Document:

Exhibit
10.29

 

2004

 

Executive
Deferred Compensation Plan

 

Summary

 

The Pharmacopeia Deferred Compensation Plan is
designed to allow key executives and members of the Board of Directors to defer
compensation from federal taxes and to provide a vehicle for tax-deferred
investment growth. It also functions as a retention mechanism through the use
of a vesting schedule for Company-made matches and bonus awards. For a more
complete review of the mechanics of Pharmacopeia’s Executive Deferred
Compensation Plan, please review the EDCP Overview.

 

Participation

 

This plan is restricted to full time, US-based Vice
Presidents of the Company and members of its Board of Directors

 

Enrollment

 

Annual Deferral Amounts: The deferred compensation arrangement will be
provided as a benefit enhancement for key executives and members of the Board
of Directors allowing deferrals of up to 100% of annual compensation.

 

Election Timing: Deferral elections are effective as of
January 1st of the year in which the deferred compensation is earned.
Participants may elect individual elections for each of their annual base
salary and their annual bonus amounts.

 

Due Dates: Enrollment forms for 2004 should be returned
no later than December 31, 2003 to:

 

PCOP Employees and Board Members:

 

[NAME]

 

Investment Options

 

Deferrals will be invested into the Merrill Lynch-
trusteed permissible investment options under the oversight of Merrill Lynch
and at the direction of the participant. Individuals may direct their 

 

 

deferrals into stocks, bonds and/or preferreds that
meet Merrill Lynch Trust requirements (must be rated by S&P or Moody’s:
stock as B+ or higher, and debt securities as BBB or higher, commercial paper
as A2 or higher).

 

In addition, the following summarizes the Merrill
Lynch mutual fund options:

 

Aim, Dreyfus, Lord Albert, Provident, Alger, Eaton
Vance, Mainstay Funds, Putnam, Alliance Capital, Evergreen, Merrill Lynch,
Saloman Bros, American Funds, Federated Investors, MFS, Seligman, Aquila,
Fidelity Advisor, Montgomery, Stagecoach, Blackrock, Forum Funds, Munder,
Statestreet, Calamos, FPA Funds, Nations Funds, SunAmerica, Calvert,
Franklin/Templeton, New England Funds, Van Eck, Chase, Vista, GAM Funds,
Northstar Funds, Van Kampen Cohen & Steers, Hartford Funds, Nuveen Victory
Funds, Conseco Ivy Funds, Oppenheimer Countrywide, John Hancock, Pacific
Capital, Davis Funds, Jundt Funds, Phoenix, Dean Funds, Kemper, Pilgrim,
America, Delaware, Voyager, Kopp Funds, Pimco, Deutche Funds, Liberty Funds,
Pioneer Funds

 

Investment selections should be made in consultation
with our plan investment counselor at Merrill Lynch.  His contact information follows. Upon receipt
of your enrollment form, he will contact you to plan an individual investment
strategy.

 

Company Contributions

 

Matching Contributions: At its discretion, the Company may
recommend to the Board of Directors that it make a discretionary matching
contribution of up to $5,000 annually per eligible participant. This
contribution will be contingent upon the individual participant making an
equivalent annual salary deferral during the plan year for which the match
would be awarded.

 

Bonus Contributions: Participants will be eligible for a bonus
contribution based upon the stock performance of Pharmacopeia relative to the
performance of the Russell 2000 Index*. The bonus will be awarded based upon
Pharmacopeia stock out-performing the above named and chosen index on a
percentage over percentage basis. For each percentage point that Pharmacopeia
stock out-performs the above named and chosen index, the participant will be
eligible to receive a bonus equivalent to that percentage of his/her 

 

 

base salary or director’s fees up to a maximum bonus
award of 20% of base salary or of director’s fees. Bonus achievement will be
determined based upon stock versus index performance on a calendar year basis
(growth or decline between 1/1 and 12/31of a given year). In the event that
Pharmacopeia Inc. has negative stock price performance for a given year, the
Board of Directors reserves the right to make a discretionary determination
regarding whether or not a bonus contribution payment is to be made and to its
amount, even if such stock price performance is better than the Russell 2000
Index. *

 

*The Russell 2000 Index measures the performance of
the 2000 smallest companies within the Russell 3000 Index. It provides a broad
representation of industry sectors and has demonstrated a high correlation with
other small cap indices. The average market capitalization within the index is
$580MM. The largest market cap within the fund is $1.5B

 

Company Contribution Vesting
Schedule:
Company-made Matching Contributions and Bonus Contributions will vest over
3-years at 33 1/3% per year. Vesting will be rolling and commence on the date
the contribution is made on behalf of the eligible individual.

 

Plan Distributions

 

Distributions may be made either in a lump sum on a
pre-determined date as directed by the participant at the time of deferral or
at termination of employment.

 

Plan Administration

 

The deferred compensation plan will be approved and
administered at the direction of the Compensation Committee of Pharmacopeia’s
Board of Directors.Exhibit 10.30

 

	
  

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  February 25, 2004

  	
   

  	
  Stephen A. Spearman, Ph.D., MBA

  Executive Vice President

  Chief Operating Officer, Pharmacopeia Drug
  Discovery, Inc.

  

 

VIA FEDERAL EXPRESS

 

Paul A. Bartlett, Ph.D.

Department of Chemistry

University of California

Berkeley, CA 94720 - 1460

 

Re:           Amendment
to Consulting Agreement dated March 1993

Between Pharmacopeia, Inc. and Paul A. Bartlett

 

Dear Paul:

 

As we discussed during our recent telephone conversation, Pharmacopeia
is pleased to acknowledge the automatic renewal of your above-referenced
Consulting Agreement (“Consulting Agreement”) for another one-year term, which
runs until March 31, 2005.  We also
discussed and agreed to a reduction in your yearly cash compensation.  Therefore, by this letter, it is agreed that
Section 2 of the Consulting Agreement shall be amended to reflect that your
annual fee shall be reduced from $75,000 per annum to $36,000 per annum.  This Amendment shall take effect upon renewal
of the Consulting Agreement on April 1, 2004 and shall remain in effect for any
and all subsequent renewals unless further amended in writing by both parties.

 

For your convenience, I have enclosed two copies of this letter that
have been signed by me.  Please
countersign and date one of the letters and return it to me at your earliest
convenience, retaining the other for your files.  Please do not hesitate to contact me should
you have any questions or concerns.  I
look forward to our upcoming SAB meeting and appreciate all of your support and
guidance.

 

	
   

  	
  Sincerely yours,

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Stephen A. Spearman

  	
   

  
	
   

  	
  Stephen A. Spearman, Ph.D.

  

 

	
  Accepted and Agreed to:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  /s/ Paul A. Bartlett

  	
   

  	
  3/1/04

  	
   

  
	
  Paul Bartlett

  	
   

  	
  Date

  	
   

  

 

 

Pharmacopeia, Inc. • P.O. Box 5350 • Princeton, New
Jersey 08543-5350

609/452-3651 • spearman@pharmacop.com
•
609/919-3863 (Fax)Exhibit 4.1

 

EXECUTION

 

J. Crew
Operating Corp.

 

 

93/4%
SENIOR SUBORDINATED NOTES DUE 2014

 

 

INDENTURE

DATED AS OF March
18, 2005

 

U.S. Bank National
Association

 

TRUSTEE

 

 

 

	
  ARTICLE
  1

  
	
  DEFINITIONS
  AND INCORPORATION BY REFERENCE

  
	
   

  	
   

  	
   

  
	
  Section 1.01.

  	
  Definitions.

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 1.02.

  	
  Other Definitions

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 1.03.

  	
  Rules of Construction

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 2

  
	
  THE NOTES

  
	
   

  	
   

  	
   

  
	
  Section 2.01.

  	
  Form and Dating

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 2.02.

  	
  Execution and Authentication

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 2.03.

  	
  Registrar and Paying Agent

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 2.04.

  	
  Paying Agent to Hold Money in Trust

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 2.05.

  	
  Holder Lists

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 2.06.

  	
  Global Note Provisions

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 2.07.

  	
  Legends

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 2.08.

  	
  Transfer and Exchange

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 2.09.

  	
  Replacement Notes

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 2.10.

  	
  Outstanding Notes

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 2.11.

  	
  Treasury Notes

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 2.12.

  	
  Temporary Notes

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 2.13.

  	
  Cancellation

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 2.14.

  	
  Defaulted Interest

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 2.15.

  	
  Record Date

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 2.16.

  	
  Computation Of Interest

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 2.17.

  	
  CUSIP Number

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 2.18.

  	
  Additional Notes

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 3

  
	
  REDEMPTION AND PREPAYMENT

  
	
   

  	
   

  	
   

  
	
  Section 3.01.

  	
  Notices to Trustee

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 3.02.

  	
  Selection of Notes to be Redeemed or
  Purchased

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 3.03.

  	
  Notice of Redemption

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 3.04.

  	
  Effect of Notice of Redemption

  	
   

  

 

ii

 

	
  Section 3.05.

  	
  Deposit of Redemption or Purchase Price

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 3.06.

  	
  Notes Redeemed or Purchased in Part

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 3.07.

  	
  Optional Redemption

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 3.08.

  	
  Mandatory Redemption

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 3.09.

  	
  Asset Sale Offers

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 4

  
	
  COVENANTS

  
	
   

  	
   

  	
   

  
	
  Section 4.01.

  	
  Payment of Notes

  	
   

  
	
   

  	
   

  	
   

  
	
  Section
  4.02.

  	
  Maintenance
  of Office or Agency

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 4.03.

  	
  Commission
  Reports

  	
   

  
	
   

  	
   

  	
   

  
	
  Section
  4.04.

  	
  Compliance
  Certificate

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 4.05.

  	
  Taxes

  	
   

  
	
   

  	
   

  	
   

  
	
  Section
  4.06.

  	
  Stay,
  Extension and Usury Laws

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 4.07.

  	
  Restricted
  Payments

  	
   

  
	
   

  	
   

  	
   

  
	
  Section
  4.08.

  	
  Dividends
  and Other Payment Restrictions Affecting Restricted Subsidiaries

  	
   

  
	
   

  	
   

  	
   

  
	
  Section
  4.09.

  	
  Incurrence
  of Indebtedness and Issuance of Preferred Stock

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 4.10.

  	
  Asset Sales

  	
   

  
	
   

  	
   

  	
   

  
	
  Section
  4.11.

  	
  Transactions
  with Affiliates

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 4.12.

  	
  Liens

  	
   

  
	
   

  	
   

  	
   

  
	
  Section
  4.13.

  	
  Offer
  to Purchase Upon a Change of Control

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 4.14.

  	
  Corporate
  Existence

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 4.15.

  	
  Business
  Activities

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 4.16.

  	
  No Layering of
  Debt

  	
   

  
	
   

  	
   

  	
   

  
	
  Section
  4.17.

  	
  Additional
  Note Guarantees

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 5

  
	
  SUCCESSORS

  
	
   

  	
   

  	
   

  
	
  Section
  5.01.

  	
  Merger,
  Consolidation of Sale of Assets

  	
   

  
	
   

  	
   

  	
   

  
	
  Section
  5.02.

  	
  Successor
  Corporation Substituted

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 6

  
	
  DEFAULTS AND
  REMEDIES

  
	
   

  	
   

  	
   

  
	
  Section 6.01.

  	
  Events of Default

  	
   

  

 

iii

 

	
  Section 6.02.

  	
  Acceleration

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 6.03.

  	
  Other Remedies

  	
   

  
	
   

  	
   

  	
   

  
	
  Section
  6.04.

  	
  Waiver of
  Past Defaults

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 6.05.

  	
  Control by
  Majority

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 6.06.

  	
  Limitation on
  Suits

  	
   

  
	
   

  	
   

  	
   

  
	
  Section
  6.07.

  	
  Rights
  of Holders of Notes to Receive Payment

  	
   

  
	
   

  	
   

  	
   

  
	
  Section
  6.08.

  	
  Collection
  Suit by Trustee

  	
   

  
	
   

  	
   

  	
   

  
	
  Section
  6.09.

  	
  Trustee
  May File Proofs of Claim

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 6.10.

  	
  Priorities

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 6.11.

  	
  Undertaking
  for Costs

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 7

  
	
  TRUSTEE

  
	
   

  	
   

  	
   

  
	
  Section 7.01.

  	
  Duties of Trustee

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 7.02.

  	
  Rights of Trustee

  	
   

  
	
   

  	
   

  	
   

  
	
  Section
  7.03.

  	
  Individual
  Rights of Trustee

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 7.04.

  	
  Trustee’s
  Disclaimer

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 7.05.

  	
  Notice of
  Defaults

  	
   

  
	
   

  	
   

  	
   

  
	
  Section
  7.06.

  	
  Reports
  by Trustee to Holders of the Notes

  	
   

  
	
   

  	
   

  	
   

  
	
  Section
  7.07.

  	
  Compensation
  and Indemnity

  	
   

  
	
   

  	
   

  	
   

  
	
  Section
  7.08.

  	
  Replacement
  of Trustee

  	
   

  
	
   

  	
   

  	
   

  
	
  Section
  7.09.

  	
  Successor
  Trustee by Merger, Etc

  	
   

  
	
   

  	
   

  	
   

  
	
  Section
  7.10.

  	
  Eligibility;
  Disqualification

  	
   

  
	
   

  	
   

  	
   

  
	
  Section
  7.11.

  	
  Preferential
  Collection of Claims Against the Company

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  8

  
	
  LEGAL
  DEFEASANCE AND COVENANT DEFEASANCE

  
	
   

  	
   

  	
   

  
	
  Section
  8.01.

  	
  Option
  to Effect Legal Defeasance or Covenant Defeasance

  	
   

  
	
   

  	
   

  	
   

  
	
  Section
  8.02.

  	
  Legal
  Defeasance and Discharge

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 8.03.

  	
  Covenant
  Defeasance

  	
   

  
	
   

  	
   

  	
   

  
	
  Section
  8.04.

  	
  Conditions
  to Legal or Covenant Defeasance

  	
   

  
	
   

  	
   

  	
   

  
	
  Section
  8.05.

  	
  Deposited
  Money and U.S

  	
   

  
	
   

  	
   

  	
   

  
	
  Section
  8.06.

  	
  Repayment
  to the Company

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 8.07.

  	
  Reinstatement

  	
   

  

 

iv

 

	
  ARTICLE
  9

  
	
  AMENDMENT,
  SUPPLEMENT AND WAIVER

  
	
   

  	
   

  	
   

  
	
  Section
  9.01.

  	
  Without
  Consent of Holders of the Notes

  	
   

  
	
   

  	
   

  	
   

  
	
  Section
  9.02.

  	
  With
  Consent of Holders of Notes

  	
   

  
	
   

  	
   

  	
   

  
	
  Section
  9.03.

  	
  Revocation
  and Effect of Consents

  	
   

  
	
   

  	
   

  	
   

  
	
  Section
  9.04.

  	
  Notation
  on or Exchange of Notes

  	
   

  
	
   

  	
   

  	
   

  
	
  Section
  9.05.

  	
  Trustee
  to Sign Amendments, Etc

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 10

  
	
  SUBORDINATION

  
	
   

  	
   

  	
   

  
	
  Section
  10.01.

  	
  Agreement
  to Subordinate

  	
   

  
	
   

  	
   

  	
   

  
	
  Section
  10.02.

  	
  Liquidation;
  Dissolution; Bankruptcy

  	
   

  
	
   

  	
   

  	
   

  
	
  Section
  10.03.

  	
  Default
  On Designated Senior Debt

  	
   

  
	
   

  	
   

  	
   

  
	
  Section
  10.04.

  	
  Acceleration
  of Notes

  	
   

  
	
   

  	
   

  	
   

  
	
  Section
  10.05.

  	
  When
  Distribution Must Be Paid Over

  	
   

  
	
   

  	
   

  	
   

  
	
  Section
  10.06.

  	
  Notice by
  the Company

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 10.07.

  	
  Subrogation

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 10.08.

  	
  Relative Rights

  	
   

  
	
   

  	
   

  	
   

  
	
  Section
  10.09.

  	
  Subordination
  May Not Be Impaired by the Company

  	
   

  
	
   

  	
   

  	
   

  
	
  Section
  10.10.

  	
  Distribution
  or Notice of Representative

  	
   

  
	
   

  	
   

  	
   

  
	
  Section
  10.11.

  	
  Rights
  of Trustee and Paying Agent

  	
   

  
	
   

  	
   

  	
   

  
	
  Section
  10.12.

  	
  Authorization
  to Effect Subordination

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 10.13.

  	
  Amendments

  	
   

  
	
   

  	
   

  	
   

  
	
  Section
  10.14.

  	
  Reliance
  by Holders of Senior Debt on Subordination Provisions

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 11

  
	
  COLLATERAL AND
  SECURITY

  
	
   

  	
   

  	
   

  
	
  Section 11.01.

  	
  Security
  Documents

  	
   

  
	
   

  	
   

  	
   

  
	
  Section
  11.02.

  	
  Release of
  Collateral

  	
   

  
	
   

  	
   

  	
   

  
	
  Section
  11.03.

  	
  Certificates
  of the Trustee

  	
   

  
	
   

  	
   

  	
   

  
	
  Section
  11.04.

  	
  Authorization
  of Actions to Be Taken by the Trustee Under the Security Documents

  	
   

  
	
   

  	
   

  	
   

  
	
  Section
  11.05.

  	
  Authorization
  of Receipt of Funds by the Trustee Under the Security Documents

  	
   

  
	
   

  	
   

  	
   

  
	
  Section
  11.06.

  	
  Termination
  of Security Interest

  	
   

  

 

v

 

	
  Section 11.07.

  	
  Collateral Agent

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 11.08.

  	
  Designations

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 12

  
	
  NOTE GUARANTEES

  
	
   

  	
   

  	
   

  
	
  Section 12.01.

  	
  Note Guarantees

  	
   

  
	
   

  	
   

  	
   

  
	
  Section
  12.02.

  	
  Execution
  and Delivery of the Note Guarantees

  	
   

  
	
   

  	
   

  	
   

  
	
  Section
  12.03.

  	
  Guarantors
  May Consolidate, etc., on Certain Terms

  	
   

  
	
   

  	
   

  	
   

  
	
  Section
  12.04.

  	
  Releases
  of Note Guarantees

  	
   

  
	
   

  	
   

  	
   

  
	
  Section
  12.05.

  	
  Limitation
  on Guarantor Liability

  	
   

  
	
   

  	
   

  	
   

  
	
  Section
  12.06.

  	
  “Trustee”
  to Include Paying Agent

  	
   

  
	
   

  	
   

  	
   

  
	
  Section
  12.07.

  	
  Subordination
  of Note Guarantees

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 13

  
	
  SATISFACTION
  AND DISCHARGE

  
	
   

  	
   

  	
   

  
	
  Section
  13.01.

  	
  Satisfaction
  and Discharge

  	
   

  
	
   

  	
   

  	
   

  
	
  Section
  13.02.

  	
  Application
  of Trust Money

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 14

  
	
  MISCELLANEOUS

  
	
   

  	
   

  	
   

  
	
  Section 14.01.

  	
  Trust
  Indenture Act

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 14.02.

  	
  Notices

  	
   

  
	
   

  	
   

  	
   

  
	
  Section
  14.03.

  	
  Certificate
  and Opinion as to Conditions Precedent

  	
   

  
	
   

  	
   

  	
   

  
	
  Section
  14.04.

  	
  Statements
  Required in Certificate or Opinion

  	
   

  
	
   

  	
   

  	
   

  
	
  Section
  14.05.

  	
  Rules
  by Trustee and Agents

  	
   

  
	
   

  	
   

  	
   

  
	
  Section
  14.06.

  	
  No
  Personal Liability of Directors, Officers, Employees, Organizers and Members

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 14.07.

  	
  Governing Law

  	
   

  
	
   

  	
   

  	
   

  
	
  Section
  14.08.

  	
  No
  Adverse Interpretation of Other Agreements

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 14.09.

  	
  Successors

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 14.10.

  	
  Severability

  	
   

  
	
   

  	
   

  	
   

  
	
  Section
  14.11.

  	
  Counterpart
  Originals

  	
   

  
	
   

  	
   

  	
   

  
	
  Section
  14.12.

  	
  Table
  of Contents, Headings, Etc

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 14.13.

  	
  Entire Agreement

  	
   

  

 

vi

 

EXHIBITS

 

	
  EXHIBIT
  A

  	
   

  	
  FORM
  OF NOTE

  
	
   

  	
   

  	
   

  
	
  EXHIBIT
  B

  	
   

  	
  FORM
  OF NOTE GUARANTEE

  
	
   

  	
   

  	
   

  
	
  EXHIBIT
  C

  	
   

  	
  FORM
  OF SUPPLEMENTAL INDENTURE

  
	
   

  	
   

  	
   

  
	
  EXHIBIT
  D

  	
   

  	
  FORM
  OF CERTIFICATE FOR TRANSFER TO QIB

  
	
   

  	
   

  	
   

  
	
  EXHIBIT
  E

  	
   

  	
  FORM
  OF CERTIFICATE FOR TRANSFER PURSUANT TO RULE 144

  

 

vii

 

Indenture, dated as of March 18, 2005 among J. Crew Operating Corp., a
Delaware corporation, as issuer, the Guarantors (as defined herein), and U.S.
Bank National Association, as trustee.

 

The parties hereto agree as follows for the benefit of each other and
for the equal and ratable benefit of the holders of the J. Crew Operating Corp.’s
93/4% Senior Subordinated Notes due 2014:

 

ARTICLE 1

DEFINITIONS AND INCORPORATION

BY REFERENCE

 

Section
1.01.     Definitions.

 

“Acquired Debt”
means, with respect to any specified Person, (i) 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 (ii) Indebtedness secured by a Lien encumbering any
asset acquired by such specified Person.

 

“Additional Assets” means any property or assets
(other than Indebtedness and Capital Stock) to be used by the Company or a
Restricted Subsidiary of the Company in a Permitted Business.

 

“Additional Note
Board Resolutions” means resolutions duly adopted by the Board of
Directors of the Company and delivered to the Trustee in an Officer’s
Certificate providing for the issuance of Additional Notes.

 

“Additional Notes”
means the Company’s 93/4%
Senior Subordinated Notes originally issued after the Issue Date
pursuant to Section 2.18, including any replacement Notes as specified in the
relevant Additional Note Board Resolutions.

 

“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.
Beneficial ownership of 10% or more of the voting securities of a Person shall
be deemed to be control.  No Person in
whom a Receivables Subsidiary makes an Investment in connection with a
Qualified Receivables Transaction will be deemed to be an Affiliate of the
Company or any of its Subsidiaries solely by reason of such Investment.

 

“Agent”
means any Registrar, Paying Agent, co-registrar or additional paying agent.

 

 

“Asset Sale”
means (i) the sale, lease (other than an operating lease), conveyance or
other disposition of any assets or rights (including, without limitation, by
way of a sale and leaseback) other than in the ordinary course of business (provided
that the sale, lease (other than an operating lease), conveyance or other
disposition of all or substantially all of the assets of the Company and its
Restricted Subsidiaries taken as a whole will be governed by the provisions of
this Indenture described in Section 4.13 and Section 5.01 and not by the
provisions of Section 4.10 of this Indenture, and (ii) the issuance of
Equity Interests in any of the Company’s Restricted Subsidiaries or the sale of
Equity Interests in any of its Subsidiaries (other than directors’ qualifying
Equity Interests or Equity Interests required by applicable law to be held by a
Person other than the Company or a Restricted Subsidiary of the Company).

 

Notwithstanding the preceding, none of the following
items shall be deemed to be an Asset Sale:

 

(1)
any single transaction or series of related transactions that involves assets
having a Fair Market Value of less than $5.0 million;

 

(2) a
transfer of assets between or among the Company and its Restricted
Subsidiaries;

 

(3) an
issuance of Equity Interests by a Restricted Subsidiary of the Company to the
Company or to a Restricted Subsidiary of the Company;

 

(4)
the sale or lease of products, services or accounts receivable (including at a
discount) in the ordinary course of business and any sale or other disposition
of damaged, worn-out, negligible, surplus or obsolete assets in the ordinary
course of business;

 

(5)
the sale or other disposition of Cash Equivalents;

 

(6) a
Restricted Payment that does not violate Section 4.07 of this Indenture or is a
Permitted Investment;

 

(7) a
sale and leaseback transaction with respect to any assets within 180 days of
the acquisition of such assets;

 

(8)
any exchange of like-kind property of the type described in Section 1031 of the
Internal Revenue Code of 1986 for use in a Permitted Business;

 

(9)
the sale or disposition of any assets or property received as a result of a
foreclosure by the Company or any of its Restricted Subsidiaries on any secured
Investment or any other transfer of title with respect to any secured
Investment in default;

 

(10)
the licensing of intellectual property in the ordinary course of business or in
accordance with industry practice;

 

(11)
the sale, lease, conveyance, disposition or other transfer of (a) the Capital
Stock of, or any Investment in, any Unrestricted Subsidiary or (b) Permitted
Investments made pursuant to clause (xxii) of the definition of “Permitted
Investments”;

 

2

 

(12)
surrender or waiver of contract rights or the settlement, release or surrender
of contract, tort or other claims of any kind;

 

(13)
leases or subleases to third persons in the ordinary course of business that do
not interfere in any material respect with the business of the Company or any
of its Restricted Subsidiaries;

 

(14)
sales of accounts receivable and related assets of the type specified in the
definition of Qualified Receivables Transaction to a Receivables Subsidiary for
the Fair Market Value thereof, less amounts required to be established as
reserves and customary discounts pursuant to contractual agreements with
entities that are not Affiliates of the Company entered into as part of a
Qualified Receivables Transactions; and

 

(15) transfers
of accounts receivable and related assets of the type specified in the
definition of Qualified Receivables Transaction (or a fractional undivided
interest therein) by a Receivables Subsidiary in a Qualified Receivables
Transaction.

 

“Attributable Debt”
in respect of a sale and leaseback transaction means, at the time of
determination, the present value of the obligation of the lessee for net rental
payments during the remaining term of the lease included in such sale and
leaseback transaction including any period for which such lease has been
extended or may, at the option of the lessor, be extended. Such present value
shall be calculated using a discount rate equal to the rate of interest
implicit in such transaction, determined in good faith by a responsible
financial or accounting officer of the Company.

 

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

 

“Black Canyon Credit Facility”
means the Loan Agreement, including any related notes, Guarantees, collateral
documents, instruments and agreements executed in connection therewith, in each
case, as amended, extended, modified, renewed, refunded, replaced or refinanced
from time to time, whether or not by the same or any other agent, lender or
group of lenders.

 

“Board of Directors”
means, with respect to any Person, the board of directors, management committee
or similar governing body of such Person or any duly authorized committee
thereof.

 

“Business Day”
means any day other than a Legal Holiday.

 

“Capital 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 on a balance sheet prepared in
accordance with GAAP, and the Stated Maturity thereof shall be the date of the
last payment of rent or any other amount due under such lease prior to the
first date upon which such lease may be prepaid by the lessee without payment
of a penalty.

 

“Capital Stock”
means (i) in the case of a corporation, corporate stock, (ii) in the
case of an association or business entity, any and all shares, interests,
participations, rights or other 

 

3

 

equivalents (however designated) of corporate stock,
(iii) in the case of a partnership or limited liability company,
partnership (whether general or limited) or membership interests and
(iv) 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 but excluding from all of the foregoing any debt
securities convertible into Capital Stock, whether or not such debt securities
include any right of participation with Capital Stock.

 

“Cash Equivalents”
means:

 

(i)
United States dollars or any other currencies held from time to time in the
ordinary course of business;

 

(ii)
securities issued or directly and fully guaranteed or insured by the United
States government or any agency or instrumentality of the United States
government (provided that
the full faith and credit of the United States is pledged in support of those
securities) having maturities of not more than 12 months from the date of
acquisition;

 

(iii)
direct obligations issued by any state of the United States of America or any
political subdivision of any such state, or any public instrumentality thereof,
in each case having maturities of not more than 12 months from the date of
acquisition;

 

(iv)
certificates of deposit and eurodollar time deposits with maturities of 12
months or less from the date of acquisition, bankers’ acceptances with
maturities not exceeding 12 months and overnight bank deposits, in each case,
with any lender party to the Congress Credit Facility or with any domestic
commercial bank that is at least “adequately capitalized” (as defined in the
regulations of its primary Federal banking regulator) and has Tier 1 Capital
(as defined in such regulations) of not less than $250.0 million;

 

(v)
repurchase obligations with a term of not more than one year for underlying
securities of the types described in clauses (ii) and (iv) above entered into
with any financial institution meeting the qualifications specified in clause
(iv) above;

 

(vi)
commercial paper having one of the two highest ratings obtainable from Moody’s
Investors Service, Inc. or Standard & Poor’s Rating Services and, in each
case, maturing within 12 months after the date of acquisition;

 

(vii)
Indebtedness or preferred stock issued by Persons with a rating of “A” or
higher from Standard & Poor’s Rating Services or “A2” or higher from Moody’s
Investors Service, Inc. with maturities of 12 months or less from the date of
acquisition; and

 

(viii)
money market funds at least 95% of the assets of which constitute Cash
Equivalents of the kinds described in clauses (i) through (vi) of this
definition.

 

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

 

4

 

(i) the direct or indirect sale, lease, transfer,
conveyance or other disposition (other than by way of merger or consolidation),
in one or a series of related transactions, of all or substantially all of the
properties or assets of the Company and its Subsidiaries taken as a whole to
any “person” (as such term is used in Section 13(d)(3) of the Exchange
Act), other than Permitted Holders;

 

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

 

(iii) the consummation of any transaction
(including, without limitation, any merger or consolidation) the result of
which is that any “person” (as defined above), other than the Permitted
Holders, becomes the “beneficial owner” (as such term is defined in
Rule 13d-3 and Rule 13d-5 under the Exchange Act), directly or
indirectly, of 50% or more of the Voting Stock of the Company (measured by
voting power rather than number of shares); provided, however, for purposes of this
clause (iii), each Person will be deemed to beneficially own any Voting Stock
of another Person held by one or more of its Subsidiaries.

 

“Closing Date”
means December 23, 2004, or such later date on which the conditions precedent
set forth in Section 9.02 of the Loan Agreement shall be satisfied or waived
pursuant to Section 13.02 of the Loan Agreement.

 

“Collateral”
means the Capital Stock
of the Company held by Intermediate, all property and assets of the Company,
and all property and assets of each Subsidiary of the Company that is a
Guarantor hereunder, in each case, with respect to which from time to time a
Lien is granted as security for the Notes pursuant to the applicable Security
Documents.

 

“Collateral
Agent” means U.S. Bank National
Association in its capacity as the “Collateral Agent” under and as defined in
the Security Documents and any successor thereto in such capacity.

 

“Collateral
Permitted Liens” means:

 

(i) Liens existing as of the Effective Date plus
renewals and extensions of such Liens;

 

(ii) Liens securing any First-Lien Obligations;

 

(iii) Liens securing the Notes (or the Note Guarantees)
and any Other Second-Lien Obligations;

 

(iv) Liens securing Permitted Refinancing
Indebtedness permitted to be incurred under this Indenture; provided
that such Liens securing Permitted Refinancing Indebtedness that ranks equal to
or junior in right of payment with the Notes (A) are not materially less
favorable to the Holders and are not materially more favorable to the
lienholders with respect to such Liens than the Liens in respect of the
Indebtedness being refinanced and (B) are limited to all or part of the
same property and assets that secured or, under the written agreements pursuant
to which the original Lien arose, could secure 

 

5

 

the original Lien (plus improvements and accessions to
such property or proceeds or distributions thereof);

 

(v) Liens for taxes, assessments or governmental
charges or claims either (A) not delinquent or (B) contested in good
faith by appropriate proceedings and as to which the Company or its Restricted
Subsidiaries shall have set aside on their books such reserves as may be
required pursuant to GAAP;

 

(vi) statutory Liens of landlords and Liens of
carriers, warehousemen, mechanics, suppliers, materialmen, repairmen and other
Liens imposed by law incurred in the ordinary course of business;

 

(vii) Liens incurred or deposits or pledges made
in the ordinary course of business in connection with workers’ compensation,
unemployment insurance and other types of social security or similar
obligations, including any Lien securing letters of credit issued in the
ordinary course of business in connection therewith, or to secure the
performance of tenders, public or statutory obligations, progress payments,
surety and appeal bonds, bids, leases, contracts (other than contracts for the
payment of money), performance and return-of-money bonds and other similar
obligations;

 

(viii) Liens arising out of judgments, decrees,
orders or awards in respect of which the Company shall in good faith be
prosecuting an appeal or proceedings for review which appeal or proceedings
shall not have been finally terminated, or if the period within which such
appeal or proceedings may be initiated shall not have expired;

 

(ix) survey exceptions, easements, rights of way,
zoning restrictions, licenses, reservations, provisions, encroachments,
encumbrances, protrusion permits, servitudes, covenants, conditions, waivers,
restrictions on the use of property or title defects (and with respect to
leasehold interests, mortgages, obligations, liens and other encumbrances
incurred, created, assumed or permitted to exist and arising by, through or
under a landlord or owner of the leased property, with or without the consent
of the lessee) and other similar charges, restrictions or encumbrances in
respect of real property that do not in the aggregate materially adversely
affect the ordinary conduct of the business of the Company or any of its
Restricted Subsidiaries;

 

(x) any interest or title of a lessor under any
lease, whether or not characterized as capital or operating; provided
that such Liens do not extend to any property or asset which is not leased
property subject to such lease;

 

(xi) Liens securing Capital Lease Obligations and
purchase money Indebtedness incurred in accordance with Section 4.09(b) hereof;
provided that the Indebtedness shall not be secured by any property or
assets of the Company or any Restricted Subsidiary of the Company other than
the property and assets being acquired or constructed or improved or financed
by such Indebtedness;

 

(xii) Liens upon specific items of inventory or
other goods and proceeds of any Person securing such Person’s obligations in
respect of bankers’ acceptances issued or 

 

6

 

created for the account of such Person to facilitate
the purchase, shipment or storage of such inventory or other goods;

 

(xiii) Liens securing reimbursement obligations
with respect to letters of credit which encumber documents and other property
relating to such letters of credit and products and proceeds thereof;

 

(xiv) Liens to secure obligations arising from
statutory, regulatory, contractual, or warranty requirements of the Company or
any of its Restricted Subsidiaries, including rights of offset and set-off;

 

(xv) Liens securing Hedging Obligations;

 

(xvi) Liens on property or assets of a Person,
plus renewals and extensions of such Liens, existing at the time such Person is
merged with or into or consolidated with the Company or any Subsidiary of the
Company; provided that such Liens were in existence prior to the
contemplation of such merger or consolidation and do not extend to any assets
other than those of the Person merged into or consolidated with the Company or
the Subsidiary;

 

(xvii) Liens on property (including Capital Stock)
existing at the time of acquisition of the property by the Company or any
Restricted Subsidiary of the Company; provided that such Liens were in
existence prior to such acquisition and not incurred in contemplation of such
acquisition;

 

(xviii) leases, subleases, licenses or
sublicenses to third parties entered into in the ordinary course of business;

 

(xix) Liens arising out of consignment or similar
arrangements for the sale of goods entered into by the Company or any
Restricted Subsidiary in the ordinary course of business;

 

(xx) Liens in favor of the Company or the Guarantors;

 

(xxi) Liens on Capital Stock of an Unrestricted
Subsidiary that secure Indebtedness or other obligations of such Unrestricted
Subsidiary;

 

(xxii) Liens of a bank, broker or securities intermediary
on whose records a deposit account or securities account is maintained securing
the payment of customary fees and commissions to the bank, broker or securities
intermediary or, which respect to a deposit account, items deposited but
returned unpaid;

 

(xxiii) Liens on the assets of Non-Guarantor
Subsidiaries securing Indebtedness of the Company or its Restricted
Subsidiaries that was permitted by the terms of this Indenture to be incurred;

 

(xxiv) 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; and

 

7

 

(xxv) Liens incurred in the ordinary course of
business of the Company or any Subsidiary of the Company with respect to
obligations that do not exceed (A) $5.0 million at any one time outstanding
prior to the Initial Call Termination Date and (B) thereafter $15.0 million at
any one time outstanding.

 

“Commission”
means the Securities and Exchange Commission.

 

“Company”
means J. Crew Operating Corp., a Delaware corporation, and any and all
successors thereto.

 

“Congress Credit
Facility” means the Loan and Security Agreement, dated as of
December 23, 2002 by and among the Company, J. Crew Inc., Grace Holmes, Inc.
and H.F.D. No. 55, Inc., as borrowers, Congress Financial Corporation, as
administrative and collateral agent, and certain other parties named therein,
including any related notes, Guarantees, collateral documents, instruments and
agreements executed in connection therewith, and in each case as amended,
extended, modified, renewed, refunded, replaced or refinanced from time to
time, whether or not by the same or any other agent, lender or group of
lenders.

 

“Consolidated Cash
Flow” means, with respect to any specified Person for any period,
the Consolidated Net Income of such Person for such period plus, without duplication and to the
extent deducted in determining such Consolidated Net Income, the amounts for
such period of:

 

(i) the Fixed Charges of such Person and its
Restricted Subsidiaries for such period;

 

(ii) the consolidated income tax expense of such
Person and its Restricted Subsidiaries for such period;

 

(iii) fees, costs and expenses paid or payable in cash
by the Company or any of its Subsidiaries during such period in connection with
the issuance of the Notes and the Note Guarantees;

 

(iv) any management fees to be paid or payable by the
Company and any of its Subsidiaries during such period to any Permitted Holder
not to exceed $2.0 million in any fiscal year;

 

(v) non-recurring redundancy and restructuring
charges;

 

(vi) other non-cash expenses and charges for such
period reducing Consolidated Net Income (excluding any such non-cash item to
the extent representing an accrual or reserve for potential cash items in any
future period or amortization of a prepaid cash item that was paid in a prior
period);

 

(vii) any non-recurring out-of-pocket expenses or
charges for such period relating to any offering of Equity Interests by the
Company or any direct or indirect parent of the Company, any Asset Sale,
Investment or merger, recapitalization or acquisition transactions made by the
Company or any of 

 

8

 

its Restricted Subsidiaries or any direct or indirect
parent of the Company, or any Indebtedness incurred by the Company or any of
its Restricted Subsidiaries or any direct or indirect parent of the Company (in
each case, whether or not successful);

 

(viii) Net Income attributable to minority interests
of a Restricted Subsidiary of the Company that is not a Wholly Owned
Subsidiary; and

 

(ix) all depreciation and amortization charges
(including the amortization of any premiums, fees or expenses incurred in
connection with the issuance of the Notes and the Note Guarantees and the
amortization of any amounts required or permitted by Accounting Principles
Board Opinions Nos. 16 (including non-cash write-ups and non-cash charges
relating to inventory and fixed assets) and 17 (including non-cash charges relating
to intangibles and goodwill)), other than in respect of the amortization of
prepaid cash expenses that were paid in a prior period;

 

minus,
without duplication, other non-cash items (other than the accrual of revenue in
accordance with GAAP consistently applied in the ordinary course of business)
increasing Consolidated Net Income for such items (excluding any such non-cash
item to the extent it represents the reversal of an accrual or reserve for
potential cash items in any prior period).

 

“Consolidated Net
Income” means, with respect to any specified Person for any period,
the aggregate of the Net Income of such Person and its Restricted Subsidiaries
for such period, on a consolidated basis, determined in accordance with GAAP, provided
that:

 

(i) the Net Income (but not loss) of any Person that
is not a Restricted Subsidiary or that is accounted for by the equity method of
accounting shall be included only to the extent of the amount of dividends or
distributions paid in cash to the specified Person or a Restricted Subsidiary
thereof;

 

(ii) the Net Income of any Restricted Subsidiary shall
be excluded to the extent that the declaration or payment of dividends or other
distributions by that Restricted Subsidiary of that Net Income is not at the
date of determination permitted without any prior governmental approval (that
has not been obtained) or, directly or indirectly, by 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;

 

(iii) any gain or loss,
together with any related provision for taxes on such gain or loss, realized in
connection with (A) any Asset Sale or (B) the disposition of any securities by
such Person or any of its Restricted Subsidiaries or the extinguishment of any
Indebtedness of such Person or any of its Restricted Subsidiaries will be
excluded;

 

(iv) any extraordinary gain or loss, together with any
related provision for taxes on such extraordinary gain or loss will be
excluded;

 

(v) all non-recurring or unusual gains and losses and
all restructuring charges will be excluded;

 

9

 

(vi) income or losses attributable to discontinued
operations and ownership interests therein (including, without limitation,
operations disposed during such period whether or not such operations were
classified as discontinued) will be excluded;

 

(vii) any non-cash impact of capitalized interest on Subordinated
Shareholder Funding will be excluded;

 

(viii) any non-cash charges attributable to applying
the purchase method of accounting will be excluded;

 

(ix) all non-cash charges relating to employee benefit
or other management or stock compensation plans of the Company or a Restricted
Subsidiary of the Company (excluding any such non-cash charge to the extent
that it represents an accrual of or reserve for cash expenses in any future
period or amortization of a prepaid cash expense incurred in a prior period)
will be excluded to the extent that such non-cash charges are deducted in
computing such Consolidated Net Income; provided, further that if the Company or
any Restricted Subsidiary of the Company makes a cash payment in respect of
such non-cash charge in any period, such cash payment will (without
duplication) be deducted from the Consolidated Net Income of the Company for
such period;

 

(x) the Net Income of any Person acquired in a pooling
of interests transaction for any period prior to the date of such acquisition
shall be excluded; and

 

(xi) the cumulative effect of a change in accounting
principles shall be excluded.

 

“Consolidated Total
Indebtedness to Consolidated Cash Flow Ratio” means, with respect to
the Company as of any determination date, the ratio of the aggregate amount of
Total Indebtedness for the Company as of such determination date to
Consolidated Cash Flow for the Company for the four most recent full fiscal
quarters for which financial statements are available ending prior to such
determination date.

 

In addition, for purposes of calculating Consolidated Total Indebtedness to
Consolidated Cash Flow Ratio:

 

(i)            Investments,
acquisitions, mergers, consolidations and dispositions that have been made by
the specified Person or any of its Restricted Subsidiaries, or any Person or
any of its Restricted Subsidiaries acquired by, merged or consolidated with the
specified Person or any of its Restricted Subsidiaries, and including any
related financing transactions and including increases in ownership of Restricted
Subsidiaries, during the four-quarter reference period or subsequent to such
reference period and on or prior to such determination date shall be given pro forma effect and deemed to
have occurred on the first day of the four-quarter reference period, and
Consolidated Cash Flow and Fixed Charges for such reference period shall
reflect any pro forma expense and cost reductions attributable to any such
transactions;

 

(ii)           the
Total Indebtedness and Consolidated Cash Flow attributable to discontinued operations,
as determined in accordance with GAAP, and operations or businesses (and
ownership interests therein) disposed of prior to such determination date,

 

10

 

shall be excluded, and Total Indebtedness and Consolidated
Cash Flow for such reference period shall reflect any pro forma expense or cost
reductions relating to such discontinuance or disposition;

 

(iii)          the
Fixed Charges attributable to discontinued operations, as determined in
accordance with GAAP, and operations or businesses (and ownership interests
therein) disposed of prior to such determination date, shall be excluded, but
only to the extent that the obligations giving rise to such Fixed Charges will
not be obligations of the specified Person or any of its Subsidiaries following
such determination date;

 

(iv)          any
Person that is a Restricted Subsidiary on the determination date will be deemed
to have been a Restricted Subsidiary at all times during such four-quarter
reference period;

 

(v)           any
Person that is not a Restricted Subsidiary on the determination date will be
deemed not to have been a Restricted Subsidiary at any times during such
four-quarter reference period; and

 

(vi)          if
any Indebtedness bears a floating rate of interest, the interest expense on
such Indebtedness shall be calculated as if the rate in effect on the
determination date had been the applicable rate for the entire period (taking
into account any Hedging Obligations applicable to such Indebtedness).

 

For purposes of this definition, whenever pro forma
effect is given to a transaction, the pro forma calculations shall be made in
good faith by the chief financial officer of the Company in an Officer’s
Certificate.  For purposes of determining
whether any Indebtedness constituting a Guarantee may be incurred, the interest
on the Indebtedness to be guaranteed shall be included in calculating the
Consolidated Total Indebtedness to Consolidated Cash Flow Ratio on a pro forma
basis. Interest on a Capital Lease Obligation shall be deemed to accrue at an
interest rate reasonably determined by a responsible financial or accounting
officer of the Company to be the rate of interest implicit in such Capital
Lease Obligation in accordance with GAAP. 
Interest on Indebtedness that may optionally be determined at an
interest rate based upon a factor of a prime or similar rate, a eurocurrency
interbank offered rate, or other rate, shall be deemed to have been based upon
the rate actually chosen, or, if none, then based upon such optional rate chosen
as the Company may designate.

 

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

 

“Credit Agent”
means Congress Financial Corporation, in its capacity as administrative and
collateral agent for the lenders party to the Congress Credit Facility or any
successor thereto, or any Person at any time becoming the “Senior Credit Agent”
under the Intercreditor Agreement pursuant to the terms thereof.

 

“Credit Facilities”
means one or more debt facilities (including, without limitation, the Congress
Credit Facility and the Black Canyon Credit Facility) or commercial paper
facilities, in each case, with banks or other institutional lenders providing
for revolving credit loans, term 

 

11

 

loans, receivables
financing (including through the sale of receivables to such lenders or to
special purpose entities formed to borrow from such lenders against such
receivables) or letters of credit or any other Indebtedness, in each case, as
amended, restated, modified, renewed, refunded, replaced (whether upon or after
termination or otherwise) or refinanced (including by means of sales of debt
securities and including any amendment, restatement, modification, renewal,
refunding, replacement or refinancing that increases the amount borrowed
thereunder or extends the maturity thereof) in whole or in part from time to
time, whether or not by the same or any other agent, lender or group of
lenders.

 

“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 Notes”
means Notes issued in fully-registered certificated form (other than a Global
Note), which shall be substantially in the form of Exhibit A, with
appropriate legends as specified in Section 2.07 and Exhibit A.

 

“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, until a successor shall have been appointed and become
such pursuant to this Indenture, and, thereafter, “Depositary” shall mean or include such successor.

 

“Designated Noncash Consideration” means any non-cash
consideration received by the Company or a Restricted Subsidiary of the Company
in connection with an Asset Sale that is designated as Designated Noncash
Consideration pursuant to an Officer’s Certificate, executed by the president
and the principal financial officer of the Company.

 

“Designated Preferred Stock” means preferred stock of
the Company (other than Disqualified Stock), that is issued for cash (other
than to a Restricted Subsidiary of the Company) and is so designated as
Designated Preferred Stock, pursuant to an Officer’s Certificate executed on
the date of such issuance.

 

“Designated Senior
Debt” means (i) any Senior Debt outstanding under any Credit
Facility and (ii) any other Senior Debt permitted under this Indenture the
principal amount of which is $25.0 million or more and that has been designated
as “Designated Senior Debt.”

 

“Discharge of First-Lien Obligations” means
payment in full in cash of the principal of and interest and premium, if any,
on all Indebtedness in respect of the outstanding First-Lien Obligations or,
with respect to Hedging Obligations or letters of credit outstanding
thereunder, delivery of cash collateral or backstop letters of credit in
respect thereof in compliance with such First-Lien Obligations, in each case
after or concurrently with termination of all commitments to extend credit
thereunder, and payment in full in cash of any other Obligations in respect of
the First-Lien Obligations that are due and payable or otherwise accrued and
owing.

 

“Disqualified Stock” means any Capital Stock that, by
its terms (or by the terms of any security into which it is convertible, or for
which it is exchangeable, in each case, at the option of the holder of the
Capital Stock), or upon the happening of any event, matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable
at the option of 

 

12

 

the holder of the Capital Stock, in whole or in part,
on or prior to the date that is 90 days after the date on which the Notes
mature.

 

Notwithstanding the preceding sentence, (i) any
Capital Stock that would constitute Disqualified Stock solely because the
holders of the Capital Stock have the right to require the Company or its
Subsidiary that issued such Capital Stock to repurchase such Capital Stock upon
the occurrence of a change of control or an asset sale will not constitute
Disqualified Stock, (ii) any Capital Stock that would constitute Disqualified
Stock solely as a result of any redemption feature that is conditioned upon,
and subject to, compliance with Section 4.07 hereof shall not constitute
Disqualified Stock and (iii) any Capital Stock issued to any plan for the
benefit of employees will not constitute Disqualified Stock solely because it
may be required to be repurchased by the Company or its Subsidiary that issued
such Capital Stock in order to satisfy applicable statutory or regulatory
obligations. The amount of Disqualified Stock deemed to be outstanding at any
time for purposes of this Indenture will be the maximum amount that the Company
and its Restricted Subsidiaries may become obligated to pay upon the maturity
of, or pursuant to any mandatory redemption provisions of, such Disqualified Stock.

 

“Effective Date”
means the date of execution of the Loan Agreement.

 

“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 a public or private offering of Qualified Capital Stock of the Company or
a direct or indirect parent or a Subsidiary of the Company.

 

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

 

“Excluded Contributions” means net cash proceeds,
marketable securities or Qualified Proceeds received by the Company from (i)
contributions to its common equity capital, including Subordinated Shareholder
Funding and (ii) 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 Equity Interests (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, that are excluded from the calculation
set forth in clause (C) of Section 4.07(a)(iv) hereof.

 

“Existing
Debentures” means the 131/8% Senior Discount
Debentures due 2008 issued by Holdings.

 

“Existing Indebtedness” means Indebtedness existing on the
Effective Date, plus interest accruing thereon.

 

“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 Board of
Directors, chief executive officer or chief financial officer of the Company.

 

13

 

“Final Maturity
Date” means the tenth anniversary of the Closing Date.

 

“First-Lien
Obligations” means all Obligations under (i) the Congress Credit
Facility and (ii) any other Indebtedness that constitutes Senior Debt permitted
to be incurred under this Indenture that, pursuant to its terms, is secured by
Liens on property and assets that constitute Collateral hereunder and, except
for the Congress Credit Facility, is designated by the Company as constituting “First-Lien
Obligations” for the purposes of this Indenture.

 

“Fixed Charge
Coverage Ratio” means with respect to any Person for any period, the
ratio of the Consolidated Cash Flow of such Person for such period to the Fixed
Charges of such Person for such period. 
In the event that the specified Person or any of its Restricted
Subsidiaries incurs, assumes, guarantees, repays, repurchases, redeems,
defeases or otherwise discharges any Indebtedness (other than ordinary working
capital borrowings) or issues, repurchases or redeems preferred stock or
Disqualified Stock subsequent to the commencement of the period for which the
Fixed Charge Coverage Ratio is being calculated and prior to the date on which
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,
repayment, repurchase, redemption, defeasance or other discharge of
Indebtedness, or such issuance, repurchase or redemption of preferred stock or
Disqualified Stock, and the use of proceeds therefrom, as if the same had
occurred at the beginning of the applicable four-quarter reference period.

 

In addition, for purposes of calculating the Fixed
Charge Coverage Ratio:

 

(i)
Investments, acquisitions, mergers, consolidations and dispositions that have
been made by the specified Person or any of its Restricted Subsidiaries, or any
Person or any of its Restricted Subsidiaries acquired by, merged or
consolidated with the specified Person or any of its Restricted Subsidiaries,
and including any related financing transactions and including increases in
ownership of Restricted Subsidiaries, during the four-quarter reference period
or subsequent to such reference period and on or prior to the Calculation Date
shall be given pro forma effect and deemed to have occurred on the first day of
the four-quarter reference period, and Consolidated Cash Flow and Fixed Charges
for such reference period shall reflect any pro forma expense and cost
reductions attributable to any such transactions;

 

(ii)
the Consolidated Cash Flow and Fixed Charges attributable to discontinued
operations, as determined in accordance with GAAP, and operations or businesses
(and ownership interests therein) disposed of prior to the Calculation Date,
shall be excluded, and Consolidated Cash Flow and Fixed Charges for such
reference period shall reflect any pro forma expense or cost reductions
relating to such discontinuance or disposition;

 

(iii)
the Fixed Charges attributable to discontinued operations, as determined in
accordance with GAAP, and operations or businesses (and ownership interests
therein) disposed of prior to the Calculation Date, shall be excluded, but only
to the extent that the obligations giving rise to such Fixed Charges will not
be obligations of the specified Person or any of its Subsidiaries following the
Calculation Date;

 

14

 

(iv)
any Person that is a Restricted Subsidiary on the Calculation Date will be
deemed to have been a Restricted Subsidiary at all times during such
four-quarter reference period;

 

(v)
any Person that is not a Restricted Subsidiary on the Calculation Date will be
deemed not to have been a Restricted Subsidiary at any times during such
four-quarter reference period; and

 

(vi)
if any Indebtedness bears a floating rate of interest, the interest expense on
such Indebtedness will 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 Obligation applicable to such Indebtedness).

 

For purposes of this definition, whenever pro forma
effect is given to a transaction, the pro forma calculations shall be made in
good faith by the chief financial officer of the Company in an Officer’s
Certificate.  For purposes of determining
whether any Indebtedness constituting a Guarantee may be incurred, the interest
on the Indebtedness to be guaranteed shall be included in calculating the Fixed
Charge Coverage Ratio on a pro forma basis. Interest on a Capital Lease
Obligation shall be deemed to accrue at an interest rate reasonably determined
by a responsible financial or accounting officer of the Company to be the rate
of interest implicit in such Capital 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:

 

(i) the consolidated interest expense of such Person
and its Restricted Subsidiaries for such period, whether paid or accrued
(including, without limitation, original issue discount, non-cash interest
payments (but excluding capitalized interest in relation to Subordinated
Shareholder Funding), the interest component of any deferred payment
obligations, the interest component of all payments associated with Capital
Lease Obligations, commissions, discounts and other fees and charges incurred
in respect of letter of credit or bankers’ acceptance financings, and net cash
payments (if any) pursuant to Hedging Obligations in respect of interest
rates); provided, however, that in no event shall any
amortization of any deferred financing costs be included in Fixed Charges; plus

 

(ii) the consolidated interest expense of such
Person and its Restricted Subsidiaries that was capitalized during such period
(but excluding capitalized interest in relation to Subordinated Shareholder
Funding); plus

 

15

 

(iii) any interest expense on Indebtedness of
another Person that is guaranteed by such Person or one of its Restricted
Subsidiaries or secured by a Lien on assets of such Person or one of its
Restricted Subsidiaries (whether or not such Guarantee or Lien is called upon);
plus

 

(iv) the product of (A) (without
duplication) (1) all dividends paid or accrued in respect of Disqualified
Stock which are not included in the interest expense of such Person for tax
purposes for such period and (2) all cash dividend payments on any series
of preferred stock of such Person or any of its Restricted Subsidiaries (other
than to the Company or a Restricted Subsidiary of the Company), times
(B) a fraction, the numerator of which is one and the denominator of which
is one minus the then current combined federal, state and local statutory tax
rate of such Person, expressed as a decimal, in each case, on a consolidated
basis and in accordance with GAAP.

 

“GAAP”
means generally accepted accounting principles set forth in the opinions and
pronouncements of the Accounting Principles Board of the American Institute of
Certified Public Accountants and statements and pronouncements of the Financial
Accounting Standards Board or in such other statements by such other entity as
have been approved by a significant segment of the accounting profession, which
are in effect on the Effective Date.

 

“Global Note Legend”
means the legend set forth in Exhibit A, which is required to be placed
on all Global Notes issued under this Indenture.

 

“Global Notes”
means any Note issued in fully-registered certificated form to DTC (or its
nominee), as depositary for the beneficial owners thereof, which shall be
substantially in the form of Exhibit A, with appropriate legends as
specified in Section 2.07 and Exhibit A.

 

“Government Securities” means direct obligations of,
or obligations guaranteed by, the United States of America (including any
agency or instrumentality thereof) and the payment for which the United States
pledges its full faith and credit.

 

“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, without limitation, by
way of a pledge of assets or through letters of credit or reimbursement
agreements in respect thereof, of all or any part of any Indebtedness (whether
arising by virtue of partnership arrangements, or by agreements to keep-well,
to purchase assets, goods, securities or services, to take or pay or to
maintain financial statement conditions or otherwise).

 

“Guarantor”
means Intermediate, each Subsidiary of the Company that executes a Note
Guarantee in accordance with the provisions of this Indenture and their
respective successors and assigns, in each case, until the Note 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 (i) interest rate swap
agreements (whether from fixed to floating or from floating to fixed), interest
rate cap agreements and interest rate collar agreements; (ii) other agreements
or arrangements designed to manage interest rates or interest rate risk; and
(iii) other 

 

16

 

agreements or
arrangements designed to protect such Person against fluctuations in currency
exchange rates or commodity prices.

 

“Holder”
means a Person in whose name a Note is registered.

 

“Holdings”
means J. Crew Group, Inc., a New York corporation.

 

“Indebtedness” means, with respect to any specified
Person, the principal and premium (if any) of any indebtedness of such Person
(excluding accrued expenses and trade payables), whether or not contingent:

 

(i) in
respect of borrowed money;

 

(ii)
evidenced by bonds, notes, debentures or similar instruments or letters of
credit (or reimbursement agreements in respect thereof) (other than letters of
credit issued in respect of trade payables);

 

(iii)
in respect of banker’s acceptances;

 

(iv)
representing Capital Lease Obligations;

 

(v)
representing the balance deferred and unpaid of the purchase price of any
property or services due more than twelve months after such property is acquired
or such services are completed (except any such balance that constitutes a
trade payable or similar obligation to a trade creditor); or

 

(vi)
representing the net obligations under any Hedging Obligations,

 

if and
to the extent any of the preceding items (other than letters of credit and
Hedging Obligations) would appear as a liability upon a balance sheet of the
specified Person prepared in accordance with GAAP.  In addition, the term “Indebtedness” includes
all Indebtedness of others secured by a Lien on any asset of the specified
Person (whether or not such Indebtedness is assumed by the specified Person)
and, to the extent not otherwise included, the Guarantee by the specified
Person of any Indebtedness of any other Person.

 

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

 

“Initial Call
Termination Date” means the earlier of (i) the date which is
eighteen (18) months following the Closing Date and (ii) the date on which the
Company elects to terminate its right to redeem the Notes pursuant to clause
(i) of Section 3.07(a).

 

“Intercreditor
Agreement” means (i) the Intercreditor Agreement, dated as of
November 21, 2004, among the Company, the Guarantors, Congress Financial
Corporation, as senior credit agent, and the Collateral Agent, as amended,
supplemented or otherwise modified from time to time and (ii) any substantially
identical agreement hereafter entered into pursuant to Section 11.07(c).

 

“Intermediate”
means J. Crew Intermediate LLC, a Delaware limited liability company.

 

17

 

“Investments” means, with respect to any Person, all
direct or indirect investments by such Person in other Persons (including
Affiliates) in the forms of loans (including Guarantees or other obligations),
advances or capital contributions (excluding commission, travel, relocation and
similar advances to officers and employees made in the ordinary course of
business), purchases or other acquisitions for consideration of Indebtedness,
Equity Interests or other securities, together with all items that are or would
be classified as investments on a balance sheet prepared in accordance with
GAAP.  If the Company or any Restricted
Subsidiary of the Company sells or otherwise disposes of any Equity Interests
of any direct or indirect Restricted Subsidiary of the Company such that, after
giving effect to any such sale or disposition, such Person is no longer a
Subsidiary of the Company, the Company will be deemed to have made an
Investment on the date of any such sale or disposition equal to the Fair Market
Value of the Company’s Investments in such Subsidiary that were not sold or
disposed of in an amount determined as provided in Section 4.07(d) hereof.  The acquisition by the Company or any
Restricted Subsidiary of the Company of a Person that holds an Investment in a
third Person will be deemed to be an Investment by the Company or such
Restricted Subsidiary in such third Person in an amount equal to the Fair
Market Value of the Investments held by the acquired Person in such third
Person in an amount determined as provided in Section 4.07(d) hereof.  The outstanding amount of any Investment
shall be the original cost thereof, reduced by all returns on such Investment
(including dividends, interest, distributions, returns of principal and profits
on sale).

 

“Issue Date”
means the date on which Notes are first issued and authenticated under this
Indenture.

 

“Issue Date Notes”
means the Notes originally issued on the Issue Date having an aggregate
principal amount of $275,000,000, and any replacement Notes issued therefor in
accordance with this Indenture.

 

“Legal Holiday”
means a Saturday, a Sunday or a day on which banking institutions in the City
of New York, the city in which the principal Corporate Trust Office of the
Trustee is located or at a place of payment are authorized by law, regulation
or executive order to remain closed.  If
a payment date is a Legal Holiday at a place of payment, payment shall be made
at that place on the next succeeding day that is not a Legal Holiday, and no
interest shall accrue for the intervening period.

 

“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, and any option or other agreement to sell or give a security interest
therein).

 

“Loan Agreement” means the Senior
Subordinated Loan Agreement, dated as of November 21, 2004, among the Company,
as borrower, the guarantors named therein, the lenders party thereto and U.S.
Bank National Association, as administrative agent.

 

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

 

18

 

“Net Proceeds” means the aggregate cash proceeds
received by the Company or any of its Restricted Subsidiaries in respect of any
Asset Sale (including, without limitation, any cash received upon the sale or
other disposition of any non-cash consideration received in any Asset Sale),
net of the direct costs relating to such Asset Sale, including, without
limitation, legal, accounting and investment banking fees, payments made in
order to obtain a necessary consent or required by applicable law, and sales
commissions, and any relocation expenses incurred as a result of the Asset
Sale, taxes paid or payable as a result of the Asset Sale, including taxes
resulting from the transfer of the proceeds of such Asset Sale to the Company,
in each case, after taking into account:

 

(i)
any available tax credits or deductions and any payments that are required to
be made under tax sharing arrangements (including the Tax Sharing Agreement);

 

(ii)
amounts required to be applied to the repayment of Indebtedness, other than
Senior Debt, secured by a Lien on the asset or assets that were the subject of
such Asset Sale;

 

(iii)
any reserve for adjustment in respect of the sale price of such asset or assets
established in accordance with GAAP;

 

(iv)
any reserve for adjustment in respect of any liabilities associated with the
asset disposed of in such transaction and retained by the Company or any
Restricted Subsidiary of the Company after such sale or other disposition
thereof;

 

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

 

(vi)
in the event that a Restricted Subsidiary of the Company consummates an Asset
Sale and makes a pro rata payment
of dividends to all of its stockholders from any cash proceeds of such Asset
Sale, the amount of dividends paid to any stockholder other than the Company or
any other Restricted Subsidiary of the Company; provided that any net proceeds of an Asset Sale by
a Non-Guarantor Subsidiary that are subject to restrictions on repatriation to
the Company will not be considered Net Proceeds for so long as such proceeds
are subject to such restrictions.

 

“Non-Guarantor Subsidiary” means, subject to the
provisions of Section 4.17, (A) any Unrestricted Subsidiary, (B) any
Receivables Subsidiary and (C) any Subsidiary of the Company that does not
guarantee any Indebtedness under the Congress Credit Facility.  The Board of Directors of the Company may
designate any Restricted Subsidiary as a Non-Guarantor Subsidiary by filing
with the Trustee a certified copy of a resolution of such Board of Directors
giving effect to such designation and an Officer’s Certificate certifying as to
the applicable clause of the immediately preceding sentence that warrants such
designation.  In addition, if a Guarantor
that is a guarantor under the Congress Credit Facility is released from its
Guarantee of the Congress Credit Facility, it shall be released automatically
from its Note Guarantee and will be a Non-Guarantor Subsidiary.

 

“Non-Recourse Debt” means Indebtedness (i) as to which
neither the Company nor any of its Restricted Subsidiaries (A) provides credit
support of any kind (including any undertaking, 

 

19

 

agreement or
instrument that would constitute Indebtedness), (B) is directly or indirectly
liable as a guarantor or otherwise, or (C) constitutes the lender; (ii) no
default with respect to which (including any rights that the holders of the
Indebtedness may have to take enforcement action against an Unrestricted Subsidiary)
would permit upon notice, lapse of time or both any holder of any other
Indebtedness of the Company or any of its Restricted Subsidiaries to declare a
default on such other Indebtedness or cause the payment of such other
Indebtedness to be accelerated or payable prior to its Stated Maturity; and
(iii) as to which the lenders have been notified in writing or have agreed in
writing (in the agreement relating thereto or otherwise) that they will not
have any recourse to the stock or assets of the Company or any of its
Restricted Subsidiaries.

 

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

 

“Note Guarantee”
means the Guarantee, substantially in the form of Exhibit B hereto, by
each Guarantor of the Company’s obligations under the Notes and this Indenture,
executed pursuant to the provisions of this Indenture.

 

“Notes”
means any of the Company’s 93/4% Senior Subordinated
Notes issued and authenticated pursuant to this Indenture, including any
Additional Notes.

 

“Obligations”
means, with respect to any Indebtedness, any principal, interest, penalties,
fees, indemnifications, reimbursements, damages, costs, expenses and other
liabilities payable under the documentation governing any Indebtedness,
including the payment of interest at the rate provided in such documentation
that would be applicable and other reasonable fees, costs or charges which
would accrue and become due but for the commencement of any case in bankruptcy,
in each case as to such interest or other amounts whether or not allowed or
allowable in whole or in part in such case.

 

“Officer”
means, with respect to any Person, the Chairman of the Board, the Chief
Executive Officer, the President, the Chief Operating Officer, the Chief
Financial Officer, the Treasurer, any Assistant Treasurer, the Controller, the
Secretary or any Vice-President of such Person.

 

“Officer’s
Certificate” means, with respect of any Person, a certificate signed
on behalf of such Person by one Officer of such Person, who must be the
principal executive officer, the principal financial officer, the treasurer or
the principal accounting officer of such Person that meets the requirements of
Section 14.04 hereof.

 

“Opinion of Counsel”
means an opinion from legal counsel that meets the requirements of Section
14.04 hereof.  The counsel may be an
employee of or counsel to the Company or any Subsidiary of the Company.

 

“Other Second-Lien
Obligations” means all Obligations under (i) the Senior Discount
Contingent Principal Notes and (ii) any Indebtedness permitted to be incurred
under this Indenture that, pursuant to its terms, is secured by Liens on
property and assets that constitute Collateral hereunder and is designated by the
Company as “Other Second-Lien Obligations” for the purposes of this Indenture.

 

20

 

“Permitted Business”
means (i) any business engaged in by the Company or any of its Restricted
Subsidiaries on the Effective Date, (ii) any business or other activities
that are reasonably similar, ancillary, complementary or related to, or a
reasonable extension, development or expansion of, the businesses in which the
Company and its Restricted Subsidiaries are engaged on the Effective Date and
(iii) the design, manufacture, importing, exporting, distribution, marketing,
licensing and wholesale and retail sale of apparel, housewares, home
furnishings and related items.

 

“Permitted Holders”
means, collectively, (i) TPG Partners II, L.P. and its Affiliates,
(ii) Millard S. Drexler and his immediate family members and (iii) trusts
for the benefit of any of the foregoing Persons, or any of their heirs,
executors, successors or legal representatives.

 

“Permitted
Investments” means:

 

(i) any
Investment in the Company or in a Restricted Subsidiary of the Company (other
than a Receivables Subsidiary);

 

(ii) any
Investment in cash and Cash Equivalents;

 

(iii) any
Investment by the Company or any Restricted Subsidiary of the Company in a
Person, if as a result of such Investment (A) such Person becomes a
Restricted Subsidiary of the Company (other than a Receivables Subsidiary) or
(B) such Person, in one transaction or a series of 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 (other than a Receivables Subsidiary);

 

(iv) any
Investment made as a result of the receipt of non-cash consideration from an
Asset Sale that was made pursuant to and in compliance with Section 4.10
hereof;

 

(v) any
Investment solely in exchange for the issuance of Equity Interests (other than
Disqualified Stock) of the Company;

 

(vi)
any Investments received in compromise, settlement or resolution of (A)
obligations of trade creditors or customers that were incurred in the ordinary
course of business of the Company or any of its Restricted Subsidiaries,
including pursuant to any plan of reorganization or similar arrangement upon
the bankruptcy or insolvency of any trade creditor or customer,
(B) litigation, arbitration or other disputes with Persons who are not
Affiliates or (C) as a result of a foreclosure by the Company or any Restricted
Subsidiary of the Company with respect to any secured Investment or other
transfer of title with respect to any secured Investment in default;

 

(vii)
Investments represented by Hedging Obligations;

 

(viii)
any Investment in payroll, travel and similar advances to cover
business-related travel expenses, moving expenses or other similar expenses, in
each case incurred in the ordinary course of business;

 

21

 

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

 

(x)
Investments in prepaid expenses, negotiable instruments held for collection and
lease, utility and workers’ compensation, performance and similar deposits
entered into as a result of the operations of the business in the ordinary
course of business;

 

(xi)
obligations of one or more officers or other employees of the Company or any of
its Restricted Subsidiaries in connection with such officer’s or employee’s
acquisition of shares of common stock of the Company so long as no cash or
other assets are paid by the Company or any of its Restricted Subsidiaries to
such officers or employees in connection with the acquisition of any such
obligations;

 

(xii)
loans or advances to and Guarantees provided for the benefit of employees made
in the ordinary course of business of the Company or the Restricted Subsidiary
of the Company in an aggregate principal amount not to exceed $5.0 million at
any one time outstanding;

 

(xiii)
Investments existing as of the Effective Date or an Investment consisting of
any extension, modification or renewal of any Investment existing as of the
Effective Date (excluding any such extension, modification or renewal involving
additional advances, contributions or other investments of cash or property or
other increases thereof unless it is a result of the accrual or accretion of
interest or original issue discount or payment-in-kind pursuant to the terms,
as of the Effective Date, of the original Investment so extended, modified or
renewed);

 

(xiv)
repurchases of the Notes;

 

(xv)
the acquisition by a Receivables Subsidiary in connection with a Qualified
Receivables Transaction of Equity Interests of a trust or other Person
established by such Receivables Subsidiary to effect such Qualified Receivables
Transaction;

 

(xvi)
any other Investment by the Company or a Subsidiary of the Company in a
Receivables Subsidiary or any Investment by a Receivables Subsidiary in any
other Person in connection with a Qualified Receivables Transaction customary
for such transactions;

 

(xvii)
Guarantees permitted to be incurred by Section 4.09;

 

(xviii)
joint ventures (A) engaged in a Permitted Business or (B) for the purpose of
outsourcing the internal administrative functions of the Company or any of its
Restricted Subsidiaries; provided, however, that all Investments
permitted pursuant to this clause (xviii) shall not exceed, at any time
outstanding, $15.0 million in the aggregate;

 

22

 

(xix)
Investments held by a Person (other than an Affiliate) that becomes a
Restricted Subsidiary, provided, that (A) such Investments were not
acquired in contemplation of the acquisition of such Person and (B) at the time
such Person becomes a Restricted Subsidiary, such Investments would not,
individually or in the aggregate, constitute a Significant Subsidiary of such
acquired Person;

 

(xx)
Investments made with Excluded Contributions;

 

(xxi)
Investments in any Person where such Investment was acquired by the Company or
any of its Restricted Subsidiaries in exchange for any other Investment or
accounts receivable held by the Company or any such Restricted Subsidiary in
connection with or as a result of a bankruptcy, workout, reorganization or
recapitalization of the issuer of such other Investment or accounts receivable;
and

 

(xxii)
other Investments in any Person having an aggregate Fair Market Value (measured
on the date each such Investment was made and without giving effect to
subsequent changes in value), when taken together with all other Investments
made pursuant to this clause (xxii) that are at the time outstanding not to
exceed (A) $10.0 million prior to the Initial Call Termination Date and (B)
thereafter $25.0 million; provided, however, that if any
Investment pursuant to this clause (xxii) is made in any Person that is not a
Restricted Subsidiary of the Company at the date of the making of such
Investment and such Person becomes a Restricted Subsidiary of the Company after
such date, such Investment shall thereafter be deemed to have been made
pursuant to clause (i) above and shall cease to have been made pursuant to this
clause (xxii) for so long as such Person continues to be a Restricted
Subsidiary of the Company (it being understood that if such Person thereafter
ceases to be a Restricted Subsidiary of the Company, such Investment will again
be deemed to have been made pursuant to this clause (xxii)) and provided,
further, if any Investment made pursuant to this clause (xxii) is
subsequently sold or repaid for cash or Cash Equivalents, the amount available
under this clause (xxii) for future Investments will be increased by the amount
of cash or Cash Equivalents received from such sale or repayment.

 

“Permitted Junior
Securities” means Equity Interests in the Company or any Guarantor
or debt securities that are subordinated to all Senior Debt (and any debt
securities issued in exchange for Senior Debt) to substantially the same extent
as, or to a greater extent than, the Notes and the Note Guarantees are
subordinated to Senior Debt under this Indenture (including, in the case of
Senior Debt under the Credit Facilities, with respect to payment blockage and
turnover, and the maturity and weighted average life to maturity of which are
six months greater than that of the Senior Debt and debt securities issued in
exchange for Senior Debt).

 

“Permitted Refinancing Indebtedness” means any
Indebtedness of the Company or any of its Restricted Subsidiaries issued in
exchange for, or the net proceeds of which are used to extend, renew, refund,
refinance, prepay, replace, defease or discharge other Indebtedness of the
Company or any of its Restricted Subsidiaries (other than intercompany
Indebtedness); provided that:

 

(i)
the principal amount (or accreted value, if applicable) of such Permitted
Refinancing Indebtedness does not exceed the principal amount (or accreted
value, if

 

23

 

applicable) of the
Indebtedness extended, renewed, refunded, refinanced, prepaid, replaced,
defeased or discharged (plus all accrued interest on the Indebtedness and the
amount of all fees, commissions, discounts and expenses, including premiums,
incurred in connection therewith);

 

(ii)
if such Indebtedness is not Senior Debt, either (A) such Permitted Refinancing
Indebtedness has a final maturity date later than the final maturity date of,
and has a Weighted Average Life to Maturity equal to or greater than the
Weighted Average Life to Maturity of, the Indebtedness being extended, renewed,
refunded, refinanced, prepaid, replaced, defeased or discharged or (B) all
scheduled payments on or in respect of such Permitted Refinancing Indebtedness
(other than interest payments) shall be at least 91 days following the final
scheduled maturity of the Notes; and if such Indebtedness is Senior Debt and
has a final stated maturity later than the final stated maturity of the Notes, such
Permitted Refinancing Indebtedness has a final stated maturity later than the
final maturity of the Notes;

 

(iii)
if the Indebtedness being extended, renewed, refunded, refinanced, prepaid,
replaced, defeased or discharged is subordinated in right of payment to the
Notes, such Permitted Refinancing Indebtedness is subordinated in right of
payment to the Notes on terms at least as favorable to the Holders as those
contained in the documentation governing the Indebtedness being extended,
renewed, refunded, refinanced, replaced, defeased or discharged; and

 

(iv) if such Indebtedness is not Senior Debt, such
Indebtedness is incurred

 

(A) by
the Company or by the Restricted Subsidiary who is the obligor on the
Indebtedness being renewed, refunded, refinanced, replaced, defeased or
discharged;

 

(B) by
any Guarantor if the obligor on the Indebtedness being renewed, refunded,
refinanced, replaced, defeased or discharged is a Guarantor; or

 

(C) by
any Non-Guarantor Subsidiary if the obligor on the Indebtedness being renewed,
refunded, refinanced, replaced, defeased or discharged is a Non-Guarantor
Subsidiary.

 

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

 

“Purchase Money
Note” means a promissory note evidencing a line of credit, or
evidencing other Indebtedness owed to the Company or any Restricted Subsidiary
in connection with a Qualified Receivables Transaction, which note shall be
repaid from cash available to the maker of such note, other than amounts
required to be established as reserves pursuant to agreement, amounts paid to
investors in respect of interest, principal and other amounts owing to such
investors and amounts paid in connection with the purchase of newly generated
receivables.

 

“QIB”
means a “qualified institutional buyer” as defined in Rule 144A under the
Securities Act.

 

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

 

24

 

“Qualified Proceeds” means any of the following or any
combination of the following: (i) Cash Equivalents; (ii) the Fair Market Value
of assets that are used or useful in the Permitted Business; and (iii) the Fair
Market Value of the Capital Stock of any Person engaged primarily in a
Permitted Business if, in connection with the receipt by the Company or any of
its Restricted Subsidiaries of such Capital Stock, such Person becomes a
Restricted Subsidiary of the Company or such Person is merged or consolidated
into the Company or any of its Restricted Subsidiaries; provided that Qualified Proceeds shall not include
Excluded Contributions.

 

“Qualified Receivables Transaction” means any
transaction or series of transactions entered into by the Company or any of its
Subsidiaries pursuant to which the Company or any of its Subsidiaries sells,
conveys or otherwise transfers, or grants a security interest, to: (i) a
Receivables Subsidiary (in the case of a transfer by the Company or any of its
Subsidiaries, which transfer may be effected through the Company or one or more
of its Subsidiaries); and (ii) if applicable, any other Person (in the case of
a transfer by a Receivables Subsidiary), in each case, in any Receivables of
the Company or any of its Subsidiaries, and any assets related thereto,
including, without limitation, all collateral securing such Receivables, all
contracts, contract rights and all Guarantees or other obligations in respect
of such Receivables, proceeds of such Receivables and any other assets, which
are customarily transferred or in respect of which security interests are
customarily granted in connection with receivables financings and asset
securitization transactions of such type, together with any related
transactions customarily entered into in a receivables financings and asset
securitizations, including servicing arrangements.

 

“Receivables”
means, with respect to any Person or entity, all of the following property and
interests in property of such Person or entity, whether now existing or
existing in the future or hereafter acquired or arising:  (i) accounts, (ii) accounts
receivable incurred in the ordinary course of business, including without
limitation, all rights to payment created by or arising from sales of goods,
leases of goods or the rendition of services no matter how evidenced, whether
or not earned by performance, (iii) all rights to any goods or merchandise
represented by any of the foregoing after creation of the foregoing, including,
without limitation, returned or repossessed goods, (iv) all reserves and
credit balances with respect to any such accounts receivable or account
debtors, (v) all letters of credit, security, or Guarantees for any of the
foregoing, (vi) all insurance policies or reports relating to any of the
foregoing, (vii) all collection or deposit accounts relating to any of the
foregoing, (viii) all proceeds of the foregoing and (ix) all books
and records relating to any of the foregoing.

 

“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 Qualified
Receivables Transaction.

 

“Receivables Subsidiary” means a Subsidiary of the
Company which engages in no activities other than in connection with the
financing of accounts receivable and in businesses related or ancillary thereto
and that is designated by the Board of Directors of the Company (as provided
below) as a Receivables Subsidiary (i) no portion of the Indebtedness or any
other Obligations (contingent or otherwise) of which: (A) is guaranteed by the
Company or any Subsidiary of the Company (excluding Guarantees of Obligations
(other than the principal of,

 

25

 

and
interest on, Indebtedness) pursuant to representations, warranties, covenants
and indemnities entered into in the ordinary course of business in connection
with a Qualified Receivables Transaction); (B) is recourse to or obligates the
Company or any Subsidiary of the Company in any way other than pursuant to
representations, warranties, covenants and indemnities customarily entered into
in connection with a Qualified Receivables Transaction; or (c) subjects any
property or asset of the Company or any Subsidiary of the Company (other than
accounts receivable and related assets as provided in the definition of
Qualified Receivables Transaction), directly or indirectly, contingently or
otherwise, to the satisfaction thereof, other than pursuant to representations,
warranties, covenants and indemnities customarily entered into in connection
with a Qualified Receivables Transaction; and (ii) with which neither the
Company nor any Subsidiary of the Company has any material contract, agreement,
arrangement or understanding other than on terms no less favorable to the
Company or such Subsidiary than those that might be obtained at the time from
Persons who are not Affiliates of the Company, other than as may be customary
in a Qualified Receivables Transaction including for fees payable in the
ordinary course of business in connection with servicing accounts receivable;
and (iii) with which neither the Company nor any Subsidiary of the Company has
any obligation to maintain or preserve such Subsidiary’s financial condition or
cause such Subsidiary to achieve certain levels of operating results. Any such
designation by the Board of Directors of the Company will be evidenced to the
Trustee by filing with the Trustee a certified copy of the resolution of the
Board of Directors of the Company giving effect to such designation and an
Officer’s Certificate certifying that such designation complied with the foregoing
conditions.

 

“Replacement Preferred Stock” means any Disqualified Stock or
preferred stock of the Company or any of its Restricted Subsidiaries issued in
exchange for, or the net proceeds of which are used to renew, refund,
refinance, replace or discharge any other preferred stock of the Company or any
of its Restricted Subsidiaries (other than intercompany preferred stock).

 

“Resale Restriction
Termination Date” means for any Restricted Note (or beneficial
interest therein), two years (or such other period specified in Rule 144(k))
from the Issue Date or, if any Additional Notes that are Restricted Notes have
been issued before the Resale Restriction Termination Date for any Restricted
Notes, from the latest such original issue date of such Additional Notes.

 

“Responsible
Officer” when used with respect to the Trustee, means any officer in
the Corporate Trust Services Division of the Trustee (or any successor group of
the Trustee) or any other officer of the Trustee customarily performing
functions similar to those performed by any of the above designated officers
and also means, with respect to a particular corporate trust matter, any other
officer to whom such matter is referred because of his knowledge of and
familiarity with the particular subject and who shall have responsibility for
the administration of this Indenture.

 

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

 

“Restricted Note”
means any Issue Date Note (or beneficial interest therein) or any Additional
Note (or beneficial interest therein) not originally issued and sold pursuant
to an effective registration statement under the Securities Act until such time
as:

 

26

 

(i)            the
Resale Restriction Termination Date therefor has passed; or

 

(ii)           the
Private Placement Legend therefor has otherwise been removed pursuant to
Section 2.08 or, in the case of a beneficial interest in a Global Note, such
beneficial interest has been exchanged for an interest in a Global Note not
bearing a Private Placement Legend.

 

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

 

“Rule 144”
means Rule 144 promulgated under the Securities Act or any successor rule.

 

“Rule 144A”
means Rule 144A promulgated under the Securities Act or any successor
rule.

 

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

 

“Security Agreement”
means the Security Agreement, dated as of November 21, 2004, among the Company,
the Guarantors and the Collateral Agent.

 

“Security Documents”
means the Security Agreement and any other document or instrument pursuant to
which a Lien is granted by the Company or any Guarantor to secure any
Obligations hereunder or under which rights or remedies with respect to such
Lien are governed, as such agreements may be amended, modified or supplemented
from time to time.

 

“Senior Debt”
means (i) all Indebtedness of the Company or any Guarantor outstanding under
the Congress Credit Facility (including post-petition interest at the rate
provided in the documentation with respect thereto, whether or not allowed as a
claim in any bankruptcy proceeding) and all Hedging Obligations and Treasury
Management Obligations with respect thereto; (ii) any other Indebtedness of the
Company or any Guarantor permitted to be incurred under the terms of this
Indenture, unless the instrument under which such Indebtedness is incurred
expressly provides that it is on a parity with or subordinated in right of
payment to the Notes; and (iii) all Obligations with respect to the
foregoing.  Notwithstanding anything to
the contrary in the foregoing, Senior Debt will not include (A) the Notes and
the Note Guarantees, (B) any liability for federal, state, local or other taxes
owed or owing by the Company, (C) any Indebtedness of the Company to any of its
Subsidiaries or other Affiliates, (D) any trade payables, (E) Indebtedness
which is classified as non-recourse in accordance with GAAP or any unsecured
claim arising in respect thereof by reason of the application of Section
1111(b)(1) of the Bankruptcy Code, or (F) that portion of any Indebtedness that
is incurred in violation of the Indenture (but only to the extent so incurred);
provided that Indebtedness
outstanding under the Congress Credit Facility will not cease to be Senior Debt
as a result of this clause (F) if the lenders or agents thereunder obtained a
representation from the Company or any of its Subsidiaries on the date such
Indebtedness was incurred to the effect that such Indebtedness was not
prohibited by this Indenture.

 

“Senior Discount
Contingent Principal Notes” means the 16.0% Senior Discount
Contingent Principal Notes due 2008 issued by Intermediate.

 

27

 

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

 

“Stated Maturity”
means, with respect to any installment of interest or principal on any series
of Indebtedness, the date on which the payment of interest or principal was
scheduled to be paid in the documentation governing such Indebtedness as of the
Effective Date, and shall not include any contingent obligations to repay,
redeem or repurchase any such interest or principal prior to the date
originally scheduled for the payment thereof.

 

“Subordinated
Shareholder Funding” means any Indebtedness of the Company (and any
security into with such Indebtedness is converted or for which it is
exchangeable at the option of the holder) issued to and held by a direct or
indirect parent of the Company or one or more shareholders of such parent that:

 

(i) does not mature or require any amortization,
redemption or other repayment of principal or any sinking fund payment prior to
the first anniversary of the Stated Maturity of the Notes (other than through
conversion or exchange of such Indebtedness into Capital Stock (other than
Disqualified Stock) of the Company or such parent or any Indebtedness meeting
the requirements of this definition),

 

(ii) does not require, prior to the first anniversary
of the Stated Maturity of the Notes, payment of cash interest, cash withholding
amounts or other gross-ups, or any similar amounts,

 

(iii) does not provide for or require any security
interest or encumbrance over any property and assets of the Company or any of
its Restricted Subsidiaries,

 

(iv) does not contain any covenants (financial or
otherwise) other than a covenant to pay such Subordinated Shareholder Funding
at maturity; and

 

(v) is fully subordinated and junior in right of
payment to the Notes and the performance of all obligations under the Indenture
and the Security Documents pursuant to customary subordination terms for
similar Indebtedness and otherwise reflecting the terms above.

 

“Subsidiary” means, with respect to any specified
Person, (i) any corporation, association or other business 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 and after giving effect to any
voting agreement or stockholders’ agreement that effectively transfers voting
power) 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 (ii) any partnership (A) the
sole general partner or the managing general partner of which is such Person or
a Subsidiary of such Person or (B) the only general partners of which are that
Person or one or more Subsidiaries of that Person (or any combination thereof).

 

28

 

“Tax Sharing Agreement” means the tax sharing agreement in
effect as of the Effective Date among the Company, Intermediate, Holdings and
any one or more of subsidiaries of the Company, as amended from time to time,
so long as the amount of the Company’s (or any of its Restricted Subsidiaries’)
payments for which the Company and its Restricted Subsidiaries are responsible, or the time when such
payments are required to be made thereunder or any other of the Company’s rights, duties, and obligations thereunder
are no less favorable to the Company than as provided in such agreement as in effect on the Effective Date, as
determined in good faith by a majority of the members of the Board of Directors
of the Company.

 

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

 

“Total
Indebtedness” means, with respect to the Company, as of any
date of determination, an amount equal to the aggregate amount (without
duplication) of all Indebtedness of the Company and its Restricted Subsidiaries
outstanding as of such determination date, excluding Indebtedness incurred
under clauses (vi), (viii), (ix), (x), (xi), (xiii), (xv), (xvi) and (xviii) of
Section 4.09(b).

 

“Transaction Documents” means any of this
Indenture, the Notes, the Note Guarantees, the Intercreditor Agreement, the
Security Documents, the Loan Agreement, the Loan Notes (as defined in the Loan
Agreement), the Loan Guarantees (as defined in the Loan Agreement), the
Congress Credit Facility Amendment No. 3 (as defined in the Loan Agreement),
the Amendment No. 1, dated as of November 21, 2004, to the Credit Agreement,
dated as of February 4, 2003, by and among TPG-MD INVESTMENT, LLC, as Lender,
the Company, Holdings and certain of the Guarantors party thereto, the Letter
Agreement, dated as of November 21, 2004, by and among the Company, Private
Capital Partners LLC and Canpartners Investment IV, LLC, relating to certain
fees payable, certain transfer restrictions and other matters described therein
and all other documents, instruments or agreements executed and delivered by
the Company or the Guarantors for the benefit of the Holders in connection
herewith.

 

“Treasury
Management Obligations” means
obligations under any agreement governing the provision of treasury or cash
management services, including deposit accounts, funds transfer, automated
clearing house, zero balance accounts, returned check concentration, controlled
disbursement, lock box, account reconciliation and reporting and trade finance
services.  Treasury Management
Obligations shall not constitute Indebtedness.

 

“Treasury Rate”
means, with respect to any redemption date, the yield to maturity at the time
of computation of United States Treasury securities with a constant maturity
(as compiled and published in the most recent Federal Reserve Statistical
Release H.15(519) that has become publicly available at least two Business Days
prior to such redemption date (or, if such Statistical Release is no longer
published, any publicly available source of similar market data)) most nearly
equal to the period from such redemption date to the Final Maturity Date; provided that if the period from
such redemption date to the Final Maturity Date is not equal to the constant
maturity of the United States Treasury security for which a weekly average
yield is given, the Treasury Rate will be obtained by linear interpolation
(calculated to the nearest one-twelfth of a year) from the weekly average
yields of United States Treasury securities for which such yields are given,
except that if the period from such redemption date to the Final Maturity Date
is less

 

29

 

than one year, the weekly
average yield on actually traded United States Treasury securities adjusted to
a constant maturity of one year will be used. 
The Treasury Rate shall be calculated on the third Business Day
preceding the redemption date.

 

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

 

“Unrestricted Subsidiary” means any Subsidiary of the
Company and any Subsidiary of an Unrestricted Subsidiary that is designated by
the Board of Directors of the Company as an Unrestricted Subsidiary pursuant to
a resolution of the Board of Directors, but only to the extent that such
Subsidiary (i) has no Indebtedness other than Non-Recourse Debt; (ii) except as
permitted by Section 4.11 hereof, is not party to any agreement, contract,
arrangement or understanding with the Company or any Restricted Subsidiary of
the Company unless the terms of any such agreement, contract, arrangement or
understanding are no less favorable to the Company or such Restricted
Subsidiary than those that might be obtained at the time from Persons who are
not Affiliates of the Company; (iii) is a Person with respect to which neither
the Company nor any of its Restricted Subsidiaries has any direct or indirect
obligation (A) to subscribe for additional Equity Interests or (B) to maintain
or preserve such Person’s financial condition or to cause such Person to
achieve any specified levels of operating results; and (iv) has not
guaranteed or otherwise directly or indirectly provided credit support for any
Indebtedness of the Company or any of its Restricted Subsidiaries, except in
the case of clauses (iii) and (iv), to the extent (1) that the Company or such
Restricted Subsidiary could otherwise provide such a Guarantee or incur such
Indebtedness (other than as Permitted Debt) pursuant to Section 4.09 hereof,
and (2) the provision of such Guarantee and the incurrence of such indebtedness
otherwise would be permitted by Section 4.07 hereof.

 

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

 

“Weighted Average
Life to Maturity” means, when applied to any Indebtedness at any
date, the number of years obtained by dividing (i) the sum of the products
obtained by multiplying (A) the amount of each then remaining installment,
sinking fund, serial maturity or other required payments of principal,
including payment at final maturity, in respect of the Indebtedness, by
(B) the number of years (calculated to the nearest one-twelfth) that will
elapse between such date and the making of such payment, by (ii) the then
outstanding principal amount of such Indebtedness.

 

“Wholly Owned Subsidiary” of any specified Person
means a Subsidiary of such Person all of the outstanding Capital Stock or other
ownership interest of which (other than directors’ qualifying shares) will as
that time be owned by such Person or by one or more Wholly Owned Subsidiaries
of such person.

 

30

 

Section
1.02.        Other
Definitions.

 

	
  Term

  	
   

  	
  Defined
  in

  Section

  
	
  “Affiliate
  Transaction”

  	
   

  	
  Section 4.11

  
	
  “Agent
  Members”

  	
   

  	
  Section 2.06

  
	
  “Asset
  Sale Offer”

  	
   

  	
  Section 3.09

  
	
  “Authenticating
  Agent”

  	
   

  	
  Section 2.02

  
	
  “Change
  of Control Offer”

  	
   

  	
  Section 4.13

  
	
  “Change
  of Control Payment”

  	
   

  	
  Section 4.13

  
	
  “Change
  of Control Payment Date”

  	
   

  	
  Section 4.13

  
	
  “Company
  Order”

  	
   

  	
  Section 2.02

  
	
  “Covenant
  Defeasance”

  	
   

  	
  Section 8.03

  
	
  “Custodian”

  	
   

  	
  Section 6.01

  
	
  “DTC”

  	
   

  	
  Section 2.01

  
	
  “Event
  of Default”

  	
   

  	
  Section 6.01

  
	
  “Excess
  Proceeds”

  	
   

  	
  Section 4.10

  
	
  “incur”

  	
   

  	
  Section 4.09

  
	
  “Legal
  Defeasance”

  	
   

  	
  Section 8.02

  
	
  “Liens
  Securing Note Obligations”

  	
   

  	
  Section 11.07

  
	
  “Liens
  Securing Other Second-Lien Obligations”

  	
   

  	
  Section 11.07

  
	
  “Offer
  Amount”

  	
   

  	
  Section 3.09

  
	
  “Offer
  Period”

  	
   

  	
  Section 3.09

  
	
  “Paying
  Agent”

  	
   

  	
  Section 2.03

  
	
  “Payment
  Default”

  	
   

  	
  Section 6.01

  
	
  “Payment
  Blockage Notice”

  	
   

  	
  Section 10.03

  
	
  “Permitted
  Debt”

  	
   

  	
  Section 4.09

  
	
  “Private
  Placement Legend”

  	
   

  	
  Section 2.07

  
	
  “Purchase
  Date”

  	
   

  	
  Section 3.09

  
	
  “Registrar”

  	
   

  	
  Section 2.03

  
	
  “Representative”

  	
   

  	
  Section 10.03

  
	
  “Restricted
  Payments”

  	
   

  	
  Section 4.07

  

 

Section
1.03.        Rules
of Construction.

 

Unless the context otherwise requires:

 

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

 

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

 

(c)  “or” is
not exclusive;

 

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

 

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

 

31

 

(f)  provisions
apply to successive events and transactions;

 

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

 

(h)  “including”
shall be interpreted to mean “including without limitation”; and

 

(i)  references
to the payment of principal of the Notes shall include applicable premium, if
any.

 

ARTICLE 2

THE NOTES

 

Section
2.01.        Form
and Dating.

 

(a)  The Notes
and the Trustee’s certificate of authentication to be borne by the Notes shall
be substantially in the form of Exhibit A hereto.  The Notes may have notations, legends or
endorsements as specified in Section 2.07 or as otherwise required by law,
stock exchange rule or The Depository Trust Company (“DTC”) rule or usage.  The Company and the Trustee shall approve the
form of the Notes and any notation, legend or endorsement on them.  Each Note shall be dated the date of its
authentication.  The Notes initially
shall be issued in minimum denominations of $1,000 and integral multiples
thereof.

 

(b)  The terms
and provisions of the Notes shall constitute, and are hereby expressly made, a
part of this Indenture, and, to the extent applicable, 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.  Except as otherwise expressly permitted in
this Indenture, all Notes shall be identical in all respects.  Notwithstanding any differences among them,
all Notes issued under this Indenture shall vote and consent together on all
matters as one class.

 

(c)  Notes
originally issued to QIBs in reliance on Rule 144A will be issued in the
form of one or more permanent Global Notes.

 

(d)  Each
Global Note shall represent such of the outstanding Notes as shall 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,
repurchases, 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
shall be made by the Trustee or the Note Custodian, at the direction of the
Trustee, in accordance with instructions given by the Holder thereof as required
by Section 2.08 hereof and shall be made on the records of the Trustee and the
Depositary.

 

32

 

Section
2.02.        Execution
and Authentication.

 

(a)  One
Officer of the Company shall sign the Notes for the Company by manual or
facsimile signature.  If an Officer of
the Company whose signature is on a Note no longer holds that office at the
time the Note is authenticated, the Note shall nevertheless be valid.

 

(b)  A Note
shall not be valid until authenticated by the manual signature of the
Trustee.  The signature of the Trustee
shall be conclusive evidence that the Note has been duly authenticated under
this Indenture.

 

(c)  At any
time and from time to time after the execution and delivery of this Indenture, the
Trustee shall authenticate and make available for delivery Notes upon a written
order of the Company signed by an Officer of the Company (the “Company Order”).  A Company Order shall specify the amount of
the Notes to be authenticated and the date on which the original issue of Notes
is to be authenticated.

 

(d)  The
Trustee may appoint an authenticating agent (the “Authenticating Agent”)
acceptable to the Company to authenticate Notes.  Unless limited by the terms of such
appointment, any such Authenticating Agent may authenticate Notes whenever the
Trustee may do so.  Each reference in
this Indenture to authentication by the Trustee includes authentication by the
Authenticating Agent.  An Authenticating
Agent has the same rights as an Agent to deal with the Company or an Affiliate
of the Company.

 

Section
2.03.        Registrar
and Paying Agent.

 

(a)  The
Company shall maintain (i) an office or agency where Notes may be
presented for registration of transfer or for exchange (“Registrar”) and
(ii) an office or agency where Notes may be presented for payment (“Paying
Agent”).  The Registrar shall 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 shall 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, the
Guarantors or any of the Company’s Subsidiaries may act as Paying Agent or
Registrar.

 

(b)  The
Company initially appoints DTC to act as Depositary with respect to the Global
Notes.  The Company initially appoints
the Trustee to act as the Registrar and Paying Agent and to act as Note
Custodian with respect to the Global Notes. 
The Company initially appoints the Trustee to act as the Registrar and
Paying Agent with respect to the Definitive Notes.

 

Section
2.04.        Paying
Agent to Hold Money in Trust.

 

The Company shall require each Paying Agent other than
the Trustee to agree in writing that the Paying Agent shall hold in trust for
the benefit of Holders or the Trustee all money held by the Paying Agent for
the payment of principal, premium or interest on the Notes, and shall notify
the Trustee of any default by the Company or the Guarantors in making any such

 

33

 

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, the Guarantors or a Subsidiary) shall have no
further liability for the money.  If the
Company, the Guarantors or a Subsidiary acts as Paying Agent, it shall
segregate and hold in a separate trust fund for the benefit of the Holders all
money held by it as Paying Agent.  Upon
the occurrence of events specified in Section 6.01(vii) or (viii) hereof, the
Trustee shall serve as Paying Agent for the Notes.

 

Section
2.05.        Holder
Lists.

 

The Trustee shall preserve in as current a form as is
reasonably practicable the most recent list available to it of the names and
addresses of all Holders.  If the Trustee
is not the Registrar, the Company and the Guarantors shall furnish to the
Trustee at least seven (7) 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.

 

Section
2.06.        Global
Note Provisions.

 

(a)  Each
Global Note initially shall (i) be registered in the name of DTC or the
nominee of DTC, (ii) be delivered to the Note Custodian, and
(iii) bear the appropriate legend, as set forth in Section 2.07 and Exhibit A.  Any Global Note may be represented by more
than one certificate.  The aggregate
principal amount of each Global Note may from time to time be increased or
decreased by adjustments made on the records of the Note Custodian, as provided
in this Indenture.

 

(b)  Members
of, or participants in, DTC (“Agent Members”) shall have no rights under this
Indenture with respect to any Global Note held on their behalf by DTC or by the
Note Custodian under such Global Note, and DTC may be treated by the Company, the Trustee, the Paying Agent
and the Registrar and any of their agents as the absolute owner of such Global
Note for all purposes whatsoever. 
Notwithstanding the foregoing, nothing herein shall prevent the Company, the Trustee, the Paying Agent
or the Registrar or any of their agents from giving effect to any written
certification, proxy or other authorization furnished by DTC or impair, as
between DTC and its Agent Members, the operation of customary practices of DTC
governing the exercise of the rights of an owner of a beneficial interest in
any Global Note.  The registered Holder
of a Global Note may grant proxies and otherwise authorize any person,
including Agent Members and persons that may hold interests through Agent
Members, to take any action that a Holder is entitled to take under this
Indenture or the Notes.

 

(c)  Except as
provided below, owners of beneficial interests in Global Notes will not be
entitled to receive Definitive Notes. 
Definitive Notes shall be issued to all owners of beneficial interests
in a Global Note in exchange for such interests if:

 

(i)                                     DTC
notifies the Company that it is
unwilling or unable to continue as depositary for such Global Note or DTC
ceases to be a clearing agency registered under the Exchange Act, at a time
when DTC is required to be

 

34

 

so
registered in order to act as depositary, and in each case a successor
depositary is not appointed by the Company
within 120 days of such notice;

 

(ii)                                  the
Company executes and delivers to the Trustee and Registrar an Officer’s
Certificate stating that such Global Note shall be so exchangeable; or

 

(iii)                               an Event of Default has
occurred and is continuing and the Registrar has received a request from DTC.

 

In connection with the exchange of an entire Global
Note for Definitive Notes pursuant to this subsection (c), such Global
Note shall be deemed to be surrendered to the Trustee for cancellation, and the
Company shall execute, and upon
Company Order the Trustee shall authenticate and deliver, to each beneficial
owner identified by DTC in exchange for its beneficial interest in such Global
Note, an equal aggregate principal amount of Definitive Notes of authorized
denominations.

 

Section
2.07.        Legends.

 

(a)  Each
Global Note shall bear the legend specified therefor in Exhibit A
on the face thereof.

 

(b)  Each
Restricted Note shall bear the private placement legend specified therefor in Exhibit A
on the face thereof (the “Private Placement Legend”).

 

Section
2.08.        Transfer
and Exchange.

 

(a)  Transfers.  If the owner of a Restricted Note that is a
Definitive Note wishes to transfer such Restricted Note (or any portion
thereof) to a Person that it reasonably believes is a QIB, it shall provide to
the Registrar:

 

(i)                                     such
Note,

 

(ii)                                  instructions
directing the Registrar to deliver to the transferee a Note in an equivalent
principal amount to the Note (or portion thereof) being transferred and, if the
entire principal amount of such Note is not being transferred, to the
transferor in an amount equal to the principal amount not transferred and

 

(ii)                                  a certificate in the form of Exhibit D
duly executed by the transferor.

 

Any other transfer of
Restricted Notes (other than a transfer of a beneficial interest in a Global
Note that does not involve an exchange of such interest for a Definitive Note
or a beneficial interest in another Global Note, which must be effected in
accordance with applicable law and the rules and procedures of DTC, but is not
subject to any procedure required by this Indenture) shall be made only upon
receipt by the Registrar of such opinions of counsel, certificates and/or

 

35

 

other information
reasonably required by and satisfactory to it in order to ensure compliance
with the Securities Act or in accordance with Section 2.08(b).

 

(b)  Use and
Removal of Private Placement Legends. 
Upon the transfer, exchange or replacement of Notes (or beneficial
interests in a Global Note) not bearing (or not required to bear upon such
transfer, exchange or replacement) a Private Placement Legend, the Note
Custodian and Registrar shall exchange such Notes (or beneficial interests) for
beneficial interests in a Global Note (or Definitive Notes if they have been
issued pursuant to Section 2.06(c)) that does not bear a Private Placement
Legend.  Upon the transfer, exchange or
replacement of Notes (or beneficial interests in a Global Note) bearing a Private
Placement Legend, the Note Custodian and Registrar shall deliver only Notes (or
beneficial interests in a Global Note) that bear a Private Placement Legend
unless:

 

(i)                                     such
Notes (or beneficial interests) are transferred pursuant to Rule 144 upon
delivery to the Registrar of a certificate of the transferor in the form of Exhibit E
and an Opinion of Counsel reasonably satisfactory to the Registrar;

 

(ii)                                  such
Notes (or beneficial interests) are transferred, replaced or exchanged after
the Resale Restriction Termination Date therefor; or

 

(iii)                               in connection with such
transfer, exchange or replacement the Registrar shall have received an Opinion
of Counsel and other evidence reasonably satisfactory to it to the effect that
neither such Private Placement Legend nor the related restrictions on transfer
are required in order to maintain compliance with the provisions of the
Securities Act.

 

The Private Placement Legend on any Note shall be
removed at the request of the Holder on or after the Resale Restriction
Termination Date therefor.  The Holder of
a Global Note may exchange an interest therein for an equivalent interest in a
Global Note not bearing a Private Placement Legend upon transfer of such
interest pursuant to any of clauses (i) through (iii) of Section 2.08(b).

 

(c)  Retention
of Documents. The Registrar shall retain copies of all letters, notices and
other written communications received pursuant to this Article 2.  The Company
shall have the right to inspect and make copies of all such letters, notices or
other written communications at any reasonable time upon the giving of
reasonable written notice to the Registrar.

 

(d)  Execution,
Authentication of Notes, etc.

 

(i)                                     Subject
to the other provisions of this Section 2.08, when Notes are presented to the
Registrar with a request to register the transfer of such Notes or to exchange
such Notes for an equal principal amount of Notes of other authorized
denominations, the Registrar shall register the transfer or make the exchange
as requested if its requirements for such transaction are met; provided
that any Notes presented or surrendered for registration of transfer or
exchange shall be duly endorsed or accompanied by a written instrument of
transfer in form satisfactory to the Registrar, duly executed

 

36

 

by
the Holder thereof or his attorney duly authorized in writing and such
additional information and documents as may be reasonably requested by the
Registrar to document compliance with the provisions of this Section 2.08 of
the Indenture.  To permit registrations
of transfers and exchanges and subject to the other terms and conditions of
this Article 2, the Company will
execute and, upon Company Order, the Trustee will authenticate Definitive Notes
and Global Notes at the Registrar’s request.

 

(ii)                                  No
service charge shall be made to a Holder for any registration of transfer or
exchange, but the Company may
require payment of a sum sufficient to cover any transfer tax, assessments, or
similar governmental charge payable in connection therewith (other than any
such transfer taxes, assessments or similar governmental charges payable upon
exchange or transfer pursuant to Section 3.07, Section 4.10, Section 4.13 or
Section 9.04).

 

(iii)                               All Global Notes and
Definitive Notes issued upon any registration of transfer or exchange of Global
Notes or Definitive Notes shall be the valid obligations of the 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.

 

(iv)                              The
Registrar and the Company shall not be required:  (A) to issue, to register the transfer of or
to exchange Notes during a period beginning at the opening of fifteen (15)
Business Days before the day of any selection of Notes for redemption under
Section 3.02 hereof and ending at the close of business on the day of
selection, (B) to register the transfer of or to exchange any Note so selected
for redemption in whole or in part, except the unredeemed portion of any Note
being redeemed in part or (C) to register the transfer of or to exchange a Note
between a record date and the next succeeding interest payment date.

 

(v)                                 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 purposes,
and neither the Trustee, any Agent nor the Company shall be affected by notice
to the contrary.

 

(vi)                              The
Trustee shall authenticate Global Notes and Definitive Notes in accordance with
the provisions of Section 2.02 hereof.

 

(vii)                           All certifications,
certificates and Opinions of Counsel required to be submitted to the Registrar
pursuant to this Section 2.08 to effect a registration of transfer or exchange
may be submitted by facsimile.

 

37

 

Section
2.09.        Replacement
Notes.

 

(a)  If any
mutilated Note is surrendered to the Trustee, or the Company and the Trustee
receives evidence to their satisfaction of the destruction, loss or theft of
any Note, the Company shall issue and the Trustee, upon the written order of
the Company signed by an Officer of the Company, shall authenticate a
replacement Note 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 and the Trustee may charge for their expenses in replacing a Note.

 

(b)  Every
replacement Note is an additional obligation of the Company and the Guarantors
and shall be entitled to all of the benefits of this Indenture equally and
proportionately with all other Notes duly issued hereunder.

 

Section
2.10.        Outstanding
Notes.

 

(a)  The Notes
outstanding at any time are all the Notes authenticated by the Trustee except
for those cancelled 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 2.10
as not outstanding.  Except as set forth
in Section 2.11 hereof, a Note does not cease to be outstanding because the
Company, the Guarantors or any of their Affiliates holds the Note.  If a Note is replaced pursuant to Section
2.09 hereof, it ceases to be outstanding unless the Trustee receives proof
satisfactory to it that the replaced Note is held by a bona fide purchaser.

 

(b)  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.

 

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

 

Section
2.11.        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, the Guarantors or any of their respective
Affiliates shall be considered as though not outstanding, except that for the
purposes of determining whether the Trustee shall be protected in relying on
any such direction, waiver or consent, only Notes shown on the Trustee’s
register as being so owned shall be so disregarded.

 

Section
2.12.        Temporary
Notes.

 

Until certificates representing Notes are ready for
delivery, the Company may prepare and the Trustee shall authenticate temporary
Notes upon a written order of the Company signed

 

38

 

by an Officer of the
Company.  Temporary Notes shall be
substantially in the form of certificated Notes but may have variations that
the Company considers appropriate for temporary Notes.  Without unreasonable delay, the Company shall
prepare and the Trustee shall authenticate Definitive Notes in exchange for
temporary Notes.  Holders of temporary
Notes shall be entitled to all of the benefits of this Indenture.

 

Section
2.13.        Cancellation.

 

The Company at any time may deliver to the Trustee for
cancellation any Notes previously authenticated and delivered hereunder or
which the Company may have acquired in any manner whatsoever, and all Notes so
delivered shall be promptly cancelled by the Trustee.  All Notes surrendered for registration of
transfer, exchange or payment, if surrendered to any Person other than the
Trustee, shall be delivered to the Trustee. 
The Trustee and no one else shall cancel all Notes surrendered for
registration of transfer, exchange, payment, replacement or cancellation and
shall destroy cancelled Notes (subject to the record retention requirement of
the Exchange Act).  Upon request,
certification of the destruction of all cancelled Notes shall be delivered to
the Company.  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
2.14.        Defaulted
Interest.

 

If the Company defaults in a payment of interest on
the Notes, it shall pay the defaulted interest in any lawful manner plus, to
the extent lawful, interest payable on the defaulted interest, to the Persons
who are Holders on a subsequent special record date, which date shall be at the
earliest practicable date but in all events at least ten (10) Business Days
prior to the payment date, in each case at the rate provided in the Notes and
in Section 4.01 hereof.  The Company
shall fix or cause to be fixed each such special record date and payment date,
and shall promptly thereafter, notify the Trustee of any such date and of the
amount of defaulted interest proposed to be paid on each Note.  At least fifteen (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) shall mail or cause to
be mailed to Holders a notice that states the special record date, the related
payment date and the amount of such interest to be paid.

 

Section
2.15.        Record
Date.

 

The Company may, but shall not be obligated to, fix a
record date for the purpose of determining the Holders entitled to give their
consent or take any other action required or permitted to be taken pursuant to
this Indenture.  If a record date is
fixed, those Persons who were Holders at such record date (or their duly
designated proxies), and only those Persons, shall be entitled to give such
consent or to revoke any consent previously given or to take any such action,
whether or not such Persons continue to be Holders after such record date.  No such consent shall be valid or effective
for more than 90 days after such record date.

 

Section
2.16.        Computation
Of Interest.

 

Interest on the Notes shall be computed on the basis
of a 360-day year comprised of twelve 30-day months.

 

39

 

Section
2.17.        CUSIP
Number.

 

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

 

Section
2.18.        Additional
Notes.

 

(a)  The
Company may, from time to time, in each case in a minimum aggregate principal
amount of $10.0 million, subject to compliance with any applicable provisions
of this Indenture, without the consent of the Holders, create and issue
pursuant to this Indenture Additional Notes, if the Company’s Consolidated Cash Flow for
the Company’s most recently ended four full fiscal quarters for which internal
financial statements are available immediately preceding the date on which such
Additional Notes are issued is greater than $75.0 million.  Additional Notes issued pursuant to this Section
2.18 shall have terms and conditions identical to those of the Notes
issued on the Issue Date, except with respect to:

 

(i)                                     the
date of issuance;

 

(ii)                                  the
amount of interest payable on the first interest payment date;

 

(iii)                               issue price; and

 

(iv)                              any
adjustments in order to conform to and ensure compliance with the Securities
Act (or other applicable securities laws).

 

The Notes issued on the Issue Date and any Additional
Notes shall be treated as a single class for all purposes under this
Indenture.  The aggregate principal
amount of Notes and Additional Notes that may be issued under this Indenture is limited to
$325.0 million.

 

(b)  With
respect to any Additional Notes, the Company will set forth in an Officer’s
Certificate pursuant to a resolution of the Board of Directors of the Company,
copies of which will be delivered to the Trustee, the following information:

 

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

 

(ii)                                  the
issue price, the issue date and the CUSIP number of such Additional Notes; provided
that no Additional Notes may be issued at a price that would cause such
Additional Notes to have “original issue discount” within the meaning of
Section 1273 of the Internal Revenue Code of 1986, as amended; and

 

40

 

(iii)                               whether such Additional
Notes will be subject to transfer restrictions under the Securities Act (or
other applicable securities laws).

 

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 shall furnish to the Trustee, at least 30 days but not more than 60
days before a redemption date (unless a shorter period is acceptable to the
Trustee) an Officer’s Certificate setting forth (a) the Section of this
Indenture pursuant to which the redemption shall occur, (b) the redemption
date, (c) the principal amount of Notes to be redeemed and (d) the
redemption price.

 

Section
3.02.        Selection
of Notes to be Redeemed or Purchased.

 

(a)  If less
than all of the Notes are to be redeemed or purchased in an offer to purchase
at any time, the Trustee shall select Notes for redemption or purchase on a pro rata basis except (a) if the
Notes are listed on any national securities exchange, in compliance with the
requirements of the principal national securities exchange on which the Notes
are listed; or (b) if otherwise required by law.

 

(b)  In the
event of partial redemption or purchase by lot, the particular Notes to be
redeemed or purchased shall be selected, unless otherwise provided herein, not
less than 30 nor more than 60 days prior to the redemption or purchase date by
the Trustee from the outstanding Notes not previously called for redemption or
purchase.

 

(c)  The
Trustee shall 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 shall be in amounts of $1,000 or whole multiples of $1,000; except
that if all of the Notes of a Holder are to be redeemed or purchased, the
entire outstanding amount of Notes held by such Holder, even if not a multiple
of $1,000, shall be redeemed or purchased. 
Except as provided in the preceding sentence, provisions of this
Indenture that apply to Notes called for redemption or purchase also apply to
portions of Notes called for redemption or purchase.

 

Section
3.03.        Notice
of Redemption.

 

(a)  Subject to
the provisions of Section 3.09 and Section 4.13 hereof, at least 30 days but
not more than 60 days before a redemption date, the Company shall mail or cause
to be mailed by first class mail a notice of redemption to each Holder whose
Notes are to be redeemed at its registered address, except that redemption
notices may be mailed 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 Article 8 or Article 13 of this
Indenture.

 

41

 

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

 

(i)                                     the
redemption date;

 

(ii)                                  the
redemption price;

 

(iii)                               if any Note is being
redeemed in part, the portion of the principal amount of such Notes to be
redeemed and that, after the redemption date, upon surrender of such Note, a
new Note or Notes in principal amount equal to the unredeemed portion shall be
issued upon cancellation of the original Note;

 

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

 

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

 

(vi)                              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;

 

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

 

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

 

(c)  At the
Company’s request, the Trustee shall give the notice of redemption in the
Company’s name and at the Company’s expense; provided, however,
that the Company shall have delivered to the Trustee, at least 45 days prior to
the redemption date (or such shorter period as shall be acceptable to the
Trustee), an Officer’s Certificate requesting that the Trustee give such notice
and setting forth the information to be stated in the notice as provided in
Section 3.03(b).  The notice mailed in
the manner herein provided shall be conclusively presumed to have been duly
given whether or not the Holder receives such notice.  In any case, failure to give such notice by
mail or any defect in the notice to the Holder of any Note shall not affect the
validity of the proceeding for the redemption of any other Note.

 

Section
3.04.        Effect
of Notice of Redemption.

 

Except in connection with a defeasance pursuant to
Article 8 of this Indenture, at any time prior to giving notice of redemption
to the Holders pursuant to Section 3.03, the Company may withdraw, revoke or
rescind any notice of redemption delivered to the Trustee without any
continuing obligation to redeem the Notes. 
Notwithstanding the foregoing, a notice of redemption given to the
Holders may not be conditional or subject to revocation.

 

Section
3.05.        Deposit
of Redemption or Purchase Price.

 

(a)  On or
before 10:00 a.m. (New York City time) on each redemption date or the date on which
Notes must be accepted for purchase pursuant to Section 4.10 or Section 4.13,
the Company shall deposit with the Trustee or with the Paying Agent money
sufficient to pay the

 

42

 

redemption or purchase price
of and accrued and unpaid interest on all Notes to be redeemed or purchased on
that date.  The Trustee or the Paying
Agent shall 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 (including any applicable premium) and
accrued interest on all Notes to be redeemed or purchased.

 

(b)  If the
Company complies with the provisions of Section 3.05(a), on and after the
redemption or purchase date, whether or not such Notes are presented for
payment, interest shall 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 shall issue and, upon the Company’s written request, the
Trustee shall authenticate for the Holder at the expense of the Company a new
Note equal in principal amount to the unredeemed or unpurchased portion of the
Note surrendered.

 

Section
3.07.        Optional
Redemption.

 

(a)  Optional
Redemption.

 

(i)                                     Prior
to the date which is eighteen (18) months following the Closing Date, the
Company may redeem the Notes, at its option, in whole at any time or in part
from time to time, at a redemption price equal to 101% of the principal amount
thereof, plus accrued and unpaid interest thereon to the redemption date; provided,
however, the Company may, at its option at any time prior to such date,
irrevocably elect to terminate its right to redeem the Notes pursuant to this
clause (i) by delivering a written notice to the Trustee and upon delivering
such notice, the Initial Call Termination Date shall be deemed to have
occurred.

 

(ii)                                  Commencing
from the date which is the fifth anniversary of the Closing Date, the Company
may redeem the Notes, at its option, in whole at any time or in part from time
to time, at the following redemption prices, expressed as percentages of the
principal amount thereof, plus accrued and unpaid interest thereon to the
redemption date, if redeemed during the twelve-month period commencing on the
anniversary of the Closing Date in any year set forth below:

 

43

 

	
  Year

  	
   

  	
  Percentage

  	
   

  
	
  2009

  	
   

  	
  104.875

  	
  %

  
	
  2010

  	
   

  	
  102.438

  	
  %

  
	
  2011

  	
   

  	
  101.219

  	
  %

  
	
  2012 and
  thereafter

  	
   

  	
  100.0

  	
  %

  

 

(b)  Optional
Redemption upon a Change of Control. 
Upon the occurrence of a Change of Control, at any time after the
consummation of the Change of Control Offer in accordance with the provisions
of Section 4.13 and prior to the date which is fifty-four (54) months following
the Closing Date, the Company may redeem the Notes not tendered in the Change
of Control Offer, in whole at any time or in part from time to time, at the
Company’s option at a redemption price equal to 100% of the principal amount
thereof plus the excess of:

 

(i)                                     the
present value at such redemption date of (A) the redemption price of such Notes
on the date which is fifty-four (54) months following the Closing Date (as
determined pursuant to Section 3.07(a); plus (B) all required remaining
scheduled interest payments due on such Notes through the date which is
fifty-four (54) months following the Closing Date, other than accrued interest
to such redemption date, computed using a discount rate equal to the Treasury
Rate plus 75 basis points per annum discounted on a semi-annual bond equivalent
basis; over

 

(ii)                                  the
principal amount of such Notes on such redemption date; plus

 

accrued and unpaid
interest on such Notes to the redemption date. 
The Treasury Rate shall be calculated by the Company or on behalf of the
Company by such Persons as the Company shall designate (and will not be a duty
or obligation of the Trustee) on the third Business Day preceding the
redemption date and notice thereof shall promptly be given by the Company to
the Trustee.

 

(c)  Optional
Redemption upon Equity Offerings.  At
any time prior to the third anniversary of the Initial Call Termination Date,
the Company may, at its option, use the net cash proceeds of one or more Equity
Offerings or a contribution to the common equity capital of the Company from
the net proceeds of one or more Equity Offerings by a direct or indirect parent
of the Company (in each case, other than Excluded Contributions and the net
proceeds of a sale of Designated Preferred Stock) to redeem up to 40% of the
aggregate principal amount of the Notes at a redemption price equal to 109.75%
of the principal amount thereof, plus accrued and unpaid interest thereon to
the date of redemption; provided that the Company shall make such redemption
not more than 90 days after the closing of such Equity Offering or equity
contribution.

 

Section
3.08.        Mandatory
Redemption.

 

Except as set forth under Section 3.09, Section 4.10
and Section 4.13 hereof, the Company shall not be required to make mandatory
redemption or sinking fund payments with respect to the Notes.

 

44

 

Section 3.09.        Asset
Sale Offers.

 

(a)           In
the event that the Company shall be required to commence an offer to all
Holders to repurchase Notes pursuant to Section 4.10 hereof (an “Asset
Sale Offer”), the Company shall follow the procedures specified below.

 

(b)           The
Asset Sale Offer shall be made to all Holders and if the Company elects (or is
required by the terms of other pari passu Indebtedness),
to all holders of other Indebtedness that is pari passu
with the Notes.  The Asset Sale Offer
shall 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 five Business Days after the
termination of the Offer Period (the “Purchase
Date”), the Company shall apply all Excess Proceeds (the “Offer Amount”) to the purchase of
Notes and such other pari passu
Indebtedness, if any, required to be purchased pursuant to Section 4.10
hereof, on a pro rata basis, if
applicable, or, if less than the Offer Amount has been tendered, all Notes and
other pari passu Indebtedness tendered in
response to the Asset Sale Offer. 
Payment for any Notes so purchased shall be made pursuant to Section 4.01
hereof.

 

(c)           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 shall be paid to
the Person in whose name a Note is registered at the close of business on such
record date, and no additional interest shall be payable to Holders who tender
Notes pursuant to the Asset Sale Offer.

 

(d)           Upon
the commencement of an Asset Sale Offer, the Company shall send, by first class
mail, a notice to the Trustee and each of the Holders, with a copy to the
Trustee.  The notice shall contain all
instructions and materials necessary to enable such Holders to tender Notes
pursuant to the Asset Sale Offer.  The
notice, which shall govern the terms of the Asset Sale Offer, shall describe
the transaction or transactions giving rise to the Asset Sale Offer and shall
state:

 

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

 

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

 

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

 

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

 

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

 

45

 

(vi)          that
Holders electing to have Notes purchased pursuant to any Asset Sale Offer shall
be required to surrender the Note, with the form entitled “Option of Holder to
Elect Purchase” attached to the Notes completed, or transfer by book-entry
transfer, to the Company, the Depositary, or the Paying Agent at the address
specified in the notice at least three (3) Business Days before the Purchase
Date;

 

(vii)         that
Holders shall be entitled to withdraw their election if the Company, the
Depositary or the Paying Agent, as the case may be, receives, not later than on
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;

 

(viii)        that,
if the aggregate principal amount of Notes and other pari passu
Indebtedness surrendered by holders thereof exceeds the Offer Amount, the Company
shall select the Notes and other pari passu
Indebtedness to be purchased on a pro rata
basis based on the principal amount of Notes and such other pari passu Indebtedness surrendered (with such adjustments
as may be deemed appropriate by the Company so that only Notes in denominations
of $1,000, or integral multiples thereof, shall be purchased); and

 

(ix)           that
Holders whose Notes were purchased only in part shall be issued new Notes equal
in principal amount to the unpurchased portion of the Notes surrendered (or
transferred by book-entry transfer).

 

(e)           On
or before the Purchase Date, the Company shall, to the extent lawful, accept
for payment, on a pro rata basis
to the extent necessary, Notes or portions thereof tendered pursuant to the
Asset Sale Offer in an aggregate principal amount up to and including the Offer
Amount, or if less than the Offer Amount has been tendered, all Notes tendered,
and shall 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, shall promptly
(but in any case not later than five Business Days after the Purchase Date)
mail or 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 shall promptly issue a new Note, and the Trustee, upon written
request from the Company shall authenticate and mail or 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 by the Company shall
be promptly mailed or delivered by the Company to the Holder thereof.  The Company shall publicly announce the
results of the Asset Sale Offer on the Purchase Date.

 

(f)            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 Section 3.01,
Section 3.02, Section 3.05 and Section 3.06 hereof.

 

46

 

ARTICLE 4

COVENANTS

 

Section 4.01.        Payment
of Notes.

 

(a)           The
Company shall 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 shall be considered paid for all purposes hereunder on the date due if
the Paying Agent if other than the Company, the Guarantors or a Subsidiary of
the Company holds, as of 10:00 a.m. (New York City time) money deposited by or
on behalf of the Company in immediately available funds and designated for and
sufficient to pay all such principal, premium, if any, and interest then due.

 

(b)           The
Company shall pay interest (including post-petition interest in any proceeding
under any Bankruptcy Law) 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 shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue installments of interest
(without regard to any applicable grace period) at the same rate to the extent
lawful.  Interest on the Notes shall
accrue from the date of original issuance or, if interest has already been
paid, from the date it was most recently paid. Interest shall be computed on
the basis of a 360-day year comprised of twelve 30-day months.

 

Section 4.02.        Maintenance
of Office or Agency.

 

(a)           The
Company shall maintain in the Borough of Manhattan, the City of New York an
office or agency (which may be an office of the Trustee or an Affiliate of the
Trustee or 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 shall 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
shall fail to maintain any such required office or agency or shall fail to
furnish the Trustee with the address thereof, such presentations, surrenders,
notices and demands may be made or served at the Corporate Trust Office of the
Trustee.

 

(b)           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; provided, however,
that no such designation or rescission shall in any manner relieve the Company
of its obligation to maintain an office or agency in the Borough of Manhattan,
the City of New York for such purposes. 
The Company shall give prompt written notice to the Trustee of any such
designation or rescission and of any change in the location of any such other
office or agency.

 

(c)           The
Company hereby designates the office of U.S. Bank Trust National Association,
100 Wall Street, 16th Floor, in the Borough of Manhattan, City of
New York, as one such office or agency of the Company in accordance with Section 2.03
hereof.

 

47

 

Section 4.03.        Commission
Reports.

 

(a)           Whether
or not required by the rules and regulations of the Commission, so long as any
Notes are outstanding, the Company shall be required to file with the
Commission and shall furnish to the Holders of Notes (i) all quarterly and
annual financial information that would be required to be contained in a filing
with the Commission on Forms 10-Q and 10-K, including a “Management’s
Discussion and Analysis of Financial Condition and Results of Operations” that
describes the financial condition and results of operation of the Company and
its consolidated Subsidiaries and, with respect to the annual information only,
a report on the Company’s consolidated financial statements by the Company’s
certified independent accountants and (ii) all current reports Form 8-K,
in each case within the time periods set forth in the Commission’s rules and
regulations.

 

(b)           In
addition, the Company and the Guarantors have agreed that, for so long as any
Notes remain outstanding, at any time
when the Company is not current in its reporting obligations or the Commission
does not accept the filings provided for in Section 4.03(a), they
shall furnish to the Holders and to securities analysts and prospective
investors, upon their request, the information required to be delivered
pursuant to Rule 144A(d)(4) under the Securities Act.  The financial information to be distributed
to Holders of Notes shall be filed with the Trustee and mailed to the Holders
at their addresses appearing in the register of Notes maintained by the
Registrar, within 90 days after the end of the Company’s fiscal years and
within 45 days after the end of each of the first three quarters of each such
fiscal year.

 

(c)           The
Company shall provide the Trustee with a sufficient number of copies of all
reports and other documents and information and, if requested by the Company
and at the Company’s expense, the Trustee will deliver such reports to the
Holders under this Section 4.03.

 

(d)           Notwithstanding
the foregoing, the availability of the foregoing materials on either the
Commission’s Electronic Data Gathering, Analysis and Retrieval System (or any
successor system) or on the Company’s website, as the case may be, will be
deemed to satisfy the Company’s delivery obligations.

 

Section 4.04.        Compliance
Certificate.

 

(a)           The
Company and each Guarantor shall deliver to the Trustee, within 105 days after
the end of each fiscal year, an Officer’s Certificate stating that a review of
the activities of the Company, and the Company’s Subsidiaries during the
preceding fiscal year has been made under the supervision of the signing
Officers with a view to determining whether each has kept, observed, performed
and fulfilled its obligations under this Indenture, and further stating, as to
each such Officer signing such certificate, that, to the best of his or her
knowledge, each entity 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 shall have 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 the best of his or her knowledge, no event has occurred
and remains in existence by reason of which payments on account of the
principal of, premium or interest on the Notes is prohibited or if such event
has

 

48

 

occurred, a
description of the event and what action the Company is taking or proposes to
take with respect thereto.

 

(b)           The
Company shall, so long as any of the Notes are outstanding, deliver to the
Trustee, forthwith upon 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 shall pay, and
shall 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 is not adverse in any material respect to the Holders.

 

Section 4.06.        Stay,
Extension and Usury Laws.

 

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

 

Section 4.07.        Restricted
Payments.

 

(a)           The
Company shall not, and shall not permit any of its Restricted Subsidiaries to,
directly or indirectly take any of the following actions (each, a “Restricted
Payment”):

 

(i) declare or pay
any dividend or make any other payment or distribution on account of the
Company’s or any of its Restricted Subsidiaries’ Equity Interests (including,
without limitation, any payment in connection with any merger or consolidation
involving the Company or
any of its Restricted Subsidiaries), other than dividends or
distributions payable in Equity Interests (other than Disqualified Stock) of
the Company or dividends or distributions payable to the Company or any Wholly
Owned Subsidiary of the Company or payments of cash interest on Subordinated
Shareholder Funding;

 

(ii) purchase,
redeem, retire or otherwise
acquire for value (including, without limitation, in connection
with any merger or consolidation involving the Company) any Equity Interests or Subordinated Shareholder Funding
of the Company held by any Person (other
than a Restricted Subsidiary), including in connection with any merger or
consolidation and including the exercise of any option to exchange any Equity
Interests (other than into Equity Interests of the Company that do not
constitute Disqualified Stock);

 

49

 

(iii) make any
payment on or with respect to, or purchase, redeem, defease or otherwise
acquire or retire for value any Indebtedness that is subordinated to the Notes or any Note Guarantee (excluding any
intercompany Indebtedness between or among the Company and any of its
Restricted Subsidiaries), except (A)
a payment of interest or principal at the Stated Maturity thereof or (B) the purchase, repurchase or other
acquisition of any such subordinated Indebtedness in anticipation of satisfying
a sinking fund obligation, principal installment or payment at final maturity,
in each case within one year of the date of acquisition; or

 

(iv) make any
Restricted Investment,
unless, at the time of and immediately after giving effect to such Restricted
Payment:

 

(A)          no
Default or Event of Default shall have occurred and be continuing or would
occur as a consequence of such Restricted Payment;

 

(B)           the
Company would, at the time of such Restricted Payment and after giving pro
forma effect thereto as if such
Restricted Payment had been made at the beginning of the applicable
four-quarter period, have been 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); and

 

(C)           such
Restricted Payment, together with the aggregate amount of all other Restricted
Payments made by the Company and its Restricted Subsidiaries after the
Effective Date (excluding Restricted Payments permitted by clauses (ii), (iii),
(iv), (v), (vi), (vii), (viii), (ix), (x), (xii), (xiii), (xiv), (xv), (xvi),
(xvii), (xviii), (xix), (xx), (xxi), (xxii), (xxiii) and (xxiv) of 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) from the beginning
of the fiscal quarter which includes the Effective Date 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 loss, less 100% of such loss),
plus

 

(2)   100%
of the aggregate Qualified Proceeds received by the Company since the Effective
Date as a contribution to its common equity or from the issue or sale of Equity
Interests of the Company (other than Disqualified Stock, Excluded Contributions
and the net proceeds from a sale of Designated Preferred Stock) or from
Subordinated Shareholder Funding (to the extent not designated as an Excluded
Contribution) subsequent to the Effective Date or from the issue or sale of
convertible or exchangeable Disqualified Stock or convertible or exchangeable
debt securities of the Company that have been converted into or exchanged for
such Equity Interests (other than Equity Interests (or Disqualified Stock or
debt securities) sold to a Subsidiary of the Company), plus

 

50

 

(3)   100% of the aggregate Qualified Proceeds from
(x) the sale or other disposition (other than to the Company or a Restricted Subsidiary) of any Restricted Investment
that was made after the Effective Date and (y) repurchases, redemptions
and repayments of such Restricted Investments and the receipt of any dividends
or distributions from such Restricted Investments, plus

 

(4)   to the extent that any Unrestricted Subsidiary
of the Company designated as such after the Effective Date is redesignated as a Restricted Subsidiary after the Effective
Date, the Fair Market Value of the
Company’s  Investment in such Subsidiary as of the date of such redesignation,
plus

 

(5)   in the event the Company and/or any Restricted
Subsidiary of the Company makes any Investment in a Person that, as a result of or in connection with such
Investment, becomes a Restricted Subsidiary of the Company, an amount equal to
the existing Investment of the Company and/or any of its Restricted
Subsidiaries in such Person that was previously treated as a Restricted
Payment, plus

 

(6)   (x)
$10.0 million prior to the date which is eighteen (18) months following the
Closing Date and (y) thereafter $25.0 million.

 

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

 

(i)            the payment of any
dividend or other distribution or the
consummation of any irrevocable redemption within 60 days after the date
of declaration of the dividend or giving
of the redemption notice, as the case may be, if at the date of declaration or notice, the dividend or redemption payment would have complied with
the provisions of this Indenture;

 

(ii)           the making of any Restricted Payment in exchange for, or out of net cash
proceeds of the substantially concurrent sale (other than to a Restricted
Subsidiary of the Company) of, Equity Interests of the Company (other than
Disqualified Stock) or from the substantially concurrent contribution of common
equity capital to the Company, provided that the amount of any such net
cash proceeds that are utilized for any such Restricted Payment will be
excluded from clause (C)(2) of  Section 4.07(a)(iv);

 

(iii)          the defeasance,
redemption, repurchase, retirement or other acquisition for value of any
Indebtedness of the Company or any Guarantor
that is contractually subordinated to the Notes or any Note Guarantee with the
net cash proceeds from a substantially concurrent incurrence of
Permitted Refinancing Indebtedness;

 

(iv)          the declaration and payment of any regularly scheduled  or accrued dividends to holders of any class or series of
Disqualified Stock of the Company or any Restricted Subsidiary of the Company
issued on or after the Effective Date in accordance with the provisions of Section 4.09;

 

51

 

(v)           the repurchase, redemption or other acquisition or retirement for value of
Disqualified Stock of the Company or any Restricted Subsidiary of the Company
made by exchange for, or out of the proceeds of the substantially concurrent
sale of Replacement Preferred Stock that is permitted to be incurred in
accordance with the provisions of Section 4.09;

 

(vi)          the payment of any dividend or other distributions to holders of any class
or series of Designated Preferred Stock (other than Disqualified Stock) issued
by the Company after the Effective Date;

 

(vii)         the payment of any dividend (or any similar distribution) by a
Restricted Subsidiary of the Company to the holders of its Equity Interests on a pro
rata basis;

 

(viii)        the repurchase, redemption
or other acquisition or retirement for value of any Equity Interests of the
Company or any Restricted Subsidiary of the Company, held by any current or former officer, director, employee
or consultant of the Company or any of its Restricted Subsidiaries, and any dividend payment or other
distribution by the Company or any of its Restricted Subsidiaries to a
direct or indirect parent holding company of the Company utilized for the repurchase,
redemption or other acquisition or retirement for value of any Equity Interests
of such direct or indirect parent holding company held by any current or former
officer, director, employee or consultant of the Company or any of its
Restricted Subsidiaries, in each case, pursuant to any equity subscription agreement, stock
option agreement, shareholders’ agreement
or similar agreement or benefit plan of any kind; provided that the aggregate price paid for all such
repurchased, redeemed, acquired or retired Equity Interests may not exceed $7.5
million in any fiscal year (it being understood, however, that any unused
amounts permitted to be paid pursuant to this clause are available to be
carried over to subsequent fiscal years); provided, however,
notwithstanding clause (C) of Section 4.07(a)(iv), the amount of any such
Restricted Payments made prior to the Initial Call Termination Date will be
included in the calculation of the amount of Restricted Payments; provided,
further, that such amount in any fiscal year may be increased by an
amount not to exceed:

 

(A)          the cash proceeds from the sale of Equity Interests of the Company and, to
the extent contributed to the Company as common equity capital, Equity
Interests of the Company’s direct or indirect parent entities, in each case to
members of management, directors or consultants of the Company, and any of its
Subsidiaries or any of its direct or indirect parent entities that occurs after
the Effective Date, to the extent the cash proceeds from the sale of such
Equity Interests have not otherwise been applied to the payment of Restricted
Payments by virtue of clause (C)(2) of Section 4.07(a)(iv), and excluding
Excluded Contributions plus

 

52

 

(B)           the cash proceeds of
key man life insurance policies received by the Company and its Restricted
Subsidiaries after the Effective Date; provided, however, such
proceeds are used to repurchase, redeem, acquire or retire for value Equity
Interests of the Company or any of its Restricted Subsidiaries held by (1) the
estate, executors, administrators, testamentary trustees, legatees or
beneficiaries of any such officer, director, employee or consultant of the
Company or any of its Restricted Subsidiaries or (2) any trust or custodianship
a beneficiary of which was such officer, director, employee or consultant of
the Company or any of its Restricted Subsidiaries or any such Person’s spouse
or lineal descendants (by blood or adoption), less

 

(C)           the
amount of any Restricted Payments previously made pursuant to clauses (A) and
(B) of this clause (viii);

 

and provided further that cancellation of
Indebtedness owing to the Company from members of management, directors or
consultants of the Company or any of its Restricted Subsidiaries, or any direct
or indirect parent holding company of the Company, in connection with a
repurchase of Equity Interests of the Company or any direct or indirect parent
holding company of the Company shall not be deemed to constitute a Restricted
Payment for purposes of this covenant or any other provision of this Indenture;

 

(ix)           the
repurchase of Equity Interests deemed to occur upon the exercise of options,
rights or warrants to the extent such Equity Interests represent a portion of
the exercise price of those options, rights or warrants;

 

(x)            the repurchase,
redemption, defeasance or other acquisition or retirement for value of
Indebtedness of the Company or any Guarantor that is contractually subordinated
to the Notes or to the Note Guarantees with any Excess Proceeds that remain
after consummation of an Asset Sale Offer;

 

(xi)           so long as no Default
has occurred and is continuing or would be caused thereby, after the occurrence
of a Change of Control and within 60 days after the completion of the offer to
repurchase the Notes pursuant to Section 4.13 of this Indenture (including
the purchase of the Notes tendered), any purchase or redemption of Indebtedness
that is contractually subordinated to the Notes or to the Note Guarantees
required pursuant to the terms thereof as a result of such Change of Control at
a purchase or redemption price not to exceed 101% of the outstanding principal
amount or accreted value thereof, plus any accrued and unpaid interest; provided,
however, that the Company would be able to incur at least $1.00 of
additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set
forth in Section 4.09(a) after giving pro forma effect to such Restricted
Payment;

 

53

 

(xii)          cash
payments in lieu of fractional shares issuable as dividends on preferred stock
or upon the conversion of any convertible debt securities of the Company or any
of its Restricted Subsidiaries;

 

(xiii)         so
long as no Default has occurred and is continuing or would be caused thereby,
the payment:

 

(A)          by
the Company or any Restricted Subsidiary of the Company to any direct or
indirect parent of the Company, which payment is used by the Person receiving
such payment, following the first initial public offering of common Equity
Interests by such Person, to pay dividends of up to 6% per annum of the net
proceeds received by such Person in such public offering that are contributed
to the Company as common equity capital, or

 

(B)           by
the Company, following the first initial public offering of common Equity
Interests by the Company, to pay dividends of up to 6% per annum of the net
proceeds received by the Company in such public offering,

 

(excluding, in the case of both clause (A) and clause
(B), public offerings of common Equity Interests registered on Form S-8 and any
other public sale to the extent the proceeds thereof are Excluded
Contributions);

 

(xiv)        Investments that are made with Excluded Contributions;

 

(xv)         Distributions or payments of Receivables Fees;

 

(xvi)        so long as no Default or
Event of Default will have occurred and be continuing, payments required to be
made under the Tax Sharing Agreement;

 

(xvii)       so long as no Default or
Event of Default will have occurred and be continuing, payments of cash
dividends or the making of loans or advances to a direct or indirect parent of
the Company not to exceed $1.0 million in any fiscal year for costs and
expenses incurred by such direct or indirect parent of the Company in its
capacity as a holding company or for services rendered by such direct or
indirect parent of the Company on behalf of the Company;

 

(xviii)      so long as no Default or
Event of Default will have occurred and be continuing, payments of cash
dividends to a direct or indirect parent of the Company in order to enable such
direct or indirect parent of the Company to make payments of interest required
to be made in respect of the Existing Debentures in accordance with the terms
thereof in effect on the Effective Date;

 

54

 

(xix)         so long as no Default or Event of Default will have occurred and be
continuing, payments of cash dividends to a direct or indirect parent of the
Company in order to enable such direct or indirect parent of the Company to
defease, redeem, repurchase or retire the Existing Debentures;

 

(xx)          so long as no Default or Event of Default will have occurred and be
continuing, payments of cash dividends to a direct or indirect parent of the
Company in order to enable such direct or indirect parent of the Company to
make payments of interest required to be made in respect of the Senior Discount
Contingent Principal Notes;

 

(xxi)         so long as no Default or Event of Default will have occurred and be
continuing, payments of cash dividends to a direct or indirect parent of the
Company in order to enable such direct or indirect parent of the Company to
defease, redeem, repurchase or retire the Senior Discount Contingent Principal
Notes;

 

(xxii)        so
long as no Default or Event of Default will have occurred and be continuing,
payments of cash dividends to a direct or indirect parent of the Company, from
Net Cash Proceeds from Asset Sales remaining after the application thereof as
required by the provisions of Section 4.10 (including after making any
Asset Sale Offer required to be made pursuant to Section 4.10 and the
application of the entire Offer Amount to purchase all Notes tendered pursuant
to such Asset Sale Offer) in an aggregate principal amount not to exceed $25.0
million;

 

(xxiii)       payments
of cash dividends to any direct or indirect parent of the Company in order to
pay any out-of-pocket expenses or charges for such period relating to any
offering of Equity Interests by any direct or indirect parent of the Company,
any Asset Sale, Investment or merger, recapitalization or acquisition
transactions made by any direct or indirect parent of the Company, or any
Indebtedness incurred by any direct or indirect parent of the Company (in each
case, whether or not successful); and

 

(xxiv)       purchases
of shares of Capital Stock for contribution to an employee stock ownership plan
of the Company or the direct or indirect parent company of the Company not in
excess of (A) $5.0 million in the aggregate prior to the Initial Call
Termination Date and (B) thereafter $15.0 million in the aggregate.

 

(c)           The
Board of Directors may designate any Restricted Subsidiary to be an
Unrestricted Subsidiary if such designation would not cause a Default or an
Event of Default.  For purposes of making
such determination, all outstanding Investments by the Company and its Restricted
Subsidiaries (except to the extent repaid in cash) in the Subsidiary so
designated will be deemed to be Restricted Payments at the time of such
designation and will reduce the amount available for Restricted Payments under Section 4.07(a).  All such outstanding Investments will be deemed

 

55

 

to constitute
Investments in an amount equal to the greater of (i) the net book value of
such Investments at the time of such designation and (ii) the Fair Market
Value of such Investments at the time of such designation.  Such designation will only be permitted if
such Restricted Payment would be permitted at such time and if such Restricted
Subsidiary otherwise meets the definition of an Unrestricted Subsidiary.

 

(d)           The
amount of all Restricted Payments (other than cash) shall be the Fair Market
Value on the date of the Restricted Payment of the asset(s) or securities
proposed to be transferred or issued by the Company or such Restricted
Subsidiary, as the case may be, pursuant to the Restricted Payment.  The Fair Market Value of any
assets or securities that are required to be valued by Section 4.07 shall
be determined by the Board of Directors whose resolution with respect thereto
shall be delivered to the Trustee.

 

(e)           For purposes of determining compliance with the
provisions of this Section 4.07, in the event that a Restricted Payment
meets the criteria of more than one of the types of Restricted Payments
described in clauses (i) through (xxiv) above or is entitled to be made
pursuant to Section 4.07(a), the Company, in its sole discretion, may
classify such Restricted Payment on the date of such Restricted Payment or
later reclassify all or a portion of such Restricted Payment, in any manner
that complies with this covenant. 
Restricted Payments permitted by this Section 4.07 need not be
permitted solely by reference to one provision permitting such Restricted
Payments but may be permitted in part by one such provision and in part by one
or more other provisions of this covenant permitting such Restricted Payments.

 

Section 4.08.        Dividends
and Other Payment Restrictions Affecting Restricted Subsidiaries.

 

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

 

(a)           (i) pay
dividends or make any other distributions to the Company or any of its
Restricted Subsidiaries on its Capital Stock or with respect to any other
interest or participation in, or measured by, its profits or (ii) pay any
Indebtedness owed to the Company or any of its Restricted Subsidiaries;

 

(b)           make
loans or advances to the Company or any of its Restricted Subsidiaries; or

 

(c)           sell, lease or transfer any of its
properties or assets to the Company or any of its Restricted Subsidiaries,
except for such encumbrances or restrictions existing under or by reason of:

 

(i)            agreements governing Existing Indebtedness and
Credit Facilities as in effect on the Effective Date, and any
amendments, modifications, restatements, renewals, increases, supplements,
refundings, replacements or refinancings of those agreements, provided
that such amendments, modifications, restatements, renewals, increases,
supplements, refundings, replacements or refinancings are not materially more restrictive, taken as a whole, with respect to
dividend and other payment restrictions contained in those agreements on the
Effective Date;

 

56

 

(ii)           the
Indenture, the Notes and the Note Guarantees;

 

(iii)          applicable
law or any applicable rule, regulation, order or governmental permit or
concession;

 

(iv)          any
agreement or instrument governing Indebtedness or Capital Stock of a Restricted
Subsidiary acquired by the Company or any of its Restricted Subsidiaries as in
effect at the time of such acquisition (except to the extent such agreement or
instrument was created or entered into in connection with 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 or
any of its Subsidiaries, so acquired, provided that in the case of Indebtedness, such Indebtedness was
permitted by the terms of this Indenture to be incurred;

 

(v)           customary
non-assignment provisions in contracts
and licenses entered into in the ordinary course of business;

 

(vi)          customary restrictions in leases (including
capital leases), security agreements or mortgages or other purchase
money obligations for property acquired in the ordinary course of business that
impose restrictions on the property
purchased or leased of the nature described in clause (iii) above;

 

(vii)         any
Purchase Money Note, or other Indebtedness or contractual requirements incurred
with respect to a Qualified Receivables Transaction relating to a Receivables
Subsidiary;

 

(viii)        Permitted
Refinancing Indebtedness, provided that the restrictions contained in
the agreements governing such Permitted Refinancing Indebtedness are not materially more restrictive, taken as a whole, than those contained
in the agreements governing the Indebtedness being refinanced;

 

(ix)           any agreement for the sale or other disposition of all or substantially all
the Capital Stock or the assets of a Restricted Subsidiary that restricts
distributions by that Restricted Subsidiary pending the sale or other
disposition;

 

(x)            Liens permitted to be incurred under the
provisions of Section 4.12 that limit the right of the debtor to dispose
of the assets subject to such Liens;

 

(xi)           provisions limiting the disposition or distribution of assets or property
in joint venture agreements, asset sale agreements, sale-leaseback agreements,
stock sale agreements and other similar agreements, which limitation is
applicable only to the assets that are the subject of such agreements;

 

57

 

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

 

(xiii)         customary provisions imposed on the transfer of copyrighted or patented
materials;

 

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

 

(xv)         contracts entered into in the ordinary course of business, not relating to
any Indebtedness, and that do not, individually or in the aggregate, detract
from the value of property or assets of the Company or any Restricted
Subsidiary of the Company in any manner material to the Company or any
Restricted Subsidiary of the Company; and

 

(xvi)        restrictions on the transfer of property or
assets required by any regulatory authority having jurisdiction over the
Company or any Restricted Subsidiary of the Company or any of their businesses.

 

Section 4.09.        Incurrence
of Indebtedness and Issuance of Preferred Stock.

 

(a)           Except
as otherwise provided in this Section 4.09, the Company shall not, and
shall not permit any of its Restricted Subsidiaries to, directly or indirectly,
create, incur, issue, assume, guarantee or otherwise become directly or
indirectly liable, contingently or otherwise, with respect to (collectively, “incur”)
any Indebtedness (including Acquired Debt) and the Company shall not issue any
Disqualified Stock and shall not permit any of its Restricted Subsidiaries to
issue any shares of preferred stock; provided, however, that the
Company or any of its Restricted Subsidiaries may incur Indebtedness (including
Acquired Debt) or issue shares of Disqualified Stock or preferred stock if the Fixed Charge Coverage Ratio for the
Company’s 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 such
preferred stock is issued, as the
case may be, would have been at least 2.0 to 1.0, determined on a pro
forma basis (including a pro forma application of the net proceeds therefrom as
determined in good faith by the chief financial officer of the Company in an
Officer’s Certificate) as if the additional Indebtedness had been incurred, or
the Disqualified Stock or the preferred
stock had been issued, as the case may be, at the beginning of such
four-quarter period.

 

(b)           Except
as otherwise provided in Section 4.09(c), the provisions of Section 4.09(a)
will not apply to the incurrence of any of the following items of Indebtedness or the issuance of any of the following items
of Disqualified Stock or preferred stock (collectively, “Permitted Debt”):

 

(i)            the incurrence by the Company and/or its Restricted Subsidiaries (and the Guarantee thereof by the Guarantors
and the Non-Guarantor Subsidiaries) of Indebtedness under the Credit
Facilities; provided that the aggregate principal amount of all
Indebtedness (with letters of credit being deemed to have a principal amount
equal to the maximum potential liability of the

 

58

 

Company and its Restricted Subsidiaries thereunder)
outstanding under all Credit Facilities after giving effect to such incurrence,
including all Indebtedness incurred to refund, refinance or replace any Indebtedness
incurred pursuant to this clause (i), does not exceed (A) an amount equal
to $250.0 million prior to the Initial Call Termination Date and thereafter (B)
the greater of (x) $250.0 million and (y) 85% of the total tangible assets of
the Company and its Restricted Subsidiaries on a consolidated basis as of the
end of the most recently completed fiscal quarter prior to such incurrence, as
determined in accordance with GAAP, in each case, less the aggregate principal
amount of all principal payments thereunder constituting permanent reductions
of such Indebtedness pursuant to and in accordance with Section 4.10;

 

(ii)           the incurrence by the Company and those
Restricted Subsidiaries that are Guarantors of Indebtedness in respect
of the Notes, replacement Notes, if any, and the Note Guarantees;

 

(iii)          the
incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness
(including Capital Lease
Obligations, mortgage financings,
Attributable Debt arising out of sale and leaseback transactions or purchase
money obligations), Disqualified Stock or preferred stock, in each case (x)
incurred for the purpose of financing all or any part of the purchase price or
cost of design, construction, lease, installation or improvements of
property, plant or equipment used or useful in the business of the
Company or such Restricted Subsidiary, or (y) otherwise constituting
Attributable Debt arising out of sale and leaseback transactions, in an
aggregate principal amount not to exceed (A) $20.0 million at any time outstanding
prior to the Initial Call Termination Date and (B) thereafter $30.0 million at
any time outstanding;

 

(iv)          the incurrence by the Company and its
Restricted Subsidiaries of Existing
Indebtedness;

 

(v)           the
incurrence by the Company or any of its Restricted Subsidiaries of Permitted
Refinancing Indebtedness or Replacement
Preferred Stock in exchange for, or the net proceeds of which are used
to refund, refinance or replace Indebtedness (other than intercompany
Indebtedness) or any Disqualified Stock
or preferred stock that was permitted by this Indenture to exist or be
incurred;

 

(vi)          the
incurrence by the Company or any of its
Restricted Subsidiaries of intercompany Indebtedness between or among the Company and any of its
Restricted Subsidiaries; provided, however, that
(1) if the Company or any Restricted Subsidiary that is a Guarantor is the
obligor on such Indebtedness and the payee is not the Company or such
Guarantor, such Indebtedness is expressly subordinated to the prior payment in
full in cash of all Obligations then due with
respect to the Notes, in the case of the

 

59

 

Company, or the Note Guarantees, in the case of such
Guarantor, and (2) (x) any subsequent issuance or transfer of Equity
Interests that results in any such Indebtedness being held by a Person other
than the Company or a Restricted Subsidiary of the Company and (y) any
sale or other transfer of any such Indebtedness to a Person that is not either
the Company or a Restricted Subsidiary of the Company shall be deemed, in each
case, to constitute an incurrence of such Indebtedness by the Company or such Restricted Subsidiary, as the case may
be, which new incurrence is not permitted
by this clause (vi);

 

(vii)         the issuance by any of the Company’s Restricted
Subsidiaries to the Company or to any of its Restricted Subsidiaries of shares
of preferred stock; provided, however, that (1) any subsequent
issuance or transfer of Equity Interests that results in any such preferred
stock being held by a Person other than the Company or a Restricted Subsidiary
of the Company and (2) any sale or other transfer of any such preferred stock
to a Person that is not either the Company or a Restricted Subsidiary of the
Company will be deemed, in each case, to constitute a new issuance of such
preferred stock by such Restricted Subsidiary, which new issuance is not
permitted by this clause (vii);

 

(viii)        the
incurrence by the Company or any of the Restricted Subsidiaries of Hedging
Obligations in the ordinary course of business;

 

(ix)           the
guarantee: (1) by the Company or any Restricted Subsidiary of the Company of
Indebtedness of the Company or any
Restricted Subsidiary of the Company that was permitted to be incurred by
another provision of this covenant; provided
that if the Indebtedness being guaranteed is subordinated to or pari passu with the Notes, then the
guarantee shall be subordinated or pari
passu, as applicable, to the same extent as the Indebtedness
guaranteed and (2) by any Non-Guarantor Subsidiary of Indebtedness of a
Non-Guarantor Subsidiary;

 

(x)            the incurrence by the Company or any of its
Restricted Subsidiaries of Indebtedness in respect of workers’
compensation claims, self-insurance obligations, bankers’ acceptances, letters of credit, performance, surety bonds, appeal bonds or other similar
bonds and completion guarantees provided by the Company or a Restricted
Subsidiary in the ordinary course of business;

 

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

 

60

 

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

 

(xiii)         the incurrence of Indebtedness resulting from endorsements of negotiable
instruments for collection in the ordinary course of business;

 

(xiv)        Indebtedness
(which may include Disqualified Stock or preferred stock) of Persons that are
acquired by the Company or any Restricted Subsidiary (including by way of
merger or consolidation) in accordance with the terms of this Indenture; provided
that such Indebtedness, Disqualified Stock or preferred stock is not incurred
in contemplation of such acquisition or merger; and provided, further,
that after giving effect to such acquisition or merger, either (A) the Company
would be permitted to incur at least $1.00 of additional Indebtedness pursuant
to the Fixed Charge Coverage Ratio or (B) the Company’s Fixed Charge Coverage
Ratio after giving pro forma effect to such acquisition or merger would be
greater than the Company’s actual Fixed Charge Coverage Ratio immediately prior
to such acquisition or merger;

 

(xv)         Indebtedness of the Company or a Restricted
Subsidiary in respect of netting services, overdraft protection and otherwise
in connection with deposit accounts; provided that such Indebtedness
remains outstanding for ten Business Days or less;

 

(xvi)        the
incurrence by a Receivables Subsidiary of Indebtedness in a Qualified
Receivables Transaction;

 

(xvii)       the incurrence by the Company of Additional Notes pursuant to Section 2.18;

 

(xviii)      the incurrence by the Company of Indebtedness consisting of Subordinated
Shareholder Funding; and

 

(xix)         the
incurrence or issuance by the
Company or any Restricted Subsidiary of additional Indebtedness, Disqualified Stock or preferred stock
in an aggregate principal amount (or
accreted value or liquidation preference, as applicable) at any time
outstanding, including all Permitted Refinancing
Indebtedness and all Replacement Preferred Stock incurred to renew, refund, refinance, replace, defease or discharge any such
Indebtedness,

 

61

 

Disqualified Stock and
preferred stock incurred or
issued pursuant to this clause (xix), not to exceed (A) $15.0
million prior to the Initial Call Termination Date and (B) thereafter $40.0
million.

 

(c)           Notwithstanding
the provisions of Section 4.09(a) and Section 4.09(b), prior to the
date which is eighteen (18) months following the Closing Date, neither the
Company nor any Restricted Subsidiary of the Company shall incur any Senior
Debt if, at the time of the incurrence of such Senior Debt, the Company’s
Consolidated Total Indebtedness to Consolidated Cash Flow Ratio (after giving a
pro forma effect thereto) would have been greater than 3.75 to 1.00; provided,
however, that this Section 4.09(c) shall not apply to:

 

(i)            the
incurrence by the Company or any Restricted Subsidiary of the Company of Senior
Debt otherwise permitted to be incurred under the Congress Credit Facility; and

 

(ii)           the
incurrence by the Company or any Restricted Subsidiary of the Company of
Indebtedness otherwise permitted to be incurred under clause (viii), (ix), (x), (xi), (xii), (xiii), (xv)
or (xvi) of Section 4.09(b).

 

(d)           Notwithstanding
the provisions of Section 4.09(a), prior to the Initial Call Termination
Date, neither the Company nor any Restricted Subsidiary of the Company shall
incur any Indebtedness permitted to be incurred pursuant to Section 4.09(a)
if, at the time of the incurrence of such Indebtedness, the Company’s
Consolidated Total Indebtedness to Consolidated Cash Flow Ratio (after giving a
pro forma effect thereto) would have been greater than 3.75 to 1.00.

 

(e)           For
purposes of determining compliance with this covenant, in the event that an
item of Indebtedness meets the criteria of more than one of the categories of
Permitted Debt described in clauses (i) through (xix) above or is entitled
to be incurred pursuant to Section 4.09(a), the Company may, in its sole
discretion, classify such item of Indebtedness on the date of its incurrence,
or later reclassify all or a portion of such item of Indebtedness, in any
manner that complies with this covenant. 
Indebtedness permitted by this Section 4.09 need not be permitted
solely by reference to one provision permitting such Indebtedness but may be
permitted in part by one such clause and in part by one or more other
provisions of this Section 4.09 permitting such Indebtedness.  The outstanding principal amount of any
particular Indebtedness shall be counted only once and any obligations arising
under any Guarantee, Lien, letter of credit or similar instrument supporting
such Indebtedness shall not be double counted. 
The accrual of interest,
the accretion or amortization of original issue discount, the payment 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 Disqualified
Stock or preferred stock in the form of additional shares of the same class of
Disqualified Stock or preferred stock will not be deemed to be an
incurrence of Indebtedness or an issuance of Disqualified Stock or preferred
stock for purposes of this Section 4.09; provided that, in each such case, the amount thereof is included
in Fixed Charges of the Company as accrued (other than the reclassification of
preferred stock as Indebtedness due to a change in accounting principles).

 

62

 

(f)            The amount of any Indebtedness outstanding on
any date will be (1) the accreted value of the Indebtedness, in the case of any
Indebtedness issued with original issue discount; (2) the principal amount of
the Indebtedness, in the case of any other Indebtedness; and (3) in respect of
Indebtedness of another Person secured by a Lien on the assets of the specified
Person, the lesser of (x) the Fair Market Value of such assets at the date of
determination and (y) the amount of the Indebtedness of the other Person.

 

Section 4.10.        Asset
Sales.

 

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

 

(i)            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 or Equity Interests issued or sold or otherwise disposed
of; and

 

(ii)           at
least 75% of the consideration received in the Asset Sale by the Company or
such Restricted Subsidiary is in the form of cash.  For purposes of this provision, each of the
following shall be deemed to be cash:

 

(A)          Cash
Equivalents;

 

(B)           any
liabilities, as shown on the Company’s most recent consolidated balance sheet,
of the Company or any Restricted Subsidiary of the Company (other than
contingent liabilities and liabilities that are by their terms subordinated to
the Notes or the Note Guarantees) that are assumed by the transferee of any
such assets pursuant to a customary novation agreement that releases the
Company or such Restricted Subsidiary from further liability;

 

(C)           any
securities, notes or other obligations received by the Company or any such
Restricted Subsidiary from such transferee that are converted by the Company or
such Restricted Subsidiary into cash within 180 days of receipt, to the extent
of the cash received in that conversion;

 

(D)          any
Designated Noncash Consideration the Fair Market Value of which, when taken
together with all other Designated Noncash Consideration received pursuant to
this clause (D) (and not subsequently converted into Cash Equivalents that are
treated as Net Proceeds of an Asset Sale) does not exceed $15.0 million since
the Effective Date, 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

 

63

 

(E)           any
stock or assets of the kind referred to in clauses (ii) or (iv) of Section 4.10(b)
hereof.

 

(b)           Within
360 days after the receipt of any Net Proceeds from an Asset Sale, the Company
(or the applicable Restricted Subsidiary, as the case may be) may apply such
Net Proceeds at its option:

 

(i)            to
repay Senior Debt and, if the Senior Debt repaid is revolving credit
Indebtedness, to (A) correspondingly reduce commitments with respect
thereto or (B) acquire Additional Assets;

 

(ii)           to
acquire all or substantially all of the assets of, or any Capital Stock of,
another Permitted Business, if, after giving effect to any such acquisition of
Capital Stock, the Permitted Business is or becomes a Restricted Subsidiary of
the Company;

 

(iii)          to
buy out or purchase a release from lease obligations on existing retail stores
or distribution centers;

 

(iv)          to
make a capital expenditure; or

 

(v)           to
acquire Additional Assets.

 

Pending the final application of any Net Proceeds, the
Company may temporarily reduce revolving credit borrowings or otherwise invest
such Net Proceeds in any manner that is not prohibited by this Indenture.

 

(c)           Any
Net Proceeds from Asset Sales that are not applied or invested as provided in Section 4.10(b)
hereof shall constitute “Excess Proceeds.” 
When the aggregate amount of Excess Proceeds exceeds $15.0 million,
within ten Business Days thereof, the Company shall make an Asset Sale Offer to
all Holders and if the Company elects (or is required by the terms of such
other pari passu Indebtedness),
all holders of other Indebtedness that is pari
passu with the Notes.  The
offer price in any Asset Sale Offer shall be equal to 100% of the principal
amount plus accrued and unpaid interest, if any, to the date of purchase (or,
in respect of any pari passu Indebtedness,
such lesser price, if any, as may be provided for by its terms), and shall be
payable in cash.  If any Excess Proceeds
remain after consummation of an Asset Sale Offer, the Company may use such
Excess Proceeds for any purpose not otherwise prohibited by this Indenture.  If the aggregate principal amount of Notes
and such other pari passu
Indebtedness tendered in such Asset Sale Offer exceeds the amount of Excess
Proceeds, the Trustee shall select the Notes and such other pari passu Indebtedness to be purchased on
a pro rata basis.  Upon completion of
each Asset Sale Offer, the amount of Excess Proceeds shall be reset at zero.

 

(d)           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 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 or Section 4.10 of this Indenture, the
Company shall comply with the

 

64

 

applicable
securities laws and regulations and shall not be deemed to have breached its
obligations under Section 3.09 or this Section 4.10 by virtue of such
compliance.

 

Section 4.11.        Transactions
with Affiliates.

 

(a)           The
Company shall not, and shall not permit any of its Restricted Subsidiaries to,
make any payment to, or sell, lease, transfer or otherwise dispose of any of
its properties or assets to, or purchase any property or assets from, or enter
into or make or amend any transaction, contract, agreement, understanding,
loan, advance or Guarantee with, or for the benefit of, any Affiliate of the Company involving aggregate consideration
in excess of $5.0 million (each of the foregoing, an “Affiliate
Transaction”), unless (i) such Affiliate Transaction is on terms that,
taken as a whole, 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 an
unrelated Person and (ii) the Company delivers to the Trustee
(A) with respect to any Affiliate Transaction or series of related Affiliate
Transactions involving aggregate consideration in excess of $10.0 million, a resolution of the Board of
Directors set forth in an Officer’s Certificate certifying that such Affiliate
Transaction complies with clause (i) above and that such Affiliate
Transaction has been approved by a majority of the Board of Directors of the Company and (B) with
respect to any Affiliate Transaction or series of related Affiliate
Transactions involving aggregate consideration in excess of $20.0 million, an
opinion as to the fairness to Company or
such Restricted Subsidiary of such Affiliate Transaction from a
financial point of view issued by an accounting, appraisal or investment
banking firm of national standing.

 

(b)           The
following items shall not be deemed to be Affiliate Transactions and,
therefore, shall not be subject to the provisions of Section 4.11(a):

 

(i)            transactions with customers, suppliers, contractors, joint venture partners or
purchasers or sellers of goods or services, in each case in the ordinary
course of business (including, without limitation, pursuant to joint venture
agreements) and otherwise in accordance with the terms of this Indenture which
are fair to the Company, in the reasonable determination of the Board of
Directors of the Company or the senior management of the Company and are on
terms at least as favorable as might reasonably have been obtained at such time
from an unaffiliated party;

 

(ii)           any employment
agreement, stock option or other compensation agreement or employee benefit plan, officer or director indemnification agreement
or any similar arrangement entered into by the Company or any of its Restricted
Subsidiaries in the ordinary course of business and payments or the issuance of securities thereunder;

 

(iii)          transactions between or
among the Company and/or its Restricted Subsidiaries;

 

(iv)          transactions with a Person (other than an Unrestricted Subsidiary of the
Company) that is an Affiliate of the Company solely because the

 

65

 

Company owns, directly or
through a Restricted Subsidiary, an Equity Interest in, or controls, such
Person;

 

(v)           payment of reasonable directors’ fees;

 

(vi)          any issuance of Equity Interests (other than Disqualified Stock) of the
Company to Affiliates of the Company;

 

(vii)         loans (or cancellation of loans) or advances to employees in the ordinary
course of business;

 

(viii)        sales or other transfers
or dispositions of accounts receivable and other related assets customarily
transferred in an asset securitization transaction involving accounts
receivable to a Receivables Subsidiary in a Qualified Receivables Transaction,
and acquisitions of Permitted Investments in connection with a Qualified
Receivables Transaction;

 

(ix)           Permitted Investments or Restricted Payments that do not violate the provisions of Section 4.07;

 

(x)            the existence of, or the performance by the
Company or any Restricted Subsidiary of their obligations under the terms of,
any stockholders agreement, partnership agreement or limited liability company
agreement (including any registration rights agreement or purchase agreement
related thereto) to which it is a part as of the Effective 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 Effective Date
will only be permitted by this clause (x) to the extent that the terms of any
such amendment or new agreement, taken as a whole, are not materially
disadvantageous to the Holders of the Notes, as determined in good faith by the
Board of Directors of the Company or the senior management of the Company;

 

(xi)           any management, financial advisory, financing, underwriting or placement
services or any other investment banking, banking or similar services involving
the Company and any of its Restricted Subsidiaries (including, without
limitation, any payments in cash, Equity Interests or other consideration made
by the Company or any of its Restricted Subsidiaries in connection therewith)
on the one hand and the Permitted Holders on the other hand, which services
(and payments and other transactions in connection therewith) are approved by a
majority of the members of the Board of Directors of the Company in good faith;

 

(xii)          the issuance of Equity Interests (other than Disqualified Stock) in the
Company or any Restricted Subsidiary for compensation purposes;

 

66

 

(xiii)         the issuance of any Subordinated Shareholder Funding;

 

(xiv)        intellectual property licenses between or among the Company and/or any
Subsidiary of the Company in the ordinary course of business;

 

(xv)         tax sharing arrangements (including the Tax Sharing Agreement);

 

(xvi)        the issuance or sale of any Capital Stock by the Company; and

 

(xvii)       Existing Indebtedness and any other obligations pursuant to an agreement
existing on the Effective Date, including any amendment thereto (so long as
such amendment is not disadvantageous to the Holders of the Notes in any
material respect).

 

Section 4.12.        Liens.

 

The Company shall not,
and shall not permit any of its Restricted Subsidiaries to, directly or
indirectly, create, incur, assume or suffer to exist any Lien against or upon
any of the Collateral or any proceeds therefrom or assign or convey any right
to receive income therefrom for purposes of security, except Collateral
Permitted Liens.

 

Section 4.13.        Offer
to Purchase Upon a Change of Control.

 

(a)           Upon
the occurrence of a Change of Control and subject to Section 3.07(c), each
Holder shall have the right to require the Company to make an offer (a “Change
of Control Offer”) to repurchase all or any part (equal to $1,000 or an
integral multiple of $1,000) of that Holder’s Notes at a purchase price equal
to 101% of the aggregate principal amount thereof plus accrued and unpaid
interest, if any, on the Notes repurchased to the date of purchase subject to
the rights of Holders on the relevant record date to receive interest due on
the relevant interest payment date, (the “Change of Control Payment”). Within
30 days following any Change of Control, the Company shall mail a notice to
each Holder, with a copy to the Trustee, describing the transaction or
transactions that constitute the Change of Control and stating:

 

(i)            that
the Change of Control Offer is being made pursuant to this Section 4.13
and that all Notes tendered shall be accepted for payment;

 

(ii)           the
purchase price and the purchase date, which shall be no earlier than 30 days
and no later than 60 days from the date such notice is mailed (the “Change of
Control Payment Date”);

 

(iii)          that
any Note not tendered shall continue to accrue interest;

 

(iv)          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 shall
cease to accrue interest after the Change of Control Payment Date;

 

67

 

(v)           that
Holders electing to have any Notes purchased pursuant to a Change of Control
Offer shall 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;

 

(vi)          that
Holders shall 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;

 

(vii)         that
Holders whose Notes are being purchased only in part shall be issued new Notes
equal in principal amount to the unpurchased portion of the Notes surrendered,
which unpurchased portion must be equal to $1,000 in principal amount or an
integral multiple thereof; and

 

(viii)        that
Holders electing to have a Note purchased pursuant to a Change of Control Offer
may elect to have Notes purchased in integral multiples of $1,000 only.

 

(b)           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 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 4.13, the Company shall
comply with the applicable securities laws and regulations and shall not be
deemed to have breached its obligations under this Section 4.13 by virtue
of such compliance.

 

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

 

(i)            accept
for payment all Notes or portions of Notes properly tendered pursuant to the
Change of Control Offer;

 

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

 

(iii)          deliver
or cause to be delivered to 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)           The
Paying Agent shall promptly mail to each Holder of Notes properly tendered the
Change of Control Payment for such Notes, and the Trustee shall promptly
authenticate and mail (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.  The Company shall
publicly

 

68

 

announce the
results of the Change of Control Offer on or as soon as practicable after the
Change of Control Payment Date.

 

(e)           Prior
to complying with any of the provisions of this Section 4.13, but in any
event within 90 days following a Change of Control, the Company shall either
repay all its outstanding Senior Debt or obtain the requisite consents, if any,
under all agreements governing its outstanding Senior Debt to permit the
repurchase of Notes required by this Section 4.13.

 

(f)            The
Change of Control provisions described above will be applicable whether or not
any other provisions of this Indenture are applicable.  Except as described above with respect to a
Change of Control, this Indenture does not contain provisions that permit the
Holders of the Notes to require that the Company repurchase or redeem the Notes
in the event of a takeover, recapitalization, leveraged buy out or similar
transaction which is not a Change of Control.

 

(g)           Notwithstanding
anything to the contrary in this Section 4.13, the Company shall not be
required to make a Change of Control Offer upon a Change of Control if (i) a
third party makes the Change of Control Offer in the manner, at the times and
otherwise in compliance with the requirements set forth in this Section 4.13
and purchases all Notes validly tendered and not withdrawn under the Change of
Control Offer or (ii) notice of redemption has been given pursuant to Section 3.07
of this Indenture unless and until there is a Default in payment of the
applicable redemption price.

 

Section 4.14.        Corporate
Existence.

 

Subject to Section 4.13
and Article 5 hereof, as the case may be, the Company shall do or cause to
be done all things necessary to preserve and keep in full force and effect its
corporate existence and the corporate, partnership or other existence of each
of its Restricted Subsidiaries in accordance with the respective organizational
documents (as the same may be amended from time to time) of the Company or any
such Restricted Subsidiary and the rights (charter and statutory), licenses and
franchises of the Company and its Restricted Subsidiaries; provided that
the Company shall not be required to preserve any such right, license or franchise,
or the corporate, partnership or other existence of any of its Restricted
Subsidiaries, if the Board of Directors of the Company shall determine that the
preservation thereof is no longer desirable in the conduct of the business of
the Company and its Restricted Subsidiaries, taken as a whole, and that the
loss thereof is not adverse in any material respect to the Holders of the
Notes.

 

Section 4.15.        Business
Activities.

 

The Company shall not,
and shall not permit any Restricted Subsidiary to engage in any business other
than Permitted Businesses,
except to such extent as would not be material to the Company and its
Restricted Subsidiaries taken as a whole.

 

Section 4.16.        No
Layering of Debt.

 

Notwithstanding the
provisions of Section 4.09 hereof, (a) the Company shall not incur,
create, issue, assume, guarantee or otherwise become liable for any
Indebtedness that is contractually subordinate or junior in right of payment to
any Senior Debt and senior in any respect in right of payment to the Notes, and
(b) no Guarantor shall incur, create, issue, assume,

 

69

 

guarantee or
otherwise become liable for any Indebtedness that is contractually subordinate
or junior in right of payment to Senior Debt of such Guarantor and senior in
any respect in right of payment to such Guarantor’s  Note Guarantee.  No such
Indebtedness will be considered to be senior by virtue of being secured on a
first or junior priority basis and Indebtedness that is not guaranteed by a particular
Person shall not be deemed to be subordinate or junior to Indebtedness that is
so guaranteed solely because it is not so guaranteed.

 

Section 4.17.        Additional Note Guarantees.

 

If
(a) the Company or any of its Restricted Subsidiaries acquires or creates
another Subsidiary after the date of this Indenture that guarantees
Indebtedness under the Congress Credit Facility or (b) any Subsidiary of the
Company or any of its Restricted Subsidiaries existing as of the date hereof
becomes a guarantor of Indebtedness under the Congress Credit Facility, then
such newly acquired or created Subsidiary or such Subsidiary guarantor of
Indebtedness under the Congress Credit Facility, as the case may be, shall
become a Guarantor and execute a Note Guarantee, the form of which is attached
as Exhibit B, pursuant to a supplemental indenture, the form of which is
attached as Exhibit C, and deliver an Opinion of Counsel in form and
substance satisfactory to the Trustee within 30 Business Days of the date on
which it was acquired or created.

 

ARTICLE 5

SUCCESSORS

 

Section 5.01.        Merger,
Consolidation of Sale of Assets.

 

(a)           The
Company shall not consolidate or merge with or into (whether or not the Company
is the surviving corporation), or sell, assign, transfer, lease, convey or
otherwise dispose of all or substantially all of the properties or assets of the Company and its Restricted
Subsidiaries, taken as a whole, in one or more related transactions, to
another Person unless (i) either the
Company is the surviving Person 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 an entity organized or
existing under the laws of the United States, any state of the United States or
the District of Columbia; (ii) the Person formed by or surviving any such
consolidation or merger (if other than the Company) or the Person to which such
sale, assignment, transfer, lease, conveyance or other disposition has been made assumes all the
obligations of the Company under the Notes and this Indenture pursuant to agreements reasonably satisfactory to
the Trustee; (iii) immediately after such transaction no Default or Event of
Default exists; and (iv) except in the case of a merger of the Company with or
into a Wholly Owned Subsidiary of the Company (other than a Receivables
Subsidiary), the Company 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 has been made at the time of such
transaction and after giving pro forma effect thereto as if such transaction
had occurred at the beginning of the applicable four-quarter period, would (i)
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) or (ii) have
a Fixed Charge Coverage Ratio that is greater than the actual Fixed Charge
Coverage Ratio of the Company immediately prior to such transaction.

 

70

 

 

(b)           Section 5.01(a)
will not prohibit (A) a merger of the Company into a Wholly Owned
Subsidiary of the Company created for the purpose of holding the Capital Stock
of the Company, (B) any consolidation or merger, or any sale, assignment,
transfer, conveyance, lease or other disposition of assets between or among the
Company and its Restricted Subsidiaries (C) a merger between the Company
and an Affiliate incorporated solely for the purpose of reincorporating the
Company in another State of the United States, (D) any merger of a Restricted Subsidiary into the Company or (E)
transfers of accounts receivable and related assets of the type specified in
the definition of Qualified Receivables Transaction (or a fractional undivided
interest therein) by a Receivables Subsidiary in a Qualified Receivables
Transaction, so long as, in each case, the amount of Indebtedness of the
Company and its Restricted Subsidiaries,
taken as a whole, is not increased thereby.

 

Section 5.02.        Successor
Corporation Substituted.

 

Upon any consolidation or
merger, or any sale, assignment, transfer, lease, conveyance or other
disposition of all or substantially all of the assets of the 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, assignment,
transfer, merger, sale, lease, conveyance or other disposition, the provisions
of this Indenture or the Notes referring to the “Company” shall refer instead
to the successor Person and not to the Company), and shall exercise every right
and power of the Company under this Indenture and the Notes with the same
effect as if such successor Person had been named as the Company herein; provided, however, that the predecessor
Company, if any, shall not be relieved from the obligation to pay the principal
of and interest on the Notes except in the case of a sale of all or
substantially all of the properties or assets of the Company and its Restricted
Subsidiaries taken as whole 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.

 

Each of the following
constitutes an “Event of Default”:

 

(i)            default
for 30 days in the payment when due of interest on the Notes;

 

(ii)           default
in payment when due (at maturity, upon redemption or otherwise) of principal of
or premium, if any, on the Notes;

 

(iii)          failure
by the Company or any of its Restricted Subsidiaries for 30 days after notice
by the Trustee or by the Holders of at least 25% in principal amount of the
Notes then outstanding voting as a single
class to comply with the provisions described under Section 4.07, Section 4.09,
Section 4.10 or Section 4.13;

 

71

 

(iv)          failure
by the Company or any of its Restricted Subsidiaries for 60 days after notice
to the Company by the Trustee or the Holders of at least a majority in
principal amount of the then outstanding voting as a single class to comply with any other agreement in this
Indenture or the Notes;

 

(v)           default
under any mortgage, indenture or instrument under which there may be issued or
by which there may be secured or evidenced any Indebtedness for money borrowed
by the Company or any of its Significant Subsidiaries (or the payment of which
is guaranteed by the Company or any of its Significant Subsidiaries) whether
such Indebtedness or Guarantee now exists, or is created after the Issue Date,
which default (a) is caused by a failure to pay principal of such Indebtedness
after giving effect to any grace period provided in such Indebtedness on the
date of such default (a “Payment Default”) or (b) results in the
acceleration of such Indebtedness prior to its stated maturity and, in each
case, the principal amount of any such Indebtedness, together with the
principal amount of any other such Indebtedness under which there has been a
Payment Default or the maturity of which has been so accelerated, aggregates
$25.0 million or more;

 

(vi)          failure
by the Company or any of its Subsidiaries to pay final, non-appealable
judgments aggregating in excess of $25.0 million (net of any amounts covered by
a reputable and credit worthy insurance company that has not contested coverage
or reserved rights with respect to an underlying claim), which judgments are
not paid, discharged, waived or stayed for a period of more than 60 consecutive
days after such judgments become final and non-appealable;

 

(vii)         the
Company or any of its Restricted Subsidiaries that is a Significant Subsidiary
pursuant to or within the meaning of any Bankruptcy Law:

 

(A)          commences
a voluntary case;

 

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

 

(C)           consents
to the appointment of a Custodian of it or for all or substantially all of its
property; or

 

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

 

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

 

(A)          is
for relief against the Company or any of its Restricted Subsidiaries that is a
Significant Subsidiary in an involuntary case;

 

72

 

(B)           appoints
a Custodian of the Company or any of its Restricted Subsidiaries that is a
Significant Subsidiary for all or substantially all of the property of the
Company or any of its Restricted Subsidiaries that is a Significant Subsidiary;
or

 

(C)           orders
the liquidation of the Company or any of its Restricted Subsidiaries that is a
Significant Subsidiary;

 

and the order or decree remains unstayed and in effect
for 60 consecutive days;

 

(ix)           except
as permitted herein, any Note Guarantee is held to be unenforceable or invalid
by any final and non-appealable judgment or decree or ceases for any reason to
be in full force and effect or any Guarantor that is a Significant Subsidiary,
or any Person acting on behalf of any Guarantor that is a Significant
Subsidiary, denies or disaffirms such Guarantor’s obligations under its Note
Guarantee and such Default continues for 10 days after receipt of the notice
specified in this Indenture; or

 

(x)            except
as permitted herein, any Security Document or any security interest granted
thereby is held to be unenforceable or invalid by any final and non-appealable
judgment or decree or ceases for any reason to be in full force and effect and
such Default continues for 10 days after receipt of the notice specified in
this Indenture, or the Company or any Guarantor that is a Significant
Subsidiary, or any Person acting on behalf of such Person, denies or disaffirms
the Company’s or such Guarantor’s obligations under any Security Document.

 

The term “Custodian”
means any receiver, trustee, assignee, liquidator or similar official under any
Bankruptcy Law.

 

Section 6.02.        Acceleration.

 

In the case of an Event
of Default specified in clause (vii) or (viii) of Section 6.01 hereof, all
outstanding Notes shall 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 25% in aggregate principal amount of the
then outstanding Notes may declare all the Notes to be due and payable
immediately; provided that so long as any Indebtedness permitted to be
incurred pursuant to the Credit Facilities is outstanding, such acceleration
shall not be effective until the earlier of (a) the acceleration of such
Indebtedness under the Credit Facilities or (b) five Business Days after
receipt by the Company of written notice of such acceleration.  Holders of the Notes may not enforce this Indenture
or the Notes except as provided in this Indenture.

 

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 or waive any
existing Default or Event of Default and its consequences if the rescission
would not conflict

 

73

 

with any judgment or decree and if all existing Events
of Default (except nonpayment of principal, interest or premium that has become
due solely because of the acceleration) have been cured or waived.

 

Section 6.03.        Other
Remedies.

 

(a)           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, interest
on the Notes or to enforce the performance of any provision of the Notes or
this Indenture.

 

(b)           The
Trustee may maintain a proceeding even if it does not possess any of the Notes
or does not produce any of them in the proceeding.  A delay or omission by the Trustee or any
Holder of a Note in exercising any right or remedy accruing upon an Event of
Default shall not impair the right or remedy or constitute a waiver of or
acquiescence in the Event of Default. 
All remedies are cumulative to the extent permitted by law.

 

Section 6.04.        Waiver
of Past Defaults.

 

Holders of 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, 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.

 

Section 6.05.        Control
by Majority.

 

The Holders of a majority
in 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 power conferred on it.  However, (i) 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, and (ii) the
Trustee may take any other action deemed proper by the Trustee which is not
inconsistent with such direction.

 

Section 6.06.        Limitation
on Suits.

 

A Holder of a Note may
pursue a remedy with respect to this Indenture, the Notes or the Note
Guarantees only if:

 

(i)            the
Holder of a Note gives to the Trustee written notice of a continuing Event of
Default;

 

74

 

(ii)           the
Holders of at least 25% in aggregate principal amount of the then outstanding
Notes make a written request to the Trustee to pursue the remedy;

 

(iii)          such
Holder of a Note or Holders of Notes offer and, if requested, provide to the
Trustee reasonable security or indemnity against any loss, liability or
expense;

 

(iv)          the
Trustee does not comply with the request within 60 days after receipt of the
request and the offer and, if requested, the provision of security or
indemnity; and

 

(v)           during
such 60-day period the Holders of a majority in aggregate principal amount of
the then outstanding Notes do not give the Trustee a direction inconsistent
with the request.

 

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

 

Section 6.07.        Rights
of Holders of Notes to Receive Payment.

 

Notwithstanding any other
provision of this Indenture, the right of any Holder of a Note to receive
payment of principal, premium, if any, and interest on such Note, on or after
the respective due dates expressed in such 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(i) or (ii) 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 and each Guarantor 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 proceeding 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 securities or 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

 

75

 

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 pursuant to this Article 6, it shall pay out the money 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, expense 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, 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 the extent the Trustee collects any amount pursuant to Article 12
from the Guarantors, to such Guarantors, or to such party as a court of
competent jurisdiction shall direct.

 

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, 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 principal amount of the then
outstanding Notes.

 

76

 

ARTICLE 7

TRUSTEE

 

Section 7.01.        Duties
of Trustee.

 

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

 

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

 

(i)            the
duties of the Trustee shall be determined solely by the express provisions of
this Indenture and the Trustee need perform only those duties that are
specifically set forth in this Indenture and no others, and no implied
covenants or obligations shall be read into this Indenture against the Trustee;
and

 

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

 

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

 

(i)            this
Section 7.01(c) does not limit the effect of Section 7.01(b);

 

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

 

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

 

(d)           Whether
or not therein expressly so provided, every provision of this Indenture that in
any way relates to the Trustee is subject to paragraphs (a), (b), (c) and
(e) of this Section 7.01.

 

(e)           No
provision of this Indenture shall require the Trustee to expend or risk its own
funds or incur any liability.

 

(f)            The
Trustee shall not be liable for interest on any money received by it except as
the Trustee may agree in writing with the Company.  Money held in trust by the Trustee need not
be segregated from other funds except to the extent required by law.

 

77

 

Section 7.02.        Rights
of Trustee.

 

(a)           The
Trustee may conclusively rely on the truth of the statements and correctness of
the opinions contained in, and shall be protected from 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 shall not be liable for any action it takes or omits to take
in good faith in reliance on such Officer’s Certificate or Opinion of
Counsel.  The Trustee may consult with
counsel and the written advice of such counsel or any Opinion of Counsel shall
be full and complete authorization and protection from liability in respect of
any action taken, suffered or omitted by it hereunder in good faith and in
reliance thereon.

 

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

 

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

 

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

 

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

 

(g)           The
Trustee shall not be deemed to have notice of any Default or Event of Default
unless a Responsible Officer of the Trustee has actual knowledge thereof or
unless written notice of any event which is in fact such a default is received
by the Trustee at the Corporate Trust Office of the Trustee, and such notice
references the Notes and this Indenture.

 

(h)           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.

 

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, the Guarantors or any Affiliate of the
Company or the Guarantors 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 or resign.  Any Agent may
do the same with like rights and duties. 
The Trustee is also subject to Section 7.10 and Section 7.11
hereof.

 

78

 

Section 7.04.        Trustee’s
Disclaimer.

 

The Trustee shall not be
responsible for and makes no representation as to the validity or adequacy of
this Indenture, the Notes or the Note Guarantees, 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 shall not be responsible for the use or application of any money received by
any Paying Agent other than the Trustee, and it shall not be responsible for
any statement or recital herein or any statement in the Notes or any other
document in connection with the sale of the Notes or pursuant to this Indenture
other than its certificate of authentication.

 

Section 7.05.        Notice
of Defaults.

 

If a Default or Event of
Default occurs and is continuing and if it is known to the Trustee, the Trustee
shall mail to Holders of Notes a notice of the Default or Event of Default
within 90 days after it occurs.  Except
in the case of a Default or Event of Default in payment on any Note pursuant to
Section 6.01(i) or (ii) hereof, the Trustee may withhold the notice if and
so long as a committee of its Responsible Officers in good faith determines that
withholding the notice is in the interests of the Holders of the Notes.

 

Section 7.06.        Reports
by Trustee to Holders of the Notes.

 

Within 60 days after each
May 15 beginning with the May 15 following the date of this Indenture, and for
so long as Notes remain outstanding, the Trustee shall mail to the Holders of
the Notes a brief report dated as of such reporting date that complies with TIA
Section 313(a) as if it were applicable to this Indenture (but if no event
described in TIA Section 313(a) has occurred within the twelve months
preceding the reporting date, no such report need be transmitted).  The Trustee also shall comply with TIA Section 313(b)
and transmit by mail all reports as required by TIA Section 313(c), as if
TIA Section 313(b) and TIA Section 313(c) were applicable to this
Indenture.  The Company shall promptly
notify the Trustee when the Notes are listed on any stock exchange and of any
delisting thereof.

 

Section 7.07.        Compensation
and Indemnity.

 

(a)           The
Company shall pay to the Trustee from time to time reasonable compensation for
its acceptance of this Indenture and services hereunder.  To the extent permitted by law, the Trustee’s
compensation shall not be limited by any law on compensation of a trustee of an
express trust.  The Company shall
reimburse the Trustee promptly upon request for all reasonable disbursements,
advances and expenses incurred or made by it in addition to the compensation
for its services.  Such expenses shall
include the reasonable compensation, disbursements and expenses of the Trustee’s
agents and counsel.

 

(b)           The
Company and the Guarantors, jointly and severally, shall indemnify the Trustee
against any and all losses, liabilities 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
against the Company and the Guarantors (including this Section 7.07) and
defending itself against any claim (whether asserted by the Company and the
Guarantors or any Holder or any other person) or liability in connection with
the exercise or

 

79

 

performance of any
of its powers or duties hereunder except to the extent any such loss, liability
or expense may be attributable to its negligence, willful misconduct or bad
faith.  The Trustee shall notify the
Company and the Guarantors promptly of any claim for which it may seek
indemnity.  Failure by the Trustee to so
notify the Company and the Guarantors shall not relieve the Company or the
Guarantors of their obligations hereunder. 
The Company and the Guarantors shall defend the claim and the Trustee
shall cooperate in the defense.  The
Trustee may have separate counsel and the Company and the Guarantors shall pay
the reasonable fees and expenses of such counsel.  The Company and the Guarantors need not pay
for any settlement made without their consent, which consent shall not be
unreasonably withheld.

 

(c)           The
obligations of the Company and the Guarantors under this Section 7.07
shall survive the satisfaction and discharge of this Indenture.  To secure the Company’s and the Guarantors’
payment obligations in this Section 7.07, the Trustee shall have a Lien
prior to the Notes on all money or property held or collected by the Trustee,
except that held in trust to pay principal and interest on particular
Notes.  Such Lien shall survive the
satisfaction and discharge of this Indenture.

 

(d)           When
the Trustee incurs expenses or renders services after an Event of Default
specified in Section 6.01(vii) or (viii) hereof occurs, the expenses and
the compensation for the services (including the fees and expenses of its
agents and counsel) are intended to constitute expenses of administration under
any Bankruptcy Law.

 

Section 7.08.        Replacement
of Trustee.

 

(a)           A
resignation or removal of the Trustee and appointment of a successor Trustee
shall become effective only upon the successor Trustee’s acceptance of
appointment as provided in this Section 7.08.

 

(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 principal amount of the then outstanding
Notes may remove the Trustee by so notifying the Trustee and the Company in
writing.  The Company may remove the
Trustee if:

 

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

 

(ii)           the
Trustee is adjudged bankrupt or insolvent or an order for relief is entered
with respect to the Trustee under any Bankruptcy Law;

 

(iii)          a
Custodian or public officer takes charge of the Trustee or its property; or

 

(iv)          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 shall promptly appoint a successor
Trustee.  Within one year after the
successor Trustee takes office, the Holders of a majority in principal amount
of the then outstanding Notes may appoint a successor Trustee to replace the
successor Trustee appointed by the Company.

 

80

 

(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 principal amount of the then outstanding Notes may
petition any court of competent jurisdiction for the appointment of a successor
Trustee.

 

(e)           If
the Trustee, after written request by any Holder of a Note who has been a
Holder of a Note for at least six months, fails to comply with Section 7.10
hereof, such Holder of a Note may petition any court of competent jurisdiction
for the removal of the Trustee and the appointment of a successor Trustee.  A successor Trustee shall deliver a written
acceptance of its appointment to the retiring Trustee and to the Company.  Thereupon, the resignation or removal of the
retiring Trustee shall become effective, and the successor Trustee shall have
all the rights, powers and the duties of the Trustee under this Indenture.  The successor Trustee shall mail a notice of
its succession to the Holders of the Notes. 
The retiring Trustee shall promptly transfer all property held by it as
Trustee to the successor Trustee, provided that 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 shall continue for the benefit of the retiring
Trustee.

 

Section 7.09.        Successor
Trustee by Merger, Etc.

 

If the Trustee or any
Agent consolidates, merges or converts into, or transfers all or substantially
all of its corporate trust business to, another corporation, the successor
corporation without any further act shall be the successor Trustee or any
Agent, as applicable.

 

Section 7.10.        Eligibility;
Disqualification.

 

(a)           There
shall at all times be a Trustee hereunder that is a corporation organized and
doing business under the laws of the United States of America or of any state
thereof that is authorized under such laws to exercise corporate trustee power,
that is subject to supervision or examination by federal or state authorities
and that has a combined capital and surplus of at least $100.0 million as set
forth in its most recent annual report of condition.

 

(b)           This
Indenture shall always have a Trustee that satisfies the requirements of TIA Section 310(a)(1),
(2) and (5), as if such provisions were applicable to this Indenture.  The Trustee shall comply with TIA Section 310(b)
as if it were applicable to this Indenture; provided, however,
that for purposes of this Indenture, all references in TIA Section 310(b)
to actions by or application to the Commission shall be deemed deleted; and provided, further, that there shall be
excluded from the operation of TIA Section 310(b)(1) any indenture or
indentures under which other securities or certificates of interest or
participation in other securities of the Company are outstanding if the
requirements for such exclusion set forth in TIA Section 310(b)(1) are
met.

 

Section 7.11.        Preferential
Collection of Claims Against the Company.

 

The Trustee shall comply
with TIA Section 311(a) as if it were applicable to this Indenture,
excluding any creditor relationship listed in TIA Section 311(b).  A Trustee who has resigned or been removed
shall comply with the requirements of TIA Section 311(a) to the extent
indicated therein, as if they were applicable to this Indenture.

 

81

 

ARTICLE 8

LEGAL DEFEASANCE AND COVENANT DEFEASANCE

 

Section 8.01.        Option
to Effect Legal Defeasance or Covenant Defeasance.

 

The Company may, at any
time, elect to have either Section 8.02 or Section 8.03 hereof be
applied to all outstanding Notes and all obligations of the Guarantors with
respect to the Note Guarantees then outstanding 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 shall, subject to the satisfaction of
the conditions set forth in Section 8.04 hereof, be deemed to have been
discharged from their respective obligations with respect to all Notes and the
Note Guarantees then outstanding on the date the conditions set forth below are
satisfied (“Legal Defeasance”).  For this
purpose, Legal Defeasance means that the Company and each Guarantor shall be
deemed to have paid and discharged the entire Indebtedness represented by the
Notes and the Note Guarantees outstanding, which shall thereafter be deemed to
be “outstanding” only for the purposes of Section 8.05 and the other
Sections of this Indenture referred to in (i) and (ii) below, and to have satisfied
all their respective other obligations under such Notes, the Note 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:  (i) the
rights of Holders of outstanding Notes to receive payments in respect of the
principal amount, premium, if any, and interest on such Notes when such
payments are due from the trust referred to in Section 8.04; (ii) the
Company’s obligations with respect to such Notes under Section 2.03, Section 2.04,
Section 2.05, Section 2.08, Section 2.09, Section 2.12 and Section 4.02
hereof; (iii) the rights, powers, trusts, duties and immunities of the
Trustee hereunder and the Company’s and the Guarantors’ obligations in
connection therewith; and (iv) the provisions of this Section 8.02.  Subject to compliance with this Section 8.02,
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 the Guarantors shall, subject to the satisfaction of the
conditions set forth in Section 8.04 hereof, be released from their
respective obligations under the covenants contained in Article 5 and in Section 4.03,
Section 4.05, Section 4.07, Section 4.08, Section 4.09, Section 4.10,
Section 4.11, Section 4.12, Section 4.13, Section 4.15, Section 4.16,
Section 4.17 and Section 12.01 hereof with respect to the outstanding
Notes and the Note Guarantees on and after the date the conditions set forth in
Section 8.04 are satisfied (hereinafter, “Covenant Defeasance”), and the
Notes shall thereafter be deemed not “outstanding” for the purposes of any
direction, waiver, consent or declaration or act of Holders (and the
consequences of any thereof) in connection with such covenants, but shall
continue to be deemed “outstanding” for all other purposes hereunder (it being
understood that such Notes shall not be deemed outstanding for

 

82

 

accounting
purposes).  For this purpose, Covenant
Defeasance means that, with respect to the outstanding Notes and the Note
Guarantees, the Company and the Guarantors may omit to comply with and shall
have no liability in respect of any term, condition or limitation set forth in
any such covenant, whether directly or indirectly, by reason of any reference
elsewhere herein to any such covenant or by reason of any reference in any such
covenant to any other provision herein or in any other document and such
omission to comply shall not constitute a Default or an Event of Default under Section 6.01
hereof, but, except as specified above, the remainder of this Indenture and
such Notes and the Note Guarantees shall 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, Section 6.01(iii) through (v) hereof and, to the extent relating
to a Significant Subsidiary, Section 6.01(vii) and Section 6.01(viii)
shall not constitute Events of Default.

 

Section 8.04.        Conditions
to Legal or Covenant Defeasance.

 

The following shall be
the conditions to the application of either Section 8.02 or Section 8.03
hereof to the outstanding Notes and the Note Guarantees:

 

In order to exercise
either Legal Defeasance or Covenant Defeasance:

 

(i)            the
Company must irrevocably deposit with the Trustee, in trust, for the benefit of
the Holders of the Notes, cash in U.S. dollars, non-callable Government
Securities, or a combination thereof, in such amounts as shall be sufficient,
in the opinion of a nationally recognized investment bank, appraisal firm or
firm of independent public accountants, to pay the principal amount of,
premium, if any, and interest on the outstanding Notes on the stated date for
payment thereof or on the applicable redemption date, as the case may be, and
the Company must specify whether the Notes are being defeased to such stated
date for payment or to a particular redemption date;

 

(ii)           in
the case of Legal Defeasance, the Company shall have delivered to the Trustee
an Opinion of Counsel reasonably acceptable to the Trustee confirming that
(A) the Company has received from, or there has been published by, the
Internal Revenue Service a ruling or (B) since the 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,
subject to customary assumptions and exclusions, the Holders of the outstanding
Notes shall not recognize income, gain or loss for federal income tax purposes
as a result of such Legal Defeasance and shall 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;

 

(iii)          in
the case of Covenant Defeasance, the Company shall have delivered to the
Trustee an Opinion of Counsel reasonably acceptable to the Trustee confirming
that, subject to customary assumptions and exclusions, the

 

83

 

Holders of the outstanding Notes shall not recognize
income, gain or loss for federal income tax purposes as a result of such
Covenant Defeasance and shall 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;

 

(iv)          such
Legal Defeasance or Covenant Defeasance shall not result in a breach or
violation of, or constitute a default under any material agreement (including,
without limitation, the Congress Credit Facility) or instrument (other than
this Indenture) to which the Company or any of its Subsidiaries is a party or
by which the Company or any of its Subsidiaries is bound;

 

(v)           the
Company shall have delivered 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 Notes over the other creditors of the Company with the intent of
defeating, hindering, delaying or defrauding creditors of the Company or
others; and

 

(vi)          the
Company shall have delivered to the Trustee an Officer’s Certificate and an
Opinion of Counsel, each stating that all conditions precedent provided for
relating to the Legal Defeasance or the Covenant Defeasance have been complied
with.

 

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

 

(a)           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 then outstanding Notes
shall be held in trust and applied by the Trustee, in accordance with the
provisions of such Notes and this Indenture, to the payment, either directly or
through any Paying Agent (including the 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.

 

(b)           The
Company shall 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.

 

(c)           Anything
in this Article 8 to the contrary notwithstanding, the Trustee shall
deliver or pay to the Company from time to time at the Company’s request any
money or non-callable Government Securities held by it as provided in Section 8.04
hereof which, in the opinion of a nationally recognized investment bank,
appraisal firm or firm of independent public accountants expressed in a written
certification thereof delivered to the Trustee (which may be the opinion

 

84

 

delivered under
clause (i) of Section 8.04 hereof), are in excess of the amount thereof
that would then be required to be deposited to effect an equivalent Legal
Defeasance or Covenant Defeasance.

 

Section 8.06.        Repayment
to the Company.

 

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 one year after such principal, and premium, if any, or
interest, if any, have become due and payable shall be paid to the Company on
its request or (if then held by the Company) shall be discharged from such
trust; and the Holder of such Note shall 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, shall 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 shall
not be less than 30 days from the date of such notification or publication, any
unclaimed balance of such money then remaining shall be repaid to the Company.

 

Section 8.07.        Reinstatement.

 

If the Trustee or Paying
Agent is unable to apply any United States dollars or non-callable Government
Securities in accordance with Section 8.02 hereof or Section 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 obligations of the Company and the Guarantors under this
Indenture, and the Notes and the Note Guarantees shall be revived and
reinstated as though no deposit had occurred pursuant to Section 8.02
hereof or Section 8.03 hereof, as the case may be, until such time as the
Trustee or Paying Agent is permitted to apply all such money in accordance with
Section 8.02 hereof or Section 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 shall be subrogated to the rights of the Holders of
such Notes to receive such payment from the cash or Government Securities held
by the Trustee or Paying Agent.

 

ARTICLE 9

AMENDMENT, SUPPLEMENT AND WAIVER

 

Section 9.01.        Without
Consent of Holders of the Notes.

 

(a)           Notwithstanding
Section 9.02 of this Indenture, without the consent of any Holder of
Notes, the Company, the Guarantors and the Trustee may amend or supplement this
Indenture, the Notes or the Note Guarantees:

 

(i)            to
cure any ambiguity, defect or inconsistency;

 

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

 

85

 

(iii)          to
provide for the assumption of the Company’s or a Guarantor’s obligations to the
Holders of the Notes in the case of a merger, or consolidation pursuant to Article 5
or Section 12.03 hereof;

 

(iv)          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 Holder of the Notes;

 

(v)           to
provide for the issuance of Additional Notes as permitted by Section 2.18;
or

 

(vi)          to
allow any Guarantor to execute a supplemental indenture and/or a Note Guarantee
with respect to the Notes.

 

(b)           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(b)
hereof, the Trustee shall 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 shall not be
obligated to enter into such amended or supplemental indenture that affects its
own rights, duties or immunities under this Indenture or otherwise.

 

Section 9.02.        With
Consent of Holders of Notes.

 

(a)           Except
as provided below in this Section 9.02, this Indenture, the Notes and the
Note Guarantees issued hereunder may be amended or supplemented with the
consent of the Holders of at least a majority in aggregate principal amount of
the Notes then outstanding (including, without limitation, consents obtained in
connection with a purchase of, or a tender offer or exchange offer for, Notes),
and, subject to Section 6.04 and Section 6.07 hereof, any existing
Default or Event of Default (other than a Default or Event of Default in the
payment of the principal of, premium, or interest on the Notes, except a
payment default resulting from an acceleration that has been rescinded) or
compliance with any provision of this Indenture, the Notes or the Note
Guarantees may be waived with the consent of the Holders of a majority in
principal amount of the then outstanding Notes (including, without limitation,
consents obtained in connection with a purchase of, or a tender offer or
exchange offer for, Notes).

 

(b)           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(b) hereof, the
Trustee shall 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 rights, duties or immunities under this
Indenture or otherwise, in which case the Trustee may, but shall not be
obligated to, enter into such amended or supplemental indenture.

 

86

 

(c)           It
shall not be necessary for the consent of the Holders of Notes under this Section 9.02
to approve the particular form of any proposed amendment or waiver, but it
shall be sufficient if such consent approves the substance thereof.  After an amendment, supplement or waiver
under this Section 9.02 becomes effective, the Company shall mail to the
Holders of each Note affected thereby a notice briefly describing the
amendment, supplement or waiver.  Any
failure of the Company to mail such notice, or any defect therein, shall not,
however, in any way impair or affect the validity of any such amended or
supplemental indenture or waiver.

 

(d)           Subject
to Section 6.04 and Section 6.07 hereof, the Holders of a majority in
aggregate principal amount of the Notes then outstanding, voting as a single
class, may amend or waive compliance in a particular instance by the Company or
the Guarantors with any provision of this Indenture or the Notes or the Note
Guarantees.  However, without the consent
of each Holder affected, an amendment, or waiver may not (with respect to any
Note held by a non-consenting Holder):

 

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

 

(ii)           reduce
the principal of or change the fixed maturity of any Notes or alter the
provisions with respect to the redemption of the Notes (other than provisions
relating to Section 3.09, Section 4.10 and Section 4.13 hereof);

 

(iii)          reduce
the rate of or change the time for payment of interest on any Note;

 

(iv)          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);

 

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

 

(vi)          make
any change in Section 6.04 or Section 6.07 hereof;

 

(vii)         waive
a redemption or repurchase payment with respect to any Note (other than a
payment required by Section 3.09, Section 4.10 or Section 4.13
hereof);

 

(viii)        except
as otherwise permitted herein, release any Guarantor from any of its
obligations under its Note Guarantee or this Indenture, or amend the provisions
herein relating to the release of any Guarantor; or

 

(ix)           make
any change in the amendment and waiver provisions of this Article 9.

 

87

 

Section 9.03.        Revocation
and Effect of Consents.

 

(a)           Until
an amendment, supplement or waiver becomes effective, a consent to it by a
Holder of a Note is a continuing consent by the Holder 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.

 

(b)           However,
any such Holder or subsequent Holder of a Note may revoke the consent as to its
Note if the Trustee receives written notice of revocation before the date the
waiver, supplement or amendment becomes effective.  When an amendment, supplement or waiver
becomes effective in accordance with its terms, it thereafter binds every
Holder.

 

Section 9.04.        Notation
on or Exchange of Notes.

 

(a)           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
authenticate new Notes that reflect the amendment, supplement or waiver.

 

(b)           Failure
to make the appropriate notation or issue a new Note shall not affect the
validity and effect of such amendment, supplement or waiver.

 

Section 9.05.        Trustee
to Sign Amendments, Etc.

 

The Trustee shall 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. 
The Company and the Guarantors may not sign an amendment or supplemental
indenture until their respective Board of Directors approves it.  In executing any amended or supplemental
indenture the Trustee shall be entitled to receive and (subject to Section 7.01
hereof) shall be fully protected in relying upon 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

SUBORDINATION

 

Section 10.01.      Agreement
to Subordinate.

 

The Company agrees, and
each Holder of Notes by accepting a Note agrees, that all Obligations evidenced
by the Notes are subordinated in right of payment, to the extent and in the
manner provided in this Article 10, to the prior payment in full in cash
of all Senior Debt (whether outstanding on the Effective Date or created,
incurred, assumed or guaranteed thereafter), and that the subordination is for
the benefit of the holders of Senior Debt of the Company.

 

Section 10.02.      Liquidation;
Dissolution; Bankruptcy.

 

The holders of Senior
Debt of the Company will be entitled to receive payment in full in cash of all
Obligations due in respect of such Senior Debt (including interest after the

 

88

 

commencement of
any bankruptcy proceeding at the rate that would be applicable under the terms
of the documentation governing the applicable Senior Debt and other reasonable
fees, costs or charges provided for under the applicable Senior Debt which
would accrue and become due under the terms of the applicable Senior Debt but
for the commencement of any case in bankruptcy, in each case as to such
interest or other amounts whether or not allowed or allowable in whole or in
part in such case) before the Holders of Notes will be entitled to receive any
payment (by setoff or otherwise) with respect to the Notes:

 

(a)   in
a liquidation or dissolution of the Company;

 

(b)   in
a bankruptcy, reorganization, insolvency, receivership or similar proceeding
relating to the Company or its property;

 

(c)   in
an assignment for the benefit of the Company’s creditors; or

 

(d)   in
any marshaling of the Company’s assets and liabilities,

 

and, if any of the
foregoing shall have occurred, until all Obligations with respect to Senior
Debt are paid in full in cash, any payment or distribution to which the Holders
of Notes would be entitled shall be made to the holders of Senior Debt (except
that Holders of Notes may receive and retain Permitted Junior Securities and
payments made from any trust created pursuant to Section 8.04 or Article 13
hereof).

 

Section 10.03.      Default
On Designated Senior Debt.

 

(a)           The
Company shall not make any payment (by setoff or otherwise) in respect of the
Notes (except in Permitted Junior Securities or from the trust created pursuant
to Section 8.04 or Article 13 hereof) if (i) a default in the
payment of the principal or premium, if any, or interest on Designated Senior
Debt occurs and is continuing beyond any applicable grace period or (ii) any
other default occurs and is continuing with respect to Designated Senior Debt
that permits holders of the Designated Senior Debt to accelerate its maturity,
and the Trustee receives a notice of such default (a “Payment Blockage Notice”)
from the holders of any Designated Senior Debt or any agent or trustee for such
holders.  Payments on the Notes may and
shall be resumed (a) in the case of a payment default, upon the date on which
such default is cured or waived and (b) in case of a nonpayment default, the
earlier of the date on which such nonpayment default is cured or waived or 179
days after the date on which the applicable Payment Blockage Notice is
received, unless a payment default has occurred and is continuing (as a result
of the maturity of any Designated Senior Debt having been accelerated).  No new period of payment blockage (other than
for a payment default) may be commenced unless and until (i) 360 days have
elapsed since the effectiveness of the immediately prior Payment Blockage
Notice and (ii) all scheduled payments of principal, premium, if any, and
interest on the Notes that have come due have been paid in full in cash.  No nonpayment default that existed or was
continuing on the date of delivery of any Payment Blockage Notice to the
Trustee shall be, or be made, the basis for a subsequent Payment Blockage
Notice unless such default shall have been cured or waived for a period of not
less than 90 days.

 

(b)           Whenever
the Company is prohibited from making any payment in respect of the Notes, the
Company also shall be prohibited from making, directly or indirectly, any
payment of

 

89

 

any kind on
account of the purchase or other acquisition of the Notes.  If any Holder receives any payment or
distribution that such Holder is not entitled to receive with respect to the
Notes, such Holder shall be required to pay the same over to the holders of
Designated Senior Debt or, in the event there are not any such holders, to the holders
of Senior Debt, or any representative of such holders under the indenture or
other agreement (if any) pursuant to which such Designated Senior Debt or
Senior Debt, as the case may be, may have been issued (the “Representative”).

 

Section 10.04.      Acceleration
of Notes.

 

If payment of the Notes
is accelerated because of an Event of Default, the Company shall promptly
notify holders of Senior Debt of the acceleration.

 

Section 10.05.      When
Distribution Must Be Paid Over.

 

(a)           In
the event that the Trustee or any Holder of a Note receives any payment
(including a payment by a Guarantor under its Note Guarantee) of any
Obligations with respect to the Notes (other than Permitted Junior Securities
and payments made from any trust created pursuant to Section 8.04 or Article 13
hereof) at a time when the Trustee or such Holder, as applicable, has actual
knowledge that such payment is prohibited by Section 10.03 hereof, such
payment shall be held by the Trustee or such Holder, in trust for the benefit
of, and shall be paid forthwith over and delivered, upon written request, to,
the holders of Designated Senior Debt or, in the event there are not any such
holders, to the holders of Senior Debt, in each case as their interests may
appear, or their respective Representative, as their respective interests may
appear, for application to the payment of all Obligations with respect to such
Designated Senior Debt or such Senior Debt, as the case may be, remaining
unpaid to the extent necessary to pay such Obligations in full in accordance
with their terms, after giving effect to any concurrent payment or distribution
to or for the holders of such Designated Senior Debt or such Senior Debt, as
the case may be.

 

(b)           With
respect to the holders of Designated Senior Debt and Senior Debt, the Trustee
undertakes to perform only such obligations on the part of the Trustee as are
specifically set forth in this Article 10, and no implied covenants or
obligations with respect to the holders of Designated Senior Debt or Senior
Debt shall be read into this Indenture against the Trustee.  The Trustee shall not be deemed to owe any
fiduciary duty to the holders of Designated Senior Debt or Senior Debt and
shall not be liable to any such holders if the Trustee shall pay over or
distribute to or on behalf of Holders of the Notes or the Company or any other
Person money or assets to which any holders of Designated Senior Debt or Senior
Debt shall be entitled by virtue of this Article 10, except if such
payment is made as a result of the willful misconduct or gross negligence of
the Trustee.

 

Section 10.06.      Notice
by the Company.

 

The Company shall
promptly notify the Trustee and the Paying Agent of any facts known to the
Company that would cause a payment of any Obligations with respect to the Notes
to violate this Article 10, but failure to give such notice shall not
affect the subordination of the Notes to the Senior Debt as provided in this Article 10.

 

90

 

Section 10.07.      Subrogation.

 

After all Senior Debt is
paid in full in cash and all commitments to make loans under such Senior Debt
have been terminated and until the Notes are paid in full, Holders of the Notes
shall be subrogated (equally and ratably with all other Indebtedness pari passu with the Notes) to the rights
of holders of Senior Debt to receive distributions applicable to Senior Debt to
the extent that distributions otherwise payable to the Holders of the Notes
have been applied to the payment of Senior Debt.  A distribution made under this Article 10
to holders of Senior Debt that otherwise would have been made to Holders of the
Notes is not, as between the Company and Holders of the Notes, a payment by the
Company on the Notes.

 

Section 10.08.      Relative
Rights.

 

(a)           This
Article 10 defines the relative rights of Holders of the Notes and holders
of Senior Debt.  Nothing in this
Indenture shall:

 

(i)            impair,
as between the Company and Holders of the Notes, the obligations of the
Company, which are absolute and unconditional, to pay principal of and interest
on the Notes in accordance with their terms;

 

(ii)           affect
the relative rights of Holders of the Notes and creditors of the Company other
than their rights in relation to holders of Senior Debt; or

 

(iii)          prevent
the Trustee or any Holder of the Notes from exercising its available remedies
upon a Default or Event of Default, subject to the rights of holders of Senior
Debt to receive distributions and payments otherwise payable to Holders of the
Notes.

 

(b)           If
the Company fails because of this Article 10 to pay principal of or
interest on a Note on the due date, the failure is still a Default or Event of
Default.

 

Section 10.09.      Subordination
May Not Be Impaired by the Company.

 

No
right of any holder of Senior Debt to enforce the subordination of the
Indebtedness evidenced by the Notes shall be impaired by any act or failure to
act by the Company, any Subsidiary of the Company, the Trustee or any Holder or
by the failure of the Company, any Subsidiary of the Company, the Trustee or
any Holder to comply with this Indenture.

 

Section 10.10.      Distribution
or Notice of Representative.

 

(a)           Whenever
a distribution is to be made or a notice given to holders of Designated Senior
Debt or Senior Debt, as the case may be, the distribution may be made and the
notice given to the Representative of such holders.

 

(b)           Upon
any payment or distribution of assets of the Company referred to in this Article 10,
the Trustee and the Holders of the Notes shall be entitled to rely upon any
order or decree made by any court of competent jurisdiction or upon any
certificate of such Representative or of the liquidating trustee or agent or
other Person making any distribution to the Trustee or to the

 

91

 

Holders of the Notes
for the purpose of ascertaining the Persons entitled to participate in such
distribution, the holders of the Senior Debt and other Indebtedness of the
Company, the amount thereof or payable thereon, the amount or amounts paid or
distributed thereon and all other facts pertinent thereto or to this Article 10.

 

Section 10.11.      Rights
of Trustee and Paying Agent.

 

(a)           Notwithstanding
the provisions of this Article 10 or any other provision of this
Indenture, the Trustee shall not be charged with knowledge of the existence of
any facts that would prohibit the making of any payment or distribution by the
Trustee, and the Trustee and the Paying Agent may continue to make payments on
the Notes, unless the Trustee shall have received at its Corporate Trust Office
at least three Business Days prior to the date of such payment written notice
of facts that would cause the payment of any Obligations with respect to the
Notes to violate this Article 10. 
Only the Company or a Representative may give the notice.  Nothing in this Article 10 shall impair
or subordinate the claims of or payments to, the Trustee under or pursuant to Section 7.07
hereof.

 

(b)           The
Trustee in its individual or any other capacity may hold Senior Debt with the
same rights it would have if it were not Trustee.  Any Agent may do the same with like rights.

 

Section 10.12.      Authorization
to Effect Subordination.

 

Each Holder of a Note by
the Holder’s acceptance thereof authorizes and directs the Trustee on the
Holder’s behalf to take such action as may be necessary or appropriate to
effectuate the subordination as provided in this Article 10, and appoints
the Trustee to act as the Holder’s attorney-in-fact for any and all such
purposes.  If the Trustee does not file a
proper proof of claim or proof of debt in the form required in any proceeding
referred to in Section 6.09 hereof at least 30 days before the expiration
of the time of such claim, the Representatives of the Designated Senior Debt,
including the Credit Agent, are hereby authorized to file an appropriate claim
for and on behalf of the Holders of the Notes.

 

Section 10.13.      Amendments.

 

Any amendment to the
provisions of this Article 10 shall require the consent of (a) the
Holders of a majority in principal amount of the then outstanding Notes if such
amendment would adversely affect the rights of the Holders of Notes and (b) the
holders of Senior Debt if such amendment would adversely affect the rights of
the holders of such Senior Debt then outstanding (or any group or
representative thereof authorized to give such consent).

 

Section 10.14.      Reliance
by Holders of Senior Debt on Subordination Provisions.

 

Each Holder by accepting
a Note acknowledges and agrees that the foregoing subordination provisions are,
and are intended to be, an inducement and a consideration to each holder of any
Senior Debt, whether such Senior Debt was created or acquired before or after
the issuance of the Notes, to acquire and continue to hold, or to continue to
hold, such Senior Debt and such holder of such Senior Debt shall be deemed
conclusively to have relied on such subordination provisions in acquiring and
continuing to hold, or in continuing to hold, such Senior Debt.

 

92

 

ARTICLE 11

COLLATERAL AND SECURITY

 

Section 11.01.      Security
Documents.

 

The due and punctual
payment of the principal of and 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 and interest on the Notes and performance of all other obligations
of the Company and the Guarantors to the Holders or the Trustee under this
Indenture, the Notes and the Note Guarantees, according to the terms hereunder
or thereunder, are secured as provided in the Security Documents which the
Company and the Guarantors have entered into prior to and simultaneously with
the execution of this Indenture, subject to the terms of the Intercreditor
Agreement.  Each Holder, by its
acceptance thereof, consents and agrees to the terms of the Security Documents
and the Intercreditor Agreement (including the provisions providing for
foreclosure and release of Collateral) as the same may be in effect or may be
amended from time to time in accordance with the terms thereof and authorizes
and directs the Collateral Agent to enter into the Security Documents and the
Intercreditor Agreement and other documents referenced in the Intercreditor
Agreement in connection therewith, confirms and ratifies each prior entry by
the Collateral Agent into any Security Documents and the Intercreditor
Agreement executed prior to the date hereof, and authorizes and directs the
Collateral Agent to perform its obligations and exercise its rights thereunder
in accordance therewith.  The Company and
the Guarantors shall deliver to the Trustee (if it is not itself then the
Collateral Agent) copies of all documents delivered to the Collateral Agent
pursuant to the Security Documents, and will do or cause to be done all such
acts and things as may be required by the next sentence of this Section 11.01,
to assure and confirm to the Trustee and the Collateral Agent the security
interest in the Collateral contemplated hereby, by the Security Documents or
any part thereof, as from time to time constituted, so as to render the same
available for the security and benefit of this Indenture and of the Notes
secured hereby, according to the intent and purposes herein expressed.  Each of the Company and the Guarantors shall
take, and shall cause the Restricted Subsidiaries to take, any and all actions
reasonably required to cause the Security Documents to create and maintain, as
security for the Obligations of the Company and the Guarantors hereunder, a
valid and enforceable perfected second-priority Lien and security interest in
and on all the Collateral, in favor of the Collateral Agent for the benefit of
the Holders, second in priority (subject to Collateral Permitted Liens) to any
and all security interests at any time granted in the Collateral to secure the
First-Lien Obligations.

 

Section 11.02.      Release
of Collateral.

 

(a)           Subject
to paragraphs (b), (c) and (d) of this Section 11.02, Collateral may be
released from the Lien and security interest created by the Security Documents
at any time or from time to time in accordance with the provisions of the
Security Documents, the Intercreditor Agreement, or as provided hereby.  Whether prior to or after the Discharge of
First-Lien Obligations, upon the request of the Company pursuant to an Officer’s
Certificate certifying that all conditions precedent hereunder have been met
and without the consent of any Holder, the Company and the Guarantors will be
entitled to releases of assets included in the Collateral from the Liens securing
the Notes under any one or more of the following circumstances:

 

93

 

(i)            if
all other Liens on that asset securing Obligations under First-Lien Obligations
and any Other Second-Lien Obligations then secured by that asset (including all
commitments thereunder) are released; provided, that after giving effect to the
release, obligations secured by the first-priority Liens on the remaining
Collateral remain outstanding;

 

(ii)           to
enable the Company or Guarantors to consummate any sale, lease, conveyance or
other disposition of any assets or rights permitted or not prohibited under Section 4.10
hereof;

 

(iii)          if
the Company or any Guarantor, as the case may be, provides substitute
collateral with at least an equivalent fair value, as determined in good faith
by its Board of Directors;

 

(iv)          in
respect of assets subject to a Lien securing purchase money Indebtedness
permitted under Section 4.09(b) hereof;

 

(v)           if
any Guarantor is released from its Note Guarantee, any of its assets comprising
Collateral will also be released;

 

(vi)          in
respect of assets included in the Collateral with a fair value, as determined
in good faith by the Board of Directors, of up to $2.0 million in any calendar year, subject to a cumulative carryover
for any amount not used in any prior calendar year; or

 

(vii)         pursuant
to an amendment, waiver or supplement in accordance with Article 9 hereof.

 

Upon receipt of
such Officer’s Certificate, the Collateral Agent shall execute, deliver or acknowledge
any necessary or proper instruments of termination, satisfaction or release to
evidence the release of any Collateral permitted to be released pursuant to
this Indenture or the Security Documents.

 

(b)           Except
as otherwise provided in the Intercreditor Agreement, no Collateral may be
released from the Lien and security interest created by the Security Documents
pursuant to the provisions of the Security Documents unless the Officer’s
Certificate required by this Section 11.02 has been delivered to the
Collateral Agent.

 

(c)           At
any time when a Default or Event of Default has occurred and is continuing and
the maturity of the Notes has been accelerated (whether by declaration or
otherwise) and the Trustee has delivered a notice of acceleration to the Collateral
Agent, no release of Collateral pursuant to the provisions of the Security
Documents will be effective as against the Holders, except as otherwise
provided in the Intercreditor Agreement.

 

Section 11.03.      Certificates
of the Trustee.

 

In the event that the
Company or any Guarantor wishes to release Collateral in accordance with the
Security Documents at a time when the Trustee is not itself also the

 

94

 

Collateral Agent
and has delivered the certificates and documents required by the Security
Documents and Section 11.02 hereof, the Trustee will determine whether it
has received all documentation required hereunder in connection with such
release and, based on such determination, will deliver a certificate to the
Collateral Agent setting forth such determination.

 

Section 11.04.      Authorization
of Actions to Be Taken by the Trustee Under the Security Documents.

 

Subject to the provisions
of Section 7.01 and Section 7.02 hereof and the Intercreditor Agreement,
the Trustee may, in its sole discretion and without the consent of the Holders,
direct, on behalf of the Holders, the Collateral Agent to, take all actions it
deems necessary or appropriate in
order to:

 

(a)           enforce
any of the terms of the Security Documents; and

 

(b)           collect
and receive any and all amounts payable in respect of the Obligations of the
Company hereunder.

 

Subject to the provisions
of the Intercreditor Agreement, the Trustee will have power to institute and
maintain such suits and proceedings as it may deem expedient to prevent any
impairment of the Collateral by any acts that may be unlawful or in violation
of the Security Documents or this Indenture, and such suits and proceedings as
the Trustee may deem expedient to preserve or protect its interests and the
interests of the Holders in the Collateral (including power to institute and
maintain suits or proceedings to restrain the enforcement of or compliance with
any legislative or other governmental enactment, rule or order that may be unconstitutional
or otherwise invalid if the enforcement of, or compliance with, such enactment,
rule or order would impair the security interest hereunder or be prejudicial to
the interests of the Holders or of the Trustee).

 

Section 11.05.      Authorization
of Receipt of Funds by the Trustee Under the Security Documents.

 

The Trustee is authorized
to receive any funds for the benefit of the Holders distributed under the
Security Documents and the Intercreditor Agreement, and to make further
distributions of such funds to the Holders according to the provisions of this
Indenture.

 

Section 11.06.      Termination
of Security Interest.

 

The Trustee will, at the
request of the Company, deliver a certificate to the Collateral Agent stating
that the Obligations under the Transaction Documents have been paid in full,
and instruct the Collateral Agent to release the Liens pursuant to this
Indenture and the Security Documents upon (a) payment in full of the principal
of and accrued and unpaid interest on the Notes and all other Obligations under
the Transaction Documents that are due and payable at or prior to the time such
principal and accrued and unpaid interest are paid, (b) satisfaction and
discharge of this Indenture as described in Article 8 or (c) legal
defeasance or covenant defeasance as described in Article 8.  Upon receipt of such instruction, the
Collateral Agent shall execute, deliver or acknowledge any necessary or proper
instruments of termination, satisfaction or release to evidence the release of
all such Liens.

 

95

 

 

Section 11.07.      Collateral
Agent.

 

(a)           The Trustee shall act as Collateral
Agent and shall be authorized to appoint co-Collateral Agents as necessary in
its sole discretion. Except as otherwise explicitly provided herein or in the
Security Documents, neither the Collateral Agent nor any of its respective
officers, directors, employees or agents shall be liable for failure to demand,
collect or realize upon any of the Collateral or for any delay in doing so or
shall be under any obligation to sell or otherwise dispose of any Collateral
upon the request of any other Person or to take any other action whatsoever
with regard to the Collateral or any part thereof.  The Collateral Agent shall be accountable
only for amounts that it actually receives as a result of the exercise of such
powers, and neither the Collateral Agent nor any of its officers, directors,
employees or agents shall be responsible for any act or failure to act
hereunder, except for its own willful misconduct, negligence or bad faith.

 

(b)           The Trustee, as Collateral Agent, is
authorized and directed to (i) enter into the Security Documents, (ii) enter
into the Intercreditor Agreement, (iii) bind the Holders on the terms as
set forth in the Security Documents and the Intercreditor Agreement and (iv) perform
and observe its obligations under the Security Documents and the Intercreditor
Agreement.

 

(c)           If the Company (i) incurs
Indebtedness constituting Senior Debt at any time when no Intercreditor
Agreement is in effect or at any time when Indebtedness constituting First-Lien
Obligations entitled to the benefit of an existing Intercreditor Agreement is
concurrently retired, and (ii) delivers to the Collateral Agent an Officer’s
Certificate so stating and designating such Senior Debt as First-Lien Obligations
and requesting the Collateral Agent to enter into an Intercreditor Agreement in
favor of a designated agent or representative for the holders of the
Indebtedness so incurred, the Collateral Agent shall (and is hereby authorized
and directed to) enter into such Intercreditor Agreement and other documents
referenced in the Intercreditor Agreement in connection therewith, bind the
Holders on the terms set forth therein, and perform and observe its obligations
thereunder.

 

(d)           If (i) the Company at any time
incurs any Indebtedness constituting Other Second-Lien Obligations, (ii) the
indenture or agreement governing such Indebtedness provides that,
notwithstanding the date, manner or order of grant, attachment or perfection of
any Liens granted to the Collateral Agent under the Security Documents (the “Liens
Securing Note Obligations”) or granted to the holders of Other Second-Lien
Obligations or any agent or representative for the holders of Other Second-Lien
Obligations (the “Liens Securing Other Second-Lien Obligations”), the Liens
Securing Note Obligations and the Liens Securing Other Second-Lien Obligations
shall be of equal dignity, priority and rank, (iii) the Company delivers
to the Collateral Agent an Officer’s Certificate so stating and requesting that
the Collateral Agent serve as collateral agent and enter into security
documents with respect thereto and (iv) the Company delivers to the
Collateral Agent an Opinion of Counsel stating that, in the opinion of such
counsel, the Collateral Agent is empowered and obligated (on substantially the
terms applicable to the Collateral Agent pursuant to the Indenture Documents)
to hold the Liens Securing Note Obligations and all Liens Securing Other-Second
Lien Obligations and all proceeds of all such Liens for the equal and ratable
benefit of the holders of all Obligations secured thereby, giving effect to the
assignment or transfer requested in such Officer’s Certificate, then (A) the
Liens Securing Note Obligations shall be of equal dignity, priority and rank
with all such Liens 

 

96

 

Securing Other
Second-Lien Obligations and (B) the Collateral Agent shall enter into such
security documents as requested in such Officer’s Certificate.

 

Section 11.08.      Designations.

 

For purposes of the provisions hereof and the
Intercreditor Agreement requiring the Company to designate Indebtedness for the
purposes of the terms “First-Lien Obligations,” “Other Second-Lien Obligations”
or any other such designations hereunder or under the Intercreditor Agreement,
any such designation shall be sufficient if the relevant designation is set
forth in writing, signed on behalf of the Company by an Officer and delivered
to the Trustee, the Collateral Agent and the Credit Agent.

 

ARTICLE 12

NOTE GUARANTEES

 

Section 12.01.      Note
Guarantees.

 

(a)           Subject to Section 12.05 hereof,
each Guarantor hereby 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 and the Obligations of the Company hereunder and
thereunder, that:  (i) the principal
of, premium, if any, and interest on the Notes will be promptly paid in full
when due, subject to any applicable grace period, whether at maturity, by
acceleration, redemption or otherwise, and interest on the overdue principal,
premium, if any, (to the extent permitted by law) and interest on any interest,
if any, on the Notes, and all other payment Obligations of the Company to the
Holders or the Trustee hereunder or thereunder will be promptly paid in full
and performed, all in accordance with the terms hereof and thereof; and (ii) in
case of any extension of time of payment or renewal of any Notes or any of such
other Obligations, the same will be promptly paid in full when due or performed
in accordance with the terms of the extension or renewal, subject to any
applicable grace period, whether at stated maturity, by acceleration, redemption
or otherwise.  Failing payment when so
due of any amount so guaranteed for whatever reason each Guarantor will be
obligated to pay the same immediately. 
An Event of Default under this Indenture or the Notes shall constitute
an event of default under the Note Guarantees, and shall entitle the Holders to
accelerate the Obligations of the Guarantors hereunder in the same manner and
to the same extent as the Obligations of the Company.

 

(b)           Each Guarantor hereby agrees that its
Obligations hereunder shall be unconditional, irrespective of the validity,
regularity or enforceability of the Notes or this Indenture or by release in
accordance with the provisions of this Indenture, the absence of any action to
enforce the same, any waiver or consent by any Holder 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 which might otherwise
constitute a legal or equitable discharge or defense of such Guarantor.  Each Guarantor hereby waives diligence,
presentment, demand of payment, filing of claims with a court in the event of
insolvency or bankruptcy of the Company, any right to require a proceeding
first against the Company, protest, notice and all demands whatsoever and
covenants that its Note Guarantee will not be discharged except by complete
performance of the Obligations contained in the Notes and this Indenture.  If any Holder or the Trustee is required 

 

97

 

by any court or
otherwise to return to the Company, the Guarantors, or any Note 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, the Note Guarantees, to the extent theretofore discharged, shall be
reinstated in full force and effect. 
Each Guarantor agrees that it shall not be entitled to, and hereby
waives, any right of subrogation in relation to the Holders in respect of any
Obligations guaranteed hereby.

 

(c)           Each Guarantor further agrees that,
as between such Guarantor, on the one hand, and the Holders and the Trustee, on
the other hand, (i) the maturity of the Obligations guaranteed hereby may
be accelerated as provided in Article 6 for the purposes of the Note
Guarantees, notwithstanding any stay, injunction or other prohibition
preventing such acceleration in respect of the Obligations guaranteed hereby,
and (ii) in the event of any declaration of acceleration of such
Obligations as provided in Article 6 hereof, such Obligations (whether or
not due and payable) shall forthwith become due and payable by the Guarantors
for the purpose of the Note Guarantees.

 

(d)           The Guarantors shall have the right
to seek contribution from any non-paying Guarantor so long as the exercise of
such right does not impair the rights of the Holders under the Note Guarantee.

 

Section 12.02.      Execution
and Delivery of the Note Guarantees.

 

(a)           To evidence the Note Guarantees set
forth in Section 12.01, each Guarantor hereby agrees that a notation of
its Note Guarantee substantially in the form of Exhibit B shall be
endorsed by an Officer of such Guarantor on each Note authenticated and
delivered by the Trustee and that this Indenture shall be executed on behalf of
such Guarantor, by manual or facsimile signature,  by an Officer of
such Guarantor.

 

(b)           Each Guarantor hereby agrees that its
Note Guarantee set forth in Section 12.01 shall remain in full force and
effect notwithstanding any failure to endorse on each Note a notation of such
Note Guarantee.

 

(c)           If an Officer whose signature is on
this Indenture or on a Note Guarantee no longer holds that office at the time
the Trustee authenticates the Note on which such Note Guarantee is endorsed,
the Note Guarantee shall be valid nevertheless.

 

(d)           The delivery of any Note by the
Trustee, after the authentication thereof hereunder, shall constitute due
delivery of the Note Guarantees set forth in this Indenture on behalf of the
Guarantors.

 

(e)           In the event that the Company or any
of its Restricted Subsidiaries creates or acquires any Subsidiary after the
date of this Indenture, if required by Section 4.17 hereof, the Company
shall cause such Subsidiary to comply with the provisions of Section 4.17
hereof and this Article 12, to the extent applicable.

 

98

 

Section 12.03.      Guarantors
May Consolidate, etc., on Certain Terms

 

(a)           Except as set forth in Article 4
and Article 5 hereof, nothing contained in this Indenture shall prohibit
any consolidation or merger of a Guarantor with or into the Company or another
Guarantor, or shall prevent any sale or conveyance of the property of a
Guarantor as an entirety or substantially as an entirety to the Company or
another Guarantor.

 

(b)           Subject to Section 12.04 hereof,
no Guarantor may consolidate with or merge with or into (whether or not the
Guarantor is the surviving Person) another corporation, Person or entity
whether or not affiliated with the Guarantor unless, subject to the provisions
of the following paragraph, (i) the Person formed by or surviving any such
consolidation or merger (if other than the Guarantor) assumes all the
obligations of the Guarantor pursuant to a supplemental indenture in form and
substance reasonably satisfactory to the Trustee, under this Indenture and the
Note Guarantee; and (ii) immediately after giving effect to such
transaction, no Default or Event of Default exists.

 

(c)           In the case of any such
consolidation, merger, sale or conveyance and upon the assumption by the
successor Person, by supplemental indenture, executed and delivered to the
Trustee and in a form reasonably satisfactory to the Trustee, of the Note
Guarantee endorsed upon the Notes and the due and punctual performance of all
of the covenants and conditions of this Indenture to be performed by the
Guarantor, such successor Person shall succeed to and be substituted for the
Guarantor with the same effect as if it had been named herein as a
Guarantor.  Such successor Person
thereupon may cause to be signed the Note Guarantee to be endorsed upon all of
the Notes issuable hereunder which theretofore shall not have been signed by
the Company and delivered to the Trustee. 
Any Note Guarantee so issued shall in all respects have the same legal
rank and benefit under this Indenture as the Note Guarantee theretofore and
thereafter issued in accordance with the terms of this Indenture as though such
Note Guarantee had been issued at the date of the execution hereof.

 

Section 12.04.      Releases
of Note Guarantees.

 

The Note Guarantee of each Guarantor shall be
released:

 

(i)                                     in connection with any sale 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 (either
before or after giving effect to such transaction) the Company or a Restricted
Subsidiary of the Company, if the sale or other disposition does not violate Section 4.10
hereof;

 

(ii)                                  in connection with any sale or other
disposition of all of the Capital Stock of that Guarantor to a Person that is
not (either before or after giving effect to such transaction) the Company or a
Restricted Subsidiary of the Company, if the sale or other disposition does not
violate Section 4.10 hereof;

 

(iii)                               if the Company designates any Restricted
Subsidiary that is a Guarantor to be an Unrestricted Subsidiary;

 

99

 

(iv)                              if that Guarantor is released from its
Guarantee under the Black Canyon Credit Facility;

 

(v)                                 if that Guarantor is designated as a
Non-Guarantor Subsidiary in accordance with the definition of Non-Guarantor
Subsidiary; or

 

(vi)                              upon legal defeasance in accordance with Article 8
hereof or satisfaction and discharge in accordance with Article 13 hereof.

 

If any Guarantor is released from its Note Guarantee,
any of its Subsidiaries that are Guarantors shall be released from their Note
Guarantees, if any.

 

Section 12.05.      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
Note Guarantee of each Guarantor not constitute a fraudulent transfer or
conveyance for purposes of Bankruptcy Law, the Uniform Fraudulent Conveyance
Act, the Uniform Fraudulent Transfer Act or any similar federal or state law to
the extent applicable to such Note Guarantee. 
To effectuate the foregoing intention, the Trustee, the Holders and the
Guarantors hereby irrevocably agree that the obligations of each Guarantor
shall be limited to the maximum amount that shall, 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 12, result in the obligations of such Guarantor under its
Note Guarantee not constituting a fraudulent transfer or conveyance.

 

Section 12.06.      “Trustee”
to Include Paying Agent.

 

In case at any time any Paying Agent other than the
Trustee shall have been appointed by the Company and be then acting hereunder,
the term “Trustee” as used in this Article 12 shall in each case (unless
the context shall otherwise require) be construed as extending to and including
such Paying Agent within its meaning as fully and for all intents and purposes
as if such Paying Agent were named in this Article 12 in place of the
Trustee.

 

Section 12.07.      Subordination
of Note Guarantees.

 

The Obligations of each Guarantor under its Note
Guarantee pursuant to this Article 12 shall be junior and subordinated to
the Senior Debt of such Guarantor on the same basis as the Notes are junior and
subordinated to the Senior Debt of the Company. 
For the purposes of the foregoing sentence, the Trustee and the Holders
shall have the right to receive and/or retain payments by any of the Guarantors
only at such times as they may receive and/or retain payments in respect of the
Notes pursuant to this Indenture, including Article 12 hereof.

 

100

 

ARTICLE 13

SATISFACTION AND DISCHARGE

 

Section 13.01.      Satisfaction
and Discharge.

 

(a)           This Indenture shall be discharged
and shall cease to be of further effect as to all Notes issued hereunder, when:

 

(i)                                     either:

 

(A)                              all Notes that have been authenticated,
except lost, stolen or destroyed Notes that have been replaced or paid and
Notes for which payment money has theretofore been deposited in trust and
thereafter repaid to the Company, have been delivered to the Trustee for
cancellation; or

 

(B)                                all Notes that have not been delivered to
the Trustee for cancellation have become due and payable by reason of the
mailing of a notice of redemption or otherwise or shall become due and payable
within one year and the Company or any Guarantor has irrevocably deposited or
caused to be deposited with the Trustee as trust funds in trust solely for the
benefit of the Holders, cash in U.S. dollars, non-callable Government
Securities, or a combination of cash in U.S. dollars and non- callable
Government Securities, in amounts as shall be sufficient, without consideration
of any reinvestment of interest, to pay and discharge the entire Indebtedness
on the Notes not delivered to the Trustee for cancellation for principal,
premium, if any, and accrued interest to the date of maturity or redemption;

 

(ii)                                  no Default or Event of Default has
occurred and is continuing on the date of the deposit (other than a Default or
Event of Default resulting from the borrowing of funds to be applied to such
deposit) and the deposit shall not result in a breach or violation of, or
constitute a default under, any other instrument to which the Company or any
Guarantor is a party or by which the Company or any Guarantor is bound;

 

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

 

(iv)                              the Company has delivered irrevocable
instructions to the Trustee under this Indenture to apply the deposited money
toward the payment of the Notes at maturity or on the redemption date, as the
case may be.

 

(b)           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.

 

101

 

(c)           Notwithstanding the satisfaction and
discharge of this Indenture, if money has been deposited with the Trustee
pursuant to clause (B) of Section 13.01(a), the provisions of Section 13.02
and Section 8.06 shall survive.  In
addition, nothing in this Section 13.01 shall be deemed to discharge those
provisions of Section 7.07 hereof, that, by their terms, survive the
satisfaction and discharge of this Indenture.

 

Section 13.02.      Application
of Trust Money.

 

(a)           Subject to the provisions of Section 8.06
hereof, all money deposited with the Trustee pursuant to Section 13.01
hereof shall be held in trust and applied by it, in accordance with the
provisions of the Notes and this Indenture, to the payment, either directly or
through any Paying Agent (including the 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.

 

(b)           To the extent that and so long as the
Trustee or Paying Agent is unable to apply any money or Government Securities
in accordance with Section 13.01 hereof by reason of any legal proceeding
or by reason of any order or judgment of any court or governmental authority
enjoining, restraining or otherwise prohibiting such application, the Company’s
and any Guarantor’s obligations under this Indenture, the Notes and the Note
Guarantees shall be revived and reinstated as though no deposit had occurred
pursuant to Section 13.01 hereof; provided, however, that if the Company has
made any payment of principal of, premium, if any, or interest on any Notes
following the reinstatement of their 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.

 

ARTICLE 14

MISCELLANEOUS

 

Section 14.01.      Trust
Indenture Act.

 

This Indenture shall in no event be qualified under
the TIA.

 

Section 14.02.      Notices.

 

(a)           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 or mailed by first class mail (registered or certified,
return receipt requested), telecopier or overnight air courier guaranteeing
next day delivery:

 

If to the Company and/or any Guarantor, to:

 

J. Crew Operating Corp.

770 Broadway

New York, New York 10003

Telecopier No.:  (212) 209-2666

Attention:  Chief Financial Officer

 

102

 

With a copy to:

 

Cleary Gottlieb, Steen & Hamilton

One Liberty Plaza

New York, New York 10006

Telecopier No.:  (212) 225-3999

Attention:  Michael L. Ryan

 

If to the Trustee, to:

 

U.S. Bank National Association

Goodwin Square

225 Asylum Street

Hartford, Connecticut 06103

 

(b)           The Company, any Guarantor or the
Trustee, by notice to the others may designate additional or different
addresses for subsequent notices or communications.

 

(c)           All notices and communications (other
than those sent to Holders) shall be deemed to have been duly given:  at the time delivered by hand, if personally
delivered; five Business Days after being deposited in the mail, postage
prepaid, if mailed; when receipt acknowledged, if telecopied; and the next
Business Day after timely delivery to the courier, if sent by overnight air
courier guaranteeing next day delivery.

 

(d)           Any notice or communication to a
Holder shall be mailed by first class mail or by overnight air courier
guaranteeing next day delivery to its address shown on the register kept by the
Registrar.  Failure to mail a notice or
communication to a Holder or any defect in it shall not affect its sufficiency
with respect to other Holders.

 

(e)           If a notice or communication is
mailed in the manner provided above within the time prescribed, it is duly
given, whether or not the addressee receives it.

 

(f)            If the Company mails a notice or
communication to Holders, it shall mail a copy to the Trustee and each Agent at
the same time.

 

(g)           Any notice or communication delivered
to the Company under the provisions herein shall constitute notice to the
Guarantors.

 

Section 14.03.      Certificate
and Opinion as to Conditions Precedent.

 

Upon any request or application by the Company or the
Guarantor to the Trustee to take any action under this Indenture (other than
the initial issuance of the Notes), the Company or the Guarantors shall furnish
to the Trustee upon request:

 

(i)                                     an Officer’s Certificate in form and
substance reasonably satisfactory to the Trustee (which shall include the
statements set forth in Section 14.04 hereof) stating that, in the opinion
of the signers, all conditions precedent 

 

103

 

and covenants, if
any, provided for in this Indenture relating to the proposed action have been
satisfied; and

 

(ii)                                  an Opinion of Counsel in form and
substance reasonably satisfactory to the Trustee (which shall include the
statements set forth in Section 14.04 hereof) stating that, in the opinion
of such counsel, all such conditions precedent and covenants have been
satisfied.

 

Section 14.04.      Statements
Required in Certificate or Opinion.

 

Each certificate or opinion with respect to compliance
with a condition or covenant provided for in this Indenture shall include:

 

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

 

(ii)                                  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;

 

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

 

(iv)                              a statement as to whether or not, in the
opinion of such Person, such condition or covenant has been satisfied.

 

Section 14.05.      Rules by
Trustee and Agents.

 

The Trustee may make reasonable rules for action
by or at a meeting of Holders.  The
Registrar or Paying Agent may make reasonable rules and set reasonable
requirements for its functions.

 

Section 14.06.      No
Personal Liability of Directors, Officers, Employees, Organizers and Members.

 

No director, officer, employee, incorporator,
stockholder, member or other holders of Equity Interests of the Company or any
Guarantor, as such, shall have any liability for any obligations of the Company
or the Guarantors under this Indenture, the Notes or the Note Guarantees 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.

 

104

 

Section 14.07.      Governing
Law.

 

THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN
AND BE USED TO CONSTRUE THIS INDENTURE, THE NOTES AND THE NOTE 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.

 

Section 14.08.      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 14.09.      Successors.

 

All agreements of the Company in this Indenture and
the Notes shall bind its successors.  All
agreements of the Trustee in this Indenture shall bind its successors.  All agreements of each Guarantor in this
Indenture shall bind its successors, except as otherwise provided in Section 12.03.

 

Section 14.10.      Severability.

 

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

 

Section 14.11.      Counterpart
Originals.

 

The parties may sign any number of copies of this
Indenture.  Each signed copy shall be an
original, but all of them together represent the same agreement.

 

Section 14.12.      Table
of Contents, Headings, Etc.

 

The Table of Contents and Headings of the Articles and
Sections of this Indenture have been inserted for convenience of reference
only, are not to be considered a part of this Indenture and shall in no way
modify or restrict any of the terms or provisions hereof.

 

Section 14.13.      Entire
Agreement.

 

The Transaction Documents
constitute the entire agreement among the parties hereto and supersede any
prior understandings, agreements or representations by or among such parties,
written or oral, that may have related in any way to the subject matter hereof.

 

[Signatures on following page]

 

105

 

SIGNATURES

 

 

Dated as of                       ,
2005

 

	
   

  	
  J. CREW OPERATING CORP.

  
	
   

  	
  as Issuer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  J. CREW INTERMEDIATE
  LLC

  
	
   

  	
  as Guarantor

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  GRACE HOLMES, INC.
  d/b/a

  
	
   

  	
  J. CREW RETAIL

  
	
   

  	
  as Guarantor

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  H.F.D. NO 55, INC.
  d/b/a J. CREW

  
	
   

  	
  FACTORY

  
	
   

  	
  as Guarantor

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

 

	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  J. CREW, INC.

  
	
   

  	
  as Guarantor

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  J. CREW INTERNATIONAL,
  INC.

  
	
   

  	
  as Guarantor

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  U.S. Bank National
  Association

  
	
   

  	
  as Trustee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

 

EXHIBIT A

 

FORM OF NOTE

 

[Include the following legend for
Global Notes only:

 

“THIS IS A GLOBAL NOTE WITHIN THE MEANING OF THE
INDENTURE REFERRED TO HEREINAFTER.

 

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

 

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

 

[Include the following legend on all
Notes that are Restricted Notes:

 

“THIS NOTE AND ANY RELATED NOTE GUARANTEE HAS NOT BEEN
REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), AND ACCORDINGLY, MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE
TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER, OR AN
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF, THE SECURITIES ACT, IN
ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED
STATES OR ANY OTHER JURISDICTION AND IN ACCORDANCE WITH THE TRANSFER
RESTRICTIONS CONTAINED IN THE INDENTURE UNDER WHICH THIS NOTE AND ANY RELATED
GUARANTEE WAS ISSUED. IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER
TO THE REGISTRAR SUCH OPINIONS OF COUNSEL, CERTIFICATES AND/OR OTHER
INFORMATION AS IT MAY REASONABLY REQUIRE IN FORM REASONABLY
SATISFACTORY TO IT AS PROVIDED FOR IN THE INDENTURE TO CONFIRM THAT THE
TRANSFER COMPLIED WITH THE FOREGOING RESTRICTIONS AS PROVIDED FOR IN THE
INDENTURE.”]

 

A-1

 

[FORM OF FACE OF NOTE] 

93/4% Senior Subordinated Notes due 2014

 

	
  No. 1

  	
   

  	
  Principal Amount:
  $275,000,000

  

 

[If the Note is a Global Note include the
following two lines:
as revised by the Schedule of Increases and

Decreases in Global Note attached hereto]

CUSIP NO. 46612GAC1

 

J. CREW OPERATING CORP., a Delaware corporation,
promises to pay to                         
or registered assigns, the principal amount of                          
Dollars ($                             )
[If the Note is a Global Note, add the
following: as revised by the Schedule of Increases and
Decreases in Global Note attached hereto] on December 23, 2014.

 

	
  Interest Payment Dates:

  	
  June 23 and
  December 23

  
	
   

  	
   

  
	
  Record Dates:

  	
  June 8 and
  December 8

  

 

Additional provisions of
this Note are set forth on the other side of this Note, which provisions shall
for all purposes have the same effect as if fully set forth at this place.

 

	
   

  	
  J. CREW OPERATING CORP.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

TRUSTEE’S CERTIFICATE OF AUTHENTICATION

 

This is one of the 93/4%
Senior Subordinated Notes due 2014 referred to in the within-mentioned
Indenture:

 

	
  Dated: 

  	
   

  	
   

  	
  U.S. BANK NATIONAL ASSOCIATION

  
	
   

  	
   as Trustee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

A-2

 

[FORM OF BACK OF NOTE]

93/4% Senior Subordinated
Notes due 2014

 

Capitalized terms used herein shall have the meanings
assigned to them in the Indenture referred to below unless otherwise indicated.

 

1.             INTEREST.

 

J. Crew Operating Corp., a Delaware corporation, or
its successor (the “Company”), promises to pay interest on the principal amount
of this Note at the rate of 93/4% per annum.  The Company will pay interest in United
States dollars (except as otherwise provided herein) semi-annually in arrears
on June 23 and December 23, commencing on June 23, 2005, 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 shall accrue from the most recent date to which interest has been
paid or, if no interest has been paid, from December 23, 2004; provided
that if there is no existing Default or Event of Default on 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 (but after December 23,
2004), interest shall accrue from such next succeeding Interest Payment Date,
except in the case of the original issuance of Notes, in which case interest
shall accrue from December 23, 2004. 
The Company shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) 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 shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue installments of interest
(without regard to any applicable grace period) at the same rate to the extent
lawful.  Interest shall be computed on
the basis of a 360-day year comprised of twelve 30-day months.

 

2.             METHOD
OF PAYMENT.

 

The Company will pay interest on the Notes (except
defaulted interest) on the applicable Interest Payment Date to the Persons who
are registered Holders of Notes at the close of business on June 8 or December 8next
preceding the Interest Payment Date, even if such Notes are cancelled after
such record date and on or before such Interest Payment Date, except as
provided in Section 2.14 of the Indenture with respect to defaulted
interest.  The Notes shall be payable as
to principal, premium and interest at the office or agency of the Company
maintained for such purpose within or without the City and State of New York,
or, at the option of the Company, payment of interest may be made by check
mailed to the Holders at their addresses set forth in the register of Holders; provided
that payment by wire transfer of immediately available funds shall be required
with respect to principal of, premium and interest on, all Global Notes.  Such payment shall be in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts.

 

3.             PAYING
AGENT AND REGISTRAR.

 

Initially, U.S. Bank National Association, the Trustee
under the Indenture, shall act as Paying Agent and Registrar.  The Company may change any Paying Agent or
Registrar without 

 

A-3

 

notice to any
Holder.  The Company, the Guarantors or
any of the Company’s Subsidiaries may act in any such capacity.

 

4.             INDENTURE.

 

The Company issued the Notes under an Indenture dated
as of March 18, 2005 (“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. 
The Notes are subordinated secured Obligations of the Company having an
initial aggregate principal amount of $275,000,000.  Subject to the conditions set forth in the
Indenture and without the consent of the Holders, the Company may issue Additional Notes in an aggregate principal
amount not to exceed $50,000,000.  All
Notes will be treated as a single class of securities under the Indenture.

 

To guarantee the due and punctual payment of the
principal of and interest on the Notes and all other amounts payable by the
Company under the Indenture and the Notes when and as the same shall be due and
payable, whether at maturity, by acceleration or otherwise, according to the
terms of the Notes and the Indenture, J. Crew Intermediate LLC and certain
Subsidiaries of the Company have unconditionally guaranteed such obligations
pursuant to the terms of the Indenture. 
The Note Guarantees will be subject to release as provided in the
Indenture.  The obligations of any
Guarantor in respect of its Note Guarantee will be limited to the maximum
amount as will, after giving effect to all other contingent and fixed
liabilities of such Guarantor and after giving effect to any collections from,
rights to receive contributions from or payments made by or on behalf of any
other Guarantor in respect of the obligations of such other Guarantor under the
Indenture, result in the obligations of such Guarantor under its Note Guarantee
not constituting a fraudulent conveyance or fraudulent transfer under federal
or state law.

 

5.             OPTIONAL
REDEMPTION.

 

(a)           Optional Redemption.

 

(i)                                     Prior to the date which is eighteen (18)
months following the Closing Date, the Company may redeem the Notes, at its
option, in whole at any time or in part from time to time, at a redemption
price equal to 101% of the principal amount thereof, plus accrued and unpaid
interest thereon to the redemption date; provided, however, the
Company may, at its option at any time prior to such date, irrevocably elect to
terminate its right to redeem the Notes pursuant to this clause (i) by
delivering a written notice to the Trustee and upon delivering such notice, the
Initial Call Termination Date shall be deemed to have occurred.

 

(ii)                                  Commencing from the date which is the
fifth anniversary of the Closing Date, the Company may redeem the Notes, at its
option, in whole at any time or in part from time to time, at the following
redemption prices, expressed as percentages of the principal amount thereof,
plus accrued and unpaid interest thereon to the redemption date, if redeemed
during the 

 

A-4

 

twelve-month period
commencing on the anniversary of the Closing Date in any year set forth below:

 

	
  Year

  	
   

  	
  Percentage

  	
   

  
	
  2009

  	
   

  	
  104.875

  	
  %

  
	
  2010

  	
   

  	
  102.438

  	
  %

  
	
  2011

  	
   

  	
  101.219

  	
  %

  
	
  2012 and thereafter

  	
   

  	
  100.0

  	
  %

  

 

(b)           Optional Redemption upon a Change
of Control.  Upon the occurrence of a
Change of Control, at any time after the consummation of the Change of Control
Offer in accordance with the provisions of Section 4.13 and prior to the
date which is fifty-four (54) months following the Closing Date, the Company
may redeem the Notes not tendered in the Change of Control Offer, in whole at
any time or in part from time to time, at the Company’s option at a redemption
price equal to 100% of the principal amount thereof plus the excess of:

 

(i)                                     the present value at such redemption date
of (A) the redemption price of the Notes on the date which is fifty-four
(54) months following the Closing Date (as determined pursuant to Section 3.07(a));
plus (B) all required remaining scheduled interest payments due on the
Notes through the date which is fifty-four (54) months following the Closing
Date, other than accrued interest to such redemption date, computed using a
discount rate equal to the Treasury Rate plus 75 basis points per annum
discounted on a semi-annual bond equivalent basis; over

 

(ii)                                  the principal amount of the Notes on such
redemption date; plus

 

accrued
and unpaid interest on the Notes to the redemption date.  The Treasury Rate shall be calculated by the
Company or on behalf of the Company by such Persons as the Company shall
designate (and will not be a duty or obligation of the Trustee) on the third
Business Day preceding the redemption date and notice thereof shall promptly be
given by the Company to the Trustee.

 

(c)           Optional Redemption upon Equity
Offerings.  At any time prior to the
third anniversary of the Initial Call Termination Date, the Company may, at its
option, use the net cash proceeds of one or more Equity Offerings or a
contribution to the common equity capital of the Company from the net proceeds
of one or more Equity Offerings by a direct or indirect parent of the Company
(in each case, other than Excluded Contributions and the net proceeds of a sale
of Designated Preferred Stock) to redeem up to 40% of the aggregate principal
amount of the Notes at a redemption price equal to 109.75% of the principal
amount thereof, plus accrued and unpaid interest thereon to the date of
redemption; provided that the Company shall make such redemption not
more than 90 days after the closing of such Equity Offering or equity
contribution.

 

 

A-5

 

6.             MANDATORY
REDEMPTION.

 

Except as set forth in paragraph 7 below, the
Company shall not be required to make mandatory redemption or sinking fund
payments with respect to the Notes.

 

7.             REPURCHASE
AT OPTION OF HOLDER.

 

(a)           Upon
the occurrence of a Change of Control, each Holder of Notes will have the right
to require the Company to make an offer to repurchase all or any part (equal to
$1,000 or an integral multiple of $1,000) of such Holder’s Notes pursuant to
the offer described below (the “Change of Control Offer”) at a purchase price
equal to 101% of the aggregate
principal amount thereof, plus accrued and unpaid interest thereon, if any, to
the date of purchase.  Within 30
days following any Change of Control, the Company will mail a notice to each
Holder describing the transaction or transactions that constitute the Change of
Control and setting forth the procedures governing the Change of Control Offer
required by the Indenture.

 

(b)           When
the aggregate amount of Excess Proceeds exceeds $15.0 million, the Company will
be required to make an offer to all Holders of Notes and, to the extent the
Company elects or is required by the terms of any pari passu Indebtedness, to all holders of such pari passu Indebtedness (an “Asset Sale
Offer”) to purchase the maximum principal amount of Notes and any such pari passu Indebtedness that may be
purchased out of the Excess Proceeds, at a purchase price equal to 100% of the
principal amount thereof, plus accrued and unpaid interest thereon, if any, to
the date of purchase (or, in respect of any pari
passu Indebtedness, such lesser price, if any, as may be provided by
its terms) in accordance with the procedures set forth in the Indenture or such
pari passu Indebtedness.  If any Excess Proceeds remain after
consummation of an Asset Sale Offer, the Company may use such Excess Proceeds
for any purpose not otherwise prohibited by the Indenture.  If the aggregate principal amount of Notes
and such other pari passu Indebtedness
tendered in such Asset Sale Offer exceeds the amount of Excess Proceeds, the
Trustee shall select the Notes and such other pari
passu Indebtedness to be purchased on a pro rata basis.  Upon completion of each Asset Sale Offer, the
amount of Excess Proceeds shall be reset at zero.

 

(c)           Holders
of the Notes that are the subject of an offer to purchase will receive a Change
of Control Offer or Asset Sale Offer from the Company prior to any related
purchase date and may elect to have such Notes purchased by completing the form
titled “Option of Holder to Elect Purchase” appearing below.

 

8.             NOTICE
OF REDEMPTION.

 

Notice of redemption shall be mailed pursuant to the
terms of the Indenture to each Holder whose Notes are to be redeemed at its
registered address.  On and after the
redemption date, interest will cease to accrue on the Notes or portions thereof
called for redemption as long as the Company has deposited with the paying
agent funds in satisfaction of the applicable redemption price pursuant to the
Indenture.

 

A-6

 

9.             SUBORDINATION.

 

This Note and the Note
Guarantees are subordinated in right of payment, as set forth in the Indenture,
to the prior payment in full in cash of all existing and future Senior Debt of
the Company or any Guarantor, as the case may be.  This Note and the Note Guarantees in all
respects rank pari passu with, or
senior to, all other Indebtedness of the Company or the Guarantors, as the case
may be.  By accepting a Note, each Holder
agrees to the subordination provisions set forth in the Indenture, authorizes
the Trustee to effectuate such subordination provisions and appoints the
Trustee as attorney-in-fact for such purpose.

 

10.           DENOMINATIONS,
TRANSFER, EXCHANGE.

 

The Notes are in registered form without coupons.  The transfer of the Notes may be registered
and the 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,
it 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.

 

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 the following paragraphs and to the
provisions of the Indenture, the Indenture, the Notes and the Note Guarantees
may be amended or supplemented with the consent of the Holders of at least a
majority in aggregate principal amount of the Notes then outstanding
(including, without limitation, consents obtained in connection with a purchase
of or, tender offer or exchange offer for, Notes), and, subject to the
Indenture, any existing Default or Event of Default (other than a Default or
Event of Default in the payment of the principal of, premium or interest on the
Notes, except a payment default resulting from an acceleration that has been
rescinded) or compliance with any provision of the Indenture, the Notes and the
Note Guarantees may be waived with the consent of the Holders of a majority in
principal amount of the then outstanding Notes (including consents obtained in
connection with a purchase of, or a tender offer or exchange offer for, Notes).

 

Without the consent of any Holder of Notes, the
Company, the Guarantors and the Trustee may amend or supplement the Indenture,
the Notes or the Note Guarantees to cure any ambiguity, defect or
inconsistency, to provide for uncertificated Notes in addition to or in place of
certificated Notes, to provide for the assumption of the Company’s or a
Guarantor’s obligations to Holders of Notes in the case of a merger or
consolidation, to make any change that would provide any additional rights or
benefits to the Holders of Notes or that does not adversely affect the legal
rights under the Indenture of any such Holder, to provide for the issuance of 

 

A-7

 

Additional Notes or to
allow any Guarantor to execute a supplemental indenture and/or a Note Guarantee
with respect to the Notes.

 

13.           DEFAULTS
AND REMEDIES.

 

Events of Default include (i) default for 30 days
in the payment when due of interest on the Notes; (ii) default in payment
when due (at maturity, upon redemption or otherwise) of principal of or
premium, if any, on the Notes; (iii) failure by the Company or any of its
Restricted Subsidiaries for 30 days after notice by the Trustee or by the
Holders of at least 25% in principal amount of the Notes then outstanding voting as a single
class to comply with
the provisions described under Section 4.07, Section 4.09, Section 4.10
or Section 4.13; (iv) failure by the Company or any of its Restricted
Subsidiaries for 60 days after notice to the Company by the Trustee or the
Holders of at least a majority in principal amount of the then outstanding voting as a
single class to
comply with any other agreement in the Indenture or the Notes; (v) default
under any mortgage, indenture or instrument under which there may be issued or
by which there may be secured or evidenced any Indebtedness for money borrowed
by the Company or any of its Significant Subsidiaries (or the payment of which
is guaranteed by the Company or any of its Significant Subsidiaries) whether
such Indebtedness or Guarantee now exists, or is created after the Issue Date,
which default (a) is caused by a failure to pay principal of such
Indebtedness after giving effect to any grace period provided in such
Indebtedness on the date of such default (a “Payment Default”) or (b) results
in the acceleration of such Indebtedness prior to its stated maturity and, in
each case, the principal amount of any such Indebtedness, together with the
principal amount of any other such Indebtedness under which there has been a
Payment Default or the maturity of which has been so accelerated, aggregates
$25.0 million or more; (vi) failure by the Company or any of its
Subsidiaries to pay final, non-appealable judgments aggregating in excess of
$25.0 million (net of any amounts covered by a reputable and credit worthy
insurance company that has not contested coverage or reserved rights with
respect to an underlying claim), which judgments are not paid, discharged or
stayed for a period of more than 60 consecutive days after such judgments
become final and non-appealable; (vii) the Company or any of its
Restricted Subsidiaries that is a Significant Subsidiary pursuant to or within
the meaning of any Bankruptcy Law (A) commences a voluntary case, (B) consents
to the entry of an order for relief against it in an involuntary case, (C) consents
to the appointment of a Custodian of it or for all or substantially all of its
property or (D) makes a general assignment for the benefit of its
creditors; (viii) a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that (A) is for relief against the Company
or any of its Restricted Subsidiaries that is 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 for all or
substantially all of the property of the Company or any of its Restricted
Subsidiaries that is a Significant Subsidiary or (C) orders the
liquidation of the Company or any of its Restricted Subsidiaries that is a
Significant Subsidiary and the order or decree remains unstayed and in effect
for 60 consecutive days; (ix) except as permitted under the Indenture, any
Note Guarantee is held to be unenforceable or invalid by any final and
non-appealable judgment or decree or ceases for any reason to be in full force
and effect or any Guarantor that is a Significant Subsidiary, or any Person
acting on behalf of any Guarantor that is a Significant Subsidiary, denies or
disaffirms such Guarantor’s obligations under its Note Guarantee and such
Default continues for 10 days after receipt of the notice specified in the
Indenture; or (x) except as permitted under the Indenture, any Security
Document or any security interest granted thereby is 

 

A-8

 

held to be unenforceable
or invalid by any final and non-appealable judgment or decree or ceases for any
reason to be in full force and effect and such Default continues for 10 days
after receipt of the notice specified in the Indenture, or the Company or any
Guarantor that is a Significant Subsidiary, or any Person acting on behalf of
such Person, denies or disaffirms the Company’s or such Guarantor’s obligations
under any Security Document.

 

In the case of an Event of Default specified in clause
(vii) or (viii) of the immediately preceding paragraph, all
outstanding Notes shall 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 25% in aggregate principal amount of the
then outstanding Notes may declare all the Notes to be due and payable
immediately; provided that so long as any Indebtedness permitted to be
incurred pursuant to the Credit Facilities is outstanding, such acceleration
shall not be effective until the earlier of (a) the acceleration of such
Indebtedness under the Credit Facilities or (b) five Business Days after
receipt by the Company of written notice of such acceleration.  Holders of the Notes may not enforce the
Indenture or the Notes except as provided in the Indenture.

 

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 or waive any existing Default or Event of Default 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 that has become due solely because of the acceleration) have been
cured or waived.

 

Subject to certain limitations, Holders of a majority
in principal amount of the then outstanding Notes may direct the
Trustee in its exercise of any trust or power.  The Trustee may withhold from Holders of the
Notes notice of any continuing Default or Event of Default (except a Default or
Event of Default relating to the payment of principal or interest) if and so
long as it determines that withholding notice is in their interest.   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, 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 the Indenture; but no such waiver shall extend to any subsequent or
other Default or impair any right consequent thereon.

 

14.           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,
the Guarantors or their Affiliates, and may otherwise deal with the Company,
the Guarantors or their Affiliates, as if it were not the Trustee.

 

A-9

 

15.           NO
RECOURSE AGAINST OTHERS.

 

No director, officer, employee, incorporator,
stockholder, member or other holders of Equity Interests of the Company or any
Guarantor, as such, shall have any liability for any obligations of the Company
or the Guarantors under the Notes, the Note Guarantees or the Indenture 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.

 

16.           AUTHENTICATION.

 

This Note shall not be valid until authenticated by
the manual signature of the Trustee or an authenticating agent.

 

17.           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).

 

18.           CUSIP
NUMBERS.

 

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

 

The Company shall furnish to any Holder upon written
request and without charge a copy of the Indenture.  Requests may be made to:

 

J. Crew Operating Corp.

770 Broadway

New York, New York 10003

Telecopy:  (212) 209-2666

Attention:  Chief Financial Officer

 

A-10

 

ASSIGNMENT FORM

 

To assign this Note, fill in the form below:

 

(I) or (we) assign and transfer this Note to ___________________
(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:

  	
   

  	
   

  
	
   

  	
  (Signature
  must be guaranteed)

  	
   

  

 

	
   

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

  

 

The signature(s) should be guaranteed by an eligible guarantor
institution (banks, stockbrokers, savings and loan associations and credit
unions with membership in an approved signature guarantee medallion program),
pursuant to Exchange Act Rule 17Ad-15.

 

A-11

 

OPTION OF HOLDER TO ELECT PURCHASE

 

If you want to elect to have this Note purchased by
the Company pursuant to Section 4.10 or Section 4.13 of the
Indenture, check the box below:

 

o Section 4.10      o Section 4.13

 

If you want to elect to have only part of the Note
purchased by the Company pursuant to Section 4.10 or Section 4.13 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:____________________________________

(Signature must be
guaranteed)

 

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

  

 

The signature(s) should be guaranteed by an eligible guarantor
institution (banks, stockbrokers, savings and loan associations and credit
unions with membership in an approved signature guarantee medallion program),
pursuant to Exchange Act Rule 17Ad-15.

 

A-12

 

[To be attached to Global Notes only:

 

SCHEDULE OF
INCREASES OR DECREASES IN GLOBAL NOTE

 

The
following increases or decreases 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 Note

  Custodian

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

A-13

 

EXHIBIT B

 

FORM OF NOTE
GUARANTEE

 

Subject to Section 12.05 of the Indenture, each
Guarantor hereby 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 the
Indenture, the Notes and the Obligations of the Company under the Notes or
under the Indenture, that: (a) the principal of, premium, if any, and
interest on the Senior Subordinated Notes will be promptly paid in full when
due, subject to any applicable grace period, whether at maturity, by
acceleration, redemption or otherwise, and interest on overdue principal,
premium, if any, (to the extent permitted by law) and interest on any interest,
if any, on the Notes and all other payment Obligations of the Company to the
Holders or the Trustee under the Indenture or under the Notes will be promptly
paid in full and performed, all in accordance with the terms thereof; and (b) in
case of any extension of time of payment or renewal of any Notes or any of such
other payment Obligations, the same will be promptly paid in full when due or
performed in accordance with the terms of the extension or renewal, subject to
any applicable grace period, whether at stated maturity, by acceleration,
redemption or otherwise.  Failing payment
when so due of any amount so guaranteed or any performance so guaranteed for
whatever reason, each Guarantor will be jointly and severally obligated to pay
the same immediately.

 

The obligations of each Guarantor to the Holders and
to the Trustee pursuant to this Note Guarantee and the Indenture are expressly
set forth in Article 12 of the Indenture, and reference is hereby made to
such Indenture for the precise terms of this Note Guarantee.  The terms of Article 12 of the Indenture
are incorporated herein by reference. 
This Note Guarantee is subject to release as and to the extent provided
in Section 12.04 of the Indenture.

 

This is a continuing Guarantee and shall remain in
full force and effect and shall be binding upon each Guarantor and its
respective successors and assigns to the extent set forth in the Indenture
until full and final payment of all of the Company’s Obligations under the
Notes and the Indenture and shall inure to the benefit of the successors and
assigns of the Trustee and the Holders and, in the event of any transfer or
assignment of rights by any Holder or the Trustee, the rights and privileges
herein conferred upon that party shall automatically extend to and be vested in
such transferee or assignee, all subject to the terms and conditions
hereof.  This is a Note Guarantee of
payment and not a guarantee of collection.

 

This Note Guarantee shall not be valid or obligatory
for any purpose until the certificate of authentication on the Note to which
this Note Guarantee relates shall have been executed by the Trustee under the
Indenture by the manual signature of one of its authorized officers.

 

Capitalized terms used herein have the same meanings
given in the Indenture unless otherwise indicated.

 

B-1

 

	
  Dated as of
                            ,
  2005

  	
  [NAME OF GUARANTOR(S)]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

B-2

 

EXHIBIT C

 

FORM OF
SUPPLEMENTAL INDENTURE

 

SUPPLEMENTAL INDENTURE (this “Supplemental Indenture”), dated as of                            ,
200      , among                                   
(the “Guaranteeing Subsidiary”),
a subsidiary of                                        
(or its permitted successor), J. Crew Operating Corp. (the “Company”) (or its
permitted successor), the other Guarantors (as defined in the Indenture
referred to herein) and
([                       ]),
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
[           ] providing
for the issuance of 93/4% Senior Subordinated
Notes due 2014 (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 the Company’s obligations under the Indenture
on the terms and conditions set forth herein; 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 herein and in the Indenture, including but
not limited to Article 12 thereof.

 

3.             NO
RECOURSE AGAINST OTHERS.  No past,
present or future director, officer, employee, incorporator, stockholder or
agent of the Guaranteeing Subsidiary, as such, shall have any liability for any
obligations of the Company or any Guarantor under the Notes, any Note
Guarantee, 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
Commission that such a waiver is against public policy.

 

C-1

 

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 BUT 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.

 

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.

 

C-2

 

EXHIBIT D

 

FORM OF
TRANSFER CERTIFICATE FOR TRANSFER TO QIB

 

	
   

  	
  [Date]

  

 

[Address of Trustee]

 

Re:  93/4% Senior
Subordinated Notes due 2014 by J. Crew Operating Corp.

 

Ladies and Gentlemen:

 

Reference is hereby made to the Indenture, dated as of
[          ] (as amended and
supplemented from time to time, the “Indenture”), among the Company, the Guarantors (as defined in the Indenture) and
[          ], as
Trustee.  Capitalized terms used but not
defined herein shall have the meanings given to them in the Indenture.

 

This letter relates to
the transfer of $                
aggregate principal amount of Notes beneficially owned by the undersigned (the “Transferor”).

 

In connection with such
request, and with respect to such Notes, the Transferor does hereby certify
that such Notes are being transferred in accordance with Rule 144A under
the Securities Act of 1933, as amended (“Rule 144A”), to a transferee that
the Transferor reasonably believes is purchasing the Notes for its own account
or an account with respect to which the transferee exercises sole investment
discretion, and the transferee, as well as any such account, is a “qualified
institutional buyer” within the meaning of Rule 144A, in a transaction
meeting the requirements of Rule 144A and in accordance with applicable
securities laws of any state of the United States or any other jurisdiction.

 

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.

 

	
   

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
  [Name of Transferor]

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Authorized Signature

  

 

D-1

 

EXHIBIT E

 

FORM OF
CERTIFICATE FOR TRANSFER PURSUANT TO RULE 144

 

	
   

  	
  [Date]

  

 

[Address of Trustee]

 

Re:  93/4% Senior
Subordinated Notes due 2014 by J. Crew Operating Corp.

 

Ladies
and Gentlemen:

 

Reference is hereby made to the Indenture, dated as of
[          ] (as amended and
supplemented from time to time, the “Indenture”), among the Company, the Guarantors (as defined in the Indenture) and
[          ], as
Trustee.  Capitalized terms used but not
defined herein shall have the meanings given to them in the Indenture.

 

In connection with our proposed sale of $             
aggregate principal amount of the Notes, [in the case of a transfer
of an interest in a 144A Global Note: which represent an interest in
a 144A Global Note beneficially owned by the undersigned,] we confirm that such
sale has been effected pursuant to and in accordance with Rule 144 under
the Securities Act.

 

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.

 

	
   

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
  [Name of Transferor]

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Authorized Signature

  

 

E-1

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