basis in accordance with GAAP as shown on the most recent internal balance sheet of the Company.
“Funded Debt” means all Indebtedness of the Company and its Restricted Subsidiaries for borrowed money that has a stated maturity more than one year from the date of its creation or has a stated maturity within one year from such date that is renewable or extendable, at the option of such Person, to a date more than one year from such date or arises under a revolving credit or similar agreement that obligates the lender or lenders to extend credit during a period of more than one year from such date.
“GAAP” means generally accepted accounting principles in the United States of America that are in effect on the Issue Date.  At any time after the Issue Date, the Company may elect to apply IFRS accounting principles in lieu of GAAP and, upon any such election, references herein to GAAP shall thereafter be construed to mean IFRS (except as otherwise provided in the Indenture); provided that any calculation or determination in the Indenture that requires the application of GAAP for periods that include fiscal quarters ended prior to the Company's election to apply IFRS shall remain as previously calculated or determined in accordance with GAAP. 
“Global Note Legend” means the legend set forth in Section 2.06(f)(2) hereof, which is required to be placed on all Global Notes issued under this Indenture.
“Global Notes” means, individually and collectively, each of the Restricted Global Notes and the Unrestricted Global Notes deposited with or on behalf of and registered in the name of the Depository or its nominee, substantially in the form of Exhibit A hereto and that bears the Global Note Legend and that has the “Schedule of Exchanges of Interests in the Global Note” attached thereto.
“Government Securities” 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 by the United States of America, which, in either case, are not callable or redeemable at the option of the issuers thereof, and shall also include a depository receipt issued by a bank (as defined in Section 3(a)(2) of the Securities Act), as custodian with respect to any such Government Securities or a specific payment of principal of or interest on any such Government Securities held by such custodian for the account of the holder of such depository receipt; provided that (except as required by law) such custodian is not authorized to make any deduction from the amount payable to the holder of such depository receipt from any amount received by the custodian in respect of the Government Securities or the specific payment of principal of or interest on the Government Securities evidenced by such depository receipt.
“guarantee” means a guarantee (other than by endorsement of negotiable instruments for collection in the ordinary course of business), direct or indirect, in any manner (including letters of credit and reimbursement agreements in respect thereof), of all or any part of any Indebtedness or other obligations, and, when used as a verb, shall have a corresponding meaning.
“Guarantee” means the guarantee by each Guarantor of the Company's and the Co-Issuers' obligations under this Indenture and the Notes.
“Guarantors” means:
(1)    each Domestic Subsidiary of the Company that guarantees or is a co-borrower under the Credit Agreement; and
(2)    any other Subsidiary of the Company that executes a Guarantee in accordance with the 

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provisions of this Indenture,
and their respective successors and assigns, in each case, until the Guarantee of such Person has been released in accordance with the provisions of this Indenture.
“Hedging Obligations” means, with respect to any specified Person, the obligations of such Person under currency exchange, interest rate or commodity swap agreements, currency exchange, interest rate or commodity cap agreements and currency exchange, interest rate or commodity collar agreements and other agreements or arrangements, in each case designed to manage fluctuations in currency exchange, interest rates or commodity prices.
“Holder” means a Person in whose name a Note is registered on the Registrar's books.
“IFRS” means the International Financial Reporting Standards, as promulgated by the International Accounting Standards Board (or any successor board or agency), as in effect on the date of the election, if any, by the Company to change GAAP to IFRS; provided that IFRS shall not include any provision of such standards that would require a lease that would be classified as an operating lease under GAAP to be classified as indebtedness or a finance or capital lease. 
“Immaterial Subsidiary” means, at any date of determination, any Restricted Subsidiary designated as such in writing by the Company that: 
(1)    contributed 2.5% or less of EBITDA of the Company and the Restricted Subsidiaries for the period of four fiscal quarters most recently ended more than forty-five (45) days prior to the date of determination (after intercompany eliminations), and 
(2)    had consolidated assets representing 2.5% or less of Total Assets on the last day of the most recent fiscal quarter ended more than forty-five (45) days prior to the date of determination (after intercompany eliminations).
“Indebtedness” means, without duplication, with respect to any specified Person:
(1)    any indebtedness (including principal and premium) of such Person, whether or not contingent
(a)    in respect of borrowed money,
(b)    evidenced by bonds, notes, debentures or similar instruments or letters of credit or bankers' acceptances (or, without double counting, reimbursement agreements in respect thereof),
(c)    representing the balance deferred and unpaid of the purchase price of any property (including Capitalized Lease Obligations), except any such balance that constitutes a trade payable or  other ordinary course payable or similar obligation, in each case accrued in the ordinary course of business, or
(d)    representing any Hedging Obligations,
if and to the extent that any of the foregoing Indebtedness (other than letters of credit and Hedging Obligations) would appear as a liability upon a balance sheet (excluding the footnotes thereto) of such Person prepared in accordance with GAAP,
(2)    to the extent not otherwise included, any obligation by such Person to be liable for, or to pay, as obligor, guarantor or otherwise, on the obligations of the type referred to in clause (1) of another Person (whether or not such items would appear upon the balance sheet of such obligor or guarantor), other than by endorsement of negotiable instruments for collection in the ordinary course of business,
(3)    to the extent not otherwise included, the obligations of the type referred to in clause (1) of 

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another Person secured by a Lien on any asset owned by such Person, whether or not such obligations are assumed by such Person and whether or not such obligations would appear upon the balance sheet of such Person; provided that the amount of such Indebtedness will be the lesser of the fair market value of such asset at the date of determination and the amount of Indebtedness so secured, and
(4)    Attributable Debt in respect of Sale and Lease-Back Transactions;
provided, however, that notwithstanding the foregoing, Indebtedness will be deemed not to include (A) Contingent Obligations that are incurred in the ordinary course of business, (B) obligations under, or in respect of, Receivables Facilities and (C) redeemable Preferred Stock of such Person.
Notwithstanding anything in the Indenture to the contrary, Indebtedness shall not include, and shall be calculated without giving effect to, the effects of FASB ASC Topic 815 and related interpretations to the extent such effects would otherwise increase or decrease an amount of Indebtedness for any purpose under the Indenture as a result of accounting for any embedded derivatives created by the terms of such Indebtedness; and any such amounts that would have constituted Indebtedness under the Indenture but for the application of this sentence shall not be deemed an incurrence of Indebtedness under the Indenture. 
“Indenture” means this Indenture, as amended or supplemented from time to time.
“Independent Financial Advisor” means an accounting, appraisal, investment banking firm or consultant to Persons engaged in similar businesses of nationally recognized standing that is, in the good faith judgment of the Company, qualified to perform the task for which it has been engaged and that is independent of the Company and its Affiliates.
“Indirect Participant” means a Person who holds a beneficial interest in a Global Note through a Participant.
“Initial Notes” means the $235.0 million in aggregate principal amount of 9.750% Senior Secured Notes due 2018 issued under this Indenture on the date hereof.  
“Initial Purchasers” means Credit Suisse Securities (USA) LLC, Citigroup Global Markets Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Deutsche Bank Securities Inc., Jefferies & Company, Inc., UBS Securities LLC and Natixis Securities Americas LLC.
“Insolvency or Liquidation Proceeding” means: 
(1)    any case commenced by or against the Company or any Guarantor under the Bankruptcy Code or any similar federal or state law for the relief of debtors, any other proceeding for the reorganization, recapitalization or adjustment or marshalling of the assets or liabilities of the Company or any Guarantor, any receivership or assignment for the benefit of creditors relating to the Company or any Guarantor or any similar case or proceeding relative to the Company or any other Guarantor or its creditors, as such, in each case whether or not voluntary; 
(2)    any liquidation, dissolution, marshalling of assets or liabilities or other winding up of or relating to the Company or any Guarantor, in each case whether or not voluntary and whether or not involving bankruptcy or insolvency; provided that the liquidation or dissolution of any Subsidiary that is not prohibited by and does not require consent under any of the Parity Lien Documents or the Junior Lien Documents shall not be considered an Insolvency or Liquidation Proceeding; or 
(3)    any other proceeding of any type or nature in which substantially all claims of creditors of the Company or any Guarantor are determined and any payment or distribution is or may be made on account of such claims. 
“Institutional Accredited Investor” means an institution that is an “accredited investor” as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act, that is not also a QIB.

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“Investment Grade Securities” means:
(1)    securities issued or directly and fully guaranteed or insured by the government of the United States of America or any agency or instrumentality thereof (other than Cash Equivalents);
(2)    debt securities or debt instruments with a rating of BBB or higher by S&P or Baa3 or higher by Moody's or the equivalent of such rating by such rating organization, or, if no rating of S&P or Moody's then exists, the equivalent of such rating by any other nationally recognized securities rating agency, but excluding any debt securities or instruments constituting loans or advances among the Company and its Subsidiaries;
(3)    investments in any fund that invests exclusively in investments of the type described in clauses (1) and (2), which fund may also hold immaterial amounts of cash pending investment or distribution; and
(4)    corresponding instruments in countries other than the United States of America customarily utilized for high quality investments.
“Investments” means, with respect to any Person, all investments by such Person in other Persons (including Affiliates) in the form of loans (including guarantees), advances or capital contributions (including 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, but excluding accounts receivable, trade credit, advances to customers, commission, travel and similar advances to officers and employees, in each case made in the ordinary course of business), purchases or other acquisitions for consideration of Indebtedness, Equity Interests or other securities issued by any other Person and investments that are required by GAAP to be classified on the balance sheet (excluding the footnotes) of such Person in the same manner as the other investments included in this definition to the extent such transactions involve the transfer of cash or other property. For purposes of the definition of “Unrestricted Subsidiary” and Section 4.07 hereof:
(1)    “Investments” shall include the portion (proportionate to the Company's equity interest in such Subsidiary) of the fair market value of the net assets of a Subsidiary of the Company at the time that such Subsidiary is designated an Unrestricted Subsidiary; provided that upon a redesignation of such Subsidiary as a Restricted Subsidiary, the Company shall be deemed to continue to have a permanent “Investment” in an Unrestricted Subsidiary in an amount (if positive) equal to (x) the Company's “Investment” in such Subsidiary at the time of such redesignation, less (y) the portion (proportionate to the Company's equity interest in such Subsidiary) of the fair market value of the net assets of such Subsidiary at the time of such redesignation; and
(2)    any property transferred to or from an Unrestricted Subsidiary shall be valued at its fair market value at the time of such transfer, in each case as determined in good faith by the Company.
The amount of any Investment outstanding at any time shall be the original amount of such Investment, reduced by any dividend, distribution, interest payment, return of capital, repayment or other amount received by the Company or a Restricted Subsidiary in respect of such Investment; provided that the amount resulting in such reduction shall not also increase the amount of Restricted Payments that are permitted to be made under Section 4.07(a).
“Issue Date” means July 24, 2012, the date of this Indenture.
“Junior Lien” means a Lien granted by a Security Document to the Collateral Trustee, at any time, upon any property of the Company or any Guarantor to secure Junior Lien Obligations. 
“Junior Lien Debt” means any Indebtedness of the Company or any Guarantor (other than in respect of any Future ABL Facility) that is secured by a subordinate and junior Lien to the Lien securing the Notes, that was permitted to be incurred and so secured under each applicable Parity Lien Document; provided that: 
(1)    on or before the date on which such Indebtedness is incurred by the Company or such Guarantor, such Indebtedness is designated by the Company, in accordance with the terms and conditions of 

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the Collateral Trust Agreement, as “Junior Lien Debt” for the purposes of the Junior Lien Documents and the Collateral Trust Agreement; provided that no Series of Secured Debt may be designated as both Junior Lien Debt and Priority Lien Debt and no Series of Secured Debt may be designated as both Junior Lien Debt and Parity Lien Debt; and 
(2)    the Junior Lien Representative of such Indebtedness delivers a Lien Sharing and Priority Confirmation to the Collateral Trustee. 
The requirements of this definition will be conclusively established if the Company delivers to the Collateral Trustee an Officer's Certificate stating that such requirements have been satisfied and that such Indebtedness is “Junior Lien Debt.” 
“Junior Lien Document” means, collectively, the credit agreement, indenture or other agreement governing each Series of Junior Lien Debt and the security documents related thereto (other than any security documents that do not secure Junior Lien Obligations). 
“Junior Lien Obligations” means Junior Lien Debt and all other Obligations in respect thereof. 
“Junior Lien Representative” means in the case of any Series of Junior Lien Debt, the trustee, agent or representative of the holders of such Series of Junior Lien Debt who maintains the transfer register for such Series of Junior Lien Debt and is appointed as a Junior Lien Representative (for purposes related to the administration of the Collateral Trust Security Documents) pursuant to the indenture, credit agreement or other agreement governing such Series of Junior Lien Debt, together with its successors in such capacity. 
“Lanham Act” means the Lanham Act, 15 U.S.C. § 1051. 
“Legal Holiday” means a Saturday, a Sunday or a day on which banking institutions are not required to be open in the State of New York. If a payment date is a Legal Holiday at such place, payment may be made at such place on the next succeeding day that is not a Legal Holiday, and no interest shall accrue for the intervening period.
“Letter of Credit Rights” has the meaning set forth in the Uniform Commercial Code.
“Lien” means, with respect to any asset, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind in respect of such asset, whether or not filed, recorded or otherwise perfected under applicable law, including any conditional sale or other title retention agreement, any lease in the nature thereof, any option or other agreement to sell or give a security interest in and any filing of or agreement to give any financing statement under the Uniform Commercial Code (or equivalent statutes) of any jurisdiction; provided that in no event shall an operating lease be deemed to constitute a Lien.
“Lien Sharing and Priority Confirmation” means a collateral trust joinder agreement substantially in the form of Exhibit B to the Collateral Trust Agreement. 
“MFW” means M&F Worldwide Corp., a Delaware corporation.
“Net Income” means, with respect to any specified Person, the net income (loss) of such Person, determined in accordance with GAAP and before any reduction in respect of Preferred Stock dividends.
“Net Proceeds” means the aggregate cash proceeds received by the Company or any Restricted Subsidiary in respect of any Asset Sale or Designated Asset Sale, including any cash received upon the sale or other disposition of any Designated Noncash Consideration received in any Asset Sale or Designated Asset Sale, net of the direct costs relating to such Asset Sale or Designated Asset Sale and the sale or disposition of such Designated Noncash Consideration, including: 
(1)    legal, accounting and investment banking fees, and brokerage and sales commissions, 

24

(2)    any relocation, restructuring or severance expenses incurred (or reasonably expected to be payable) as a result thereof, 
(3)    taxes paid or estimated in good faith to be payable as a result thereof (after taking into account any available tax credits or deductions and any tax sharing arrangements), 
(4)    amounts required to be applied to the repayment of principal, premium, prepayment fees, penalties, if any, and interest on Indebtedness required (other than as required by Section 4.10 hereof) to be paid as a result of such transaction, and 
(5)    any deduction of appropriate amounts to be provided by the Company or any Restricted Subsidiary as a reserve in accordance with GAAP in respect of (A) the sale price of the assets that are the subject of such sale or other disposition (including in respect of working capital adjustments or any evaluation of such assets) or (B) any liabilities associated with the asset disposed of in such transaction and retained by the Company or any Restricted Subsidiary after such sale or other disposition thereof, including pension and other post-employment benefit liabilities and liabilities related to environmental matters or against any indemnification obligations associated with such transaction.
“Non-U.S. Person” means a Person who is not a U.S. Person.
“Note Documents” means this Indenture, the Notes and the Collateral Trust Security Documents.
“Notes” has the meaning assigned to it in the preamble to this Indenture.  Except as expressly provided herein, the Initial Notes and the Additional Notes shall be treated as a single class for all purposes under this Indenture, and unless the context otherwise requires, all references to the Notes shall include the Initial Notes and any Additional Notes.
“Obligations” means any principal (including reimbursement obligations with respect to letters of credit whether or not drawn), interest (including, to the extent legally permitted, all interest accrued thereon after the commencement of any Insolvency or Liquidation Proceeding at the rate, including any applicable post-default rate, specified in the applicable agreement), premium (if any), guarantees of payment, fees, indemnifications, reimbursements, expenses, damages and other liabilities payable under the documentation governing any Indebtedness; provided that Obligations with respect to the Notes shall not include fees or indemnification in favor of the Trustee and any other third parties other than the Holders.
“Offering Circular” means the offering circular of the Company, dated July 17, 2012.
“Officer” means the Chairman of the Board, the Chief Executive Officer, the Chief Financial Officer, the President, any Executive Vice President, Senior Vice President or Vice President, the Treasurer, the controller or the Secretary of the Company.
“Officer's Certificate” means a certificate signed on behalf of the Company by an Officer of the Company, who must be the chief executive officer or a Financial Officer of the Company, and delivered to the Trustee.
“Opinion of Counsel” means an opinion from legal counsel that meets the requirements of Section 13.05 hereof.  Such opinion may be subject to customary assumptions, exceptions and qualifications.  The counsel may be an employee of or counsel to the Company or any Subsidiary of the Company.
“Parents” means: 
(1)    MacAndrews & Forbes Holdings Inc., 
(2)    MFW, 
(3)    each of their direct and indirect subsidiaries and Affiliates, 

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(4)    Ronald O. Perelman, 
(5)    any of the directors or executive officers of MacAndrews & Forbes Holdings Inc., or 
(6)    any of their respective Permitted Transferees.
“Parity Lien” means a Lien granted to the Collateral Trustee or other Parity Lien Representative under any Parity Lien Debt, at any time, upon the Collateral to secure Parity Lien Obligations.
“Parity Lien Cap” means the greater of (1) the aggregate amount of (x) Indebtedness permitted to be incurred by Section 4.09(b)(1) plus (y) the aggregate principal amount of the Notes issued on the Issue Date plus (z) $50.0 million or (2) the amount of Parity Lien Debt that may be incurred by the Company such that, after giving pro forma effect to such incurrence and the application of the net proceeds therefrom, the Consolidated Secured Debt Ratio for the period of the most recently ended four full consecutive fiscal quarters for which internal financial statements are available immediately preceding the date of such incurrence would not exceed 3.30 to 1.00 (and any Refinancing Indebtedness incurred in respect thereof); provided that this clause (2) shall permit the incurrence of additional Indebtedness as Parity Lien Debt if, at the time of incurrence of such Indebtedness and after giving pro forma effect to the application of the net proceeds therefrom, the Consolidated Secured Debt Ratio for the period of the most recently ended four full consecutive fiscal quarters for which internal financial statements are available immediately preceding the date of such incurrence would be greater than 3.30 to 1.00 but less than 3.55 to 1.00, so long as (a) the proceeds of the Obligations in respect of any such Indebtedness which are so secured pursuant to this proviso shall be applied to make Investments and acquisitions that are permitted by the indenture and (b) the Liens securing such Indebtedness shall extend solely to such Investments or acquired property or the Capital Stock of the acquired entity, and the proceeds and products thereof (and improvements thereon) and any Refinancing Indebtedness incurred in respect thereof. 
“Parity Lien Debt” means: 
(1)    Indebtedness represented by the Notes initially issued by the Company under the Indenture on the Issue Date; 
(2)    Indebtedness (including letters of credit and reimbursement obligations with respect thereto) incurred by the Company or any of the Guarantors under the Existing Credit Agreement; 
(3)    any other Indebtedness of the Company or any Guarantor (including Additional Notes but, for the avoidance of doubt, excluding Priority Lien Debt) that is intended by the Company to be secured equally and ratably with the Parity Lien Obligations by a Parity Lien that is permitted to be incurred under this Indenture; provided, that, in the case of any Indebtedness referred to in this clause (3): 
(a)    on or before the date on which such Indebtedness is incurred by the Company or such Guarantor, such Indebtedness is designated by the Company, in accordance with the terms and conditions of the Collateral Trust Agreement, as “Parity Lien Debt” for the purposes of the Parity Lien Documents and the Collateral Trust Agreement; provided that no Series of Secured Debt may be designated as both Parity Lien Debt and Priority Lien Debt and no Series of Secured Debt may be designated as both Junior Lien Debt and Parity Lien Debt; and 
(b)    the Parity Lien Representative of such Indebtedness delivers a Lien Sharing and Priority Confirmation to the Collateral Trustee (and the satisfaction of such requirements and the other provisions of this clause (3) will be conclusively established if the Company delivers to the Collateral Trustee an Officer's Certificate stating that such requirements and other provisions have been satisfied and that such Indebtedness is “Parity Lien Debt”); 
(4)    Hedging Obligations and Cash Management Obligations of the Company or any Guarantor incurred pursuant to arrangements provided by the holders, former holders, agents, or former agents (or 

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Affiliates of any of the foregoing) of Parity Lien Debt described in clauses (1) through (3) above as designated by the Company, in an Officer's Certificate delivered to the Collateral Trustee, as “Parity Lien Debt”; and 
(5)    guarantees in respect of any of the Obligations described in the foregoing clauses (1) through (4). 
“Parity Lien Documents” means, collectively, the Note Documents, the Applicable Credit Agreement and the indenture, credit agreement or other agreement governing each other Series of Parity Lien Debt and the Parity Lien Security Documents (other than any Parity Lien Security Documents that do not secure Parity Lien Obligations). 
“Parity Lien Obligations” means Parity Lien Debt and all other Obligations in respect thereof. 
“Parity Lien Representative” means (1) the trustee, in the case of the Notes and (2) in the case of any other Series of Parity Lien Debt, the trustee, agent or representative of the holders of such Series of Parity Lien Debt who is appointed as a representative of such Series of Parity Lien Debt (for purposes related to the administration of the applicable security documents related thereto) pursuant to the indenture, credit agreement or other agreement governing such Series of Parity Lien Debt. 
“Parity Lien Security Documents” means all security agreements, pledge agreements, collateral assignments, mortgages, deeds of trust, collateral agency or trust agreements, control agreements or other grants or transfers for security executed and delivered by the Company or any Guarantor creating (or purporting to create) a Lien upon Collateral in favor of the Credit Agreement Collateral Agent or the Collateral Trustee, as applicable, for the benefit of any of the holders of Parity Lien Obligations, in each case, as amended, modified, renewed, restated or replaced, in whole or in part, from time to time, in accordance with its terms and the Applicable Credit Agreement or Collateral Trust Agreement, as applicable. 
“Participant” means, with respect to the Depositary, Euroclear or Clearstream, a Person who has an account with the Depositary, Euroclear or Clearstream, respectively (and, with respect to DTC, shall include Euroclear and Clearstream).
“Permitted Asset Swap” means the concurrent purchase and sale or exchange of Related Business Assets or a combination of Related Business Assets and cash or Cash Equivalents between the Company or any of its Restricted Subsidiaries and another Person that is not the Company or any of its Restricted Subsidiaries; provided that any cash or Cash Equivalents received must be applied in accordance with Section 4.10 hereof.
“Permitted Holders” means each of the Parents and any group (within the meaning of Section 13(d)(3) or Section 14(d)(2) of the Exchange Act, or any successor provision) of which any of the Parents is a member; provided that, in the case of such group and without giving effect to the existence of such group or any other group, the Parents have beneficial ownership of more than 50% of the total voting power of the Voting Stock of the Company or any of its direct or indirect parent companies. Any Person or group whose acquisition of beneficial ownership or assets constitutes a Change of Control in respect of which a Change of Control Offer is made in accordance with Section 4.15 hereof will thereafter, together with its Affiliates, constitute an additional Permitted Holder.
“Permitted Investments” means:
(1)    any Investment in the Company or any Restricted Subsidiary;
(2)    any Investment in cash and Cash Equivalents or Investment Grade Securities;
(3)    (x) any Investment by the Company or any Restricted Subsidiary of the Company in a Person that is engaged in a Similar Business if as a result of such Investment (a) such Person becomes a Restricted Subsidiary of the Company or (b) such Person, in one transaction or a series of related transactions, is merged, consolidated or amalgamated with or into, or transfers or conveys substantially all of its assets to, or is liquidated into, the Company or a Restricted Subsidiary of the Company, and (y) any Investment held by such Person;

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(4)    any Investment in securities or other assets not constituting cash, Cash Equivalents or Investment Grade Securities and received in connection with an Asset Sale made pursuant to Section 4.10 hereof or any other disposition of assets not constituting an Asset Sale;
(5)    loans and advances to, and guarantees of Indebtedness of, employees not in excess of $10.0 million outstanding at any one time, in the aggregate;
(6)    any Investment acquired by the Company or any Restricted Subsidiary (x) in exchange for any other Investment or accounts receivable held by the Company or any such Subsidiary in connection with or as a result of a bankruptcy, workout, reorganization or recapitalization of the Person in which such other Investment is made or which is the obligor with respect to such accounts receivable, (y) as a result of a foreclosure by the Company or any Restricted Subsidiary with respect to any secured Investment or other transfer of title with respect to any secured Investment in default or (z) as a result of litigation, arbitration or other disputes with Persons who are not Affiliates;
(7)    Hedging Obligations permitted under Section 4.09 hereof;
(8)    loans and advances to officers, directors and employees for business-related travel expenses, moving expenses and other similar expenses, in each case incurred in the ordinary course of business or consistent with past practice or to fund such Person's purchase of Equity Interests of the Company or any direct or indirect parent company thereof under compensation plans approved by the Board of Directors of the Company in good faith;
(9)    Investments the payment for which consists of Equity Interests of the Company or any of its direct or indirect parent companies (exclusive of Disqualified Stock of the Company);
(10)    guarantees of Indebtedness permitted under Section 4.09 hereof and performance guarantees in the ordinary course of business;
(11)    any transaction to the extent it constitutes an investment that is permitted and made in accordance with Section 4.11 hereof (other than any transaction set forth in Section 4.11(b)(2), (b)(6) and (b)(7) hereof);
(12)    Investments consisting of purchases and acquisitions of inventory, supplies, material or equipment or the licensing or contribution of intellectual property pursuant to joint marketing, joint development or similar arrangements with other Persons;
(13)    Investments in a Similar Business having an aggregate fair market value, taken together with all other Investments made pursuant to this clause (13) that are at that time outstanding (without giving effect to the sale of an Unrestricted Subsidiary to the extent the proceeds of such sale do not consist of cash or marketable securities), not to exceed the greater of (x) $175.0 million or (y) 5.0% of Total Assets at the time of such Investment (with the fair market value of each Investment being measured by the Company in good faith at the time made and without giving effect to subsequent changes in value);
(14)    Investments relating to a Receivables Facility; provided that in the case of Receivables Facilities established after the Issue Date, such Investments are necessary or advisable (in the good faith determination of the Company) to effect such Receivables Facility;
(15)    additional Investments having an aggregate fair market value, taken together with all other Investments made pursuant to this clause (15) that are at that time outstanding (without giving effect to the sale of an Unrestricted Subsidiary to the extent the proceeds of such sale do not consist of cash or marketable securities), not to exceed $200.0 million (with the fair market value of each Investment being measured by the Company in good faith at the time made and without giving effect to subsequent changes in value);

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(16)    Investments in respect of pre-paid incentives to customers (which pre-paid incentive payments may also be recorded as “upfront contract acquisition costs”);
(17)    any Investments in receivables owing to the Company or a Restricted Subsidiary, if 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 such Restricted Subsidiary deems reasonable under the circumstances;
(18)    advances, loans and extensions of credit to suppliers, customers and vendors in the ordinary course of business;
(19)    Investments in prepaid expenses, negotiable instruments held for collection and lease and utility and worker's compensation deposits provided to third parties in the ordinary course of business; and
(20)    Investments in existence on the Issue Date or made pursuant to legally binding commitments in effect on the Issue Date.
“Permitted Liens” means:
(1)    Parity Liens securing (a) Parity Lien Debt in an aggregate principal amount (as of the date of incurrence of any Parity Lien Debt and after giving pro forma effect to the application of the net proceeds therefrom) not exceeding the Parity Lien Cap as of such date and (b) all related Parity Lien Obligations;
(2)    Liens on Current Asset Collateral securing (a) Indebtedness under a Future ABL Facility in an aggregate principal amount (as of the date of incurrence of any Priority Lien Debt and after giving pro forma effect to the application of net proceeds therefrom) not exceeding the amount of Indebtedness permitted to be incurred by Section 4.09(b)(3) and (b) all related Priority Lien Obligations;
(3)    Liens on Fixed Asset Collateral securing (a) Indebtedness under a Future ABL Facility in an aggregate principal amount (as of the date of incurrence of any Priority Lien Debt and after giving pro forma effect to the application of net proceeds therefrom) not exceeding the amount of Indebtedness permitted to be incurred by Section 4.09(b)(3) and (b) all related Priority Lien Obligations, in each case in this clause (3), which Liens are made junior to the Liens securing Parity Lien Obligations pursuant to the terms of an ABL Intercreditor Agreement;
(4)    Junior Liens securing (a) Junior Lien Debt and (b) all other Junior Lien Obligations, which Liens are made junior to the Liens securing Priority Lien Obligations and Parity Lien Obligations pursuant to the Collateral Trust Agreement;
(5)    pledges or deposits by such Person under workmen's compensation laws, unemployment insurance laws or similar legislation, or good faith deposits to secure bids, tenders, contracts (other than for the payment of Indebtedness) or leases to which such Person is a party, or deposits to secure public or statutory obligations of such Person or deposits of cash or U.S. government bonds to secure surety or appeal bonds to which such Person is a party, or deposits as security for contested taxes or import duties or for the payment of rent, in each case incurred in the ordinary course of business;
(6)    Liens imposed by law, such as carriers', warehousemen's and mechanics' Liens and other similar Liens, in each case, for sums not yet overdue for a period of more than 30 days or being contested in good faith by appropriate proceedings or other Liens arising out of judgments or awards against such Person with respect to which such Person shall then be proceeding with an appeal or other proceedings for review, if adequate reserves with respect thereto are maintained on the books of such Person in accordance with GAAP;
(7)    Liens for taxes, assessments or other governmental charges or claims not yet overdue for a period of more than 30 days or payable or subject to penalties for nonpayment or which are being contested in good faith by appropriate proceedings diligently conducted, if adequate reserves with respect thereto are 

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maintained on the books of such Person in accordance with GAAP;
(8)    Liens in favor of issuers of performance and surety bonds or bid bonds or with respect to other regulatory requirements or letters of credit issued pursuant to the request of and for the account of such Person in the ordinary course of its business;
(9)    (a) survey exceptions, encumbrances, 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 other restrictions 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, in each case, which were not incurred in connection with Indebtedness and which do not in the aggregate materially adversely affect the value of said properties or materially impair their use in the operation of the business of such Person and (b) any zoning or similar law or right reserved to or vested in any Governmental Authority to control or regulate the use of any real property;
(10)    Liens existing on the Issue Date (other than Parity Liens securing Parity Lien Debt);
(11)    Liens on property or shares of Capital Stock of a Person at the time such Person becomes a Subsidiary; provided that such Liens are not created or incurred in connection with, or in contemplation of, such other Person becoming such a Subsidiary; provided, further, that such Liens may not extend to any other property (other than improvements thereon or the proceeds or products thereof and other than after-acquired property of such acquired subsidiary) owned by the Company or any Restricted Subsidiary;
(12)    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 that such Liens are not created or incurred in connection with, or in contemplation of, such acquisition; provided, further, that the Liens may not extend to any other property (other than improvements thereon or the proceeds or products thereof)  owned by the Company or any Restricted Subsidiary;
(13)    Liens securing Indebtedness or other obligations of a Restricted Subsidiary owing to the Company or another Restricted Subsidiary permitted to be incurred pursuant to Section 4.09 hereof;
(14)    Liens on specific items of inventory or other goods and proceeds of any Person securing such Person's obligations in respect of bankers' acceptances or letters of credit issued or created for the account of such Person to facilitate the purchase, shipment or storage of such inventory or other goods;
(15)    Leases, licenses, subleases and sublicenses granted to others in the ordinary course of business of the Company or any of the Restricted Subsidiaries and do not secure any Indebtedness;
(16)    Liens arising from financing statement filings under the Uniform Commercial Code or similar state laws regarding operating leases entered into by the Company and its Restricted Subsidiaries in the ordinary course of business;
(17)    Liens in favor of the Company or any Guarantor;
(18)    Liens on inventory or equipment of the Company or any Restricted Subsidiary granted in the ordinary course of business to the Company's client at which such inventory or equipment is located;
(19)    Liens on accounts receivable, payment intangibles and related assets incurred in connection with a Receivables Facility, and limited recourse Liens on the Capital Stock of any Receivables Subsidiary;
(20)    Liens to secure any refinancing, refunding, extension, renewal or replacement (or successive refinancing, refunding, extensions, renewals or replacements) as a whole, or in part, of any Indebtedness secured by any Lien referred to in the foregoing clauses (10), (11), (12) and (13) and the following clause (21) 

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of this definition, as the case may be; provided that 
(a)    such new Lien shall be limited to all or part of the same property that secured (or was required to secure) the original Lien (plus improvements on such property and the proceeds and products thereof), and 
(b)    the Indebtedness secured by such Lien at such time is not increased to any amount greater than the sum of (A) the outstanding principal amount or, if greater, committed amount of the Indebtedness described under clauses (10), (11), (12) and the following clause (21) of this definition, respectively, at the time the original Lien became a Permitted Lien under this Indenture, and (B) an amount necessary to pay (or reasonably estimated to be payable) any accrued interest, fees and expenses, including premiums, related to such refinancing, refunding, extension, renewal or replacement, and any original issue discount;
(21)    Liens securing Indebtedness permitted to be incurred pursuant to Section 4.09(b)(4), Section 4.09(b)(14)(a), Section 4.09(b)(17), Section 4.09(b)(18) and Section 4.09(b)(21) hereof (whether or not, in the case of Indebtedness incurred under each of Section 4.09(b)(17) and Section 4.09(b)(18), such Indebtedness is subsequently deemed to have been incurred pursuant to Section 4.09(a) as provided in Section 4.09(b)(17) or Section 4.09(b)(18), as applicable); provided that 
(a)    Liens securing Indebtedness permitted to be incurred pursuant to Section 4.09(b)(4) do not at any time encumber any property or assets other than the property or assets the cost of which is either financed or reimbursed by such Indebtedness and improvements thereon and the proceeds and the products thereof, 
(b)    Liens securing Indebtedness permitted to be incurred pursuant to Section 4.09(b)(14)(a) or Section 4.09(b)(17) are solely on acquired property or the assets or Capital Stock of the acquired entity, as the case may be, and improvements thereon and the proceeds and the products thereof and 
(c)    Liens securing Indebtedness permitted to be incurred pursuant to Section 4.09(b)(18) extend only to the assets of Foreign Subsidiaries;
(22)    deposits in the ordinary course of business to secure liability to insurance carriers;
(23)    Liens securing judgments for the payment of money not constituting an Event of Default under Section 6.01(5) hereof so long as such Liens are adequately bonded and any appropriate legal proceedings that may have been duly initiated for the review of such judgment have not been finally terminated or the period within which such proceedings may be initiated shall not have expired;
(24)    Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of customs duties in connection with the importation of goods in the ordinary course of business;
(25)    Liens (i) of a collection bank arising under Section 4-210 of the Uniform Commercial Code on items in the course of collection, (ii) attaching to commodity trading accounts or other commodity brokerage accounts incurred in the ordinary course of business and (iii) in favor of banking institutions arising as a matter of law encumbering deposits (including the right of set-off) and which are within the general parameters customary in the banking industry;
(26)    Liens that are contractual rights of set-off (i) relating to the establishment of depository relations with banks not given in connection with the issuance of Indebtedness, (ii) relating to pooled deposit or sweep accounts of the Company or any of its Restricted Subsidiaries to permit satisfaction of overdraft or similar obligations incurred in the ordinary course of business of the Company and its Restricted Subsidiaries or (iii) relating to purchase orders and other agreements entered into with customers of the Company or any of its Restricted Subsidiaries in the ordinary course of business;

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(27)    Liens encumbering reasonable customary initial deposits and margin deposits and similar Liens attaching to commodity trading accounts or other brokerage accounts incurred in the ordinary course of business and not for speculative purposes;
(28)    Liens deemed to exist in connection with Investments in repurchase agreements permitted under Section 4.09 hereof; provided that such Liens do not extend to any assets other than those assets that are the subject of such repurchase agreement;
(29)    [Intentionally Omitted];
(30)    Liens (including Parity Liens and Priority Liens) securing (x) secured Cash Management Obligations, (y) Hedging Obligations secured by assets securing (i) Credit Facilities or (ii) a Future ABL Facility and (z) any 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 Obligations;
(31)    Liens incurred to secure guarantees permitted under Section 4.09(b)(l), but only to the extent that the Indebtedness so guaranteed is permitted to be secured under the terms of this Indenture and only to the extent of the assets permitted to secure such Indebtedness under the terms of this Indenture; and
(32)    Liens on (i) the net proceeds of the incurrence of Indebtedness to secure any redemption, repurchase or defeasance obligations in respect of such Indebtedness or any other Indebtedness being refinanced with the proceeds of such Indebtedness and (ii) any additional cash to secure such redemption, repurchase or defeasance obligations in an amount which, when added to such net proceeds, is necessary to effect such redemption, repurchase or defeasance; and
(33)    Liens with respect to property or assets of any Foreign Subsidiary securing Indebtedness of a Foreign Subsidiary permitted to be incurred pursuant to Section 4.09.
“Permitted Transferees” means, with respect to any Person that is a natural person (and any Permitted Transferee of such Person), (x) such Person's immediate family, including his or her spouse, ex-spouse, children, step-children and their respective lineal descendants and (y) any trust or other legal entity the beneficiary of which is such Person's immediate family, including his or her spouse, ex-spouse, children, step-children or their respective lineal descendants and which is controlled by such Person.
“Person” means any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization, limited liability company or government or any agency or political subdivision thereof or other entity.
“Preferred Stock” means any Equity Interest with preferential rights of payment of dividends or upon liquidation, dissolution, or winding up.
“Printed Products Business” means the provision of checks and related products, direct marketing and contact center services to financial and commercial institutions and individuals.
“Priority Lien” means any Lien described in clause (2) of the definition of “Permitted Liens” or clause (30)(y)(ii) of the definition of “Permitted Liens.” 
“Priority Lien Agent” the collateral agent under any Future ABL Facility, and its successors and permitted assigns thereunder. 
“Priority Lien Debt” means: 
(1)    Indebtedness of the Company or any Guarantor under a Future ABL Facility (including letters of credit and reimbursement obligations with respect thereto) that was permitted to be incurred and secured and was so incurred and secured under Section 4.09(b)(3) and permitted to be incurred and secured by the 

32

terms of each applicable Parity Lien Document (or as to which the administrative agent under such Future ABL Facility obtained an Officer's Certificate at the time of incurrence to the effect that such Indebtedness was permitted to be incurred and secured by all applicable Parity Lien Documents); provided that, in the case of any Indebtedness incurred under a Future ABL Facility: 
(a)    on or before the date on which such Indebtedness is incurred by the Company, such Indebtedness is designated by the Company, in an Officer's Certificate delivered to the Collateral Trustee, as “Priority Lien Debt” for the purposes of the Indenture (it being understood that no series of Indebtedness may be designated as both Priority Lien Debt and Parity Lien Debt); and 
(b)    the Priority Lien Representative, each Parity Lien Representative and the Company has duly executed and delivered an ABL Intercreditor Agreement; 
(2)    Hedging Obligations and Cash Management Obligations of the Company or any Guarantor as designated by the Company, in an Officer's Certificate delivered to the Collateral Trustee, as “Priority Lien Debt”; and 
(3)    guarantees in respect of any of the Obligations described in the foregoing clauses (1) through (2). 
The requirements of this definition will be conclusively established if the Company delivers to the Collateral Trustee an Officer's Certificate stating that such requirements have been satisfied and that such Indebtedness is “Priority Lien Debt.” 
“Priority Lien Obligations” means Priority Lien Debt and all other Obligations in respect thereof.
“Priority Lien Representative” means, in the case of any future Priority Lien Debt, the agent of the holders of such Priority Lien Debt who is appointed as an agent for purposes related to the administration of the security documents related to the Priority Lien Debt pursuant to the credit agreement or other agreement governing such Priority Lien Debt, together with its successors in such capacity. 
“Priority Lien Security Documents” means all security agreements, pledge agreements, collateral assignments, mortgages, deeds of trust, collateral agency agreements, control agreements or other grants or transfers for security executed and delivered by the Co-Issuers or any Guarantor creating (or purporting to create) a Lien upon Collateral in favor of the Priority Lien Agent, for the benefit of any of the holders of Priority Lien Obligations, in each case, as amended, modified, renewed, restated or replaced, in whole or in part, from time to time, in accordance with its terms and the credit agreement for the Future ABL Facility. 
“Private Placement Legend” means the legend set forth in Section 2.06(f)(1) hereof to be placed on all Notes issued under this Indenture except where otherwise permitted by the provisions of this Indenture.
“QIB” means a “qualified institutional buyer” as defined in Rule 144A.
“Qualified Affiliate Debt” means unsecured, subordinated Indebtedness issued by the Company to the Parents or any of their Affiliates in an aggregate principal amount at any time outstanding not to exceed $30.0 million (plus capitalized interest on such Indebtedness).
“Qualified Proceeds” means assets that are used or useful in, or Capital Stock of any Person engaged in, a Similar Business; provided that the fair market value of any such assets or Capital Stock shall be determined by the Company in good faith.
“Receivables Facility” means one or more receivables financing facilities, as amended, supplemented, modified, extended, renewed, restated, refunded, replaced or refinanced from time to time, the Indebtedness of which is non-recourse (except for representations, warranties, covenants and indemnities made in connection with such facilities 

33

that the Company has determined in good faith to be customary in financings similar to a Receivables Facility, including, without limitation, those relating to the servicing of the assets of a Receivables Subsidiary and those relating to any obligation of the Company or any Restricted Subsidiary to repurchase the assets it sold thereunder as a result of a breach of a representation, warranty or covenant or otherwise) to the Company and its Restricted Subsidiaries pursuant to which the Company or any of its Restricted Subsidiaries sells or transfers its accounts receivable, payment intangibles and related assets to either (x) a Person that is not a Restricted Subsidiary or (y) a Receivables Subsidiary that in turn sells or transfers its accounts receivable, payment intangibles and related assets to a Person that is not a Restricted Subsidiary; provided that the aggregate book value (measured at the time of transfer thereof) of all receivables and payment intangibles at any time subject to the Receivables Facility that had been transferred to the Receivables Subsidiary by the Company and any Restricted Subsidiaries shall not exceed an amount equal to $150.0 million.
“Receivables Fees” means distributions or payments made directly or by means of discounts with respect to any participation interest issued or sold in connection with, and other fees paid to a Person that is not a Restricted Subsidiary in connection with, any Receivables Facility.
“Receivables Subsidiary” means any subsidiary formed solely for the purpose of engaging, and that engages only, in one or more Receivables Facilities and any Subsidiary of another Receivables Subsidiary.
“Regulation S” means Regulation S promulgated under the Securities Act.
“Regulation S Global Note” means a Global Note substantially in the form of Exhibit A hereto bearing the Global Note Legend, the Private Placement Legend and the Regulation S Legend and deposited with or on behalf of and registered in the name of the Depositary or its nominee, issued in a denomination equal to the outstanding principal amount of the Notes initially sold in reliance on Rule 903 of Regulation S upon expiration of the Restricted Period.
“Regulation S Legend” means the legend set forth in Section 2.06(f)(4) hereof to be placed on all Regulation S Global Notes issued under this Indenture.
“Related Business Assets” means assets (other than cash or Cash Equivalents) used or useful in a Similar Business; provided that any assets received by the Company or a Restricted Subsidiary in exchange for assets transferred by the Company or a Restricted Subsidiary shall not be deemed to be Related Business Assets if they consist of securities of a Person, unless upon receipt of the securities of such Person, such Person would become a Restricted Subsidiary.
“Representative” means, with respect to a person, any trustee, agent or representative (if any) for an issue of Senior Indebtedness of such Person.
“Responsible Officer” of any Person means the chief executive officer, the president, any vice president, the chief operating officer or any Financial Officer of such Person and any other officer or similar official thereof responsible for the administration of the obligations of such Person in respect of the Notes.
“Restricted Definitive Note” means a Definitive Note bearing the Private Placement Legend.
“Restricted Global Note” means a Global Note bearing the Private Placement Legend.
“Restricted Investment” means an Investment other than a Permitted Investment.
“Restricted Period” means the 40-day distribution compliance period as defined in Regulation S.
“Restricted Subsidiary” of a Person means any Subsidiary of such Person that is not an Unrestricted Subsidiary or a Receivables Subsidiary; provided that upon the occurrence of an Unrestricted Subsidiary ceasing to be an Unrestricted Subsidiary, such Subsidiary shall be included in the definition of “Restricted Subsidiary.” Unless otherwise specified or the context otherwise requires, a reference to a “Restricted Subsidiary” shall be a reference to a Restricted Subsidiary of the Company.

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“Retained Basket Amount” means:
(1)    if as of the date of such Restricted Payment the Consolidated Secured Debt Ratio of the Company is equal to or greater than 3.00 to 1.00, $10.0 million; or
(2)    if as of the date of such Restricted Payment the Consolidated Secured Debt Ratio of the Company is less than 3.00 to 1.00, $50.0 million; 
provided, however, that in connection with any calculation of Consolidated Secured Debt Ratio pursuant to this definition the amount of cash and Cash Equivalents of the Company and its Restricted Subsidiaries that may be included in clause (x)(ii) of the definition of Consolidated Secured Debt Ratio shall be calculated on a pro forma basis giving effect to the Restricted Payment that is proposed to be made.
“Rule 144” means Rule 144 promulgated under the Securities Act.
“Rule 144A” means Rule 144A promulgated under the Securities Act.
“Rule 903” means Rule 903 promulgated under the Securities Act.
“Rule 904” means Rule 904 promulgated under the Securities Act.
“Sale and Lease-Back Transaction” means any arrangement with any Person providing for the leasing by the Company or any Restricted Subsidiary of any real or tangible personal property, which property has been or is to be sold or transferred by the Company or such Restricted Subsidiary to such Person in contemplation of a transaction that constitutes a capital lease in accordance with GAAP.
“SEC” means the United States Securities and Exchange Commission.
“Secured Debt” means Parity Lien Debt and Junior Lien Debt. 
“Secured Indebtedness” means any Indebtedness secured by a Lien.
“Secured Leverage Threshold” means, (i) for the Excess Cash Flow Trigger Date in respect of the fiscal year ending December 31, 2013, 3:25:1.00 and (ii) for Excess Cash Flow Trigger Dates in respect of fiscal years ending after December 31, 2013, 3.00:1.00.
“Securities Act” means the Securities Act of 1933, as amended, or any successor statute, and the rules and regulations promulgated by the SEC thereunder.
“Security Documents” means the Collateral Trust Agreement, the ABL Intercreditor Agreement, each joinder to the Collateral Trust Agreement or intercreditor agreement, all security agreements, pledge agreements control agreements, collateral assignments, mortgages, deeds of trust or other grants or transfers for security or agreements related thereto executed and delivered by the Company or any Guarantor creating or perfecting (or purporting to create or perfect) or perfecting a Lien upon Collateral in favor of the Collateral Trustee on behalf of the Trustee and the holders of the Notes to secure the Notes and the Guarantee, in each case, as amended, modified, restated, supplemented or replaced from time to time.
“Senior Indebtedness” means with respect to any Person:
(1)    all Indebtedness of such Person, whether outstanding on the Issue Date or thereafter incurred; and
(2)    all other Obligations of such Person (including interest accruing on or after the filing of any petition in bankruptcy or for reorganization relating to such Person whether or not post-filing interest is allowed in such proceeding) in respect of Indebtedness described in clause (1) above

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unless, in the case of clauses (1) and (2), the instrument creating or evidencing the same or pursuant to which the same is outstanding expressly provides that such Indebtedness or other Obligations are subordinate in right of payment to the Notes or the Guarantee of such Person, as the case may be; provided that Senior Indebtedness shall not include:
(1)    any obligation of such Person to the Company or any Subsidiary of the Company or to any joint venture in which the Company or any Restricted Subsidiary has an interest;
(2)    any liability for Federal, state, local or other taxes owed or owing by such Person;
(3)    any accounts payable or other liability to trade creditors in the ordinary course of business (including guarantees thereof as instruments evidencing such liabilities);
(4)    any Indebtedness or other Obligation of such Person that is subordinate or junior in right of payment to any other Indebtedness or other Obligation of such Person; or
(5)    that portion of any Indebtedness that at the time of incurrence is incurred in violation of this Indenture.
For the purposes of the foregoing, for the avoidance of doubt, no Indebtedness shall be deemed to be subordinated in right of payment to any other Indebtedness solely by virtue of being unsecured or secured by a lower priority Lien or by virtue of the fact that the holders of such Indebtedness have entered into intercreditor agreements or other arrangements giving one or more of such holders priority over the other holders in the collateral held by them.
“Series of Collateral Trust Debt” means, severally, (a) the Notes, (b) each issue of Junior Lien Debt, or (c) each other issue or series of Indebtedness that constitutes Parity Lien Debt for which a single transfer register is maintained (provided that any Hedging Obligations and Cash Management Obligations constituting Parity Lien Debt that relates to a Series of Collateral Trust Parity Lien Debt shall be deemed part of such Series).
“Series of Collateral Trust Parity Lien Debt” means, severally, (a) the Notes or (b) each other issue or series of Indebtedness that constitutes Parity Lien Debt for which a single transfer register is maintained (provided that any Hedging Obligations and Cash Management Obligations constituting Parity Lien Debt that relates to a Series of Collateral Trust Parity Lien Debt shall be deemed part of such Series).
“Series of Junior Lien Debt” means, severally, each issue or series of Junior Lien Debt for which a single transfer register is maintained. 
“Series of Parity Lien Debt” means, severally, (a) the Notes, (b) the Indebtedness incurred under the Existing Credit Agreement, or (c) each other issue or series of Indebtedness that constitutes Parity Lien Debt for which a single transfer register is maintained (provided that any Hedging Obligations and Cash Management Obligations constituting Parity Lien Debt shall be deemed part of the Series of Parity Lien Debt to which it relates). 
“Series of Secured Debt” means, severally, each Series of Junior Lien Debt and each Series of Parity Lien Debt.
“Significant Subsidiary” means any Restricted Subsidiary that would be a “significant subsidiary” of the Company as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated pursuant to the Securities Act, as such Regulation is in effect on the Issue Date.
“Similar Business” means any business conducted by the Company and its Restricted Subsidiaries on the Issue Date or any business that is a natural outgrowth or reasonable extension of any such business or is similar, reasonably related, incidental, complementary or ancillary to any of the foregoing, or any business that in the Company's good faith business judgment constitutes a reasonable diversification of businesses conducted by the Company and its Subsidiaries.
“Subordinated Indebtedness” means (a) with respect to the Company, any Indebtedness of the Company that is by its terms subordinated in right of payment to the Notes pursuant to a written agreement, and (b) with respect to any 

36

Guarantor, any Indebtedness of such Guarantor that is by its terms subordinated in right of payment to the Guarantee of such Guarantor pursuant to a written agreement. For the purposes of the foregoing, for the avoidance of doubt, no Indebtedness shall be deemed to be subordinated in right of payment to any other Indebtedness solely by virtue of being unsecured or secured by a lower priority Lien or by virtue of the fact that the holders of such Indebtedness have entered into intercreditor agreements or other arrangements giving one or more of such holders priority over the other holders in the collateral held by them. 
“Subsidiary” means, with respect to any specified Person:
(1)    any corporation, association or other business entity (other than a partnership, joint venture, limited liability company or similar entity) of which more than 50% of the total voting power of shares of Capital Stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees of the corporation, association or other business entity is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person (or a combination thereof); and
(2)    any partnership, joint venture, limited liability company or similar entity of which (x) more than 50% of the capital accounts, distribution rights, total equity and voting interests or general or limited partnership interests, as applicable, are owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of that Person or a combination thereof whether in the form of membership, general, special or limited partnership or otherwise, and (y) such Person or any Restricted Subsidiary of such Person is a controlling general partner or otherwise controls such entity.
Unless otherwise specified or the context otherwise requires, a reference to a “Subsidiary” shall be a reference to a Subsidiary of the Company.
“Tax Sharing Agreement” means the Amended and Restated Tax Sharing Agreement dated as of December 22, 2011, among MacAndrews & Forbes Holdings Inc., MFW, the Company and PCT International Holdings Inc., and any amendments, supplements or modifications thereof.
“TIA” means the Trust Indenture Act of 1939, as amended, or any successor statute. 
“Total Assets” means the total amount of all assets of the Company and the Restricted Subsidiaries, determined on a consolidated basis in accordance with GAAP as shown on the most recent internal balance sheet of the Company.
“Trademarks ” shall mean (i) all United States, state and foreign trademarks, service marks, trade names, corporate names, company names, business names, fictitious business names, trade styles, trade dress, domain names, logos and other source or business identifiers, whether registered or unregistered, all registrations and recordings thereof, and all applications in connection therewith, whether in the United States Patent and Trademark Office or in any similar office or agency of the United States, any State thereof or any other country, union of countries, or any political subdivision of any of the foregoing, or otherwise, (ii) all renewals thereof and the right to obtain all renewals thereof, (iii) the right to sue or otherwise recover for past, present and future infringements or dilutions of any of the foregoing or for any injury to goodwill, (iv) all proceeds of the foregoing, including all royalties, income, payments, claims, damages and proceeds of suit now and hereafter due and/or payable with respect thereto (including payments under all licenses entered into in connection therewith, and damages and payments for past, present or future infringements or dilutions thereof), and (v) all other rights of any kind whatsoever accruing thereunder or pertaining thereto throughout the world, together in each case with the goodwill of the business connected with the use of, and symbolized by, each of the above.
“Transactions” means the “Refinancing Transactions” and the “MacAndrews Acquisition” (each as defined in the Offering Circular).
“Treasury Rate” means, as of any redemption (or deposit) date, the yield to maturity as of such redemption (or deposit) date of United States Treasury securities with a constant maturity (as compiled and published in the most recent Federal 

37

Reserve Statistical Release H.15 (519) that has become publicly available at least two business days prior to the redemption (or deposit) date (or, if such Statistical Release is no longer published, any publicly available source of similar market data)) most nearly equal to the period from the redemption (or deposit) date to August 1, 2015,  provided, however, that if the period from the redemption (or deposit) date to August 1, 2015 with respect to the Notes, is less than one year, the weekly average yield on actually traded United States Treasury securities adjusted to a constant maturity of one year will be used.
“Trust Officer” means, when used with respect to the Trustee, any corporate trust officer or any other officer or assistant officer of the Trustee customarily performing functions similar to those performed by the persons who at the time shall be such corporate trust officer who shall have direct responsibility for the administration of this Indenture at the Corporate Trust Office, or any other officer of the Trustee to whom any corporate trust matter is referred because of his or her knowledge of and familiarity with the particular subject. 
“Trustee” means Wells Fargo Bank, National Association until a successor replaces it in accordance with the applicable provisions of this Indenture and thereafter means the successor serving hereunder.
“Uniform Commercial Code” means the Uniform Commercial Code as in effect in the State of New York or any other applicable jurisdiction.
“Unrestricted Definitive Note” means a Definitive Note that does not bear and is not required to bear the Private Placement Legend.
“Unrestricted Global Note” means a Global Note that does not bear and is not required to bear the Private Placement Legend.
“Unrestricted Subsidiary” means (1) any Subsidiary of the Company that at the time of determination is an Unrestricted Subsidiary (as designated by the Company, as provided below) and (2) any Subsidiary of an Unrestricted Subsidiary.
The Company may designate any Subsidiary of the Company (including any existing Subsidiary and any newly acquired or newly formed Subsidiary) to be an Unrestricted Subsidiary unless such Subsidiary or any of its Subsidiaries owns any Equity Interests or Indebtedness of, or owns or holds any Lien on, any property of, the Company or any Subsidiary of the Company (other than any Subsidiary of the Subsidiary to be so designated or any other Unrestricted Subsidiary); provided that
(1)    any Unrestricted Subsidiary must be an entity of which shares of the capital stock or other equity interests (including partnership interests) entitled to cast at least a majority of the votes that may be cast by all shares or equity interests having ordinary voting power for the election of directors or other governing body are owned, directly or indirectly, by the Company,
(2)    such designation complies with Section 4.07 hereof and
(3)    each of (1) the Subsidiary to be so designated and (2) its Subsidiaries has not at the time of designation, and does not thereafter, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable with respect to any Indebtedness pursuant to which the lender has recourse to any of the assets of the Company or any Restricted Subsidiary.
The Company may designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided that, immediately after giving effect to such designation no Default shall have occurred and be continuing and either
(1)    the Company could incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test in Section 4.09(a) hereof, or
(2)    the Fixed Charge Coverage Ratio for the Company and its Restricted Subsidiaries would be equal to or greater than such ratio for the Company and its Restricted Subsidiaries immediately prior to such 

38

designation, in each case on a pro forma basis taking into account such designation.
Any such designation by the Company shall be notified by the Company to the Trustee by promptly filing with the Trustee a copy of any applicable Board Resolution giving effect to such designation and an Officer's Certificate certifying that such designation complied with the foregoing provisions. Notwithstanding the foregoing, as of the Issue Date, all of the subsidiaries of the Company will be Restricted Subsidiaries.
“U.S. Person” means a U.S. Person as defined in Rule 902(k) promulgated under the Securities Act.
“Voting Stock” means, with respect to any Person that is (a) a corporation, any class or series of capital stock of such Person that is at the time entitled to vote in the election of directors thereof at a meeting of stockholders called for such purpose, without the occurrence of any additional event or contingency, (b) a limited liability company, membership interests entitled, by contract or otherwise, to manage, or to elect or appoint the Persons that will manage the operations or business of the limited liability company, or (c) a partnership, partnership interests entitled to elect or replace the general partner thereof.
“Weighted Average Life to Maturity” means, when applied to any Indebtedness, Disqualified Stock or Preferred Stock, as the case may be, at any date, the quotient obtained by dividing:
(1)    the sum of the products of the number of years from the date of determination to the date of each successive scheduled principal payment of such Indebtedness or redemption or similar payment with respect to such Disqualified Stock or Preferred Stock multiplied by the amount of such payment; by
(2)    the sum of all such payments.
“Wholly-Owned Subsidiary” of any Person means a Subsidiary of such Person, 100% of the outstanding Capital Stock or other ownership interests of which (other than directors' qualifying shares) shall at the time be owned by such Person or by one or more Wholly-Owned Subsidiaries of such Person.

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Section 1.02    Other Definitions.
	
		
	Term
	Defined in
Section

	“Affiliate Transaction”
	4.11

	“Asset Sale Offer”
	4.10

	“Authentication Order”
	2.02

	“Change of Control Offer”
	4.15

	“Change of Control Payment”
	4.15

	“Change of Control Payment Date”
	4.15

	“Clause (4) Limit”
	4.07

	“Covenant Defeasance”
	8.03

	“DTC”
	2.03

	“Event of Default”
	6.01

	“Excess Cash Flow Offer”
	4.19

	“Excess Cash Flow Payment”
	4.19

	“Excess Cash Flow Payment Date”
	4.19

	“Excess Proceeds”
	4.10

	“Funds in Trust”
	8.04

	“Future ABL Facility”
	4.09

	“Increased Amount”
	4.12

	“Incumbency Certificate”
	7.02

	“incur”
	4.09

	“Indemnitees”
	7.07

	“Legal Defeasance”
	8.02

	“Make-Whole Redemption Date”
	3.07

	“Offer Amount”
	3.09

	“Offer Period”
	3.09

	“Paying Agent”
	2.03

	“Payment Default” 
	6.01

	“Permitted Debt”
	4.09

	“Purchase Date”
	3.09

	“Refinancing Indebtedness”
	4.09

	“Refunding Capital Stock”
	4.07

	“Registrar”
	2.03

	“Restricted Payments”
	4.07

	“Retired Capital Stock”
	4.07

	“Successor Company”
	5.01

	“Successor Guarantor”
	5.01

Section 1.03    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;

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(3)“or” is not exclusive;
(4)words in the singular include the plural, and in the plural include the singular;
(5)“will” shall be interpreted to express a command; and
(6)references to sections of or rules under the Securities Act or the Exchange Act will be deemed to include substitute, replacement of successor sections or rules adopted by the SEC from time to time.

ARTICLE 2
THE NOTES

Section 2.01    Form and Dating.
(a)General.  The Notes and the Trustee's certificate of authentication will be substantially in the form of Exhibit A.  The Notes may have notations, legends or endorsements required by law, stock exchange rule or usage.  Each Note will be dated the date of its authentication.  The Notes shall be in denominations of $2,000 and integral multiples of $1,000 in excess thereof. 
The terms and provisions contained in the Notes will constitute, and are hereby expressly made, a part of this Indenture and the Company, the Guarantors and the Trustee, by their execution and delivery of this Indenture, expressly agree to such terms and provisions and to be bound thereby.  However, to the extent any provision of any Note conflicts with the express provisions of this Indenture, the provisions of this Indenture shall govern and be controlling.
(b)Global Notes.  Notes issued in global form will be substantially in the form of Exhibit A hereto (including the Global Note Legend thereon and the “Schedule of Exchanges of Interests in the Global Note” attached thereto).  Notes issued in definitive form will be substantially in the form of Exhibit A hereto (but without the Global Note Legend thereon and without the “Schedule of Exchanges of Interests in the Global Note” attached thereto).  Each Global Note will represent such of the outstanding Notes as will be specified therein and each shall provide that it represents the aggregate principal amount of outstanding Notes from time to time endorsed thereon and that the aggregate principal amount of outstanding Notes represented thereby may from time to time be reduced or increased, as appropriate, to reflect exchanges and redemptions.  Any endorsement of a Global Note to reflect the amount of any increase or decrease in the aggregate principal amount of outstanding Notes represented thereby will be made by the Trustee or the Custodian, at the direction of the Trustee, in accordance with instructions given by the Holder thereof as required by Section 2.06 hereof.
(c)Euroclear and Clearstream Procedures Applicable.  The provisions of the “Operating Procedures of the Euroclear System” and “Terms and Conditions Governing Use of Euroclear” and the “General Terms and Conditions of Clearstream Banking” and “Customer Handbook” of Clearstream will be applicable to transfers of beneficial interests in the Regulation S Global Notes that are held by Participants through Euroclear or Clearstream.
Section 2.02    Execution and Authentication.
One Officer of each of the Company and the Co-Issuers must sign the Notes by manual or facsimile signature.  Upon an entity becoming a Co-Issuer of a Note in accordance with this Indenture, such Co-Issuer shall be added to the “Schedule of Co-Issuers” attached to the relevant Note and shall sign a signature page to such Note agreeing to be obligated jointly and severally with all of the other Co-Issuers with respect to such Note.
If an Officer whose signature is on a Note no longer holds that office at the time a Note is authenticated, the Note will nevertheless be valid.
A Note will not be valid until authenticated by the manual signature of the Trustee.  The signature will be conclusive evidence that the Note has been authenticated under this Indenture.
The Trustee will, upon receipt of a written order of the Company and the Co-Issuers signed by an Officer of 

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the Company and each Co-Issuer (an “Authentication Order”), authenticate and deliver for original issue Notes that may be validly issued under this Indenture, including any Additional Notes.  The aggregate principal amount of Notes outstanding at any time may not exceed the aggregate principal amount of Notes authorized for issuance by the Company and the Co-Issuers pursuant to one or more Authentication Orders, except as provided in Section 2.07 hereof.  
The Trustee may appoint an authenticating agent acceptable to the Company to authenticate Notes.  An authenticating agent may authenticate Notes whenever the Trustee may do so.  Each reference in this Indenture to authentication by the Trustee includes authentication by such agent.  An authenticating agent has the same rights as an Agent to deal with Holders or an Affiliate of the Company.
Section 2.03    Registrar and Paying Agent.
The Company will maintain an office or agency where Notes may be presented for registration of transfer or for exchange (“Registrar”) and an office or agency where Notes may be presented for payment (“Paying Agent”).  The Registrar will keep a register of the Notes and of their transfer and exchange.  The Company may appoint one or more co-registrars and one or more additional Paying Agents.  The term “Registrar” includes any co-registrar and the term “Paying Agent” includes any additional paying agent.  The Company may change any Paying Agent or Registrar without notice to any Holder.  The Company will notify the Trustee in writing of the name and address of any Agent not a party to this Indenture.  If the Company fails to appoint or maintain another entity as Registrar or Paying Agent, the Trustee shall act as such.  The Company or any of its Subsidiaries may act as Paying Agent or Registrar.
The Company initially appoints The Depository Trust Company (“DTC”) to act as Depositary with respect to the Global Notes.  The Company may change any Paying Agent or Registrar without notice to any Holder.
The Company initially appoints the Trustee to act as the Registrar and Paying Agent and to act as Custodian with respect to the Global Notes.
Section 2.04    Paying Agent to Hold Money in Trust.
The Company will require each Paying Agent other than the Trustee to agree in writing that the Paying Agent will hold in trust for the benefit of Holders or the Trustee all money held by the Paying Agent for the payment of principal, premium, if any, or interest on the Notes, and will notify the Trustee of any default by the Company in making any such payment.  While any such default continues, the Trustee may require a Paying Agent to pay all money held by it to the Trustee.  The Company at any time may require a Paying Agent to pay all money held by it to the Trustee.  Upon payment over to the Trustee, the Paying Agent (if other than the Company or a Subsidiary) will have no further liability for the money.  If the Company or a Subsidiary acts as Paying Agent, it will segregate and hold in a separate trust fund for the benefit of the Holders all money held by it as Paying Agent.  Upon any bankruptcy or reorganization proceedings relating to the Company, the Trustee will serve as Paying Agent for the Notes.
Section 2.05    Holder Lists.
The Trustee will preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of all Holders.  If the Trustee is not the Registrar, the Company will furnish to the Trustee at least seven Business Days before each Interest Payment Date and at such other times as the Trustee may request in writing, a list in such form and as of such date as the Trustee may reasonably require of the names and addresses of the Holders of Notes.
Section 2.06    Transfer and Exchange.
(a)Transfer and Exchange of Global Notes.  A Global Note may not be transferred except as a whole by the Depositary to a nominee of the Depositary, by a nominee of the Depositary to the Depositary or to another nominee of the Depositary, or by the Depositary or any such nominee to a successor Depositary or a nominee of such successor Depositary.  All Global Notes will be exchanged by the Company for Definitive Notes if:
(1)the Company delivers to the Trustee notice from the Depositary that it is unwilling or unable to continue to act as Depositary or that it is no longer a clearing agency registered under the Exchange Act 

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and, in either case, a successor Depositary is not appointed by the Company; 
(2)the Company in its sole discretion determines that the Global Notes (in whole but not in part) should be exchanged for Definitive Notes and delivers a written notice to such effect to the Trustee; or
(3)there has occurred and is continuing an Event of Default with respect to the Notes and the Depositary has requested the Trustee to exchange the Global Notes to Definitive Notes.
Upon the occurrence of either of the preceding events in (1) or (2) above, Definitive Notes shall be issued in such names as the Depositary shall instruct the Trustee.  Global Notes also may be exchanged or replaced, in whole or in part, as provided in Sections 2.07 and 2.10 hereof.  Every Note authenticated and delivered in exchange for, or in lieu of, a Global Note or any portion thereof, pursuant to this Section 2.06 or Section 2.07 or 2.10 hereof, shall be authenticated and delivered in the form of, and shall be, a Global Note.  A Global Note may not be exchanged for another Note other than as provided in this Section 2.06(a), however, beneficial interests in a Global Note may be transferred and exchanged as provided in Section 2.06(b) or (c) hereof.
(b)Transfer and Exchange of Beneficial Interests in the Global Notes.  The transfer and exchange of beneficial interests in the Global Notes will be effected through the Depositary, in accordance with the provisions of this Indenture and the Applicable Procedures.  Beneficial interests in the Restricted Global Notes will be subject to restrictions on transfer comparable to those set forth herein to the extent required by the Securities Act.  Transfers of beneficial interests in the Global Notes also will require compliance with either subparagraph (1) or (2) below, as applicable, as well as one or more of the other following subparagraphs, as applicable:
(1)Transfer of Beneficial Interests in the Same Global Note.  Beneficial interests in any Restricted Global Note may be transferred to Persons who take delivery thereof in the form of a beneficial interest in the same Restricted Global Note in accordance with the transfer restrictions set forth in the Private Placement Legend.  Beneficial interests in any Unrestricted Global Note may be transferred to Persons who take delivery thereof in the form of a beneficial interest in an Unrestricted Global Note.  No written orders or instructions shall be required to be delivered to the Registrar to effect the transfers described in this Section 2.06(b)(1).
(2)All Other Transfers and Exchanges of Beneficial Interests in Global Notes.  In connection with all transfers and exchanges of beneficial interests that are not subject to Section 2.06(b)(1) above, the transferor of such beneficial interest must deliver to the Registrar either:
(a)both: 
(i)a written order from a Participant or an Indirect Participant given to the Depositary in accordance with the Applicable Procedures directing the Depositary to credit or cause to be credited a beneficial interest in another Global Note in an amount equal to the beneficial interest to be transferred or exchanged; and
(ii)instructions given in accordance with the Applicable Procedures containing information regarding the Participant account to be credited with such increase; or 
(b)both:
(i)a written order from a Participant or an Indirect Participant given to the Depositary in accordance with the Applicable Procedures directing the Depositary to cause to be issued a Definitive Note in an amount equal to the beneficial interest to be transferred or exchanged; and
(ii)instructions given by the Depositary to the Registrar containing information regarding the Person in whose name such Definitive Note shall be registered to effect the transfer or exchange referred to in (1) above.

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Upon satisfaction of all of the requirements for transfer or exchange of beneficial interests in Global Notes contained in this Indenture and the Notes or otherwise applicable under the Securities Act, the Trustee shall adjust the principal amount of the relevant Global Note(s) pursuant to Section 2.06(g) hereof.
(3)Transfer of Beneficial Interests to Another Restricted Global Note.  A beneficial interest in any Restricted Global Note may be transferred to a Person who takes delivery thereof in the form of a beneficial interest in another Restricted Global Note if the transfer complies with the requirements of Section 2.06(b)(2) above and the Registrar receives the following:
(a)if the transferee will take delivery in the form of a beneficial interest in the 144A Global Note, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (1) thereof;
(b)if the transferee will take delivery in the form of a beneficial interest in the Regulation S Global Note, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (2) thereof; and
(4)Transfer and Exchange of Beneficial Interests in a Restricted Global Note for Beneficial Interests in an Unrestricted Global Note.  A beneficial interest in any Restricted Global Note may be exchanged by any holder thereof for a beneficial interest in an Unrestricted Global Note or transferred to a Person who takes delivery thereof in the form of a beneficial interest in an Unrestricted Global Note if the exchange or transfer complies with the requirements of Section 2.06(b)(2) above and the Registrar receives the following:
(a)if the holder of such beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for a beneficial interest in an Unrestricted Global Note, a certificate from such holder in the form of Exhibit C hereto, including the certifications in item (1)(a) thereof; or
(b)if the holder of such beneficial interest in a Restricted Global Note proposes to transfer such beneficial interest to a Person who shall take delivery thereof in the form of a beneficial interest in an Unrestricted Global Note, a certificate from such holder in the form of Exhibit B hereto, including the certifications in item (4) thereof;
and, if the Registrar so requests or if the Applicable Procedures so require, an Opinion of Counsel in form reasonably acceptable to the Registrar to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act.
If any such transfer is effected at a time when an Unrestricted Global Note has not yet been issued, the Company shall issue and, upon receipt of an Authentication Order in accordance with Section 2.02 hereof, the Trustee shall authenticate one or more Unrestricted Global Notes in an aggregate principal amount equal to the aggregate principal amount of beneficial interests transferred pursuant to the above paragraph.
Beneficial interests in an Unrestricted Global Note cannot be exchanged for, or transferred to Persons who take delivery thereof in the form of, a beneficial interest in a Restricted Global Note.
(c)Transfer or Exchange of Beneficial Interests for Definitive Notes.
(1)Beneficial Interests in Restricted Global Notes to Restricted Definitive Notes.  If any holder of a beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for a Restricted Definitive Note or to transfer such beneficial interest to a Person who takes delivery thereof in the form of a Restricted Definitive Note, then, upon receipt by the Registrar of the following documentation:
(a)if the holder of such beneficial interest in a Restricted Global Note proposes to 

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exchange such beneficial interest for a Restricted Definitive Note, a certificate from such holder in the form of Exhibit C hereto, including the certifications in item (2)(a) thereof;
(b)if such beneficial interest is being transferred to a QIB in accordance with Rule 144A, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (1) thereof;
(c)if such beneficial interest is being transferred to a Non-U.S. Person in an offshore transaction in accordance with Rule 903 or Rule 904, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (2) thereof;
(d)if such beneficial interest is being transferred pursuant to an exemption from the registration requirements of the Securities Act in accordance with Rule 144, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(a) thereof;
(e)if such beneficial interest is being transferred to an Institutional Accredited Investor in reliance on an exemption from the registration requirements of the Securities Act other than those listed in subparagraphs (b) through (d) above, a certificate to the effect set forth in Exhibit B hereto, including the certifications, certificates and Opinion of Counsel required by item (3) thereof, if applicable;
(f)if such beneficial interest is being transferred to the Company or any of its Subsidiaries, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(b) thereof; or
(g)if such beneficial interest is being transferred pursuant to an effective registration statement under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(c) thereof,
the Trustee shall cause the aggregate principal amount of the applicable Global Note to be reduced accordingly pursuant to Section 2.06(g) hereof, and the Company shall execute and the Trustee shall authenticate and deliver to the Person designated in the instructions a Definitive Note in the appropriate principal amount.  Any Definitive Note issued in exchange for a beneficial interest in a Restricted Global Note pursuant to this Section 2.06(c) shall be registered in such name or names and in such authorized denomination or denominations as the holder of such beneficial interest shall instruct the Registrar through instructions from the Depositary and the Participant or Indirect Participant.  The Trustee shall deliver such Definitive Notes to the Persons in whose names such Notes are so registered.  Any Definitive Note issued in exchange for a beneficial interest in a Restricted Global Note pursuant to this Section 2.06(c)(1) shall bear the Private Placement Legend and shall be subject to all restrictions on transfer contained therein.
(2)  Beneficial Interests in Restricted Global Notes to Unrestricted Definitive Notes.  A holder of a beneficial interest in a Restricted Global Note may exchange such beneficial interest for an Unrestricted Definitive Note or may transfer such beneficial interest to a Person who takes delivery thereof in the form of an Unrestricted Definitive Note only if the Registrar receives the following:
(a)if the holder of such beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for an Unrestricted Definitive Note, a certificate from such holder in the form of Exhibit C hereto, including the certifications in item (1)(b) thereof; or
(b)if the holder of such beneficial interest in a Restricted Global Note proposes to transfer such beneficial interest to a Person who shall take delivery thereof in the form of an Unrestricted Definitive Note, a certificate from such holder in the form of Exhibit B hereto, including the certifications in item (4) thereof;
and, if the Registrar so requests or if the Applicable Procedures so require, an Opinion of Counsel in form reasonably acceptable to the Registrar to the effect that such exchange or transfer is in compliance 

45

with the Securities Act and that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act.
(3)  Beneficial Interests in Unrestricted Global Notes to Unrestricted Definitive Notes.  If any holder of a beneficial interest in an Unrestricted Global Note proposes to exchange such beneficial interest for a Definitive Note or to transfer such beneficial interest to a Person who takes delivery thereof in the form of a Definitive Note, then, upon satisfaction of the conditions set forth in Section 2.06(b)(2) hereof, the Trustee will cause the aggregate principal amount of the applicable Global Note to be reduced accordingly pursuant to Section 2.06(g) hereof, and the Company will execute and the Trustee will authenticate and deliver to the Person designated in the instructions a Definitive Note in the appropriate principal amount.  Any Definitive Note issued in exchange for a beneficial interest pursuant to this Section 2.06(c)(3) will be registered in such name or names and in such authorized denomination or denominations as the holder of such beneficial interest requests through instructions to the Registrar from or through the Depositary and the Participant or Indirect Participant.  The Trustee will deliver such Definitive Notes to the Persons in whose names such Notes are so registered.  Any Definitive Note issued in exchange for a beneficial interest pursuant to this Section 2.06(c)(3) will not bear the Private Placement Legend.
(d)Transfer and Exchange of Definitive Notes for Beneficial Interests.
(1)Restricted Definitive Notes to Beneficial Interests in Restricted Global Notes.  If any Holder of a Restricted Definitive Note proposes to exchange such Note for a beneficial interest in a Restricted Global Note or to transfer such Restricted Definitive Notes to a Person who takes delivery thereof in the form of a beneficial interest in a Restricted Global Note, then, upon receipt by the Registrar of the following documentation:
(a)if the Holder of such Restricted Definitive Note proposes to exchange such Note for a beneficial interest in a Restricted Global Note, a certificate from such Holder in the form of Exhibit C hereto, including the certifications in item (2)(b) thereof;
(b)if such Restricted Definitive Note is being transferred to a QIB in accordance with Rule 144A, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (1) thereof;
(c)if such Restricted Definitive Note is being transferred to a Non-U.S. Person in an offshore transaction in accordance with Rule 903 or Rule 904, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (2) thereof;
(d)if such Restricted Definitive Note is being transferred pursuant to an exemption from the registration requirements of the Securities Act in accordance with Rule 144, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(a) thereof;
(e)if such Restricted Definitive Note is being transferred to an Institutional Accredited Investor in reliance on an exemption from the registration requirements of the Securities Act other than those listed in subparagraphs (b) through (d) above, a certificate to the effect set forth in Exhibit B hereto, including the certifications, certificates and Opinion of Counsel required by item (3) thereof, if applicable;
(f)if such Restricted Definitive Note is being transferred to the Company or any of its Subsidiaries, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(b) thereof; or
(g)if such Restricted Definitive Note is being transferred pursuant to an effective registration statement under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(c) thereof,

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the Trustee will cancel the Restricted Definitive Note, increase or cause to be increased the aggregate principal amount of, in the case of clause (a) above, the appropriate Restricted Global Note, in the case of clause (b) above, the 144A Global Note and in the case of clause (c) above, the Regulation S Global Note.
(2)Restricted Definitive Notes to Beneficial Interests in Unrestricted Global Notes.  A Holder of a Restricted Definitive Note may exchange such Note for a beneficial interest in an Unrestricted Global Note or transfer such Restricted Definitive Note to a Person who takes delivery thereof in the form of a beneficial interest in an Unrestricted Global Note only if the Registrar receives the following:
(a)if the Holder of such Definitive Notes proposes to exchange such Notes for a beneficial interest in the Unrestricted Global Note, a certificate from such Holder in the form of Exhibit C hereto, including the certifications in item (1)(c) thereof; or
(b)if the Holder of such Definitive Notes proposes to transfer such Notes to a Person who shall take delivery thereof in the form of a beneficial interest in the Unrestricted Global Note, a certificate from such Holder in the form of Exhibit B hereto, including the certifications in item (4) thereof;
and, if the Registrar so requests or if the Applicable Procedures so require, an Opinion of Counsel in form reasonably acceptable to the Registrar to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act.
Upon satisfaction of the conditions of any of the subparagraphs in this Section 2.06(d)(2), the Trustee will cancel the Definitive Notes and increase or cause to be increased the aggregate principal amount of the Unrestricted Global Note.
(3)Unrestricted Definitive Notes to Beneficial Interests in Unrestricted Global Notes.  A Holder of an Unrestricted Definitive Note may exchange such Note for a beneficial interest in an Unrestricted Global Note or transfer such Definitive Notes to a Person who takes delivery thereof in the form of a beneficial interest in an Unrestricted Global Note at any time.  Upon receipt of a request for such an exchange or transfer, the Trustee will cancel the applicable Unrestricted Definitive Note and increase or cause to be increased the aggregate principal amount of one of the Unrestricted Global Notes.
If any such exchange or transfer from a Definitive Note to a beneficial interest is effected pursuant to subparagraphs (2)(a) or (3) above at a time when an Unrestricted Global Note has not yet been issued, the Company will issue and, upon receipt of an Authentication Order in accordance with Section 2.02 hereof, the Trustee will authenticate one or more Unrestricted Global Notes in an aggregate principal amount equal to the principal amount of Definitive Notes so transferred.
(e)Transfer and Exchange of Definitive Notes for Definitive Notes.  Upon request by a Holder of Definitive Notes and such Holder's compliance with the provisions of this Section 2.06(e), the Registrar will register the transfer or exchange of Definitive Notes.  Prior to such registration of transfer or exchange, the requesting Holder must present or surrender to the Registrar the Definitive Notes duly endorsed or accompanied by a written instruction of transfer in form satisfactory to the Registrar duly executed by such Holder or by its attorney, duly authorized in writing.  In addition, the requesting Holder must provide any additional certifications, documents and information, as applicable, required pursuant to the following provisions of this Section 2.06(e).
(1)Restricted Definitive Notes to Restricted Definitive Notes.  Any Restricted Definitive Note may be transferred to and registered in the name of Persons who take delivery thereof in the form of a Restricted Definitive Note if the Registrar receives the following:
(a)if the transfer will be made pursuant to Rule 144A, then the transferor must deliver 

47

a certificate in the form of Exhibit B hereto, including the certifications in item (1) thereof;
(b)if the transfer will be made pursuant to Rule 903 or Rule 904, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (2) thereof; and
(c)if the transfer will be made pursuant to any other exemption from the registration requirements of the Securities Act, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications, certificates and Opinion of Counsel required by item (3) thereof, if applicable.
(2)Restricted Definitive Notes to Unrestricted Definitive Notes.  Any Restricted Definitive Note may be exchanged by the Holder thereof for an Unrestricted Definitive Note or transferred to a Person or Persons who take delivery thereof in the form of an Unrestricted Definitive Note if the Registrar receives the following:
(a)if the Holder of such Restricted Definitive Notes proposes to exchange such Notes for an Unrestricted Definitive Note, a certificate from such Holder in the form of Exhibit C hereto, including the certifications in item (1)(d) thereof; or
(b)if the Holder of such Restricted Definitive Notes proposes to transfer such Notes to a Person who shall take delivery thereof in the form of an Unrestricted Definitive Note, a certificate from such Holder in the form of Exhibit B hereto, including the certifications in item (4) thereof;
and, if the Registrar so requests, an Opinion of Counsel in form reasonably acceptable to the Registrar to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act.
(3)Unrestricted Definitive Notes to Unrestricted Definitive Notes.  A Holder of Unrestricted Definitive Notes may transfer such Notes to a Person who takes delivery thereof in the form of an Unrestricted Definitive Note.  Upon receipt of a request to register such a transfer, the Registrar shall register the Unrestricted Definitive Notes pursuant to the instructions from the Holder thereof.
(f)Legends.  The following legends will appear on the face of all Global Notes and Definitive Notes issued under this Indenture unless specifically stated otherwise in the applicable provisions of this Indenture.
(1)Private Placement Legend.
(a)Except as permitted by subparagraph (b) below, each Global Note and each Definitive Note (and all Notes issued in exchange therefor or substitution thereof) shall bear the legend in substantially the following form:
“THIS NOTE (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND THIS NOTE MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THIS NOTE IS HEREBY NOTIFIED THAT THE SELLER OF THIS NOTE MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.  THE HOLDER OF THIS NOTE AGREES FOR THE BENEFIT OF THE ISSUER THAT (A) THIS NOTE MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (I) IN THE UNITED STATES TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (II) OUTSIDE THE UNITED STATES IN AN OFFSHORE 

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TRANSACTION IN ACCORDANCE WITH RULE 904 UNDER THE SECURITIES ACT, (III) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE) OR (IV) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH OF CASES (I) THROUGH (IV) IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES, AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THIS NOTE FROM IT OF THE RESALE RESTRICTIONS REFERRED TO IN (A) ABOVE.”
(b)Notwithstanding the foregoing, any Global Note or Definitive Note issued pursuant to subparagraphs (b)(4), (c)(2), (d)(2), (d)(3), (e)(2) or (e)(3) of this Section 2.06 (and all Notes issued in exchange therefor or substitution thereof) will not bear the Private Placement Legend.
(2)Global Note Legend.  Each Global Note will bear a legend in substantially the following form:
“THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (1) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO SECTION 2.06 OF THE INDENTURE, (2) THIS GLOBAL NOTE MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE, (3) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO SECTION 2.11 OF THE INDENTURE AND (4) THIS GLOBAL NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF HARLAND CLARKE HOLDINGS CORP.
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN DEFINITIVE FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY.  UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) (“DTC”), TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR SUCH OTHER ENTITY AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.”
(3)OID Legend.  To the extent required by Section 1275(c)(A) of the Internal Revenue Code of 1986, as amended, and Treasury Regulation Section 1.1275-3(b)(1), each Note issued at a discount to its stated redemption price at maturity shall bear a legend in substantially the following form (with any necessary amendments thereto to reflect any amendments occurring after the Issue Date to the applicable sections):
“FOR THE PURPOSES OF SECTIONS 1272, 1273 AND 1275 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED, THIS NOTE IS BEING ISSUED WITH ORIGINAL ISSUE DISCOUNT.  YOU MAY CONTACT THE ISSUER AT 10931 LAUREATE DRIVE, SAN ANTONIO, TX 78249, ATTENTION: CHIEF FINANCIAL OFFICER, AND THE ISSUER WILL PROVIDE YOU WITH THE ISSUE PRICE, THE AMOUNT OF ORIGINAL ISSUE DISCOUNT, THE ISSUE DATE AND THE YIELD TO MATURITY OF THIS NOTE.”
(4)Regulation S Legend.  Each Regulation S Global Note will bear a legend in substantially the following form:
“THIS NOTE (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION ORIGINALLY EXEMPT FROM REGISTRATION UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE 

49

“SECURITIES ACT”), AND MAY NOT BE TRANSFERRED IN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, ANY U.S. PERSON EXCEPT PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND ALL APPLICABLE STATE SECURITIES LAWS. TERMS USED ABOVE HAVE THE MEANINGS GIVEN TO THEM IN REGULATION S UNDER THE SECURITIES ACT.”
(g)Cancellation and/or Adjustment of Global Notes.  At such time as all beneficial interests in a particular Global Note have been exchanged for Definitive Notes or a particular Global Note has been redeemed, repurchased or canceled in whole and not in part, each such Global Note will be returned to or retained and canceled by the Trustee in accordance with Section 2.11 hereof.  At any time prior to such cancellation, if any beneficial interest in a Global Note is exchanged for or transferred to a Person who will take delivery thereof in the form of a beneficial interest in another Global Note or for Definitive Notes, the principal amount of Notes represented by such Global Note will be reduced accordingly and an endorsement will be made on such Global Note by the Trustee or by the Depositary at the direction of the Trustee to reflect such reduction; and if the beneficial interest is being exchanged for or transferred to a Person who will take delivery thereof in the form of a beneficial interest in another Global Note, such other Global Note will be increased accordingly and an endorsement will be made on such Global Note by the Trustee or by the Depositary at the direction of the Trustee to reflect such increase.
(h)General Provisions Relating to Transfers and Exchanges.
(1)To permit registrations of transfers and exchanges, the Company will execute and the Trustee will authenticate Global Notes and Definitive Notes upon receipt of an Authentication Order in accordance with Section 2.02 hereof or at the Registrar's request.
(2)No service charge will be made to a Holder of a beneficial interest in a Global Note or to a Holder of a Definitive Note for any registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any transfer tax or similar governmental charge payable in connection therewith (other than any such transfer taxes or similar governmental charge payable upon exchange or transfer pursuant to Sections 2.10, 3.06, 3.09, 4.10, 4.15 and 9.05 hereof).  
(3)The Registrar will not be required to register the transfer of or exchange of any Note selected for redemption in whole or in part, except the unredeemed portion of any Note being redeemed in part.
(4)All Global Notes and Definitive Notes issued upon any registration of transfer or exchange of Global Notes or Definitive Notes will be the valid obligations of the Company, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Global Notes or Definitive Notes surrendered upon such registration of transfer or exchange.
(5)Neither the Registrar nor the Company will be required:
(a)to issue, to register the transfer of or to exchange any Notes during a period beginning at the opening of business 15 days before the providing of a notice of redemption of Notes to be redeemed under Section 3.02 hereof and ending at the close of business on the day of such notice of redemption is provided;
(b)to register the transfer of or to exchange any Note selected for redemption in whole or in part, except the unredeemed portion of any Note being redeemed in part; or 
(c)to register the transfer of or to exchange a Note between a record date and the next succeeding interest payment date.
(6)Prior to due presentment for the registration of a transfer of any Note, the Trustee, any Agent and the Company may deem and treat the Person in whose name any Note is registered as the absolute owner of such Note for the purpose of receiving payment of principal of and interest on such Notes and for all other 

50

purposes, and none of the Trustee, any Agent or the Company shall be affected by notice to the contrary.
(7)The Trustee will authenticate Global Notes and Definitive Notes in accordance with the provisions of Section 2.02 hereof.
(8)All certifications, certificates and Opinions of Counsel required to be submitted to the Registrar pursuant to this Section 2.06 to effect a registration of transfer or exchange may be submitted by facsimile.
(9)To the extent that any Notes are issued at a discount to their stated redemption price at maturity and bear the legend required by Section 2.06(f)(3) hereof, each group of Notes bearing a given amount of original issue discount shall be treated as a separate series only for purposes of the transfer and exchange provisions of this Section 2.06.
(10)The Trustee shall have no obligation or duty to monitor, determine or inquire as to compliance with any restrictions on transfer imposed under this Indenture or under applicable law with respect to any transfer of any interest in any Note (including any transfers between or among Depositary Participants or beneficial owners of interests in any Global Notes) 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.
(11)Neither the Trustee nor any Agent shall have any responsibility for any actions taken or not taken by the Depositary.
Section 2.07    Replacement Notes.
If any mutilated Note is surrendered to the Trustee or the Company and the Trustee receives evidence to its satisfaction of the destruction, loss or theft of any Note, the Company will issue and the Trustee, upon receipt of an Authentication Order, will authenticate a replacement Note of the same series if the Trustee's requirements are met.  If required by the Trustee or the Company, an indemnity bond must be supplied by the Holder that is sufficient in the judgment of the Trustee and the Company to protect the Company, the Trustee, any Agent and any authenticating agent from any loss that any of them may suffer if a Note is replaced.  The Company may charge for its expenses in replacing a Note.
Every replacement Note is an additional obligation of the Company and will be entitled to all of the benefits of this Indenture equally and proportionately with all other Notes duly issued hereunder.
Section 2.08    Outstanding Notes.
The Notes outstanding at any time are all the Notes authenticated by the Trustee except for those canceled by it, those delivered to it for cancellation, those reductions in the interest in a Global Note effected by the Trustee in accordance with the provisions hereof, and those described in this Section 2.08 as not outstanding.  Except as set forth in Section 2.09 hereof, a Note does not cease to be outstanding because the Company or an Affiliate of the Company holds the Note; however, Notes held by the Company or a Subsidiary of the Company and not cancelled shall not be deemed to be outstanding for purposes of Sections 3.07(a) through (c) hereof.  
If a Note is replaced pursuant to Section 2.07 hereof, it ceases to be outstanding unless the Trustee receives proof satisfactory to it that the replaced Note is held by a protected purchaser.
If the principal amount of any Note is considered paid under Section 4.01 hereof, it ceases to be outstanding and interest on it ceases to accrue.
If the Paying Agent (other than the Company, a Subsidiary or an Affiliate of any thereof) holds, on a redemption date or maturity date, money sufficient to pay Notes payable on that date, then on and after that date such Notes will be deemed to be no longer outstanding and will cease to accrue interest.

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Section 2.09    Treasury Notes.
In determining whether the Holders of the required principal amount of Notes have concurred in any direction, waiver or consent, Notes owned by the Company or any Subsidiary, or by any Person directly or indirectly controlled by the Company or any Subsidiary, shall be considered as though not outstanding, except that for the purposes of determining whether the Trustee will be protected in relying on any such direction, waiver or consent, only Notes that a Trust Officer of the Trustee actually knows are so owned will be so disregarded.
Section 2.10    Temporary Notes.
Until certificates representing Notes are ready for delivery, the Company may prepare and the Trustee, upon receipt of an Authentication Order, will authenticate temporary Notes.  Temporary Notes will be substantially in the form of certificated Notes but may have variations that the Company considers appropriate for temporary Notes and as may be reasonably acceptable to the Trustee.  Without unreasonable delay, the Company will prepare and the Trustee will authenticate definitive Notes of the same series in exchange for temporary Notes.
Holders of temporary Notes will be entitled to all of the benefits of this Indenture.
Section 2.11    Cancellation.
The Company at any time may deliver Notes to the Trustee for cancellation.  The Registrar and Paying Agent will forward to the Trustee any Notes surrendered to them for registration of transfer, exchange or payment.  The Trustee and no one else will cancel all Notes surrendered for registration of transfer, exchange, payment, replacement or cancellation and will dispose of such canceled Notes in accordance with its customary procedures (subject to the record retention requirement of the Exchange Act).  Certification of the disposal of all canceled Notes will be delivered to the Company upon its request.  The Company may not issue new Notes to replace Notes that it has paid or that have been delivered to the Trustee for cancellation.
Section 2.12    Defaulted Interest.
If the Company defaults in a payment of interest on any series of the Notes, it will pay the defaulted interest in any lawful manner plus, to the extent lawful, interest payable on the defaulted interest, to the Persons who are Holders on a subsequent special record date, in each case at the rate provided in such Notes and in Section 4.01 hereof.  The Company will notify the Trustee in writing of the amount of defaulted interest proposed to be paid on each such Note and the date of the proposed payment.  The Company will fix or cause to be fixed each such special record date and payment date; provided that no such special record date may be less than 10 days prior to the related payment date for such defaulted interest.  At least 15 days before the special record date, the Company (or, upon the written request of the Company, the Trustee in the name and at the expense of the Company) will provide or cause to be provided to Holders of such Notes a notice that states the special record date, the related payment date and the amount of such interest to be paid.
Section 2.13    CUSIP Numbers.
The Company in issuing the Notes may use “CUSIP” numbers (if then generally in use), and, if so, the Trustee shall use “CUSIP” numbers in notices of redemption as a convenience to Holders; provided that any such notice may state that no representation is made as to the correctness of such numbers either as printed on the Notes or as contained in any notice of a redemption and that reliance may be placed only on the other identification numbers printed on the Notes, and any such redemption shall not be affected by any defect in or omission of such numbers.  The Company shall promptly notify the Trustee in writing of any change in the “CUSIP” numbers.

ARTICLE 3
REDEMPTION AND PREPAYMENT

Section 3.01    Notices to Trustee.
If the Company elects to redeem Notes pursuant to the optional redemption provisions of Section 3.07 hereof, it must furnish to the Trustee, at least 30 days but not more than 60 days before a redemption date, an Officer's Certificate 

52

of the Company (except that such Officer's Certificate may be furnished more than 60 days prior to a redemption date if it is issued in connections with a defeasance of the Notes or a satisfaction and discharge of this Indenture pursuant to Articles 8 or 11 hereof) setting forth:
(1)the clause of this Indenture pursuant to which the redemption shall occur;
(2)the redemption date;
(3)the principal amount of Notes to be redeemed; 
(4)the “CUSIP” numbers of the Notes to be redeemed; and 
(5)the redemption price.

Section 3.02    Selection of Notes to Be Redeemed or Purchased.
If less than all of the Notes of a series are to be redeemed at any time, the Trustee will select such Notes for redemption on a pro rata basis, by lot or by such method as the Trustee shall deem fair and appropriate, to the extent practicable unless otherwise required by law or applicable stock exchange requirements.
In the event of partial redemption or purchase by lot, the particular Notes of the series to be redeemed or purchased will be selected, unless otherwise provided herein, not less than 30 nor more than 60 days prior to the redemption or purchase date by the Trustee from the outstanding Notes not previously called for redemption or purchase.
The Trustee will promptly notify the Company in writing of the Notes selected for redemption or purchase and, in the case of any Note selected for partial redemption or purchase, the principal amount thereof to be redeemed or purchased.  Notes and portions of Notes selected will be in amounts of $2,000 or whole multiples of $1,000 in excess thereof; except that if all of the Notes of a series of a Holder are to be redeemed or purchased, the entire outstanding amount of such Notes held by such Holder, even if not a multiple of $1,000, shall be redeemed or purchased.  Except as provided in the preceding sentence, provisions of this Indenture that apply to Notes called for redemption or purchase also apply to portions of Notes called for redemption or purchase.
Section 3.03    Notice of Redemption.
Subject to the provisions of Section 3.09 hereof, at least 30 days but not more than 60 days before a redemption date, the Company will provide a notice of redemption to each Holder whose Notes are to be redeemed at its registered address or sent to DTC in accordance with its procedures applicable to global notes, except that redemption notices may be provided more than 60 days prior to a redemption date if the notice is issued in connection with a defeasance of the Notes or a satisfaction and discharge of this Indenture pursuant to Articles 8 or 11 hereof.
The notice will identify the Notes to be redeemed and will state:
(1)the redemption date;
(2)the redemption price;
(3)if any Note is being redeemed in part, the portion of the principal amount of such Note to be redeemed and that, after the redemption date upon surrender of such Note, a new Note or Notes of the same series in principal amount equal to the unredeemed portion will be issued upon cancellation of the original Note;
(4)the name and address of the Paying Agent;
(5)that Notes called for redemption must be surrendered to the Paying Agent to collect the redemption price;

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(6)that, unless the Company defaults in making such redemption payment, interest on Notes called for redemption ceases to accrue on and after the redemption date;
(7)the paragraph of the Notes and/or Section of this Indenture pursuant to which the Notes called for redemption are being redeemed; and
(8)that no representation is made as to the correctness or accuracy of the CUSIP number listed in such notice or printed on the Notes.
At the Company's request, the Trustee will give the notice of redemption in the Company's name and at its expense; provided, however, that the Company has delivered to the Trustee, at least 45 days (or such shorter period as may be agreed by the Trustee) prior to the redemption date, an Officer's Certificate requesting that the Trustee give such notice and setting forth the information to be stated in such notice as provided in the preceding paragraph.
In connection with any redemption of Notes (including in any redemption described under Section 3.07 below), any such redemption may, at the Company's discretion, be subject to one or more conditions precedent, including any related Equity Offering or a Change of Control.  In addition, if such redemption or notice is subject to satisfaction of one or more conditions precedent, such notice shall sate that, in the Company's discretion, the redemption date may be delayed until such time as any or all such conditions shall be satisfied, or such redemption may not occur and such notice may be rescinded in the event that any or all such conditions shall not have been satisfied by the redemption date, or by the redemption date so delayed.
Section 3.04    Effect of Notice of Redemption.
Once notice of redemption is provided in accordance with Section 3.03 hereof, Notes called for redemption become due and payable on the redemption date at the redemption price, unless any conditions precedent have not been satisfied or waived.  
Section 3.05    Deposit of Redemption or Purchase Price.
On or prior to the redemption or purchase date, the Company will deposit no later than 11:00 a.m. New York City time on such date with the Trustee or with the Paying Agent money sufficient to pay the redemption or purchase price of and accrued interest, if any, on all Notes to be redeemed or purchased on that date.  The Trustee or the Paying Agent will promptly return to the Company any money deposited with the Trustee or the Paying Agent by the Company in excess of the amounts necessary to pay the redemption or purchase price of, and accrued interest, if any, on, all Notes to be redeemed or purchased.
If the Company complies with the provisions of the preceding paragraph, on and after the redemption or purchase date, interest will cease to accrue on the Notes or the portions of Notes called for redemption or purchase.  If a Note is redeemed or purchased on or after an interest record date but on or prior to the related interest payment date, then any accrued and unpaid interest shall be paid to the Person in whose name such Note was registered at the close of business on such record date.  If any Note called for redemption or purchase is not so paid upon surrender for redemption or purchase because of the failure of the Company to comply with the preceding paragraph, interest shall be paid on the unpaid principal, from the redemption or purchase date until such principal is paid, and to the extent lawful on any interest not paid on such unpaid principal, in each case at the rate provided in the Notes and in Section 4.01 hereof.
Section 3.06    Notes Redeemed or Purchased in Part.
Upon surrender of a Note that is redeemed or purchased in part, the Company will issue and, upon receipt of an Authentication Order, the Trustee will authenticate for the Holder at the expense of the Company a new Note of the same series equal in principal amount to the unredeemed or unpurchased portion of the Note surrendered.

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Section 3.07    Optional Redemption.
(a) At any time prior to August 1, 2015, the Company may, on any one or more occasions, redeem up to 35% of the aggregate principal amount of Notes issued under the Indenture (including the principal amount of any Additional Notes issued under the Indenture) at a redemption price equal to 109.750% of the principal amount of the Notes redeemed, plus accrued and unpaid interest, if any, to the redemption date, with the net cash proceeds of one or more Equity Offerings of the Company, subject to the rights of Holders of Notes on the relevant record date to receive interest on the relevant interest payment date; provided that
(1)at least 50% of the aggregate principal amount of Notes issued under the Indenture (excluding Notes held by the Company and its Subsidiaries, but including any Additional Notes) remains outstanding immediately after the occurrence of such redemption; and
(2)the redemption occurs within 90 days after the date of the closing of any such Equity Offering.
(b)Except pursuant to the preceding paragraph and clause (e) below, the Notes will not be redeemable at the Company's option prior to August 1, 2015.
(c)On or after August 1, 2015, the Company may, in one or more instances, redeem all or a part of the Notes upon not less than 30 nor more than 60 days' notice by the Company (except that redemption notices may be provided by the Company more than 60 days prior to a redemption date if the notice is issued in connection with a defeasance of the Notes or a satisfaction and discharge of the Indenture), at the redemption prices (expressed as percentages of principal amount of the Notes to be redeemed) set forth below plus accrued and unpaid interest, if any, on the Notes redeemed, to the applicable redemption date, if redeemed during the twelve-month period beginning on August 1 of the years indicated below, subject to the rights of Holders of Notes on the relevant record date to receive interest on the relevant interest payment date:
	
			
	Year
	Percentage

	2015
	104.875
	%

	2016
	102.438
	%

	2017 and thereafter
	100.000
	%

(d)Any redemption pursuant to this Section 3.07 shall be made pursuant to the provisions of Sections 3.01 through 3.06 hereof.
(e)At any time prior to August 1, 2015, the Company may, in one or more instances, also redeem all or a part of the Notes, upon not less than 30 nor more than 60 days' prior notice by the Company (except that redemption notices may be provided by the Company more than 60 days prior to a redemption date if the notice is issued in connection with a defeasance of the Notes or a satisfaction and discharge of the Indenture), at a redemption price equal to 100% of the principal amount of Notes redeemed plus the Applicable Premium as of the date of redemption, and accrued and unpaid interest, if any, to such redemption date (the “Make-Whole Redemption Date”), subject to the rights of Holders of the Notes on the relevant record date to receive interest due on the relevant interest payment date.
(f)Unless the Company defaults in the payment of the redemption price, interest will cease to accrue on the Notes or portions thereof called for redemption on the applicable redemption date.
(g)The Company may provide in such notice that payment of the redemption price and the performance of the Company's obligations with respect to such redemption may be performed by another Person.
Section 3.08    Mandatory Redemption.
The Company is not required to make mandatory redemption or sinking fund payments with respect to the Notes.

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Section 3.09    Offer to Purchase by Application of Excess Proceeds.
In the event that, pursuant to Section 4.10 hereof, the Company is required to commence an Asset Sale Offer, it will follow the procedures specified below.
The Asset Sale Offer shall be made to all Holders of Notes and, at the Company's option, to the holders of other Parity Lien Debt.  The Asset Sale Offer will remain open for a period of at least 20 Business Days following its commencement and not more than 30 Business Days, except to the extent that a longer period is required by applicable law (the “Offer Period”).  No later than three Business Days after the termination of the Offer Period (the “Purchase Date”), the Company will apply all Excess Proceeds (the “Offer Amount”) to the purchase of Notes and such other Parity Lien Debt (on a pro rata basis, if applicable, with such adjustments so that only Notes in denominations of $2,000, or integral multiples of $1,000 thereof, will be purchased) or, if less than the Offer Amount has been tendered, all Notes and such other Parity Lien Debt tendered in response to the Asset Sale Offer.  Payment for any Notes so purchased will be made in the same manner as interest payments are made.
If the Purchase 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, will be paid to the Person in whose name a Note is registered at the close of business on such record date.
Upon the commencement of an Asset Sale Offer, the Company will provide a notice to the Trustee and each of the Holders, with a copy to the Trustee.  The notice will contain all instructions and materials necessary to enable such Holders to tender Notes pursuant to the Asset Sale Offer.  The notice, which will govern the terms of the Asset Sale Offer, will state:
(1)that the Asset Sale Offer is being made pursuant to this Section 3.09 and Section 4.10 hereof and the length of time the Asset Sale Offer will remain open;
(2)the Offer Amount, the purchase price and the Purchase Date;
(3)that any Note or any portion thereof not tendered or accepted for payment will continue to accrue interest;
(4)that, unless the Company defaults in making such payment, any Note or any portion thereof accepted for payment pursuant to the Asset Sale Offer will cease to accrue interest on and after the Purchase Date;
(5)that Holders electing to have a Note or any portion thereof purchased pursuant to an Asset Sale Offer may elect to have Notes purchased in denominations of $2,000 or integral multiples of $1,000 in excess thereof only;
(6)that Holders electing to have Notes or any portions thereof purchased pursuant to any Asset Sale Offer will be required to surrender the Note, with the form entitled “Option of Holder to Elect Purchase” attached to the Notes completed, or transfer by book-entry transfer, to the Company, a Depositary, if appointed by the Company, or a Paying Agent at the address specified in the notice at least three days before the Purchase Date;
(7)that Holders will be entitled to withdraw their election if the Company, the Depositary or the Paying Agent, as the case may be, receives, not later than the expiration of the Offer Period, a telegram, telex, facsimile transmission or letter setting forth the name of the Holder, the principal amount of the Note the Holder delivered for purchase and a statement that such Holder is withdrawing his election to have such Note purchased;
(8)that, if the aggregate principal amount of Notes and such other Parity Lien Debt surrendered by holders thereof exceeds the Offer Amount, the Company will select the Notes and such other Parity Lien 

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Debt to be purchased on a pro rata basis based on the principal amount of Notes and such other Parity Lien Debt surrendered (with such adjustments as may be deemed appropriate by the Company so that only Notes in denominations of $2,000, or integral multiples of $1,000 in excess thereof, will be purchased); and
(9)that Holders whose Notes were purchased only in part will be issued new Notes of the same series equal in principal amount to the unpurchased portion of the Notes surrendered (or transferred by book-entry transfer).
On or before the Purchase Date, the Company will, to the extent lawful, accept for payment, on a pro rata basis to the extent necessary (with such adjustments so that only Notes in denominations of $2,000, or integral multiples of $1,000 thereof, will be purchased), the Offer Amount of Notes or portions thereof tendered pursuant to the Asset Sale Offer, or if less than the Offer Amount has been tendered, all Notes tendered, and will deliver or cause to be delivered to the Trustee the Notes properly accepted together with an Officer's Certificate stating that such Notes or portions thereof were accepted for payment by the Company in accordance with the terms of this Section 3.09.  The Company, the Depositary or the Paying Agent, as the case may be, will promptly (but in any case not later than five days after the Purchase Date) deliver to each tendering Holder an amount equal to the purchase price of the Notes tendered by such Holder and accepted by the Company for purchase, and the Company will promptly issue a new Note, and the Trustee, upon written request from the Company, will authenticate and deliver (or cause to be transferred by book entry) such new Note to such Holder, in a principal amount equal to any unpurchased portion of the Note surrendered.  Any Note not so accepted shall be promptly delivered by the Company to the Holder thereof.  
Other than as specifically provided in this Section 3.09, any purchase pursuant to this Section 3.09 shall be made pursuant to the provisions of Sections 3.01 through 3.06 hereof.

ARTICLE 4
COVENANTS

Section 4.01    Payment of Notes.
The Company and the Co-Issuers, jointly and severally, will pay or cause to be paid the principal of, premium, if any, and interest on, the Notes on the dates and in the manner provided in the Notes.  Principal, premium, if any, and interest will be considered paid on the date due if the Paying Agent, if other than the Company or a Subsidiary thereof, holds as of 11:00 a.m. New York City time on the due date money deposited by the Company in immediately available funds and designated for and sufficient to pay all principal, premium, if any, and interest then due.
The Company and the Co-Issuers, jointly and severally, will pay interest (including post-petition interest in any proceeding under any Bankruptcy Code) on overdue principal at the rate equal to 1% per annum in excess of the then applicable interest rate on the Notes to the extent lawful; it will pay interest (including post-petition interest in any proceeding under any Bankruptcy Code) on overdue installments of interest (without regard to any applicable grace period) at the same rate to the extent lawful.  
Section 4.02    Maintenance of Office or Agency. 
The Company will maintain an office or agency (which may be an office of the Trustee or an Affiliate of the Trustee, Registrar or co-registrar) where Notes may be surrendered for registration of transfer or for exchange and where notices and demands to or upon the Company in respect of the Notes and this Indenture may be served.  The Company will give prompt written notice to the Trustee of the location, and any change in the location, of such office or agency.  If at any time the Company fails to maintain any such required office or agency or fails to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the Corporate Trust Office of the Trustee.
The Company may also from time to time designate one or more other offices or agencies where the Notes may be presented or surrendered for any or all such purposes and may from time to time rescind such designations.  The Company will give prompt written notice to the Trustee of any such designation or rescission and of any change 

57

in the location of any such other office or agency.
The Company hereby designates the Corporate Trust Office of the Trustee as one such office or agency of the Company in accordance with Section 2.03 hereof.  
Section 4.03    Reports.
(a)So long as any Notes are outstanding, the Company will distribute, as provided in Section 4.03(f), the following information:
(1)within 90 days after the end of each fiscal year, annual consolidated reports of the Company and its Subsidiaries containing substantially all of the information that would have been required to be contained (pursuant to applicable rules and regulations in effect on the Issue Date) in an Annual Report on Form 10-K under the Exchange Act if the Company had been a reporting company under the Exchange Act (but only to the extent similar information is included in this Offering Circular), including (A) “Management's Discussion and Analysis of Financial Condition and Results of Operations” and (B) audited financial statements prepared in accordance with Applicable Accounting Standards, but, without limiting the generality of the foregoing, such reports (A) will not be required to contain information required by Items 1B, 4, 5, 9A or 14 of Form 10-K and (B) will not be required to contain information required by Items 10 and 11 of Form 10-K (relating to management and compensation) but in lieu of such information will include information of the type and scope contained in this Offering Circular under the caption “Management” (without giving effect to the items incorporated by reference therein);
(2)within 45 days after the end of each of the first three fiscal quarters of each fiscal year, quarterly consolidated reports of the Company and its Subsidiaries containing substantially all of the information that would have been required to be contained (pursuant to applicable rules and regulations in effect on the Issue Date) in a Quarterly Report on Form 10-Q under the Exchange Act if the Company had been a reporting company under the Exchange Act (but only to the extent similar information is provided in the Offering Circular), including (A) “Management's Discussion and Analysis of Financial Condition and Results of Operations” and (B) unaudited quarterly financial statements prepared in accordance with Applicable Accounting Standards but, without limiting the generality of the foregoing, such reports will not be required to contain information required by Items 2 or 4 of Part II of Form 10-Q; and
(3)within five Business Days after the occurrence of each event that would have been required to be reported (pursuant to applicable rules and regulations in effect on the Issue Date) in a Current Report on Form 8-K under the Exchange Act if the Company had been a reporting company under the Exchange Act, current reports containing substantially all of the information that would have been required to be contained (pursuant to applicable rules and regulations in effect on the Issue Date) in a Current Report on Form 8-K under the Exchange Act if the Company had been a reporting company under the Exchange Act; provided, however, that (A) no such current report will be required to be furnished if the Company determines in its good faith judgment that such event is not material to holders or the business, assets, operations, financial positions or prospects of the Company and its Restricted Subsidiaries, taken as a whole and (B) such reports will not be required to contain information required by Items 2.02, 3.01, 3.02 of Form 8-K or Items 5.02(c), (d) or (e) (except to the extent similar information is contained in this Offering Circular, without giving effect to the items incorporated by reference therein, under the caption “Management”) of Form 8-K.
provided, however, that all of the foregoing reports (A) will not be required to comply with Section 302 or Section 404 of the Sarbanes-Oxley Act of 2002, or related Items 307 and 308 of Regulation S-K promulgated by the SEC, or Item 10(e)(l)(ii) of Regulation S-K promulgated by the SEC (with respect to any non-GAAP financial measures contained therein), (B) will not be required to contain the separate financial information for Guarantors and non-guarantor subsidiaries contemplated by Rule 3-10 or 3-16 of Regulation S-X promulgated by the SEC and (C) will not be required to contain information required by Item 601 of Regulation S-K.

58

(b)References under this Section 4.03 to the laws, rules, forms, items, articles and sections shall be to such laws, rules, forms, items, articles and sections as they exist on the Issue Date, without giving effect to amendments thereto that may take effect after the Issue Date.
(c)All such reports will be prepared in all material respects in accordance with all of the rules and regulations applicable to such reports.  Each annual report will include a report on the relevant entity's consolidated financial statements by the relevant entity's certified independent accountants.  
(d)For so long as any Notes remain outstanding, if at any time it is not required to file with the SEC the reports required by the preceding clauses of this Section 4.03, the Company will furnish to the Holders of Notes and prospective investors, upon their request, the information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act.  
(e)Any subsequent restatement of financial statements shall have no retroactive effect for purposes of calculations previously made pursuant to the covenants contained in this Indenture.
(f)The Company will (1) distribute the information and reports described in clauses (1), (2) or (3) of Section 4.03(a) electronically to the Trustee and (2) make the Financial Reports available to any holder or beneficial owner of Notes, any prospective investor, any security analyst and any market maker affiliated with any initial purchaser by posting the Financial Reports on Intralinks or any comparable password protected online data system; provided that the Company shall not be required to make available any password or other login information to any person other than any such holder, beneficial owner, prospective investor, security analyst or market maker that establishes its identity as such to the reasonable satisfaction of the Company
(g)In addition, the Company will:
(1)hold a quarterly conference call to discuss the information contained in the Financial Reports not later than ten business days from the time the Company furnishes the Financial Reports to the Trustee; and 
(2)no fewer than two business days prior to the date of the conference call required to be held in accordance with clause (1) above, issue a press release to the appropriate U.S. wire services announcing the time and date of such conference call and directing the holders or beneficial owners of, and prospective investors in, the Notes and securities analysts and market makers to contact an individual at the Company (for whom contact information shall be provided in such press release) to obtain the Financial Reports and information on how to access such conference call.
(h)If at any time the Notes are guaranteed by a direct or indirect parent of the Company, and such company has furnished the Financial Reports described herein with respect to such company as required by this Section 4.03 as if such company were the Company (including any financial information required hereby), the Company shall be deemed to be in compliance with this Section 4.03.  An annual report on Form 10-K, a quarterly report on Form 10-Q or a current report on Form 8-K that is filed with, or furnished to, the SEC within the time periods specified in this Section 4.03 shall be deemed to have been distributed as required by this Section 4.03, and to the extent such filings comply with the rules and regulations of the SEC regarding such filings, they will be deemed to comply with the requirements of clause (1), (2) or (3), respectively, of the first paragraph of this Section 4.03.  The subsequent filing or making available of any materials or conference call required by this Section 4.03 shall be deemed automatically to cure any Default or Event of Default resulting from the failure to file or make available such materials or conference call within the required time frame.
(i)Reports by the Company or Guarantors delivered to the Trustee should be considered for informational purposes only and the Trustee's receipt of such shall not constitute constructive notice of any information contained therein or determinable from information contained therein, including the Company's compliance with any of its covenants hereunder (as to which the Trustee is entitled to rely exclusively on Officer's Certificates).

59

Section 4.04    Compliance Certificate. 
(a)The Company shall deliver to the Trustee, within 90 days after the end of each fiscal year after the Issue Date, an Officer's Certificate stating that a review of the activities of the Company and its Subsidiaries during the preceding fiscal year has been made under the supervision of the signing Officers with a view to determining whether the Company has kept, observed, performed and fulfilled its obligations under this Indenture, and further stating, as to each such Officer signing such certificate, that to his or her knowledge the Company has kept, observed, performed and fulfilled each and every covenant contained in this Indenture and is not in default in the performance or observance of any of the terms, provisions and conditions of this Indenture (or, if a Default or Event of Default has occurred, describing all such Defaults or Events of Default of which he or she may have knowledge and what action the Company is taking or proposes to take with respect thereto) and that to his or her knowledge no event has occurred and remains in existence by reason of which payments on account of the principal of or interest, if any, on the Notes is prohibited or if such event has occurred, a description of the event and what action the Company is taking or proposes to take with respect thereto.
(b)So long as any of the Notes are outstanding, the Company will deliver to the Trustee, within ten (10) Business Days of any Officer becoming aware of any Default or Event of Default, an Officer's Certificate specifying such Default or Event of Default and what action the Company is taking or proposes to take with respect thereto. 
Section 4.05    Taxes.
The Company will pay, and will cause each of its Subsidiaries to pay, prior to delinquency, all material taxes, assessments, and governmental levies except such as are contested in good faith and by appropriate proceedings or where the failure to effect such payment would not reasonably be expected to result in a material adverse effect on the business, assets, operations or financial condition of the Company and its Subsidiaries taken as a whole or the ability of the Company and the Guarantors (taken as a whole) to perform their obligations under this Indenture or the rights of, or remedies available to the Trustee or the Holders under, this Indenture.  
Section 4.06    Stay, Extension and Usury Laws. 
The Company and each of the Guarantors covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law wherever enacted, now or at any time hereafter in force, that may affect the covenants or the performance of this Indenture; and the Company and each of the Guarantors (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and covenants that it will not, by resort to any such law, hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law has been enacted.  
Section 4.07    Restricted Payments. 
(a)The Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly:
(1)declare or pay any dividend or make any distribution on account of the Company's or any Restricted Subsidiary's Equity Interests, including any dividend or distribution payable in connection with any merger or consolidation other than (A) dividends or distributions by the Company payable in Equity Interests (other than Disqualified Stock) of the Company or (B) dividends or distributions by a Restricted Subsidiary so long as, in the case of any dividend or distribution payable on or in respect of any class or series of securities issued by a Restricted Subsidiary other than a Wholly-Owned Subsidiary, the Company or a Restricted Subsidiary receives at least its pro rata share of such dividend or distribution in accordance with its Equity Interests in such class or series of securities;
(2)purchase, redeem or otherwise acquire or retire for value (including without limitation, in connection with any merger or consolidation involving the Company) any Equity Interests of the Company or any direct or indirect parent of the Company; 

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(3)make any principal payment on, or redeem, repurchase, defease or otherwise acquire or retire for value in each case, prior to any scheduled repayment, sinking fund payment or maturity, any Subordinated Indebtedness of the Company or a Guarantor, other than (x) Indebtedness permitted under Section 4.09(b)(7) or Section 4.09(b)(8) or (y) the purchase, repurchase or other acquisition of Subordinated Indebtedness of the Company or any Restricted Subsidiary purchased in anticipation of satisfying a sinking fund obligation, principal installment or final maturity, in each case due within one year of the date of purchase, repurchase or acquisition; or
(4)make any Restricted Investment 
(all such payments and other actions set forth in these clauses (1) through (4) above being collectively referred to as “Restricted Payments”), 
unless, at the time of and after giving effect to such Restricted Payment:
(i)    no Default or Event of Default has occurred and is continuing or would occur as a consequence of such Restricted Payment; 
(ii)    immediately after giving effect to such transaction on a pro forma basis, the Company could incur $1.00 of additional Indebtedness under Section 4.09(a) hereof; and
(iii)    such Restricted Payment, together with the aggregate amount, without duplication, of all other Restricted Payments made by the Company and its Restricted Subsidiaries since the Issue Date pursuant to this Section 4.07(a) or Sections 4.07(b)(1), (b)(2) (with respect to the payment of dividends on Refunding Capital Stock pursuant to subclause (b) thereof only), (b)(6)(c) and (11) (and excluding, for the avoidance of doubt, all other Restricted Payments made pursuant to Section 4.07(b)), is less than the sum, without duplication, of:
(1)    50% of the Consolidated Net Income of the Company for the period (taken as one accounting period) beginning on July 1, 2012 to the end of the Company's most recently ended fiscal quarter for which internal financial statements are available at the time of such Restricted Payment (or, if such Consolidated Net Income for such period is a deficit, less 100% of such deficit), plus the Retained Basket Amount; plus
(2)    100% of the aggregate net cash proceeds and the fair market value, as determined in good faith by the Company, of marketable securities or other property received by the Company after the Issue Date (less the amount of such net cash proceeds to the extent such amount has been relied upon to permit the incurrence of Indebtedness, or issuance of Disqualified Stock or Preferred Stock pursuant to Section 4.09(b)(20)(b) hereof) from the issue or sale of:
(x)    Equity Interests of the Company, including Retired Capital Stock (as defined below), but excluding cash proceeds and the fair market value, as determined in good faith by the Company, of marketable securities or other property received from the sale of (A) Equity Interests to any future, present or former employees, directors, managers or consultants of the Company, any direct or indirect parent company of the Company or any of the Company's Subsidiaries after the Issue Date to the extent such amounts have been applied to Restricted Payments made in accordance with Section 4.07(b)(4) hereof and (B) Designated Preferred Stock,
(y)    to the extent such proceeds are actually contributed to the Company, Equity Interests of the Company's direct or indirect parent companies (excluding contributions of the proceeds from the sale of Designated Preferred Stock of such companies or contributions to the extent such amounts have been applied to Restricted Payments made in accordance with Section 4.07(b)(4) hereof), or

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(z)    debt securities of the Company that have been converted into or exchanged for such Equity Interests of the Company;
provided that this clause (2) shall not include the proceeds from (a) Refunding Capital Stock (as defined below) to the extent the proceeds of any corresponding Retired Capital Stock are included in this clause (2), (b) Equity Interests of the Company or debt securities of the Company that have been converted into or exchanged for Equity Interests of the Company sold to a Restricted Subsidiary or the Company, as the case may be, (c) Disqualified Stock or debt securities that have been converted into or exchanged for Disqualified Stock or (d) Excluded Contributions; plus
(3)    100% of the aggregate amount of cash and the fair market value, as determined in good faith by the Company, of marketable securities or other property contributed to the capital of the Company after the Issue Date (less the amount of such net cash proceeds to the extent such amount has been relied upon to permit the incurrence of Indebtedness or issuance of Disqualified Stock or Preferred Stock pursuant to Section 4.09(b)(20)(b) hereof) (other than by a Restricted Subsidiary and other than any Excluded Contributions); plus
(4)    to the extent not already included in Consolidated Net Income, 100% of the aggregate amount received in cash and the fair market value, as determined in good faith by the Company, of marketable securities or other property received after the Issue Date by means of (A) the sale or other disposition (other than to the Company or a Restricted Subsidiary) of Restricted Investments made by the Company or any Restricted Subsidiary and repurchases and redemptions of such Restricted Investments from the Company or any Restricted Subsidiary and repayments of loans or advances that constitute Restricted Investments by the Company or any Restricted Subsidiary or (B) the sale (other than to the Company or a Restricted Subsidiary) of the Capital Stock of an Unrestricted Subsidiary or other equity investee or a distribution from an Unrestricted Subsidiary or other equity investee (other than in each case to the extent the Investment in such Unrestricted Subsidiary or other equity investee was made by the Company or a Restricted Subsidiary pursuant to Section 4.07(b)(11) hereof or to the extent such Investment constituted a Permitted Investment) or a dividend from an Unrestricted Subsidiary or other equity investee; plus
(5)    in the case of the redesignation of an Unrestricted Subsidiary as a Restricted Subsidiary after the Issue Date, the fair market value of the Investment in such Unrestricted Subsidiary, as determined by the Company in good faith or if, in the case of an Unrestricted Subsidiary, such fair market value may exceed $50.0 million, in writing by an Independent Financial Advisor, at the time of the redesignation of such Unrestricted Subsidiary as a Restricted Subsidiary, other than an Unrestricted Subsidiary to the extent the Investment in such Unrestricted Subsidiary was made by the Company or a Restricted Subsidiary pursuant to Section 4.07(b)(11) or to the extent such Investment constituted a Permitted Investment.
(b)The provisions of Section 4.07(a) hereof will not prohibit:
(1)the payment of any dividend or distribution or the consummation of any irrevocable redemption within 60 days after the date of declaration of the dividend or distribution or the giving of the redemption notice, as the case may be, thereof, if at the date of declaration or notice such payment would have complied with the provisions of this Indenture;
(2)(a) the redemption, repurchase, retirement or other acquisition of any Equity Interests (“Retired Capital Stock”) or Subordinated Indebtedness of the Company or any Equity Interests of any direct or indirect parent company of the Company, in exchange for, or out of the proceeds of the sale, within 60 days of such redemption, retirement, repurchase or other acquisition, (other than to a Restricted Subsidiary) of, Equity Interests of the Company (in each case, other than any Disqualified Stock unless the Retired Capital Stock is itself Disqualified Stock) (“Refunding Capital Stock”) or cash capital contributions and (b) if immediately 

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prior to the retirement of Retired Capital Stock, the declaration and payment of dividends thereon was permitted under clause (6) of this paragraph, the declaration and payment of dividends on the Refunding Capital Stock (other than Refunding Capital Stock the proceeds of which were used to redeem, repurchase, retire or otherwise acquire any Equity Interests of any direct or indirect parent company of the Company) in an aggregate amount per year no greater than the aggregate amount of dividends per annum that was declarable and payable on such Retired Capital Stock immediately prior to such retirement;
(3)the defeasance, redemption, repurchase or other acquisition or retirement of Subordinated Indebtedness of the Company or a Guarantor made by exchange for, or out of the proceeds of the sale, within 60 days of such defeasance, redemption, repurchase or other acquisition or retirement, of, new Indebtedness of such Person that is incurred in compliance with Section 4.09 hereof so long as:
(a)    the principal amount of such new Indebtedness does not exceed the principal amount (or accreted value, if applicable) of the Subordinated Indebtedness being so defeased, redeemed, repurchased, acquired or retired for value, plus the amount of any reasonable premium required to be paid under the terms of the instrument governing the Subordinated Indebtedness being so defeased, redeemed, repurchased, acquired or retired and any reasonable fees and expenses incurred (or reasonably expected to be payable) in connection with the issuance of such new Indebtedness,
(b)    such Indebtedness is subordinated to the Notes in right of payment at least to the same extent as the Subordinated Indebtedness being so defeased, redeemed, repurchased, acquired or retired,
(c)    such Indebtedness has a final scheduled maturity date equal to or later than the final scheduled maturity date of the Subordinated Indebtedness being so defeased, redeemed, repurchased, acquired or retired, and
(d)    such Indebtedness has a Weighted Average Life to Maturity equal to or greater than the remaining Weighted Average Life to Maturity of the Subordinated Indebtedness being so defeased, redeemed, repurchased, acquired or retired;
(4)a Restricted Payment to pay for the repurchase, redemption or other acquisition or retirement for value of Equity Interests (other than Disqualified Stock) of the Company or any of its direct or indirect parent companies held by, or any Restricted Payments made to, any future, present or former employee, officer, director, manager or consultant of the Company, any of its subsidiaries or any of its direct or indirect parent companies, their respective estates, spouses or former spouses pursuant to any management equity plan or stock option plan, phantom stock plan or any other management or employee benefit plan or agreement; provided that the aggregate Restricted Payments made under this clause (4) do not exceed in any calendar year $10.0 million (with unused amounts in any calendar year being carried over to succeeding calendar years subject to a maximum (in addition to the following proviso) of $20.0 million in any calendar year) (collectively, the “Clause (4) Limit”); provided, further, that such Clause (4) Limit in any calendar year may be increased by an amount not to exceed
(a)    the cash proceeds from the sale of Equity Interests (other than Disqualified Stock) of the Company and, to the extent contributed to the Company, Equity Interests of any of the Company's direct or indirect parent companies, in each case to members of management, directors, managers or consultants of the Company, any of its Subsidiaries or any of its direct or indirect parent companies that occurs after the Issue Date, to the extent the cash proceeds from the sale of such Equity Interests have not otherwise been applied to the payment of Restricted Payments by virtue of Section 4.07(a)(iii), plus
(b)    the cash proceeds of key man life insurance policies received by the Company and the Restricted Subsidiaries after the Issue Date, less
(c)    the amount of any Restricted Payments previously made pursuant to clauses (a) and 

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(b) of this clause (4);
provided, further, that cancellation of Indebtedness owing to the Company from members of management, directors, managers or consultants of the Company, any of its direct or indirect parent companies or any Restricted Subsidiary in connection with a repurchase of Equity Interests of the Company or any of its direct or indirect parent companies will not be deemed to constitute a Restricted Payment for purposes of this Section 4.07 or any other provision of this Indenture;
(5)the declaration and payment of dividends to holders of any class or series of Disqualified Stock of the Company or any Restricted Subsidiary or Preferred Stock of any Restricted Subsidiary issued in accordance with Section 4.09 hereof to the extent such dividends are included in the definition of Fixed Charges and payment of any redemption price or liquidation value of any such Disqualified Stock or Preferred Stock when due in accordance with its terms;
(6)(a)    the declaration and payment of dividends to holders of any class or series of Designated Preferred Stock (other than Disqualified Stock) issued by the Company after the Issue Date; 
(b)    the declaration and payment of dividends to a direct or indirect parent company of the Company, the proceeds of which will be used to fund the payment of dividends to holders of any class or series of Designated Preferred Stock (other than Disqualified Stock) of such parent company issued after the Issue Date; provided that the aggregate amount of dividends paid pursuant to this clause (b) shall not exceed the aggregate amount of cash actually contributed to the Company from the sale of such Designated Preferred Stock; or 
(c)    the declaration and payment of dividends on Refunding Capital Stock that is Preferred Stock in excess of the dividends declarable and payable thereon pursuant to Section 4.07(b)(2); provided, however, in the case of each of (a), (b) and (c) of this clause (6), that for the most recently ended four full fiscal quarters for which internal financial statements are available immediately preceding the date of issuance of such Designated Preferred Stock or the declaration of such dividends on Refunding Capital Stock that is Preferred Stock, after giving effect to such issuance or declaration on a pro forma basis, the Company and the Restricted Subsidiaries on a consolidated basis would have had a Fixed Charge Coverage Ratio of at least 2.00 to 1.00;
(7)repurchases of Equity Interests deemed to occur upon exercise of stock options or warrants if such Equity Interests represent a portion of the exercise price of such options or warrants;
(8)Restricted Payments that are made with Excluded Contributions or Excess Designated Proceeds;
(9)the declaration and payment of dividends by the Company to, or the making of loans by the Company to, its direct parent company in amounts required for the Company's direct or indirect parent companies to pay:
(a)    fees, taxes and expenses required to maintain their corporate existence,
(b)    (without duplication for amounts paid pursuant to Section 4.07(b)(15)) so long as the Company is a member of a consolidated, combined, unitary or similar group with such direct parent company for U.S. federal, state or local income tax purposes, (1) federal, state and local income taxes incurred by such parent company, but only to the extent such income taxes are attributable to the income of the Company and the Restricted Subsidiaries, provided that in each case the amount of such payments with respect to any fiscal year does not exceed the amount that the Company and the Restricted Subsidiaries would have been required to pay in respect of such income taxes for such fiscal year were the Company and its Restricted Subsidiaries a consolidated or combined group of which the Company was the common parent, (2) amounts required to pay federal, state and local income 

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taxes to the extent attributable to the income of the Unrestricted Subsidiaries or Receivables Subsidiaries, if any, but only to the extent of the amount actually received by the Company from such Unrestricted Subsidiaries or Receivables Subsidiaries, as the case may be, and (3) any non-cash “deemed” dividend” resulting from a parent company offsetting income against losses of the Company which does not involve any cash distribution by the Company,
(c)    customary salary, bonus and other benefits payable to officers and employees of any direct or indirect parent company of the Company to the extent such salaries, bonuses and other benefits are attributable to or reasonably allocated to (as determined by the Company in good faith) the ownership or operation of the Company and the Restricted Subsidiaries,
(d)    general corporate overhead expenses of any direct or indirect parent company of the Company to the extent such expenses are attributable to or reasonably allocated to (as determined by the Company in good faith) the ownership or operation of the Company and the Restricted Subsidiaries, and
(e)    reasonable fees and expenses incurred in connection with any successful or unsuccessful debt or equity offering or any successful or unsuccessful acquisition or strategic transaction by such direct or indirect parent company of the Company;
(10)the repurchase, redemption or other acquisition or retirement for value of any Subordinated Indebtedness pursuant to provisions in documentation governing such Subordinated Indebtedness similar to those described under Sections 4.10 and 4.15 hereof; provided that, prior to such repurchase, redemption or other acquisition, the Company (or a third party to the extent permitted by this Indenture) shall have made a Change of Control Offer or Asset Sale Offer, as the case may be, with respect to the Notes and shall have repurchased all Notes validly tendered and not withdrawn in connection with such Change of Control Offer or Asset Sale Offer;
(11)Investments in Unrestricted Subsidiaries, having an aggregate fair market value, taken together with all other Investments made pursuant to this clause (11) that are at the time outstanding, without giving effect to the sale of an Unrestricted Subsidiary to the extent the proceeds of such sale do not consist of cash or marketable securities, not to exceed the greater of (x) $100.0 million or (y) 3.0% of Total Assets at the time of such Investment (with the fair market value of each Investment being determined in good faith by the Company and measured at the time such Investment is made and without giving effect to subsequent changes in value);
(12)distributions or payments of Receivables Fees;
(13)the distribution, as a dividend or otherwise (and the declaration of such dividend), of shares of Capital Stock of, or Indebtedness owed to the Company or a Restricted Subsidiary by, any Unrestricted Subsidiary;
(14)additional Restricted Payments to the Company's direct or indirect parent companies, whether in respect of management fees or otherwise, in an aggregate amount not to exceed $15.0 million in any fiscal year; provided that the Company may carry over and pay in any subsequent fiscal year, in addition to the amounts permitted for such fiscal year, any portion of the amounts otherwise permitted for prior fiscal years to be paid pursuant to this clause (14) that were not in fact paid;
(15)for so long as (x) the Company is a member of a group filing a consolidated federal income tax return with MacAndrews & Forbes Holdings Inc., and/or (y) the Company or any of its Subsidiaries is included in any consolidated combined or unitary group for foreign, state, local income or franchise tax purposes with any Subsidiary of MacAndrews & Forbes Holdings Inc. (other than the Company or any of its Subsidiaries), payments pursuant to the Tax Sharing Agreement; and

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(16)other Restricted Payments in an aggregate amount which, when taken together with all other Restricted Payments made pursuant to this clause (16), do not exceed $20.0 million during each twelve-month period elapsed after the Issue Date (provided that the Company may carry over and pay in any subsequent twelve-month period, in addition to the amounts permitted for such twelve-month period, any portion of the amounts otherwise permitted for prior twelve-month periods to be paid pursuant to this clause (16) that were not in fact paid);
provided, however, that, at the time of, and after giving effect to, any Restricted Payment permitted under Section 4.07(b)(14) and (b)(16) hereof, no Default shall have occurred and be continuing or would occur as a consequence thereof.
In determining whether any payment or Investment is permitted by this covenant, the Company and its Restricted Subsidiaries may allocate all or any portion of such (i) payment or Investment among (x) the categories (or portions thereof) described in clauses (1) through (16) above and (y) the categories (or portions thereof) and the types of Restricted Payments described in the first paragraph of this covenant or (ii) Investments among the categories (or portions thereof) of Permitted Investments; provided that, at the time of such allocation, all such payments or Investments, or allocated portions thereof, would be permitted under the various provisions of this covenant and provided further that the Company and its Restricted Subsidiaries may reclassify all or a portion of such payment or Investment in any manner that complies with this covenant (based on circumstances existing at the time of such reclassification), and following such reclassification such payment or Investment shall be treated as having been made pursuant to only the clause or clauses (or portions thereof) to which such payment or Investment has been reclassified.
For purposes of designating an Unrestricted Subsidiary, all outstanding Investments by the Company and the Restricted Subsidiaries (except to the extent repaid) in the Subsidiary so designated will be deemed to be Restricted Payments in an amount determined as set forth in the last sentence of the definition of “Investments.”  Such designation will be permitted only if a Restricted Payment in such amount would be permitted at such time, whether pursuant to Section 4.07(a) hereof or Sections 4.07(b)(8), (b)(9), (b)(11), (b)(12), (b)(14) or (b)(16) hereof, or pursuant to the definition of “Permitted Investments,” and if such Subsidiary otherwise meets the definition of an Unrestricted Subsidiary. Unrestricted Subsidiaries will not be subject to any of the restrictive covenants set forth in this Indenture.  
Section 4.08    Dividend and Other Payment Restrictions Affecting Restricted Subsidiaries. 
(a)The Company will not, and will not permit any of its Restricted Subsidiaries that are not Guarantors to, directly or indirectly, create or permit to exist or become effective any consensual encumbrance or restriction on the ability of any Restricted Subsidiary to:
(1)pay dividends or make any other distributions on its Capital Stock to the Company or any of its Restricted Subsidiaries or with respect to any other interest or participation in, or measured by, its profits (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)pay any Indebtedness owed to the Company or any Restricted Subsidiary; or
(3)sell, lease or transfer any of its properties or assets to the Company or any of its Restricted Subsidiaries.
(b)The restrictions in Section 4.08(a) hereof will not apply to encumbrances or restrictions existing under or by reason of:
(1)contractual encumbrances or restrictions in effect on the Issue Date, including pursuant to the Existing Credit Agreement and any related documentation (including security documents) and Hedging Obligations;

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(2)this Indenture, the Notes, any Additional Notes or the Guarantees;
(3)purchase money obligations for property acquired in the ordinary course of business and Capitalized Lease Obligations that impose restrictions of the nature discussed in Section 4.08(a)(3) hereof on the property so acquired;
(4)applicable law, rule, regulation or order;
(5)any agreement or other instrument governing Indebtedness or Capital Stock of a Person acquired by the Company or any of its Restricted Subsidiaries as in effect at the time of such acquisition (but not created in connection therewith or in contemplation of such acquisition), which encumbrance or restriction is not applicable to any Person, or the properties or assets of any Person, other than the Person, or the property or assets of the Person, so acquired;
(6)    contracts for the sale of assets, including customary restrictions with respect to a Subsidiary pursuant to an agreement that has been entered into for the sale or disposition of all or substantially all of the Capital Stock or assets of such Subsidiary;
(7)    Secured Indebtedness otherwise permitted to be incurred pursuant to Sections 4.09 and 4.12 hereof that limit the right of the debtor to dispose of the assets securing such Indebtedness;
(8)    restrictions on cash or other deposits or net worth imposed by customers under contracts entered into in the ordinary course of business;
(9)    other Indebtedness, Disqualified Stock or Preferred Stock of Restricted Subsidiaries permitted to be incurred after the Issue Date pursuant to Section 4.09 hereof;
(10)    customary provisions in joint venture agreements and other similar agreements;
(11)    customary provisions contained in leases and other agreements entered into in the ordinary course of business;
(12)    restrictions created in connection with any Receivables Facility; provided that in the case of Receivables Facilities established after the Issue Date, such restrictions are necessary or advisable, in the good faith determination of the Company, to effect such Receivables Facility;
(13)    restrictions or conditions contained in any trading, netting, operating, construction, service, supply, purchase or other agreement to which the Company or any of its Restricted Subsidiaries is a party entered into in the ordinary course of business; provided that such agreement prohibits the encumbrance of solely the property or assets of the Company or such Restricted Subsidiary that are the subject of such agreement, the payment rights arising thereunder or the proceeds thereof and does not extend to any other asset or property of the Company or such Restricted Subsidiary or the assets or property of any other Restricted Subsidiary;
(14)    any instrument governing any Indebtedness or Capital Stock of a Person that is an Unrestricted Subsidiary as in effect on the date that such Person becomes a Restricted Subsidiary, which encumbrance or restriction is not applicable to any Person, or the properties or assets of any Person, other than the Person who became a Restricted Subsidiary, or the property or assets of the Person who became a Restricted Subsidiary; provided that, in the case of Indebtedness, the incurrence of such Indebtedness as a result of such Person becoming a Restricted Subsidiary was permitted by the terms of this Indenture; and
(15)    any encumbrances or restrictions of the type referred to in Section 4.08(a)(1), (a)(2) and (a)(3)  hereof imposed by any amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings of the contracts, instruments or obligations referred to in Sections 4.08(b)(1) through (14); provided that such amendments, modifications, restatements, renewals, increases, 

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supplements, refundings, replacements or refinancings are, in the good faith judgment of the Company, not materially more restrictive with respect to such encumbrance and other restrictions than those prior to such amendment, modification, restatement, renewal, increase, supplement, refunding, replacement or refinancing; provided, further, that with respect to contracts, instruments or obligations existing on the Issue Date, any amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings are in the good faith judgment of the Company not materially more restrictive with respect to such encumbrances and other restrictions than those contained in such contracts, instruments or obligations as in effect on the Issue Date.
Section 4.09    Incurrence of Indebtedness and Issuance of Preferred Stock and Disqualified Stock. 
(a)The Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, “incur”) any Indebtedness (including Acquired Debt), and the Company will not issue any Disqualified Stock and will not permit any of its Restricted Subsidiaries to issue any shares of Disqualified Stock or Preferred Stock; provided that the Company may incur Indebtedness (including Acquired Debt) or issue shares of Disqualified Stock, and any Restricted Subsidiary may incur Indebtedness (including Acquired Debt), issue shares of Disqualified Stock or issue shares of Preferred Stock, if the Fixed Charge Coverage Ratio on a consolidated basis for the Company's and its Restricted Subsidiaries' most recently ended four full fiscal quarters for which internal financial statements are available immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock or Preferred Stock is issued would have been at least 2.00 to 1.00, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred, or the Disqualified Stock or Preferred Stock had been issued, as the case may be, and the application of the proceeds therefrom had occurred at the beginning of such four-quarter period; provided that the amount of Indebtedness (including Acquired Debt), Disqualified Stock and Preferred Stock that may be incurred or issued, as applicable, pursuant to the foregoing by Restricted Subsidiaries that are not Guarantors shall not exceed $100.0 million at any one time outstanding.
(b)The provisions of Section 4.09(a) hereof will not prohibit the incurrence of any of the following items (collectively, “Permitted Debt”):
(1)    Indebtedness incurred pursuant to Credit Facilities by the Company or any Guarantor; provided that after giving effect to any such incurrence, the aggregate principal amount of all Indebtedness incurred under this clause (1) and then outstanding does not exceed $1,900.0 million less an amount equal to either (A) in the event a Future ABL Facility has been established pursuant to clause (3) below, the sum of (x) $100.0 million (or, if less, the aggregate amount of all then-outstanding revolving credit commitments, other than any then-outstanding incremental revolving credit commitments, under the Credit Agreement) plus (y) the amount by which the aggregate amount of the commitments under the Future ABL Facility exceeds $125.0 million or (B) the then-outstanding principal amount of any Attributable Receivables Facility Debt (or, if less, the aggregate amount of all then-outstanding revolving credit commitments, other than any then-outstanding incremental revolving credit commitments, under the Credit Agreement), as the case may be;
(2)    the incurrence by the Company and its Restricted Subsidiaries of the Existing Indebtedness and the incurrence by the Company and any Guarantor of Indebtedness represented by the Notes issued on the Issue Date (including any Subsidiary Guarantees thereof) (other than any Additional Notes);
(3)    Indebtedness under an asset-based revolving credit facility providing the Company and the Guarantors in an aggregate principal committed amount not to exceed $150.0 million (the “Future ABL Facility”); provided that no such Future ABL Facility shall be permitted in the event that a Receivables Facility is in existence at such time;
(4)    Indebtedness (including Capitalized Lease Obligations), Disqualified Stock and Preferred Stock incurred by the Company or any of the Restricted Subsidiaries, to finance or reimburse the cost of the development, construction, purchase, lease, repairs, additions or improvement of property (real or personal), equipment or other fixed or capital assets that are used or useful in a Similar Business, whether through the 

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direct purchase of assets or the Capital Stock of any Person owning such assets; provided that at the time of incurrence of such Indebtedness or issuance of such Disqualified Stock or Preferred Stock the aggregate amount of Indebtedness, Disqualified Stock and Preferred Stock incurred pursuant to this clause (d) (together with any Refinancing Indebtedness in respect of any such Indebtedness, Disqualified Stock or Preferred Stock which is then outstanding in reliance on clause (m) below) does not exceed the greater of (x) $175.0 million or (y) 5.0% of consolidated Total Assets of the Company as of the last annual or interim balance sheet date for which internal financial statements are available at any one time outstanding;
(5)    Indebtedness incurred by the Company or any Restricted Subsidiary constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business, including letters of credit in respect of workers' compensation claims, or other Indebtedness with respect to reimbursement type obligations regarding workers' compensation claims, self-insurance obligations and bankers' acceptances in the ordinary course of business; provided that upon the drawing of such letters of credit or the incurrence of such Indebtedness, such obligations are reimbursed within 30 days following such drawing or incurrence;
(6)    Indebtedness arising from agreements of the 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, assets or a Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or Subsidiary for the purpose of financing such acquisition; provided that 
(a)    such Indebtedness is not reflected on the balance sheet of the Company or any Restricted Subsidiary (contingent obligations referred to in a footnote to financial statements and not otherwise reflected on the balance sheet shall not be deemed to be reflected on such balance sheet for purposes of this clause (a)), and 
(b)    the maximum assumable liability in respect of all such Indebtedness (other than liability for those indemnification obligations that are not customarily subject to a cap) shall at no time exceed the gross proceeds including noncash proceeds (the fair market value of such noncash proceeds being measured at the time received and without giving effect to any subsequent changes in value) actually received by the Company and the Restricted Subsidiaries in connection with such disposition;
(7)    Indebtedness of the Company to a Restricted Subsidiary; provided that any such Indebtedness owing to a Restricted Subsidiary that is not a Guarantor is subordinated in right of payment to the Notes; provided, further, that any subsequent issuance or transfer of any Capital Stock or any other event which results in any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or any other subsequent transfer of any such Indebtedness (except to the Company or another Restricted Subsidiary) shall be deemed, in each case, to be an incurrence of such Indebtedness;
(8)    Indebtedness of a Restricted Subsidiary to the Company or another Restricted Subsidiary; provided that if a Guarantor incurs such Indebtedness to a Restricted Subsidiary that is not a Guarantor such Indebtedness is subordinated in right of payment to the Guarantee of such Guarantor; provided, further, that any subsequent issuance or transfer of Capital Stock or any other event that results in any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or any subsequent transfer of any such Indebtedness (except to the Company or another Restricted Subsidiary) shall be deemed, in each case, to be an incurrence of such Indebtedness;
(9)    shares of Preferred Stock of a Restricted Subsidiary issued to the Company or another Restricted Subsidiary; provided that any subsequent issuance or transfer of any Capital Stock or any other event which results in any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or any other subsequent transfer of any such shares of Preferred Stock (except to the Company or another Restricted Subsidiary) shall be deemed, in each case, to be an issuance of such shares of Preferred Stock;
(10)    Hedging Obligations (excluding Hedging Obligations entered into for speculative purposes) 

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for the purpose of managing: (a) interest rate risk with respect to any Indebtedness that is permitted by the terms of this Indenture to be outstanding, (b) exchange rate risk with respect to any currency exchange or (c) commodity pricing risk with respect to any commodity;
(11)    obligations in respect of performance, bid, appeal and surety bonds and completion guarantees and similar obligations provided by the Company or any Restricted Subsidiary in the ordinary course of business;
(12)    (x) any guarantee by the Company or a Restricted Subsidiary of Indebtedness or other Obligations of any Restricted Subsidiary, so long as the incurrence of such Indebtedness by such Restricted Subsidiary is permitted under the terms of this Indenture or (y) any guarantee by a Restricted Subsidiary of Indebtedness or other Obligations of the Company permitted to be incurred under the terms of this Indenture; provided that such guarantee is incurred in accordance with Section 4.17 hereof;
(13)    the incurrence by the Company or any Restricted Subsidiary of Indebtedness, Disqualified Stock or Preferred Stock that serves to extend, replace, refund, refinance, renew or defease any Indebtedness, Disqualified Stock or Preferred Stock incurred as permitted under Section 4.09(a) and clauses (2), (4), (13), (14), (17), (18) or (22) of this Section 4.09(b) or any Indebtedness, Disqualified Stock or Preferred Stock issued to so extend, replace, refund, refinance, renew or defease such Indebtedness, Disqualified Stock or Preferred Stock including additional Indebtedness, Disqualified Stock or Preferred Stock incurred to pay (or reasonably estimated to be payable) accrued interest, premiums, fees and expenses in connection therewith and any original issue discount (the “Refinancing Indebtedness”); provided, however, that such Refinancing Indebtedness:
(a)    has a Weighted Average Life to Maturity at the time such Refinancing Indebtedness is incurred which is not less than the remaining Weighted Average Life to Maturity of the Indebtedness, Disqualified Stock or Preferred Stock being extended, replaced, refunded, refinanced, renewed or defeased;
(b)    to the extent such Refinancing Indebtedness extends, replaces, refunds, refinances, renews or defeases (i) Indebtedness subordinated in right of payment to the Notes or any Guarantee, such Refinancing Indebtedness is subordinated in right of payment to the Notes or such Guarantee at least to the same extent as the Indebtedness being extended, replaced, refunded, refinanced, renewed or defeased or is Disqualified Stock or Preferred Stock or (ii) Disqualified Stock or Preferred Stock, such Refinancing Indebtedness must be Disqualified Stock or Preferred Stock, respectively; 
(c)    shall not include (x) Indebtedness, Disqualified Stock or Preferred Stock of a Restricted Subsidiary that is not a Guarantor that refinances Indebtedness, Disqualified Stock or Preferred Stock of the Company, (y) Indebtedness, Disqualified Stock or Preferred Stock of a Restricted Subsidiary that is not a Guarantor that refinances Indebtedness, Disqualified Stock or Preferred Stock of a Guarantor or (z) Indebtedness, Disqualified Stock or Preferred Stock of the Company or a Restricted Subsidiary that refinances Indebtedness, Disqualified Stock or Preferred Stock of an Unrestricted Subsidiary; and
(d)    to the extent such Refinancing Indebtedness extends, replaces, refunds, refinances, renews or defeases Indebtedness secured by Liens junior in priority to the Liens securing the Notes or any Guarantee, such Refinancing Indebtedness is secured by Liens junior in priority to the Liens securing the Notes or such Guarantee;
(14)    Indebtedness, Disqualified Stock or Preferred Stock (x) of the Company or any of its Restricted Subsidiaries incurred to finance the acquisition of any Person or assets or (y) of Persons that are acquired by the Company or any Restricted Subsidiary or merged into the Company or a Restricted Subsidiary in accordance with the terms of this Indenture; provided that either

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(a)    after giving effect to such acquisition or merger on a pro forma basis, either (i) the Company would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in Section 4.09(a) hereof; or (ii) the Fixed Charge Coverage Ratio of the Company and the Restricted Subsidiaries on a consolidated basis for the Company's and its Restricted Subsidiaries' most recently ended four fiscal quarters for which internal financial statements are available immediately preceding the date of such acquisition or merger would be equal to or greater than the Fixed Charge Coverage Ratio immediately prior to such acquisition or merger; or
(b)    such Indebtedness, Disqualified Stock or Preferred Stock 
(i)    is not Secured Indebtedness and is Subordinated Indebtedness with subordination terms that are either, at the Company's election, (x) consistent with market terms of agreements governing comparable Indebtedness of similar companies in the high yield market at the time of such acquisition or merger and do not conflict with the provisions of this Indenture, provided, that a certificate of a Responsible Officer delivered to the Trustee at least five Business Days (or such shorter time as the Trustee may agree) prior to the incurrence of such Indebtedness, together with a reasonably detailed description of the subordination terms of such Indebtedness, stating that the Company has determined in good faith that such terms satisfy the foregoing requirement shall be conclusive evidence thereof or (y) otherwise in form and substance reasonably satisfactory to the Trustee, 
(ii)    is not incurred while a Default exists and no Default shall result therefrom, 
(iii)    does not mature (and is not mandatorily redeemable in the case of Disqualified Stock or Preferred Stock) and does not require any payment of principal prior to the final maturity of the Notes and 
(iv)    in the case of sub-clause (ii) above only, is not incurred in contemplation of such acquisition or merger;
(15)    Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business; provided that such Indebtedness is extinguished within two Business Days after its incurrence;
(16)    Indebtedness of the Company or any Restricted Subsidiary supported by a letter of credit, in a principal amount not in excess of the stated amount of such letter of credit;
(17)    Indebtedness, Disqualified Stock or Preferred Stock of the Company or a Restricted Subsidiary incurred to finance or assumed in connection with an acquisition in an aggregate principal amount and liquidation preference which, when aggregated with the principal amount or liquidation preference of all other Indebtedness, Disqualified Stock and Preferred Stock incurred pursuant to this clause (17) and then outstanding (together with any Refinancing Indebtedness in respect of any such Indebtedness, Disqualified Stock or Preferred Stock which is then outstanding in reliance on clause (13) above), does not at any one time outstanding exceed $75.0 million (it being understood that any Indebtedness, Disqualified Stock and Preferred Stock incurred pursuant to this clause (17) shall cease to be deemed incurred or outstanding for purposes of this clause (17) but shall be deemed incurred pursuant to Section 4.09(a) hereof from and after the first date on which the Company or such Restricted Subsidiary could have incurred such Indebtedness, Disqualified Stock or Preferred Stock pursuant to Section 4.09(a) hereof without reliance on this clause (17));
(18)    Indebtedness, Disqualified Stock or Preferred Stock incurred by a Foreign Subsidiary in an aggregate principal amount or liquidation preference which, when aggregated with the principal amount and liquidation preference of all other Indebtedness, Disqualified Stock and Preferred Stock incurred pursuant to this clause (18) and then outstanding (together with any Refinancing Indebtedness in respect of any such Indebtedness, Disqualified Stock or Preferred Stock which is then outstanding in reliance on clause (13) above, 

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does not exceed 5.0% of Foreign Subsidiary Total Assets as of the most recent date for which internal financial statements are available (it being understood that any Indebtedness, Disqualified Stock and Preferred Stock incurred pursuant to this clause (18) shall cease to be deemed incurred or outstanding for purposes of this clause (18) but shall be deemed incurred pursuant to Section 4.09(a) hereof from and after the first date on which the Company or such Restricted Subsidiary could have incurred such Indebtedness, Disqualified Stock or Preferred Stock pursuant to such Section 4.09(a) without reliance on this clause (18));
(19)    Indebtedness consisting of Indebtedness issued by the Company or any Restricted Subsidiary to future, current or former officers, managers, directors, consultants and employees of the Company, its subsidiaries or its direct or indirect parent companies, their respective estates, spouses or former spouses, in each case to finance the purchase or redemption of Equity Interests of the Company or any direct or indirect parent company of the Company to the extent described in Section 4.07(b)(4) hereof;
(20)    Indebtedness, Disqualified Stock and Preferred Stock of the Company or any Restricted Subsidiary not otherwise permitted under this Indenture in an aggregate principal amount or liquidation preference, which, when aggregated with the principal amount and liquidation preference of all other Indebtedness, Disqualified Stock and Preferred Stock incurred pursuant to this clause (20) and then outstanding, does not at any one time outstanding exceed the sum of:
(a)    $125.0 million (it being understood that any Indebtedness, Disqualified Stock and Preferred Stock incurred pursuant to this clause (20)(a) shall cease to be deemed incurred or outstanding for purposes of this clause (20)(a) but shall be deemed incurred pursuant to Section 4.09(a) hereof from and after the first date on which the Company or such Restricted Subsidiary could have incurred such Indebtedness, Disqualified Stock or Preferred Stock pursuant to such Section 4.09(a) without reliance on this clause (20)(a)); plus
(b)    100% of the net cash proceeds received by the Company since after the Issue Date from the issue or sale of Equity Interests of the Company or cash contributed to the capital of the Company (in each case, other than proceeds of Disqualified Stock or sales of Equity Interests to the Company or any of its Subsidiaries) to the extent such net cash proceeds or cash have not been applied to make Restricted Payments or to make other investments, payments or exchanges pursuant to Section 4.07(b) hereof or to make Permitted Investments (other than Permitted Investments specified in clauses (1) and (2) of the definition thereof);
(21)    Attributable Debt incurred by the Company or any Restricted Subsidiary pursuant to Sale and Lease-Back Transactions of property (real or personal), equipment or other fixed or capital assets owned by the Company or any Restricted Subsidiary as of the Issue Date or acquired by the Company or any Restricted Subsidiary after the Issue Date in exchange for, or with the proceeds of the sale of, such assets owned by the Company or any Restricted Subsidiary as of the Issue Date, provided that the aggregate amount of Attributable Debt incurred under this clause (21) at any time outstanding does not exceed $60.0 million; and
(22)    the incurrence by the Company of Qualified Affiliate Debt.
For purposes of determining compliance with this Section 4.09, in the event that an item of Indebtedness, Disqualified Stock or Preferred Stock meets the criteria of more than one of the categories (or portion thereof) of Permitted Debt described in clauses (1) through (22) above or is entitled to be incurred pursuant to Section 4.09(a) hereof, the Company, in its sole discretion, will be permitted to classify such item of Indebtedness, Disqualified Stock or Preferred Stock on the date of its incurrence in any manner that complies with this Section 4.09, or later divide, classify or reclassify (based on circumstances existing at the time of such reclassification) all or a portion of such item of Indebtedness, in any manner that complies with this Section 4.09 and such item of Indebtedness, Disqualified Stock or Preferred Stock (or portion thereof, as applicable) will be treated as having been incurred pursuant to only such clause or clauses or Section 4.09(a). Indebtedness under Credit Facilities outstanding on the date on which Notes are first issued and authenticated under this Indenture will initially be deemed to have been incurred on such date in reliance on the exception provided by clause (1) of the definition of Permitted Debt and may not be subsequently reclassified.  

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The accrual of interest, the accretion or amortization of original issue discount, the payment or accretion of interest on any Indebtedness in the form of additional Indebtedness with the same terms, the reclassification of Preferred Stock as Indebtedness due to a change in accounting principles, and the payment of dividends on Preferred Stock in the form of additional shares of the same class of Preferred Stock will not be deemed to be an incurrence of Indebtedness or an issuance of Preferred Stock for purposes of this Section 4.09. Notwithstanding any other provision of this Section 4.09, the maximum amount of Indebtedness that the Company or any Restricted Subsidiary may incur pursuant to this Section 4.09 shall not be deemed to be exceeded solely as a result of fluctuations in exchange rates or currency values.
The amount of any Indebtedness outstanding as of any date will be:
(23)the accreted value of the Indebtedness, in the case of any Indebtedness issued with original issue discount;
(24)the principal amount of the Indebtedness, in the case of any other Indebtedness; and
(25)in respect of Indebtedness of another Person secured by a Lien on the assets of the specified Person, the lesser of:
(a)the Fair Market Value of such assets at the date of determination; and
(b)the amount of the Indebtedness of the other Person.
Section 4.10    Asset Sales.
(a)     The Company will not, and will not permit any of its Restricted Subsidiaries to, consummate an Asset Sale unless:
(1)the Company (or the Restricted Subsidiary, as the case may be) receives consideration at the time of the Asset Sale at least equal to the Fair Market Value of the assets sold or otherwise disposed of; and
(2)except in the case of a Permitted Asset Swap, at least 75% of the consideration received in the Asset Sale by the Company or such Restricted Subsidiary is in the form of cash or Cash Equivalents.  For purposes of this provision, each of the following shall be deemed to be cash:
(a)any liabilities (as shown on the Company's or such Restricted Subsidiary's most recent internal balance sheet or in the notes thereto) of the Company or such Restricted Subsidiary, other than liabilities that are by their terms subordinated to the Notes, that are assumed by the transferee of any such assets (or a third party on behalf of the transferee) and for which the Company or such Restricted Subsidiary has been released by all creditors in writing or that are otherwise retired, cancelled or terminated in connection with the transaction with such transferee;
(b)any securities, notes or other obligations or assets received by the Company or any such Restricted Subsidiary from such transferee that are converted by the Company or such Restricted Subsidiary into cash or Cash Equivalents, to the extent of the cash or Cash Equivalents received in that conversion, within 180 days following the closing of the Asset Sale;
(c)(1) any Designated Noncash Consideration received by the Company or such Restricted Subsidiary in such Asset Sale in respect of assets or property that is Collateral having an aggregate fair market value, taken together with all other Designated Noncash Consideration received pursuant to this clause (c)(1) that is at that time outstanding, not to exceed the greater of (x) $125.0 million or (y) 4.0% of Total Assets at the time of the receipt of such Designated Noncash Consideration; and (2) any Designated Noncash Consideration received by the Company or such Restricted Subsidiary in such Asset Sale in respect of assets or property that is not Collateral, having an aggregate fair market value, taken together with all other Designated Noncash Consideration received pursuant to this clause 

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(c)(2) that is at that time outstanding, not to exceed the greater of (x) $125.0 million or (y) 4.0% of Total Assets at the time of the receipt of such Designated Noncash Consideration, in each case of (1) and (2), with the Fair Market Value of each item of Designated Noncash Consideration being measured at the time received and without giving effect to subsequent changes in value; and
(d)the proceeds of any Designated Asset Sale.
(b)    Within 450 days after the receipt of any Net Proceeds from an Asset Sale (other than any Excess Designated Proceeds), the Company (or the applicable Restricted Subsidiary, as the case may be) may apply such Net Proceeds to, at its option:
(3)to the extent that such Net Proceeds represent proceeds from an Asset Sale of Fixed Asset Collateral, (a) repay, prepay, defease, redeem, purchase or otherwise retire Parity Lien Debt (and, in the case of revolving loans and other similar obligations, permanently reduce the commitment thereunder), or (b) purchase other assets that are used or useful in a Similar Business so long as 50% of such Net Proceeds applied pursuant to this clause (b) are used to purchase Fixed Asset Collateral, or (c) make an investment in (i) any one or more businesses primarily engaged in a Similar Business; provided that such investment in any business is in the form of (x) a merger with the Company or a Restricted Subsidiary, (y) the acquisition of Capital Stock and results in the Company or any Restricted Subsidiary owning an amount of the Capital Stock of such business such that it constitutes a Restricted Subsidiary or (z) the acquisition of all or substantially all of the assets of such business, (ii) properties, (iii) capital expenditures and (iv) acquisitions of other assets, that in each of (i), (ii), (iii) or (iv), are used or useful in a Similar Business or replace the businesses, properties and assets that are the subject of such Asset Sale;
(4)to the extent that such Net Proceeds do not represent proceeds from an Asset Sale of Fixed Asset Collateral, (a) repay, prepay, defease, redeem, purchase or otherwise retire Priority Lien Debt or the Indebtedness of a Restricted Subsidiary that is not a Guarantor or (b) repay, prepay, defease, redeem, purchase or otherwise retire Indebtedness of the Company or any Guarantor that is not subordinated in right of payment to the Notes or the Guarantees, in each case owing to a person other than the Company or any Affiliate of the Company; provided that the Company shall use a portion of such Net Proceeds pursuant to this clause (b) to retire an aggregate principal amount of Parity Lien Debt equal to (x) the amount of such Net Proceeds times (y) a fraction, the numerator of which is the sum of the aggregate principal amounts of Parity Lien Debt and the denominator of which is the sum of the aggregate principal amounts all Parity Lien Debt and all other Indebtedness of the Company and its Restricted Subsidiaries that is not subordinated in right of payment to the Notes or the Guarantees; or
(5)to the extent that such Net Proceeds do not represent proceeds from an Asset Sale of Fixed Asset Collateral, an investment in 
(a)    any one or more businesses primarily engaged in a Similar Business; provided that such investment in any business is in the form of (w) a merger with the Company or a Restricted Subsidiary, (x) the acquisition of Capital Stock and results in the Company or any Restricted Subsidiary owning an amount of the Capital Stock of such business such that it constitutes a Restricted Subsidiary, (y) the acquisition of all or substantially all of the assets of such business or (z) the acquisition of Capital Stock constituting a minority interest in any Person that at such time is a Restricted Subsidiary primarily engaged in a Similar Business,
(b)    properties, 
(c)    capital expenditures and 
(d)    acquisitions of other assets, that in each of (a), (b), (c) and (d), are used or useful in a Similar Business or replace the businesses, properties and assets that are the subject of such Asset Sale.

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(c)    Any Designated Noncash Consideration received by the Company or a Restricted Subsidiary pursuant to Section 4.10(a)(2)(c) shall be deemed to have been applied pursuant to Sections 4.10(b)(1) or 4.10(b)(3) so long as such Designated Noncash Consideration is used in the business of the Company or a Restricted Subsidiary within the time periods set forth in this Section 4.10. 
(d)    Any Net Proceeds from the Asset Sale (other than any Excess Designated Proceeds) that are not invested or applied in accordance with Section 4.10(b) within 450 days from the date of the receipt of such Net Proceeds will be deemed to constitute “Excess Proceeds”; provided that if during such 450-day period the Company or a Restricted Subsidiary enters into a definitive binding agreement committing it to apply such Net Proceeds in accordance with the requirements of Sections 4.10(b)(1) or 4.10(b)(3) (as applicable) after such 450th day, such 450-day period will be extended with respect to the amount of Net Proceeds so committed until such Net Proceeds are required to be applied in accordance with such agreement (but such extension will in no event be for a period longer than 180 days) (or, if earlier, the date of termination of such agreement).
(e)    When the aggregate amount of Excess Proceeds exceeds $45.0 million, within 30 days thereof, the Company will make an offer to all Holders of Notes, and, at the Company's option, to the holders of any other Parity Lien Debt, to purchase the maximum principal amount of Notes and such other Parity Lien Debt, on a pro rata basis, that may be purchased out of the Excess Proceeds (an “Asset Sale Offer”).  The offer price in any Asset Sale Offer will be equal to 100% of the principal amount plus accrued and unpaid interest, if any, to the date of purchase, and will be payable in cash.  The Company may satisfy the foregoing obligations with respect to any Net Proceeds from an Asset Sale by making an Asset Sale Offer with respect to such Net Proceeds prior to the expiration of the relevant 450 days or with respect to Excess Proceeds of $45.0 million or less.  If any Excess Proceeds remain after consummation of an Asset Sale Offer, the Company and any Restricted Subsidiary may use those Excess Proceeds for any purpose not otherwise prohibited by the Indenture, including, without limitation, the making of Restricted Payments otherwise permitted under the terms of the Indenture.  If the aggregate principal amount of Notes and other Parity Lien Debt tendered into such Asset Sale Offer exceeds the amount of Excess Proceeds, the Notes and such other Parity Lien Debt will be purchased on a pro rata basis (with such adjustments for authorized denominations).  Upon completion of each Asset Sale Offer, the amount of Excess Proceeds will be reset at zero.  The Company at its election may retain or use any Excess Designated Proceeds for any purpose, including, if applicable, to make any Restricted Payment otherwise permitted under the terms of the Indenture.
(f)    Pending the final application of any Net Proceeds, the Company or its Restricted Subsidiaries may temporarily reduce revolving credit borrowings or otherwise invest the Net Proceeds in any manner that is not prohibited by this Indenture.
(g)    The Company will comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent such laws and regulations are applicable in connection with each repurchase of Notes pursuant to an Asset Sale Offer.  To the extent that the provisions of any securities laws or regulations conflict with the provisions of Section 3.09 hereof or this Section 4.10, the Company will comply with the applicable securities laws and regulations and will not be deemed to have breached its obligations under Section 3.09 hereof or this Section 4.10 by virtue of such compliance.
Section 4.11    Transactions with Affiliates. 
(a)The Company will not, and will not permit any of its Restricted Subsidiaries to, make any payment to, or sell, lease, transfer or otherwise dispose of any of its properties or assets to, or purchase any property or assets from, or enter into or make or amend any transaction, contract, agreement, understanding, loan, advance or guarantee with, or for the benefit of, any Affiliate of the Company (each, an “Affiliate Transaction”) involving aggregate payments or consideration in excess of $10.0 million, unless: 
(1)the Affiliate Transaction is on terms that are not materially less favorable to the Company or the relevant Restricted Subsidiary than those that would have been obtained in a comparable transaction by the Company or such Restricted Subsidiary with a Person who is not an Affiliate of the Company or such Restricted Subsidiary; and

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(2)the Company delivers to the Trustee with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of $30.0 million, a resolution of the Board of Directors of the Company approving such Affiliate Transaction and set forth in an Officer's Certificate certifying that such Affiliate Transaction complies with clause (1) of this Section 4.11(a).
(b)The following items will not be deemed to be Affiliate Transactions and, therefore, will not be subject to the provisions of Section 4.11(a) hereof:
(1)    transactions between or among the Company or any of the Restricted Subsidiaries;
(2)    Restricted Payments permitted by Section 4.07 hereof and the definition of “Permitted Investments”;
(3)    the issuance or transfer of Equity Interests (other than Disqualified Stock) of the Company to any Permitted Holder or to any director, manager, officer, employee or consultant of the Company, its subsidiaries or any direct or indirect parent company thereof (or their estates, spouses or former spouses);
(4)    the payment of reasonable and customary fees and other compensation paid to, and indemnities provided on behalf of, officers, directors, managers, employees or consultants of the Company, any of its direct or indirect parent companies or any Restricted Subsidiary;
(5)    payments or loans (or cancellations of loans) to officers, managers, directors, consultants and employees of the Company, any of its direct or indirect parent companies or any Restricted Subsidiary and employment agreements, stock option plans and other compensatory or benefit arrangements with such officers, managers, directors, consultants and employees that are, in each case, approved by the Company in good faith;
(6)    transactions in which the Company or any Restricted Subsidiary, as the case may be, delivers to the Trustee a letter from an Independent Financial Advisor stating that such transaction is fair to the Company or such Restricted Subsidiary from a financial point of view or meets the requirements of clause (1) of Section 4.11(a) hereof;
(7)    transactions with customers, clients, suppliers, or purchasers or sellers of goods or services, in each case in the ordinary course of business and otherwise in compliance with the terms of this Indenture that are fair to the Company and the Restricted Subsidiaries, in the good faith determination of the Board of Directors or the senior management of the Company, or are on terms at least as favorable as might reasonably have been obtained at such time from an unaffiliated party;
(8)    any agreement, instrument or arrangement as in effect as of the Issue Date, or any amendment thereto (so long as any such amendment is not disadvantageous to the Holders when taken as a whole in any material respect as compared to the applicable agreement as in effect on the Issue Date as reasonably determined in good faith by the Company);
(9)    payments by the Company or any Restricted Subsidiary to any of the Parents for any financial advisory, financing, underwriting or placement services or in respect of other investment banking activities, including in connection with acquisitions or divestitures, which payments are approved by a majority of the members of the Board of Directors of the Company in good faith;
(10)    the existence of, or the performance by the Company or any of the Restricted Subsidiaries of its obligations under the terms of, any agreement with the stockholders of the Company or any direct or indirect parent of the Company or its equivalent (including any registration rights agreement or purchase agreement related thereto) to which it is a party as of the Issue Date and any similar agreements which it may enter into thereafter; provided, however, that the existence of, or the performance by the Company or any Restricted Subsidiary of obligations under any future amendment to any such existing agreement or under any similar agreement entered into after the Issue Date shall only be permitted by this clause (10) to the extent that the 

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terms of any such existing agreement together with all amendments thereto, taken as a whole, or new agreement are not otherwise more disadvantageous to the Holders when taken as a whole in any material respect than the terms of the original agreement in effect on the Issue Date as reasonably determined in good faith by the Company;
(11)    investments by the Parents in securities of the Company or any of its Restricted Subsidiaries so long as (i) the investment is being offered generally to other investors on the same or more favorable terms and (ii) the investment constitutes less than 5.0% of the proposed or outstanding issue amount of such class of securities;
(12)    sales or repurchases of accounts receivable, payment intangibles and related assets or participations therein, in connection with, or any other transactions relating to, any Receivables Facility;
(13)    any transaction pursuant to which MFW or any of its Affiliates provides the Company and/or its Restricted Subsidiaries, at their request and at the cost to MFW, with services, including services to be purchased from third-party providers, such as legal and accounting, tax, consulting, financial advisory, corporate governance, insurance coverage and other services;
(14)    the issuance of Qualified Affiliate Debt and the transactions in connection therewith;
(15)    any transaction contemplated by Sections 4.07(b)(9), (b)(14) or (b)(15) hereof;
(16)    any transaction with an Affiliate in which the consideration paid by the Company or any Restricted Subsidiary consists only of Equity Interests of the Company;
(17)    any merger, consolidation or reorganization of the Company with an Affiliate of the Company solely for the purpose of (a) reorganizing to facilitate an initial public offering of securities of the Company or a direct or indirect parent of the Company, (b) forming or collapsing a holding company structure or (c) reincorporating the Company in a new jurisdiction;
(18)    payments to or from, and transactions with, any joint venture in the ordinary course of business; and
(19)    transactions with Affiliates solely in their capacity as holders of Indebtedness or Equity Interests of the Company or any of its Subsidiaries, so long as such transaction is with (or is offered to) all holders of such class (and there are such non-Affiliate holders) and such Affiliates are treated no more favorably than all other holders of such class generally; provided, however, that with regard to an issue of Indebtedness of the Company or any of its Subsidiaries, such Affiliate holds no more than 15% of such issue.
Section 4.12    Liens. 
The Company will not, and will not permit any of the Guarantors to, directly or indirectly, create, incur, assume or otherwise cause or suffer to exist or become effective any Lien of any kind on any asset now owned or hereafter acquired to secure obligations under any Indebtedness, except Permitted Liens. 
For purposes of determining compliance with this covenant, (A) a Lien securing an item of Indebtedness need not be permitted solely by reference to one category (or portion thereof) of Permitted Liens described in clauses (1) through (33) of the definition of “Permitted Liens” but may be permitted in part under any combination thereof and (B) in the event that a Lien securing an item of Indebtedness, Disqualified Stock of Preferred Stock (or any portion thereof) meets the criteria of one or more of the categories (or portions thereof) of Permitted Liens described in clauses (1) through (33) of the definition of “Permitted Liens”, the Company shall, in its sole discretion, divide, classify or reclassify, or later divide, classify, or reclassify, such Lien securing such item of Indebtedness (or any portion thereof) in any manner that complies (based on circumstances existing at the time of such division, classification or reclassification) with this Section 4.12 and will only be required to include the amount and type of such Lien or such 

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item of Indebtedness secured by such Lien in one of the clauses (or portion thereof) of the definition of “Permitted Liens” and such Lien securing such item of Indebtedness will be treated as being Incurred or existing pursuant to only one of such clauses (or portion thereof).
With respect to any Lien securing Indebtedness that was permitted to secure such Indebtedness at the time of the Incurrence of such Indebtedness, such Lien shall also be permitted to secure any Increased Amount of such Indebtedness. The “Increased Amount” of any Indebtedness shall mean any increase in the amount of such Indebtedness in connection with any accrual of interest, the accretion of accreted value, the amortization of original issue discount, the payment of interest in the form of additional Indebtedness with the same terms or in the form of common stock of the Company, the payment of dividends on Preferred Stock in the form of additional shares of Preferred Stock of the same class accretion of original issue discount or liquidation preference and increases in the amount of Indebtedness outstanding solely as a result of fluctuations in the exchange rate of currencies or increases in the value of property securing Indebtedness described in clause (3) of the definition of “Indebtedness”.
Section 4.13    Business Activities. 
The Company will not, and will not permit any of its Restricted Subsidiaries to, engage to any material extent in any material line of business substantially different from those lines of business conducted by the Company and its Restricted Subsidiaries on the Issue Date or any Similar Businesses.  For the avoidance of doubt, for purposes of this Indenture, the lines of business conducted by the Company and its Restricted Subsidiaries on the Issue Date shall be such lines of business.  
Section 4.14    Corporate Existence. 
Subject to Article 5 hereof, the Company shall do or cause to be done all things reasonably necessary to preserve and keep in full force and effect:
(1)its corporate existence, and the corporate, partnership or other existence of each of its Restricted Subsidiaries other than its Immaterial Subsidiaries, in accordance with the respective organizational documents (as the same may be amended from time to time) of the Company or any such Subsidiary; and 
(2)the rights (charter and statutory), licenses and franchises of the Company and its Restricted Subsidiaries other than its Immaterial Subsidiaries (except as such would otherwise reasonably expire, be abandoned or permitted to lapse in the ordinary course of business), necessary in the normal conduct of its business); 
except in each case (other than with respect to the Company's existence) to the extent such failure to do so would not reasonably be expected to have a material adverse effect on the business, assets, operations or financial condition of the Company and its Subsidiaries taken as a whole or the ability of the Company and the Guarantors (taken as a whole) to perform their obligations under this Indenture or the rights of, or remedies available to the Trustee or the Holders under, this Indenture.  
Section 4.15    Offer to Repurchase Upon Change of Control. 
(a)If a Change of Control occurs, each Holder of Notes will have the right to require the Company to repurchase all or any part (equal to $2,000 or an integral multiple of $1,000 in excess thereof) of that Holder's Notes pursuant to a Change of Control Offer in accordance with this Indenture (a “Change of Control Offer”).  In the Change of Control Offer, the Company will offer a payment (such payment, a “Change of Control Payment”) in cash equal to 101% of the aggregate principal amount of Notes repurchased plus accrued and unpaid interest, if any, on the Notes repurchased to the date of purchase, subject to the rights of Holders of Notes on the relevant record date to receive interest due on the relevant interest payment date.  No later than 45 days following any Change of Control, the Company shall provide a notice to each Holder and the Trustee describing the transaction or transactions that constitute the Change of Control and offering to repurchase Notes on the Change of Control payment date specified in the notice (the “Change of Control Payment Date”), which date shall be no earlier than 30 days and no later than 60 days from 

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the date such notice is provided and stating:
(1)that the Change of Control Offer is being made pursuant to this Section 4.15 and that all Notes tendered will be accepted for payment; 
(2)the purchase price and the Change of Control Payment Date; 
(3)that any Note not tendered will continue to accrue interest; 
(4)that, unless the Company defaults in the payment of the Change of Control Payment, all Notes accepted for payment pursuant to the Change of Control Offer will cease to accrue interest on and after the Change of Control Payment Date;
(5)that Holders electing to have any Notes purchased pursuant to a Change of Control Offer will be required to surrender the Notes, with the form entitled “Option of Holder to Elect Purchase” attached to the Notes completed, or transfer by book-entry transfer, to the Paying Agent at the address specified in the notice prior to the close of business on the third Business Day preceding the Change of Control Payment Date;
(6)that Holders will be entitled to withdraw their election if the Paying Agent receives, not later than the close of business on the second Business Day preceding the Change of Control Payment Date, a telegram, telex, facsimile transmission or letter setting forth the name of the Holder, the principal amount of Notes delivered for purchase, and a statement that such Holder is withdrawing his election to have the Notes purchased;
(7)that Holders whose Notes are being purchased only in part will be issued new Notes equal in principal amount to the unpurchased portion of the Notes surrendered, which unpurchased portion must be equal to $2,000 in principal amount or a $1,000 integral multiple in excess thereof; and
(8)any conditions precedent to the Change of Control Offer and whether such Change of Control Offer is being made by a third party as provided in clause (c), below.
The Company will comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent those laws and regulations are applicable in connection with the repurchase of the Notes as a result of a Change of Control.  To the extent that the provisions of any securities laws or regulations conflict with the provisions of this Section 4.15, the Company will comply with the applicable securities laws and regulations and will not be deemed to have breached its obligations under this Section 4.15 by virtue of such compliance.
(b)On or before the Change of Control Payment Date, the Company will, to the extent lawful:
(1)accept for payment all Notes or portions of Notes properly tendered pursuant to the Change of Control Offer;
(2)deposit with the Paying Agent an amount in cash equal to the Change of Control Payment in respect of all Notes or portions of Notes properly tendered; and
(3)deliver or cause to be delivered to the Trustee the Notes properly accepted together with an Officer's Certificate stating the aggregate principal amount of Notes or portions of Notes being purchased by the Company.
The Paying Agent will promptly provide to each Holder of Notes properly tendered the Change of Control Payment for such Notes, and the Trustee will promptly authenticate and provide (or cause to be transferred by book entry) to each Holder a new Note equal in principal amount to any unpurchased portion of the Notes surrendered, if any.  
(c)Notwithstanding anything to the contrary in this Section 4.15, the Company will not be required to 

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make a Change of Control Offer upon a Change of Control if (1) a third party makes the Change of Control Offer in the manner, at or prior to the times and otherwise in compliance with the requirements set forth in this Section 4.15 and purchases all Notes properly tendered and not withdrawn under the Change of Control Offer (it being understood that such third party may make a Change of Control Offer that is conditioned on and prior to the occurrence of a Change of Control pursuant to this clause (1)), or (2) notice of redemption has been given pursuant to Section 3.07 hereof, unless and until there is a default in payment of the applicable redemption price.
(d)A Change of Control Offer may be made in advance of a Change of Control, and may be subject to conditions, including such Change of Control, if a definitive agreement is in place for the Change of Control at the time of making of the Change of Control Offer.

Section 4.16    Limitation on Sale and Lease-Back Transactions. 
The Company will not, and will not permit any of its Restricted Subsidiaries to, enter into any Sale and Lease-Back Transaction with respect to any property unless the Company or such Restricted Subsidiary, as applicable, would be entitled to (a) incur Indebtedness in an amount equal to the Attributable Debt with respect to such Sale and Lease-Back Transaction pursuant to Section 4.09 and (b) create a Lien on such property securing such Attributable Debt pursuant to Section 4.12.
The Company shall apply the Net Proceeds of such Sale and Lease-Back Transaction in compliance with the terms described under Section 4.10.
Section 4.17    Limitations on Guarantees of Indebtedness by Restricted Subsidiaries.
The Company will not permit any of its Wholly-Owned Subsidiaries that are Restricted Subsidiaries (or any non-Wholly-Owned Subsidiary that guarantees capital markets debt securities or indebtedness for borrowed money under a material Credit Facility of the Company or any Guarantor), other than a Guarantor or an Immaterial Subsidiary, to guarantee the payment of any Indebtedness of the Company or any other Guarantor unless:
(1)    such Restricted Subsidiary within 30 days executes and delivers a supplemental indenture to this Indenture, substantially in the form of Exhibit F hereto, providing for a Guarantee by such Restricted Subsidiary, except that with respect to a guarantee of Indebtedness of the Company or any Guarantor, that is by its express terms subordinated in right of payment to the Notes or such Guarantor's Guarantee, any such guarantee by such Restricted Subsidiary with respect to such Indebtedness shall be subordinated in right of payment to such Guarantee substantially to the same extent as such Indebtedness is subordinated to the Notes; and
(2)    such Restricted Subsidiary waives and will not in any manner whatsoever claim or take the benefit or advantage of, any rights of reimbursement, indemnity or subrogation or any other rights against the Company or any other Restricted Subsidiary as a result of any payment by such Restricted Subsidiary under its Guarantee prior to payment in full of the Notes;
provided that this Section 4.17 shall not be applicable to (x) any guarantee of any Restricted Subsidiary that existed at the time such Person became a Restricted Subsidiary and was not incurred in connection with, or in contemplation of, such Person becoming a Restricted Subsidiary or (y) any guarantee of any Restricted Subsidiary that was incurred at the time such Person became a Restricted Subsidiary, in connection with Indebtedness that (A) existed at such time or the proceeds of which were used to make such acquisition and (B) that is permitted to be secured by clause (21) or (31) of the definition of Permitted Liens or clause (20) of the definition of Permitted Liens (but only to the extent relating to the refinancing, refunding, extension, renewal or replacement of the Liens permitted under any of the foregoing clauses).
Section 4.18    Creation and Perfection of Certain Security Interests Post-Closing.
To the extent any security interests in the Collateral otherwise required by this Indenture are not in place on 

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the date of this Indenture or are not perfected on the date of this Indenture, the Company and the Guarantors shall use their respective commercially reasonable efforts to do or cause to be done all acts and things that may be required, including obtaining any required consents from third parties, to have all security interests in the Collateral duly created and enforceable and perfected, to the extent required by the Security Documents, and obtain title insurance promptly following the date of this Indenture, but in no event later than 90 days thereafter or such later period as may be agreed by the Trustee or is the same as the equivalent period under the Existing Credit Agreement for the same asset, unless the same has been waived by the Credit Agreement Collateral Agent for such asset under the Existing Credit Agreement.  Except to the extent otherwise provided in the applicable provisions of the Security Documents, failure to obtain such consents and create and perfect a security interest in such Collateral or to obtain title insurance within such period shall constitute an Event of Default if and to the extent provided under Section 6.01(9). Notwithstanding the foregoing, if after using commercially reasonable efforts such a security interest in an asset cannot be created or perfected because a third party consent has not been obtained or local law does not permit a security interest to more than one secured party, the Company will not be required to create or perfect such security interest.  For avoidance of doubt, references in this paragraph to Collateral do not include Excluded Assets.  Neither the Trustee nor the Collateral Trustee on behalf of the Trustee and the Holders of the Notes shall have any duty or responsibility to see to or monitor the performance of the Company and its Subsidiaries with regard to these matters.
Section 4.19    Excess Cash Flow Offer.
(a)At or prior to each Excess Cash Flow Offer Trigger Date, the Company will calculate the amount of Excess Cash Flow and the Excess Cash Flow Offer Amount for the Excess Cash Flow Period with respect to such Excess Cash Flow Offer Trigger Date.  If the Consolidated Secured Debt Ratio on such Excess Cash Flow Offer Trigger Date exceeds the Secured Leverage Threshold, unless the Company has exercised its right to redeem all the Notes as described under Section 3.07, the Company will make an offer to all Holders of Notes to purchase the maximum principal amount of Notes that may be purchased out of the Excess Cash Flow Offer Amount (each, an “Excess Cash Flow Offer”).
(b)For any Excess Cash Flow Period with respect to which the Company is required to make an Excess Cash Flow Offer, within 15 days after the relevant Excess Cash Flow Offer Trigger Date, the Company will provide a notice setting forth the Excess Cash Flow Offer to each Holder at the address appearing in the security register, with a copy to the Trustee, stating:
(1)that an Excess Cash Flow Offer is being made, the maximum aggregate principal amount of Notes that the Company may be required to purchase in such offer, and that such Holder has the right to require the Company to purchase such Holders' Notes (subject to proration) at a purchase price in cash equal to 100% of the principal amount of such Notes 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 “Excess Cash Flow Payment”);
(2)the repurchase date (which shall be no earlier than 20 business days after such notice is provided and no later than 60 days from the date such notice is provided, pursuant to the procedures required by the Indenture and described in such notice (the “Excess Cash Flow Payment Date”); and
(3)the procedures determined by the Company, consistent with the Indenture, that a Holder must follow in order to have its Notes repurchased.
(c)On the Excess Cash Flow Payment Date, the Company will, to the extent lawful:
(1)accept for payment all Notes or portions thereof properly tendered pursuant to the Excess Cash Flow Offer (subject to proration); 
(2)deposit with the Paying Agent an amount equal to the Excess Cash Flow Payment in respect of all Notes or portions of Notes so accepted for payment; and 

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(3)deliver or cause to be delivered by the Trustee the Notes so accepted together with an Officer's Certificate stating the aggregate principal amount of Notes or portions of Notes being purchased by the Company.
(d)If the aggregate purchase price of the Notes tendered in connection with any Excess Cash Flow Offer exceeds the Excess Cash Flow Offer Amount, the Trustee will select the Notes to be purchased on a pro rata basis but in denominations of $1,000 principal amount and in multiples thereof.  If the aggregate purchase price of the Notes tendered in connection with any Excess Cash Flow Offer is less than the Excess Cash Flow Amount allotted to their purchase, the Company shall be permitted to use the portion of the Excess Cash Flow Amount that is not applied to the purchase of Notes in connection with such Excess Cash Flow Offer for general corporate purposes or for any other purposes not prohibited by the Indenture.
(e)The Company shall comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent such laws and regulations are applicable in connection with the repurchase of Notes pursuant to an Excess Cash Flow Offer.  To the extent the provisions of any securities laws or regulations conflict with the foregoing provisions, the Company shall comply with the applicable securities laws and regulations and shall not be deemed to have breached its obligations under the foregoing provisions.

ARTICLE 5
SUCCESSORS

Section 5.01    Merger, Consolidation, or Sale of Assets.
(a)The Company shall not: (i) consolidate or merge with or into another Person (whether or not the Company is the surviving corporation); or (ii) sell, assign, transfer, convey or otherwise dispose of all or substantially all of its properties or assets in one or more related transactions, to another Person, unless:
(1)the Company is the surviving corporation or the Person formed by or surviving any such consolidation or merger (if other than the Company) or to which such sale, assignment, transfer, lease, conveyance or other disposition shall have been made is a corporation or limited liability company organized or existing under the laws of the United States of America, any state thereof, the District of Columbia, or any territory thereof (the Company or such Person, as the case may be, being herein called the “Successor Company”); provided, that if the Successor Company is not a corporation, a co-issuer of the Notes will be a corporation;
(2)the Successor Company, if other than the Company, expressly assumes all the obligations of the Company under the Notes, this Indenture and the Security Documents pursuant to a supplemental indenture or other documents or instruments reasonably satisfactory to the Trustee;
(3)immediately after such transaction, no Default or Event of Default exists; and
(4)immediately after giving pro forma effect to such transaction, as if such transaction had occurred at the beginning of the applicable four-quarter period, either (i) the Company or the Successor Company would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in Section 4.09(a) hereof or (ii) the Fixed Charge Coverage Ratio for the Company or the Successor Company and its respective Restricted Subsidiaries for the most recently ended four full fiscal quarters for which internal financial statements are available immediately preceding the date of such transaction would be equal to or greater than such ratio for the Company and its Restricted Subsidiaries immediately prior to such transaction.
The Successor Company will succeed to, and be substituted for, the Company under this Indenture and the Notes, and the Company will be released from its obligations thereunder. 

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Notwithstanding this Section 5.01(a):
(1)    any Restricted Subsidiary may consolidate with or merge into the Company;
(2)    the Company or any Restricted Subsidiary may transfer all or part of its properties and assets to a Guarantor; and
(3)    the Company may merge with an Affiliate of the Company incorporated solely for the purpose of reincorporating the Company in another state of the United States of America so long as the amount of Indebtedness of the Company and the Restricted Subsidiaries is not increased thereby.
(b)Each Guarantor will not, and the Company will not permit any Guarantor to, consolidate or merge with or into or wind up into (whether or not such Guarantor is the surviving Person), or sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of its properties or assets in one or more related transactions to, any Person unless:
(1)    (a) such Guarantor is the surviving Person or the Person formed by or surviving any such consolidation or merger (if other than such Guarantor) or to which such sale, assignment, transfer, lease, conveyance or other disposition will have been made is a Person organized or existing under the laws of the United States of America, any state thereof, the District of Columbia, or any territory thereof (such Guarantor or such Person, as the case may be, being herein called the “Successor Guarantor”); (b) the Successor Guarantor, if other than such Guarantor, expressly assumes all the obligations of such Guarantor under this Indenture, such Guarantor's Guarantee and the Security Documents, pursuant to supplemental indentures or other documents or instruments in form reasonably satisfactory to the Trustee; and (c) immediately after such transaction, no Event of Default exists; or
(2)    the transaction does not violate Section 4.10 hereof or is not an Asset Sale pursuant to the definition thereof.
The Successor Guarantor will succeed to, and be substituted for, such Guarantor under this Indenture and such Guarantor's Guarantee, and the Guarantor will be released from its obligations thereunder.
(c)Notwithstanding paragraphs (a) and (b) of this Section 5.01, any Guarantor may (x) merge into or sell, assign, transfer, lease, convey or otherwise dispose of (each such action being referred to in this paragraph as a “transfer”) all or part of its properties and assets to another Guarantor or the Company, (y) transfer all or part of its properties and assets to a Restricted Subsidiary that is not a Guarantor in a transaction that (i) does not violate Section 4.10 hereof or is not an Asset Sale pursuant to the definition thereof or (ii) comprised of one or more non-exclusive licenses of intellectual property for fair value (as determined in good faith by the Company), or (z) transfer all or part of its properties and assets to a Restricted Subsidiary that is not a Guarantor; provided that any transfer made pursuant to this clause (z) satisfies the following conditions:
(1)    the transferor receives consideration at the time of such transfer at least equal to the fair value (as determined in good faith by the Company) of the properties and assets transferred, such consideration to be in the form of cash, Cash Equivalents and/or one or more promissory notes made by the transferee to the transferor;
(2)    the Capital Stock of the transferee is owned by the Company or a Restricted Subsidiary, or by a Restricted Subsidiary the Capital Stock of which is owned by the Company or another Restricted Subsidiary;
(3)    the transferee (and, if the Capital Stock of the transferee is owned by a Foreign Subsidiary, such owner) agrees in writing not to incur any Indebtedness or Preferred Stock other than:
(a)    pursuant to clauses (4), (5), (6), (8), (9), (11), (15) or (16) of Section 4.09(b) hereof,

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(b)    Indebtedness in the nature of deferred purchase price of any property (including Capitalized Lease Obligations) permitted pursuant to Section 4.09 hereof and
(c)    other Indebtedness other than for borrowed money; and
(4)    with respect to any property and assets that are owned by the Company or a Guarantor on the Issue Date and subsequently transferred in reliance on this clause (z),
(a)    the fair value of such property and assets as of the date of such transfer (as determined in good faith by the Company and evidenced by a certificate of a Responsible Officer delivered to the Trustee not less than five Business Days (or such shorter time as the Trustee may agree) prior to such transfer), plus
(b)    the fair value of any other property or assets previously transferred in reliance on this clause (z) as of their respective dates of transfer (as determined in good faith by the Company), minus
(c)    the aggregate amount of payments of principal made on or before the date of the transfer in question with respect to all promissory notes previously delivered pursuant to this clause (z) shall not exceed $175.0 million.
(d)For purposes of this Section 5.01, the sale, lease, conveyance, assignment, transfer or other disposition of all or substantially all of the properties and assets of one or more of the Restricted Subsidiaries in one or more related transactions (other than to the Company or a Guarantor), which properties and assets if held by the Company, instead of such Restricted Subsidiaries, would constitute all or substantially all of the properties and assets of the Company and its Restricted Subsidiaries on a consolidated basis (other than to the Company or a Guarantor), shall be deemed to be the transfer of all or substantially all of the properties and assets of the Company.
Section 5.02    Successor Corporation Substituted.
Upon any consolidation or merger, or any sale, assignment, transfer, lease, conveyance or other disposition of all or substantially all of the properties or assets of the Company in a transaction that is subject to, and that complies with the provisions of, Section 5.01 hereof, the successor Person formed by such consolidation or into or with which the Company is merged or to which such sale, assignment, transfer, lease, conveyance or other disposition is made shall succeed to, and be substituted for (so that from and after the date of such consolidation, merger, sale, assignment, transfer, lease, conveyance or other disposition, the provisions of this Indenture referring to the “Company” shall refer instead to the successor Person and not to the Company), and may exercise every right and power of the Company under this Indenture with the same effect as if such successor Person had been named as the Company herein; provided, however, that the predecessor Company shall not be relieved from the obligation to pay the principal of and interest on the Notes in the case of a sale of the Company's assets (other than a sale of all or substantially all of the Company's assets) in a transaction that is subject to, and that complies with the provisions of, Section 5.01 hereof.

ARTICLE 6
DEFAULTS AND REMEDIES

Section 6.01    Events of Default and Remedies.
Each of the following is an “Event of Default”:
(1)default for 30 days in the payment when due and payable of interest on the Notes;
(2)default in the payment when due and payable (at maturity, upon redemption or otherwise) of the principal of, or premium, if any, on, the Notes;
(3)failure by the Company or any Guarantor for 60 days after receipt of written notice given by 

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the Trustee or by the Holders of at least 30% in principal amount of the then outstanding Notes issued under this Indenture to comply with any of its other agreements in this Indenture or the Notes;
(4)    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 the Guarantors (or the payment of which is guaranteed by the Company or any of the Guarantors) other than, for the avoidance of doubt, Indebtedness owed to the Company or any of its Restricted Subsidiaries, whether such Indebtedness or guarantee now exists, or is created after the Issue Date, if that default both:
(a)    (i) is caused by a failure to pay principal of such Indebtedness prior to the expiration of the grace period provided in such Indebtedness on the date of such default (a “Payment Default”), or (ii) relates to an obligation other than the obligation to pay principal of any such Indebtedness at its stated final maturity and results in the holder or holders of such Indebtedness causing such Indebtedness to become due prior to its stated final maturity; and
(b)    the principal amount of such Indebtedness, together with the principal amount of any other such Indebtedness in default for failure to pay principal at stated final maturity (after giving effect to any applicable grace periods), or the maturity of which has been so accelerated, aggregate $40.0 million or more at any one time outstanding;
(5)    failure by the Company or any Significant Subsidiary (or any group of Subsidiaries that together would constitute a Significant Subsidiary) to pay final judgments aggregating in excess of $40.0 million and not covered by insurance, which final judgments remain unpaid, undischarged and unstayed for a period of more than 60 days after such judgment becomes final, and in the event such judgment is covered by insurance, an enforcement proceeding has been commenced by any creditor upon such judgment or decree which is not promptly stayed;
(6)    the Company or any of its Restricted Subsidiaries that is a Significant Subsidiary or any group of Restricted Subsidiaries of the Company that, taken together, would constitute a Significant Subsidiary pursuant to or within the meaning of Bankruptcy Code:
(a)commences a voluntary case,
(b)consents to the entry of an order for relief against it in an involuntary case,
(c)consents to the appointment of a custodian of it or for all or substantially all of its property,
(d)makes a general assignment for the benefit of its creditors, or
(e)generally is not paying its debts as they become due;
(7)    a court of competent jurisdiction enters an order or decree under any Bankruptcy Code that:
(a)    is for relief against the Company or any of its Restricted Subsidiaries that is a Significant Subsidiary or any group of Restricted Subsidiaries of the Company that, taken together, would constitute a Significant Subsidiary in an involuntary case;
(b)    appoints a custodian of the Company or any of its Restricted Subsidiaries that is a Significant Subsidiary or any group of Restricted Subsidiaries of the Company that, taken together, would constitute a Significant Subsidiary or for all or substantially all of the property of the Company or any of its Restricted Subsidiaries that is a Significant Subsidiary or any group of Restricted Subsidiaries of the Company that, taken together, would constitute a Significant Subsidiary; or
(c)    orders the liquidation of the Company or any of its Restricted Subsidiaries that is a 

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Significant Subsidiary or any group of Restricted Subsidiaries of the Company that, taken together, would constitute a Significant Subsidiary;
and the order or decree remains unstayed and in effect for 60 consecutive days;
(8)    the Guarantee of any Significant Subsidiary (or any group of Subsidiaries that together would constitute a Significant Subsidiary) shall for any reason cease to be in full force and effect or be declared null and void or any Responsible Officer of any Guarantor that is a Significant Subsidiary (or the Responsible Officers of any group of Subsidiaries that together would constitute a Significant Subsidiary), as the case may be, denies that it has any further liability under its Guarantee or gives notice to such effect, other than by reason of the termination of this Indenture or the release of any such Guarantee in accordance with this Indenture; or
(9)    so long as the Security Documents have not otherwise been terminated in accordance with their terms or the Collateral as a whole of the Company or any Guarantor has not otherwise been released from the Lien of the Security Documents in accordance with the terms thereof, (a) default by the Company or any such Guarantor for 60 days after written notice given by the Trustee or Holders of at least 30% in aggregate principal amount of the then outstanding Notes in the performance of the Security Documents which adversely affects the enforceability, validity, perfection or priority of the Lien on the Collateral securing the Obligations under this Indenture and the Notes or which adversely affects the condition or value of the Collateral, in each case, taken as a whole, in any material respect, (b) repudiation or disaffirmation by the Company or any Guarantor, or any Person acting on behalf of the Company or any Guarantor, of its obligations under the Security Documents or (c) the determination in a judicial proceeding that all or any material portion of the Security Documents, taken as a whole, are unenforceable or invalid, for any reason, against the Company or any Guarantor; provided, that, it will not be an Event of Default under this clause (9) if the sole result of the failure of one or more Security Documents to be fully enforceable is that any Lien securing Parity Lien Debt (other than the Notes) or Priority Lien Debt purported to be granted under such Security Documents on Collateral ceases to be enforceable and perfected.
Section 6.02    Acceleration.
In the case of an Event of Default specified in clause (6) or (7) of Section 6.01 hereof, all outstanding Notes will become due and payable immediately without further action or notice.  If any other Event of Default occurs and is continuing, the Trustee or the Holders of at least 30% in aggregate principal amount of the then outstanding Notes may declare all the Notes to be due and payable immediately.
Upon any such declaration, the Notes shall become due and payable immediately.
The Holders of a majority in aggregate principal amount of the then outstanding Notes by written notice to the Trustee may, on behalf of all of the Holders, rescind an acceleration and its consequences, if the rescission would not conflict with any judgment or decree and if all existing Events of Default (except nonpayment of principal, interest or premium, if any, that has become due solely because of the acceleration) have been cured or waived.
Section 6.03    Other Remedies.
If an Event of Default occurs and is continuing, the Trustee may pursue any available remedy to collect the payment of principal, premium, if any, and interest on the Notes or to enforce the performance of any provision of the Notes or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any of the Notes or does not produce any of them in the proceeding.  A delay or omission by the Trustee or any Holder of a Note in exercising any right or remedy accruing upon an Event of Default shall not impair the right or remedy or constitute a waiver of or acquiescence in the Event of Default.  All remedies are cumulative to the extent permitted by law.

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Section 6.04    Waiver of Past Defaults.
(a)Holders of a majority in aggregate principal amount of the then outstanding Notes by notice to the Trustee may on behalf of the Holders of all of the Notes waive an existing Default or Event of Default and its consequences hereunder, or compliance with any provision of this Indenture except a continuing Default or Event of Default in the payment of the principal of, premium, if any, or interest on, the Notes (including in connection with an offer to purchase); provided, however, that the Holders of a majority in aggregate principal amount of the then outstanding Notes may rescind an acceleration and its consequences, including any related payment default that resulted from such acceleration.  Upon any such waiver, such Default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other Default or impair any right consequent thereon.
(b)In the event of any Event of Default specified in Section 6.01(4) hereof, such Event of Default and all consequences thereof (excluding any resulting Payment Default) shall be annulled, waived and rescinded automatically and without any action by the Trustee or the Holders if, within 20 days after such Event of Default arose,
(x)    the Indebtedness or guarantee that is the basis for such Event of Default has been discharged,
(y)    the holders thereof have rescinded or waived the acceleration, notice or action (as the case may be) giving rise to such Event of Default or
(z)    the Default that is the basis for such Event of Default has been cured.
Section 6.05    Control by Majority.
Holders of a majority in aggregate principal amount of the then outstanding Notes may direct the time, method and place of conducting any proceeding for exercising any remedy available to the Trustee or exercising any trust or power conferred on it.  However, the Trustee may refuse to follow any direction that conflicts with law or this Indenture that the Trustee determines may be unduly prejudicial to the rights of other Holders of Notes or that may involve the Trustee in personal liability or expense for which the Trustee has not received indemnity satisfactory to it against any loss, liability or expense.
Section 6.06    Limitation on Suits.
Except to enforce the right to receive payment of principal, premium, if any, or interest, if any, when due, no Holder may pursue a remedy with respect to this Indenture or the Notes unless:
(1)such Holder has previously given to the Trustee written notice that an Event of Default is continuing;
(2)Holders of at least 30% in aggregate principal amount of the then outstanding Notes make a written request to the Trustee to pursue the remedy;
(3)such Holder or Holders offer and, if requested, provide to the Trustee security and indemnity satisfactory to the Trustee against any loss, liability or expense;
(4)the Trustee has not complied with the request within 60 days after receipt of the request and the offer of security and indemnity; and
(5)Holders of a majority in aggregate principal amount of the then outstanding Notes have not given the Trustee a direction inconsistent with such request within such 60-day period.
A Holder of a Note may not use this Indenture to prejudice the rights of another Holder of a Note or to obtain a preference or priority over another Holder of a Note.

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Section 6.07    Rights of Holders of Notes to Receive Payment.
Notwithstanding any other provision of this Indenture, the right of any Holder of a Note to receive payment of principal, premium, if any, and interest on the Note, on or after the respective due dates expressed in the Note (including in connection with an offer to purchase), or to bring suit for the enforcement of any such payment on or after such respective dates, shall not be impaired or affected without the consent of such Holder.
Section 6.08    Collection Suit by Trustee.
If an Event of Default specified in Section 6.01(1) or (2) hereof occurs and is continuing, the Trustee is authorized to recover judgment in its own name and as trustee of an express trust against the Company for the whole amount of principal of, premium, if any, and interest remaining unpaid on, the Notes and interest on overdue principal and, to the extent lawful, interest and such further amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel.
Section 6.09    Trustee May File Proofs of Claim.
The Trustee is authorized to file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel) and the Holders of the Notes allowed in any judicial proceedings relative to the Company (or any other obligor upon the Notes), its creditors or its property and shall be entitled and empowered to collect, receive and distribute any money or other property payable or deliverable on any such claims and any custodian in any such judicial proceeding is hereby authorized by each Holder to make such payments to the Trustee, and in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due to it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 7.07 hereof.  To the extent that the payment of any such compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 7.07 hereof out of the estate in any such proceeding, shall be denied for any reason, payment of the same shall be secured by a Lien on, and shall be paid out of, any and all distributions, dividends, money, securities and other properties that the Holders may be entitled to receive in such proceeding whether in liquidation or under any plan of reorganization or arrangement or otherwise.  Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Notes or the rights of any Holder, or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding.
Section 6.10    Priorities.
If the Trustee collects any money or property pursuant to this Article 6, or after an Event of Default any moneys or properties distributable in respect of the Company's or any Guarantor's obligations under this Indenture, such money or property shall be distributed in the following order:
First:      to the Trustee, its agents and attorneys for amounts due under Section 7.07 hereof, including payment of all compensation, expenses and liabilities incurred, and all advances made, by the Trustee and the costs and expenses of collection;
Second:      to Holders of Notes for amounts due and unpaid on the Notes for principal, premium, if any, and interest, ratably, without preference or priority of any kind, according to the amounts due and payable on the Notes for principal, premium, if any, and interest, respectively; and
Third:      to the Company or to such party as a court of competent jurisdiction shall direct in a final, non-appealable order.

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The Trustee may fix a record date and payment date for any payment to Holders of Notes pursuant to this Section 6.10.
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 a Trustee, a court in its discretion may require the filing by any party litigant in the suit of an undertaking to pay the costs of the suit, and the court in its discretion may assess reasonable costs, including reasonable attorneys' fees and expenses, against any party litigant in the suit, having due regard to the merits and good faith of the claims or defenses made by the party litigant.  This Section 6.11 does not apply to a suit by the Trustee, a suit by a Holder of a Note pursuant to Section 6.07 hereof, or a suit by Holders of more than 10% in aggregate principal amount of the then outstanding Notes.

ARTICLE 7
TRUSTEE

Section 7.01    Duties of Trustee.
(a)If an Event of Default has occurred and is continuing (and is not cured or waived), the Trustee will exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in its exercise, as a prudent person would exercise or use under the circumstances in the conduct of such person's own affairs.
(b)Except during the continuance of an Event of Default:
(1)the duties of the Trustee will be determined solely by the express provisions of this Indenture and the Trustee need perform only those duties that are specifically set forth in this Indenture and no others, and no implied covenants or obligations shall be read into this Indenture against the Trustee; and
(2)in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture.  However, in the case of certificates or opinions specifically required by any provision hereof to be furnished to it, the Trustee will examine the certificates and opinions to determine whether or not they conform to the form required by this Indenture (but need not confirm or investigate the accuracy of mathematical calculations stated therein).
(c)The Trustee may not be relieved from liabilities for its own grossly negligent action, its own grossly negligent failure to act, its own bad faith or its own willful misconduct, except that:
(1)this paragraph does not limit the effect of paragraph (b) of this Section 7.01;
(2)the Trustee will not be liable for any error of judgment made in good faith by a Trust Officer, unless it is proved that the Trustee was grossly negligent in ascertaining the pertinent facts; and
(3)the Trustee will not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction received by it pursuant to Section 6.05 hereof.
(d)Whether or not therein expressly so provided, every provision of this Indenture that in any way relates to the Trustee is subject to paragraphs (a), (b), and (c) of this Section 7.01.
(e)No provision of this Indenture will require the Trustee to expend or risk its own funds or incur any liability.  The Trustee will be under no obligation to exercise any of its rights and powers under this Indenture at the request of any Holders, unless such Holder has offered to the Trustee security and indemnity satisfactory to it against any loss, liability or expense.

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(f)The Trustee will not be liable for interest on any money received by it except as the Trustee may agree in writing with the Company.  Money held in trust by the Trustee need not be segregated from other funds except to the extent required by law.
Section 7.02    Rights of Trustee.
(a)The Trustee may conclusively rely and shall be fully protected on acting or refraining from acting upon any document believed by it to be genuine and to have been signed or presented by the proper Person.  The Trustee need not investigate any fact or matter stated in the document.
(b)Before the Trustee acts or refrains from acting, it may require an Officer's Certificate or an Opinion of Counsel or both.  The Trustee will not be liable for any action it takes or omits to take in good faith in reliance on such Officer's Certificate or Opinion of Counsel or certificate of or notice from a Responsible Officer.  The Trustee may consult with counsel of it selection and the advice of such counsel or any Opinion of Counsel will be full and complete authorization and protection from liability in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon.
(c)The Trustee may act through its attorneys and agents and will not be responsible for the misconduct or negligence of any agent appointed with due care.
(d)The Trustee will not be liable for any action it takes or omits to take in good faith that it believes to be authorized or within the rights or powers conferred upon it by this Indenture or any Security Document.  The permissive right of the Trustee to do things enumerated in the Indenture or in any Security Document shall not be construed as a duty of the Trustee.
(e)Unless otherwise specifically provided in this Indenture, any demand, request, direction or notice from the Company will be sufficient if signed by an Officer of the Company.
(f)The Trustee will 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 have offered to the Trustee indemnity or security reasonably satisfactory to it against the losses, liabilities and expenses that might be incurred by it in compliance with such request or direction.
(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 in each Security Document, and each agent, custodian and other Person employed to act hereunder.
(h)Neither the Trustee nor the Collateral Trustee shall be responsible for and make no representation as to the existence, genuineness, value or protection of any Collateral, for the legality, effectiveness or sufficiency of any Security Document, or for the creation, perfection, priority, sufficiency or protection of any Liens securing the Notes.  Neither the Trustee nor the Collateral Trustee shall be responsible for filing any financing or continuation statements or recording any documents or instruments in any public office at any time or times or otherwise perfecting or maintaining the perfection of any Lien or security interest in the Collateral.
(i)By their acceptance of the Notes, the Holders of the Notes will be deemed to have authorized the Trustee to enter into and to perform each of the Security Documents.
(j)In no event shall the Trustee be responsible or liable for special, indirect, punitive or consequential loss or damage of any kind whatsoever (including, but not limited to, loss of profit) irrespective of whether the Trustee has been advised of the likelihood of such loss or damage and regardless of the form of action.
(k)The Trustee shall not be deemed to have notice of any Default or Event of Default unless a Trust Officer 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, and such notice references the Notes and this Indenture.

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(l)The Trustee may request that the Company deliver a certificate setting forth the names of individuals and/or titles of officers authorized at such time to take specified actions pursuant to this Indenture. (an “Incumbency Certificate”).
(m)The Trustee shall not be required to give any bond or surety in respect of the  performance of its powers and duties hereunder.
Section 7.03    Individual Rights of Trustee.
The Trustee in its individual or any other capacity may become the owner or pledgee of Notes and may otherwise deal with the Company or any Affiliate of the Company with the same rights it would have if it were not Trustee.  However, in the event that the Trustee acquires any conflicting interest it must eliminate such conflict within 90 days, apply to the SEC for permission to continue as trustee or resign.  Any Agent may do the same with like rights and duties.  The Trustee is also subject to Section 7.10 hereof.
Section 7.04    Trustee's Disclaimer.
The Trustee will not be responsible for and makes no representation as to the validity or adequacy of this Indenture, the Guarantees, the Security Documents or the Notes, it shall not be accountable for the Company's use of the proceeds from the Notes or any money paid to the Company or upon the Company's direction under any provision of this Indenture, it will not be responsible for the use or application of any money received by any Paying Agent other than the Trustee, and it will not be responsible for any statement or recital herein or any statement in the Notes or any other document in connection with the sale of the Notes or pursuant to this Indenture other than its certificate of authentication.
Section 7.05    Notice of Defaults.
If a Default or Event of Default occurs and is continuing and if it is known to a Trust Officer of the Trustee, the Trustee will provide to Holders of Notes a notice of the Default (unless such Default is cured) 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 Note, the Trustee may withhold the notice if and so long as the Trustee in good faith determines that withholding the notice is in the interests of the Holders of the Notes.
Section 7.06    [Intentionally Omitted].
Section 7.07    Compensation and Indemnity.
(a)The Company will pay to the Trustee from time to time reasonable compensation for its acceptance of this Indenture and services hereunder as agreed to in writing from time to time.  The Trustee's compensation will not be limited by any law on compensation of a trustee of an express trust.  The Company will reimburse the Trustee promptly upon request for all reasonable disbursements, advances and expenses incurred or made by it in addition to the compensation for its services.  Such expenses will include the reasonable compensation, disbursements and expenses of the Trustee's agents and counsel.
(b)The Company and the Guarantors, jointly and severally, will indemnify, defend and hold harmless the Trustee, its directors, employees, agents and affiliates (the “Indemnitees”) against any and all losses, liabilities, claims, damages or expenses incurred by it arising out of or in connection with the acceptance or administration of its duties under this Indenture, including the costs and expenses of enforcing this Indenture or any other Note Document against the Company and the Guarantors (including this Section 7.07) and defending such Indemnitee against any claim (whether asserted by the Company, the Guarantors, any Holder or any other Person) or liability in connection with the exercise or performance of any of its powers or duties hereunder, except to the extent any such loss, liability or expense is determined by a court of competent jurisdiction to have been caused by its own gross negligence or willful misconduct.  The Trustee will notify the Company promptly of any claim for which it may seek indemnity.  Failure by the Trustee to so notify the Company will not relieve the Company or any of the Guarantors of their obligations hereunder.  The 

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Company or such Guarantor will defend the claim and the Trustee will cooperate in the defense.  To the extent there exists a conflict or a potential conflict of interest, as determined in good faith by the Indemnitee, the Indemnitee may have separate counsel and the Company will pay the reasonable fees and expenses of such counsel.  Neither the Company nor any Guarantor need pay for any settlement made without its consent, which consent will not be unreasonably withheld.
(c)The obligations of the Company and the Guarantors under this Section 7.07 will survive the satisfaction and discharge of this Indenture.
(d)To secure the Company's and the Guarantors' payment obligations in this Section 7.07, the Trustee will have a Lien prior to the Notes on all money or property held or collected by the Trustee, except that held in trust to pay principal and interest on particular Notes.  Such Lien will survive the satisfaction and discharge of this Indenture and the resignation or removal of the Trustee.
(e)When the Trustee incurs expenses or renders services after an Event of Default specified in Section 6.01(6) or (7) hereof occurs, the expenses and the compensation for the services (including the reasonable fees and expenses of its agents and counsel) are intended to constitute expenses of administration under any Bankruptcy Code.
(f)“Trustee” for the purposes of this Section 7.07 shall include any predecessor Trustee and the Trustee in each of its capacities hereunder and each agent, custodian and other person employed to act hereunder; provided, however, that the gross negligence or willful misconduct of any Trustee hereunder shall not affect the rights of any other Trustee hereunder.
Section 7.08    Replacement of Trustee.
(a)A resignation or removal of the Trustee and appointment of a successor Trustee will become effective only upon the successor Trustee's acceptance of appointment as provided in this Section 7.08.
(b)The Trustee may resign in writing at any time and be discharged from the trust hereby created by so notifying the Company.  The Holders of a majority in aggregate principal amount of the then outstanding Notes may remove the Trustee by so notifying the Trustee and the Company in writing not less than 30 days prior to the effective date of such removal.  The Company may remove the Trustee if:
(1)the Trustee fails to comply with Section 7.10 hereof;
(2)the Trustee is adjudged a bankrupt or an insolvent or an order for relief is entered with respect to the Trustee under any Bankruptcy Code;
(3)a custodian or public officer takes charge of the Trustee or its property; or
(4)the Trustee becomes incapable of acting.
(c)If the Trustee resigns or is removed or if a vacancy exists in the office of Trustee for any reason, the Company will promptly appoint a successor Trustee.  Within one year after the successor Trustee takes office, the Holders of a majority in aggregate principal amount of the then outstanding Notes may appoint a successor Trustee to replace the successor Trustee appointed by the Company.
(d)If a successor Trustee does not take office within 60 days after the retiring Trustee resigns or is removed, the retiring Trustee, the Company, or the Holders of at least 10% in aggregate principal amount of the then outstanding Notes may at the Company's expense petition any court of competent jurisdiction for the appointment of a successor Trustee.
(e)If the Trustee, after written request by any Holder who has been a Holder for at least six months, fails to comply with Section 7.10 hereof, such Holder may petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee.

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(f)A successor Trustee will deliver a written acceptance of its appointment to the retiring Trustee and to the Company.  Thereupon, the resignation or removal of the retiring Trustee will become effective, and the successor Trustee will have all the rights, powers and duties of the Trustee under this Indenture.  The successor Trustee will provide a notice of its succession to Holders.  The retiring Trustee will promptly transfer all property held by it as Trustee to the successor Trustee; provided all sums owing to the Trustee hereunder have been paid and subject to the Lien provided for in Section 7.07 hereof.  Notwithstanding replacement of the Trustee pursuant to this Section 7.08, the Company's obligations under Section 7.07 hereof will continue for the benefit of the retiring Trustee.  The retiring Trustee shall have no responsibility or liability for any action or inaction of a successor Trustee.
Section 7.09    Successor Trustee by Merger, etc.
If the Trustee consolidates, merges or converts into, or transfers all or substantially all of its corporate trust business to, another corporation, the successor corporation without any further act will be the successor Trustee.
Section 7.10    Eligibility; Disqualification.
There will at all times be a Trustee hereunder that is a corporation organized and doing business under the laws of the United States of America or of any state thereof that is authorized under such laws to exercise corporate trustee power, that is subject to supervision or examination by federal or state authorities and that has a combined capital and surplus of at least $100.0 million as set forth in its most recent published annual report of condition.
Section 7.11    Agency Capacities.
The rights, privileges, protections, immunities and benefits given to the Trustee, including without limitation its right to be compensated, reimbursed, and 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 or any other Note Document.

ARTICLE 8
LEGAL DEFEASANCE AND COVENANT DEFEASANCE

Section 8.01    Option to Effect Legal Defeasance or Covenant Defeasance.
The Company may at any time, at its option evidenced by a resolution of its Board of Directors set forth in an Officer's Certificate, elect to have either Section 8.02 or 8.03 hereof be applied to all outstanding Notes of any particular series upon compliance with the conditions set forth below in this Article 8.
Section 8.02    Legal Defeasance and Discharge.
Upon the Company's exercise under Section 8.01 hereof of the option applicable to this Section 8.02, the Company and each of the Guarantors will, subject to the satisfaction of the conditions set forth in Section 8.04 hereof, be deemed to have been discharged from their obligations with respect to all outstanding Notes of any particular series and all obligations of the Guarantors with respect to their Guarantees and such Notes (to the extent they are Co-Issuers) on the date the conditions set forth below are satisfied (hereinafter, “Legal Defeasance”).  For this purpose, Legal Defeasance means that the Company and the Guarantors will be deemed to have paid and discharged the entire Indebtedness represented by the outstanding Notes (including the Guarantees) and cured all existing Events of Default, which shall thereafter be deemed to be “outstanding” only for the purposes of Section 8.05 hereof and the other Sections of this Indenture referred to in clauses (1) and (2) below, and to have satisfied all their other obligations under such Notes, the Guarantees and this Indenture (and the Trustee, on demand of and at the expense of the Company, shall execute proper instruments acknowledging the same), except for the following provisions which shall survive until otherwise terminated or discharged hereunder:
(1)the rights of Holders of outstanding Notes of any particular series to receive payments in respect of the principal of, or interest or premium, if any, on, such Notes when such payments are due from 

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the Funds in Trust referred to in Section 8.04 hereof;
(2)the Company's obligations with respect any series of Notes under Article 2 and Section 4.02 hereof;
(3)the rights, powers, trusts, duties and immunities of the Trustee hereunder and the Company's and the Guarantors' obligations in connection therewith; and
(4)this Article 8.
Subject to compliance with this Article 8, the Company may exercise its option under this Section 8.02 notwithstanding the prior exercise of its option under Section 8.03 hereof.
Section 8.03    Covenant Defeasance.
Upon the Company's exercise under Section 8.01 hereof of the option applicable to this Section 8.03, the Company and each of the Guarantors will, subject to the satisfaction of the conditions set forth in Section 8.04 hereof, be released from each of their obligations with respect to a particular series of Notes under the covenants contained in Sections 4.03, 4.04, 4.07, 4.08, 4.09, 4.10, 4.11, 4.12, 4.13, 4.14 (except with respect to the existence of the Company), 4.15, 4.16, 4.17, 4.18 and 4.19 hereof, Sections 5.01(a)(3) and 5.01(a)(4) hereof, Sections 5.01(b) through (d) hereof and Article 10 hereof with respect to the outstanding Notes on and after the date the conditions set forth in Section 8.04 hereof are satisfied (hereinafter, “Covenant Defeasance”), any existing failure by the Company to comply with any such obligations shall no longer constitute an Event of Default, and such Notes will thereafter be deemed not “outstanding” for the purposes of any direction, waiver, consent or declaration or act of Holders (and the consequences of any thereof) in connection with such covenants, but will continue to be deemed “outstanding” for all other purposes hereunder (it being understood that such Notes will not be deemed outstanding for accounting purposes).  For this purpose, Covenant Defeasance means that, with respect to the outstanding Notes of a particular series and Guarantees, the Company and the Guarantors may omit to comply with and will have no liability in respect of any term, condition or limitation set forth in any such covenant, whether directly or indirectly, by reason of any reference elsewhere herein to any such covenant or by reason of any reference in any such covenant to any other provision herein or in any other document and such omission to comply will not constitute a Default or an Event of Default under Section 6.01 hereof, but, except as specified above, the remainder of this Indenture and such Notes and Guarantees will be unaffected thereby.  In addition, upon the Company's exercise under Section 8.01 hereof of the option applicable to this Section 8.03, subject to the satisfaction of the conditions set forth in Section 8.04 hereof, Sections 6.01(3) through 6.01(5) and 6.01(9) hereof will not constitute Events of Default.  In addition the Guarantees will be terminated and released and the Guarantors discharged with respect to their Guarantees and such Notes (to the extent they are Co-Issuers) upon a Covenant Defeasance.
Section 8.04    Conditions to Legal or Covenant Defeasance.
In order to exercise either Legal Defeasance or Covenant Defeasance under either Section 8.02 or 8.03 hereof:
(1)the Company must irrevocably deposit with the Trustee, in trust, for the benefit of the Holders of the series of Notes being defeased, cash in U.S. dollars, non-callable Government Securities, or a combination of cash in U.S. dollars and non-callable Government Securities (“Funds in Trust”), in amounts as will be sufficient, based on the advice of a nationally recognized firm of independent public accountants, to pay the principal of, or interest and premium, if any, on, the outstanding Notes of such series on the stated date for payment thereof or on the applicable redemption date, as the case may be, and the Company must specify whether such Notes are being defeased to such stated date for payment or to a particular redemption date;
(2)in the case of an election under Section 8.02 hereof, the Company must deliver to the Trustee an Opinion of Counsel reasonably acceptable to the Trustee confirming that:
(a)the Company has received from, or there has been published by, the Internal Revenue 

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Service a ruling; or
(b)since the Issue Date, there has been a change in the applicable federal income tax law,
in either case to the effect that, and based thereon such Opinion of Counsel shall confirm that, the Holders of the outstanding Notes being defeased will not recognize income, gain or loss for federal income tax purposes as a result of such Legal Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Legal Defeasance had not occurred;
(3)in the case of an election under Section 8.03 hereof, the Company must deliver to the Trustee an Opinion of Counsel reasonably acceptable to the Trustee confirming that the Holders of the outstanding Notes being defeased will not recognize income, gain or loss for federal income tax purposes as a result of such Covenant Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Covenant Defeasance had not occurred;
(4)no Default or Event of Default shall have occurred and be continuing on the date of such deposit (other than a Default or Event of Default resulting from the borrowing of funds to be applied to the Funds in Trust);
(5)such Legal Defeasance or Covenant Defeasance will not result in a breach or violation of, or constitute a default under, any material agreement or instrument (other than this Indenture) to which the Company or any of its Restricted Subsidiaries is a party or by which the Company or any of its Restricted Subsidiaries is bound;
(6)the Company must deliver to the Trustee an Officer's Certificate stating that the deposit was not made by the Company with the intent of preferring the Holders of the Notes being defeased over the other creditors of the Company with the intent of defeating, hindering, delaying or defrauding any creditors of the Company or others; and
(7)the Company must deliver to the Trustee an Officer's Certificate and an Opinion of Counsel, each stating that all conditions precedent relating to the Legal Defeasance or the Covenant Defeasance, as applicable, have been satisfied.
All of the Collateral will be released from the Lien securing the Notes, as provided under Section 12.03 hereof, upon a Legal Defeasance or Covenant Defeasance in accordance with the provisions described above.
Section 8.05    Deposited Money and Government Securities to be Held in Trust; Other Miscellaneous Provisions.
Subject to Section 8.06 hereof, all money and non-callable Government Securities (including the proceeds thereof) deposited with the Trustee (or other qualifying trustee, collectively for purposes of this Section 8.05, the “Trustee”) pursuant to Section 8.04 hereof in respect of the outstanding Notes will be held in trust and applied by the Trustee, in accordance with the provisions of such Notes and this Indenture, to the payment, either directly or through any Paying Agent (including the Company acting as Paying Agent) as the Trustee may determine, to the Holders of such Notes of all sums due and to become due thereon in respect of principal, premium, if any, and interest, but such money need not be segregated from other funds except to the extent required by law.
The Company will pay and indemnify the Trustee against any tax, fee or other charge imposed on or assessed against the cash or non-callable Government Securities deposited pursuant to Section 8.04 hereof or the principal and interest received in respect thereof other than any such tax, fee or other charge which by law is for the account of the Holders of the outstanding Notes.
Notwithstanding anything in this Article 8 to the contrary, the Trustee will deliver or pay to the Company from time to time upon the request of the Company any money or non-callable Government Securities held by it as provided 

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in Section 8.04 hereof, which are in excess of the amount thereof that would then be required to be deposited to effect an equivalent Legal Defeasance or Covenant Defeasance.
Section 8.06    Repayment to Company.
Subject to any applicable abandoned property law, any money deposited with the Trustee or any Paying Agent, or then held by the Company, in trust for the payment of the principal of, premium, if any, or interest on, any Note and remaining unclaimed for two years after such principal, premium, if any, or interest has become due and payable shall be paid to the Company on its request or (if then held by the Company) will be discharged from such trust; and the Holder of such Note will thereafter be permitted to look only to the Company for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money, and all liability of the Company as trustee thereof, will thereupon cease; provided, however, that the Trustee or such Paying Agent, before being required to make any such repayment, may at the expense of the Company cause to be published once, in the New York Times and The Wall Street Journal (national edition), notice that such money remains unclaimed and that, after a date specified therein, which will not be less than 30 days from the date of such notification or publication, any unclaimed balance of such money then remaining will be repaid to the Company.
Section 8.07    Reinstatement.
If the Trustee or Paying Agent is unable to apply any U.S. dollars or non-callable Government Securities in accordance with Section 8.02 or 8.03 hereof, as the case may be, by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, then the Company's and the Guarantors' obligations under this Indenture and such Notes and the Guarantees will be revived and reinstated as though no deposit had occurred pursuant to Section 8.02 or 8.03 hereof until such time as the Trustee or Paying Agent is permitted to apply all such money in accordance with Section 8.02 or 8.03 hereof, as the case may be; provided, however, that, if the Company makes any payment of principal of, premium, if any, or interest on, any Note following the reinstatement of its obligations, the Company will be subrogated to the rights of the Holders of such Notes to receive such payment from the money held by the Trustee or Paying Agent.

ARTICLE 9
AMENDMENT, SUPPLEMENT AND WAIVER

Section 9.01    Without Consent of Holders of Notes.
Notwithstanding Section 9.02 of this Indenture, the Company, the Guarantors and the Trustee may amend or supplement this Indenture or the Notes or the Guarantees or the Security Documents without the consent of any Holder of Note:
(1)to cure any ambiguity, defect, inconsistency or omission;
(2)to provide for uncertificated Notes in addition to or in place of certificated Notes;
(3)to provide for the assumption of the Company's, a Co-Issuer's or a Guarantor's obligations to the Holders of the Notes and Guarantees by a successor to the Company, such Co-Issuer's or such Guarantor pursuant to Article 5 hereof;
(4)to make any change that would provide any additional rights or benefits to the Holders of the Notes or that does not adversely affect the legal rights hereunder of any such Holder;
(5)to add covenants for the benefit of the Holders or to surrender any right or power conferred upon the Company or a Guarantor;
(6)to conform the text of this Indenture, the Guarantees, the Notes or any Security Document to any provision of the “Description of Notes” section of the Offering Circular, to the extent that such provision 

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in that “Description of Notes” was intended to be a verbatim recitation of a provision of this Indenture, the Guarantees, the Notes or such Security Document as set forth in an Officer's Certificate;
(7)to provide for the issuance of Additional Notes in accordance with the limitations set forth in this Indenture as of the Issue Date;
(8)to allow any Guarantor or other obligor to execute a supplemental indenture and/or a Guarantee with respect to the Notes;
(9)to add additional assets as Collateral;
(10)to release a Guarantor or Co-Issuer as provided in this Indenture;
(11)to make, complete or confirm any grant of Collateral permitted or required by this Indenture or any of the Security Documents or any release, termination or discharge of Collateral that becomes effective as set forth in this Indenture or any of the Security Documents;
(12)to make any amendment to the provisions of the Indenture relating to the transfer and legending of Notes provided, however, that (a) compliance with the Indenture as so amended would not result in Notes being transferred in violation of the Securities Act or any applicable securities law and (b) such amendment does not materially and adversely affect the rights of Holders to transfer Notes;
(13)to evidence and provide the acceptance of the appointment of a successor Trustee under this Indenture; or
(14)to comply with the rules of any applicable securities depositary.
In addition, the Collateral Trustee and the Trustee will be authorized to amend the Security Documents as provided under Section 7.1 of the Collateral Trust Agreement.
Upon the request of the Company accompanied by a resolution of its Board of Directors authorizing the execution of any such amended or supplemental indenture, and upon receipt by the Trustee of the documents described in Section 7.02 hereof, the Trustee will join with the Company and the Guarantors in the execution of any amended or supplemental indenture authorized or permitted by the terms of this Indenture and to make any further appropriate agreements and stipulations that may be therein contained, but the Trustee will not be obligated to enter into such amended or supplemental indenture that affects its own rights, duties or immunities under this Indenture or otherwise.
Section 9.02    With Consent of Holders of Notes.
Except as provided below in this Section 9.02 or as permitted by Section 9.01, the Company and the Trustee may amend or supplement this Indenture (including, without limitation, Section 3.09, 4.10, 4.15 and 4.19 hereof) and the Notes and the Guarantees and the Security Documents with the consent of the Holders of at least a majority in aggregate principal amount of the then outstanding Notes (including, without limitation, consents obtained in connection with a tender offer or exchange offer for, or purchase of, the Notes), and, subject to Sections 6.04 and 6.07 hereof, any existing Default or Event of Default or compliance with any provision of this Indenture or the Notes or the Guarantees or the Security Documents may be waived with the consent of the Holders of a majority in aggregate principal amount of the then outstanding Notes (including, without limitation, consents obtained in connection with a tender offer or exchange offer for, or purchase of, the Notes).
Upon the request of the Company accompanied by a resolution of its Board of Directors authorizing the execution of any such amended or supplemental indenture, and upon the filing with the Trustee of evidence satisfactory to the Trustee of the consent of the Holders of Notes as aforesaid, and upon receipt by the Trustee of the documents described in Section 7.02 hereof, the Trustee will join with the Company and the Guarantors in the execution of such amended or supplemental indenture unless such amended or supplemental indenture directly affects the Trustee's own 

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rights, duties or immunities under this Indenture or otherwise, in which case the Trustee may in its discretion, but will not be obligated to, enter into such amended or supplemental Indenture.
It is not be necessary for the consent of the Holders of Notes under this Section 9.02 to approve the particular form of any proposed amendment, supplement or waiver, but it is sufficient if such consent approves the substance thereof.
After an amendment, supplement or waiver under this Section 9.02 becomes effective, the Company will provide to the Holders of Notes affected thereby a notice briefly describing the amendment, supplement or waiver.  Any failure of the Company to provide such notice, or any defect therein, will not, however, in any way impair or affect the validity of any such amended or supplemental indenture or waiver.  Subject to Sections 6.04 and 6.07 hereof, the Holders of a majority in aggregate principal amount of the Notes then outstanding may waive compliance in a particular instance by the Company with any provision of this Indenture or the Notes or the Guarantees.  However, without the consent of each Holder affected, an amendment, supplement or waiver under this Section 9.02 may not (with respect to any Notes held by a non-consenting Holder):
(1)reduce the principal amount of Notes whose Holders must consent to an amendment, supplement or waiver;
(2)reduce the principal of or extend the fixed maturity of any Note or alter any of the provisions with respect to the redemption of the Notes (except as provided above with respect to Sections 3.09, 4.10, 4.15 and 4.19 hereof);
(3)reduce the rate of or extend the time for payment of interest, including default interest, on any Note;
(4)waive a Default or Event of Default in the payment of principal of, or premium, if any, or interest on, the Notes (except a rescission of acceleration of the Notes by the Holders of at least a majority in aggregate principal amount of the then outstanding Notes and a waiver of the Payment Default that resulted from such acceleration) or in respect of a covenant or provision contained in this Indenture or any Guarantee that cannot be amended or modified without the consent of all Holders;
(5)make any Note payable in money other than that stated in the Notes;
(6)make any change in the provisions of this Indenture relating to waivers of past Defaults or the rights of Holders of Notes to receive payment of principal of, or interest or premium, if any, on, the Notes;
(7)except as otherwise permitted by this Indenture, release the Guarantee of any Significant Subsidiary (or any group of Subsidiaries that together would constitute a Significant Subsidiary); 
(8)make any change in these amendment and waiver provisions; or
(9)impair the right of any Holder to receive payment of principal of, or interest on, such Holder's Notes on or after the due dates therefor or to institute suit for the enforcement of any payment on or with respect to such Holder's Notes.
In addition, without the consent of the Holders of Notes of at least 66 2/3% in principal amount of the Notes then outstanding, no amendment, supplement or waiver may release all or substantially all of the Collateral other than in accordance with this Indenture and the Security Documents.
Section 9.03    [Intentionally Omitted].
Section 9.04    Revocation and Effect of Consents.
Until an amendment, supplement or waiver becomes effective, a consent to it by a Holder of a Note is a 

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continuing consent by the Holder of a Note and every subsequent Holder of a Note or portion of a Note that evidences the same debt as the consenting Holder's Note, even if notation of the consent is not made on any Note.  However, any such Holder of a Note or subsequent Holder of a Note may revoke the consent as to its Note if the Trustee receives written notice of revocation before the date the amendment, supplement or waiver becomes effective.  An amendment, supplement or waiver becomes effective in accordance with its terms and thereafter binds every Holder.
Section 9.05    Notation on or Exchange of Notes.
The Trustee may place an appropriate notation about an amendment, supplement or waiver on any Note thereafter authenticated.  The Company in exchange for all Notes may issue and the Trustee shall, upon receipt of an Authentication Order, authenticate new Notes that reflect the amendment, supplement or waiver.
Failure to make the appropriate notation or issue a new Note will not affect the validity and effect of such amendment, supplement or waiver.
Section 9.06    Trustee to Sign Amendments, etc.
The Trustee will sign any amended or supplemental indenture authorized pursuant to this Article 9 if the amendment or supplement does not adversely affect the rights, duties, liabilities or immunities of the Trustee.  Neither the Company nor any Co-Issuer may sign an amended or supplemental indenture until the Board of Directors of the Company or such Co-Issuer, as applicable, approves it.  In executing any amended or supplemental indenture, the Trustee will be provided with and (subject to Section 7.01 hereof) will be fully protected in conclusively relying upon, in addition to the documents required by Section 13.04 hereof, an Officer's Certificate and an Opinion of Counsel stating that the execution of such amended or supplemental indenture is authorized or permitted by this Indenture.

ARTICLE 10
GUARANTEES

Section 10.01.    Guarantee.
(a)Subject to this Article 10, each of the Guarantors hereby, jointly and severally, unconditionally guarantees to each Holder of a Note authenticated and delivered by the Trustee and to the Trustee and its successors and assigns, irrespective of the validity and enforceability of this Indenture, the Notes or the Obligations of the Company hereunder or thereunder, that:
(1) the principal of, premium, if any, and interest on, the Notes will be promptly paid in full when due, whether at maturity, by acceleration, redemption or otherwise, and interest on the overdue principal of and interest on the Notes, if any, if lawful, and all other Obligations of the Company to the Holders or the Trustee hereunder or thereunder will be promptly paid in full or performed, all in accordance with the terms hereof and thereof; and 
(2)in case of any extension of time of payment or renewal of any Notes or any of such other obligations, that same will be promptly paid in full when due or performed in accordance with the terms of the extension or renewal, whether at stated maturity, by acceleration or otherwise.
Failing payment when due of any amount so guaranteed or any performance so guaranteed for whatever reason, the Guarantors will be jointly and severally obligated to pay the same immediately.  Each Guarantor agrees that this is a guarantee of payment and not a guarantee of collection.
(b)The Guarantors hereby agree that their obligations hereunder are unconditional, irrespective of the validity, regularity or enforceability of the Notes or this Indenture, the absence of any action to enforce the same, any waiver or consent by any Holder of the Notes with respect to any provisions hereof or thereof, the recovery of any judgment against the Company, any action to enforce the same or any other circumstance (other than complete performance) which might otherwise constitute a legal or equitable discharge or defense of a guarantor.  Each Guarantor 

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hereby waives diligence, presentment, demand of payment, filing of claims with a court in the event of insolvency or bankruptcy of the Company, any right to require a proceeding first against the Company, protest, notice and all demands whatsoever and covenant that this Guarantee will not be discharged except by complete performance of the obligations contained in the Notes and this Indenture.
(c)If any Holder or the Trustee is required by any court or otherwise to return to the Company, the Guarantors or any custodian, trustee, liquidator or other similar official acting in relation to either the Company or the Guarantors, any amount paid by either to the Trustee or such Holder, this Guarantee, to the extent theretofore discharged, will be reinstated in full force and effect.
(d)Each Guarantor agrees that it will not be entitled to any right of subrogation in relation to the Holders in respect of any obligations guaranteed hereby until payment in full of all obligations guaranteed hereby.  Each Guarantor further agrees that, as between the Guarantors, on the one hand, and the Holders and the Trustee, on the other hand, (1) the maturity of the obligations guaranteed hereby may be accelerated as provided in Article 6 hereof for the purposes of this Guarantee, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the obligations guaranteed hereby, and (2) in the event of any declaration of acceleration of such obligations as provided in Article 6 hereof, such obligations (whether or not due and payable) will forthwith become due and payable by the Guarantors for the purpose of this Guarantee.  The Guarantors will have the right to seek contribution from any non-paying Guarantor so long as the exercise of such right does not impair the rights of the Holders under the Guarantee.
Section 10.02.    Limitation on Guarantor Liability.
Each Guarantor, and by its acceptance of Notes, each Holder, hereby confirms that it is the intention of all such parties that the Guarantee of such Guarantor not constitute a fraudulent transfer or conveyance for purposes of Bankruptcy Code, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any similar federal or state law to the extent applicable to any Guarantee.  To effectuate the foregoing intention, the Trustee, the Holders and the Guarantors hereby irrevocably agree that the obligations of such Guarantor will be limited to the maximum amount that will, after giving effect to such maximum amount and all other contingent and fixed liabilities of such Guarantor that are relevant under such laws, and after giving effect to any collections from, rights to receive contribution from or payments made by or on behalf of any other Guarantor in respect of the obligations of such other Guarantor under this Article 10, result in the obligations of such Guarantor under its Guarantee not constituting a fraudulent transfer or conveyance.
Section 10.03.    Execution and Delivery of Guarantee.
To evidence its Guarantee set forth in Section 10.01 hereof, each Guarantor hereby agrees that a notation of such Guarantee substantially in the form attached as Exhibit E hereto will be endorsed by an Officer of such Guarantor on each Note authenticated and delivered by the Trustee after the time such Guarantor becomes a Guarantor and that this Indenture will be executed on behalf of such Guarantor by one of its Officers.
Each Guarantor hereby agrees that its Guarantee set forth in Section 10.01 hereof will remain in full force and effect notwithstanding any failure to endorse on each Note a notation of such Guarantee.
If an Officer whose signature is on this Indenture or on the Guarantee no longer holds that office at the time the Trustee authenticates the Note on which a Guarantee is endorsed, the Guarantee will be valid nevertheless.
The delivery of any Note by the Trustee, after the authentication thereof hereunder, will constitute due delivery of the Guarantee set forth in this Indenture on behalf of the Guarantors.
Section 10.04.    Releases.
The Guarantee of a Guarantor and such Guarantor's obligations (if any) as a Co-Issuer shall automatically be released:

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(a)    In connection with any sale, transfer or other disposition of all or substantially all of the assets of that Guarantor (including by way of merger or consolidation) to a Person that is not (after giving effect to such transaction) the Company or a Restricted Subsidiary of the Company, if the sale, transfer or other disposition does not violate Section 4.10 hereof or is not an Asset Sale pursuant to the definition thereof;
(b)    In connection with any sale, transfer or other disposition of all of the Capital Stock of that Guarantor to a Person that is not (after giving effect to such transaction) the Company or a Restricted Subsidiary of the Company, if the sale, transfer or other disposition does not violate Section 4.10 hereof or is not an Asset Sale pursuant to the definition thereof;
(c)    If the Company designates such Guarantor to be an Unrestricted Subsidiary in accordance with the applicable provisions of this Indenture;
(d)    upon Legal Defeasance, Covenant Defeasance or satisfaction and discharge of this Indenture as provided in Article 8 or Article 11 hereof;
(e)    upon a sale, transfer or other disposition of Capital Stock which causes such Guarantor to cease to be a Restricted Subsidiary if such sale, transfer or other disposition does not violate any of the provisions of this Indenture; 
(f)    if such Guarantor no longer has any obligations under any Indebtedness that would require it to become a Guarantor pursuant to Section 4.17 hereof; or
(g)    upon a merger, sale of assets or other transaction that satisfies the requirements of Section 5.01(c).
Any Guarantor not released from its obligations under its Guarantee as provided in this Section 10.04 will remain liable for the full amount of principal of and interest and premium, if any, on the Notes and for the other obligations of any Guarantor under this Indenture as provided in this Article 10.  
If the Guarantee of any Guarantor is deemed to be released or is automatically released, the Company shall provide notice promptly to the Trustee of such release; provided, however, that the failure to provide such notice shall not impair any release under this Indenture.

ARTICLE 11
SATISFACTION AND DISCHARGE

Section 11.01    Satisfaction and Discharge.
This Indenture will be discharged and will cease to be of further effect as to all Notes of any particular series issued hereunder, when:
(1)either:
(a)all Notes of such series that have been authenticated, except lost, stolen or destroyed Notes that have been replaced or paid and Notes for whose payment money has theretofore been deposited in trust and thereafter repaid to the Company, have been delivered to the Trustee for cancellation; or
(b)all Notes of such series that have not been delivered to the Trustee for cancellation (i) have become due and payable by reason of the providing of a notice of redemption or otherwise or (ii) will become due and payable within one year, and the Company or any Guarantor have irrevocably deposited or caused to be deposited with the Trustee as trust funds in trust solely for the benefit of such Holders, cash in U.S. dollars, non-callable Government Securities, or a combination of cash in U.S. dollars and non-callable Government Securities, in amounts as will be sufficient based on the advice of a nationally recognized firm of independent accountants, without consideration of any reinvestment of interest, to pay and discharge the entire Indebtedness on such Notes not delivered to the Trustee for cancellation, including principal, premium, 

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if any, and accrued interest to the date of maturity or redemption (for the avoidance of doubt, in the case of a discharge that occurs in connection with a redemption that is to occur on a Make-Whole Redemption Date, the amount to be deposited shall be the amount that, as of the date of such deposit, is deemed reasonably sufficient to make such payment and discharge on the Make-Whole Redemption Date, in the good-faith determination of the Board of Directors of the Company pursuant to a Board Resolution and as evidenced by an Officer's Certificate);
(2)no Default or Event of Default with respect to such Notes has occurred and is continuing on the date of such deposit (other than a Default or Event of Default resulting from the borrowing of funds to be applied to such deposit) and the deposit will not result in a breach or violation of, or constitute a default under, any other instrument (other than this Indenture) to which the Company or any Guarantor is a party or by which the Company or any Guarantor is bound;
(3)the Company has paid or caused to be paid all sums payable by the Company under this Indenture with respect to such series of Notes; and
(4)the Company has delivered irrevocable instructions to the Trustee under this Indenture to apply the deposited money toward the payment of such Notes at maturity or on the redemption date, as the case may be.
In addition, the Company must deliver an Officer's Certificate and an Opinion of Counsel to the Trustee stating that all conditions precedent to satisfaction and discharge have been satisfied.
The Collateral will be released from the Lien securing the Notes, as provided under Section 12.04 hereof, upon a satisfaction and discharge in accordance with the provisions described above.
Notwithstanding the satisfaction and discharge of this Indenture, if money has been deposited with the Trustee pursuant to subclause (b) of clause (1) of this Section 11.01, the provisions of Sections 11.02 and 8.06 hereof will survive.  In addition, nothing in this Section 11.01 will be deemed to discharge those provisions of Section 7.07 hereof, that, by their terms, survive the satisfaction and discharge of this Indenture.
Section 11.02    Application of Trust Money.
Subject to the provisions of Section 8.06 hereof, all money deposited with the Trustee pursuant to Section 11.01 hereof shall be held in trust and applied by it, in accordance with the provisions of the relevant series of Notes and this Indenture, to the payment, either directly or through any Paying Agent (including the Company acting as its own Paying Agent) as the Trustee may determine, to the Persons entitled thereto, of the principal (and premium, if any) and interest for whose payment such money has been deposited with the Trustee; but such money need not be segregated from other funds except to the extent required by law.
If the Trustee or Paying Agent is unable to apply any money or Government Securities in accordance with Section 11.01 hereof by reason of any legal proceeding or by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, the Company's and any Guarantor's obligations under this Indenture and the relevant series of Notes shall be revived and reinstated as though no deposit had occurred pursuant to Section 11.01 hereof; provided that if the Company has made any payment of principal of, premium, if any, or interest on, any such Notes because of the reinstatement of its obligations, the Company shall be subrogated to the rights of the Holders of such Notes to receive such payment from the money or Government Securities held by the Trustee or Paying Agent.

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ARTICLE 12
COLLATERAL AND SECURITY

Section 12.01    Security Interest.
The due and punctual payment of the principal of, premium, if any, interest on, the Notes when and as the same shall be due and payable, whether on an interest payment date, at maturity, by acceleration, repurchase, redemption or otherwise, and interest on the overdue principal of, premium, if any, interest on, the Notes and performance of all other Obligations of the Company, the Co-Issuers and the Guarantors to the Holders of Notes or the Trustee and the Notes (including, without limitation, the Guarantees), according to the terms hereunder or thereunder, are secured as provided in the Security Documents.  Each Holder of Notes, by its acceptance thereof, consents and agrees to the terms of the Security Documents (including, without limitation, the provisions providing for priority of Liens and foreclosure and release of Collateral) as the same may be in effect or may be amended from time to time in accordance with their terms and authorizes and appoints Wells Fargo Bank, National Association as the Trustee and as the Collateral Trustee, and each Holder of Notes and the Trustee authorize and direct the Collateral Trustee to enter into the Security Documents and to perform its obligations and exercise its rights thereunder in accordance therewith and authorize and direct each of the Trustee and the Collateral Trustee to bind the Holders of the Notes as set forth in the Security Documents.  The Company, the Co-Issuers and the Guarantors consent and agree to be bound by the terms of the Security Documents, as the same may be in effect from time to time, and agrees to perform its obligations thereunder in accordance therewith.  The Company will take, and will cause its Subsidiaries to take, any and all actions reasonably required by the Security Documents to create and maintain, as security for the Collateral Trust Parity Lien Obligations and any Junior Lien Obligations, a valid and enforceable perfected Lien in and on all the Collateral in favor of the Collateral Trustee for the benefit of the Holders of Notes, holders of other Collateral Trust Parity Lien Obligations and any holders of Junior Lien Obligations, to the extent required by, and with the Lien priority required under, the Note Documents.
Section 12.02    [Intentionally Omitted].
Section 12.03    Release of Liens on Collateral.
The Collateral Trustee's Liens on the Collateral will be released in any one or more of the circumstances set forth in Section 4.1 of the Collateral Trust Agreement.
Section 12.04    Release of Liens in Respect of Notes.
The Collateral Trustee's Liens on the Collateral will no longer secure the Notes outstanding under this Indenture or any other Obligations under this Indenture or other Note Documents, and the right of holders of the Notes and such Obligations to the benefits and proceeds of the Collateral Trustee's Liens on the Collateral will terminate and be discharged, as provided in Section 4.4 of the Collateral Trust Agreement.
Section 12.05    Amendment of Security Documents.
No amendment or supplement to the provisions of the Collateral Trust Agreement or any Collateral Trust Security Document will be effective except in accordance with Section 7.1 of the Collateral Trust Agreement.
Any amendment or supplement to the provisions of the Collateral Trust Security Documents that releases Collateral will be effective only in accordance with Section 4.1 of the Collateral Trust Agreement.  Any amendment or supplement that results in the Collateral Trustee's Liens upon the Collateral no longer securing the Notes and the other Obligations under this Indenture may only be effected in accordance with Section 4.4 of the Collateral Trust Agreement.
Section 12.06    Equal and Ratable Sharing of Collateral by Holders of Parity Lien Debt.
(a)Notwithstanding:

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(1)anything to the contrary contained in the Collateral Trust Security Documents or the other Parity Lien Security Documents;
(2)the time of incurrence of any Series of Parity Lien Debt; 
(3)the order or method of attachment or perfection of any Liens securing any Series of Parity Lien Debt; 
(4)the time or order of filing or recording of financing statements, mortgages or other documents filed or recorded to perfect any Lien upon any Collateral; 
(5)the time of taking possession or control over any Collateral; 
(6)that any Parity Lien may not have been perfected or may be or have become subordinated, by equitable subordination or otherwise, to any other Lien; or 
(7)the rules for determining priority under any law governing relative priorities of Liens; 
but subject to the Collateral Trust Agreement and the ABL Intercreditor Agreement:
(a)all Parity Liens granted at any time by the Company or any Guarantor will secure, equally and ratably, all present and future Parity Lien Obligations; and
(b)all proceeds of all Parity Liens granted at any time by the Company or any Guarantor will be allocated and distributed in accordance with the Collateral Trust Agreement. 
This Section 12.06 is intended for the benefit of, and will be enforceable as a third party beneficiary by, each present and future holder of Parity Lien Obligations, each present and future Parity Lien Representative and the Collateral Trustee as holder of Parity Liens.
(b)Pursuant to Section 3.9 of the Collateral Trust Agreement, the Parity Lien Representative of each future Series of Parity Lien Debt (other than the Credit Agreement Obligations in respect of the Existing Credit Agreement) shall deliver a Lien Sharing and Priority Confirmation to the Collateral Trustee, the Credit Agreement Collateral Agent and the Trustee at the time of incurrence of such Series of Parity Lien Debt (other than the Credit Agreement Obligations in respect of the Existing Credit Agreement).
(c)Notwithstanding anything contained herein to the contrary, Liens securing Parity Lien Debt described in the proviso to clause (2) of the definition of Parity Lien Cap shall extend solely to the assets and property described in clause (b) of such proviso, and therefore such Parity Lien Debt will not share equally and ratably with the other Series of Parity Lien Debt with respect to any other Collateral.
Section 12.07    Ranking of Priority Liens in Current Asset Collateral.
Notwithstanding:
(a)anything to the contrary contained in the Priority Lien Security Documents, Collateral Trust Security Documents or the other Parity Lien Security Documents; 
(b)the time of incurrence of any Series of Parity Lien Debt or Priority Lien Debt; 
(c)the order or method of attachment or perfection of any Liens securing any Series of Parity Lien Debt or Priority Lien Debt; 
(d)the time or order of filing or recording of financing statements, mortgages or other documents filed or recorded to perfect any Lien upon any Current Asset Collateral; 

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(e)the time of taking possession or control over any Current Asset Collateral; 
(f)that any Priority Lien may not have been perfected or may be or have become subordinated, by equitable subordination or otherwise, to any other Lien; or 
(g)the rules for determining priority under any law governing relative priorities of Liens; 
but subject to the Collateral Trust Agreement and the ABL Intercreditor Agreement:
(1)all Priority Liens granted at any time by the Company or any Guarantor on Current Asset Collateral will be senior to the Parity Liens granted at any time by the Company or any Guarantor on Current Asset Collateral securing any present and future Parity Lien Obligations; and
(2)all proceeds of all Priority Liens granted at any time by the Company or any Guarantor on Current Asset Collateral will be allocated and distributed first, on account of the Priority Lien Obligations and second to the Collateral Trustee for distribution in accordance with the Collateral Trust Agreement.
This Section 12.07 is intended for the benefit of, and will be enforceable as a third party beneficiary by, each present and future holder of Priority Lien Obligations and each present and future Priority Lien Representative.
Section 12.08    Ranking of Priority Liens in Fixed Asset Collateral.
The Priority Lien Documents, if any, shall provide that, notwithstanding:
(a)anything to the contrary contained in the Priority Lien Security Documents, the Collateral Trust Security Documents or the other Parity Lien Security Documents; 
(b)the time of incurrence of any Series of Parity Lien Debt or Priority Lien Debt; 
(c)the order or method of attachment or perfection of any Liens securing any Series of Parity Lien Debt or Priority Lien Debt; 
(d)the time or order of filing or recording of financing statements, mortgages or other documents filed or recorded to perfect any Lien upon any Fixed Asset Collateral; 
(e)the time of taking possession or control over any Fixed Asset Collateral; 
(f)that any Parity Lien securing Fixed Asset Collateral may not have been perfected or may be or have become subordinated, by equitable subordination or otherwise, to any other Lien; or
(g)the rules for determining priority under any law governing relative priorities of Liens; 
but subject to the Collateral Trust Agreement and the ABL Intercreditor Agreement:
(1)all Priority Liens granted at any time by the Company or any Guarantor on Fixed Asset Collateral will be junior to the Parity Liens granted at any time by the Company or any Guarantor on Fixed Asset Collateral securing any present and future Parity Lien Obligations; and
(2)all proceeds of all Priority Liens granted at any time by the Company or any Guarantor on Fixed Asset Collateral will be allocated and distributed first, to the Collateral Trustee for distribution in accordance with clauses FIRST and SECOND of Section 3.5(a) of the Collateral Trust Agreement (subject to the last paragraph of such Section 3.5(a)), second on account of the Priority Lien Obligations and third, to the Collateral Trustee for distribution in accordance with clauses THIRD and FOURTH of Section 3.5(a) of the Collateral Trust Agreement.

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Such Priority Lien Documents shall also provide that the provisions described in this Section 12.08 are intended for the benefit of, and will be enforceable as a third party beneficiary by, each present and future holder of Parity Lien Obligations, each present and future Parity Lien Representative and the Collateral Trustee as holder of Parity Liens.
Section 12.09    Ranking of Junior Liens Relative to Parity Liens.
(a)The Junior Lien Documents, if any, shall provide that, notwithstanding:
(1)anything to the contrary contained in the Collateral Trust Security Documents or the other Parity Lien Security Documents; 
(2)the time of incurrence of any Series of Parity Lien Debt or Series of Junior Lien Debt; 
(3)the order or method of attachment or perfection of any Liens securing any Series of Parity Lien Debt or Series of Junior Lien Debt; 
(4)the time or order of filing or recording of financing statements, mortgages or other documents filed or recorded to perfect any Lien upon any Collateral; 
(5)the time of taking possession or control over any Collateral; 
(6)that any Parity Lien may not have been perfected or may be or have become subordinated, by equitable subordination or otherwise, to any other Lien; or 
(7)the rules for determining priority under any law governing relative priorities of Liens, 
all Junior Liens at any time granted by the Company or any Guarantor will be subject and subordinate to all Parity Liens securing Parity Lien Obligations up to an aggregate amount of no less than the Parity Lien Cap.
(b)Such Junior Lien Documents shall also provide that the provisions described in Section 12.09(a) are intended for the benefit of, and will be enforceable as a third party beneficiary by, each present and future holder of Parity Lien Obligations, each present and future Parity Lien Representative and the Collateral Trustee as holder of Parity Liens
(c)Pursuant to Section 3.9 of the Collateral Trust Agreement, the Junior Lien Representative of each future Series of Junior Lien Debt shall deliver a Lien Sharing and Priority Confirmation to the Collateral Trustee and each Parity Lien Representative at the time of incurrence of such Series of Junior Lien Debt as contemplated by clause (2) of the definition thereof.
(d)This Section 12.09 is intended solely to set forth the relative ranking, as Liens, of the Liens securing Junior Lien Debt as against the Parity Liens.  Neither the Notes nor any other Parity Lien Obligations nor the exercise or enforcement of any right or remedy for the payment or collection thereof are intended to be, or will ever be by reason of this Section 12.09, in any respect subordinated, deferred, postponed, restricted or prejudiced.
Section 12.10    Ranking of Junior Liens Relative to Priority Liens.
(a)The Junior Lien Documents, if any, shall provide that, notwithstanding:
(1)anything to the contrary contained in the Priority Lien Security Documents, the Collateral Trust Security Documents or the other Parity Lien Security Documents; 
(2)the time of incurrence of any Series of Parity Lien Debt, any Series of Junior Lien Debt or any Priority Lien Debt; 
(3)the order or method of attachment or perfection of any Liens securing any Series of Parity 

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Lien Debt, any Series of Junior Lien Debt or any Priority Lien Debt; 
(4)the time or order of filing or recording of financing statements, mortgages or other documents filed or recorded to perfect any Lien upon any Collateral; 
(5)the time of taking possession or control over any Collateral; 
(6)that any Priority Lien may not have been perfected or may be or have become subordinated, by equitable subordination or otherwise, to any other Lien; or 
(7)the rules for determining priority under any law governing relative priorities of Liens,  
all Junior Liens at any time granted by the Company or any Guarantor will be subject and subordinate to all Priority Liens securing Priority Lien Obligations.
(b)Such Junior Lien Documents shall also provide that the provisions described in Section 12.09(a) are intended for the benefit of, and will be enforceable as a third party beneficiary by, each present and future holder of Priority Lien Obligations and each present and future Priority Lien Representative.
(c)This Section 12.10 is intended solely to set forth the relative ranking, as Liens, of the Liens securing Junior Lien Debt as against the Priority Liens. Neither the Priority Lien Obligations nor the exercise or enforcement of any right or remedy for the payment or collection thereof are intended to be, or will ever be by reason of this Section 2.10, in any respect subordinated, deferred, postponed, restricted or prejudiced.
Section 12.11    Relative Rights.
Nothing in the Collateral Trust Agreement will:
(a)impair, as between the Company and the Holders of the Notes, the obligation of the Company to pay principal, premium and interest, if any, on the Notes in accordance with their terms or any other obligation of the Company or any Guarantor; 
(b)affect the relative rights of Holders of the Notes as against any other creditors of the Company or any Guarantor (other than holders of other Parity Liens, Priority Liens or Junior Liens); 
(c)restrict the right of any Holder of Notes to sue for payments that are then due and owing (but not enforce any judgment in respect thereof against any Collateral to the extent prohibited by the Collateral Trust Agreement or the ABL Intercreditor Agreement; 
(d)restrict or prevent any holder of Junior Lien Obligations, the Collateral Trustee or any Junior Lien Representative from exercising any of its rights or remedies upon a Default or Event of Default not restricted or prohibited by the Collateral Trust Agreement or the ABL Intercreditor Agreement; or 
(e)restrict or prevent any Holder of Notes or other Junior Lien Obligations, the Collateral Trustee or any Junior Lien Representative from taking any lawful action in an Insolvency or Liquidation Proceeding not restricted or prohibited by the Collateral Trust Agreement or the ABL Intercreditor Agreement.
Section 12.12    Designations.
For all purposes hereof and of the Security Documents, the Indebtedness incurred under the Existing Credit Agreement is automatically designated Parity Lien Debt.  For all purposes hereof and of the Security Documents requiring or permitting the Company and the Guarantors to designate any other Indebtedness as Priority Lien Debt, Parity Lien Debt or Junior Lien Debt and related definitions and any other such designations hereunder or under any of the Security Documents, any such designation shall be sufficient if the relevant designation provides in an Officer's Certificate that such Priority Lien Debt, Parity Lien Debt or Junior Lien Debt, as applicable, is permitted under this 

107

Indenture.
Section 12.13    Further Assurances.
(a)Subject to applicable law:
(1)The Company and each Guarantor shall cause (i) each of its Domestic Subsidiaries (other than any Immaterial Subsidiary (except as otherwise provided in clause (5) below) or Unrestricted Subsidiary or Receivables Subsidiary or except as otherwise provided under Section 4.17) existing on the Issue Date or formed or acquired after the Issue Date that is required to become a Guarantor as provided under Section 4.17 and (ii) thereafter any such Domestic Subsidiary that was an Immaterial Subsidiary as of the Issue Date but, as of the end of the most recently ended fiscal quarter of the Company for which internal financial statements are available has ceased to qualify as an Immaterial Subsidiary or except as otherwise provided under Section 4.17, to become a Guarantor as promptly thereafter as reasonably practicable by executing and delivering to the Collateral Trustee or any Collateral Trust Representative such amendments to the Collateral Trust Agreement and the Collateral Trust Security Documents as the Collateral Trustee or any Collateral Trust Representative reasonably deems necessary or advisable to cause such Subsidiary to become a party to the Collateral Trust Agreement and such Collateral Trust Security Documents (and provide guarantees of the Collateral Trust Obligations) and to do all things that the Collateral Trustee from time to time may reasonably request, to assure and confirm that the Collateral Trustee holds, for the benefit of the holders of Collateral Trust Obligations, duly created and enforceable and perfected Liens on the Collateral, in each case to the extent required by the terms of the Collateral Trust Security Documents, in any property (subject to the limitations with respect to Equity Interests set forth in clause (2) below, the limitations with respect to real property set forth in clause (6) below and any other limitations set forth in the Collateral Trust Security Documents) of the Company or such Guarantor which constitutes Collateral, on such terms as may be required pursuant to the terms of the Collateral Trust Security Documents.
(2)The Company and each Guarantor will cause (i) 100% of the issued and outstanding Equity Interests of each of its Domestic Subsidiaries, other than (x) any Domestic Subsidiary taxed as a partnership or a disregarded entity for federal income tax purposes that holds Capital Stock of a Foreign Subsidiary whose Equity Interests are pledged pursuant to clause (ii) below and (y) any Receivables Subsidiary, and (ii) 65% of the issued and outstanding Equity Interests entitled to vote (within the meaning of Treas. Reg. Section 1.956-2(c)(2)) and 100% of the issued and outstanding Equity Interests not entitled to vote (within the meaning of Treas. Reg. Section 1.956-2(c)(2)) in each Foreign Subsidiary directly owned by the Company or any Guarantor to be subject at all times from and after the Issue Date to a perfected Lien for the benefit of the holders of Collateral Trust Obligations as contemplated by the Collateral Trust Security Documents, subject to no Lien other than Permitted Liens, pursuant to the terms and conditions of the Collateral Trust Security Documents as the Collateral Trustee shall reasonably request; provided, however this clause (2) shall not require the Company or any Subsidiary to grant a security interest in (i) any Equity Interests of a Subsidiary to the extent a pledge of such Equity Interests contemplated by the Collateral Trust Security Documents for the benefit of the holders of Collateral Trust Obligations or to secure any debt securities of the Company or any Subsidiary that would be entitled to such a security interest would require separate financial statements of a Subsidiary to be filed with the SEC (or any other government agency) under the consolidation rules of Rule 3-10 or Rule 3-16 of Regulation S-X under the Securities Act (or any successor thereto) or any other law, rule or regulation or (ii) the Equity Interests of any Foreign Subsidiary that is an Immaterial Subsidiary, any Unrestricted Subsidiary or Receivables Subsidiary; provided, further, however that no pledge of any Equity Interests shall be required to the extent such Equity Interests are excluded from the Collateral pursuant to the terms of this Indenture or the Collateral Trust Security Documents.
(3)Without limiting the foregoing, the Company and each Guarantor will, and will cause each Subsidiary that is a Guarantor to, execute and deliver, or cause to be executed and delivered, such documents, agreements and instruments, and will take or cause to be taken such further actions (including the delivery of supplemental schedules to the Collateral Trust Security Documents if required thereunder, the filing and recording of financing statements, fixture filings, mortgages, deeds of trust and other documents and such 

108

other actions or deliveries of the type required by the equivalent provision of the Existing Credit Agreement, as applicable) to carry out the terms and conditions of the Collateral Trust Agreement and the Collateral Trust Security Documents and to ensure perfection and priority of the Liens created or intended to be created by the Collateral Trust Security Documents except to the extent contemplated hereby and thereby, or as the Collateral Trustee may, from time to time, reasonably request, all at the expense of the Company and the Guarantors.
(4)Subject to the limitations set forth or referred to in this Section 12.13, if any material assets (including any real property or improvements thereto or any interest therein) are acquired by the Company or any Guarantor after the Issue Date (other than assets constituting Collateral under the Collateral Trust Security Documents that become subject to the Lien held by the Collateral Trustee for the benefit of the holders of Collateral Trust Obligations upon acquisition thereof), the Company will (if such assets were acquired outside the ordinary course of business) notify the Collateral Trustee thereof, who shall provide a copy of such notice to the Collateral Trust Representatives, and, if requested by the Collateral Trustee, the Company will cause such assets to be subjected to a Lien securing the Collateral Trust Obligations and will take, and cause Guarantors to take, such actions as shall be necessary or reasonably requested by the Collateral Trustee to grant and perfect such Liens, including actions described in clause (3) above, all at the expense of the Company and the Guarantors.
(5)If, at any time and from time to time after the Issue Date, Domestic Subsidiaries that are not Guarantors solely because they are Immaterial Subsidiaries comprise in the aggregate more than 5% of Total Assets as of the end of the most recently ended fiscal quarter of the Company for which internal financial statements are available or more than 5% of EBITDA of the Company and the Restricted Subsidiaries for the period of four consecutive fiscal quarters ending as of the end of the most recently ended fiscal quarter of the Company for which internal financial statements are available (or, in each case, such later date as the Collateral Trustee or the Credit Agreement Collateral Agent under the equivalent provision of the Credit Agreement may agree), then the Company shall, not later than 90 days after the last date of such fiscal quarter (or, in the case of the last fiscal quarter of a fiscal year, 135 days after the end of such fiscal quarter), cause one or more such Restricted Subsidiaries to become additional Guarantors (notwithstanding that such Restricted Subsidiaries are, individually, Immaterial Subsidiaries) such that the foregoing condition ceases to be true.
(6)Notwithstanding anything to the contrary in this section, real property required to be mortgaged under this Section 12.13 shall be limited to real property located in the United States owned in fee by the Company or a Guarantor having a fair market value at the time of the acquisition thereof of $3.0 million or more (provided that the cost of perfecting such Lien is not unreasonable in relation to the benefits to the holders of the Collateral Trust Obligations of the security afforded thereby in the reasonable judgment of the Company or of the Credit Agreement Collateral Agent in respect of the equivalent provision in the Applicable Credit Agreement, in each case after consultation with the Company).
(7)Neither the Company nor any Guarantor shall be required to (i) include as collateral any Excluded Assets, (ii) perfect any Liens in any cash, deposit accounts or securities accounts to the extent perfection requires actions other than the filing of customary financing statements or (iii) perfect any Liens or take any other action with respect to any asset if the Credit Agreement Collateral Agent has agreed with the Company that the burden or cost of the equivalent of such action under the Credit Agreement is excessive in relation to the benefits to be obtained by such action.  The Company or any Guarantor may elect, in its sole discretion to take any action referred to in the previous sentence but no such election shall require the Company or any Guarantor to continue to maintain any such action or take any other action referred to in the preceding sentence.
(b)Notwithstanding the foregoing, if after using commercially reasonable efforts such a security interest in an asset cannot be created or perfected because a third party consent has not been obtained or local law does not permit a security interest to more than one secured party, the Company will not be required to create or perfect such security interest.

109

ARTICLE 13
MISCELLANEOUS

Section 13.01    No Trust Indenture Act Provisions.
For the avoidance of doubt, the Indenture will not be required to be qualified under the TIA and will not incorporate any provisions of the TIA.
Section 13.02    Notices.
Any notice or communication by the Company, any Guarantor or the Trustee to the others is duly given if in writing and delivered in Person, by facsimile transmission or overnight air courier guaranteeing next day delivery, to the others' address:
If to the Company and/or any Guarantor:  
Harland Clarke Holdings Corp.
10931 Laureate Drive
San Antonio, TX  78249
Facsimile No.:  (210) 558-5254
Attention:  Chief Financial Officer

With a copy to:  
M&F Worldwide Corp.
35 East 62nd Street
New York, NY 10021
Facsimile No: (212) 572-5056
Attention:  Barry F. Schwartz

and

Paul, Weiss, Rifkind, Wharton & Garrison LLP
1285 Avenue of the Americas
New York, NY  10019
Facsimile No.:  (212) 492-0052
Attention:  Lawrence G. Wee

If to the Trustee:
Wells Fargo Bank, National Association
Corporate Trust Services
45 Broadway, 14th Floor
New York, New York 10006
Facsimile No.:  (212) 515-1589
Attention:  Corporate Trust Services - Administrator for Harland Clarke Holdings Corp.

The Company, any Guarantor or the Trustee, by notice to the others, may designate additional or different addresses for subsequent notices or communications.
All notices and communications (other than those sent to Holders) will be deemed to have been duly given: at the time delivered by hand, if personally delivered; five Business Days after being deposited in the mail, postage prepaid, if mailed; when receipt acknowledged, if transmitted by facsimile; and the next Business Day after timely delivery to the courier, if sent by overnight air courier guaranteeing next day delivery.

110

Any notice or communication to a Holder will be mailed by first class mail, certified or registered, return receipt requested, or by overnight air courier guaranteeing next day delivery to its address shown on the register kept by the Registrar.  Failure to provide a notice or communication to a Holder or any defect in it will not affect its sufficiency with respect to other Holders.
If a notice or communication is provided in the manner provided above within the time prescribed, it is duly given, whether or not the addressee receives it.
If the Company provides a notice or communication to Holders, it will provide a copy to the Trustee and each Agent at the same time.
Notwithstanding any other provision of this Indenture or any Note, where this Indenture or any Note provides for notice of any event (including any notice of redemption or repurchase) to a Holder of a Global Note, such notice shall be sufficiently given if given to DTC (or its designee) pursuant to the standing instructions from DTC or its designee, including by electronic mail in accordance with DTC operational arrangements or other applicable DTC procedures.
Section 13.03    [Intentionally Omitted].
Section 13.04    Certificate and Opinion as to Conditions Precedent.
Upon any request or application by the Company to the Trustee to take any action under this Indenture, the Company shall furnish to the Trustee:
(1)an Officer's Certificate in form and substance reasonably satisfactory to the Trustee (which must include the statements set forth in Section 13.05 hereof) stating that, in the opinion of the signers, all conditions precedent and covenants, if any, provided for in this Indenture relating to the proposed action have been satisfied; and
(2)an Opinion of Counsel in form and substance reasonably satisfactory to the Trustee (which must include the statements set forth in Section 13.05 hereof) stating that, in the opinion of such counsel, all such conditions precedent and covenants have been satisfied; provided that no such Opinion of Counsel shall be required in connection with the issuance of the Initial Notes on the Issue Date.
Section 13.05    Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture (other than a certificate provided pursuant to Section 4.04) must include:
(1)a statement that the Person making such certificate or opinion has read such covenant or condition;
(2)a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based;
(3)a statement that, in the opinion of such Person, he or she has made such examination or investigation as is necessary to enable him or her to express an informed opinion as to whether or not such covenant or condition has been satisfied; and
(4)a statement as to whether or not, in the opinion of such Person, such condition or covenant has been satisfied.  Any opinion of Counsel may be subject to customary assumptions and qualifications.
Section 13.06    Rules by Trustee and Agents.
The Trustee may make reasonable rules for action by or at a meeting of Holders.  The Registrar, or Paying 

111

Agent may make reasonable rules and set reasonable requirements for its functions.
Section 13.07    No Personal Liability of Directors, Officers, Employees, Stockholders or Controlling Persons.
No director, officer, employee, incorporator, stockholder or controlling person of the Company or any Guarantor or any of their parent companies, as such, will have any liability for any obligations of the Company or the Guarantors under the Notes, this Indenture, the Guarantees, the Security Documents or for any claim based on, in respect of, or by reason of, such obligations or their creation.  Each Holder of Notes by accepting a Note waives and releases all such liability.  The waiver and release are part of the consideration for issuance of the Notes.  The waiver may not be effective to waive liabilities under the federal securities laws.
Section 13.08    Governing Law, Jury Trial Waiver.
THE INTERNAL LAW OF THE STATE OF NEW YORK WILL GOVERN AND BE USED TO CONSTRUE THIS INDENTURE, THE NOTES AND THE GUARANTEES WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
EACH OF THE CO-ISSUERS, THE GUARANTORS, THE TRUSTEE, AND BY ITS ACCEPTANCE THEREOF, EACH HOLDER OF A NOTE, HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING ARISING OUT OF OR IN CONNECTION WITH THIS INDENTURE, THE SECURITY DOCUMENTS, OR THE NOTES.
Section 13.09    No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret any other indenture, loan or debt agreement of the Company or its Subsidiaries or of any other Person.  Any such indenture, loan or debt agreement may not be used to interpret this Indenture.
Section 13.10    Successors.
All agreements of the Company in this Indenture and the Notes will bind its successors.  All agreements of the Trustee in this Indenture will bind its successors.  All agreements of each Guarantor and Co-Issuer, as applicable, in this Indenture and the Notes, as applicable, will bind its successors, except as otherwise provided in Section 10.04 hereof.
Section 13.11    Severability.
In case any provision in this Indenture or in the Notes is invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions will not in any way be affected or impaired thereby.
Section 13.12    Counterpart Originals.
The parties may sign any number of copies of this Indenture.  Each signed copy will be an original, but all of them together represent the same agreement.  The exchange of copies of this Indenture and of signature pages by facsimile or PDF transmission shall constitute effective execution and delivery of this Indenture as to the parties hereto and may be used in lieu of the original Indenture for all purposes.  Signatures of the parties hereto transmitted by facsimile or PDF shall be deemed to be their original signatures for all purposes. 
Section 13.13    Table of Contents, Headings, etc.
The Table of Contents, Cross-Reference Table and Headings of the Articles and Sections of this Indenture have been inserted for convenience of reference only, are not to be considered a part of this Indenture and will in no way modify or restrict any of the terms or provisions hereof.

112

Section 13.14    Force Majeure.
In no event shall the Trustee be responsible or liable for any failure or delay in the performance of its obligations hereunder arising out of or caused by, directly or indirectly, forces beyond its control, including, without limitation, strikes, work stoppages, accidents, acts of war or terrorism, civil or military disturbances, nuclear or natural catastrophes or acts of God, and interruptions, loss or malfunctions of utilities, communications or computer (software and hardware) services; it being understood that the Trustee shall use reasonable efforts which are consistent with accepted practices in the banking industry to resume performance as soon as practicable under the circumstances.
Section 13.15    Patriot Act.
The parties hereto acknowledge that in accordance with Section 326 of the U.S.A. PATRIOT Act, the Trustee, like all financial institutions and in order to help fight the funding of terrorism and money laundering, is required to obtain, verify, and record information that identifies each person or legal entity that establishes a relationship or opens an account with the Trustee. The parties to this Indenture agree that they will provide the Trustee with such information as it may request in order for the Trustee to satisfy the requirements of the U.S.A. PATRIOT Act.

[Signatures on following page]

113

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

HARLAND CLARKE HOLDINGS CORP.
By:    ________________________________________
Name:  
Title: 

HARLAND CLARKE CORP.
By:    ________________________________________
Name:  
Title: 

HARLAND FINANCIAL SOLUTIONS, INC.
By:    ________________________________________
Name:  
Title: 

SCANTRON CORPORATION
By:    ________________________________________
Name:  
Title: 

CHECKS IN THE MAIL, INC.
By:    ________________________________________
Name:  
Title: 

NEW FANEUIL, INC.
By:    ________________________________________
Name:  
Title: 

114

FANEUIL, INC.
By:    ________________________________________
Name:  
Title: 

FANEUIL VIRGINIA LLC
By:    ________________________________________
Name:  
Title: 

FANEUIL TOLL OPERATIONS LLC
By:    ________________________________________
Name:  
Title: 

ORIGINAL RESEARCH II LLC
By:    ________________________________________
Name:  
Title: 

HARLAND FINANCIAL SOLUTIONS INDIA, LLC
By:    ________________________________________
Name:  
Title: 

HFS RESEARCH & DEVELOPMENT, INC.
By:    ________________________________________
Name:  
Title: 

HFS SCANTRON HOLDINGS CORP.
By:    ________________________________________
Name:  
Title: 

115

JOHN H. HARLAND COMPANY OF PUERTO RICO
By:    ________________________________________
Name:  
Title: 

116

WELLS FARGO BANK, NATIONAL ASSOCIATION, 
        AS TRUSTEE
By:    ________________________________________
Name:  
Title: 

117

EXHIBIT A

[Face of Note]
______________________________________________________________________________________________________
CUSIP/CINS ____________
9.750% Senior Secured Notes due 2018
No. ___                                                $____________
HARLAND CLARKE HOLDINGS CORP.
AND THE CO-ISSUERS LISTED ON THE "SCHEDULE OF CO-ISSUERS" HERETO

each promise to pay to                                 or registered assigns, 
the principal sum of __________________________________________________________________ DOLLARS on August 1, 2018.
Interest Payment Dates:  February 1 and August 1
Record Dates:  January 15 and July 15
Dated:  _________, 20

A-1

HARLAND CLARKE HOLDINGS CORP.

By:    ________________________________________
Name:  
Title: 

HARLAND CLARKE CORP.

By:    ________________________________________
Name:  
Title: 

HARLAND FINANCIAL SOLUTIONS, INC.

By:    ________________________________________
Name:  
Title: 

SCANTRON CORPORATION

By:    ________________________________________
Name:  
Title: 

CHECKS IN THE MAIL, INC.

By:    ________________________________________
Name:  
Title: 

A-2

This is one of the Notes referred to
in the within-mentioned Indenture:

WELLS FARGO BANK, NATIONAL ASSOCIATION,
  as Trustee

By:  ________________________________
Authorized Signatory

A-3

[Back of Note]
9.750% Senior Secured Notes due 2018

[Insert the Regulation S Legend, if applicable pursuant to the provisions of the Indenture]
[Insert the Global Note Legend, if applicable pursuant to the provisions of the Indenture]
[Insert the Private Placement Legend, if applicable pursuant to the provisions of the Indenture]
[Insert the OID Legend, if applicable pursuant to the provisions of the Indenture]
Capitalized terms used herein have the meanings assigned to them in the Indenture referred to below unless otherwise indicated.
(1)INTEREST.  Harland Clarke Holdings Corp., a Delaware corporation (the “Company”), and the entities listed on the “Schedule of Co-Issuers” hereto (the “Co-Issuers”), jointly and severally, promise to pay interest on the principal amount of this Note at 9.750% per annum from July 24, 2012 until maturity.  The Company and the Co-Issuers, jointly and severally, will pay interest semi-annually in arrears on February 1 and August 1 of each year, or if any such day is not a Business Day, on the next succeeding Business Day (each, an “Interest Payment Date”).  Interest on the Notes will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from the date of issuance;1 provided that if there is no existing Default in the payment of interest, and if this Note is authenticated between a record date referred to on the face hereof and the next succeeding Interest Payment Date, interest shall accrue from such next succeeding Interest Payment Date; provided further that the first Interest Payment Date shall be            , 20  .  The Company and the Co-Issuers, jointly and severally, will pay interest (including post-petition interest in any proceeding under any Bankruptcy Code) on overdue principal and premium, if any, from time to time on demand at a rate that is 1% per annum in excess of the rate then in effect to the extent lawful; it will pay interest (including post-petition interest in any proceeding under any Bankruptcy Code) on overdue installments of interest (without regard to any applicable grace periods) from time to time on demand at the same rate 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.  The Company and the Co-Issuers, jointly and severally, will pay interest on the Notes (except defaulted interest) to the Persons who are registered Holders of Notes at the close of business on the January 15 or July 15 next preceding the Interest Payment Date, even if such Notes are canceled after such record date and on or before such Interest Payment Date, except as provided in Section 2.12 of the Indenture with respect to defaulted interest.  The Notes will be payable as to principal, premium, if any, and interest at the office or agency of the Paying Agent and Registrar (which initially will be the office of the Trustee), or, at the option of the Company, payment of interest may be made by check provided to the Holders at their addresses set forth in the register of Holders; provided that payment by wire transfer of immediately available funds will be required with respect to principal of and interest, premium, if any, on, all Global Notes and all other Notes the Holders of which will have provided wire transfer instructions to the Company or the Paying Agent.  Such payment will be in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts.

(3)PAYING AGENT AND REGISTRAR.  Initially, Wells Fargo Bank, National Association, the Trustee under the Indenture, will act as Paying Agent and Registrar.  The Company may change any Paying Agent and Registrar without notice to any Holder.  The Company or any of its Subsidiaries may act in any such capacity.

1 Additional Notes may have interest accruing from various dates after the Issue Date, including dates that are prior to the date of issuance of such Additional Notes

A-4

(4)INDENTURE.  The Company and Co-Issuers issued the Notes under an Indenture dated as of July 24, 2012 (the “Indenture”) among the Company, the Guarantors and the Trustee.  The terms of the Notes include those stated in the Indenture.  The Notes are subject to all such terms, and Holders are referred to the Indenture for a statement of such terms.  To the extent any provision of this Note conflicts with the express provisions of the Indenture, the provisions of the Indenture shall govern and be controlling.  The Notes and the Indenture (and the Guarantees by the Guarantors) and various related Obligations are secured pursuant to the Security Documents.  To the extent any provision of this Note conflicts with the express provisions of a Security Document, such Security Document shall govern and be controlling.  The Notes are secured obligations of the Company and the Co-Issuers on a joint and several basis.  The Indenture does not limit the aggregate principal amount of Notes that may be issued thereunder.

(5)OPTIONAL REDEMPTION.

(a)Except as set forth below in this Paragraph 5, the Company will not have the option to redeem the Notes prior to August 1, 2015.  On or after August 1, 2015, the Company may, in one or more instances, redeem all or a part of the Notes upon not less than 30 nor more than 60 days' notice (except that redemption notices may be provided more than 60 days prior to a redemption date if the notice is issued in connection with a defeasance of the Notes or a satisfaction and discharge of the Indenture), at the redemption prices (expressed as percentages of principal amount of the Notes to be redeemed) set forth below plus accrued and unpaid interest on the Notes redeemed, to the applicable redemption date, if redeemed during the twelve-month period beginning on August 1 of the years indicated below, subject to the rights of Holders of Notes on the relevant record date to receive interest on the relevant Interest Payment Date:

	
		
	Year
	Percentage

	2015
	104.875%

	2016
	102.438%

	2017 and thereafter
	100.000%

(b)At any time prior to August 1, 2015, the Company may, on any one or more occasions, redeem up to 35% of the aggregate principal amount of Notes issued under the Indenture (including the principal amount of any Additional Notes issued under the Indenture) at a redemption price equal to 109.750% of the principal amount of the Notes redeemed, plus accrued and unpaid interest to the redemption date, with the net cash proceeds of one or more Equity Offerings of the Company subject to the rights of Holders of Notes on the relevant record date to receive interest on the relevant interest payment date; provided that at least 50% of the aggregate principal amount of Notes issued under the Indenture (excluding Notes held by the Company and its Subsidiaries, but including any Additional Notes) remains outstanding immediately after the occurrence of such redemption; and that such redemption occurs within 90 days after the date of the closing of any such Equity Offering.

(c)At any time prior to August 1, 2015, the Company may, in one or more instances, also redeem all or a part of the Notes, upon not less than 30 nor more than 60 days' prior notice by the Company (except that redemption prices may be provided by the Company more than 60 days prior to a redemption date if the notice is issued in connection with a defeasance of the Notes or a satisfaction and discharge of the Indenture), at a redemption price equal to 100% of the principal amount of Notes redeemed plus the Applicable Premium as of the date of redemption, and accrued and unpaid interest, if any, to such redemption date, subject to the rights of Holders of the Notes on the relevant record date to receive interest due on the relevant Interest Payment Date.

(6)MANDATORY REDEMPTION. The Company and the Co-Issuers are not required to make mandatory redemption or sinking fund payments with respect to the Notes.

A-5

(7)REPURCHASE AT THE OPTION OF HOLDER.

(a)If a Change of Control occurs, the Company will make an offer (a “Change of Control Offer”) to each Holder to repurchase all or any part (equal to $2,000 or an integral multiple of $1,000 in excess thereof) of that Holder's Notes at a purchase price in cash equal to 101% of the aggregate principal amount of Notes repurchased plus accrued and unpaid interest on the Notes repurchased to the date of purchase, subject to the rights of Holders of Notes on the relevant record date to receive interest due on the relevant Interest Payment Date (the “Change of Control Payment”).  No later than 45 days following any Change of Control, the Company will provide a notice to each Holder and the Trustee setting forth the procedures governing the Change of Control Offer as required by the Indenture.

(b)At or prior to each Excess Cash Flow Offer Trigger Date, the Company will calculate the amount of Excess Cash Flow and the Excess Cash Flow Offer Amount for the Excess Cash Flow Period with respect to such Excess Cash Flow Offer Trigger Date.  If the Consolidated Secured Debt Ratio on such Excess Cash Flow Offer Trigger Date exceeds the Secured Leverage Threshold, unless the Company has exercised its right to redeem all the Notes as described under Section 3.07 of the Indenture, the Company will make an offer to all Holders of Notes to purchase the maximum principal amount of Notes that may be purchased out of the Excess Cash Flow Offer Amount (each, an “Excess Cash Flow Offer”). For any Excess Cash Flow Period with respect to which the Company is required to make an Excess Cash Flow Offer, within 15 days after the relevant Excess Cash Flow Offer Trigger Date, the Company will provide a notice to each Holder and the Trustee setting forth the procedures governing the Excess Cash Flow Offer as required by the Indenture.

(c)If the Company or a Restricted Subsidiary of the Company consummates any Asset Sale and the aggregate amount of Excess Proceeds exceeds $45.0 million, within 30 days thereof, the Company will make an offer to all Holders of Notes, and, at the Company's option, to the holders of any other Parity Lien Debt, to purchase the maximum principal amount of Notes and such other Parity Lien Debt, on a pro rata basis, that may be purchased out of the Excess Proceeds (the “Asset Sale Offer”). The offer price in any Asset Sale Offer will be equal to 100% of the principal amount plus accrued and unpaid interest, if any, to the date of purchase, and will be payable in cash. The Company may satisfy the foregoing obligations with respect to any Net Proceeds from an Asset Sale by making an Asset Sale Offer with respect to such Net Proceeds prior to the expiration of the relevant 450 days or with respect to Excess Proceeds of $45.0 million or less. If any Excess Proceeds remain after consummation of an Asset Sale Offer, the Company and any Restricted Subsidiary may use those Excess Proceeds for any purpose not otherwise prohibited by the Indenture, including, without limitation, the making of Restricted Payments otherwise permitted under the terms of the Indenture. If the aggregate principal amount of Notes and other Parity Lien Debt tendered into such Asset Sale Offer exceeds the amount of Excess Proceeds, the Notes and such other Parity Lien Debt shall be purchased on a pro rata basis (with such adjustments for authorized denominations). Upon completion of each Asset Sale Offer, the amount of Excess Proceeds will be reset at zero. The Company at its election may retain or use any Excess Designated Proceeds for any purpose, including, if applicable, to make any Restricted Payment otherwise permitted under the terms of the Indenture.  Holders of Notes that are the subject of an offer to purchase will receive an Asset Sale Offer from the Company prior to any related purchase date and may elect to have such Notes purchased by completing the form entitled “Option of Holder to Elect Purchase” attached to the Notes.

(8)NOTICE OF REDEMPTION.  Notice of redemption will be provided at least 30 days but not more than 60 days before the redemption date to each Holder whose Notes are to be redeemed at its registered address or sent to DTC in accordance with its procedures applicable to global notes, except that redemption notices may be provided more than 60 days prior to a redemption date if the notice is issued in connection with a defeasance of the Notes or a satisfaction or discharge of the Indenture.  Notes in denominations larger than $2,000 may be redeemed in part but only in whole multiples of $1,000, unless all of the Notes held by a Holder are to be redeemed.  

A-6

(9)DENOMINATIONS, TRANSFER, EXCHANGE.  The Notes are in registered form without coupons in denominations of $2,000 and integral multiples of $1,000 in excess thereof.  The transfer of Notes may be registered and Notes may be exchanged as provided in the Indenture.  The Registrar and the Trustee may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and the Company may require a Holder to pay any taxes and fees required by law or permitted by the Indenture.  The Company need not exchange or register the transfer of any Note or portion of a Note selected for redemption, except for the unredeemed portion of any Note being redeemed in part.  Also, the Company need not exchange or register the transfer of any Notes for a period of 15 days before a selection of Notes to be redeemed or during the period between a record date and the corresponding Interest Payment Date.

(10)SECURITY.  The Notes will be secured by the Collateral on the terms and subject to the conditions set forth in the Indenture and the Security Documents.  Each Holder, by accepting this Note, consents and agrees to the terms of the Security Documents as the same may be in effect or may be amended from time to time in accordance with their terms and the Indenture and authorizes and directs the Trustee and/or the Collateral Trustee, as applicable, to enter into the Security Documents, and to perform its obligations and exercise its rights thereunder in accordance therewith.

(11)PERSONS DEEMED OWNERS.  The registered Holder of a Note may be treated as its owner for all purposes.

(12)AMENDMENT, SUPPLEMENT AND WAIVER.  Subject to certain exceptions, the Indenture or the Notes or the Guarantees or the Security Documents may be amended or supplemented with the consent of the Holders of at least a majority in aggregate principal amount of the then outstanding Notes (including, without limitation, consents obtained in connection with a tender offer or exchange offer for, or purchase of, the Notes), and any existing Default or Event or Default or compliance with any provision of the Indenture or the Notes or the Guarantees or the Security Documents may be waived with the consent of the Holders of a majority in aggregate principal amount of the then outstanding Notes (including, without limitation, consents obtained in connection with a tender offer or exchange offer for, or purchase of, the Notes).  Without the consent of any Holder of a Note, the Indenture or the Notes or the Guarantees or the Security Documents may be amended or supplemented as described in Section 9.01 of the Indenture.

(13)DEFAULTS AND REMEDIES.  The Notes are subject to certain Events of Default, as provided in Section 6.01 of the Indenture.  Upon the occurrence of an Event of Default, the Notes may be subject to acceleration as provided in Section 6.02 of the Indenture.  Other provisions relating to defaults and remedies may be found in Article 6 of the Indenture.

(14)GUARANTEES.  The Company's and the Co-Issuers' obligations under the Notes are fully and unconditionally guaranteed, jointly and severally, by the Guarantors.

(15)TRUSTEE DEALINGS WITH COMPANY.  The Trustee, in its individual or any other capacity, may make loans to, accept deposits from, and perform services for the Company or its Affiliates, and may otherwise deal with the Company or its Affiliates, as if it were not the Trustee.

(16)NO RECOURSE AGAINST OTHERS.  No director, officer, employee, incorporator, stockholder or controlling person of the Company or any of the Guarantors or any of their parent companies, as such, will have any liability for any obligations of the Company or the Guarantors under the Notes, the Guarantees, the Indenture or the Security Documents or for any claim based on, in respect of, or by reason of, such obligations or their creation.  Each Holder of Notes by accepting a Note waives and releases all such liability.  The waiver and release are part of the consideration for the issuance of the Notes.  The waiver may not be effective to waive liabilities under the federal securities laws.

A-7

(17)AUTHENTICATION.  This Note will not be valid until authenticated by the manual signature of the Trustee or an authenticating agent.

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

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

(20)GOVERNING LAW.  THE INTERNAL LAW OF THE STATE OF NEW YORK WILL GOVERN AND BE USED TO CONSTRUE THE INDENTURE, THIS NOTE AND THE GUARANTEES WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.

The Company will furnish to any Holder upon written request and without charge a copy of the Indenture.  Requests may be made to:
Harland Clarke Holdings Corp.
10931 Laureate Drive
San Antonio, TX 78249
Attention:  Chief Financial Officer

A-8

ASSIGNMENT FORM
To assign this Note, fill in the form below:
(I) or (we) assign and transfer this Note to:  _____________________________________________________
(Insert assignee's legal name)

_________________________________________________________________________________________________
(Insert assignee's soc. sec. or tax I.D. no.)
_________________________________________________________________________________________________

_________________________________________________________________________________________________

_________________________________________________________________________________________________

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

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

Date:  _______________
Your Signature:      ________________________________________
(Sign exactly as your name appears on the face of this Note)

Signature Guarantee*:  _________________________

*    Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor acceptable to the Trustee).

A-9

OPTION OF HOLDER TO ELECT PURCHASE

If you want to elect to have this Note purchased by the Company pursuant to Section 4.10, 4.15 or 4.19 of the Indenture, check the appropriate box below:
q Section 4.10                    q Section 4.15                    q Section 4.19
If you want to elect to have only part of this Note purchased by the Company pursuant to Section 4.10, 4.15 or 4.19 of the Indenture, state the amount you elect to have purchased:
$_______________

Date:  _______________
Your Signature:  ___________________________________
(Sign exactly as your name appears on the face of this Note)
Tax Identification No.:  ___________________________

Signature Guarantee*:  _________________________

*    Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor acceptable to the Trustee).

A-10

SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE *
The following exchanges of a part of this Global Note for an interest in another Global Note or for a Definitive Note, or exchanges of a part of another Global Note or Definitive Note for an interest in this Global Note, have been made:

	
					
	Date of Exchange
	Amount of decrease in Principal Amount of 
this Global Note
	Amount of increase in Principal Amount of 
this Global Note
	Principal Amount 
of this Global Note following such decrease 
(or increase)
	Signature of authorized signatory of Trustee or Custodian

	 
	 
	 
	 
	 

SCHEDULE OF CO-ISSUERS

The following are the Co-Issuers of the Notes represented by this Note:

	
		
	Name
	Jurisdiction of Formation

	 
	 

		
	*
	This schedule should be included only if the Note is issued in global form.

A-11

EXHIBIT B

    
FORM OF CERTIFICATE OF TRANSFER
Harland Clarke Holdings Corp.
10931 Laureate Drive
San Antonio, TX 78249

Wells Fargo Bank, National Association
Corporate Trust Services
213 Court Street, Suite 703
Middletown, CT 06457

Wells Fargo Bank, National Association,
as Trustee and Registrar - DAPS Reorg
MAC N9303-121
608 2nd Avenue South
Minneapolis, MN  55479
Telephone No.:  (877) 872-4605
Fax No.:  (866) 969-1290
Email:  DAPSReorg@wellsfargo.com

		
	Re:  
	9.750% Senior Secured Notes due 2018

Reference is hereby made to the Indenture, dated as of July 24, 2012 (the “Indenture”), among Harland Clarke Holdings Corp., as issuer (the “Company”), the Guarantors and Co-Issuers party thereto and Wells Fargo Bank, National Association, as trustee.  Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture.
___________________, (the “Transferor”) owns and proposes to transfer [9.750% Senior Secured Note[s]] (the “Note[s]”) or interest in such Note[s] specified in Annex A hereto, in the principal amount of $___________ in such Note[s] or interests (the “Transfer”), to  ___________________________ (the “Transferee”), as further specified in Annex A hereto.  In connection with the Transfer, the Transferor hereby certifies that:
[CHECK ALL THAT APPLY]
1.  o  Check if Transferee will take delivery of a beneficial interest in the 144A Global Note or a Restricted Definitive Note pursuant to Rule 144A.  The Transfer is being effected pursuant to and in accordance with Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”), and, accordingly, the Transferor hereby further certifies that the beneficial interest or Definitive Note is being transferred to a Person that the Transferor reasonably believes is purchasing the beneficial interest or Definitive Note for its own account, or for one or more accounts with respect to which such Person exercises sole investment discretion, and such Person and each such account is a “qualified institutional buyer” within the meaning of Rule 144A in a transaction meeting the requirements of Rule 144A, and such Transfer is in compliance with any applicable blue sky securities laws of any state of the United States.  Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the 144A Global Note and/or the Restricted Definitive Note and in the Indenture and the Securities Act.

B-1

2.  o  Check if Transferee will take delivery of a beneficial interest in the Regulation S Global Note or a Restricted Definitive Note pursuant to Regulation S.  The Transfer is being effected pursuant to and in accordance with Rule 903 or Rule 904 under the Securities Act and, accordingly, the Transferor hereby further certifies that (i) the Transfer is not being made to a Person in the United States and (x) at the time the buy order was originated, the Transferee was outside the United States or such Transferor and any Person acting on its behalf reasonably believed and believes that the Transferee was outside the United States or (y) the transaction was executed in, on or through the facilities of a designated offshore securities market and neither such Transferor nor any Person acting on its behalf knows that the transaction was prearranged with a buyer in the United States, (ii) no directed selling efforts have been made in contravention of the requirements of Rule 903(b) or Rule 904(b) of Regulation S under the Securities Act, (iii) the transaction is not part of a plan or scheme to evade the registration requirements of the Securities Act and (iv) if the proposed transfer is being made prior to the expiration of the Restricted Period, the transfer is not being made to a U.S. Person or for the account or benefit of a U.S. Person (other than an Initial Purchaser).  Upon consummation of the proposed transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will be subject to the restrictions on Transfer enumerated in the Private Placement Legend printed on the Regulation S Global Note and/or the Restricted Definitive Note and in the Indenture and the Securities Act.
3.  o  Check and complete if Transferee will take delivery of a beneficial interest in a Restricted Definitive Note pursuant to any provision of the Securities Act other than Rule 144A or Regulation S.  The Transfer is being effected in compliance with the transfer restrictions applicable to beneficial interests in Restricted Global Notes and Restricted Definitive Notes and pursuant to and in accordance with the Securities Act and any applicable blue sky securities laws of any state of the United States, and accordingly the Transferor hereby further certifies that (check one):
(a)     o such Transfer is being effected pursuant to and in accordance with Rule 144 under the Securities Act;
or
(b)     o such Transfer is being effected to the Company or a subsidiary thereof;
or
(c)     o such Transfer is being effected pursuant to an effective registration statement under the Securities Act and in compliance with the prospectus delivery requirements of the Securities Act;
or
(d)     o such Transfer is being effected to an Institutional Accredited Investor and pursuant to an exemption from the registration requirements of the Securities Act other than Rule 144A, Rule 144, Rule 903 or Rule 904, and the Transferor hereby further certifies that it has not engaged in any general solicitation within the meaning of Regulation D under the Securities Act and the Transfer complies with the transfer restrictions applicable to beneficial interests in a Restricted Global Note or Restricted Definitive Notes and the requirements of the exemption claimed, which certification is supported by (1) a certificate executed by the Transferee in the form of Exhibit D to the Indenture and (2) if such Transfer is in respect of a principal amount of Notes at the time of transfer of less than $250,000, an Opinion of Counsel provided by the Transferor or the Transferee (a copy of which the Transferor has attached to this certification), to the effect that such Transfer is in compliance with the Securities Act.  Upon consummation of the proposed transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Definitive Notes and in the Indenture and the Securities Act.

B-2

4.  o  Check if Transferee will take delivery of a beneficial interest in an Unrestricted Global Note or of an Unrestricted Definitive Note.
(a)  o  Check if Transfer is pursuant to Rule 144.  (i) The Transfer is being effected pursuant to and in accordance with Rule 144 under the Securities Act and in compliance with the transfer restrictions contained in the Indenture and any applicable blue sky securities laws of any state of the United States and (ii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act.  Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will no longer be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Global Notes, on Restricted Definitive Notes and in the Indenture.
(b)  o  Check if Transfer is Pursuant to Regulation S.  (i) The Transfer is being effected pursuant to and in accordance with Rule 903 or Rule 904 under the Securities Act and in compliance with the transfer restrictions contained in the Indenture and any applicable blue sky securities laws of any state of the United States and (ii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act.  Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will no longer be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Global Notes, on Restricted Definitive Notes and in the Indenture.
(c)  o  Check if Transfer is Pursuant to Other Exemption.  (i) The Transfer is being effected pursuant to and in compliance with an exemption from the registration requirements of the Securities Act other than Rule 144, Rule 903 or Rule 904 and in compliance with the transfer restrictions contained in the Indenture and any applicable blue sky securities laws of any State of the United States and (ii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act.  Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will not be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Global Notes or Restricted Definitive Notes and in the Indenture.
This certificate and the statements contained herein are made for your benefit and the benefit of the Company.

___________________________________________________        [Insert Name of Transferor]

By:    ___________________________________________________        Name:
Title:

Dated:______________________________________________

B-3

ANNEX A TO CERTIFICATE OF TRANSFER

1.    The Transferor owns and proposes to transfer the following:
[CHECK ONE OF (a) OR (b)]
(a) o a beneficial interest in the:
(i)     o 144A Global Note (CUSIP _________), or
(ii)     o Regulation S Global Note (CUSIP _________), or
(b)  o  a Restricted Definitive Note.
2.    After the Transfer the Transferee will hold:
[CHECK ONE]
(a)  o  a beneficial interest in the:
(i)     o 144A Global Note (CUSIP _________), or
(ii)     o Regulation S Global Note (CUSIP _________), or
(iii)     o Unrestricted Global Note (CUSIP _________); or
(b)  o  a Restricted Definitive Note; or
(c)  o  an Unrestricted Definitive Note,
in accordance with the terms of the Indenture.

B-4

EXHIBIT C

FORM OF CERTIFICATE OF EXCHANGE

Harland Clarke Holdings Corp.
10931 Laureate Drive
San Antonio, TX 78249

Wells Fargo Bank, National Association
Corporate Trust Services
213 Court Street, Suite 703
Middletown, CT 06457

Wells Fargo Bank, National Association,
as Trustee and Registrar - DAPS Reorg
MAC N9303-121
608 2nd Avenue South
Minneapolis, MN  55479
Telephone No.:  (877) 872-4605
Fax No.:  (866) 969-1290
Email:  DAPSReorg@wellsfargo.com

		
	Re:  
	9.750% Senior Secured Notes due 2018

(CUSIP ____________)
Reference is hereby made to the Indenture, dated as of July 24, 2012 (the “Indenture”), among Harland Clarke Holdings Corp., as issuer (the “Company”), the Guarantors and Co-Issuers party thereto and Wells Fargo Bank, National Association, as trustee.  Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture.
__________________________, (the “Owner”) owns and proposes to exchange [9.750% Senior Secured Note[s]] (the “Note[s]”) or interest in such Note[s] specified herein, in the principal amount of $____________ in such Note[s] or interests (the “Exchange”).  In connection with the Exchange, the Owner hereby certifies that:
1.    Exchange of Restricted Definitive Notes or Beneficial Interests in a Restricted Global Note for Unrestricted Definitive Notes or Beneficial Interests in an Unrestricted Global Note
(a) o Check if Exchange is from beneficial interest in a Restricted Global Note to beneficial interest in an Unrestricted Global Note.  In connection with the Exchange of the Owner's beneficial interest in a Restricted Global Note for a beneficial interest in an Unrestricted Global Note in an equal principal amount, the Owner hereby certifies (i) the beneficial interest is being acquired for the Owner's own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to the Global Notes and pursuant to and in accordance with the Securities Act of 1933, as amended (the “Securities Act”), (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the beneficial interest in an Unrestricted Global Note is being acquired in compliance with any applicable blue sky securities laws of any state of the United States.

C-1

(b)  o Check if Exchange is from beneficial interest in a Restricted Global Note to Unrestricted Definitive Note.  In connection with the Exchange of the Owner's beneficial interest in a Restricted Global Note for an Unrestricted Definitive Note, the Owner hereby certifies (i) the Definitive Note is being acquired for the Owner's own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to the Restricted Global Notes and pursuant to and in accordance with the Securities Act, (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the Definitive Note is being acquired in compliance with any applicable blue sky securities laws of any state of the United States.
(c) o  Check if Exchange is from Restricted Definitive Note to beneficial interest in an Unrestricted Global Note.  In connection with the Owner's Exchange of a Restricted Definitive Note for a beneficial interest in an Unrestricted Global Note, the Owner hereby certifies (i) the beneficial interest is being acquired for the Owner's own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to Restricted Definitive Notes and pursuant to and in accordance with the Securities Act, (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the beneficial interest is being acquired in compliance with any applicable blue sky securities laws of any state of the United States.
(d)  o Check if Exchange is from Restricted Definitive Note to Unrestricted Definitive Note.  In connection with the Owner's Exchange of a Restricted Definitive Note for an Unrestricted Definitive Note, the Owner hereby certifies (i) the Unrestricted Definitive Note is being acquired for the Owner's own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to Restricted Definitive Notes and pursuant to and in accordance with the Securities Act, (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the Unrestricted Definitive Note is being acquired in compliance with any applicable blue sky securities laws of any state of the United States.
2.    Exchange of Restricted Definitive Notes or Beneficial Interests in Restricted Global Notes for Restricted Definitive Notes or Beneficial Interests in Restricted Global Notes
(a)  o Check if Exchange is from beneficial interest in a Restricted Global Note to Restricted Definitive Note.  In connection with the Exchange of the Owner's beneficial interest in a Restricted Global Note for a Restricted Definitive Note with an equal principal amount, the Owner hereby certifies that the Restricted Definitive Note is being acquired for the Owner's own account without transfer.  Upon consummation of the proposed Exchange in accordance with the terms of the Indenture, the Restricted Definitive Note issued will continue to be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Definitive Note and in the Indenture and the Securities Act.
(b)  o Check if Exchange is from Restricted Definitive Note to beneficial interest in a Restricted Global Note.  In connection with the Exchange of the Owner's Restricted Definitive Note for a beneficial interest in the [CHECK ONE] 144A Global Note, Regulation S Global Note with an equal principal amount, the Owner hereby certifies (i) the beneficial interest is being acquired for the Owner's own account without transfer and (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to the Restricted Global Notes and pursuant to and in accordance with the Securities Act, and in compliance with any applicable blue sky securities laws of any state of the United States.  Upon consummation of the proposed Exchange in accordance with the terms of the Indenture, the beneficial interest issued will be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the relevant Restricted Global Note and in the Indenture and the Securities Act.

C-2

This certificate and the statements contained herein are made for your benefit and the benefit of the Company.
________________________________________________    
[Insert Name of Transferor]

By:  ________________________________________________            Name:
Title:
Dated:  __________________

C-3

EXHIBIT D
FORM OF CERTIFICATE FROM
ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR

Harland Clarke Holdings Corp.
10931 Laureate Drive
San Antonio, TX 78249

Wells Fargo Bank, National Association
Corporate Trust Services
213 Court Street, Suite 703
Middletown, CT 06457

Wells Fargo Bank, National Association,
as Trustee and Registrar - DAPS Reorg
MAC N9303-121
608 2nd Avenue South
Minneapolis, MN  55479
Telephone No.:  (877) 872-4605
Fax No.:  (866) 969-1290
Email:  DAPSReorg@wellsfargo.com

		
	Re:  
	9.750% Senior Secured Notes due 2018

Reference is hereby made to the Indenture, dated as of July 24, 2012 (the “Indenture”), among Harland Clarke Holdings Corp., as issuer (the “Company”), the Guarantors and Co-Issuers party thereto and Wells Fargo Bank, National Association, as trustee.  Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture.
In connection with our proposed purchase of $____________ aggregate principal amount of:
(a)  o a beneficial interest in a Global Note, or
(b)  o a Definitive Note,
we confirm that:
1.    We understand that any subsequent transfer of the Notes or any interest therein is subject to certain restrictions and conditions set forth in the Indenture and the undersigned agrees to be bound by, and not to resell, pledge or otherwise transfer the Notes or any interest therein except in compliance with, such restrictions and conditions and the Securities Act of 1933, as amended (the “Securities Act”).
2.    We understand that the offer and sale of the Notes have not been registered under the Securities Act, and that the Notes and any interest therein may not be offered or sold except as permitted in the following sentence.  We agree, on our own behalf and on behalf of any accounts for which we are acting as hereinafter stated, that if we should sell the Notes or any interest therein, we will do so only (A) to the Company or any subsidiary thereof, (B) in accordance with Rule 144A under the Securities Act to a “qualified institutional buyer” (as defined therein), (C) to an institutional “accredited investor” (as defined below) that, prior to such transfer, furnishes (or has furnished on its behalf by a U.S. broker-dealer) to you and to the Company a signed letter substantially in the form of this letter and, 

D-1

if such transfer is in respect of a principal amount of Notes, at the time of transfer of less than $250,000, an Opinion of Counsel in form reasonably acceptable to the Company to the effect that such transfer is in compliance with the Securities Act, (D) outside the United States in accordance with Rule 904 of Regulation S under the Securities Act, (E) pursuant to the provisions of Rule 144(k) under the Securities Act or (F) pursuant to an effective registration statement under the Securities Act, and we further agree to provide to any Person purchasing the Definitive Note or beneficial interest in a Global Note from us in a transaction meeting the requirements of clauses (A) through (E) of this paragraph a notice advising such purchaser that resales thereof are restricted as stated herein.
3.    We understand that, on any proposed resale of the Notes or beneficial interest therein, we will be required to furnish to you and the Company such certifications, legal opinions and other information as you and the Company may reasonably require to confirm that the proposed sale complies with the foregoing restrictions.  We further understand that the Notes purchased by us will bear a legend to the foregoing effect.
4.    We are an institutional “accredited investor” (as defined in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and have such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of our investment in the Notes, and we and any accounts for which we are acting are each able to bear the economic risk of our or its investment.
5.    We are acquiring the Notes or beneficial interest therein purchased by us for our own account or for one or more accounts (each of which is an institutional “accredited investor”) as to each of which we exercise sole investment discretion.
You 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.

_________________________________________________        
[Insert Name of Accredited Investor]

By:    _________________________________________________        
Name:
Title:
Dated:    _________________________

D-2

EXHIBIT E
FORM OF NOTATION OF GUARANTEE FOR NOTES
For value received, each Guarantor (which term includes any successor Person under the Indenture) has, jointly and severally, unconditionally guaranteed, to the extent set forth, and subject to the provisions of, the Indenture dated as of July 24, 2012 (the “Indenture”) among Harland Clarke Holdings Corp., (the “Company”), the Guarantors and Co-Issuers party thereto and Wells Fargo Bank, National Association, as trustee (the “Trustee”), (a) the due and punctual payment of the principal of, premium, if any, and interest on, the Notes, whether at maturity, by acceleration, redemption or otherwise, the due and punctual payment of interest on overdue principal of and interest on the Notes, if any, if lawful, and the due and punctual performance of all other obligations of the Company to the Holders or the Trustee all in accordance with the terms of the Indenture and (b) in case of any extension of time of payment or renewal of any Notes or any of such other obligations, that the same will be promptly paid in full when due or performed in accordance with the terms of the extension or renewal, whether at stated maturity, by acceleration or otherwise.  The obligations of the Guarantors to the Holders of Notes and to the Trustee pursuant to the Guarantee and the Indenture are expressly set forth in Article 10 of the Indenture and reference is hereby made to the Indenture for the precise terms of the Guarantee.  To the extent the provisions of this Notation of Guarantee conflicts with the express provisions of the Indenture, the provisions of the Indenture shall govern and be controlling.
Capitalized terms used but not defined herein have the meanings given to them in the Indenture.

[NAME OF GUARANTOR(S)]
By:  _________________________________________________
Name:
Title:

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EXHIBIT F

FORM OF SUPPLEMENTAL INDENTURE
TO BE DELIVERED BY SUBSEQUENT GUARANTORS
Supplemental Indenture (this “Supplemental Indenture”), dated as of ________________, 20__, among __________________ (the “Guaranteeing Subsidiary”), a subsidiary of Harland Clarke Holdings Corp. (or its permitted successor), a Delaware corporation (the “Company”), the Company, the Co-Issuers (as defined in the Indenture referred to herein) the other Guarantors (as defined in the Indenture referred to herein) and Wells Fargo Bank, National Association, as trustee under the Indenture referred to below (the “Trustee”).
W I T N E S S E T H
WHEREAS, the Company has heretofore executed and delivered to the Trustee an indenture (the “Indenture”), dated as of July 24, 2012 providing for the issuance of 9.750% Senior Secured Notes due 2018 ( the “Notes”);
WHEREAS, the Indenture provides that under certain circumstances the Guaranteeing Subsidiary shall execute and deliver to the Trustee a supplemental indenture pursuant to which the Guaranteeing Subsidiary shall unconditionally guarantee all of the Company's Obligations under the Notes and the Indenture on the terms and conditions set forth herein (the “Guarantee”); and
WHEREAS, pursuant to Section 9.01 of the Indenture, the Trustee is authorized to execute and deliver this Supplemental Indenture.
NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the Guaranteeing Subsidiary and the Trustee mutually covenant and agree for the equal and ratable benefit of the Holders of the Notes as follows:
1.    CAPITALIZED TERMS.  Capitalized terms used herein without definition shall have the meanings assigned to them in the Indenture.
2.    AGREEMENT TO GUARANTEE.  The Guaranteeing Subsidiary hereby agrees to provide an unconditional Guarantee on the terms and subject to the conditions set forth in the Guarantee and in the Indenture including but not limited to Article 10 thereof.
3.    NO RECOURSE AGAINST OTHERS.  No director, officer, employee, incorporator, stockholder or controlling person of the Guaranteeing Subsidiary, as such, shall have any liability for any obligations of the Company or any Guaranteeing Subsidiary under the Notes, any Guarantees, the Indenture or this Supplemental Indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation.  Each Holder of the Notes by accepting a Note waives and releases all such liability.  The waiver and release are part of the consideration for issuance of the Notes.  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.
4.    NEW YORK LAW TO GOVERN.  THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO CONSTRUE THIS SUPPLEMENTAL INDENTURE WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
5.    COUNTERPARTS.  The parties may sign any number of copies of this Supplemental Indenture.  Each signed copy shall be an original, but all of them together represent the same agreement.  The exchange of copies of this Supplemental Indenture and of signature pages by facsimile or PDF transmission shall constitute effective execution and delivery of this Supplemental Indenture as to the parties hereto and may be used in lieu of the original Supplemental Indenture for all purposes.  Signatures of the parties hereto transmitted by facsimile or PDF shall be deemed to be their 

F-1

original signatures for all purposes.
6.    EFFECT OF HEADINGS.  The Section headings herein are for convenience only and shall not affect the construction hereof.
7.    THE TRUSTEE.  The Trustee shall not be responsible in any manner whatsoever for or in respect of the validity or sufficiency of this Supplemental Indenture or for or in respect of the recitals contained herein, all of which recitals are made solely by the Guaranteeing Subsidiary and the Company.

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IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly executed and attested, all as of the date first above written.
Dated:  _______________, 20___
[GUARANTEEING SUBSIDIARY]

By:  _______________________________
Name:
Title:
HARLAND CLARKE HOLDINGS CORP.
By:  _______________________________
Name:
Title:
[EXISTING CO-ISSUERS]
By:  _______________________________
Name:
Title:
[EXISTING GUARANTORS]
By:  _______________________________
Name:
Title:
WELLS FARGO BANK, NATIONAL ASSOCIATION,
  as Trustee
By:  _______________________________
Authorized Signatory

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